Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom keene Jaily.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Paul,
Speaker 1: thank you with missouris where us part of an acclaimed
Speaker 1: teen years ago without Saminski and company and now at
Speaker 1: missoo O doing granular work on oil. Paul, just just
Speaker 1: simply to your research note for this weekend and to Monday,
Speaker 1: what part of this collapse are you most focused on. Well,
Speaker 1: we're obviously following the end of the lockdown, but as
Speaker 1: you know, some of the data, for example out of
Speaker 1: Japan is headed in the wrong direction completely. But as
Speaker 1: you know, the overall problem here is a demand one
Speaker 1: and generally or less, as you also note on focus
Speaker 1: far too much on the supply side. The fact is
Speaker 1: that demand here is is so low relative to anything
Speaker 1: we've previously seen before. It's just a major major problem
Speaker 1: managing the market. That's why we've seen negative prices. It's
Speaker 1: a physical challenge to manage the market and that's manifesting
Speaker 1: itself very clearly in the tape, Paul, are we going
Speaker 1: to see negative prices again on the June contract? It
Speaker 1: depends if people are dumb enough to get caught again.
Speaker 1: I think once you do go into that negative situation
Speaker 1: um where you know you've got to get out for
Speaker 1: any price in order to avoid taking delivery of the crude,
Speaker 1: you could notionally go to any kind of price, you know,
Speaker 1: sort of day before. I think what happened here wasn't
Speaker 1: so much the USO. It was more c T a S.
Speaker 1: Commodity trade advisors who have to get out the day
Speaker 1: before settlement and not allowed to hold a physical position,
Speaker 1: And I think they were probably the sellers that caused
Speaker 1: us to go to minus forty. Once you break loose
Speaker 1: into that sort of territory, obviously you can go just
Speaker 1: about anywhere. It's not if you like a totally real price,
Speaker 1: but it's certainly showing you that there's a massive problem
Speaker 1: with managing oil physically at the moment. I'll try carefully here,
Speaker 1: really carefully if I can. But some people in the
Speaker 1: all patch are obviously very unhappy with the price action.
Speaker 1: Continental Resources Harold Ham came out and asked for a
Speaker 1: probe into what he thinks suggests might be manipulation in
Speaker 1: the commodity market. Paul, it made me wander and I
Speaker 1: asked this question with the greatest respect for anyone working
Speaker 1: in the industry industry, but whether any of these owners
Speaker 1: of say Continental and others too have had the reality
Speaker 1: check about what's about to happen and the support that
Speaker 1: they may or may not get from the government, well,
Speaker 1: I think they would definitely slow to recognize the scale
Speaker 1: of the problem. I wouldn't single out any particular name
Speaker 1: for this. I think the industry in general couldn't quite
Speaker 1: believe what was happening. Obviously, it was an incredibly quick event.
Speaker 1: I mean we went from sailing along fairly normal at
Speaker 1: sixty dollars a barrel on the first of the year
Speaker 1: to a total and after collapse within three months. That
Speaker 1: occurred over the course of about two weeks, so I'm
Speaker 1: not surprised they were they were called short. However, you know,
Speaker 1: very early we were calling for negative prices seeing how
Speaker 1: bad the problem would be. And I'm surprised, for example,
Speaker 1: someone like Concho Phillips it was quite slow to cut.
Speaker 1: I mean, they've got there now, but it was it
Speaker 1: was not as quick a response as we expected from
Speaker 1: the industry given the severity of the downturn. I think
Speaker 1: that we have been a bit negatively surprised by how
Speaker 1: slow it seems it's going to going to be to
Speaker 1: get out of this unfortunately. Um and that you know,
Speaker 1: I'm sympathetic obviously, it's a very difficult situation to manage.
Speaker 1: I think, just to build on that point, there also
Speaker 1: was a probe by the CFTC into other trading that
Speaker 1: was revealed yesterday by Bloomberg and possible manipulation. And there's
Speaker 1: a real question here how much was some of the
Speaker 1: turmoil stemming from people with advanced knowledge of negotiations out
Speaker 1: of Russia, etcetera, versus a lack of an awareness of
Speaker 1: the reality or perhaps denial of the reality that's still
Speaker 1: is being denied to this day. Well, you know, that's
Speaker 1: the crazy thing about the whole situation with with OPEC
Speaker 1: is that there's really no limitation on insider trading. I mean,
Speaker 1: I guess the CFTC can try and go after people,
Speaker 1: but the reality is this is an active cartel that's
Speaker 1: trying to manipulate the market. And also, Paul, just reflect
Speaker 1: on if anyone that's ever been to Vienna or spoken
Speaker 1: to someone that's been to Vienna and watched how this
Speaker 1: meeting operates. The idea that some information slipped through the cracks,
Speaker 1: I mean, come on, it doesn't surprise me at all.
Speaker 1: I would say that it's an active competition to be
Speaker 1: first to give the inside information. But you know that's
Speaker 1: the wild west of the oil market, and you know,
Speaker 1: the regulator I think, can yell at the Russians or
Speaker 1: the or the Satis or whoever. I'm not tingling anyone
Speaker 1: else across the board an active attempt to manipulate the market.
Speaker 1: I mean it's quite open, Paul. There ever was a
Speaker 1: four masure, This is it, and I get to a sovereign, Well,
Speaker 1: it's funnesced to take its lumps and move on. What
Speaker 1: does Saudi Arabia do, What does Kuwait do? What does
Speaker 1: Nigeria do? How do they affect a force masure in
Speaker 1: their core economy? Well, I think you can see clearly
Speaker 1: what's happening strategically through the Saudi official selling prices right
Speaker 1: and what we saw here, interestingly, I think very much
Speaker 1: post the President Trump's President Trump's intervention was that prices
Speaker 1: were raised by Saudi Arabia to the US to reduce
Speaker 1: their sales to the US, but at the same time
Speaker 1: they maintained a very aggressive pricing into Asia, which by
Speaker 1: the way, the next day was matched, if not undercut,
Speaker 1: by Iraq, where I think one of the big tensions
Speaker 1: in the market today is the Saudi versus Iraq uh
Speaker 1: stroke Iran price competition into Asia, which is very interesting
Speaker 1: in terms of what they can actually do that that's
Speaker 1: been a major question, and this is very you know,
Speaker 1: I've taken the OPEC meeting was it's it's very much
Speaker 1: rearranging deck chairs on the Titanic insofar as you're going
Speaker 1: to have to cut whether you like it or not.
Speaker 1: A very good example being Nigeria tom where they've just
Speaker 1: simply been able to unable to sell their all because
Speaker 1: there's no market and m and that's obviously what we
Speaker 1: saw with the negative price as well. It's it's just
Speaker 1: an epic challenge because as you know, the ord industry
Speaker 1: is efficient and it runs with relatively low inventory. This
Speaker 1: just surpasses any capacity to actually manage the oil shorts
Speaker 1: of shutting down production. The Saudis are in good shape
Speaker 1: in that regard because they're so heavily invested with such
Speaker 1: a sophisticated oil system that they can just turn a
Speaker 1: volume knob and change their production. Others, you know, such
Speaker 1: as Nigeria and such as produced in the Permian, they're
Speaker 1: going to find it more difficult to do an orderly
Speaker 1: shut there. What price does the cartel need to break
Speaker 1: even out a fiscal basis just the stability of their governments?
Speaker 1: What price do they need on a ended basis? That's
Speaker 1: fairly well reported by the I M. F. Tom. So
Speaker 1: you'll see about seventy two eighty for sauity, about forty
Speaker 1: to fifty for Russia. I read a hundred and fifty
Speaker 1: for Algeria. You know, one of the one of the
Speaker 1: amusing conceptual things I've highlighted is what do you think
Speaker 1: to break even is? For the US Government's probably about
Speaker 1: a thousand dollars a barrel based on the current epit.
Speaker 1: But but now in all seriousness there's an issue there.
Speaker 1: Of course, the Saudis will tell you they have the
Speaker 1: capacity to raise death um, you know, so they can
Speaker 1: run at a depthosit obviously, and as you know that
Speaker 1: cash brain even as closer to ten dollars a barrel,
Speaker 1: they can get along. Since I'm hugely stabilizing. I mean,
Speaker 1: this is going to really cause problems in many places,
Speaker 1: and I think Russia is probably the most interesting, you know,
Speaker 1: in terms of the difficulties they're going to face financially,
Speaker 1: there are and obviously as another major candidate for serious prominence.
Speaker 1: Let's do this again, Paul, thank you, thank you. Someone
Speaker 1: from the zoo just really really appreciate it. Right now,
Speaker 1: you'd like to digress over to the equity market, John,
Speaker 1: Lisa and I all looked at our one on one
Speaker 1: case and said, let's get somebody on who can give
Speaker 1: us confidence forward. Sevida Supermannian advises for the Bank of America,
Speaker 1: where she's had of equity and quantitative strategy as well. Sevina,
Speaker 1: what is the quantitative observation right now? What is the
Speaker 1: mathiness right now you're focused on? Yeah, no, it's a
Speaker 1: great question. So I think there's a couple of things
Speaker 1: going on. I think from a stock perspective, what we're
Speaker 1: noticing is that the dispersion of stocks has actually increased
Speaker 1: to close to record levels. So what this means is
Speaker 1: that stocks are behaving very very differently from one another um,
Speaker 1: which suggests that there's UM increasing alpha to be made
Speaker 1: or increasing performance money to be made um from stock
Speaker 1: selection rather than just buying or selling the market, or
Speaker 1: buying or selling sectors or broad slabs uh um of companies.
Speaker 1: So I think this is a different environment from what
Speaker 1: we've been in for for you know, the bulk of
Speaker 1: this bull market, where stocks have been very correlated and
Speaker 1: um and have behaved very similarly. Uh So I think
Speaker 1: that's one trend that's that's very different. And then I
Speaker 1: think the thing that's worth pointing out is it for
Speaker 1: equity investors, time is actually the best barbitrage opportunity. And
Speaker 1: what I mean is if if you just extend your
Speaker 1: time horizon on US equities, there's a very unique characteristic
Speaker 1: of stocks where you know, if you look at tenure
Speaker 1: returns of U S stocks, they have very rarely been
Speaker 1: negative less than four percent of the time, which compares
Speaker 1: very favorably to commodities, which you know, commodities returns have
Speaker 1: been negative of the time over ten your periods. So
Speaker 1: I think that the key here is pick stocks and
Speaker 1: extend one's time horizons. Because obviously we're in a rough
Speaker 1: patch right now. Okay, let's say I do that, extend
Speaker 1: the time horizon. And then as you a pretty basic question,
Speaker 1: do I need to pay attention to earning season? You know,
Speaker 1: I think earning season is important in the short term,
Speaker 1: and and again, you know, I think that's what's driving
Speaker 1: the dispersion between stocks, is that we're seeing, you know,
Speaker 1: even within consumer staples, some companies are doing better than
Speaker 1: others depending on what their retail channels are. Um. You know,
Speaker 1: if you sell outside of the grocery store, you're not
Speaker 1: doing as well. If you sell in a grocery store,
Speaker 1: you're doing well. So I think that there are definitely, um,
Speaker 1: you know, kind of themes that were that we're seeing
Speaker 1: across earning season. But but you know, I think that
Speaker 1: even earning season is relatively opaque, so very few companies
Speaker 1: are actually offering forward guidance. In fact, the bulk of
Speaker 1: companies have just stopped talking about earnings guidance for the
Speaker 1: year because we are in a little bit of a um,
Speaker 1: you know, kind of an opaque period in terms of
Speaker 1: how long this business shutdown last um, you know, kind
Speaker 1: of what what the what the impact is going to
Speaker 1: be on earnings. So, you know, I think the earning
Speaker 1: season is important in terms of picking stocks, But I
Speaker 1: actually don't see it as giving us much of a
Speaker 1: guide for how to navigate the next few few quarters.
Speaker 1: How much is buying stocks here a bet on the
Speaker 1: Federal Reserve back stopping the market? Yeah, I mean I
Speaker 1: I personally think that that upside is in the market
Speaker 1: because we've essentially heard say they're going to buy almost anything,
Speaker 1: and um, you know, they're they're buying as the classes
Speaker 1: that they had previously never touched, like high yield bonds.
Speaker 1: So I think that that the good news from the
Speaker 1: set is our in the stocks and they've provided a
Speaker 1: backstop against a major liquidity meltdown. But from here, I
Speaker 1: think the real bet that we're making in buying or
Speaker 1: selling stocks is that the crisis is contained within let's
Speaker 1: call it the first half, and that this is a short,
Speaker 1: kind of a sharp economic recession with either a V
Speaker 1: or a you know, kind of a reasonable U shaped recovery. Um.
Speaker 1: I don't think what's priced in is uh, you know,
Speaker 1: a double U shaped recovery if you will, or you know,
Speaker 1: another um onset of COVID nineteen later in the year. Um,
Speaker 1: So I think that would be downside risk. And I
Speaker 1: also think that the market is actually discounting at this
Speaker 1: point a relatively aggressive recovery on it. On the economic front,
Speaker 1: I mean, what worries me is that the pe ratio
Speaker 1: of the SMP five is right back up to its
Speaker 1: February peak levels because earnings have come down but prices
Speaker 1: are still relatively high. Um So, I think that that's
Speaker 1: the risk, is that that a lot of the good
Speaker 1: policy news is likely to be in the market. Savina.
Speaker 1: I'm struggling to understand. If everybody is looking past earnings
Speaker 1: and past the horrible and getting worse economic data, do
Speaker 1: these jobless claims that we're all focused on matter. Yeah.
Speaker 1: I mean, I think employment has historically been a lagging indicator, so,
Speaker 1: you know, and I think that again we we kind
Speaker 1: of are forecasting us fairly uh employment scenario. I think
Speaker 1: our economists are forecasting tem percent unemployment by the end
Speaker 1: of the year. Um So, so I think that employment
Speaker 1: will while it does, you know, kind of points to
Speaker 1: newer term stresses, doesn't necessarily impact normalized earnings as much.
Speaker 1: I think what it does show, though, is that there
Speaker 1: might be a reticence amongst consumers coming out of this
Speaker 1: to you know, return to buying big ticket items or
Speaker 1: even home home home purchases UM. Given that that consumer
Speaker 1: competence has seen such an extreme shock cevida, how does
Speaker 1: MidCap and small cap resolve itself? Is it through combinations?
Speaker 1: Is it how do they jump start their entrepreneurial you know,
Speaker 1: the pulse the process. Yeah, yeah, it's a great question.
Speaker 1: I think small caps, I mean, I think we will
Speaker 1: will be likely to see consolidations given how cheap small
Speaker 1: caps are today. I mean, the sector is treating at
Speaker 1: the low recessionary levels UM and the gap between large
Speaker 1: and small is the widest we've seen and you know,
Speaker 1: in in multiple decades. So I think that this is
Speaker 1: a This is an environment where large companies can buy
Speaker 1: smaller traps stocks for up for a song. I think
Speaker 1: the real risk though, for smaller companies is whether they
Speaker 1: survive this UM this downturn, because as you know, smaller
Speaker 1: companies are much more GDP sensitive, so you know, large
Speaker 1: caps have a lot more um you know, kind of
Speaker 1: staying power. Uh. But I think that that's the risk
Speaker 1: for the overall assets. Are you are you predicting whether
Speaker 1: the storm are you predicting a roll up phase? I
Speaker 1: mean there was a period what twenty years ago where
Speaker 1: you know, we rolled up the specialty chemical industry over
Speaker 1: three cups of coffee on the July weekend. I mean,
Speaker 1: is that what we're heading for? I mean, I think
Speaker 1: we couldn't see that. We could see more heavy M
Speaker 1: and A activity once we get a little bit more
Speaker 1: clarity on on the length of this downturn. Um. But
Speaker 1: I think that these large and small right now are
Speaker 1: just boarding cash. They're not doing anything. They're suspending buy backs,
Speaker 1: you know, some of them are suspending dividends, and companies
Speaker 1: seem to be very very conservative in terms of cash
Speaker 1: and capital allocation. But I think if we get to
Speaker 1: a point where there's a little bit more clarity on
Speaker 1: how long this fall lasts and whether it's you know,
Speaker 1: there's potential to contain this crisis, that's when you start
Speaker 1: to see the consolidation. But I was embolish on on
Speaker 1: an M and A cycle um sometimes exact Sevida, thank
Speaker 1: you so much, Savida Superbanian with the Bank of America.
Speaker 1: Right now, the former president of the Minnieapples Fed at Rochester,
Speaker 1: Nariannicata Lakota, joins us, Professor, I want to go right
Speaker 1: away to the mathiness of your work, and that is
Speaker 1: that so much of our belief and research is based
Speaker 1: on smooth curves on glide pass odd models that are
Speaker 1: comfortable and at times some would even say elegant or beautiful.
Speaker 1: We've just had the mother of all jump conditions, exogenous shocks.
Speaker 1: How does that change your belief in models? Hi, Tom,
Speaker 1: thanks for having me on. I think models are still
Speaker 1: very useful for trying to organize your thinking about what
Speaker 1: you're you're likely appropriate responses to to to economic conditions. Obviously,
Speaker 1: this was an event that was not forecast by economists,
Speaker 1: but now once we're in the event, I think that
Speaker 1: modeling and can help you with framing what how to
Speaker 1: think about what should be done. And I think it's
Speaker 1: been helpful for my former colleagues in the Federal Reserve
Speaker 1: as they as they try to try to figure out
Speaker 1: what to do next. One thing that they have done
Speaker 1: is being incredibly aggressive, and for the most part, people
Speaker 1: have cheered them. American confidence in the FEDS leadership right
Speaker 1: now is the highest since a green Span era. If
Speaker 1: you take a look at the latest Gallop poll, I'm
Speaker 1: wondering they're going forward about the to say, the politicization
Speaker 1: of the Federal Reserve based on some of the fiscal
Speaker 1: stimulus type of efforts they've been doing. What's your expectation. Yeah,
Speaker 1: I think that's a great questions. I think that, Um,
Speaker 1: what we've seen in this recession. UM, I'm gonna call
Speaker 1: it that because I think go to we're in is
Speaker 1: that there's been a lot of coordination between Treasury and
Speaker 1: the FED and implicit coordination between Congress and the Fed. UM. So,
Speaker 1: for example of that is set up a facility whereby
Speaker 1: they're going to be willing to lend directly to corporations.
Speaker 1: That's basically they're using their ability to create government liabilities money, uh,
Speaker 1: in order to finance a physical intervention by Congress. I
Speaker 1: suspect we're going to see a lot more of that
Speaker 1: as we go forward. Um, it's clear that the American
Speaker 1: public is comfortable with this, it's or that Congress is
Speaker 1: comfortable with it. Um, it's clear the FED is comfortable
Speaker 1: with it. What that's going to mean I think in
Speaker 1: terms of politalization, you know, it's I think that's a
Speaker 1: good question. I I worry about that certainly. How do
Speaker 1: you get the genie back in the bottle? We asked
Speaker 1: Vice Chairman Clara to this question. And many others have
Speaker 1: been asked the same question down there, out there somewhere,
Speaker 1: I get, would you just let the debt run out?
Speaker 1: Or or do you find a way to actually do
Speaker 1: what many would say as responsible and just pull it
Speaker 1: in a little bit. I think that, uh, it's very
Speaker 1: difficult to put the genie back in the bottle unless
Speaker 1: people perceive a cost to having all this debt um
Speaker 1: As long as interest rates remain low, as long as
Speaker 1: inflation remains low, I think that you're going to see
Speaker 1: Congress and the FED continue to feel comfortable with with
Speaker 1: with these kinds of expansiony programs. Professor, you could argue
Speaker 1: that if the Fed's balance she gets to twelve twilli
Speaker 1: in the near term, which isn't a crazy estimate, that
Speaker 1: it won't matter if borrowing costs from beIN low to
Speaker 1: your point, and if everything just keeps chucking along, that
Speaker 1: they'll look like the hero. So why would they become
Speaker 1: a more political body at that point? I think the
Speaker 1: issue is that what is the role of FED in
Speaker 1: terms of fighting fighting recessions? The traditional role for the
Speaker 1: FED is simply, Uh, procession comes along, We're gonna cut
Speaker 1: interest rates if we see inflation on the horizon, we
Speaker 1: raise interest rates. That's a pretty simple technocratic position. Now,
Speaker 1: I think the FED is in the business of Okay,
Speaker 1: which kind of program should we be financing for Congress? Well,
Speaker 1: that's a that's a much more political kind of job.
Speaker 1: And I think the issue is whether or not we
Speaker 1: want a group of as as Americans. We want a
Speaker 1: group of unelected technocrats to to have that have that power.
Speaker 1: As you say, right now, they're the heroes. But I
Speaker 1: I think that this is uh creates risk for the
Speaker 1: institution going down the road. Certainly, That's why I wanted
Speaker 1: to go there. This is so important, Professor CATCHA Dakota.
Speaker 1: Is the risk to the institution? What is your action
Speaker 1: plan for Chairman Powell now as a former member of
Speaker 1: the institution to maintain the integrity of the FED? What
Speaker 1: does he need? Does he need to get out of
Speaker 1: the speaking circuit, or does he need to, you know,
Speaker 1: do the Today Show. What's what's his best practice? Well?
Speaker 1: I don't think I need to give any advice to
Speaker 1: to uh uh to cheer Powell about to handle pup.
Speaker 1: He's done a fantastic job, I think in terms of
Speaker 1: communicating about what the FED is doing. Why it's doing it.
Speaker 1: Um I think that's one of the most striking differences
Speaker 1: I see between where the FED is today as opposed
Speaker 1: to where it was in two thousand and eight, where
Speaker 1: it was also doing I think, things to save the
Speaker 1: US economy, but not communicating as effectively as as Powell
Speaker 1: has done. Um. No, I think it's really this question
Speaker 1: that that you asked about, how do you get the
Speaker 1: genie back in the bottle? You can't do it in
Speaker 1: in May, but I think you have to be some
Speaker 1: thinking what are guidelines for using thirteen three going four?
Speaker 1: You know this this uh clause in the Federals are
Speaker 1: back that seems to say, well, the fake can do
Speaker 1: anything it wants too, as long as your country sectory
Speaker 1: signs on yeah, this is This has been wonderful, professor,
Speaker 1: Thank you so much. Snaria the Cutchler Code of Folks,
Speaker 1: the former president of the Many atmos feer now at
Speaker 1: the University of Rochester. We want to continue our discussions
Speaker 1: now on what we're all experiencing with this pandemic and
Speaker 1: just so many that is the doctors and indeed the
Speaker 1: nurses on the front lines. I spoke today with Jason Farley.
Speaker 1: He's Johns Hopkins University in their Department of Nursing, and
Speaker 1: the professor is truly expert on infectious diseases. Here is
Speaker 1: Professor Farley right now. The vaccine studies are and looking
Speaker 1: at what we call faith on vaccine studies. The type
Speaker 1: of studies are really looking at the safety um and
Speaker 1: whether whether or not we actually see a response, So
Speaker 1: it does the mean system respond to the vaccine, So
Speaker 1: that's not testing epicac and meaning is it effective at
Speaker 1: preventing the virus from occurring if we have the vaccine?
Speaker 1: So those studies come next, and really importantly that will
Speaker 1: That's why we're continuing to project timelines of at least twelve,
Speaker 1: if not eighteen months UM away. Dr Farley, the raging
Speaker 1: debate this morning is in your wheelhouse. You are one
Speaker 1: of the nation's experts on Staphylococcus aureus methicillin in all
Speaker 1: the resistancies and hospitals. The arch fear of medical experts
Speaker 1: is a secondary bout of this virus down the road.
Speaker 1: Explain the likelihood and how it will demonstrate if we
Speaker 1: get a virus come September or December or been into
Speaker 1: two thousand one. Yes, certainly, well we're looking at estimates
Speaker 1: of antibody right now that are that are emerging that
Speaker 1: suggests that five cent of the population, for example, the
Speaker 1: data out of Seattle and the Washington State that suggests
Speaker 1: that five percent of the population may have been exposed
Speaker 1: and recovered. So the first question obviously it does those
Speaker 1: antibodies being recovered from lead to any form of attenuation
Speaker 1: or protection in the future. The second question is is
Speaker 1: if that's so, that still leaves of the population to
Speaker 1: what we would say are immunologically naive, meaning no prior
Speaker 1: exposure and recovery. So, in other words, if if we
Speaker 1: roll back social distancing too fast, we continue to propagate
Speaker 1: virus in the community, that then subsequently leads us into
Speaker 1: the season of cold and flu, which is you know,
Speaker 1: like you said, September and on in the United States,
Speaker 1: at least in in in the northern hemisphere that that timeline.
Speaker 1: Then we also get other respiratory viruses we emerge being
Speaker 1: such as influenza, and it complicates our scenario, as we
Speaker 1: mentioned by the CDC director Robert Redfield, because then clinicians
Speaker 1: are conceding a patient with respiratory symptoms and scratching their
Speaker 1: heads saying well, is this flu? Is this coronavirus? Is
Speaker 1: this you know, anotherblem with that become. We know how
Speaker 1: to treat flu obviously, we know how to diagnose it.
Speaker 1: We know how to prevent complications in most circumstances, not
Speaker 1: all UM. Yet transmission UM parameters and dynamics do affect
Speaker 1: the way we may respond. So again we're we're concerned
Speaker 1: about co occurring respiratory viruses in the same season, which
Speaker 1: will complicate the things making and we it's not exactly
Speaker 1: that we don't anticipate coronavirus to return during the fall.
Speaker 1: We absolutely expect a second wave of infection UM to occur.
Speaker 1: We've already seen it around the world in various sights.
Speaker 1: That has to be emerged UM from Jason Farley with
Speaker 1: Johns Hopkins University, their professor of nursing, just fascinating there
Speaker 1: on his wheelhouse infectious disease as well. Turning our attention
Speaker 1: now to Washington, d C. And the debate over immigration,
Speaker 1: the President Donald Trump signing an executive order just yesterday
Speaker 1: to temporarily curb the issuing of new green cards for
Speaker 1: would be permanent residents in the United States, and Tom
Speaker 1: with the labor market heading the way it is, I
Speaker 1: imagine this is just the beginning. I would suggest the
Speaker 1: professionals I speak to on this are absolutely stunned at
Speaker 1: the action. They don't have a strong opinion about it,
Speaker 1: you know, the actual what we're gonna see the next
Speaker 1: couple of weeks, but they are stunned by the action here.
Speaker 1: John Lieber joins us, would you raise your group to
Speaker 1: uh cover the territory here? John just very simply on
Speaker 1: immigration and the president's desire here over six zero sixty days,
Speaker 1: how many American jobs will he protect in that time?
Speaker 1: Very few? I mean, I think this is not necessarily
Speaker 1: about protecting jobs immediately. I think this is more about
Speaker 1: setting up the dynamic and setting up the immigration issue
Speaker 1: to create a contrast with Joe Biden for the election
Speaker 1: in the fall. Immigration is basically shut down in the country.
Speaker 1: They're not processing these applications, are not processing green cards.
Speaker 1: There's exemptions in here for temporary workers. Um, they didn't
Speaker 1: cover the each one B program. I mean, there's just
Speaker 1: a lot dis order doesn't do. And it's only for
Speaker 1: sixty days. So at the end of the sixty days,
Speaker 1: you know, they got to look at it again and say,
Speaker 1: are we going to extend this or is this worth
Speaker 1: fighting for? So that's where we are, sixty one days out.
Speaker 1: What would you suggest happens. I think that they're probably
Speaker 1: going to extend this. I think that the president if
Speaker 1: you look at the grouch that typically support immigration restrictions,
Speaker 1: they've been used warm on the president's announcement um. But
Speaker 1: I think the president also has a business instituency to
Speaker 1: think about folks who need these immigrant workers and rely
Speaker 1: on them, especially in the agriculture of sector. But you know,
Speaker 1: to the accept this is readily for the political base,
Speaker 1: you've got to think that they're going to find a
Speaker 1: way to make this last longer than sixty days. Perhaps,
Speaker 1: John Lieber, I'm sorry, we're living this every day. They
Speaker 1: exempted medical workers, agricultural workers, and radio presenters from what
Speaker 1: I think. It's just great how they did that, and
Speaker 1: then for full transparency, just so the audience does know
Speaker 1: this is a process I'm going through. So I won't
Speaker 1: be offering a judgment on this particular policy, just as
Speaker 1: an observation, though, John, you can see how this is
Speaker 1: going to be a huge focal point ahead of a
Speaker 1: little bit later this morning, we'll have an extra four
Speaker 1: point five million dollar jobless claims four point five million
Speaker 1: jobless claims according to the estimate, that would take us
Speaker 1: to near twenty five million in five weeks. This is
Speaker 1: going to be a big debate, and I just want
Speaker 1: to jomp from your perspective because you've got to read
Speaker 1: the political tea leaves. This is how the president is
Speaker 1: setting himself up for November. Does he manage to bring
Speaker 1: the left with him? Did the left come in on
Speaker 1: this topic or do they go south of the otherwise?
Speaker 1: I think if you look at Joe Biden's immigration plan, um,
Speaker 1: it's a lot like Barack Obama's immigration plan, but even
Speaker 1: more liberal. We think that you've got the possibility of
Speaker 1: um uh amnesty for workers that are already here, the
Speaker 1: possibility of more workers coming in under the plan. So
Speaker 1: I think that where the Democratic Party is is certainly
Speaker 1: far to the left of President Trump. But you're right,
Speaker 1: this is a sensitive issue and in times of high unemployment,
Speaker 1: the issue the issue immigration is going to be politically charged.
Speaker 1: So I think the president the President did this because
Speaker 1: he understands this is an issue that excites as voters,
Speaker 1: and you know they're fighting over the same voters in
Speaker 1: a couple of key battleground states in November. So but
Speaker 1: but where the Democratic Party is not, where President Trump is,
Speaker 1: that they're going to have to oppose this. We'll find
Speaker 1: some you know, say, therefore, some sensible policies that would
Speaker 1: allow immigrants to come in where needed, or something like that. John,
Speaker 1: I was struck as I was researching this issue last night.
Speaker 1: I was struck by the pushback the President Trump is
Speaker 1: getting within the further right parts of the Republican Party,
Speaker 1: basically saying this doesn't go far enough by any stretch
Speaker 1: of the imagination that if it is going to be extended,
Speaker 1: it would have to be increased, and all of the
Speaker 1: exemptions render it basically toothless. How moderate is this on
Speaker 1: some levels within the framework of the Republican range of
Speaker 1: President Trump. I mean, the reality is that the greatest
Speaker 1: cure if you don't like immigration, the best cure for
Speaker 1: too many immigrants coming to your country is a higher
Speaker 1: employment rate, because that's what draws people to this country.
Speaker 1: So you're going to see immigration numbers dropped dramatically throughout
Speaker 1: the course of this year at the job market collasses.
Speaker 1: In terms of how moderate and extreme this composal is,
Speaker 1: I mean, it's you know, we don't usually ban green
Speaker 1: card for people, so I'd say it's a fairly extreme,
Speaker 1: but it's not nearly as far as some of his
Speaker 1: kind of principle organized supporters want to see, which is
Speaker 1: why I think that going down the road, you know,
Speaker 1: this all came together pretty fast over the course of
Speaker 1: forty eight hours. You may see this expanded in consultations
Speaker 1: with business leaders and heavily affected groups, and of course
Speaker 1: the Trump campaign. M Johnny Leavir, thank you so much
Speaker 1: with your ratio group today on this important political issue.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.