My Chat with Mr. Big …

Two men look out the window from One World Trade Center
Photo by Drew Angerer/Getty Images
William D. Cohan
July 13, 2021

A short lifetime ago, back in the earliest days of the pandemic, and around the time that Tom Hanks announced he had Covid-19 and the N.B.A. upended its 2020 season, I started talking to one of the most powerful financial minds on Wall Street, a leader in every sense of the word. For the purpose of this article, and for future emails, I will to refer to him as Mr. Big, which sums him up pretty nicely. I will be interviewing Mr. Big about the most important issues on Wall Street, from time to time, over the coming months. (For those of you who enjoyed my interview last week with Jamie Dimon, all I will say is that he is not Mr. Big, although he is a very important person on Wall Street. But no more hints. Sorry.)

During those early weeks and months of our conversations, I was struck by the impressive balance he was able to strike between abject fear and calm confidence. And I was entranced by Mr. Big’s analysis of the virus—of the need for I.C.U. beds and incubators—and the second-order effects it might have on Wall Street. There was no question that the pandemic was wreaking havoc across the country, testing our healthcare system and our economy in horrific and unexpected ways. How could the most powerful and richest country on Earth have been so woefully unprepared for the pandemic, and then, once it was upon us, how could we have handled its deadly repercussions so poorly?

This was something we discussed early on, in the third week of March 2020. Mr. Big had—and still has—a big title overseeing one of the world’s preeminent financial institutions. But he was unfailingly generous with his time and insights, considering that in his day job he sat at the table as Wall Street and central bankers helped keep an economic depression at bay. “The Fed has been extraordinary in how it’s responded,” he marveled in that first conversation. “In an uneconomic shutdown, the Fed has to be the lender of last resort. And it’s doing it. It’s doing it and it’s doing it thoughtfully. Yeah, there’s a cost to that, but there’s also a huge cost to society in that we have a pandemic that we were unprepared for and it’s shutting down the economy.”

Many of his predictions were prophetic—or perhaps, given his influence inside Washington, prescriptive. “At the end of the day, I’m of the belief that you have no choice but to try to get money to all the people who are out of work,” he told me at the time. “We have a massive unemployment issue. And we need to do everything we can to bridge and sustain those people the best we can as a society.” But even he was a little surprised by how much the federal government did to stem a collapse, and how effective the stimulus has been at getting the economy functioning again.

Mr. Big and I spoke again recently, under the same ground rules. He was happy to chat as my partners and I, in stealth mode, work to stand up Puck, our new media enterprise. He even offered his generous belief that Puck could be special. “You have great access and you should be able to do something really substantive and high-quality,” he said. (I hope he’s right.)

Mr. Big and I chatted openly about the key issues on his mind: the recovery, China, and the latest stages of our public health crisis. Among his most pressing concerns was the fact that vaccine uptake seems to have plateaued. Not at his firm, he said, where the vaccination rates for employees is in the 90 percent range in the United States and about 80 percent worldwide, but among Americans more broadly. “At this point, we’re fighting an information war more than we’re fighting a nudging war,” he said. “There’s a whole bunch of states across and into the upper Rocky Mountain West where the vaccination rates are in the 40s. If you have vaccination rates in the 40s, you’re going to have Covid.”

He said that he was pleased that older Americans, who are most vulnerable, are getting inoculated in high numbers. But he expressed worry that the holdouts could result in an economic backslide, especially considering the spread of the newer, more contagious Delta variant—and especially in red states that have “had it” with lockdowns and are never going back. “If people aren’t getting vaccinated, it’s their choice,” Mr. Big said. “Then they live with the consequences.” But, he added thoughtfully, each individual decision has collective consequences. “It’s endemic in society, and the way you learn to live with it is to get more people vaccinated.”

A year and three months ago, the stock market was falling off a cliff and fears of an economic Armageddon were couched in loaded terms like “tradeoffs.” Of course, easy money and a pending recovery have changed spirits. Mr. Big has been “pleasantly surprised” by his firm’s performance since the start of 2020—it has been nothing short of breathtaking—but was hardly shocked that the combination of intense monetary and fiscal stimulus would lead to good things for Wall Street, and beyond. He shared details of a conversation that he had last year with another Mr. Big—“whom you would know,” he winked—and they both agreed that “given this set of circumstances, we’re probably going to have a really good tailwind for the financial services industry for a number of years.”

Why would you conclude that, I wondered? “In a period of free money, very, very loose monetary policy, aggressive fiscal policy, that’s pretty constructive for financial services,” he replied. “It’s pretty constructive for asset owners. It’s constructive for transaction activity. It’s constructive for the things we do. I’m not surprised. Now, has it been better than I thought it would be up to this point? Yeah, but it’s going to be bumpy. It’s not going to be perfect and consistent.”

Mr. Big was happy to acknowledge where the market exceeded his expectations, but he also exhibited the sort of brash confidence that executives typically hedge with false modesty. “It wasn’t a question of if we could get through it,” he said, referring to the country’s economic recovery from the virus. “It was when we would get through it.” The bullish signs were all there, for anyone who took the 30,000-foot view. “There would be higher savings rates. There would be all this fiscal support,” he said. “You could just see the roadmap laying out.”

That got us talking about the economy more generally. He said he had dinner recently with about eight C.E.O.s, each of whom was worried about “wage pressure” and “real inflation” in their supply chains. (U.S. consumer prices increased 5.4 percent in June, the highest annual rate of inflation in 13 years.) “I’m not smart enough to tell you what’s transitory and what’s not, but the inflation is real,” he said. “Of course I’m concerned about that. On the other hand, I watch the bond market very carefully. The bond market is telling you at the moment that you should be more worried about growth and not as worried about inflation.”

He cited the projected growth trajectory for the U.S. economy in 2021 as ratcheting up to some 10 percent, from 7 percent, while inflation, he said, looks like it will clock in at 3 percent. “Yet bond yields have gone down,” he continued. “The bond market is telling you that you should be more worried about growth. I don’t know if the bond market is right or wrong, but I watch those signals very carefully. I think it’s uncertain.” So, he worries, since that’s what he’s paid to do.

What would he tell Jerome Powell, the Chairman of the Federal Reserve, if he could, I wondered aloud, knowing full well that the Fed Chairman probably talks to him regularly. “If I was seeing him today,” Mr. Big said, “I’d say I applaud the fact that you are sending signals that you have a sharp eye on inflation, and that the lax monetary policies are not continuing out three or four years. Rates can move more quickly. The Q.E.”—quantitative easing, the industry euphemism for the Fed’s ongoing monetary stimulus program—“could reverse more quickly. You watch the signals very closely and you’re very, very attuned to what’s going on.”

I asked Mr. Big whether he was concerned about the recent moves within the Chinese government to rein in what it perceives as entrepreneurial excess, whether it be Didi—the Chinese ride-hailing service that recently completed its I.P.O.—or the seeming erasure of Jack Ma, the Chinese billionaire behind the Alibaba Group. Mr. Big worried about this, too, especially about the anti-Chinese rhetoric. “One of the big risks I think that exists in the world is the bilateral relationship between the U.S. and China right now,” he said. “It’s not in a great place.”

He confided that he doesn’t agree with the political rhetoric—now somewhat ameliorated by the Biden administration—that China must be stopped. “We can’t stop China,” he said. “China is a massive economic engine … We have to cooperate, compete, and confront. We have to pick some places where we really want to focus on confronting the Chinese and getting them to adjust, but we also have to find ways to cooperate and work with them, because a world where we create two economic spheres and they get more decoupled is a more dangerous world.”

He continued that the “micro actions” against Didi or Jack Ma are indications of a bigger problem. “The Chinese and the U.S. are in a confrontational place,” he observed. “The Chinese are looking to control more of their world and that’s an issue. We want a more open economic environment and we’ve got to push back in certain places. Do I think it’s a big deal that they’re picking on a handful of these companies doing this? Yeah. I don’t like it. It creates skepticism around dealing with any Chinese company and that isn’t good for global growth. That’s just an indication of the fact that we’ve got to find a way—the United States and China—to get to a different balance than the current balance, and I worry that our policymakers aren’t in a position to execute appropriately … We have to get along.”

As our most recent conversation was winding down—busy guy, after all—I couldn’t resist asking Mr. Big about Donald Trump and whether he thought the country was better off with him in Mar-a-Lago full-time. “We’re better without him,” he answered immediately. “I wish he’d go away and not come back. That’s easy … But whether or not he’ll come back and he’ll be involved or he won’t, or how things will evolve, I certainly hope that there are other alternatives in the Republican Party. I hope for better.”

But he’s not wild about the whining on the progressive left, either, which he thinks is just a “direct reaction” to Trump and Trumpism. “One of the most horrible things I’ve seen go on recently is looking at a lot of very left progressive people talking about the American flag in a negative way, people saying when we see people flying a flag in their lawn, we assume they’re racist. That is horrible, horrible for our country.”