1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom keene Jaily. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,360 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Paul, 5 00:00:27,440 --> 00:00:30,240 Speaker 1: thank you with missouris where us part of an acclaimed 6 00:00:30,360 --> 00:00:33,839 Speaker 1: teen years ago without Saminski and company and now at 7 00:00:33,920 --> 00:00:38,320 Speaker 1: missoo O doing granular work on oil. Paul, just just 8 00:00:38,479 --> 00:00:41,280 Speaker 1: simply to your research note for this weekend and to Monday, 9 00:00:41,600 --> 00:00:46,120 Speaker 1: what part of this collapse are you most focused on. Well, 10 00:00:46,200 --> 00:00:50,120 Speaker 1: we're obviously following the end of the lockdown, but as 11 00:00:50,159 --> 00:00:52,120 Speaker 1: you know, some of the data, for example out of 12 00:00:52,240 --> 00:00:56,120 Speaker 1: Japan is headed in the wrong direction completely. But as 13 00:00:56,200 --> 00:00:58,560 Speaker 1: you know, the overall problem here is a demand one 14 00:00:58,880 --> 00:01:02,280 Speaker 1: and generally or less, as you also note on focus 15 00:01:02,400 --> 00:01:04,880 Speaker 1: far too much on the supply side. The fact is 16 00:01:05,000 --> 00:01:08,720 Speaker 1: that demand here is is so low relative to anything 17 00:01:08,760 --> 00:01:11,959 Speaker 1: we've previously seen before. It's just a major major problem 18 00:01:12,440 --> 00:01:15,959 Speaker 1: managing the market. That's why we've seen negative prices. It's 19 00:01:15,959 --> 00:01:19,880 Speaker 1: a physical challenge to manage the market and that's manifesting 20 00:01:19,920 --> 00:01:22,520 Speaker 1: itself very clearly in the tape, Paul, are we going 21 00:01:22,600 --> 00:01:26,040 Speaker 1: to see negative prices again on the June contract? It 22 00:01:26,120 --> 00:01:28,720 Speaker 1: depends if people are dumb enough to get caught again. 23 00:01:29,280 --> 00:01:31,880 Speaker 1: I think once you do go into that negative situation 24 00:01:32,800 --> 00:01:35,400 Speaker 1: um where you know you've got to get out for 25 00:01:35,959 --> 00:01:38,919 Speaker 1: any price in order to avoid taking delivery of the crude, 26 00:01:39,640 --> 00:01:42,360 Speaker 1: you could notionally go to any kind of price, you know, 27 00:01:42,440 --> 00:01:45,080 Speaker 1: sort of day before. I think what happened here wasn't 28 00:01:45,080 --> 00:01:48,160 Speaker 1: so much the USO. It was more c T a S. 29 00:01:48,680 --> 00:01:51,600 Speaker 1: Commodity trade advisors who have to get out the day 30 00:01:51,640 --> 00:01:55,080 Speaker 1: before settlement and not allowed to hold a physical position, 31 00:01:55,600 --> 00:01:57,680 Speaker 1: And I think they were probably the sellers that caused 32 00:01:57,760 --> 00:02:00,400 Speaker 1: us to go to minus forty. Once you break loose 33 00:02:00,680 --> 00:02:02,840 Speaker 1: into that sort of territory, obviously you can go just 34 00:02:02,960 --> 00:02:06,480 Speaker 1: about anywhere. It's not if you like a totally real price, 35 00:02:06,560 --> 00:02:10,239 Speaker 1: but it's certainly showing you that there's a massive problem 36 00:02:10,320 --> 00:02:13,440 Speaker 1: with managing oil physically at the moment. I'll try carefully here, 37 00:02:13,560 --> 00:02:15,959 Speaker 1: really carefully if I can. But some people in the 38 00:02:16,040 --> 00:02:18,320 Speaker 1: all patch are obviously very unhappy with the price action. 39 00:02:18,400 --> 00:02:21,519 Speaker 1: Continental Resources Harold Ham came out and asked for a 40 00:02:21,600 --> 00:02:25,679 Speaker 1: probe into what he thinks suggests might be manipulation in 41 00:02:25,760 --> 00:02:28,400 Speaker 1: the commodity market. Paul, it made me wander and I 42 00:02:28,440 --> 00:02:31,000 Speaker 1: asked this question with the greatest respect for anyone working 43 00:02:31,040 --> 00:02:33,480 Speaker 1: in the industry industry, but whether any of these owners 44 00:02:33,600 --> 00:02:36,760 Speaker 1: of say Continental and others too have had the reality 45 00:02:36,840 --> 00:02:39,160 Speaker 1: check about what's about to happen and the support that 46 00:02:39,240 --> 00:02:42,639 Speaker 1: they may or may not get from the government, well, 47 00:02:42,919 --> 00:02:45,280 Speaker 1: I think they would definitely slow to recognize the scale 48 00:02:45,320 --> 00:02:48,440 Speaker 1: of the problem. I wouldn't single out any particular name 49 00:02:48,520 --> 00:02:50,680 Speaker 1: for this. I think the industry in general couldn't quite 50 00:02:50,720 --> 00:02:54,919 Speaker 1: believe what was happening. Obviously, it was an incredibly quick event. 51 00:02:55,080 --> 00:02:57,800 Speaker 1: I mean we went from sailing along fairly normal at 52 00:02:57,840 --> 00:02:59,919 Speaker 1: sixty dollars a barrel on the first of the year 53 00:03:00,600 --> 00:03:03,000 Speaker 1: to a total and after collapse within three months. That 54 00:03:03,080 --> 00:03:05,839 Speaker 1: occurred over the course of about two weeks, so I'm 55 00:03:05,840 --> 00:03:08,799 Speaker 1: not surprised they were they were called short. However, you know, 56 00:03:09,000 --> 00:03:12,600 Speaker 1: very early we were calling for negative prices seeing how 57 00:03:12,720 --> 00:03:15,200 Speaker 1: bad the problem would be. And I'm surprised, for example, 58 00:03:15,320 --> 00:03:18,359 Speaker 1: someone like Concho Phillips it was quite slow to cut. 59 00:03:18,480 --> 00:03:20,840 Speaker 1: I mean, they've got there now, but it was it 60 00:03:21,000 --> 00:03:23,600 Speaker 1: was not as quick a response as we expected from 61 00:03:23,639 --> 00:03:26,640 Speaker 1: the industry given the severity of the downturn. I think 62 00:03:26,680 --> 00:03:29,320 Speaker 1: that we have been a bit negatively surprised by how 63 00:03:29,400 --> 00:03:31,079 Speaker 1: slow it seems it's going to going to be to 64 00:03:31,160 --> 00:03:34,160 Speaker 1: get out of this unfortunately. Um and that you know, 65 00:03:34,200 --> 00:03:37,160 Speaker 1: I'm sympathetic obviously, it's a very difficult situation to manage. 66 00:03:37,920 --> 00:03:40,160 Speaker 1: I think, just to build on that point, there also 67 00:03:40,320 --> 00:03:43,400 Speaker 1: was a probe by the CFTC into other trading that 68 00:03:43,560 --> 00:03:47,800 Speaker 1: was revealed yesterday by Bloomberg and possible manipulation. And there's 69 00:03:47,840 --> 00:03:51,080 Speaker 1: a real question here how much was some of the 70 00:03:51,280 --> 00:03:55,600 Speaker 1: turmoil stemming from people with advanced knowledge of negotiations out 71 00:03:55,640 --> 00:03:59,880 Speaker 1: of Russia, etcetera, versus a lack of an awareness of 72 00:04:00,040 --> 00:04:03,120 Speaker 1: the reality or perhaps denial of the reality that's still 73 00:04:03,600 --> 00:04:06,720 Speaker 1: is being denied to this day. Well, you know, that's 74 00:04:06,760 --> 00:04:09,600 Speaker 1: the crazy thing about the whole situation with with OPEC 75 00:04:09,800 --> 00:04:13,760 Speaker 1: is that there's really no limitation on insider trading. I mean, 76 00:04:13,800 --> 00:04:17,200 Speaker 1: I guess the CFTC can try and go after people, 77 00:04:17,279 --> 00:04:19,800 Speaker 1: but the reality is this is an active cartel that's 78 00:04:19,839 --> 00:04:25,480 Speaker 1: trying to manipulate the market. And also, Paul, just reflect 79 00:04:25,560 --> 00:04:28,120 Speaker 1: on if anyone that's ever been to Vienna or spoken 80 00:04:28,160 --> 00:04:30,520 Speaker 1: to someone that's been to Vienna and watched how this 81 00:04:30,680 --> 00:04:34,400 Speaker 1: meeting operates. The idea that some information slipped through the cracks, 82 00:04:34,960 --> 00:04:37,240 Speaker 1: I mean, come on, it doesn't surprise me at all. 83 00:04:37,800 --> 00:04:40,320 Speaker 1: I would say that it's an active competition to be 84 00:04:40,480 --> 00:04:43,960 Speaker 1: first to give the inside information. But you know that's 85 00:04:44,000 --> 00:04:46,560 Speaker 1: the wild west of the oil market, and you know, 86 00:04:46,800 --> 00:04:49,120 Speaker 1: the regulator I think, can yell at the Russians or 87 00:04:49,160 --> 00:04:51,839 Speaker 1: the or the Satis or whoever. I'm not tingling anyone 88 00:04:51,880 --> 00:04:56,000 Speaker 1: else across the board an active attempt to manipulate the market. 89 00:04:56,080 --> 00:04:59,680 Speaker 1: I mean it's quite open, Paul. There ever was a 90 00:04:59,760 --> 00:05:03,960 Speaker 1: four masure, This is it, and I get to a sovereign, Well, 91 00:05:03,960 --> 00:05:06,880 Speaker 1: it's funnesced to take its lumps and move on. What 92 00:05:07,040 --> 00:05:10,360 Speaker 1: does Saudi Arabia do, What does Kuwait do? What does 93 00:05:10,520 --> 00:05:14,040 Speaker 1: Nigeria do? How do they affect a force masure in 94 00:05:14,160 --> 00:05:18,680 Speaker 1: their core economy? Well, I think you can see clearly 95 00:05:18,760 --> 00:05:22,600 Speaker 1: what's happening strategically through the Saudi official selling prices right 96 00:05:22,680 --> 00:05:25,480 Speaker 1: and what we saw here, interestingly, I think very much 97 00:05:25,600 --> 00:05:30,360 Speaker 1: post the President Trump's President Trump's intervention was that prices 98 00:05:30,440 --> 00:05:33,680 Speaker 1: were raised by Saudi Arabia to the US to reduce 99 00:05:34,440 --> 00:05:36,479 Speaker 1: their sales to the US, but at the same time 100 00:05:36,600 --> 00:05:40,120 Speaker 1: they maintained a very aggressive pricing into Asia, which by 101 00:05:40,160 --> 00:05:43,920 Speaker 1: the way, the next day was matched, if not undercut, 102 00:05:44,000 --> 00:05:46,440 Speaker 1: by Iraq, where I think one of the big tensions 103 00:05:46,760 --> 00:05:50,280 Speaker 1: in the market today is the Saudi versus Iraq uh 104 00:05:50,440 --> 00:05:54,920 Speaker 1: stroke Iran price competition into Asia, which is very interesting 105 00:05:55,480 --> 00:05:57,800 Speaker 1: in terms of what they can actually do that that's 106 00:05:57,839 --> 00:06:01,000 Speaker 1: been a major question, and this is very you know, 107 00:06:02,040 --> 00:06:05,560 Speaker 1: I've taken the OPEC meeting was it's it's very much 108 00:06:05,600 --> 00:06:08,560 Speaker 1: rearranging deck chairs on the Titanic insofar as you're going 109 00:06:08,600 --> 00:06:10,120 Speaker 1: to have to cut whether you like it or not. 110 00:06:10,960 --> 00:06:13,520 Speaker 1: A very good example being Nigeria tom where they've just 111 00:06:13,600 --> 00:06:16,720 Speaker 1: simply been able to unable to sell their all because 112 00:06:16,800 --> 00:06:19,840 Speaker 1: there's no market and m and that's obviously what we 113 00:06:19,880 --> 00:06:22,480 Speaker 1: saw with the negative price as well. It's it's just 114 00:06:22,560 --> 00:06:24,760 Speaker 1: an epic challenge because as you know, the ord industry 115 00:06:24,800 --> 00:06:28,000 Speaker 1: is efficient and it runs with relatively low inventory. This 116 00:06:28,200 --> 00:06:31,400 Speaker 1: just surpasses any capacity to actually manage the oil shorts 117 00:06:31,440 --> 00:06:34,440 Speaker 1: of shutting down production. The Saudis are in good shape 118 00:06:34,480 --> 00:06:37,599 Speaker 1: in that regard because they're so heavily invested with such 119 00:06:37,600 --> 00:06:39,960 Speaker 1: a sophisticated oil system that they can just turn a 120 00:06:40,080 --> 00:06:44,520 Speaker 1: volume knob and change their production. Others, you know, such 121 00:06:44,560 --> 00:06:47,120 Speaker 1: as Nigeria and such as produced in the Permian, they're 122 00:06:47,120 --> 00:06:49,719 Speaker 1: going to find it more difficult to do an orderly 123 00:06:49,760 --> 00:06:54,560 Speaker 1: shut there. What price does the cartel need to break 124 00:06:54,640 --> 00:06:58,560 Speaker 1: even out a fiscal basis just the stability of their governments? 125 00:06:58,600 --> 00:07:02,360 Speaker 1: What price do they need on a ended basis? That's 126 00:07:02,400 --> 00:07:04,680 Speaker 1: fairly well reported by the I M. F. Tom. So 127 00:07:04,839 --> 00:07:08,200 Speaker 1: you'll see about seventy two eighty for sauity, about forty 128 00:07:08,279 --> 00:07:12,120 Speaker 1: to fifty for Russia. I read a hundred and fifty 129 00:07:12,200 --> 00:07:15,120 Speaker 1: for Algeria. You know, one of the one of the 130 00:07:15,200 --> 00:07:18,240 Speaker 1: amusing conceptual things I've highlighted is what do you think 131 00:07:18,280 --> 00:07:21,200 Speaker 1: to break even is? For the US Government's probably about 132 00:07:21,200 --> 00:07:23,480 Speaker 1: a thousand dollars a barrel based on the current epit. 133 00:07:24,040 --> 00:07:29,040 Speaker 1: But but now in all seriousness there's an issue there. 134 00:07:29,080 --> 00:07:30,680 Speaker 1: Of course, the Saudis will tell you they have the 135 00:07:30,720 --> 00:07:33,680 Speaker 1: capacity to raise death um, you know, so they can 136 00:07:33,880 --> 00:07:35,960 Speaker 1: run at a depthosit obviously, and as you know that 137 00:07:36,120 --> 00:07:38,559 Speaker 1: cash brain even as closer to ten dollars a barrel, 138 00:07:39,000 --> 00:07:41,680 Speaker 1: they can get along. Since I'm hugely stabilizing. I mean, 139 00:07:41,720 --> 00:07:44,280 Speaker 1: this is going to really cause problems in many places, 140 00:07:44,320 --> 00:07:47,720 Speaker 1: and I think Russia is probably the most interesting, you know, 141 00:07:47,800 --> 00:07:50,680 Speaker 1: in terms of the difficulties they're going to face financially, 142 00:07:51,040 --> 00:07:54,440 Speaker 1: there are and obviously as another major candidate for serious prominence. 143 00:07:55,000 --> 00:07:56,920 Speaker 1: Let's do this again, Paul, thank you, thank you. Someone 144 00:07:57,000 --> 00:08:02,720 Speaker 1: from the zoo just really really appreciate it. Right now, 145 00:08:03,240 --> 00:08:06,520 Speaker 1: you'd like to digress over to the equity market, John, 146 00:08:06,600 --> 00:08:08,440 Speaker 1: Lisa and I all looked at our one on one 147 00:08:08,560 --> 00:08:11,360 Speaker 1: case and said, let's get somebody on who can give 148 00:08:11,400 --> 00:08:16,080 Speaker 1: us confidence forward. Sevida Supermannian advises for the Bank of America, 149 00:08:16,160 --> 00:08:20,200 Speaker 1: where she's had of equity and quantitative strategy as well. Sevina, 150 00:08:20,320 --> 00:08:24,040 Speaker 1: what is the quantitative observation right now? What is the 151 00:08:24,280 --> 00:08:28,440 Speaker 1: mathiness right now you're focused on? Yeah, no, it's a 152 00:08:28,480 --> 00:08:30,400 Speaker 1: great question. So I think there's a couple of things 153 00:08:30,520 --> 00:08:33,800 Speaker 1: going on. I think from a stock perspective, what we're 154 00:08:33,840 --> 00:08:37,800 Speaker 1: noticing is that the dispersion of stocks has actually increased 155 00:08:37,840 --> 00:08:41,120 Speaker 1: to close to record levels. So what this means is 156 00:08:41,160 --> 00:08:45,280 Speaker 1: that stocks are behaving very very differently from one another um, 157 00:08:45,360 --> 00:08:49,120 Speaker 1: which suggests that there's UM increasing alpha to be made 158 00:08:49,240 --> 00:08:52,720 Speaker 1: or increasing performance money to be made um from stock 159 00:08:52,840 --> 00:08:56,439 Speaker 1: selection rather than just buying or selling the market, or 160 00:08:56,880 --> 00:09:01,600 Speaker 1: buying or selling sectors or broad slabs uh um of companies. 161 00:09:01,640 --> 00:09:04,079 Speaker 1: So I think this is a different environment from what 162 00:09:04,200 --> 00:09:06,480 Speaker 1: we've been in for for you know, the bulk of 163 00:09:06,559 --> 00:09:10,120 Speaker 1: this bull market, where stocks have been very correlated and 164 00:09:10,520 --> 00:09:14,199 Speaker 1: um and have behaved very similarly. Uh So I think 165 00:09:14,280 --> 00:09:16,800 Speaker 1: that's one trend that's that's very different. And then I 166 00:09:16,920 --> 00:09:19,839 Speaker 1: think the thing that's worth pointing out is it for 167 00:09:19,960 --> 00:09:25,599 Speaker 1: equity investors, time is actually the best barbitrage opportunity. And 168 00:09:25,679 --> 00:09:28,160 Speaker 1: what I mean is if if you just extend your 169 00:09:28,240 --> 00:09:32,439 Speaker 1: time horizon on US equities, there's a very unique characteristic 170 00:09:32,520 --> 00:09:34,880 Speaker 1: of stocks where you know, if you look at tenure 171 00:09:35,000 --> 00:09:37,720 Speaker 1: returns of U S stocks, they have very rarely been 172 00:09:37,800 --> 00:09:41,000 Speaker 1: negative less than four percent of the time, which compares 173 00:09:41,600 --> 00:09:45,679 Speaker 1: very favorably to commodities, which you know, commodities returns have 174 00:09:45,800 --> 00:09:49,360 Speaker 1: been negative of the time over ten your periods. So 175 00:09:49,480 --> 00:09:52,199 Speaker 1: I think that the key here is pick stocks and 176 00:09:52,360 --> 00:09:56,000 Speaker 1: extend one's time horizons. Because obviously we're in a rough 177 00:09:56,080 --> 00:09:58,800 Speaker 1: patch right now. Okay, let's say I do that, extend 178 00:09:58,840 --> 00:10:01,120 Speaker 1: the time horizon. And then as you a pretty basic question, 179 00:10:01,160 --> 00:10:04,839 Speaker 1: do I need to pay attention to earning season? You know, 180 00:10:04,960 --> 00:10:07,280 Speaker 1: I think earning season is important in the short term, 181 00:10:07,360 --> 00:10:09,440 Speaker 1: and and again, you know, I think that's what's driving 182 00:10:09,480 --> 00:10:12,559 Speaker 1: the dispersion between stocks, is that we're seeing, you know, 183 00:10:12,720 --> 00:10:16,360 Speaker 1: even within consumer staples, some companies are doing better than 184 00:10:16,400 --> 00:10:19,800 Speaker 1: others depending on what their retail channels are. Um. You know, 185 00:10:19,880 --> 00:10:22,199 Speaker 1: if you sell outside of the grocery store, you're not 186 00:10:22,320 --> 00:10:24,160 Speaker 1: doing as well. If you sell in a grocery store, 187 00:10:24,200 --> 00:10:27,240 Speaker 1: you're doing well. So I think that there are definitely, um, 188 00:10:27,480 --> 00:10:29,320 Speaker 1: you know, kind of themes that were that we're seeing 189 00:10:29,360 --> 00:10:32,199 Speaker 1: across earning season. But but you know, I think that 190 00:10:32,360 --> 00:10:36,679 Speaker 1: even earning season is relatively opaque, so very few companies 191 00:10:36,720 --> 00:10:40,480 Speaker 1: are actually offering forward guidance. In fact, the bulk of 192 00:10:40,559 --> 00:10:44,079 Speaker 1: companies have just stopped talking about earnings guidance for the 193 00:10:44,160 --> 00:10:46,760 Speaker 1: year because we are in a little bit of a um, 194 00:10:47,040 --> 00:10:49,520 Speaker 1: you know, kind of an opaque period in terms of 195 00:10:49,600 --> 00:10:53,600 Speaker 1: how long this business shutdown last um, you know, kind 196 00:10:53,640 --> 00:10:56,280 Speaker 1: of what what the what the impact is going to 197 00:10:56,320 --> 00:10:58,640 Speaker 1: be on earnings. So, you know, I think the earning 198 00:10:58,679 --> 00:11:01,160 Speaker 1: season is important in terms of picking stocks, But I 199 00:11:01,480 --> 00:11:03,839 Speaker 1: actually don't see it as giving us much of a 200 00:11:03,920 --> 00:11:07,600 Speaker 1: guide for how to navigate the next few few quarters. 201 00:11:08,240 --> 00:11:11,559 Speaker 1: How much is buying stocks here a bet on the 202 00:11:11,600 --> 00:11:15,520 Speaker 1: Federal Reserve back stopping the market? Yeah, I mean I 203 00:11:15,880 --> 00:11:19,440 Speaker 1: I personally think that that upside is in the market 204 00:11:19,559 --> 00:11:23,800 Speaker 1: because we've essentially heard say they're going to buy almost anything, 205 00:11:24,280 --> 00:11:27,520 Speaker 1: and um, you know, they're they're buying as the classes 206 00:11:27,600 --> 00:11:30,400 Speaker 1: that they had previously never touched, like high yield bonds. 207 00:11:30,840 --> 00:11:32,760 Speaker 1: So I think that that the good news from the 208 00:11:32,840 --> 00:11:35,480 Speaker 1: set is our in the stocks and they've provided a 209 00:11:35,559 --> 00:11:40,679 Speaker 1: backstop against a major liquidity meltdown. But from here, I 210 00:11:40,840 --> 00:11:43,760 Speaker 1: think the real bet that we're making in buying or 211 00:11:43,800 --> 00:11:47,960 Speaker 1: selling stocks is that the crisis is contained within let's 212 00:11:48,000 --> 00:11:51,680 Speaker 1: call it the first half, and that this is a short, 213 00:11:52,040 --> 00:11:56,160 Speaker 1: kind of a sharp economic recession with either a V 214 00:11:56,400 --> 00:12:00,319 Speaker 1: or a you know, kind of a reasonable U shaped recovery. Um. 215 00:12:00,440 --> 00:12:02,679 Speaker 1: I don't think what's priced in is uh, you know, 216 00:12:03,520 --> 00:12:06,400 Speaker 1: a double U shaped recovery if you will, or you know, 217 00:12:06,480 --> 00:12:10,920 Speaker 1: another um onset of COVID nineteen later in the year. Um, 218 00:12:11,000 --> 00:12:13,000 Speaker 1: So I think that would be downside risk. And I 219 00:12:13,120 --> 00:12:16,400 Speaker 1: also think that the market is actually discounting at this 220 00:12:16,559 --> 00:12:21,000 Speaker 1: point a relatively aggressive recovery on it. On the economic front, 221 00:12:21,200 --> 00:12:23,960 Speaker 1: I mean, what worries me is that the pe ratio 222 00:12:24,120 --> 00:12:26,760 Speaker 1: of the SMP five is right back up to its 223 00:12:26,840 --> 00:12:31,360 Speaker 1: February peak levels because earnings have come down but prices 224 00:12:31,400 --> 00:12:34,960 Speaker 1: are still relatively high. Um So, I think that that's 225 00:12:35,040 --> 00:12:36,920 Speaker 1: the risk, is that that a lot of the good 226 00:12:37,080 --> 00:12:40,760 Speaker 1: policy news is likely to be in the market. Savina. 227 00:12:40,840 --> 00:12:43,720 Speaker 1: I'm struggling to understand. If everybody is looking past earnings 228 00:12:43,760 --> 00:12:47,240 Speaker 1: and past the horrible and getting worse economic data, do 229 00:12:47,360 --> 00:12:51,040 Speaker 1: these jobless claims that we're all focused on matter. Yeah. 230 00:12:51,080 --> 00:12:55,280 Speaker 1: I mean, I think employment has historically been a lagging indicator, so, 231 00:12:55,920 --> 00:12:58,080 Speaker 1: you know, and I think that again we we kind 232 00:12:58,120 --> 00:13:02,679 Speaker 1: of are forecasting us fairly uh employment scenario. I think 233 00:13:02,880 --> 00:13:06,080 Speaker 1: our economists are forecasting tem percent unemployment by the end 234 00:13:06,120 --> 00:13:09,559 Speaker 1: of the year. Um So, so I think that employment 235 00:13:09,640 --> 00:13:11,880 Speaker 1: will while it does, you know, kind of points to 236 00:13:12,440 --> 00:13:16,840 Speaker 1: newer term stresses, doesn't necessarily impact normalized earnings as much. 237 00:13:17,200 --> 00:13:19,959 Speaker 1: I think what it does show, though, is that there 238 00:13:20,040 --> 00:13:23,360 Speaker 1: might be a reticence amongst consumers coming out of this 239 00:13:24,040 --> 00:13:27,199 Speaker 1: to you know, return to buying big ticket items or 240 00:13:27,240 --> 00:13:32,440 Speaker 1: even home home home purchases UM. Given that that consumer 241 00:13:32,480 --> 00:13:36,480 Speaker 1: competence has seen such an extreme shock cevida, how does 242 00:13:36,600 --> 00:13:41,360 Speaker 1: MidCap and small cap resolve itself? Is it through combinations? 243 00:13:41,800 --> 00:13:46,439 Speaker 1: Is it how do they jump start their entrepreneurial you know, 244 00:13:46,600 --> 00:13:49,920 Speaker 1: the pulse the process. Yeah, yeah, it's a great question. 245 00:13:49,960 --> 00:13:51,719 Speaker 1: I think small caps, I mean, I think we will 246 00:13:51,920 --> 00:13:55,360 Speaker 1: will be likely to see consolidations given how cheap small 247 00:13:55,440 --> 00:13:58,079 Speaker 1: caps are today. I mean, the sector is treating at 248 00:13:58,120 --> 00:14:01,640 Speaker 1: the low recessionary levels UM and the gap between large 249 00:14:01,679 --> 00:14:04,240 Speaker 1: and small is the widest we've seen and you know, 250 00:14:04,400 --> 00:14:07,000 Speaker 1: in in multiple decades. So I think that this is 251 00:14:07,080 --> 00:14:09,880 Speaker 1: a This is an environment where large companies can buy 252 00:14:09,960 --> 00:14:13,719 Speaker 1: smaller traps stocks for up for a song. I think 253 00:14:13,840 --> 00:14:17,200 Speaker 1: the real risk though, for smaller companies is whether they 254 00:14:17,320 --> 00:14:21,200 Speaker 1: survive this UM this downturn, because as you know, smaller 255 00:14:21,280 --> 00:14:25,240 Speaker 1: companies are much more GDP sensitive, so you know, large 256 00:14:25,280 --> 00:14:27,640 Speaker 1: caps have a lot more um you know, kind of 257 00:14:27,760 --> 00:14:30,880 Speaker 1: staying power. Uh. But I think that that's the risk 258 00:14:30,960 --> 00:14:33,880 Speaker 1: for the overall assets. Are you are you predicting whether 259 00:14:34,040 --> 00:14:36,520 Speaker 1: the storm are you predicting a roll up phase? I 260 00:14:36,560 --> 00:14:38,760 Speaker 1: mean there was a period what twenty years ago where 261 00:14:39,120 --> 00:14:41,560 Speaker 1: you know, we rolled up the specialty chemical industry over 262 00:14:41,680 --> 00:14:44,360 Speaker 1: three cups of coffee on the July weekend. I mean, 263 00:14:44,480 --> 00:14:47,000 Speaker 1: is that what we're heading for? I mean, I think 264 00:14:47,040 --> 00:14:49,560 Speaker 1: we couldn't see that. We could see more heavy M 265 00:14:49,640 --> 00:14:52,440 Speaker 1: and A activity once we get a little bit more 266 00:14:52,520 --> 00:14:55,800 Speaker 1: clarity on on the length of this downturn. Um. But 267 00:14:55,920 --> 00:14:59,560 Speaker 1: I think that these large and small right now are 268 00:14:59,680 --> 00:15:03,520 Speaker 1: just boarding cash. They're not doing anything. They're suspending buy backs, 269 00:15:03,960 --> 00:15:06,360 Speaker 1: you know, some of them are suspending dividends, and companies 270 00:15:06,400 --> 00:15:09,200 Speaker 1: seem to be very very conservative in terms of cash 271 00:15:09,280 --> 00:15:12,160 Speaker 1: and capital allocation. But I think if we get to 272 00:15:12,480 --> 00:15:14,440 Speaker 1: a point where there's a little bit more clarity on 273 00:15:14,560 --> 00:15:16,520 Speaker 1: how long this fall lasts and whether it's you know, 274 00:15:16,640 --> 00:15:20,240 Speaker 1: there's potential to contain this crisis, that's when you start 275 00:15:20,280 --> 00:15:24,200 Speaker 1: to see the consolidation. But I was embolish on on 276 00:15:24,280 --> 00:15:28,920 Speaker 1: an M and A cycle um sometimes exact Sevida, thank 277 00:15:28,960 --> 00:15:32,040 Speaker 1: you so much, Savida Superbanian with the Bank of America. 278 00:15:35,200 --> 00:15:38,680 Speaker 1: Right now, the former president of the Minnieapples Fed at Rochester, 279 00:15:39,200 --> 00:15:44,000 Speaker 1: Nariannicata Lakota, joins us, Professor, I want to go right 280 00:15:44,040 --> 00:15:48,400 Speaker 1: away to the mathiness of your work, and that is 281 00:15:48,840 --> 00:15:52,320 Speaker 1: that so much of our belief and research is based 282 00:15:52,400 --> 00:15:56,920 Speaker 1: on smooth curves on glide pass odd models that are 283 00:15:57,560 --> 00:16:01,239 Speaker 1: comfortable and at times some would even say elegant or beautiful. 284 00:16:01,880 --> 00:16:05,960 Speaker 1: We've just had the mother of all jump conditions, exogenous shocks. 285 00:16:06,400 --> 00:16:11,200 Speaker 1: How does that change your belief in models? Hi, Tom, 286 00:16:11,280 --> 00:16:14,200 Speaker 1: thanks for having me on. I think models are still 287 00:16:14,800 --> 00:16:19,240 Speaker 1: very useful for trying to organize your thinking about what 288 00:16:19,440 --> 00:16:25,200 Speaker 1: you're you're likely appropriate responses to to to economic conditions. Obviously, 289 00:16:25,360 --> 00:16:28,640 Speaker 1: this was an event that was not forecast by economists, 290 00:16:29,160 --> 00:16:32,040 Speaker 1: but now once we're in the event, I think that 291 00:16:32,720 --> 00:16:36,880 Speaker 1: modeling and can help you with framing what how to 292 00:16:36,960 --> 00:16:38,920 Speaker 1: think about what should be done. And I think it's 293 00:16:38,960 --> 00:16:41,800 Speaker 1: been helpful for my former colleagues in the Federal Reserve 294 00:16:41,880 --> 00:16:43,920 Speaker 1: as they as they try to try to figure out 295 00:16:43,960 --> 00:16:46,560 Speaker 1: what to do next. One thing that they have done 296 00:16:46,760 --> 00:16:49,960 Speaker 1: is being incredibly aggressive, and for the most part, people 297 00:16:50,000 --> 00:16:53,160 Speaker 1: have cheered them. American confidence in the FEDS leadership right 298 00:16:53,200 --> 00:16:55,840 Speaker 1: now is the highest since a green Span era. If 299 00:16:55,920 --> 00:16:58,200 Speaker 1: you take a look at the latest Gallop poll, I'm 300 00:16:58,200 --> 00:17:01,640 Speaker 1: wondering they're going forward about the to say, the politicization 301 00:17:02,480 --> 00:17:06,119 Speaker 1: of the Federal Reserve based on some of the fiscal 302 00:17:06,280 --> 00:17:11,680 Speaker 1: stimulus type of efforts they've been doing. What's your expectation. Yeah, 303 00:17:11,720 --> 00:17:14,120 Speaker 1: I think that's a great questions. I think that, Um, 304 00:17:15,440 --> 00:17:19,280 Speaker 1: what we've seen in this recession. UM, I'm gonna call 305 00:17:19,359 --> 00:17:21,920 Speaker 1: it that because I think go to we're in is 306 00:17:22,520 --> 00:17:25,080 Speaker 1: that there's been a lot of coordination between Treasury and 307 00:17:26,320 --> 00:17:30,760 Speaker 1: the FED and implicit coordination between Congress and the Fed. UM. So, 308 00:17:31,200 --> 00:17:35,840 Speaker 1: for example of that is set up a facility whereby 309 00:17:36,400 --> 00:17:39,840 Speaker 1: they're going to be willing to lend directly to corporations. 310 00:17:40,680 --> 00:17:46,199 Speaker 1: That's basically they're using their ability to create government liabilities money, uh, 311 00:17:46,320 --> 00:17:52,159 Speaker 1: in order to finance a physical intervention by Congress. I 312 00:17:52,240 --> 00:17:53,840 Speaker 1: suspect we're going to see a lot more of that 313 00:17:53,960 --> 00:17:58,000 Speaker 1: as we go forward. Um, it's clear that the American 314 00:17:58,080 --> 00:18:00,879 Speaker 1: public is comfortable with this, it's or that Congress is 315 00:18:00,920 --> 00:18:03,879 Speaker 1: comfortable with it. Um, it's clear the FED is comfortable 316 00:18:03,880 --> 00:18:06,119 Speaker 1: with it. What that's going to mean I think in 317 00:18:06,320 --> 00:18:09,480 Speaker 1: terms of politalization, you know, it's I think that's a 318 00:18:09,520 --> 00:18:12,320 Speaker 1: good question. I I worry about that certainly. How do 319 00:18:12,440 --> 00:18:14,120 Speaker 1: you get the genie back in the bottle? We asked 320 00:18:14,240 --> 00:18:17,359 Speaker 1: Vice Chairman Clara to this question. And many others have 321 00:18:17,440 --> 00:18:20,040 Speaker 1: been asked the same question down there, out there somewhere, 322 00:18:20,840 --> 00:18:23,720 Speaker 1: I get, would you just let the debt run out? 323 00:18:24,200 --> 00:18:27,240 Speaker 1: Or or do you find a way to actually do 324 00:18:27,359 --> 00:18:29,960 Speaker 1: what many would say as responsible and just pull it 325 00:18:30,040 --> 00:18:34,960 Speaker 1: in a little bit. I think that, uh, it's very 326 00:18:35,000 --> 00:18:37,480 Speaker 1: difficult to put the genie back in the bottle unless 327 00:18:38,000 --> 00:18:41,679 Speaker 1: people perceive a cost to having all this debt um 328 00:18:41,840 --> 00:18:44,399 Speaker 1: As long as interest rates remain low, as long as 329 00:18:44,440 --> 00:18:47,920 Speaker 1: inflation remains low, I think that you're going to see 330 00:18:48,000 --> 00:18:51,520 Speaker 1: Congress and the FED continue to feel comfortable with with 331 00:18:51,800 --> 00:18:55,760 Speaker 1: with these kinds of expansiony programs. Professor, you could argue 332 00:18:55,840 --> 00:18:57,960 Speaker 1: that if the Fed's balance she gets to twelve twilli 333 00:18:58,400 --> 00:19:01,159 Speaker 1: in the near term, which isn't a crazy estimate, that 334 00:19:01,320 --> 00:19:04,119 Speaker 1: it won't matter if borrowing costs from beIN low to 335 00:19:04,160 --> 00:19:06,800 Speaker 1: your point, and if everything just keeps chucking along, that 336 00:19:06,880 --> 00:19:09,000 Speaker 1: they'll look like the hero. So why would they become 337 00:19:09,359 --> 00:19:14,680 Speaker 1: a more political body at that point? I think the 338 00:19:15,040 --> 00:19:17,639 Speaker 1: issue is that what is the role of FED in 339 00:19:17,760 --> 00:19:20,920 Speaker 1: terms of fighting fighting recessions? The traditional role for the 340 00:19:20,960 --> 00:19:24,320 Speaker 1: FED is simply, Uh, procession comes along, We're gonna cut 341 00:19:24,359 --> 00:19:27,200 Speaker 1: interest rates if we see inflation on the horizon, we 342 00:19:27,320 --> 00:19:32,080 Speaker 1: raise interest rates. That's a pretty simple technocratic position. Now, 343 00:19:32,280 --> 00:19:35,679 Speaker 1: I think the FED is in the business of Okay, 344 00:19:35,760 --> 00:19:39,520 Speaker 1: which kind of program should we be financing for Congress? Well, 345 00:19:39,600 --> 00:19:42,160 Speaker 1: that's a that's a much more political kind of job. 346 00:19:42,200 --> 00:19:44,800 Speaker 1: And I think the issue is whether or not we 347 00:19:44,920 --> 00:19:48,639 Speaker 1: want a group of as as Americans. We want a 348 00:19:48,680 --> 00:19:52,600 Speaker 1: group of unelected technocrats to to have that have that power. 349 00:19:52,960 --> 00:19:55,320 Speaker 1: As you say, right now, they're the heroes. But I 350 00:19:56,800 --> 00:20:00,200 Speaker 1: I think that this is uh creates risk for the 351 00:20:00,240 --> 00:20:04,280 Speaker 1: institution going down the road. Certainly, That's why I wanted 352 00:20:04,280 --> 00:20:07,280 Speaker 1: to go there. This is so important, Professor CATCHA Dakota. 353 00:20:08,000 --> 00:20:11,880 Speaker 1: Is the risk to the institution? What is your action 354 00:20:12,040 --> 00:20:14,920 Speaker 1: plan for Chairman Powell now as a former member of 355 00:20:15,000 --> 00:20:19,480 Speaker 1: the institution to maintain the integrity of the FED? What 356 00:20:19,600 --> 00:20:21,119 Speaker 1: does he need? Does he need to get out of 357 00:20:21,200 --> 00:20:24,399 Speaker 1: the speaking circuit, or does he need to, you know, 358 00:20:24,720 --> 00:20:29,000 Speaker 1: do the Today Show. What's what's his best practice? Well? 359 00:20:29,119 --> 00:20:30,879 Speaker 1: I don't think I need to give any advice to 360 00:20:31,119 --> 00:20:36,560 Speaker 1: to uh uh to cheer Powell about to handle pup. 361 00:20:36,840 --> 00:20:39,040 Speaker 1: He's done a fantastic job, I think in terms of 362 00:20:39,080 --> 00:20:42,359 Speaker 1: communicating about what the FED is doing. Why it's doing it. 363 00:20:43,080 --> 00:20:45,880 Speaker 1: Um I think that's one of the most striking differences 364 00:20:45,960 --> 00:20:48,520 Speaker 1: I see between where the FED is today as opposed 365 00:20:48,520 --> 00:20:50,840 Speaker 1: to where it was in two thousand and eight, where 366 00:20:50,840 --> 00:20:52,399 Speaker 1: it was also doing I think, things to save the 367 00:20:52,480 --> 00:20:55,960 Speaker 1: US economy, but not communicating as effectively as as Powell 368 00:20:56,040 --> 00:20:59,879 Speaker 1: has done. Um. No, I think it's really this question 369 00:21:00,160 --> 00:21:02,480 Speaker 1: that that you asked about, how do you get the 370 00:21:02,520 --> 00:21:05,320 Speaker 1: genie back in the bottle? You can't do it in 371 00:21:05,680 --> 00:21:08,639 Speaker 1: in May, but I think you have to be some 372 00:21:08,840 --> 00:21:13,200 Speaker 1: thinking what are guidelines for using thirteen three going four? 373 00:21:13,359 --> 00:21:16,399 Speaker 1: You know this this uh clause in the Federals are 374 00:21:16,440 --> 00:21:17,960 Speaker 1: back that seems to say, well, the fake can do 375 00:21:18,040 --> 00:21:20,159 Speaker 1: anything it wants too, as long as your country sectory 376 00:21:20,240 --> 00:21:23,960 Speaker 1: signs on yeah, this is This has been wonderful, professor, 377 00:21:24,040 --> 00:21:26,119 Speaker 1: Thank you so much. Snaria the Cutchler Code of Folks, 378 00:21:26,400 --> 00:21:28,679 Speaker 1: the former president of the Many atmos feer now at 379 00:21:28,680 --> 00:21:35,280 Speaker 1: the University of Rochester. We want to continue our discussions 380 00:21:35,320 --> 00:21:38,720 Speaker 1: now on what we're all experiencing with this pandemic and 381 00:21:38,880 --> 00:21:41,560 Speaker 1: just so many that is the doctors and indeed the 382 00:21:41,680 --> 00:21:45,280 Speaker 1: nurses on the front lines. I spoke today with Jason Farley. 383 00:21:45,840 --> 00:21:49,440 Speaker 1: He's Johns Hopkins University in their Department of Nursing, and 384 00:21:49,520 --> 00:21:54,399 Speaker 1: the professor is truly expert on infectious diseases. Here is 385 00:21:54,880 --> 00:21:58,600 Speaker 1: Professor Farley right now. The vaccine studies are and looking 386 00:21:58,640 --> 00:22:02,320 Speaker 1: at what we call faith on vaccine studies. The type 387 00:22:02,320 --> 00:22:05,720 Speaker 1: of studies are really looking at the safety um and 388 00:22:05,840 --> 00:22:08,480 Speaker 1: whether whether or not we actually see a response, So 389 00:22:08,560 --> 00:22:11,240 Speaker 1: it does the mean system respond to the vaccine, So 390 00:22:11,400 --> 00:22:14,280 Speaker 1: that's not testing epicac and meaning is it effective at 391 00:22:14,320 --> 00:22:17,640 Speaker 1: preventing the virus from occurring if we have the vaccine? 392 00:22:17,960 --> 00:22:22,000 Speaker 1: So those studies come next, and really importantly that will 393 00:22:22,240 --> 00:22:26,000 Speaker 1: That's why we're continuing to project timelines of at least twelve, 394 00:22:26,080 --> 00:22:31,000 Speaker 1: if not eighteen months UM away. Dr Farley, the raging 395 00:22:31,080 --> 00:22:34,359 Speaker 1: debate this morning is in your wheelhouse. You are one 396 00:22:34,400 --> 00:22:39,720 Speaker 1: of the nation's experts on Staphylococcus aureus methicillin in all 397 00:22:39,800 --> 00:22:45,040 Speaker 1: the resistancies and hospitals. The arch fear of medical experts 398 00:22:45,720 --> 00:22:49,600 Speaker 1: is a secondary bout of this virus down the road. 399 00:22:50,359 --> 00:22:55,760 Speaker 1: Explain the likelihood and how it will demonstrate if we 400 00:22:55,840 --> 00:23:00,400 Speaker 1: get a virus come September or December or been into 401 00:23:00,440 --> 00:23:05,560 Speaker 1: two thousand one. Yes, certainly, well we're looking at estimates 402 00:23:05,800 --> 00:23:08,480 Speaker 1: of antibody right now that are that are emerging that 403 00:23:08,640 --> 00:23:12,320 Speaker 1: suggests that five cent of the population, for example, the 404 00:23:12,400 --> 00:23:15,920 Speaker 1: data out of Seattle and the Washington State that suggests 405 00:23:15,960 --> 00:23:18,879 Speaker 1: that five percent of the population may have been exposed 406 00:23:18,960 --> 00:23:22,280 Speaker 1: and recovered. So the first question obviously it does those 407 00:23:22,280 --> 00:23:26,000 Speaker 1: antibodies being recovered from lead to any form of attenuation 408 00:23:26,240 --> 00:23:29,280 Speaker 1: or protection in the future. The second question is is 409 00:23:29,480 --> 00:23:33,560 Speaker 1: if that's so, that still leaves of the population to 410 00:23:33,720 --> 00:23:36,840 Speaker 1: what we would say are immunologically naive, meaning no prior 411 00:23:36,920 --> 00:23:40,879 Speaker 1: exposure and recovery. So, in other words, if if we 412 00:23:41,280 --> 00:23:44,520 Speaker 1: roll back social distancing too fast, we continue to propagate 413 00:23:44,640 --> 00:23:47,920 Speaker 1: virus in the community, that then subsequently leads us into 414 00:23:47,960 --> 00:23:50,560 Speaker 1: the season of cold and flu, which is you know, 415 00:23:50,720 --> 00:23:53,399 Speaker 1: like you said, September and on in the United States, 416 00:23:53,440 --> 00:23:56,680 Speaker 1: at least in in in the northern hemisphere that that timeline. 417 00:23:57,119 --> 00:24:00,160 Speaker 1: Then we also get other respiratory viruses we emerge being 418 00:24:00,200 --> 00:24:03,680 Speaker 1: such as influenza, and it complicates our scenario, as we 419 00:24:03,800 --> 00:24:08,760 Speaker 1: mentioned by the CDC director Robert Redfield, because then clinicians 420 00:24:08,800 --> 00:24:11,560 Speaker 1: are conceding a patient with respiratory symptoms and scratching their 421 00:24:11,600 --> 00:24:15,240 Speaker 1: heads saying well, is this flu? Is this coronavirus? Is 422 00:24:15,359 --> 00:24:19,760 Speaker 1: this you know, anotherblem with that become. We know how 423 00:24:19,800 --> 00:24:22,200 Speaker 1: to treat flu obviously, we know how to diagnose it. 424 00:24:22,320 --> 00:24:25,840 Speaker 1: We know how to prevent complications in most circumstances, not 425 00:24:26,000 --> 00:24:32,000 Speaker 1: all UM. Yet transmission UM parameters and dynamics do affect 426 00:24:32,040 --> 00:24:35,680 Speaker 1: the way we may respond. So again we're we're concerned 427 00:24:35,680 --> 00:24:39,680 Speaker 1: about co occurring respiratory viruses in the same season, which 428 00:24:39,720 --> 00:24:43,280 Speaker 1: will complicate the things making and we it's not exactly 429 00:24:43,560 --> 00:24:47,840 Speaker 1: that we don't anticipate coronavirus to return during the fall. 430 00:24:48,160 --> 00:24:53,200 Speaker 1: We absolutely expect a second wave of infection UM to occur. 431 00:24:53,320 --> 00:24:56,359 Speaker 1: We've already seen it around the world in various sights. 432 00:24:56,480 --> 00:25:00,119 Speaker 1: That has to be emerged UM from Jason Farley with 433 00:25:00,320 --> 00:25:04,080 Speaker 1: Johns Hopkins University, their professor of nursing, just fascinating there 434 00:25:04,160 --> 00:25:11,879 Speaker 1: on his wheelhouse infectious disease as well. Turning our attention 435 00:25:11,960 --> 00:25:14,960 Speaker 1: now to Washington, d C. And the debate over immigration, 436 00:25:15,080 --> 00:25:19,080 Speaker 1: the President Donald Trump signing an executive order just yesterday 437 00:25:19,400 --> 00:25:22,960 Speaker 1: to temporarily curb the issuing of new green cards for 438 00:25:23,040 --> 00:25:26,240 Speaker 1: would be permanent residents in the United States, and Tom 439 00:25:26,600 --> 00:25:28,760 Speaker 1: with the labor market heading the way it is, I 440 00:25:28,840 --> 00:25:32,159 Speaker 1: imagine this is just the beginning. I would suggest the 441 00:25:32,240 --> 00:25:35,800 Speaker 1: professionals I speak to on this are absolutely stunned at 442 00:25:35,840 --> 00:25:38,080 Speaker 1: the action. They don't have a strong opinion about it, 443 00:25:38,480 --> 00:25:40,040 Speaker 1: you know, the actual what we're gonna see the next 444 00:25:40,080 --> 00:25:43,280 Speaker 1: couple of weeks, but they are stunned by the action here. 445 00:25:43,359 --> 00:25:45,359 Speaker 1: John Lieber joins us, would you raise your group to 446 00:25:45,560 --> 00:25:49,840 Speaker 1: uh cover the territory here? John just very simply on 447 00:25:50,040 --> 00:25:55,520 Speaker 1: immigration and the president's desire here over six zero sixty days, 448 00:25:56,359 --> 00:26:00,320 Speaker 1: how many American jobs will he protect in that time? 449 00:26:02,320 --> 00:26:04,680 Speaker 1: Very few? I mean, I think this is not necessarily 450 00:26:04,720 --> 00:26:07,760 Speaker 1: about protecting jobs immediately. I think this is more about 451 00:26:07,880 --> 00:26:10,720 Speaker 1: setting up the dynamic and setting up the immigration issue 452 00:26:10,800 --> 00:26:12,920 Speaker 1: to create a contrast with Joe Biden for the election 453 00:26:13,000 --> 00:26:15,800 Speaker 1: in the fall. Immigration is basically shut down in the country. 454 00:26:15,800 --> 00:26:19,240 Speaker 1: They're not processing these applications, are not processing green cards. 455 00:26:19,520 --> 00:26:23,280 Speaker 1: There's exemptions in here for temporary workers. Um, they didn't 456 00:26:23,280 --> 00:26:25,000 Speaker 1: cover the each one B program. I mean, there's just 457 00:26:25,040 --> 00:26:27,440 Speaker 1: a lot dis order doesn't do. And it's only for 458 00:26:27,520 --> 00:26:29,520 Speaker 1: sixty days. So at the end of the sixty days, 459 00:26:30,119 --> 00:26:32,280 Speaker 1: you know, they got to look at it again and say, 460 00:26:32,280 --> 00:26:33,720 Speaker 1: are we going to extend this or is this worth 461 00:26:33,800 --> 00:26:38,000 Speaker 1: fighting for? So that's where we are, sixty one days out. 462 00:26:38,280 --> 00:26:44,000 Speaker 1: What would you suggest happens. I think that they're probably 463 00:26:44,040 --> 00:26:45,600 Speaker 1: going to extend this. I think that the president if 464 00:26:45,640 --> 00:26:49,159 Speaker 1: you look at the grouch that typically support immigration restrictions, 465 00:26:49,560 --> 00:26:53,200 Speaker 1: they've been used warm on the president's announcement um. But 466 00:26:53,280 --> 00:26:55,760 Speaker 1: I think the president also has a business instituency to 467 00:26:55,840 --> 00:26:58,240 Speaker 1: think about folks who need these immigrant workers and rely 468 00:26:58,359 --> 00:27:01,600 Speaker 1: on them, especially in the agriculture of sector. But you know, 469 00:27:01,640 --> 00:27:03,680 Speaker 1: to the accept this is readily for the political base, 470 00:27:04,440 --> 00:27:05,680 Speaker 1: you've got to think that they're going to find a 471 00:27:05,760 --> 00:27:08,399 Speaker 1: way to make this last longer than sixty days. Perhaps, 472 00:27:10,960 --> 00:27:13,520 Speaker 1: John Lieber, I'm sorry, we're living this every day. They 473 00:27:13,640 --> 00:27:18,520 Speaker 1: exempted medical workers, agricultural workers, and radio presenters from what 474 00:27:18,960 --> 00:27:20,960 Speaker 1: I think. It's just great how they did that, and 475 00:27:21,000 --> 00:27:23,600 Speaker 1: then for full transparency, just so the audience does know 476 00:27:23,720 --> 00:27:26,040 Speaker 1: this is a process I'm going through. So I won't 477 00:27:26,080 --> 00:27:28,840 Speaker 1: be offering a judgment on this particular policy, just as 478 00:27:28,880 --> 00:27:32,240 Speaker 1: an observation, though, John, you can see how this is 479 00:27:32,280 --> 00:27:35,720 Speaker 1: going to be a huge focal point ahead of a 480 00:27:35,800 --> 00:27:37,840 Speaker 1: little bit later this morning, we'll have an extra four 481 00:27:37,920 --> 00:27:41,160 Speaker 1: point five million dollar jobless claims four point five million 482 00:27:41,240 --> 00:27:43,919 Speaker 1: jobless claims according to the estimate, that would take us 483 00:27:44,000 --> 00:27:47,159 Speaker 1: to near twenty five million in five weeks. This is 484 00:27:47,160 --> 00:27:48,399 Speaker 1: going to be a big debate, and I just want 485 00:27:48,440 --> 00:27:50,360 Speaker 1: to jomp from your perspective because you've got to read 486 00:27:50,359 --> 00:27:53,000 Speaker 1: the political tea leaves. This is how the president is 487 00:27:53,040 --> 00:27:56,240 Speaker 1: setting himself up for November. Does he manage to bring 488 00:27:56,320 --> 00:27:58,800 Speaker 1: the left with him? Did the left come in on 489 00:27:58,880 --> 00:28:00,920 Speaker 1: this topic or do they go south of the otherwise? 490 00:28:03,280 --> 00:28:05,919 Speaker 1: I think if you look at Joe Biden's immigration plan, um, 491 00:28:06,400 --> 00:28:09,120 Speaker 1: it's a lot like Barack Obama's immigration plan, but even 492 00:28:09,200 --> 00:28:11,840 Speaker 1: more liberal. We think that you've got the possibility of 493 00:28:12,200 --> 00:28:16,159 Speaker 1: um uh amnesty for workers that are already here, the 494 00:28:16,200 --> 00:28:18,720 Speaker 1: possibility of more workers coming in under the plan. So 495 00:28:18,800 --> 00:28:21,160 Speaker 1: I think that where the Democratic Party is is certainly 496 00:28:21,440 --> 00:28:23,239 Speaker 1: far to the left of President Trump. But you're right, 497 00:28:23,320 --> 00:28:25,840 Speaker 1: this is a sensitive issue and in times of high unemployment, 498 00:28:25,880 --> 00:28:29,159 Speaker 1: the issue the issue immigration is going to be politically charged. 499 00:28:29,200 --> 00:28:31,280 Speaker 1: So I think the president the President did this because 500 00:28:31,320 --> 00:28:33,600 Speaker 1: he understands this is an issue that excites as voters, 501 00:28:34,000 --> 00:28:36,320 Speaker 1: and you know they're fighting over the same voters in 502 00:28:36,359 --> 00:28:39,680 Speaker 1: a couple of key battleground states in November. So but 503 00:28:39,880 --> 00:28:42,840 Speaker 1: but where the Democratic Party is not, where President Trump is, 504 00:28:42,880 --> 00:28:45,040 Speaker 1: that they're going to have to oppose this. We'll find 505 00:28:45,120 --> 00:28:48,080 Speaker 1: some you know, say, therefore, some sensible policies that would 506 00:28:48,080 --> 00:28:51,360 Speaker 1: allow immigrants to come in where needed, or something like that. John, 507 00:28:51,400 --> 00:28:54,040 Speaker 1: I was struck as I was researching this issue last night. 508 00:28:54,600 --> 00:28:57,040 Speaker 1: I was struck by the pushback the President Trump is 509 00:28:57,080 --> 00:29:01,120 Speaker 1: getting within the further right parts of the Republican Party, 510 00:29:01,160 --> 00:29:04,480 Speaker 1: basically saying this doesn't go far enough by any stretch 511 00:29:04,560 --> 00:29:07,280 Speaker 1: of the imagination that if it is going to be extended, 512 00:29:07,320 --> 00:29:09,600 Speaker 1: it would have to be increased, and all of the 513 00:29:09,680 --> 00:29:13,720 Speaker 1: exemptions render it basically toothless. How moderate is this on 514 00:29:13,880 --> 00:29:17,920 Speaker 1: some levels within the framework of the Republican range of 515 00:29:18,040 --> 00:29:22,720 Speaker 1: President Trump. I mean, the reality is that the greatest 516 00:29:22,760 --> 00:29:25,120 Speaker 1: cure if you don't like immigration, the best cure for 517 00:29:25,160 --> 00:29:27,280 Speaker 1: too many immigrants coming to your country is a higher 518 00:29:27,280 --> 00:29:29,480 Speaker 1: employment rate, because that's what draws people to this country. 519 00:29:29,600 --> 00:29:32,320 Speaker 1: So you're going to see immigration numbers dropped dramatically throughout 520 00:29:32,320 --> 00:29:34,720 Speaker 1: the course of this year at the job market collasses. 521 00:29:34,960 --> 00:29:37,200 Speaker 1: In terms of how moderate and extreme this composal is, 522 00:29:37,240 --> 00:29:39,480 Speaker 1: I mean, it's you know, we don't usually ban green 523 00:29:39,560 --> 00:29:42,080 Speaker 1: card for people, so I'd say it's a fairly extreme, 524 00:29:42,160 --> 00:29:44,280 Speaker 1: but it's not nearly as far as some of his 525 00:29:44,480 --> 00:29:47,760 Speaker 1: kind of principle organized supporters want to see, which is 526 00:29:47,800 --> 00:29:49,480 Speaker 1: why I think that going down the road, you know, 527 00:29:49,560 --> 00:29:51,480 Speaker 1: this all came together pretty fast over the course of 528 00:29:51,560 --> 00:29:56,280 Speaker 1: forty eight hours. You may see this expanded in consultations 529 00:29:56,320 --> 00:29:59,040 Speaker 1: with business leaders and heavily affected groups, and of course 530 00:29:59,120 --> 00:30:02,120 Speaker 1: the Trump campaign. M Johnny Leavir, thank you so much 531 00:30:02,160 --> 00:30:05,520 Speaker 1: with your ratio group today on this important political issue. 532 00:30:05,880 --> 00:30:09,960 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 533 00:30:10,160 --> 00:30:15,400 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 534 00:30:15,520 --> 00:30:19,720 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 535 00:30:19,760 --> 00:30:23,960 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.