romaine: i am romaine bostick. sonali: caroline hyde is off. romaine: she missed a big selloff into the close. s&p hitting the worst month since the pandemic first. investors assessing current risk -- future risk by tapering supply chain bottlenecks. we take a look at the next big risk. we heard from folks out there on wall street, kathy wouldn't

scott minerd, big names giving their take on what they see ahead. we will dissect the reviews today on inflation. you were one of the ones who talked to these people. sonali: kathy wood and her view on deflation is controversial at a time we are seeing inflation but she is talking about big technologies that are going to drive up the prices of many things from artificial intelligence to electric vehicles down over time and ultimately have effects on productivity on the job market. mohammed -- worried about inequality and the impact that will have on global gdp. political economies and what he calls the potential for a lost generation. a very scary thought when you think of people entering the job market and perhaps not ready for what they may find. i was talking about how scott

minerd often talks big risks. last year, he worried covid would be something like the spanish flu. of course, we have seen the death rise, but now he is worried about cyber risk. >> how was his risk not crypto plunging to zero? sonali: over things that people are not paying enough attention to, we know that the business of wall street is a -- risk. these are places where people are not looking. speaking of, here is what scott had to say about cyber. >> the thing that bothers me is i don't think anyone is focused on it. this really takes a high degree of international cooperation, a real macro look, meaning there needs to be somebody, or some group of people looking at how everything interconnect.

and where the potential vulnerabilities are. at this stage, this is the world of the unthinkable. therefore, i have used this phrase before, there is a cognitive distance -- cognitive dissonance surrounded to talk about the consequences are so dire that immediately people move on to say that will never happen. i think there is a wheel vulnerability to the markets in general, but even to the existence of capitalism if the payment system are to be suddenly disrupted. taylor: what likelihood do you see on some sort of attack on the u.s. payment system? >> i would put the probability very high. certainly over 50%.

the reason i put it so high is nobody seems focused on it. and for someone who is sitting out there thinking they want to disrupt our economy, this is the most logical chokepoint. i got accused when talking about this once that i am actually alerting terrorists how to attack us. i think the likelihood is they are already thinking about it. sonali: guggenheim global cio scott minerd. talking about some of the risks he sees. coming up, then asks risk of what -- the next risk of what some call a lost generation. income inequality runs the danger of leaving too many too

far behind. we do that next.

romaine: we are focused on risk, the next big risk facing investors. >> think of people whose jobs have now been displaced by this big step business has taken to digitization, who have no financial assets to begin with,

so they can't benefit from what has happened to asset prices and in addition they were hoping to buy a house and were priced out potential wealth and income has declined. sonali: there are consequences to this. what el-erian says is secular stagnation, culture war, he defines a few of them. >> let's bring in someone who has done research on this as well. dana peterson, chief economist at the conference board. what is interesting is that this risk of economic inequality is not new but is something we are really starting to talk about. >> indeed. it is not that -- certainly in the wake of the great financial crisis you saw incredible

inequality. younger people were not able to find jobs. older generations, which owned houses and financial market access were not able to see an accumulation of wealth. now through the pandemic, we are seeing differences in who can work from home and who can't. who has access to digital technologies and technological advancements. we are seeing a continuation of a very negative trend. romaine: it is a trend that she it is a trend that has been playing out for a while. we have to put this in the context of u.s. politics and what transpired over the last few years, but it has been a global phenomenon. i am curious if there is anyway the ship gets righted with regards to whether it is closing the opportunity gap, the wealth gap, how do we do this? >> there are lots of things we can do.

thinking about the pandemic itself, first making sure that all economies are able to emerge from the pandemic. that means broad access to vaccines. also, policies that are supportive monetary and fiscal policies. in terms of the digital divide, most people have a cell phone. if we could make sure everyone has access to broadband internet, that cell phone could be used to achieve things like banking and financial transactions and remittances. there are tons of things we can do, lots of opportunities for businesses to offer solutions. >> there seem to be a lot of frisks too that can make this work. central banks pull back support, stimulus moving forward might be less than what we expected or have seen before. what are some of the things you are concerned about in the near

future that we should be aware of in terms of making this problem worse? >> at the forefront of many risks is inflation. we are seeing higher prices for everything. goods, services, housing, commodities. these inflationary pressures are not just in the u.s. but around the globe. it is having a negative influence on the poor, persons on fixed incomes and businesses who have narrow profit margins who do not have the space 10 best to cost back on consumers. we are concerned about inflation. remove the punch bowl and lessen the amount of policy accommodation and how financial markets respond to that and how also individual businesses respond to that. we are also concerned about

deglobalization, having very negative -- and the free movement of labor. we are concerned about demographic shift where you have large economies like the u.s. and europe, with aging populations meaning smaller tax base and fewer workers. you have economies with very young -- people who can offer the labor to the area that have demand for labor. >> can we talk central banks? one of the big criticisms has been inflating asset bubbles. those who are not in the market or those who can afford a first time home are behind, yet the central bank comes in and says we want full employment across gender and race. are they aware that maybe some of their actions maybe exacerbating the problem? >> i am not going to speak to

the internal workings of the central bank, but central banks understand -- are one instrument. it does inflate asset prices but it also provides liquidity, which is critical for market functioning and allowing the economy to recover so that you can actually have -- achieve your agenda of employment. it is a double-edged sword and central banks, when we look at the u.s., if central banks did nothing we would be worse, but there needs to be acknowledgment that there are negative externalities. romaine: it seems like we have had acknowledgment from prominent economists that do have a say when it comes to policy, whether it is monetary or fiscal. at some point this becomes political because you would have to address some issues through the mechanisms in congress and

the white house. that seems like that would end up being the big stumbling block. >> policy does matter. one thing we think about is looking at the social safety net where you could pen chile have automatic -- kick in. automatic payments for people on the lower end of the income sector if there is a shock to labor markets. examining those types of things as more automatic and less tied to legislation or you could potentially go too far. romaine: always great to get your thoughts. so smart. dana peterson. we are going to continue today and here what kathy would has to say with regards to deflationary forces out there. it is our next big risk.

increasing ovation on the economy. this is bloomberg. ♪

taylor: we want to bring you a story which is the number month -- number one most red here. j.p. morgan chase. it is being shut out of underwriting municipal bond yields in texas after the state enacted a law banning governments to work with banks that limit business with the firearms industry. i pulled up the terminal, texas

has issued $38 billion in deals. the total market is about 11% of the total new market this-year-old on that j.p. morgan would be shut out of. romaine: most read story on the bloomberg terminal. one of the other stories are the big risk ahead. our big take today turning back to our focus now to listen in on what kathy would had to say. arc investment management's founder warning of impending deflation. >> jeff, howard and -- and ray dalio, all of them have been very concerned about a deflationary bust. we agree with them in this respect, we think it is going to be balanced by a deflationary boom. but where we agree is that there

are companies who thought the world would never change and have been catering to short-term shareholders who wanted that extra penny or two, so got it by having the companies leverage up and take more debt and shrink shares. they have also been focused on dividends. they are probably saddled with product and services that will become obsolete because of the record-breaking amount of innovation taking place today. in order to service their debt, they are going to have to cut prices. and move those goods and services that are on their way out anyway. i am concerned about that. i think there is going to be a lot of around it as well.

so, that's why we keep our eye on the innovation ball because that is going to balance these issues out to a great extent. it will also mean the traditional gdp numbers we are going to be seeing are going to be very low. growths will seem scarce. it will proliferate over time and some companies that we own, the stocks we own, they are not in any index. a lot of public market investors are not exposed to them but we they are going to be -- we think there are going to be more opportunities. >> let's get to the chief investment officer and managing partner for fuel venture capital, thank you for joining us. what kathy is saying, you had

also worked at a hedge fund before, kathy is saying what direct impacts could that use on markets and investments? >> happy to be here. i actually listens to -- and i agree with her. i have a strong belief in deflation and i think the good thing here is we are seeing good -- the technological tech innovation -- [indiscernible] we have more technology now today than ever and the pace of innovation has been increasing. that is explaining the deflationary debt. romaine: right now in the

short-term we are dealing with supply chain constraints. you have the benefit of technology as a benefit but that is running into old economy problems of how you shift hardware to people around the world. when we talk about deflationary pressures, do we get to a stage where the technology that is creating that deflation can outpace some old economy issues creating inflation? >> i believe so. you mentioned supply chain issues, some -- companies can create some -- price increase but i don't see meaningful long-term inflationary issues even -- policy and fiscal policy. with the technology these days, not just when we talk about hearing people say automation

and robotics going to increase productivity and replace a lot of skilled jobs. that is another aspect. what i see technology playing into helping -- deflationary sin no way that if you look at companies nowadays, they don't have any supply shock issue. they can scale quickly. that is one of the pieces we invest. we want to see the companies that grow their revenues exponentially while keeping costs minimal. if any company can do that -- you don't see they run into the issue that one day they will have -- demanded the to increase. that is something that plays a big role. >> what sector do you seeing that playing out the most? >> software.

let's say one of the companies we manage is a --, music streaming. the way they do it is they allow -- to stream music in their business operation. the fact that they have a customer in u.s. or latin america doesn't change their cost structure. >> do you worry about this impact on jobs that this will have near term? >> you mean the technological impact on the job market? romaine: great insight from you maggie vo, managing general partner at fuel. giving us a lot of insight into this conversation about

deflationary pressures and whether that actually is a risk or a benefit. we will get final thoughts on this because it was our big take on the day. taylor: a really cool comment, but the differentiation between good inflation versus good deflation versus bad deflation. sonali: it is a fine line and you wonder when you start to pivot over to the bed deflation, all of this will take a long time to play out. romaine: it is always hard to parse with the risks will be and how they play out. i think you saw the market jitters this month and really for the quarter how sentiment has shifted. maybe when people get more clarity about the economic picture and the covid picture, maybe that starts to abate. we will be back for our final thoughts.

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