Former chief economic adviser to former President Donald Trump, Gary Cohn, discusses how higher interest rates are affecting investors' risk-taking behavior. Topics include the impact of interest rates on businesses, fiscal stimulus, tariffs, efficiency in business operations, and the role of AI in corporate efficiency and economic outlook.
Higher interest rates are dampening investor risk appetite, impacting capital investment.
Contrasting fiscal stimulus and rate adjustment policies shape economic growth and inflation rates.
Deep dives
Changing Mindset on Capital Investment
The podcast delves into the shift in mentality regarding capital investment and risk. Previously, individuals sought higher returns by investing in startup companies due to low returns on zero-risk assets. However, the landscape has evolved, with treasury bills now offering competitive returns, altering how people approach investing and circulating capital. The closure of capital markets has hindered the expected circulation of risk capital, influencing fiscal and monetary policies.
Economic Strategies Amidst Policy Clashes
The discussion highlights the contrasting approaches of fiscal and monetary policies in shaping the economy. The Biden administration focuses on fiscal stimulus by investing in the economy, while the Federal Reserve responds with rate adjustments to manage inflation. This dynamic creates countervailing forces where fiscal spending and rate policies intersect, impacting economic growth and inflation rates.
Navigating Economic Messaging Challenges
The podcast explores the significance of effective economic messaging for political agendas. The discussion emphasizes the importance of conveying tangible progress to voters, particularly in terms of disposable income changes. Messaging strategies are crucial in influencing public perception, especially in showcasing the administration's impact on daily expenses and quality of life.
Efficiency Trends in Corporate World
The episode touches on the growing emphasis on efficiency in both big and small companies due to pricing constraints. Companies are exploring AI technologies to enhance operational efficiency in managing resources. Additionally, the conversation addresses potential challenges posed by stagflation risks and the ongoing debates surrounding tariffs and their impact on manufacturing and consumer costs.
Gary Cohn, vice chairman at International Business Machines Corp., says higher interest rates are stopping investors from taking risk. Cohn also served as chief economic adviser to former President Donald Trump. He speaks with Bloomberg's Lisa Abramowicz