Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio. Well the risk trade, as you
Speaker 1: just heard from Charlie All thanks to the rapid increase
Speaker 1: of the coronavirus and cases specifically outside of China, questions
Speaker 1: continue to linger about how exactly the viruses spread. Infections
Speaker 1: are now emerging in people who have not traveled to
Speaker 1: China or come into contact with confirmed cases. So we
Speaker 1: want to have some clarity about where we are in
Speaker 1: the virus and what the outbreak and the continued outbreak
Speaker 1: of cases outside of China, what it all means. Let's
Speaker 1: bring back Dr Jennifer Nozzo, Senior Scholar at Johns Hopkins
Speaker 1: Center for Health Security, at the Bloomberg School of Public Health.
Speaker 1: Of course, the Bloomberg Public School of Health is UM
Speaker 1: supported by Michael R. Bloomberg, founder, Bloomberg ALP, and Bloomberg Philanthropies.
Speaker 1: Michael Bloomberg, of course to a Democratic presidential candidate. So
Speaker 1: Dr Nes, nice to have you back here on Bloomberg Radio.
Speaker 1: So how do you read this news and what it
Speaker 1: says about where we are in the spread of the virus. Yeah.
Speaker 1: I think the reports that we heard over the weekend
Speaker 1: of UM rise in cases outside in countries outside of
Speaker 1: China and among people who haven't traveled to China. UM,
Speaker 1: while obviously worry I'm from a public health standpoint, are
Speaker 1: not unexpected given what we've learned about the virus so far.
Speaker 1: We have known for a while now that this virus
Speaker 1: is capable of spreading quite quickly and quite silently, which
Speaker 1: makes it difficult to know at any one point where
Speaker 1: in the world it's transmitting. So that we're seeing UH
Speaker 1: cases in new countries UM kind of tracks with what
Speaker 1: we've expected. And so when do you start to get
Speaker 1: more worried at this point? Doctor knows so because I
Speaker 1: have to say, you know, these Italian cases and everything
Speaker 1: that's going on in in South Korea. I do think that
Speaker 1: is giving people a little bit more pause. And as
Speaker 1: you say, sort of new countries, not a strong link
Speaker 1: maybe any link with some of these cases directly back
Speaker 1: to China or to to Wuhan. What's the next sort
Speaker 1: of worrisome step, just to be honest, Yeah, Well, I
Speaker 1: think one of the things that we've long suspected is
Speaker 1: that a virus like this, it spreads as quickly as
Speaker 1: it does and as silently as it does, that it
Speaker 1: would likely turn up in many parts of the globe.
Speaker 1: And that's why you'll probably hear a lot of discussion
Speaker 1: as of late as to whether or not we're in
Speaker 1: a pandemic. There's a bit of a disagreement among public
Speaker 1: health officials as to whether we're in one now, but
Speaker 1: I think it's hard to argue that we won't be
Speaker 1: in one at one point, regardless if you want to
Speaker 1: call what we're seeing uh now a pandemic. And so
Speaker 1: what that means is that countries should expect to see cases.
Speaker 1: And what that will also mean is that they will
Speaker 1: need to shift their focus from just trying to stop
Speaker 1: the virus at their borders of thinking about how best
Speaker 1: to protect their people from the virus that they will experience. UM.
Speaker 1: This situation is obviously quite worrisome given the large numbers
Speaker 1: of deaths that were reported. One of the things I
Speaker 1: think we still need to work out is how many
Speaker 1: infections are out there and then to hold that m
Speaker 1: in balance with the deaths that are reported. It could
Speaker 1: very well be that there are many many more infections
Speaker 1: out there which would bring down our death rate calculations UM.
Speaker 1: But nonetheless, it's a situation that warrants concern and preparedness
Speaker 1: by a government. Well. And what's interesting though, and I
Speaker 1: want to just challenge a little bit if I made
Speaker 1: doctor Noso, is that you know, the markets and investors
Speaker 1: are certainly reading this is something much worse than they
Speaker 1: had thought, maybe on Saturday or on Friday, even though
Speaker 1: we did see stocks flower on Friday, but that wasn't
Speaker 1: surprising ahead of the weekend. So are we missreading this?
Speaker 1: This spread? Is this? You know from a medical perspective,
Speaker 1: did you expect that it was going to spread like
Speaker 1: it is at this point? Yeah? I did, And UM,
Speaker 1: I have long thought that there has been a lot
Speaker 1: of hope UM. And I think some of this hope
Speaker 1: has been echoed by government leaders that this virus could
Speaker 1: be stopped. Um that you know that China's very drastic
Speaker 1: actions would stop transmission there and that countries would respond
Speaker 1: by preventing people from traveling for China and that would
Speaker 1: just put an end to the virus. Those were methods
Speaker 1: that worked, um in two thousand three when we have
Speaker 1: the Stars epidemic. But this virus is quite different than Stars,
Speaker 1: and it's spreading much more quickly and um with mild
Speaker 1: many milder cases, which for me has always signified that
Speaker 1: it would be very difficult to contain. That means stopping
Speaker 1: the spread of the virus entirely. I have long thought
Speaker 1: that we would likely see global spread and that we
Speaker 1: should be putting our emphasis on how best to minimize
Speaker 1: the impacts of it from the virus. Well, and DR
Speaker 1: knows that you're you're bringing up a really interesting point
Speaker 1: that that candidly I had I had not really thought
Speaker 1: through and in all these discussions, which is I guess
Speaker 1: if there are many more k is, then then maybe
Speaker 1: previously anticipated, maybe it's not as dangerous and in a
Speaker 1: way that we look at it not as you know,
Speaker 1: this sort of deadly thing that's sweeping across countries, but
Speaker 1: as something that people can be treated for, and that,
Speaker 1: as you say, sort of countries need to get their
Speaker 1: arms around treating rather than containing. Yeah, I think we
Speaker 1: need to get our arms around this because I will
Speaker 1: determine what measures we take. For instance, China has taken
Speaker 1: very aggressive measures which UM and my view has potentially
Speaker 1: exacerbated the toll of the epidemic. They're just in terms
Speaker 1: of the social and economic impacts of it. But obviously
Speaker 1: populations willingness to be um uh subjected to those measures
Speaker 1: might be higher if we thought the violence the virus
Speaker 1: were as deadly as it just seems to be just
Speaker 1: based on the raw numbers that are reported UM. But anyway,
Speaker 1: regardless of what the true you know case UM fatality
Speaker 1: percentages wind up being, UM, just the fact that there
Speaker 1: are so many deaths reported and so many hospitalizations and
Speaker 1: critically ill people that will be a struggle for a
Speaker 1: number of countries. Uh. We know that every flu season,
Speaker 1: hospitals you know across the world are are stressed. And
Speaker 1: then layering on top of this a virus that could
Speaker 1: produce significant levels of UM severe illness, critical illness and
Speaker 1: deaths that will be quite challenging. All right, We're gonna
Speaker 1: leave it on that note. Dr Noso, thank you so much.
Speaker 1: Jennifer nosoh Uh, doctor Senior Scholar at the Johns Hopkins
Speaker 1: Center for Health Security at the Bloomberg School of Public Health,
Speaker 1: joining us on the phone from Baltimore, and of course
Speaker 1: the Bloomberg School of Public Health supported by Michael R. Bloomberg, Founder,
Speaker 1: Bloomberg LP, Bloomberg Philanthropies of course, all of that home
Speaker 1: to Bloomberg News, Bloomberg Radio, Bloomberg TV. Michael Bloomberg, of
Speaker 1: course a candidate as well for the Democratic presidential nomination.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. Steep Losses indeed definitely though
Speaker 1: off our loads of the session so far, and it
Speaker 1: all has to do with those increasing concerns about the coronavirus. Uh.
Speaker 1: The worry of course, as we've just heard from Charlie,
Speaker 1: impacting the financial markets. Always great though, to check in
Speaker 1: with members of the corporate community when we have a
Speaker 1: situation like this, especially one that is very much involved
Speaker 1: in the global supply chain, including the Apple supply chain.
Speaker 1: In fact, roughly two thirds of this company's revenues come
Speaker 1: from Apple. Dr Jelal bag Early is CEO at Dialogue Semiconductor.
Speaker 1: He joins us on the phone from London. Dr Ba Gearley,
Speaker 1: Great to have you here with Jason Kelly and myself. UM,
Speaker 1: I do want to start. We know you did a
Speaker 1: deal recently, Hi, and we'll get to that in a moment,
Speaker 1: But talk to us about this virus and how it's
Speaker 1: changing and impacting what's going on at your company. UM So,
Speaker 1: I think I'll make comments about what we see so
Speaker 1: like pretty much all semiconductor companies, the supply chain UM
Speaker 1: for us and UH customers that we supply tends to
Speaker 1: go through Asian particularly China. So so it's no great
Speaker 1: surprise that these are affected, UM in terms of you know,
Speaker 1: capacity and an operation UM and I think you know
Speaker 1: it is it is a tragic event in terms of
Speaker 1: the effect on people and and the whole area. UM
Speaker 1: and from a disease point of view, but from a
Speaker 1: business and the operation point of view, I think we
Speaker 1: see UM, we've seen um um number of manufacturing contact
Speaker 1: manufacturers of you know, phones and electronic products are gradually
Speaker 1: operating back. But maybe capacity but much reduced people that
Speaker 1: don't have all their workers back at the factories. Um,
Speaker 1: but you have all your workings? Do do you have
Speaker 1: all your workers at your factories? As a results manufacturer,
Speaker 1: we don manufacturer we we are we are We do
Speaker 1: design and marketing and being manage our my infactoring throughout sourcings.
Speaker 1: So we don't have direct so factory operation. But but
Speaker 1: we deal with factories all the time every day and
Speaker 1: uh and BC the capacities are coming back, uh in
Speaker 1: terms of our customers factories, um, every every week we
Speaker 1: see improvement. So so I think in a few weeks,
Speaker 1: my guess is from a business operation point of view,
Speaker 1: those factors will be getting way close to normal operation. Alright,
Speaker 1: So dr Big earlier, let's talk about the deal that
Speaker 1: you did, because obviously amidst all of this, UH, you're
Speaker 1: still creating partnerships and and uh and doing some some
Speaker 1: M and A work. What is this deal with a
Speaker 1: Desto do for you? Right? So that's still is it?
Speaker 1: UM list of company on AZDAG They are a IoT
Speaker 1: pure play IoT business play. So what it does for
Speaker 1: us is UM increase our exposure to the very attractive
Speaker 1: industrial market for US We've been UM entering this market
Speaker 1: recently about a few months ago with a small acquisition
Speaker 1: of a company called Creative Chips. So a Deskto gives
Speaker 1: a scale in that market UM and providing us with
Speaker 1: technology for UH Internet of Things as as it relates
Speaker 1: to industrial building, smart building, small cities type application, both
Speaker 1: in terms of silicon chips as well as cloud connectivity
Speaker 1: solution platforms that they can offer our customs and some
Speaker 1: more deals to come. Do you think are you in
Speaker 1: a mode where you want to be more aggressive on
Speaker 1: the combination front. I think, you know, we have always
Speaker 1: UM a pipeline of targets that is under under review,
Speaker 1: and we look at the number of angles clearly before
Speaker 1: we make any move on a target, you know, from
Speaker 1: a from a fit, strategic fit, shareholder value, you culture,
Speaker 1: a bunch of other items that they look at. So
Speaker 1: we do have other targets to look at. But you know,
Speaker 1: currently we just closed down a desk To. We're very
Speaker 1: pleased with that and very excited about integrating that company
Speaker 1: when the deal actually closes. So one last question just
Speaker 1: got about thirty seconds, so I have to ask you
Speaker 1: to be quick, and I just want to go back
Speaker 1: to the virus. So based on what you're seeing, because
Speaker 1: I'm assuming that you saw obviously a little bit of
Speaker 1: an impact as the virus got worse, you're saying you
Speaker 1: would you would make the conclusion that things are getting
Speaker 1: better because you're seeing kind of business pick up again
Speaker 1: in terms of some of your clients, you manufacturer, and
Speaker 1: just got about thirty seconds here. Yes, I think they
Speaker 1: see over the next few weeks, you know, more and
Speaker 1: more factories are telling us that they have more people
Speaker 1: coming back, and they're opening more of their branches. You know.
Speaker 1: Sometimes they have multiple factories. Some of them have been open,
Speaker 1: some have been shot so far, but as they get
Speaker 1: decontaminated and the work has come back from other parts
Speaker 1: of China, they add more capacity. Alright, Gonna leave it
Speaker 1: on that note. Um, we really appreciate it. Dr bag Geary,
Speaker 1: Dr Jalal Bagearley, he is chief executive officer at Dialogue Semiconductor,
Speaker 1: joining us on this Monday on the phone from London
Speaker 1: and of course giving us some great insight in terms
Speaker 1: of the virus. When you feel like your flavors. Alright,
Speaker 1: so this next story is a little bit different. We've
Speaker 1: been talking a lot about the virus and will continue
Speaker 1: to but a fascinating feature in the upcoming edition of
Speaker 1: Bloomberg Business Week. You can read it online on Bloomberg
Speaker 1: dot Com and via the Bloomberg terminal. A pistachio war
Speaker 1: between the US and Iran. Mark Champion joins us. He's
Speaker 1: a senior reporter for international affairs for Bloomberg, joining us
Speaker 1: on the phone from London. We appreciate him giving us
Speaker 1: a long day, and Joel Weber, the editor Bloomberg Business Week,
Speaker 1: back in our Bloomberg Interactor Burker Studio. So, Mark, this
Speaker 1: is a little bit, as Carol Master might say, of like, wait,
Speaker 1: what kind of story tell us what's going on in
Speaker 1: the world of pistachios? Well, yeah, I mean the the US.
Speaker 1: You know, we all know that the US and Iran
Speaker 1: have been at each other for decades, basically since the
Speaker 1: Revolution in nine in ninety seventy nine UM. But perhaps
Speaker 1: a little less known is that the one aspect of
Speaker 1: that contest has been over the pistachio nuts, which Iran
Speaker 1: for literally thousands of years, more than a thousand years,
Speaker 1: perhaps more than two was basically the monopoly producer of
Speaker 1: um and it exported them and then at the time
Speaker 1: of the revolution saw this as a big source of
Speaker 1: hard currency and very successfully developed a big industry exporting
Speaker 1: you know, this is a billion dollar plus industry exporting
Speaker 1: nuts to the rest of the world. But the US
Speaker 1: got into the act in you know, the first crop
Speaker 1: in nineteen seventies x um and since then California has
Speaker 1: been you know, expanding its production enormously with the help
Speaker 1: of you know, bands, variously bands and heavy duties of
Speaker 1: two on pistachio nuts from Iran at various times um
Speaker 1: And has an now overtaken. Iran is the largest producer
Speaker 1: in the world. What's gone wrong for Iran on this front? Mark, Well,
Speaker 1: all kinds of things. I mean, first, you know, one,
Speaker 1: there's no doubt that the sanctions policy, you know, broader
Speaker 1: financial sanctions that made it difficult to invest. You know
Speaker 1: that these things had an impact. Secondly, um you have
Speaker 1: climate change, no different for Iran and California, except that
Speaker 1: Iran has been relied even in you know, the the
Speaker 1: earliest days. It relied on an ancient form of underground
Speaker 1: canal ng to bring the water to the pistachio fields
Speaker 1: which tend to be the growth which tend to be
Speaker 1: in in very arid areas that needs a hot climate,
Speaker 1: it needs cool winters um but as you have very
Speaker 1: specific climate conditions needed and tends to be dry in
Speaker 1: those areas, and so they always brought the water from underground.
Speaker 1: But since the revolution, one of the promises of the
Speaker 1: revolution was that, you know, ordinary farmers would be able
Speaker 1: to have access to as much water as they wanted.
Speaker 1: And they've been drilling wells, you know, unregistered wells across
Speaker 1: the country and sucking out with electric pumps instead of
Speaker 1: the old systems, as much water as they can. So
Speaker 1: that's you know, that's the second item, and then the
Speaker 1: third is simply a failure of governance and planning and
Speaker 1: just general efficiency. So that you know, since you know,
Speaker 1: the the US aren't producing they both used to yield
Speaker 1: about the same amount of pistacia's per hector back in
Speaker 1: the seventies, but now the US produces more than three
Speaker 1: times as many pistachios hector. Then the Iranians haven't improved
Speaker 1: at all. Mark, did you do taste testing as part
Speaker 1: of your reporting for this article. Well, every time I
Speaker 1: have gone to Iran, I've you know, I've eaten a
Speaker 1: lot of pistachios they are fantastic, and the Iranian pistachios
Speaker 1: were really really very good. So it was, you know,
Speaker 1: really striking to me that last year, the last sort
Speaker 1: of growing year which goes across it was would have
Speaker 1: been um. Their crops simply collapsed. It was a result
Speaker 1: of four years of drought and it virtually disappeared. UM.
Speaker 1: And you know, this year they've had heavy rains, floods
Speaker 1: and so on, and they've got a crop back, but
Speaker 1: it's a rather poor quality. And in the past the
Speaker 1: Uranians are enormously proud that their pistachio and they thought
Speaker 1: were better than those produced by Alfornia. But this year
Speaker 1: at least not true. Well, and I feel like Mark,
Speaker 1: you know, somewhere Sean Don in our trade guru is
Speaker 1: is smiling because it's like this is the trade ward.
Speaker 1: You know that this is sort of global trade at
Speaker 1: its best and worst to some extent. Where does it
Speaker 1: go from here? Well, that's a really good question. I mean, basically, uh,
Speaker 1: there's no reason to think that Iran is going to
Speaker 1: turn this around. They you know, the climate change isn't
Speaker 1: gonna get any better. Um, the governance doesn't look like
Speaker 1: getting any better. Um. And certainly U S sanctions aren't
Speaker 1: going to get any better for any time soon, so
Speaker 1: there's no reason to think that's going to turn around. UM.
Speaker 1: And as a result of that, there's there's a global
Speaker 1: trade organization for nott and and they believe that there's
Speaker 1: about a ten fift shortage in of supply in the
Speaker 1: market for global demand, in part because the Iranians simply
Speaker 1: haven't been able to grow their crops. So uh, now
Speaker 1: what you see is a lot of primarily Iranian farmers,
Speaker 1: exiles and someone who have experience of growing pistonageos from
Speaker 1: Iran going to different countries, new countries to see if
Speaker 1: they can develop crops in these other countries. I spoke
Speaker 1: went to visit a farm in in in Georgia where
Speaker 1: Uh an Iranian, you know, someone who left after the
Speaker 1: revolution UM is now developing a big farm. But it's
Speaker 1: also happening in UH in Ukraine and as bai Jian
Speaker 1: in uh you know, in Central Asia. So you know,
Speaker 1: the people are in Australia to Spain, they're all trying
Speaker 1: to develop. Well, it's one of those great Business Week
Speaker 1: stories where you really, you know, just kind of take
Speaker 1: it for granted. Something like Pistachio's, but you realize that
Speaker 1: there's a lot more as you dig into it in
Speaker 1: terms of what's going on in the market, and certainly
Speaker 1: when it comes to trade. Mark Champion, Thank you so much,
Speaker 1: Senior reporter for International Affairs at Bloomberg News on the
Speaker 1: phone from London, Joel Weber, Thank you as well, Editor
Speaker 1: Bloomberg Business Week. In our Interactive broker studio here in
Speaker 1: New York, you're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. Now, the coronavirus,
Speaker 1: it has spread to more than thirty countries, South Korea
Speaker 1: reporting a jump in infections, and Italy locking down an
Speaker 1: area of fifty people near Milan. And yet the most
Speaker 1: reported cases and death still in China, which has many
Speaker 1: asking questions about the state of healthcare in China. Andy
Speaker 1: Brown is Bloomberg New Economy editorial director. He has seen
Speaker 1: it firsthand and he writes about it this week. He
Speaker 1: joins us in our Bloomberg Interactive Broker studio. And you
Speaker 1: have seen it firsthand years ago and also have an
Speaker 1: idea of what's going on currently, So give us some perspective.
Speaker 1: Is it better than it used to be. Is it
Speaker 1: still not great? So the Chinese healthcare system is in crisis.
Speaker 1: Uh it was in crisis even before the coronavirus hit,
Speaker 1: and the coronavirus has exacerbated all of the strain intentions
Speaker 1: in the system and in some places stretched the system
Speaker 1: to breaking point. And that is a big political problem
Speaker 1: for the regime. Well and Andy, you know, one of
Speaker 1: the things you point out in your column is these
Speaker 1: structural problems with the Chinese medical system. You know, right
Speaker 1: down to there's a shortage of general practitioners, you know,
Speaker 1: the sort of doctor that you need on an ongoing basis.
Speaker 1: Help us understand some of what's underneath this. Yeah, So
Speaker 1: if to to to wind back a little further, you know,
Speaker 1: the the legitimacy and credibility of the Chinese Communist Party
Speaker 1: has long rested to quite some considerable extent on its
Speaker 1: boast that it uh it nursed back to health the
Speaker 1: sick man of Asia, as China was once cool, and
Speaker 1: the most visible representation of that sickness was disease and poverty.
Speaker 1: Um and in the early years of the Communist rage seam,
Speaker 1: they had a system of armies of barefoot doctors who
Speaker 1: went out and fought infectious diseases and fought very successfully.
Speaker 1: Uh Infant mortality went down, life expectancy rose, and then
Speaker 1: in the nineties the system collapsed. And the big problem
Speaker 1: now is that you don't have those general practitioners who
Speaker 1: stand really at the front lines of preventative healthcare. So
Speaker 1: when people in China get sick, they go straight to
Speaker 1: the hospital, which often means it's too late or the
Speaker 1: disease has progressed to the point where it requires heavy
Speaker 1: and expensive intervention and big sickness. Even though now of
Speaker 1: the population of China has some form of healthcare coverage. Nevertheless,
Speaker 1: DA being big sickness as people in China call cancer,
Speaker 1: stroke and so on, can ruin a family and often does. So.
Speaker 1: What does it mean in a case like with the
Speaker 1: virus in terms of how people deal with it and
Speaker 1: China's ability to contain it, well, it means that the
Speaker 1: the I mean to go to what Chinese and you
Speaker 1: have to see it is to believe it. I mean
Speaker 1: the chaos that is a you know, the Chinese emergency
Speaker 1: ward in in big cities with people from all over
Speaker 1: the countryside, you know, flooding in because the best hospitals.
Speaker 1: Of course, they're in the big cities and have a
Speaker 1: very few good hospitals in rural areas. So everybody piles
Speaker 1: into Beijing, Shanghai, Wuhan, all of these big cities, and
Speaker 1: so the hospital system is already completely overwhelmed. What's happening
Speaker 1: now in Wuhan is a people with other sicknesses, not coronaviruses,
Speaker 1: aren't getting treatment, and this is causing huge amounts of
Speaker 1: public anxiety, out and and outrage. This is literally life
Speaker 1: and death. You know, Andy, you have a great anecdote
Speaker 1: in your story, very heartwarming anecdote in many ways, especially
Speaker 1: for US journalists, about the power of journalism. And and
Speaker 1: you know, very briefly, you're writing a story about this
Speaker 1: child who I was being treated for leukemia basically couldn't
Speaker 1: afford it. Out ring of donations come from all over
Speaker 1: the world, including the United States. You tie that back
Speaker 1: to what is now quite a fractious relationship, to say
Speaker 1: the least. We've talked to you so many times about
Speaker 1: this between the U. S and China and between China
Speaker 1: and other countries in the world. This decoupling that we've
Speaker 1: seen that is economic in some ways, but it extends
Speaker 1: beyond that in the case of this virus, help us
Speaker 1: understand the context there. Yes, So I wrote about this
Speaker 1: kid with leukemia seven years old in the Beijing Children's hospital.
Speaker 1: His mother was camped out in the waiting room paying
Speaker 1: off the bill, which is pretty much a full time job.
Speaker 1: Dad was back home in a mongolia is selling off
Speaker 1: all of the family's possessions until it was nothing left
Speaker 1: to sell. Parents end up going to see a doctor
Speaker 1: in the Beijing Children's Hospital. I was in the room,
Speaker 1: and she said to the both of them, she said,
Speaker 1: you've been very foolish. You've blown through all of your
Speaker 1: life savings, and now your son is going to die.
Speaker 1: And so they went into the emergency care ward, picked
Speaker 1: up their son, walked out, And I wrote a story
Speaker 1: about this, which appeared on the front page of the
Speaker 1: World Street Journal, and donations came flooding in. I mean,
Speaker 1: it touched the hearts of so many thousands and thousands
Speaker 1: of readers. Of course, the newspaper we couldn't take donations,
Speaker 1: but a hospital very kindly set up a charity to
Speaker 1: to channel these these these donations. Um and I was
Speaker 1: reflecting on, you know, the kindness of particularly American donors
Speaker 1: to procure the save the life of this young child,
Speaker 1: and comparing and contrasting now with this coronaviruses which has
Speaker 1: you know, yet again exacerbated the differences between the US
Speaker 1: and China, where now China accuses the United States of
Speaker 1: spreading panic, of overreacting with the travel band, and so
Speaker 1: instead of collaborating on what is a global healthcare challenge,
Speaker 1: this is driving the US and China even further apart. Yeah,
Speaker 1: just one more thing right after so many other things
Speaker 1: between trade and other issues. Um, Eddie Brown, thank you
Speaker 1: so much, always Shaded Andy Brown, editorial director at Bloomberg
Speaker 1: New Economy in our interactive broker studio, I'm brooom macal Journal. Yeah,
Speaker 1: but you let me drive. No, no, no no home honey please,
Speaker 1: I'll do the riding drivel. I want to drive, just
Speaker 1: drive the question trying this is the drive to the globe. Gimmu. Thanks,
Speaker 1: We'll drying us down on Bloomberg Radio. It just got
Speaker 1: about eleven minutes left in today's trading session. Equity is
Speaker 1: definitely down off their loads of this session, but nonetheless
Speaker 1: a sell off on this Monday. Ready Watts so delighted
Speaker 1: to have him back with US executive vice president, chief
Speaker 1: investment strategist at William O'Neil and Company. He's back in
Speaker 1: our Bloomberg Interactive Broker studio right here in New York. So, Randy, Um,
Speaker 1: you know it's funny, Jason. I have to just tell you.
Speaker 1: I kind of freaked Randy out because I said, how
Speaker 1: you and I've had these conversation that there's going to
Speaker 1: be some supervirus that ultimately like is a doomsday for
Speaker 1: the world and you know, ends up unfortunately taken out
Speaker 1: a lot of people. But so Randy's kind of like,
Speaker 1: aren't you, like, you know, Susie Sunshine today? Um, and
Speaker 1: you say I'm gonna go I'm gonna like go go
Speaker 1: hide my bunker now thet you guys just keep going.
Speaker 1: And I should make a joke about it, because the
Speaker 1: virus is a serious situation. I do wonder, um, Randy,
Speaker 1: how you see it from a market perspective, because it
Speaker 1: does feel like there's a different tone, um, a different
Speaker 1: emotion in the trade today. How do you see it?
Speaker 1: So a couple of things. The first is that the
Speaker 1: market was already worried about earnings estimates for twenty before
Speaker 1: the coronavirus started right, estimates had been coming down in
Speaker 1: the second half of the year for the first half
Speaker 1: of and while this earning season that's just completing right
Speaker 1: now for Q four, two and nineteen has gone better
Speaker 1: than expected, estimates continue to fall. People are now expecting
Speaker 1: Q one to be down year to year, and they're
Speaker 1: looking for about seven point nine percent earnings growth for
Speaker 1: all That number was nine and a half percent at
Speaker 1: the start of earning season, and I think what people
Speaker 1: are realizing today is that earnings could actually be a
Speaker 1: lot worse if the coronavirus keeps spreading and lasts longer
Speaker 1: than they thought. So that means maybe earnings growth for
Speaker 1: this year is more like five percent, And I think
Speaker 1: people are rerating the market as they adjust those earnings
Speaker 1: and estimates down in their head. So is that I mean,
Speaker 1: But it's the virus that set it off, right, because
Speaker 1: you and I were talking before we got going about,
Speaker 1: you know, getting the news out of Italy and Milan specifically.
Speaker 1: That's puts the virus kind of on a different scale,
Speaker 1: if you will. I think the Italian news was a
Speaker 1: game changer. I think they've got fifty thou people under
Speaker 1: basically kind of curfew or locked down over there in
Speaker 1: in northern Italy. You know, it's right near Milan, obviously,
Speaker 1: the business capital of Italy. Uh it's spreading in Europe
Speaker 1: in a way. They are not really sure how that
Speaker 1: cells started. And so I think now people are saying, wow,
Speaker 1: this could be not just an Asia issue, maybe this
Speaker 1: is your European issue, and then they wonder if it's
Speaker 1: going to get over here to our shores. Alright, So
Speaker 1: how do you synthesize this into a market outlook where
Speaker 1: you're actually having to pick some stocks and and recommend
Speaker 1: what people have in their portfolio. Randy, So, a couple
Speaker 1: of things. The first is the technical damage done to
Speaker 1: the market today is significant. The markets moved through its
Speaker 1: fifty day moving average, which was at three thousand, two
Speaker 1: hundred and seventy six on the SMP. We're gonna look
Speaker 1: like we're gonna close below that. That's an important technical break.
Speaker 1: I think the market will hopefully be trying to bother
Speaker 1: either at the hundred day, which is around fifty or
Speaker 1: maybe all the way back to the two hundred day,
Speaker 1: which is around three thousand, forty. Uh So I do
Speaker 1: think this is this damage is gonna take some time
Speaker 1: to correct. I don't think this is going to be
Speaker 1: a one day type scenario. You said we're going back
Speaker 1: down to three thousand forty. I'm not saying that, but
Speaker 1: I think we are headed lower from here. I don't
Speaker 1: think this was a one day experience, and I think again,
Speaker 1: people are gonna have to get cust comfortable with what
Speaker 1: earnings are going to be this year. I think longer term, though,
Speaker 1: with the tenure at one spot three seven, UH, stocks
Speaker 1: are still the only game in town, and so I
Speaker 1: think I think if you own stocks a year from now,
Speaker 1: you're going to be happy. I think the market was extended,
Speaker 1: it had moved away a lot from its moving averages.
Speaker 1: It was due to correct, and this is an obvious
Speaker 1: reason to correct right the tenure now Jason net one
Speaker 1: thirty six. Right, it is all about yield, and when
Speaker 1: you talk about markets, the US market compared to elsewhere
Speaker 1: still looks better. It does, and the reason is that
Speaker 1: what investors are most focused on right now is trying
Speaker 1: to find a steady and growing cash stream that has
Speaker 1: a high duration, and one of the places they've found
Speaker 1: that over the last year or so are in the
Speaker 1: very large US stocks, and I think as things get,
Speaker 1: as people get more afraid with the virus, I think
Speaker 1: the US is still gonna be the most favored market. Also,
Speaker 1: if you look at the dollar today, you know it's
Speaker 1: it's very strong. It's up four percent already year to date.
Speaker 1: It's at its highest level since April of two thousand
Speaker 1: and seventeen. So I do think the US is still
Speaker 1: a place capital is coming to. But until we can
Speaker 1: get a sense of how big a hit the virus
Speaker 1: is gonna gonna cause the economy, people are going to
Speaker 1: be uncertain and they're going to err on the side
Speaker 1: of safety and safety in big cap stocks. It sounds
Speaker 1: like yes. Though. The thing that's unusual about the US
Speaker 1: big cap stocks is if you look at the top
Speaker 1: twenty stocks in the US market and you compare them
Speaker 1: to the top twenty stocks of all of the different
Speaker 1: developed world markets. Over the last five years, the top
Speaker 1: twenty stocks in the US market have grown faster than
Speaker 1: any other developed world market. They're also tied for the
Speaker 1: highest projected growth rate for twenty twenty if you look
Speaker 1: at the developed world. So there is it does make
Speaker 1: sense why investors have come into these stocks. It's not
Speaker 1: just fundamental reasons. There's fundamental reasons. It's not simply a
Speaker 1: momentum trade. And I do think the US equity market
Speaker 1: can carry a pretty hefty price earnings multiple because of
Speaker 1: how low rates are. The problem is we've got to
Speaker 1: figure out what the E is going to be for.
Speaker 1: You know, we've been sitting around this table and just
Speaker 1: kind of talking off air a little bit about, you know,
Speaker 1: trying to get an idea of maybe what the rest
Speaker 1: of the week will be like. Because here we have
Speaker 1: a market that's sold off, we bounced off our loads,
Speaker 1: we were starting to trend higher. You know, we're we're
Speaker 1: bouncing around. And I do wonder in a market where
Speaker 1: there's so much computerized trading and algorithms that kick in,
Speaker 1: I mean, how do you see that? Is there a
Speaker 1: point where you know, I have had people on Twitter,
Speaker 1: you know, Randy saying, I'm glad we're going to have
Speaker 1: I'm going to get in because it's gonna be five
Speaker 1: percent cheaper than it was. And I do wonder how
Speaker 1: you factor or if you factor in some of those
Speaker 1: computerized programs that just kick in at levels. I don't
Speaker 1: see it prolonged. I don't see a prolonged bear market here.
Speaker 1: Could I see a correction all the way back to
Speaker 1: the two hundred, You know, I definitely could. The market
Speaker 1: usually has at least one move from peak to trough
Speaker 1: every year. That would be that would be normal. But
Speaker 1: we've seen that and and we've seen that, and so
Speaker 1: that would not be uncommon. I do think eventually this
Speaker 1: will be an opportunity for to investors, for investors to
Speaker 1: buy stocks. I don't think it's right now, though, it's
Speaker 1: gold to buy here. Uh, gold looks great technically, It's
Speaker 1: obviously been very strong over the last year. We think
Speaker 1: this is kind of an ongoing secular move with regards
Speaker 1: to it. Gold is a store of value versus fiat currencies. Uh.
Speaker 1: It's probably a little bit overbought in the short run
Speaker 1: right now, but I do think gold is held it
Speaker 1: headed higher over the next couple of years. And thirty
Speaker 1: seconds left, Randy. How much pressured does this put on
Speaker 1: the Federal Reserve in the United States? Well, the market
Speaker 1: believes they're going to cut the markets now, dialing in
Speaker 1: two interest rate cuts, one by June and one another
Speaker 1: one by the end of the year. I think the
Speaker 1: market is going to force the Fed to take rates down.
Speaker 1: It's doing it right now. If you look at where
Speaker 1: where to five and ten yure yields are, so I
Speaker 1: would expect another cuts this year, just quickly, twenty seconds.
Speaker 1: I mean, that's what everyone has been saying that finally
Speaker 1: the equity markets are catching up with what the bond
Speaker 1: market has been telling us for some time. Do you
Speaker 1: agree with that? I do agree with it. But the
Speaker 1: news has also changed, right, It has gotten more negative.
Speaker 1: The virus is having a bigger impact than we thought
Speaker 1: it would. I always love having year. I mean, we
Speaker 1: worked out so well in terms of the market action.
Speaker 1: You wats thank you, his executive vice president, chief investment
Speaker 1: strategist at William O'Neil and Company in our Interactive broker studio.
Speaker 1: Thanks for listening to Bloomberg Business Week. You can subscribe
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