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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg I'm

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Speaker 1: pleased to say that we joined by one of the

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Speaker 1: sharpest minds in global economics now, Catherine Mann be City

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Speaker 1: Global Chief Economists. Catherine, fantastic to have you with us

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Speaker 1: on a day like this morning. Let's just start with

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Speaker 1: the basic question, what are you looking for from this

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Speaker 1: payrolls report? In not evenutes time? Well, I tell you

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Speaker 1: you know, this is a case where everybody's looking for

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Speaker 1: the report, But I'm looking beyond the report because I

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Speaker 1: think at this point for the markets, it's pretty much

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Speaker 1: all priced in and it's all about, um where we're

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Speaker 1: going to go from here. I think the elements going

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Speaker 1: forward in an inner term that are most relevant are

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Speaker 1: how long to the furloughs last, how long do they

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Speaker 1: turn in? At what point did they might be turned

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Speaker 1: into firing? There any strange quirks in this particular report, Catherine,

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Speaker 1: like wages that we should ignore pay less attention to

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Speaker 1: I think that actually there are a lot of things

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Speaker 1: in this report that are not really going to be

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Speaker 1: representative of the challenge going forward of restarting the economy. So,

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Speaker 1: I mean, you know, it's it's new, it's news that

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Speaker 1: hasn't happened yet because it hasn't been announced. But at

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Speaker 1: this point it's old news, and we've got to move

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Speaker 1: on to thinking about what we're gonna do. What are

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Speaker 1: the number is going to look like? What are the

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Speaker 1: trajectory is going to look like about getting the economy

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Speaker 1: back on track. When you talk about getting the economy

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Speaker 1: back on track, US markets seem to have already moved

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Speaker 1: past the catastrophic report. And you were quoted in a

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Speaker 1: story today talking about this massive divide, this disconnect between

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Speaker 1: stock markets that continue to rally then as that now

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Speaker 1: positive on the year, and the bleakest economic reports in history.

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Speaker 1: You don't think it can last? Why not? H No?

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Speaker 1: I don't. I mean at some point there's the market

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Speaker 1: either the fundamentals catch up to the markets, or the markets,

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Speaker 1: uh come down to the fundamentals. And and of course

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Speaker 1: the reason why they're so disconnected is because there has

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Speaker 1: been a tremendous amount of policy support put forward to

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Speaker 1: underpin the financial markets in particular. That's where the FEDS

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Speaker 1: broad set of programs. They actually haven't done much yet.

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Speaker 1: I mean they just sort of given forward guidance of

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Speaker 1: the market for writing market guidance, um. But and there's

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Speaker 1: also a lot of funding, you know, on the fiscal

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Speaker 1: side as well. So the markets are sort of saying,

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Speaker 1: we know all that it's gonna it's gonna work out.

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Speaker 1: So we're looking to Yeah, I think that's when they're

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Speaker 1: gonna be you know, they were going to be surprised

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Speaker 1: in later on in the year. Good morning. I look

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Speaker 1: out of my abode here and I can look over

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Speaker 1: and wave to Columbia University and the wonderful Laureate Edmund Phelps.

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Speaker 1: And there can be phrases like nehru output gap and

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Speaker 1: all these other stuff, And it devolves down to John

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Speaker 1: Williams Modern Kent, which is our start as we go

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Speaker 1: into this report and as we come out of it,

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Speaker 1: do we have a clue where our start is? Well,

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Speaker 1: you know, I'm interested. You say the neighbor they output gap,

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Speaker 1: our star. I put them all into the category of

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Speaker 1: we don't observe them. They are all estimates and they

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Speaker 1: move over time, and so sort of thinking that any

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Speaker 1: of them are your north star is really a bad

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Speaker 1: way of thinking about things because they are not a

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Speaker 1: north star. They don't uh you know, they're they're not changeless.

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Speaker 1: We should not be guided by them because they are

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Speaker 1: so uh in this moment in particular, so affected by

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Speaker 1: underlying data that we really have to go and look

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Speaker 1: at a much more microeconomic analysis, micro data, higher frequency data.

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Speaker 1: What does the micro data say about wage dynamics here

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Speaker 1: or will it take you a month or two or

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Speaker 1: a three to really get an understanding of a disinflationary

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Speaker 1: tendency expected? So there's a lot of uh you know,

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Speaker 1: there's a lot of challenges here because uh sure, there's

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Speaker 1: a tremendous amount of of unemployment going to be coming

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Speaker 1: out of this report. Um, it is broad based, although

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Speaker 1: there's there's higher intensity in some sectors than others. But

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Speaker 1: going forward, the question to me is when the economy

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Speaker 1: starts to reopen and people start to go back out

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Speaker 1: to we call us going back out to play. Of course,

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Speaker 1: people work at restaurants, but there are a lot of

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Speaker 1: people who play, and by going out to restaurants, as

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Speaker 1: hit the theater and sporting events and travel and tourism

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Speaker 1: and so forth. When people do that, what are the

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Speaker 1: rules of engagement by companies? Um? Do they only have

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Speaker 1: half as many tables, no middle seat, half as many

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Speaker 1: tickets in the theater? Under those situations, you you have

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Speaker 1: a very interesting dynamic because you don't need as many

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Speaker 1: people UM, and you still have to you know, make

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Speaker 1: a profit otherwise you're going to go out of business.

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Speaker 1: So how does that translate into prices that people have

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Speaker 1: to pay? So the disconnect between wages and prices could

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Speaker 1: actually get bigger, Catherine, I'd like to talk about what's

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Speaker 1: about to happen with interest rates as well, and the

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Speaker 1: difference between now and what we saw after the last crisis.

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Speaker 1: After the last crisis, it took a long time for

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Speaker 1: people to figure out rates weren't going up anytime soon.

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Speaker 1: I don't think two year rates actually bottomed out until

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Speaker 1: as you look at things right now, is this a

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Speaker 1: market that's accepted that reality The rates are going to

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Speaker 1: remain low for a whole lot longer from here. So

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Speaker 1: I think that the market definitely thinks that rates are

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Speaker 1: going to stay extremely low UM, And in some sense

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Speaker 1: they know this now for sure because of the range

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Speaker 1: of FED programs that have been put into place. But

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Speaker 1: they even knew that, um when the FED pivoted last

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Speaker 1: year after the December debacle. So you know, the markets

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Speaker 1: know for sure that the FED is so far away

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Speaker 1: from monetary policy normalization that they know that there's a

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Speaker 1: put on ptic practically every single asset in the portfolio. Well,

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Speaker 1: a put is a different thing than necessarily going negative.

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Speaker 1: And right now we're seeing traders uh that that the

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Speaker 1: Federal Reserve will take rates negative despite the fact that

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Speaker 1: the forms he has said repeatedly that it will not do.

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Speaker 1: So do you think that this is a disconnect, that

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Speaker 1: the market is in for a rude awakening and that

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Speaker 1: FED officials have come out and reiterate their stance against

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Speaker 1: negative rates, or do you think that the Fed is

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Speaker 1: going to have its hand forced yet again by the market.

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Speaker 1: So I think so perhaps the market is taking a

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Speaker 1: queue from negative w t I Right, nobody thought the

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Speaker 1: roil prices could go negative either. Um, So there are

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Speaker 1: policy rates that could go negative, and and the f

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Speaker 1: O m C has said, no, we're not going to

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Speaker 1: do that. That's not the same thing as the market

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Speaker 1: taking market determined rate negative. Right, there's a distinction between

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Speaker 1: the two. Okay, there's a distinction, but there was a

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Speaker 1: headline today. UBS is getting a lot of uh response

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Speaker 1: from their their customers. They're not going to play in

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Speaker 1: the negative rate space. You know, They're just not gonna

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Speaker 1: participate in this. Ken Rogoff in the late Marvin good

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Speaker 1: Friend would suggest we need to see a greater magnitude,

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Speaker 1: a greater courage, doctor Man of affecting negative rates. Do

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Speaker 1: we need a more bold negative rate policy or is

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Speaker 1: it a failed policy to be negative? Negative rates is

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Speaker 1: not Uh, it's not appropriate. I mean, this is not

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Speaker 1: a situation where we need negative rates. There's plenty of

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Speaker 1: credit available. Um, it's going into the financial markets. The

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Speaker 1: challenges is not going from financial markets to the real economy.

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Speaker 1: That's the disconnect, and negative interest rates won't help that. Cancine,

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Speaker 1: appreciate you time this morning, history making day on this

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Speaker 1: payrolls Friday, Catherine Man that City Global Chief Economists to

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Speaker 1: Bloomberg survey changes day to day depending on the mix

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Speaker 1: of opinions we get, and we've sort of migrated it

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Speaker 1: casually from twenty to one two million with an update.

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Speaker 1: Ellen Setner of Morgan Stanley. Ellen, I know that John

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Speaker 1: and Lisa have all sorts of current questions about a

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Speaker 1: thirty What have you learned in May, the short days

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Speaker 1: of May that we've had about what we will see

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Speaker 1: in the June, the July or the August report. Can

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Speaker 1: you take this out further as we have taken out

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Speaker 1: weekly claims. Yeah, it's a good question, tom Um. So

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Speaker 1: we should be looking ahead. I mean, any of these

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Speaker 1: numbers that are just absolutely shocking should not surprise me one.

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Speaker 1: And as we continue to get April data, it's it's

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Speaker 1: largely backward looking because they are starting to open up.

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Speaker 1: They're opening up the limited capacity, but they're opening up,

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Speaker 1: and so you're going to be pulling some people back

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Speaker 1: into the labor market very slowly here as we're in May.

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Speaker 1: And I'll tell you some of the best highest uh,

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Speaker 1: the best high frequency data at least that we have

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Speaker 1: at Morgan Stanley are these weekly alpha wise surveys of

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Speaker 1: roughly two thousand households where we could already see in

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Speaker 1: April that they were starting to look forward to a

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Speaker 1: better day, to opening financial expectations had stopped declining and

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Speaker 1: started rising uh, and so people are looking forward to

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Speaker 1: a better day. Just what is that better day gonna

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Speaker 1: look like? But we do know that the worst of

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Speaker 1: the data is past us, even though we're getting confirmation

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Speaker 1: of just how bad it was. Now, how will the

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Speaker 1: urgency of our politics change off of the stark numbers

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Speaker 1: at eight thirty? So I think it's certainly going to

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Speaker 1: make the argument for continued expanded fiscal support greater um,

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Speaker 1: even though some policymakers will assume that this is already

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Speaker 1: um at this this kind of bad data was already

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Speaker 1: accounted for in the fiscal support that's been past. But

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Speaker 1: you know, if we are going to look ahead, you know,

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Speaker 1: to the day when say the six hundred dollar weekly

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Speaker 1: supplemental checks start to uh fade, So those that were

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Speaker 1: the first to claim that would start happening in July.

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Speaker 1: In July, unemployment rate is still going to be extraordinarily high. Um.

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Speaker 1: There will be some states in July that that may

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Speaker 1: not have a fully fully reopen and so you can

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Speaker 1: imagine cries from households and how can you pull this

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Speaker 1: support out from under me when the unemployment rate is

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Speaker 1: still very high and I don't even have the opportunity

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Speaker 1: to look for a job, And so our public policy strategy.

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Speaker 1: Just don't think we're done. Which fiscal support that means

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Speaker 1: a roughly three trillion dollars in support we've passed already

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Speaker 1: will continue to rise, and it will have to rise

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Speaker 1: until we climb out of this hole. And then how

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Speaker 1: does that policy support adapt evolve as you go from

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Speaker 1: a closed economy to an open one or one that

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Speaker 1: is slowly reopening. How do you recalibrate the policy effort um,

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Speaker 1: So it's a good question, John, I think that um,

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Speaker 1: some of the support, especially of households, is going to

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Speaker 1: be have to be stepped down. Uh. And so you know,

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Speaker 1: can you design the six hundred dollar weekly supplemental check

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Speaker 1: to step down and stayed in the same way we

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Speaker 1: do unemployment benefits as the unemployment rate improved, because you

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Speaker 1: do have to step that down at some point over time.

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Speaker 1: How much will small businesses have to pay people in

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Speaker 1: order to attract them off of unemployment benefits? Because in

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Speaker 1: thirty four states, as we've estimated, people are getting as

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Speaker 1: much as not more than when they did work. Uh,

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Speaker 1: And so you're gonna have to up pay them in

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Speaker 1: order to get them back in. So that's something that

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Speaker 1: policymakers will have to take into account on the small

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Speaker 1: business side. You know, the demand for those loans will

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Speaker 1: wane over time. We've still got some room here. Um,

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Speaker 1: We've still got about a hundred billion or so left

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Speaker 1: in the coffers for those loans and demand has flowed.

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Speaker 1: And then the credit facilities from the said those haven't

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Speaker 1: even been in use yet because they've because they've not

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Speaker 1: been defined and really open yet. Um, but those have

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Speaker 1: unlimited capacity, and just those things improve, you would see

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Speaker 1: usage of those facilities naturally way and so a lot

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Speaker 1: of this is just natural wind downs. I think on

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Speaker 1: the unemployment benefits, there's going to have to be a

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Speaker 1: design to that six dollar weekly supplemental. We all want

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Speaker 1: to see things improve and improve quickly today when we

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Speaker 1: get these numbers, and I think we're pretty familiar with

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Speaker 1: the size. As tragic as it is, these are gonna

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Speaker 1: be huge job losses when this number comes out. What

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Speaker 1: we don't know a lot about right now, escope the

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Speaker 1: breadth of the job losses. What are you looking for

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Speaker 1: just in terms of breadth underneath the headline number. So

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Speaker 1: we've seen in the weekly jobs claims that started out

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Speaker 1: that most of the job loss um we're in the

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Speaker 1: the usual suspects, um, you know, services industries, in this case,

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Speaker 1: very tourism related industries as well, and it was very

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Speaker 1: concentrated restaurants, tourism, leisure, and hospitality. UM. But as a

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Speaker 1: job's claims progressed, we saw it start to broaden our

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Speaker 1: cross the labor market. So I would I would want

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Speaker 1: to look at the diffusion index to see how broad

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Speaker 1: spread the clients are, because I think we're going to

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Speaker 1: see it hit across just about every uh, every industry.

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Speaker 1: Those still the bulk of it concentrated in those uh

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Speaker 1: discretionary services related areas. Ellen. Initially, when the shock first started,

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Speaker 1: people were saying that the job losses we're going to

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Speaker 1: be temporary, that it's something different than in the past,

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Speaker 1: because this was a manufactured shutdown. As time has gone on,

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Speaker 1: people are revising that and saying it's going to take

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Speaker 1: a long time for these jobs to be brought back

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Speaker 1: into the economy. Where do you stand on that? How

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Speaker 1: many of these job losses have gone from temporary to permanent?

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Speaker 1: So I think by the so, um, good morning, Lisa,

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Speaker 1: it's uh, the you know, it's it's a bit upsetting

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Speaker 1: to talk about these kinds of jobs numbers, because there

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Speaker 1: are a lot of people that will have permanent job

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Speaker 1: loss from this, and you know, we've had more of

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Speaker 1: the thirty million jobless claims filed. Um, we think it's

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Speaker 1: reasonable to the expect that ten to twelve million of

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Speaker 1: them could come back by the end of the year. Um.

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Speaker 1: You know that's not enough. We'd like to get them

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Speaker 1: back to work more quickly. Now, how do we get

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Speaker 1: people back to work at all? Because states will be

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Speaker 1: reopening and there will be in need for some of

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Speaker 1: those jobs to come back. Um. A lot of those

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Speaker 1: have been furloughed and so they're more they're more connected

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Speaker 1: to the employer, and as those employers open back up,

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Speaker 1: you're gonna need labor quickly. That means the folks that

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Speaker 1: you've already trained that can easily walk in the door

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Speaker 1: and start working right away. But there will be an

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Speaker 1: element of either permanent job loss here. It just takes

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Speaker 1: people longer to get back into the labor first than

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Speaker 1: we previley previously thought. Some of that is because the

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Speaker 1: phase reopening will be very gradual. Um. But also our

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Speaker 1: biotechnology UH analysts are now pointing out that you know,

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Speaker 1: the the US, unlike other countries states have been reopening

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Speaker 1: when cases are still rising um and so unlike most

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Speaker 1: countries that have had strict lockdowns, the US has plateaued

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Speaker 1: at its peak and daily new cases without any sustained decline.

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Speaker 1: And so if that dynamic continues, then the reopening will

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Speaker 1: be even uh phased in an even weaker pace, if

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Speaker 1: you will, a weaker capacity than we then we had thoughts.

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Speaker 1: So these are all things are going to constantly adjust

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Speaker 1: these expectations around the labor market. I think in the

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Speaker 1: if I could said just say, I think in the

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Speaker 1: short term here we can get some really upward surprising

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Speaker 1: bounces in the data, just because you're going from very

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Speaker 1: little activity to some activity, and that can look explosive

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Speaker 1: on a month over month change, but it's really the

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Speaker 1: path after that it's going to be fairly shallow. Ellen,

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Speaker 1: just real quick here, which industries do you expect the

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Speaker 1: job losses to be most permanent? Well, I think that

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Speaker 1: that certainly, UM tourism, um energy, you know, the restaurants,

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Speaker 1: you know, those are areas where the jobs losses will

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Speaker 1: uh you may as well consider them um permanent. And

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Speaker 1: when you think about recovery across the nation state by state.

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Speaker 1: Look for states with more diverse industries to recover more quickly. Uh,

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Speaker 1: you need that. You can't be a state that's easily

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Speaker 1: concentrated it with jobs and tourism or jobs and energy. Um,

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Speaker 1: it's going to weigh on date GDP for longer. Now.

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Speaker 1: The history of that's watching new. Jersey Ellen sentner with

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Speaker 1: us with Morgan Stanley, thank you so much. Right now,

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Speaker 1: as we look at this job's report, try to synthesize

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Speaker 1: it into the markets where we see yields sustain ever

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Speaker 1: lower as we saw yesterday. Jeffrey Rosenberg joins. He is

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Speaker 1: with black Rock. Jeff, I want to take the mix

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Speaker 1: of this shocking report. I guess it's better than the

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Speaker 1: gloom that was expected, but I really don't want to

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Speaker 1: sell that to you right now, Jeff. We have to

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Speaker 1: bring it over to yields. Why did yields come in yesterday? Say?

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Speaker 1: And is it just the gaming of a crushingly difficult

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Speaker 1: labor market? Thanks Tom, Um. Yeah, I think it's hard

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Speaker 1: to turcret a lot of those moves, uh, you know,

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Speaker 1: under their normal I'm a reaction function because you have

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Speaker 1: so much of the fed and supply interacting as as

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Speaker 1: kind of the major drivers. You know, we're we're about

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Speaker 1: to embark on a historic expansion of debt issuance, UH,

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Speaker 1: and a historic expansion of the FED effectively taking down

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Speaker 1: that debt issuance to make sure that the financing rates

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Speaker 1: are are not disruptive. So you know, it's you know,

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Speaker 1: your question is, you know, what's the what's the rate

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Speaker 1: moves telling us UH, it's really hard to parcel out

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Speaker 1: this kind of very unique technicals from say, some of

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Speaker 1: the numbers that we that we normally would look at.

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Speaker 1: All right, let's let's talk more about this job to

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Speaker 1: report the worst of a port in American history. Digging

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Speaker 1: a little bit more into it, it does appear that,

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Speaker 1: as feared, the job losses were widespread the leisure and hospitality, retail, healthcare, professional, manufacturing,

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Speaker 1: construction information these millions of job losses, and then also

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Speaker 1: we saw the wage gains, pointing to a disproportionate amount

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Speaker 1: of job cuts at the lower end of the income spectrum.

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Speaker 1: I'm wondering, from your perspective, given this dynamic of the layoffs,

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Speaker 1: what does that say about the path of the recovery ahead. Well,

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Speaker 1: it confirms what we expected in terms of the distributional

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Speaker 1: impacts of the Corona virus crisis, and um, you know,

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Speaker 1: the big issue going to go forward basis is re

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Speaker 1: engagement versus reallocation. And I don't have all the data

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Speaker 1: in front of me yet. There's there's some things we

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Speaker 1: can tease out from this report that will that will

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Speaker 1: help to uh answer that. But but that's really going

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Speaker 1: to inform the path of the recovery because if you

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Speaker 1: can re engage your workers, you know, one of the

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Speaker 1: one of the things that's that's sort of anomalous about

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Speaker 1: this report is the unemployment rate. There's a note from

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Speaker 1: the BLS saying, you know, there's there's a misclassification going

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Speaker 1: on and if you if you classified yourself um as

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Speaker 1: employed but not at work because of the Corona crisis,

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Speaker 1: you know, that's understating the unemployment rate by about five

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Speaker 1: percentage points. That's kind of a technical issue, but that

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Speaker 1: that's a that's a kind of a good thing, right,

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Speaker 1: that's what we want to feel. We're we're still employed,

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Speaker 1: but we just can't work because of the coronavirus. And

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Speaker 1: it really gets to the heart of this notion of

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Speaker 1: you know, is this a temporary dislocation or is it

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Speaker 1: or is it permanent? So re engagement is about temporary

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Speaker 1: that's a faster recovery. Reallocation is you know, my job

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Speaker 1: is gone and it's not coming back. I have to

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Speaker 1: realy keep somewhere else in the economy. That's a much

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Speaker 1: more longer term process, filled with lots of frictions, and

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Speaker 1: and it slows the process down. Um, that's what we're

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Speaker 1: going to debate. And I think the impact on the

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Speaker 1: lower end is really going to be focused on did

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Speaker 1: those jobs come back? Jeff. The market seems to be

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Speaker 1: pricing in increasingly a bottoming out of the economic data,

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Speaker 1: people saying this was the worst that we're going to see,

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Speaker 1: probably in our lifetimes, possibly in history. But there's a

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Speaker 1: question about a second wave of layoffs. And I've heard

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Speaker 1: a growing number of economists and market participants talk about this,

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Speaker 1: this idea that the longer that you remove a big

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Speaker 1: cohort of of the labor market from their jobs, they

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Speaker 1: don't have the discretionary spending and that will eventually bleed

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Speaker 1: into the higher income jobs, which is starting already. Are

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Speaker 1: you seeing any signs of that, Well, I think it's

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Speaker 1: I think it's early to say that we're seeing signs

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Speaker 1: of that, But I think the sentiment is correct that

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Speaker 1: there is there. There is kind of the initial shock,

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Speaker 1: there's an initial recovery, and then there's the what are

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Speaker 1: the longer term implications. That part of the thing, of course,

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Speaker 1: that's challenging the longer term implications is we don't know

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Speaker 1: what the path of the virus itself look like. But

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Speaker 1: even beyond the path of the virus itself, there's the

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Speaker 1: question of, well, what is the more kind of permanent

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Speaker 1: reaction of the economic structure to the crisis. What is

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Speaker 1: the reaction to consumption, what is the reaction to savings rates,

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Speaker 1: what is the reaction to behaviors. So at the macro level,

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Speaker 1: a very kind of puberly simplistic perspective is, you know,

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Speaker 1: there's a higher savings rate, there's there's more precautionary savings,

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Speaker 1: there's less consumption, and that just overall changes kind of

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Speaker 1: aggregate demand, aggregate activity. But beyond that, there is a

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Speaker 1: much more distributional impact as to how does expect various sectors.

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Speaker 1: Let me ask some money question, Jeff, I'm sure you're

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Speaker 1: gonna get it today, You're gonna get it into the week,

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Speaker 1: and certainly when you roll out your reports from Monday.

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Speaker 1: Can we get the debt genie back in the bottle?

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Speaker 1: I mean, I get the rationalization of all this debt

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Speaker 1: build up given THEE it's a virus, it's a pandemic. Great,

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Speaker 1: are you optimistic we can you get the debt genie

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Speaker 1: back in the bottle? No, I I think that. I

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Speaker 1: don't think that's actually a debate right now. I mean

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Speaker 1: there's a little bit of a pushback and there's a question. Now.

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Speaker 1: You saw some comments from from from the House and

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Speaker 1: some of the congressional leaders about the next wave, and

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Speaker 1: there's a bit of a debate about that because there

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Speaker 1: is some concerns about the debt, but there's the there's

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Speaker 1: the direct fiscal policy, and then there's the expansion of

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Speaker 1: the FED support. Um we we are really kind of

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Speaker 1: put as secondary the longer term concerns about indebtedness. And

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Speaker 1: this isn't just in the US, this is this is globally.

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Speaker 1: So I don't think we're putting the debt genie back

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Speaker 1: in the anytime soon. I think we're going to be

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Speaker 1: dealing with very high levels of indebtedness and a different

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Speaker 1: structure of monetary policy to help to finance those levels

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Speaker 1: of indebtedness. It's it's almost like and I think the

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Speaker 1: analogy is apt that that we're at war against a virus,

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Speaker 1: and both debt policy and monetary policy are are at

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Speaker 1: wartime settings where you don't really worry about how large

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Speaker 1: the debt to GDP is getting, will deal with it

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Speaker 1: after the war. So I think it's secondary at this point.

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Speaker 1: We're speaking with that. Jeff Rosenberg, black Rock portfolio manager

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Speaker 1: of the Systematic Multi Strategy Fund, a long time leader

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Speaker 1: in thought and in investment at black Rock and Bank

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Speaker 1: of America. Jeff, I'd love to get your perspective about

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Speaker 1: the response to this lack of income by corporations. We

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Speaker 1: have seen an increasing number of companies try to borrow

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Speaker 1: money at increasingly high yields just because investors are increasingly

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Speaker 1: unwilling to lend to them. We're seeing that with the

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Speaker 1: likes of some of the troubled industries, in particular United

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Speaker 1: Airlines struggling to raise money. How much does this increase

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Speaker 1: the pain and the length of time that it takes

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Speaker 1: to climb out of this With the idea that these

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Speaker 1: difficult times are being met with additional leverage at high

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Speaker 1: rates for companies, where their business models may not return

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Speaker 1: in the same kind of way. So I want to

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Speaker 1: I want to challenge a little bit of the premise

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Speaker 1: of the question that, um, there's there's there's a big

430
00:24:29,920 --> 00:24:33,160
Speaker 1: distributional impact here where if you if you focus on

431
00:24:33,240 --> 00:24:37,680
Speaker 1: some of the very challenge sectors, yes they are facing

432
00:24:38,320 --> 00:24:42,399
Speaker 1: much higher rates of financing, but you are also seeing

433
00:24:42,840 --> 00:24:46,240
Speaker 1: eden sectors that are in the heart of uh COVID

434
00:24:46,280 --> 00:24:50,960
Speaker 1: crisis concerns getting access to liquidity and getting access to refinancing.

435
00:24:50,960 --> 00:24:53,880
Speaker 1: And so in some sense, that's the good news, that's

436
00:24:53,960 --> 00:24:56,719
Speaker 1: the glass half glass half full. That the that the

437
00:24:56,800 --> 00:25:03,560
Speaker 1: federal reserve liquidity interventions are working and investors are lending. Yes,

438
00:25:03,600 --> 00:25:07,000
Speaker 1: in some cases at higher rates UH and certainly at

439
00:25:07,040 --> 00:25:11,760
Speaker 1: higher spreads, but overall the access to liquidity for the

440
00:25:12,000 --> 00:25:16,480
Speaker 1: large company segment has been pretty robust and and and

441
00:25:16,960 --> 00:25:22,320
Speaker 1: the liquidity sources of unnecessary default have been forestalled, and

442
00:25:22,359 --> 00:25:25,000
Speaker 1: that's that's that's a good news. Now there's a longer

443
00:25:25,119 --> 00:25:28,800
Speaker 1: term consideration here, which is how much leverage is on

444
00:25:28,880 --> 00:25:32,120
Speaker 1: the balance sheet, how much is the liquidity bridge bridging

445
00:25:32,200 --> 00:25:35,040
Speaker 1: you to a sustainable level. And you're seeing that in

446
00:25:35,040 --> 00:25:38,280
Speaker 1: the most distress vectors like retail um where you're seeing

447
00:25:38,280 --> 00:25:42,880
Speaker 1: the bankruptcies where basically it's very clear you can't use

448
00:25:43,040 --> 00:25:45,919
Speaker 1: debt and increases in leverage to bridge you to a

449
00:25:46,000 --> 00:25:49,960
Speaker 1: recovery because there isn't recovery. And that's the shakeout that

450
00:25:50,000 --> 00:25:53,439
Speaker 1: we're going to see industry industry, company by company, and

451
00:25:53,480 --> 00:25:56,240
Speaker 1: the smallest, most over levered balance sheets will be the

452
00:25:56,280 --> 00:25:59,800
Speaker 1: most vulnerable, and default rates are absolutely going to rise.

453
00:26:00,040 --> 00:26:05,359
Speaker 1: But the liquidity interventions here to prevent unnecessary restructuring is

454
00:26:05,440 --> 00:26:09,199
Speaker 1: unnecessary defaults purely because of the lack of access to

455
00:26:09,240 --> 00:26:12,359
Speaker 1: liquidity and financial markets. I think it's been a good

456
00:26:12,440 --> 00:26:15,199
Speaker 1: part of the story. It's part of the financial market

457
00:26:15,400 --> 00:26:20,040
Speaker 1: healing that you're seeing in capital markets. Just real quick here, Jeff,

458
00:26:20,040 --> 00:26:22,600
Speaker 1: I'm wondering going forward, do you buy this rally that

459
00:26:22,600 --> 00:26:27,520
Speaker 1: we're seeing in equities? Uh? Well, you know, do we

460
00:26:27,640 --> 00:26:31,080
Speaker 1: do we buy the rally that we see in equities?

461
00:26:31,119 --> 00:26:36,000
Speaker 1: You know, I think that what you saw in equities

462
00:26:36,160 --> 00:26:40,119
Speaker 1: was forward looking, and what you're seeing in equities again

463
00:26:40,400 --> 00:26:45,560
Speaker 1: is forward looking. However, the markets don't have a great ability.

464
00:26:45,640 --> 00:26:49,879
Speaker 1: We have to recognize this in predicting where is the

465
00:26:50,000 --> 00:26:53,439
Speaker 1: virus path going to go? So right now, do I

466
00:26:53,480 --> 00:26:56,640
Speaker 1: buy it. That's the market condus is basically saying it's

467
00:26:56,760 --> 00:26:59,679
Speaker 1: be shaped, or it's it's check mark shaped, or you know,

468
00:26:59,760 --> 00:27:02,080
Speaker 1: got all all these different shapes that that there isn't

469
00:27:02,880 --> 00:27:08,200
Speaker 1: a more destructive, disruptive second wave, And from that vantage point,

470
00:27:08,200 --> 00:27:11,679
Speaker 1: it reflects what we know. Maybe it reflects optimism, but

471
00:27:11,760 --> 00:27:14,840
Speaker 1: we have to be clear here that we don't really

472
00:27:14,960 --> 00:27:19,240
Speaker 1: know where we're going. And certainly if there is a

473
00:27:19,320 --> 00:27:23,280
Speaker 1: second wave that leads to more shutdowns, leads to more disruption,

474
00:27:24,040 --> 00:27:27,080
Speaker 1: the equity market is going to reflect that. But from

475
00:27:27,119 --> 00:27:32,240
Speaker 1: the vantage point of we are putting historic levels of

476
00:27:32,320 --> 00:27:37,400
Speaker 1: fiscal policy and monetaries policy to mitigate the impact. Yes,

477
00:27:37,440 --> 00:27:40,760
Speaker 1: I think the equity market pricing that incorrectly. Jeff, thank

478
00:27:40,760 --> 00:27:43,639
Speaker 1: you so much for the brief. Jeffrey Rosenberg with black

479
00:27:43,720 --> 00:27:50,320
Speaker 1: Rock for our Listenshan Blomberg Radio, us O Blomberg TV.

480
00:27:50,440 --> 00:27:52,720
Speaker 1: I'm pleased to say with joint now outside the White

481
00:27:52,720 --> 00:27:56,119
Speaker 1: House by Larry Cartlo, National Economic Council Director, on a

482
00:27:56,160 --> 00:27:59,440
Speaker 1: difficult day with one of the worst payrolls report we've

483
00:27:59,440 --> 00:28:02,200
Speaker 1: ever say, Arry, fantastic to catch up with you. As

484
00:28:02,240 --> 00:28:04,159
Speaker 1: our audience knows, Larry, over the years, you and I

485
00:28:04,240 --> 00:28:07,199
Speaker 1: have these very energetic back and forth, a little bit

486
00:28:07,240 --> 00:28:09,600
Speaker 1: of rough and tumble and a few jokes along the way,

487
00:28:09,600 --> 00:28:10,880
Speaker 1: and I think we have to get the tone right

488
00:28:10,880 --> 00:28:13,479
Speaker 1: this morning. This is a really tough time, and it's

489
00:28:13,480 --> 00:28:15,399
Speaker 1: a tough time as a policymaker as well. There is

490
00:28:15,400 --> 00:28:18,520
Speaker 1: a cost to keeping this economy lockdown as a cost

491
00:28:18,640 --> 00:28:21,080
Speaker 1: to opening it to and Larry, I'd really love your

492
00:28:21,119 --> 00:28:25,000
Speaker 1: perspective in this moment, how difficult it is to calibrate

493
00:28:25,040 --> 00:28:29,600
Speaker 1: the right policy response in a moment like this. Well,

494
00:28:29,640 --> 00:28:31,400
Speaker 1: I just want to say and that you know your

495
00:28:31,400 --> 00:28:34,280
Speaker 1: earlier point. Look, this is a tough time, but it's

496
00:28:34,320 --> 00:28:37,040
Speaker 1: a tough time for everybody in America. There's no question

497
00:28:37,080 --> 00:28:40,239
Speaker 1: about that. Wherever you work or don't work, it's a

498
00:28:40,280 --> 00:28:44,800
Speaker 1: tough time. This job's report today is full of heartbreak,

499
00:28:45,040 --> 00:28:49,480
Speaker 1: it's full of hardship. I believe that it will prove

500
00:28:49,560 --> 00:28:53,760
Speaker 1: to be temporary, because I think the pandemic contraction or

501
00:28:53,760 --> 00:28:57,640
Speaker 1: the contraction in the economy caused by the pandemic COVID

502
00:28:57,720 --> 00:29:01,520
Speaker 1: nineteen were proved to be temporary, and that we are

503
00:29:01,520 --> 00:29:04,160
Speaker 1: actually coming down the home stretch in terms of reopening

504
00:29:04,160 --> 00:29:07,680
Speaker 1: the economy. But it's a rough number there's no question

505
00:29:07,720 --> 00:29:12,160
Speaker 1: about that. Uh. Some of this looks to be temporary layoffs,

506
00:29:12,200 --> 00:29:15,760
Speaker 1: maybe about three quarters of it, but that still doesn't

507
00:29:15,760 --> 00:29:18,760
Speaker 1: necessarily making any better. People expect to return to jobs.

508
00:29:18,840 --> 00:29:21,600
Speaker 1: Let's hope that they can return to jobs. Look, we

509
00:29:21,720 --> 00:29:26,480
Speaker 1: eat have done President Trump's leadership, Vice President Pence. UH,

510
00:29:26,600 --> 00:29:34,320
Speaker 1: we put together enormous, enormous rescue package. UH, cash liquidity,

511
00:29:34,320 --> 00:29:39,200
Speaker 1: Federal reserve, payroll protection. It's a remarkable thing. I actually

512
00:29:39,200 --> 00:29:43,080
Speaker 1: actually adding it up, it's about nine trillion dollars now,

513
00:29:43,720 --> 00:29:47,080
Speaker 1: including the Federal Reserve and what we've done on fiscal

514
00:29:47,120 --> 00:29:49,840
Speaker 1: policy and the budget. Some of this may have worked,

515
00:29:49,840 --> 00:29:53,120
Speaker 1: We may have cushioned the decline. That may be part

516
00:29:53,160 --> 00:29:57,040
Speaker 1: of this story inside these very very difficult numbers. So

517
00:29:57,400 --> 00:30:00,680
Speaker 1: we will see how this works, and we will see

518
00:30:00,680 --> 00:30:03,960
Speaker 1: whether we have to go back. Let's talk about presidential

519
00:30:04,040 --> 00:30:06,920
Speaker 1: policies in a few moments, because I do believe the

520
00:30:07,000 --> 00:30:09,520
Speaker 1: second half of this year, according to the CBO and

521
00:30:09,560 --> 00:30:13,400
Speaker 1: private forecasters, the second half is going to have very

522
00:30:13,440 --> 00:30:17,200
Speaker 1: significant bounce back in economic growth and that will head

523
00:30:17,240 --> 00:30:23,520
Speaker 1: into which could be a fantastic economic recovery. Here. We

524
00:30:23,560 --> 00:30:25,320
Speaker 1: all hope for that. Larry and I know there's going

525
00:30:25,360 --> 00:30:27,600
Speaker 1: to be an extra push in Washington to try and

526
00:30:27,680 --> 00:30:31,080
Speaker 1: see that vision come to life and materialize. There's been

527
00:30:31,120 --> 00:30:34,240
Speaker 1: a huge collective effort, Dan in Washington, not just the administration.

528
00:30:34,240 --> 00:30:36,760
Speaker 1: You've worked really well with Democrats as well. The Fed

529
00:30:36,800 --> 00:30:39,320
Speaker 1: has done its part. I'm trying to understand how the

530
00:30:39,360 --> 00:30:42,880
Speaker 1: policy effort evolves. Quite clearly, when we're shut down, you

531
00:30:42,920 --> 00:30:45,920
Speaker 1: don't stimulate the economy. You offer aid. When we reopen,

532
00:30:46,360 --> 00:30:48,560
Speaker 1: that's the time to stimulate. How do you see the

533
00:30:48,560 --> 00:30:54,480
Speaker 1: policy effort changing in the months to come, adapting Larry Um, Well,

534
00:30:54,680 --> 00:30:56,880
Speaker 1: you know I'm not here in negotiade, but I will

535
00:30:56,880 --> 00:31:01,240
Speaker 1: simply say this President try has had a set of

536
00:31:01,360 --> 00:31:05,000
Speaker 1: policies that worked very well before this pandemic the first

537
00:31:05,000 --> 00:31:08,440
Speaker 1: three years plus, and indeed, in January and February the

538
00:31:08,440 --> 00:31:12,520
Speaker 1: economy was growing at three or better. Um. I think

539
00:31:12,560 --> 00:31:16,000
Speaker 1: that he wants to extend a lot of the ideas.

540
00:31:16,600 --> 00:31:19,520
Speaker 1: He wants us to be a free enterprise economy. He

541
00:31:19,600 --> 00:31:22,760
Speaker 1: wants to reward people for their success and their initiative

542
00:31:22,840 --> 00:31:25,680
Speaker 1: in their efforts. As you know, he has talked about

543
00:31:25,720 --> 00:31:30,160
Speaker 1: from time to time talked or tweeted about payroll tax holidays.

544
00:31:30,200 --> 00:31:35,280
Speaker 1: He's talked about capital gains taxes. He's talked about tourism, restaurants,

545
00:31:35,600 --> 00:31:40,600
Speaker 1: traveling deductions that might work. We've talked about capitaling, business expensing.

546
00:31:40,800 --> 00:31:44,560
Speaker 1: For example, there's gonna be a lot of COVID related adjustments,

547
00:31:44,720 --> 00:31:47,520
Speaker 1: whether you're a large factory in Detroit or whether you're

548
00:31:47,520 --> 00:31:50,880
Speaker 1: a small restaurant in a small town in the heartland.

549
00:31:51,760 --> 00:31:54,440
Speaker 1: All of that. If you ask me, safety first here,

550
00:31:54,440 --> 00:31:57,400
Speaker 1: as we reopen all that, every nickel of that should

551
00:31:57,440 --> 00:32:02,000
Speaker 1: be completely expensed deductions and so people won't have to

552
00:32:02,000 --> 00:32:04,840
Speaker 1: pay extra for that and open the door. We've talked

553
00:32:04,840 --> 00:32:08,080
Speaker 1: about fair trade agreements. We will continue. We talked about

554
00:32:08,120 --> 00:32:10,840
Speaker 1: on shoring. We will continue that. I think a lot

555
00:32:10,880 --> 00:32:13,400
Speaker 1: of people have learned we probably will way too far

556
00:32:13,840 --> 00:32:17,520
Speaker 1: in our off shoring of factories and uh, either manufacturing

557
00:32:17,560 --> 00:32:21,120
Speaker 1: or pharmaceuticals. President Trump has talked about making it much

558
00:32:21,120 --> 00:32:23,840
Speaker 1: easier to come back home to America. So that's a

559
00:32:23,960 --> 00:32:28,360
Speaker 1: smattering of the policy ideas that he has put out there. Um,

560
00:32:28,480 --> 00:32:31,240
Speaker 1: we haven't begun to negotiate with the Hill. That will

561
00:32:31,320 --> 00:32:33,959
Speaker 1: come in due course. We've had a bit of a pause.

562
00:32:34,400 --> 00:32:36,440
Speaker 1: We're gonna take a look at how the situation is.

563
00:32:36,520 --> 00:32:39,520
Speaker 1: May is a reopening month, Jonathan. It will spill over

564
00:32:39,560 --> 00:32:43,720
Speaker 1: into June. In phases, we've seen the federal guidelines have

565
00:32:43,840 --> 00:32:47,080
Speaker 1: come down. Now the states doing the same. Uh. We

566
00:32:47,160 --> 00:32:50,040
Speaker 1: had Governor Abbot of Texas yesterday. I've been in a

567
00:32:50,080 --> 00:32:52,600
Speaker 1: lot of meetings with the President and the Governor's all

568
00:32:52,680 --> 00:32:55,800
Speaker 1: that's moving ahead in phases. That's a big plus for

569
00:32:55,840 --> 00:32:59,920
Speaker 1: the economy. We have to open safely and then get

570
00:33:00,040 --> 00:33:02,920
Speaker 1: people back to work, and I think the temporary layoffs

571
00:33:02,920 --> 00:33:05,280
Speaker 1: show that they will go back to work. And then

572
00:33:05,320 --> 00:33:08,440
Speaker 1: we have to move ahead and make sure that the

573
00:33:08,480 --> 00:33:12,120
Speaker 1: incentive structure of this economy remains intact so we can

574
00:33:12,200 --> 00:33:15,000
Speaker 1: have the blue collar boom that we had, so we

575
00:33:15,040 --> 00:33:18,920
Speaker 1: can have the entrepreneurship, so we can have the fair

576
00:33:18,960 --> 00:33:23,280
Speaker 1: trade and the energy independence. These are Trumpian themes, and

577
00:33:23,320 --> 00:33:25,760
Speaker 1: I think that's where the President is going to move.

578
00:33:27,960 --> 00:33:29,640
Speaker 1: I know you want to talk about trade, Larry. I'm

579
00:33:29,640 --> 00:33:31,520
Speaker 1: gonna get to that in just a second. When it

580
00:33:31,520 --> 00:33:34,320
Speaker 1: comes to reopening, I want to understand, and I know

581
00:33:34,320 --> 00:33:37,760
Speaker 1: you're an optimistic man, whether you've done any contingency planning

582
00:33:37,960 --> 00:33:41,120
Speaker 1: for a second wave and another shutdown. Are you doing

583
00:33:41,160 --> 00:33:45,440
Speaker 1: that contingency planning now? Yes? We are. As a matter

584
00:33:45,440 --> 00:33:48,080
Speaker 1: of fact, it's a subject that comes up. I'm not

585
00:33:48,120 --> 00:33:51,840
Speaker 1: going to go into details outside my lane. I have

586
00:33:51,960 --> 00:33:55,880
Speaker 1: talked to Ambassador Burke's on that Dr Faucci, and Vice

587
00:33:55,920 --> 00:34:00,560
Speaker 1: President Trump's a terrific team that's he's assembled. I will

588
00:34:00,600 --> 00:34:02,880
Speaker 1: tell you this without naming names. But one of the

589
00:34:02,920 --> 00:34:08,280
Speaker 1: senior people on that group, I asked that person, what happens.

590
00:34:08,480 --> 00:34:11,799
Speaker 1: You know right now the virus numbers are flattening out.

591
00:34:12,120 --> 00:34:14,799
Speaker 1: That is a really good thing. That means we can

592
00:34:14,880 --> 00:34:17,840
Speaker 1: reopen this community. So I asked this person what happens

593
00:34:17,840 --> 00:34:21,000
Speaker 1: if you get a jump back up in the virus numbers,

594
00:34:21,360 --> 00:34:25,520
Speaker 1: And the response was simply, look, we won't have to

595
00:34:25,560 --> 00:34:29,600
Speaker 1: re shut down because, first of all, we know more,

596
00:34:29,840 --> 00:34:33,120
Speaker 1: we have more experience, and second of all, we are

597
00:34:33,200 --> 00:34:36,320
Speaker 1: much better equipped with the right tools. I mean, President

598
00:34:36,320 --> 00:34:41,600
Speaker 1: Trump deserves some credit for putting together a massive infrastructure,

599
00:34:42,200 --> 00:34:45,960
Speaker 1: whether it's testing or face masks or gowns or whatever,

600
00:34:46,040 --> 00:34:48,920
Speaker 1: running the whole gamut. So I don't want to dwell

601
00:34:48,960 --> 00:34:51,600
Speaker 1: on the worst case because I am an optimist. I

602
00:34:51,640 --> 00:34:55,120
Speaker 1: think that the governors and the mayors are very well

603
00:34:55,160 --> 00:34:59,759
Speaker 1: aware of the safety needs as we reopened. But when

604
00:34:59,800 --> 00:35:02,920
Speaker 1: we do reopen, that is going to give this economy

605
00:35:02,960 --> 00:35:05,880
Speaker 1: a tremendous boost, and we will see that in the

606
00:35:05,920 --> 00:35:11,080
Speaker 1: summer at autumn quarters and spilling into one could be

607
00:35:11,120 --> 00:35:17,040
Speaker 1: a fabulous year if we keep the right policies in place, Larry,

608
00:35:17,040 --> 00:35:19,360
Speaker 1: I hope that's the case truly too. I know you

609
00:35:19,360 --> 00:35:20,719
Speaker 1: want to talk about trade, and we've only got a

610
00:35:20,719 --> 00:35:22,480
Speaker 1: few minutes left, so let me give the opportunity to

611
00:35:22,480 --> 00:35:25,680
Speaker 1: do so. When it comes to the administration's trade stance,

612
00:35:26,040 --> 00:35:29,640
Speaker 1: you just mentioned supply chain repatriation, will you actively be

613
00:35:29,719 --> 00:35:36,359
Speaker 1: looking to provide a tow companies that repatriate their supply chains. Yes,

614
00:35:36,440 --> 00:35:40,239
Speaker 1: I think we will do it by creating incentives. It's

615
00:35:40,280 --> 00:35:43,640
Speaker 1: not a matter of punishing, it's a matter of incentivizing.

616
00:35:43,640 --> 00:35:46,000
Speaker 1: I don't want to go into details, but on shoring

617
00:35:46,120 --> 00:35:50,040
Speaker 1: is a very important theme come back to America. I

618
00:35:50,080 --> 00:35:55,760
Speaker 1: think we've learned too much emphasis on supply chains overseas.

619
00:35:56,360 --> 00:36:00,120
Speaker 1: Too much emphasis is not safe and not reliable and

620
00:36:00,320 --> 00:36:03,520
Speaker 1: not good business practices. Again, I do want to unveil

621
00:36:03,800 --> 00:36:06,400
Speaker 1: or get ahead of our own policy process, but the

622
00:36:06,400 --> 00:36:09,120
Speaker 1: President is very keen on on shoring. There are many

623
00:36:09,160 --> 00:36:14,440
Speaker 1: ways to do that. Are you rethinking again your relationship

624
00:36:14,480 --> 00:36:19,239
Speaker 1: with the Chinese Communist Party, Well, I don't think we

625
00:36:19,320 --> 00:36:21,840
Speaker 1: ever stopped thinking about it, but all I'll say is

626
00:36:21,880 --> 00:36:25,040
Speaker 1: this UM. First of all, as you know from reports, today,

627
00:36:26,120 --> 00:36:31,840
Speaker 1: Basslar lighth Hazer Secretary Manution met with Vice Premier Leo

628
00:36:31,960 --> 00:36:36,480
Speaker 1: Hay of China. It was a very constructive meeting. Uh.

629
00:36:36,520 --> 00:36:40,400
Speaker 1: The print out that communicate, if you will, was very positive.

630
00:36:41,080 --> 00:36:45,000
Speaker 1: China continues to tell us that they have every intention

631
00:36:45,560 --> 00:36:50,239
Speaker 1: of meeting the requirements and the implementations of the deal

632
00:36:50,320 --> 00:36:53,760
Speaker 1: that was signed formally last winner. Seems like a thousand

633
00:36:53,840 --> 00:36:55,640
Speaker 1: years ago, but it was actually only a couple of

634
00:36:55,640 --> 00:36:58,799
Speaker 1: months ago. They're a little bit behind on commodity purchases

635
00:36:59,120 --> 00:37:01,080
Speaker 1: that may be a funk, and of course of market

636
00:37:01,120 --> 00:37:04,680
Speaker 1: and economic conditions, but Liu He said they are pledged

637
00:37:04,719 --> 00:37:10,040
Speaker 1: to continue, including I might add remedies for UM intellectual

638
00:37:10,080 --> 00:37:13,920
Speaker 1: property theft and related measures. So those talks seemed to

639
00:37:13,960 --> 00:37:18,160
Speaker 1: go well and we're constructive. However, the Chinese relationship is

640
00:37:18,280 --> 00:37:22,560
Speaker 1: very complex, and we know that the virus originated in China.

641
00:37:23,120 --> 00:37:27,000
Speaker 1: We are investigating. We the US government, the intelligence agencies,

642
00:37:27,400 --> 00:37:33,520
Speaker 1: National Security Council, State Department, et cetera, are carefully investigating

643
00:37:34,239 --> 00:37:37,400
Speaker 1: what happened and what didn't happen, what may have happened,

644
00:37:37,400 --> 00:37:42,279
Speaker 1: and what actually happened. China has been not transparent. A

645
00:37:42,360 --> 00:37:45,520
Speaker 1: lot of people are concerned. I saw this with the

646
00:37:45,560 --> 00:37:48,879
Speaker 1: President at the G seven video teleconference meeting a couple

647
00:37:48,880 --> 00:37:51,000
Speaker 1: of weeks ago, when the other world leaders felt the

648
00:37:51,040 --> 00:37:55,359
Speaker 1: same way. They will be held accountable, Jonathan, they will

649
00:37:55,440 --> 00:38:00,839
Speaker 1: be held accountable. Uh, when the final studies are in, well,

650
00:38:00,880 --> 00:38:04,799
Speaker 1: I can say this morning is the trade relationship and

651
00:38:04,840 --> 00:38:06,799
Speaker 1: it's going to be a pretty good deal. A lot

652
00:38:06,800 --> 00:38:08,640
Speaker 1: of exports going to come out of that. When the

653
00:38:08,680 --> 00:38:13,040
Speaker 1: economies recover, the trade relationship appears to be on track.

654
00:38:15,120 --> 00:38:16,760
Speaker 1: It sounds a lot like a lot of talk, Larry,

655
00:38:16,760 --> 00:38:18,719
Speaker 1: I've heard a lot of talk over the last week

656
00:38:18,840 --> 00:38:23,000
Speaker 1: about this about holding China accountable. Can we talk about accountability?

657
00:38:23,080 --> 00:38:29,880
Speaker 1: How does the United States hold China accountable by doing what? Jonathan?

658
00:38:29,920 --> 00:38:33,640
Speaker 1: I don't want to disappoint you or create otherwise emotional upset,

659
00:38:33,760 --> 00:38:36,719
Speaker 1: But I'm not going into details about that. This is

660
00:38:37,040 --> 00:38:39,879
Speaker 1: national security stuff and we'll just have to leave it

661
00:38:40,280 --> 00:38:42,239
Speaker 1: at that. I understand that, I understand that it's a

662
00:38:42,280 --> 00:38:44,960
Speaker 1: really delicate topic, but to round things out quite clearly

663
00:38:45,480 --> 00:38:48,319
Speaker 1: the United States and other countries for that matter as well,

664
00:38:48,360 --> 00:38:51,680
Speaker 1: do not trust the Chinese Communist Party. So I'm not

665
00:38:51,719 --> 00:38:53,840
Speaker 1: sure how much weight we should put on a statement

666
00:38:53,920 --> 00:38:56,840
Speaker 1: released by U s TR overnight about working towards this

667
00:38:56,880 --> 00:39:00,359
Speaker 1: Phase one agreement, because quite clearly the United States looking

668
00:39:00,400 --> 00:39:04,000
Speaker 1: to hold China accountable. How can I reconcile those two things?

669
00:39:04,320 --> 00:39:07,439
Speaker 1: Two countries working on a Phase one trade deal, two

670
00:39:07,440 --> 00:39:09,719
Speaker 1: countries that don't trust each other, and one country that

671
00:39:09,760 --> 00:39:16,719
Speaker 1: wants to punish the other. UH, without accepting your premises

672
00:39:16,760 --> 00:39:19,359
Speaker 1: there you put out quite a lot. I don't want

673
00:39:19,360 --> 00:39:22,799
Speaker 1: to go there. I would just say the relationship with

674
00:39:22,880 --> 00:39:27,440
Speaker 1: China is always a complex relationship. It covers trade, it

675
00:39:27,520 --> 00:39:32,799
Speaker 1: covers other economic matters. It covers national security matters, it

676
00:39:32,920 --> 00:39:37,560
Speaker 1: covers espionage matters, it covers cyber security matters or the

677
00:39:37,640 --> 00:39:41,279
Speaker 1: lack thereof. It covers on shoring and off shoring matters.

678
00:39:41,320 --> 00:39:46,680
Speaker 1: It's always a very complex, UH relationship. UM problems in

679
00:39:46,760 --> 00:39:51,240
Speaker 1: one end doesn't necessarily mean everything stops, but President Trump

680
00:39:51,239 --> 00:39:55,640
Speaker 1: has said any number of times they will be held accountable.

681
00:39:55,680 --> 00:40:01,719
Speaker 1: We continue to investigate the problems regarding the coronavirus of

682
00:40:01,840 --> 00:40:05,560
Speaker 1: virus and the lack of transparency. We're trying to get

683
00:40:05,600 --> 00:40:09,040
Speaker 1: to the bottom of what actually happened in China. Those

684
00:40:09,120 --> 00:40:13,040
Speaker 1: efforts are ongoing, and I believe the President in the

685
00:40:13,080 --> 00:40:16,439
Speaker 1: Oval Office yesterday said the next couple of weeks will

686
00:40:16,480 --> 00:40:21,080
Speaker 1: probably have a lot more information to share, and Larry,

687
00:40:21,080 --> 00:40:22,480
Speaker 1: I look forward to get in the answers and more

688
00:40:22,480 --> 00:40:24,520
Speaker 1: clarity from you. Larry. Can I just say thank you

689
00:40:24,560 --> 00:40:26,759
Speaker 1: for the compassion this morning for difficult time for a

690
00:40:26,800 --> 00:40:29,680
Speaker 1: lot of people without a job. Larry Carlow, I appreciate

691
00:40:29,680 --> 00:40:31,440
Speaker 1: your time and I hope you and you also doing well.

692
00:40:31,600 --> 00:40:34,719
Speaker 1: Larry Cardlo that the National Economic Council director from the

693
00:40:34,719 --> 00:40:41,400
Speaker 1: White House. There's an historic day of newsful, no question

694
00:40:41,440 --> 00:40:45,279
Speaker 1: about that. And of course the backdrop is a pandemic

695
00:40:45,320 --> 00:40:48,840
Speaker 1: with us now Andrew Pekosh with John Tompkins University and

696
00:40:48,880 --> 00:40:51,319
Speaker 1: the Bloomberg School of Public Health. I should point out

697
00:40:51,360 --> 00:40:55,360
Speaker 1: that the philanthropist of the School of Public Health is

698
00:40:55,400 --> 00:40:58,600
Speaker 1: Michael Bloomberg, the founder of Bloomberg LP, and of course

699
00:40:58,600 --> 00:41:02,000
Speaker 1: it is television and radio ration as well. He has

700
00:41:02,120 --> 00:41:06,680
Speaker 1: donated to his Johns Hopkins University and I pack Gosh,

701
00:41:06,840 --> 00:41:11,520
Speaker 1: I want to step back. I remember Crystal Clear the

702
00:41:11,600 --> 00:41:17,200
Speaker 1: path from Jonas Sack to Dr Sabin in about nineteen

703
00:41:17,360 --> 00:41:21,960
Speaker 1: sixty one sixty three, and those little pink drops that

704
00:41:22,040 --> 00:41:26,799
Speaker 1: were a polio vaccine. When we get a vaccine for

705
00:41:26,840 --> 00:41:30,359
Speaker 1: this horrific virus, is that what it's gonna be Like,

706
00:41:30,719 --> 00:41:36,600
Speaker 1: We're all gonna line up and get drops in our mouth. Well,

707
00:41:36,640 --> 00:41:38,680
Speaker 1: you know, it's really difficult to predict the future, but

708
00:41:38,719 --> 00:41:41,479
Speaker 1: I would imagine that, UM, we are going to get

709
00:41:42,120 --> 00:41:46,440
Speaker 1: a massive vaccination program going in place. The vaccines that

710
00:41:46,480 --> 00:41:49,879
Speaker 1: are currently in the lead in the pipeline are ones

711
00:41:49,920 --> 00:41:53,200
Speaker 1: that are gonna be given by injection UM and so

712
00:41:53,440 --> 00:41:55,319
Speaker 1: UM so, so I think it'll be a little bit

713
00:41:55,320 --> 00:41:58,040
Speaker 1: different from the polio pipeline. But I do think that

714
00:41:58,680 --> 00:42:02,080
Speaker 1: everything looks like UM vaccines are going to be the

715
00:42:02,120 --> 00:42:06,560
Speaker 1: game changer here UM and once those things get online, UH,

716
00:42:06,600 --> 00:42:11,480
Speaker 1: they'll be massive plans to initiate vaccination campaigns across the country.

717
00:42:11,520 --> 00:42:15,440
Speaker 1: In fact, from US the world. What is your best

718
00:42:15,480 --> 00:42:22,279
Speaker 1: practice to get to that miracle point? Well, you know,

719
00:42:23,200 --> 00:42:25,640
Speaker 1: things have been moving forward at light speed when it

720
00:42:25,640 --> 00:42:31,719
Speaker 1: comes to vaccine UH testing UM. Just this week, the UM,

721
00:42:32,320 --> 00:42:35,319
Speaker 1: uh FDA and the NIH gave approval to move into

722
00:42:35,360 --> 00:42:39,080
Speaker 1: the second phase of vaccine testing with a number of

723
00:42:39,120 --> 00:42:42,239
Speaker 1: the vaccine candidates. Um. The first phase was just the

724
00:42:42,239 --> 00:42:45,000
Speaker 1: safety testing. I haven't seen that data yet, but I

725
00:42:45,040 --> 00:42:47,200
Speaker 1: assume since they've been approved to go into the second

726
00:42:47,200 --> 00:42:51,120
Speaker 1: phase that the safety data has come up looking really good. UM,

727
00:42:51,120 --> 00:42:52,800
Speaker 1: And now the second phase is gonna be the critical

728
00:42:52,800 --> 00:42:55,319
Speaker 1: one where they really start to look at how those

729
00:42:55,400 --> 00:42:58,799
Speaker 1: vaccines are functioning. Are they making the right immune responses

730
00:42:59,239 --> 00:43:05,560
Speaker 1: that we predict would protect people from infection. Good morning

731
00:43:05,560 --> 00:43:07,120
Speaker 1: to you, Andrew. Let me ask you about the mobile

732
00:43:07,120 --> 00:43:09,919
Speaker 1: technologies that many countries are employing to try and get

733
00:43:10,000 --> 00:43:13,160
Speaker 1: us out of lockdown and to reopen economies here in

734
00:43:13,200 --> 00:43:15,440
Speaker 1: the UK. I'm talking to you from London, and by

735
00:43:15,440 --> 00:43:17,480
Speaker 1: the middle of this month there is a hope that

736
00:43:17,480 --> 00:43:20,160
Speaker 1: there will be wide use of an app that, if

737
00:43:20,160 --> 00:43:22,879
Speaker 1: it's taken up sufficiently, would would be able to help

738
00:43:22,880 --> 00:43:25,720
Speaker 1: in that in that endeavor. How excited is the medical

739
00:43:25,760 --> 00:43:30,239
Speaker 1: community about this as a way of fighting the virus. Well,

740
00:43:30,280 --> 00:43:31,799
Speaker 1: you know, the mobile apps are going to be a

741
00:43:31,800 --> 00:43:36,600
Speaker 1: way for us to really do incredibly effective contact tracing,

742
00:43:37,000 --> 00:43:40,400
Speaker 1: meaning once we find an infected individual, that's going to

743
00:43:40,480 --> 00:43:43,879
Speaker 1: be an objective, independent way to try to identify where

744
00:43:43,880 --> 00:43:46,640
Speaker 1: that person has been and who might have come in

745
00:43:46,719 --> 00:43:50,279
Speaker 1: contact with them, and for that recovery phase of this

746
00:43:50,840 --> 00:43:54,239
Speaker 1: h pandemic, that's going to be the critical way that

747
00:43:54,239 --> 00:43:57,080
Speaker 1: we're going to use to try to minimize the number

748
00:43:57,080 --> 00:44:00,359
Speaker 1: of cases. Of course, there are some implications in terms

749
00:44:00,400 --> 00:44:03,600
Speaker 1: of privacy, and so some people are feeling a little

750
00:44:03,640 --> 00:44:07,080
Speaker 1: bit um leary about this technology. But when it comes

751
00:44:07,120 --> 00:44:12,239
Speaker 1: to just straightforward being able to track individuals and and

752
00:44:12,440 --> 00:44:15,600
Speaker 1: therefore slow down the infection spread, it's going to be

753
00:44:15,640 --> 00:44:20,400
Speaker 1: an incredibly useful tool for that purpose. Well, and the

754
00:44:20,520 --> 00:44:23,680
Speaker 1: pecosh to you and all of you at Johns Hopkins University.

755
00:44:23,800 --> 00:44:27,160
Speaker 1: Thank you for your perspective each day. Dr Pekosh with

756
00:44:27,239 --> 00:44:30,200
Speaker 1: the Bloomberg School of Public Health at j H at you.

757
00:44:30,920 --> 00:44:35,160
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

758
00:44:35,200 --> 00:44:40,520
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

759
00:44:40,560 --> 00:44:44,800
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

760
00:44:44,840 --> 00:44:48,680
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

761
00:44:48,760 --> 00:44:49,040
Speaker 1: Radio