1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,680 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Phone. Again. 5 00:00:27,680 --> 00:00:29,760 Speaker 1: I'm pleased to say is David Kelly of JP Morgan 6 00:00:29,800 --> 00:00:33,479 Speaker 1: Asset Management, Lead Chief Global Strategist. David always great to 7 00:00:33,479 --> 00:00:35,960 Speaker 1: catch up with you in a round about one hour 8 00:00:36,159 --> 00:00:38,560 Speaker 1: and a half. We're going to have some dreadful data 9 00:00:38,880 --> 00:00:41,159 Speaker 1: in the United States for America. It won't surprise many 10 00:00:41,200 --> 00:00:43,599 Speaker 1: people that it's ugly. It will be ugly. But how 11 00:00:43,600 --> 00:00:45,600 Speaker 1: should we be thinking about some of these data points 12 00:00:45,600 --> 00:00:48,760 Speaker 1: as they come in through the next couple of weeks. David, Well, 13 00:00:48,800 --> 00:00:52,320 Speaker 1: I think we should not overreact to them. What we've 14 00:00:53,200 --> 00:00:54,760 Speaker 1: they are going to be ugly. I mean, we could 15 00:00:54,840 --> 00:00:58,080 Speaker 1: get two million new unemployment claims that would be three 16 00:00:58,080 --> 00:01:00,880 Speaker 1: times the highest number we've ever scene. That could be 17 00:01:00,880 --> 00:01:03,320 Speaker 1: followed up by another few weeks of similar things. So 18 00:01:03,320 --> 00:01:05,440 Speaker 1: I think the unemployee rate could quickly go above ten 19 00:01:05,520 --> 00:01:08,440 Speaker 1: percent UM. Ten point eight percent is the highest that 20 00:01:08,480 --> 00:01:10,840 Speaker 1: we've seen since the Great depression. We could we could 21 00:01:10,920 --> 00:01:13,680 Speaker 1: hit that. That's all pretty ugly, But look at what's 22 00:01:13,720 --> 00:01:17,120 Speaker 1: going on in terms of government action here to try 23 00:01:17,120 --> 00:01:18,880 Speaker 1: and take the sting and the pain out of this. 24 00:01:19,520 --> 00:01:22,959 Speaker 1: I think the release build of the Senate just passed 25 00:01:23,160 --> 00:01:26,759 Speaker 1: earlier this morning will provide the ability for a lot 26 00:01:26,760 --> 00:01:30,399 Speaker 1: of workers to to get past this period and be 27 00:01:30,440 --> 00:01:34,039 Speaker 1: able to pay their rent and pay their their bills. Um. 28 00:01:34,040 --> 00:01:36,000 Speaker 1: And I think the idea is to rehold the economy 29 00:01:36,000 --> 00:01:39,000 Speaker 1: and suspended animation until we get control of this virus. 30 00:01:39,160 --> 00:01:40,720 Speaker 1: And we will eventually do that. I mean, that's the 31 00:01:40,760 --> 00:01:42,920 Speaker 1: other thing. It's it's a long time, you know, A 32 00:01:43,000 --> 00:01:45,000 Speaker 1: year seems like a long time to wait for a vaccine. 33 00:01:45,000 --> 00:01:47,440 Speaker 1: But when we get a vaccine, this thing is done. Um. 34 00:01:47,520 --> 00:01:51,000 Speaker 1: So it's not endless, um, but it is obviously painful 35 00:01:51,000 --> 00:01:53,080 Speaker 1: in the interim. Let's think a little bit more deeply 36 00:01:53,120 --> 00:01:55,280 Speaker 1: about that particular package. There as some people out there 37 00:01:55,280 --> 00:01:57,320 Speaker 1: saying that it won't prevent a recession. While it's not 38 00:01:57,360 --> 00:02:00,480 Speaker 1: designed to prevent a recession. It's about limiting the damage 39 00:02:00,480 --> 00:02:03,480 Speaker 1: and building a bridge through this very very tough time 40 00:02:03,480 --> 00:02:06,880 Speaker 1: and over some very troubled waters. So two big objectives 41 00:02:06,920 --> 00:02:10,440 Speaker 1: for a plan like this prevent more defaults and obviously 42 00:02:10,520 --> 00:02:13,720 Speaker 1: limit layoffs. Do you think it can do that? Well, 43 00:02:13,720 --> 00:02:15,760 Speaker 1: I'm not sure there's actually gonna limit the layoffs. I 44 00:02:15,760 --> 00:02:19,320 Speaker 1: mean it may for some companies because there is obviously 45 00:02:19,360 --> 00:02:21,320 Speaker 1: a lot of this in which there's small business loans 46 00:02:21,360 --> 00:02:24,680 Speaker 1: which you're which essential you get, um, you can you 47 00:02:24,720 --> 00:02:27,799 Speaker 1: can the read small business grants, you can use them 48 00:02:27,800 --> 00:02:30,320 Speaker 1: for payroll. So I think that may actually limit some 49 00:02:30,480 --> 00:02:33,280 Speaker 1: layoffs and they may have some impact on the unemployment rate. 50 00:02:33,880 --> 00:02:35,520 Speaker 1: But as you say, I mean, you know, I regard 51 00:02:35,600 --> 00:02:38,600 Speaker 1: this kind of as night quill for the social distancing recession, 52 00:02:38,639 --> 00:02:40,560 Speaker 1: you know, I mean, we don't actually have something that's 53 00:02:40,560 --> 00:02:42,600 Speaker 1: going to cure the common Code where we can reduce 54 00:02:42,600 --> 00:02:44,679 Speaker 1: its symptoms. And this is the way of reducing the symptoms, 55 00:02:44,720 --> 00:02:48,440 Speaker 1: the painful symptoms of recession. Um, we'll have to see 56 00:02:48,440 --> 00:02:50,840 Speaker 1: on the layoffs, because it works two ways. Yes, we've 57 00:02:50,840 --> 00:02:53,520 Speaker 1: given incentives to small businesses not to file front employment 58 00:02:53,960 --> 00:02:56,680 Speaker 1: or the layoff workers. But actually that's six hundred dollar 59 00:02:56,720 --> 00:03:01,520 Speaker 1: payment um per week on eployment benefits that actually gives 60 00:03:01,520 --> 00:03:04,560 Speaker 1: an incentive to workers to actually get laid off. I mean, 61 00:03:04,919 --> 00:03:09,079 Speaker 1: the average unemployment benefit being paid in January five dollars. 62 00:03:09,200 --> 00:03:11,720 Speaker 1: Now you're saying it's going to be nine five dollars 63 00:03:11,720 --> 00:03:14,880 Speaker 1: a week. That's basic a thousand dollars a week, fifty 64 00:03:15,040 --> 00:03:18,000 Speaker 1: two dollars a year. There are an awful lot of workers, 65 00:03:18,040 --> 00:03:21,160 Speaker 1: particularly these uh these industries that are most effectives. We 66 00:03:21,240 --> 00:03:23,520 Speaker 1: weren't making anything like fifty two dollars a year. So 67 00:03:23,520 --> 00:03:26,359 Speaker 1: it actually technically makes sense for them to say the employee, 68 00:03:26,480 --> 00:03:28,120 Speaker 1: thank you so much for keeping on the books, would 69 00:03:28,160 --> 00:03:30,440 Speaker 1: you mind firing me please so I can connect these 70 00:03:30,480 --> 00:03:32,920 Speaker 1: unemployment benefits the next four weeks four months and then 71 00:03:32,960 --> 00:03:36,640 Speaker 1: and then let's talk David Kelly brilliantly said, and this 72 00:03:36,680 --> 00:03:39,400 Speaker 1: goes you know, Lindsey Graham of the Carolinas was talking 73 00:03:39,440 --> 00:03:42,720 Speaker 1: about this as well, which is the incentives in the 74 00:03:42,800 --> 00:03:47,440 Speaker 1: perverse incentives and the constructive and that we're setting up. 75 00:03:47,920 --> 00:03:51,800 Speaker 1: What is your reading on the history of this wall 76 00:03:51,960 --> 00:03:55,360 Speaker 1: of money and what it does to the incentives of 77 00:03:55,440 --> 00:03:58,200 Speaker 1: a nation. Well, I think I mean, at least it's 78 00:03:58,280 --> 00:04:02,120 Speaker 1: temporary because you know, you want you want to prevent hardship, 79 00:04:02,160 --> 00:04:05,080 Speaker 1: and if you send out a check to people in cash, um, 80 00:04:05,600 --> 00:04:08,320 Speaker 1: you know at the start, that does help. But there 81 00:04:08,360 --> 00:04:10,600 Speaker 1: is there is some perverse incentive there. And you do 82 00:04:10,680 --> 00:04:13,360 Speaker 1: want people who can work work from home or work 83 00:04:13,360 --> 00:04:15,400 Speaker 1: remotely or whatever. You know, as you say you're gonna 84 00:04:15,400 --> 00:04:18,560 Speaker 1: do yoga instruction over the internet, fine do it. You 85 00:04:18,560 --> 00:04:20,240 Speaker 1: shouldn't have an incentive to say, well, I can't do 86 00:04:20,240 --> 00:04:22,680 Speaker 1: is because I have to go down to claim unemployment benefits. 87 00:04:22,920 --> 00:04:24,640 Speaker 1: So I think there are some problems in it. I 88 00:04:24,720 --> 00:04:27,240 Speaker 1: understand the creaky system. This is the only way they 89 00:04:27,240 --> 00:04:29,600 Speaker 1: could actually get the money out fast, and I get that, 90 00:04:29,839 --> 00:04:32,559 Speaker 1: but there is there is that problem. And and also 91 00:04:32,640 --> 00:04:35,080 Speaker 1: you know, all this cash, it's not actually going to 92 00:04:35,120 --> 00:04:37,080 Speaker 1: stimulate economic activity because what are you gonna do with 93 00:04:37,160 --> 00:04:38,800 Speaker 1: the money? I mean, what can people do that all 94 00:04:38,839 --> 00:04:40,800 Speaker 1: the fun stuff in life have been closed down. So 95 00:04:40,839 --> 00:04:42,799 Speaker 1: I think we're gonna sit on it. But that also 96 00:04:42,839 --> 00:04:45,560 Speaker 1: means that when the virus, when we have a vaccine 97 00:04:45,720 --> 00:04:47,760 Speaker 1: and people can actually spend the money, we're gonna have 98 00:04:47,880 --> 00:04:50,520 Speaker 1: a real surgeon economic activity. I have a huge problem 99 00:04:50,600 --> 00:04:52,800 Speaker 1: with this, folks. And so much of this is anecdotal 100 00:04:52,800 --> 00:04:55,640 Speaker 1: incomes from you know, the experience along the way. How 101 00:04:55,680 --> 00:04:58,200 Speaker 1: is it a a David Kelly a zillion years ago 102 00:04:58,240 --> 00:05:00,520 Speaker 1: on a Livia blanch Yard still it up and put 103 00:05:00,560 --> 00:05:02,240 Speaker 1: up a chart and he said, look, there's been a 104 00:05:02,320 --> 00:05:05,720 Speaker 1: huge drop here in nominal GDP and real g d P. 105 00:05:06,240 --> 00:05:10,040 Speaker 1: Here's the glide path back and someday out there we 106 00:05:10,120 --> 00:05:13,200 Speaker 1: get back to normal. Can we just assume that X 107 00:05:13,320 --> 00:05:16,400 Speaker 1: number of quarters or years out everything gets back to 108 00:05:16,480 --> 00:05:19,880 Speaker 1: normal and the government basically gets to lower the depth 109 00:05:19,920 --> 00:05:23,560 Speaker 1: that wasn't cured in the heart of this crisis. Well 110 00:05:23,760 --> 00:05:26,480 Speaker 1: we could. So the first part. Can the economy get 111 00:05:26,480 --> 00:05:29,240 Speaker 1: back to normal? Absolutely? Once you know, they may be 112 00:05:29,279 --> 00:05:31,400 Speaker 1: slightly different companies. There will be some companies that die 113 00:05:31,400 --> 00:05:33,760 Speaker 1: in there some companies that's that will be born. But 114 00:05:34,080 --> 00:05:36,520 Speaker 1: once we have the old clear here on the disease, 115 00:05:36,560 --> 00:05:38,760 Speaker 1: this economy will want to get back to full employment. 116 00:05:38,760 --> 00:05:40,919 Speaker 1: And I think it can do that now, whether the 117 00:05:40,960 --> 00:05:44,840 Speaker 1: government has the discipline to fade to fade out all 118 00:05:44,960 --> 00:05:46,919 Speaker 1: these these things and take the hard choices which it 119 00:05:46,960 --> 00:05:49,000 Speaker 1: hasn't taken to this point. I mean, remember in the 120 00:05:49,040 --> 00:05:51,960 Speaker 1: last few years before this, we were running a boom 121 00:05:51,960 --> 00:05:54,240 Speaker 1: economy and we ran up a depit to almost five 122 00:05:54,279 --> 00:05:57,400 Speaker 1: percent of GDP, which is utterly reckless. So we do 123 00:05:57,520 --> 00:05:59,160 Speaker 1: that in the best of times, Do we really think 124 00:05:59,160 --> 00:06:01,360 Speaker 1: that we're going to have the splene to Washington to 125 00:06:02,279 --> 00:06:05,159 Speaker 1: cut the depth afterwards. I'm pretty skeptical of that. So 126 00:06:05,200 --> 00:06:07,360 Speaker 1: the economy and get back to normal, But I don't 127 00:06:07,360 --> 00:06:11,159 Speaker 1: think that's Washington is going to be disciplined, John, Tom, 128 00:06:11,279 --> 00:06:12,800 Speaker 1: you say yeah that many times I ask you, we're 129 00:06:12,800 --> 00:06:15,480 Speaker 1: going to ask a question, you can ask you a question. 130 00:06:15,560 --> 00:06:19,360 Speaker 1: I'm just joined David Kelly. John, I'm getting used to 131 00:06:19,440 --> 00:06:22,040 Speaker 1: this working at home. I bet you are, and I'm 132 00:06:22,080 --> 00:06:23,640 Speaker 1: sure ever one of the studio I was getting used 133 00:06:23,680 --> 00:06:25,960 Speaker 1: to it too. It might not want your home, they 134 00:06:26,000 --> 00:06:27,960 Speaker 1: might want to keep you there, David. Great to have 135 00:06:28,000 --> 00:06:30,920 Speaker 1: you with us on the program. Key of JP Morgan 136 00:06:31,320 --> 00:06:36,119 Speaker 1: Asset Management. Let's bring a temple Sally shown. We NBC 137 00:06:36,160 --> 00:06:39,479 Speaker 1: Capital Markets chief US economist Tom We knew the number 138 00:06:39,720 --> 00:06:41,320 Speaker 1: was going to be bad. There's a lot of economic 139 00:06:41,360 --> 00:06:45,240 Speaker 1: pain behind that economic statistic. Walk me through how we 140 00:06:45,279 --> 00:06:47,640 Speaker 1: should be processing a number like that in the weeks 141 00:06:47,680 --> 00:06:50,560 Speaker 1: to come. I mean, let let me first start by saying, honest, see, 142 00:06:50,600 --> 00:06:51,640 Speaker 1: we thought that there was a risk and that we 143 00:06:51,680 --> 00:06:53,680 Speaker 1: could be even worse than that. Um, you know, we're 144 00:06:53,720 --> 00:06:56,200 Speaker 1: we're we're trying to I's we're in a period where 145 00:06:56,320 --> 00:06:58,240 Speaker 1: sort of the standard economic data that we all like 146 00:06:58,320 --> 00:07:00,680 Speaker 1: to look at, economists like to look at. UM. You know, 147 00:07:00,760 --> 00:07:02,480 Speaker 1: that's that's not really gonna be very helpful right now. 148 00:07:02,480 --> 00:07:03,920 Speaker 1: So we're trying to find sort of you know, let's 149 00:07:03,920 --> 00:07:06,480 Speaker 1: call it alternative data that that we can sort of 150 00:07:06,520 --> 00:07:08,479 Speaker 1: scour to try to get a sense for you know, 151 00:07:08,560 --> 00:07:12,080 Speaker 1: how how how the backdrop is UM evolving on a 152 00:07:12,160 --> 00:07:14,560 Speaker 1: on a live basis. UM. And you know, one thing 153 00:07:14,600 --> 00:07:16,600 Speaker 1: we found was this this sort of interesting piece of 154 00:07:16,640 --> 00:07:19,360 Speaker 1: data from something called home Base. UM. The whole home 155 00:07:19,360 --> 00:07:23,320 Speaker 1: Base is basically a company that that allows UH small 156 00:07:23,360 --> 00:07:27,240 Speaker 1: businesses to to you know, manage schedules and etcetera, etcetera. UM. 157 00:07:27,280 --> 00:07:29,160 Speaker 1: And so when when when we were looking at that 158 00:07:29,240 --> 00:07:31,360 Speaker 1: recently UM. And the great thing about this data it 159 00:07:31,440 --> 00:07:34,440 Speaker 1: actually comes in daily UM. And when we were looking 160 00:07:34,440 --> 00:07:36,440 Speaker 1: at that data, I mean that that data really started 161 00:07:36,440 --> 00:07:37,680 Speaker 1: to scare the heck out of us. I mean we 162 00:07:37,680 --> 00:07:39,520 Speaker 1: we literally thought that you could see a five to 163 00:07:39,600 --> 00:07:45,600 Speaker 1: ten million claims number today. UM. So so three million UM. Honest, 164 00:07:45,680 --> 00:07:50,120 Speaker 1: I think relative to expectations, UH is is actually pretty modest. 165 00:07:50,160 --> 00:07:51,600 Speaker 1: And in fact, you know, I think that's the futures 166 00:07:51,600 --> 00:07:54,040 Speaker 1: are even responding to it. I mean futures are taking 167 00:07:54,080 --> 00:07:56,760 Speaker 1: back some under decline. So, um, look, I think the 168 00:07:56,800 --> 00:07:59,240 Speaker 1: reality is as we go forward on a go on 169 00:07:59,320 --> 00:08:01,560 Speaker 1: a go forward basis, you know, I think that this 170 00:08:01,640 --> 00:08:05,040 Speaker 1: is just the beginning of claims remaining incredibly elevated. Um. Again, 171 00:08:05,160 --> 00:08:07,200 Speaker 1: I think that will like this home base, I think 172 00:08:07,200 --> 00:08:10,720 Speaker 1: are are are really indicative of some real payment labor 173 00:08:10,720 --> 00:08:14,800 Speaker 1: back drop, Tom Persolle, what is the average income of 174 00:08:14,840 --> 00:08:18,160 Speaker 1: those three points three million people? What kind of jobs 175 00:08:18,240 --> 00:08:21,640 Speaker 1: are those? You have a some rough statistic of what 176 00:08:21,760 --> 00:08:24,480 Speaker 1: the average take home pay is of all this? Well, 177 00:08:24,520 --> 00:08:26,240 Speaker 1: you know what what I would say. What I would 178 00:08:26,240 --> 00:08:28,280 Speaker 1: say is this if you look at you sort of 179 00:08:28,320 --> 00:08:30,239 Speaker 1: where some of the again, if we if we were 180 00:08:30,280 --> 00:08:32,199 Speaker 1: just using this, I mean, I'm giving these guys this 181 00:08:32,280 --> 00:08:34,000 Speaker 1: free plug, you know, if we keep on using this 182 00:08:34,040 --> 00:08:36,560 Speaker 1: home base. Um, I think it's really interesting if if 183 00:08:36,559 --> 00:08:38,520 Speaker 1: you look at some of where where the really big 184 00:08:38,559 --> 00:08:41,280 Speaker 1: declines came from, some of the really big declines came 185 00:08:41,320 --> 00:08:43,200 Speaker 1: and see what we would define a sort of more 186 00:08:43,240 --> 00:08:46,960 Speaker 1: of the you know, the lower income areas. So you know, 187 00:08:47,000 --> 00:08:49,640 Speaker 1: food and drink, um, you know that saw some very 188 00:08:49,679 --> 00:08:53,760 Speaker 1: sizable declines. Um, personal care saw some very sizable declines. 189 00:08:54,040 --> 00:08:57,199 Speaker 1: So right now. I think it's very easy to make 190 00:08:57,200 --> 00:08:59,320 Speaker 1: the case that a lot of the jobs that are 191 00:08:59,360 --> 00:09:03,160 Speaker 1: being lost are in the lower income spectrum. Tom. One 192 00:09:03,200 --> 00:09:05,520 Speaker 1: thing that we've been talking a lot about is the 193 00:09:05,600 --> 00:09:08,480 Speaker 1: speed of this happening and the speed of the response 194 00:09:08,600 --> 00:09:12,000 Speaker 1: or lack thereof, in terms of trying to prevent companies 195 00:09:12,040 --> 00:09:15,120 Speaker 1: from laying people off to start with. And perhaps one 196 00:09:15,160 --> 00:09:18,319 Speaker 1: way to read this number is the layoffs have already 197 00:09:18,400 --> 00:09:20,920 Speaker 1: begun to such a degree in mass that there is 198 00:09:20,960 --> 00:09:24,160 Speaker 1: a question how much is reversible At this point, we 199 00:09:24,200 --> 00:09:27,280 Speaker 1: are expecting the bill to pass in Congress shortly. But 200 00:09:27,480 --> 00:09:30,000 Speaker 1: from that perspective, given the fact that we're seeing the 201 00:09:30,080 --> 00:09:34,000 Speaker 1: layoffs already taking place in a mass way, how concerning 202 00:09:34,080 --> 00:09:37,400 Speaker 1: is it that this damage is irreversible in the short term? No, 203 00:09:37,559 --> 00:09:39,839 Speaker 1: I I I yeah, I wouldn't take that that that 204 00:09:40,000 --> 00:09:42,160 Speaker 1: tapped on this. I would say that if in fact, 205 00:09:42,320 --> 00:09:44,280 Speaker 1: I would even take the opposite view. I think if 206 00:09:44,320 --> 00:09:47,599 Speaker 1: you actually you can seem the massive amount of layoffs 207 00:09:47,640 --> 00:09:49,680 Speaker 1: straight away, and then you can start to plane out 208 00:09:49,760 --> 00:09:52,480 Speaker 1: on on some level. Right, So the question then becomes 209 00:09:52,679 --> 00:09:55,520 Speaker 1: how long is social distancing going to remain in place? Um, 210 00:09:55,559 --> 00:09:58,200 Speaker 1: you know, again, the degree which it is in place 211 00:09:58,280 --> 00:10:00,720 Speaker 1: right now. Um, and and and that's where this is 212 00:10:00,720 --> 00:10:03,880 Speaker 1: a very time sensitive conversation, which again I think it's 213 00:10:03,880 --> 00:10:06,400 Speaker 1: an idea that is being is elusive to a lot 214 00:10:06,440 --> 00:10:09,360 Speaker 1: of folks. So if this goes until the end of April, right, 215 00:10:09,400 --> 00:10:12,000 Speaker 1: let's say, you know, extreme social distancing in the United 216 00:10:12,040 --> 00:10:14,080 Speaker 1: States goes to the end of April, um, you know, 217 00:10:14,200 --> 00:10:16,760 Speaker 1: then it's really easy, you know easy, then you can 218 00:10:16,760 --> 00:10:20,280 Speaker 1: actually come to a reasonable conclusion on what sort of 219 00:10:20,280 --> 00:10:22,360 Speaker 1: growth is going to be um, you know, and and 220 00:10:22,400 --> 00:10:24,880 Speaker 1: so again this is really illustrative. So so just bear 221 00:10:24,920 --> 00:10:26,720 Speaker 1: with me for a second. So right now we're looking 222 00:10:26,760 --> 00:10:28,679 Speaker 1: for you know about let's just end say round numbers 223 00:10:28,679 --> 00:10:31,559 Speaker 1: about ten percent decline in Q two growth. And that's 224 00:10:31,559 --> 00:10:34,440 Speaker 1: assuming that severe social distancing basically starts to come to 225 00:10:34,480 --> 00:10:36,679 Speaker 1: an end towards the end of April, you know, sort 226 00:10:36,679 --> 00:10:40,280 Speaker 1: of beginning of May. If we slide that out, we 227 00:10:40,440 --> 00:10:43,360 Speaker 1: slide out social distancing, extreme social distance to the to 228 00:10:43,400 --> 00:10:45,800 Speaker 1: the end of May instead, then all of a sudden, 229 00:10:45,840 --> 00:10:49,240 Speaker 1: O minus ten becomes minus right, So do you see 230 00:10:49,280 --> 00:10:51,720 Speaker 1: the time center. So there's sort of a sliding scale 231 00:10:51,760 --> 00:10:54,360 Speaker 1: on this, and that's why I say time sensitivities is 232 00:10:54,400 --> 00:10:57,080 Speaker 1: critical because if all of a sudden, you know, uh, 233 00:10:57,080 --> 00:10:59,920 Speaker 1: you know Dr Fauci or or um uh, you know, 234 00:11:00,080 --> 00:11:02,000 Speaker 1: any of the other folks that that are talking about 235 00:11:02,000 --> 00:11:03,760 Speaker 1: the numbers, if all of a sudden they say, hey, 236 00:11:03,800 --> 00:11:07,760 Speaker 1: it looks like the numbers are starting to um stabilize. Um, 237 00:11:07,800 --> 00:11:10,360 Speaker 1: you know, we're getting toward the peak. Once you get 238 00:11:10,400 --> 00:11:12,800 Speaker 1: toward the peak, whenever that might be, that's when you 239 00:11:12,800 --> 00:11:14,920 Speaker 1: you can actually start to have the conversation of Okay, 240 00:11:15,200 --> 00:11:18,000 Speaker 1: now we can talk about how we're going to reopen things, um. 241 00:11:18,080 --> 00:11:20,480 Speaker 1: And so to me, that's that's that's a critical part 242 00:11:20,559 --> 00:11:22,680 Speaker 1: part of this conversations all about time. So if all 243 00:11:22,720 --> 00:11:25,360 Speaker 1: of a sudden that happens in the next handful of weeks, UM, 244 00:11:25,400 --> 00:11:28,120 Speaker 1: then I don't think this necessarily has to keep on 245 00:11:28,240 --> 00:11:30,480 Speaker 1: going south. I think you can actually get some stabilization. 246 00:11:31,080 --> 00:11:32,800 Speaker 1: To be clear here, then you can't really have a 247 00:11:32,840 --> 00:11:34,800 Speaker 1: second half call until we get to the end of April. 248 00:11:34,880 --> 00:11:37,520 Speaker 1: Would that be fair? I mean, well, I have to 249 00:11:37,559 --> 00:11:42,000 Speaker 1: have a second half call getting a really clear look 250 00:11:42,000 --> 00:11:45,079 Speaker 1: at the outlook. Yeah, Jonathan, I think you're you're hitting 251 00:11:45,080 --> 00:11:47,559 Speaker 1: the nail on the head. It's really difficult to know 252 00:11:47,600 --> 00:11:49,840 Speaker 1: what the second half is going to be until we 253 00:11:49,880 --> 00:11:52,520 Speaker 1: all know what what social distancing and the degree to 254 00:11:52,600 --> 00:11:55,319 Speaker 1: which we are willing to take that UM is going 255 00:11:55,360 --> 00:11:57,760 Speaker 1: to look like UM. But right now, again, if if 256 00:11:57,800 --> 00:11:59,560 Speaker 1: our view that you know, this is basically an end 257 00:11:59,559 --> 00:12:03,160 Speaker 1: of April beginning of May UM issue, then you know 258 00:12:03,240 --> 00:12:06,080 Speaker 1: you can easily have a rebound in in the second 259 00:12:06,120 --> 00:12:07,760 Speaker 1: half of the year. Can we just talk about where 260 00:12:07,760 --> 00:12:09,640 Speaker 1: we've got to in the space of a month, Tom, 261 00:12:09,679 --> 00:12:13,480 Speaker 1: It is absolutely remarkable. We started this month with FED 262 00:12:13,600 --> 00:12:17,520 Speaker 1: funds in and around where once seventy five, and we've 263 00:12:17,520 --> 00:12:20,040 Speaker 1: cut down a hundred and fifty basis points. We've got 264 00:12:20,120 --> 00:12:25,120 Speaker 1: Quee helicopter money and an initial jobless claims print three 265 00:12:25,280 --> 00:12:27,400 Speaker 1: four or five million that some people think we might 266 00:12:27,440 --> 00:12:29,400 Speaker 1: get in the coming weeks as well, in the space 267 00:12:29,440 --> 00:12:32,160 Speaker 1: of a couple of waste. Tom, Yeah, it's been dramatic. 268 00:12:32,160 --> 00:12:34,679 Speaker 1: And again, I think the others have tried to make 269 00:12:34,679 --> 00:12:37,440 Speaker 1: this point, UM, including us and and and I'll try 270 00:12:37,440 --> 00:12:39,120 Speaker 1: to make it again. I think what we have to 271 00:12:39,160 --> 00:12:41,120 Speaker 1: keep in mind is that you know, this is something 272 00:12:41,160 --> 00:12:44,400 Speaker 1: that that we're forcing, right, We're forcing this right, We're 273 00:12:44,440 --> 00:12:47,120 Speaker 1: we're we're making people stay home. I mean, it's it's 274 00:12:47,160 --> 00:12:49,200 Speaker 1: it has a critical idea. You know, if this was 275 00:12:49,240 --> 00:12:52,400 Speaker 1: a stand you know, standard recessions are are very different 276 00:12:52,400 --> 00:12:55,000 Speaker 1: than than than what we're living through right right now. Um. 277 00:12:55,040 --> 00:12:56,640 Speaker 1: You know, this is something in a lot of ways 278 00:12:57,280 --> 00:12:59,480 Speaker 1: because of social distancing. You know, we have we have 279 00:12:59,600 --> 00:13:01,760 Speaker 1: created a dynamics obviously for our health. I mean, it's 280 00:13:01,800 --> 00:13:05,120 Speaker 1: something we obviously need to do. Um. So again that's 281 00:13:05,120 --> 00:13:07,040 Speaker 1: why I say it depends how long that goes on 282 00:13:07,120 --> 00:13:09,480 Speaker 1: for because you can unwind it. Um, It's just this 283 00:13:09,600 --> 00:13:11,559 Speaker 1: a question of time. The longer it goes, the more 284 00:13:11,640 --> 00:13:15,720 Speaker 1: damage you're gonna you're gonna leave in its wake. Yeah. Well, 285 00:13:15,840 --> 00:13:19,079 Speaker 1: Tom Vinnydale Juda is making a really good point. Hats 286 00:13:19,080 --> 00:13:21,600 Speaker 1: off to the state agencies for processing all of these 287 00:13:21,600 --> 00:13:24,320 Speaker 1: claims and the idea that you know, all of these 288 00:13:24,320 --> 00:13:28,000 Speaker 1: people did file to receive unemployment benefits and they are 289 00:13:28,000 --> 00:13:31,120 Speaker 1: going to be receiving some income in very short order. 290 00:13:31,360 --> 00:13:33,600 Speaker 1: Is there any silver lining in that that you can 291 00:13:33,600 --> 00:13:37,920 Speaker 1: take away? You mean, meaning what the fact that they're 292 00:13:37,920 --> 00:13:40,560 Speaker 1: going to be receiving their unemployment insurance benefits. I mean 293 00:13:40,800 --> 00:13:43,360 Speaker 1: that that basically is long that it's not a huge 294 00:13:43,400 --> 00:13:46,280 Speaker 1: disruption completely to the point where people won't be able 295 00:13:46,360 --> 00:13:48,640 Speaker 1: to afford food unless you live on the Upper east 296 00:13:48,679 --> 00:13:52,839 Speaker 1: Side next to Tom. I mean, you know, far be 297 00:13:52,960 --> 00:13:55,600 Speaker 1: it for me to um to to you know, judge 298 00:13:55,600 --> 00:13:57,560 Speaker 1: how other people are going to deal with any situation 299 00:13:57,840 --> 00:14:00,240 Speaker 1: that I'm not here to do that. You know, I'm 300 00:14:00,280 --> 00:14:02,240 Speaker 1: sure that this is going to be extremely painful for 301 00:14:02,240 --> 00:14:03,880 Speaker 1: for some people, and some people will be able to 302 00:14:04,000 --> 00:14:06,480 Speaker 1: endure it. I'm just fine. You know that that's for 303 00:14:06,520 --> 00:14:08,560 Speaker 1: other people to comment on. But what I would say 304 00:14:08,640 --> 00:14:11,440 Speaker 1: is it's very clear given some of the plans that 305 00:14:11,440 --> 00:14:13,800 Speaker 1: have been coming out of Washington d c UM that 306 00:14:13,880 --> 00:14:16,160 Speaker 1: you know, obviously individuals are focused. I mean, they're going 307 00:14:16,160 --> 00:14:19,160 Speaker 1: to upsize unemployment insurance claims, uh, the the amount that 308 00:14:19,200 --> 00:14:21,360 Speaker 1: you can get. They're also going to extend out the 309 00:14:21,400 --> 00:14:24,560 Speaker 1: period over which you get unemployment insurance claims. So there, there, 310 00:14:24,600 --> 00:14:26,920 Speaker 1: there's a lot, there's a lot being done. Chairman Palm 311 00:14:27,080 --> 00:14:29,920 Speaker 1: and NBC earlier this morning speaking to Main Street Tom 312 00:14:29,920 --> 00:14:32,520 Speaker 1: for Sally Tom, we've been critical of the chairman in 313 00:14:32,560 --> 00:14:35,240 Speaker 1: the past. Your take on his performance and the Federal 314 00:14:35,240 --> 00:14:37,880 Speaker 1: reserves moves over the last couple of weeks, it's not 315 00:14:38,000 --> 00:14:41,000 Speaker 1: need to see some signs of success. Yeah, No, Jonathan 316 00:14:41,200 --> 00:14:43,960 Speaker 1: I'm a I'm a fan. I like what they've done, um, 317 00:14:44,360 --> 00:14:46,720 Speaker 1: you know, and I'm i'm I'm obviously not talking about 318 00:14:46,800 --> 00:14:48,640 Speaker 1: is today's show appearance. Um, you know, I mean in 319 00:14:48,640 --> 00:14:51,800 Speaker 1: just terms of the bigger the programs up there laying 320 00:14:51,800 --> 00:14:54,720 Speaker 1: out there, I think that they were aggressive. Um. You know. 321 00:14:54,840 --> 00:14:57,680 Speaker 1: They they didn't wait. Um, they had a lot of 322 00:14:57,680 --> 00:15:01,760 Speaker 1: these teat up already because of the the financial crisis. Um, 323 00:15:01,920 --> 00:15:04,360 Speaker 1: and so they just started unloading. I mean in a 324 00:15:04,360 --> 00:15:06,360 Speaker 1: lot of ways. It was funny in a lot of ways. 325 00:15:06,400 --> 00:15:08,920 Speaker 1: They put that these some of these programs so quickly. Um. 326 00:15:09,840 --> 00:15:11,480 Speaker 1: I got a phone call from from one of our 327 00:15:12,000 --> 00:15:13,960 Speaker 1: front end traders and they said, hey, we don't know 328 00:15:14,000 --> 00:15:16,800 Speaker 1: what the settlement instructions are for one of these programs. Um. 329 00:15:17,040 --> 00:15:19,120 Speaker 1: Because the programs were just coming out with in mass 330 00:15:19,120 --> 00:15:21,480 Speaker 1: and so quick, um that some of the data weren't 331 00:15:21,640 --> 00:15:25,360 Speaker 1: um easy to find. So I'm I'm a fan. I 332 00:15:25,680 --> 00:15:27,360 Speaker 1: think a lot of what they have put a lot 333 00:15:27,400 --> 00:15:31,320 Speaker 1: of stimulus in place between monetary and fiscal authorities. And 334 00:15:31,320 --> 00:15:33,440 Speaker 1: and again, if we're right that this thing can actually 335 00:15:33,480 --> 00:15:36,120 Speaker 1: if we can start to see easing, not not a 336 00:15:36,120 --> 00:15:38,960 Speaker 1: completely going away, but in easing and social distancing UM 337 00:15:39,120 --> 00:15:41,360 Speaker 1: by the end of April beginning of May. UM, there's 338 00:15:41,360 --> 00:15:43,400 Speaker 1: so much stimulus in place, and I think calling for 339 00:15:43,760 --> 00:15:45,800 Speaker 1: a pretty a pretty good rebound in the second half 340 00:15:45,840 --> 00:15:48,280 Speaker 1: a year. It's not a stretch what in the second half. 341 00:15:48,320 --> 00:15:50,720 Speaker 1: Quite clearly, the FETES objective would be to provide some 342 00:15:50,760 --> 00:15:53,200 Speaker 1: stimulus for recovery, but in the media term, it's to 343 00:15:53,200 --> 00:15:56,400 Speaker 1: provide some easy to financial conditions and to really target 344 00:15:56,480 --> 00:15:59,280 Speaker 1: what's happening with market functioning ill market functioning. Tom. Some 345 00:15:59,320 --> 00:16:01,440 Speaker 1: of the problems of last couple of weeks, have they 346 00:16:01,480 --> 00:16:04,520 Speaker 1: eased a lot a little bit. What's your assessment of that? 347 00:16:04,800 --> 00:16:07,000 Speaker 1: You know, my my assessment speaking with some of our 348 00:16:07,000 --> 00:16:10,280 Speaker 1: traders is that they're they're starting the process of easing. UM. 349 00:16:10,320 --> 00:16:12,320 Speaker 1: There's there, there's no question about that. That That doesn't mean 350 00:16:12,320 --> 00:16:14,520 Speaker 1: that the problems are gone, but you have to start 351 00:16:14,560 --> 00:16:17,280 Speaker 1: somewhere UM and and the somewhere as things things seem 352 00:16:17,320 --> 00:16:20,560 Speaker 1: to be getting better from a from a liquidity perspective, UM, 353 00:16:20,600 --> 00:16:23,280 Speaker 1: it's not that they're they're they're they're completely healed, but 354 00:16:23,320 --> 00:16:27,240 Speaker 1: they're they're starting the process of getting better. Top of obvious. 355 00:16:27,480 --> 00:16:29,560 Speaker 1: My best to you in the team over obviously anti 356 00:16:29,600 --> 00:16:31,120 Speaker 1: you and yours as well. Tom always great to get 357 00:16:31,120 --> 00:16:35,400 Speaker 1: your thoughts on this program or just cough a lot. 358 00:16:35,600 --> 00:16:39,960 Speaker 1: Let's go this is important. I had a lot of 359 00:16:40,000 --> 00:16:43,280 Speaker 1: really good emails about coughing. And the good news is 360 00:16:43,320 --> 00:16:45,720 Speaker 1: they brought in a nurse. Surveillance brought in a nurse 361 00:16:46,360 --> 00:16:49,720 Speaker 1: and she's from an island self of Manila for one 362 00:16:49,720 --> 00:16:54,320 Speaker 1: of the tribes, the Manyan tribe, and it's I'm drinking 363 00:16:54,480 --> 00:16:59,520 Speaker 1: some teeth. It's absolutely undrinkable. I mean, dr Leslie vinjer Murray, 364 00:16:59,520 --> 00:17:03,440 Speaker 1: would this teeth it's got it's got in its stuff 365 00:17:03,480 --> 00:17:06,800 Speaker 1: from the Central Park reservoir and what's kidding? That's it's 366 00:17:06,840 --> 00:17:10,119 Speaker 1: why your coffee totally drink up any something stronger than that. 367 00:17:10,160 --> 00:17:12,440 Speaker 1: This morning, let's bring in lens of Leslie Vinja Murray 368 00:17:12,440 --> 00:17:15,440 Speaker 1: Showery Channel House head of US in America's program, Leslie. 369 00:17:15,480 --> 00:17:18,280 Speaker 1: Fantastic to catch up with you. The Senator grink on 370 00:17:18,359 --> 00:17:20,320 Speaker 1: a bill with this guy through the house with these 371 00:17:21,640 --> 00:17:24,440 Speaker 1: oh absolutely, you know. I think there was a question 372 00:17:24,440 --> 00:17:26,800 Speaker 1: of whether it would go through without anybody needing to 373 00:17:26,840 --> 00:17:29,040 Speaker 1: come back. It looks like that's not going to happen, 374 00:17:29,040 --> 00:17:31,040 Speaker 1: but it sounds like they will vote tomorrow morning. It 375 00:17:31,080 --> 00:17:33,680 Speaker 1: will go right through and UM the President Trump will 376 00:17:33,680 --> 00:17:36,960 Speaker 1: find it office. Is an extraordinary package comes out an 377 00:17:36,960 --> 00:17:40,520 Speaker 1: extraordinary time. UM. There have been a lot of concessions 378 00:17:40,520 --> 00:17:43,840 Speaker 1: on both sides have been up. It's bipartisan, you know, 379 00:17:43,920 --> 00:17:46,000 Speaker 1: some of the lessons of two thousand and eight. But 380 00:17:46,040 --> 00:17:48,560 Speaker 1: the Democrats have drawn that have and they've used to 381 00:17:48,640 --> 00:17:51,600 Speaker 1: push for oversight of that money that's going to be 382 00:17:51,720 --> 00:17:54,639 Speaker 1: used to you know, to give loans two small and 383 00:17:54,680 --> 00:17:58,000 Speaker 1: medium sized businesses to to you know, think about helping 384 00:17:58,080 --> 00:18:02,320 Speaker 1: the airlines industry. The woul have been incorporated into UM, 385 00:18:02,359 --> 00:18:04,440 Speaker 1: into the package. So I think we're seeing a lot 386 00:18:04,480 --> 00:18:07,200 Speaker 1: of you know, a lot of concessions because people recognize 387 00:18:07,240 --> 00:18:09,680 Speaker 1: that there needs to be a response to an economy 388 00:18:09,680 --> 00:18:13,000 Speaker 1: that's basically being shut down by this pandemic. Dr Vin Jamura. 389 00:18:13,040 --> 00:18:14,879 Speaker 1: A lot of eyes are on the United States, in 390 00:18:14,960 --> 00:18:18,679 Speaker 1: part because it is the becoming quickly becoming the epicenter 391 00:18:19,119 --> 00:18:21,600 Speaker 1: of the coronavirus, and also because it is the world's 392 00:18:21,600 --> 00:18:25,080 Speaker 1: biggest economy. There is a question about calling it a stimulus, 393 00:18:25,080 --> 00:18:28,040 Speaker 1: that that is inaccurate. This is an effort to plug 394 00:18:28,119 --> 00:18:29,720 Speaker 1: a bit of the whole. How much of the whole 395 00:18:29,720 --> 00:18:32,280 Speaker 1: will this plug if this is it, if this is 396 00:18:32,320 --> 00:18:34,600 Speaker 1: the stimulus, if you want to call it that that 397 00:18:34,720 --> 00:18:37,400 Speaker 1: we get, how much does it sort of stave off 398 00:18:37,440 --> 00:18:41,359 Speaker 1: the decline? Well, look, we can't answer that question until 399 00:18:41,359 --> 00:18:44,640 Speaker 1: we have some sense of how effective the response will 400 00:18:44,680 --> 00:18:48,520 Speaker 1: be to dealing with the real problem, which you've rightly noted, 401 00:18:48,720 --> 00:18:52,000 Speaker 1: is the health crisis caused by this pandemic. And so 402 00:18:53,040 --> 00:18:58,160 Speaker 1: if we don't have a push on testing, on ventilators, 403 00:18:58,280 --> 00:19:03,239 Speaker 1: on coordinating the product and distribution of protective equipment that 404 00:19:03,280 --> 00:19:08,000 Speaker 1: we need in the hospital desperately in New York, in California, 405 00:19:08,119 --> 00:19:11,639 Speaker 1: in other parts of the United States, if that response 406 00:19:12,000 --> 00:19:14,400 Speaker 1: doesn't do what it needs to do in a timely way, 407 00:19:14,480 --> 00:19:17,160 Speaker 1: then of course the economic question is going to come 408 00:19:17,240 --> 00:19:20,200 Speaker 1: right back to us, because it's a it's a result 409 00:19:20,960 --> 00:19:25,520 Speaker 1: of of America's drive to actually deal with um, the 410 00:19:25,520 --> 00:19:28,880 Speaker 1: the pressure on our hospitals and the pressure on our 411 00:19:28,880 --> 00:19:31,720 Speaker 1: communities and the people that are you know, staying home 412 00:19:31,800 --> 00:19:35,160 Speaker 1: not because they don't have jobs, but because businesses are closed. 413 00:19:35,680 --> 00:19:38,359 Speaker 1: I want to talk also about the state response, but 414 00:19:38,560 --> 00:19:41,400 Speaker 1: his New York State has come out and slam the bill, 415 00:19:41,480 --> 00:19:44,239 Speaker 1: saying that it was completely inadequate. The amount that was 416 00:19:44,560 --> 00:19:48,479 Speaker 1: attributed to New York. Uh, they're basically saying that this 417 00:19:48,560 --> 00:19:52,200 Speaker 1: virus is not hitting all regions evenly. What's your sense 418 00:19:52,240 --> 00:19:55,760 Speaker 1: of that in terms of how much the support was 419 00:19:55,840 --> 00:19:59,560 Speaker 1: skewed toward different interests, toward different groups or is it 420 00:19:59,640 --> 00:20:03,160 Speaker 1: sort of a very fair look at the virus, it's 421 00:20:03,240 --> 00:20:07,679 Speaker 1: impact and how to stop some the decline look. I 422 00:20:07,720 --> 00:20:09,679 Speaker 1: think the first thing to note is that it is 423 00:20:09,760 --> 00:20:13,360 Speaker 1: an extraordinary package. We have never seen anything like that. 424 00:20:13,400 --> 00:20:17,240 Speaker 1: And the focus on direct cash payments to people who 425 00:20:17,240 --> 00:20:20,680 Speaker 1: are out of work, the focus on unemployment, the focus 426 00:20:20,720 --> 00:20:24,280 Speaker 1: on getting supporting businesses so that they can keep people 427 00:20:24,760 --> 00:20:26,600 Speaker 1: you know, not turning up every day, but they don't 428 00:20:26,600 --> 00:20:28,920 Speaker 1: have to get rid of their jobs. That if they 429 00:20:28,960 --> 00:20:31,320 Speaker 1: do that the loans will be you know, forgiven. As 430 00:20:31,359 --> 00:20:35,240 Speaker 1: there's oversight. This is all extraordinarily important. Of course, there 431 00:20:35,280 --> 00:20:38,680 Speaker 1: were lots of interest pushing for different things. We saw 432 00:20:38,720 --> 00:20:42,040 Speaker 1: the size of the package double and you know, virtually 433 00:20:42,080 --> 00:20:46,000 Speaker 1: double over the course of you know, several several days. 434 00:20:46,920 --> 00:20:52,240 Speaker 1: New York State isn't a difficult position, and the need 435 00:20:52,400 --> 00:20:56,520 Speaker 1: for the medical equipment is the number one concern, and 436 00:20:56,800 --> 00:21:00,680 Speaker 1: not only the money for it, but actually get firms 437 00:21:01,200 --> 00:21:06,280 Speaker 1: directing them to put their effort into manufacturing those those 438 00:21:06,320 --> 00:21:09,960 Speaker 1: products and distributing them in a way that is cognizant 439 00:21:10,040 --> 00:21:12,000 Speaker 1: at a very different needs. Right now across the country. 440 00:21:12,440 --> 00:21:14,520 Speaker 1: The trend, the trend here, the ramp up of this 441 00:21:14,680 --> 00:21:17,879 Speaker 1: fiscal support is tangible. John has mentioned that, of course, 442 00:21:17,880 --> 00:21:20,439 Speaker 1: folks over the last number of days, Leslie vin Ja 443 00:21:20,520 --> 00:21:22,879 Speaker 1: Murray's with us with Chad a mouse. Leslie, you're maybe 444 00:21:23,280 --> 00:21:26,479 Speaker 1: the most qualified person I can imagine, working out of London, 445 00:21:26,560 --> 00:21:31,040 Speaker 1: of understanding the social differences of how politicians are approaching 446 00:21:31,040 --> 00:21:35,200 Speaker 1: this in America versus in Europe. What's the major distinction 447 00:21:36,040 --> 00:21:41,320 Speaker 1: of the pandemic debate among politicians in America versus what 448 00:21:41,400 --> 00:21:46,479 Speaker 1: you observe on continental Europe in the United Kingdom. Well, 449 00:21:46,520 --> 00:21:49,520 Speaker 1: I mean, I think there are two things. You know, Europeans, 450 00:21:49,560 --> 00:21:52,240 Speaker 1: you know, it's it's sweeping generalization, but it does hold 451 00:21:52,240 --> 00:21:56,639 Speaker 1: true have been more committed to national health systems, to 452 00:21:57,320 --> 00:22:02,320 Speaker 1: UH responses that are coordinated from the center. UM And 453 00:22:02,359 --> 00:22:05,480 Speaker 1: in some ways you can argue know America coming closer 454 00:22:05,520 --> 00:22:08,119 Speaker 1: to Europe, it's moving to the left, moving closer to Europe. 455 00:22:08,119 --> 00:22:12,520 Speaker 1: And questions of unemployment, unemployment insurance. But the big difference 456 00:22:12,840 --> 00:22:18,120 Speaker 1: still is that we are seeing a federally driven response 457 00:22:18,480 --> 00:22:21,640 Speaker 1: responsiveness in the in the U S. And that's very 458 00:22:21,640 --> 00:22:23,840 Speaker 1: different from what's happening in Europe and Europe it's coming 459 00:22:23,840 --> 00:22:27,080 Speaker 1: from the center. The States, the fifty states you know, 460 00:22:27,119 --> 00:22:29,639 Speaker 1: across the United States are taking very horrent policies that 461 00:22:29,800 --> 00:22:35,040 Speaker 1: driving resources. They're making good decisions about medical responses, so 462 00:22:35,080 --> 00:22:38,280 Speaker 1: that we don't see a central response in the same 463 00:22:38,280 --> 00:22:40,560 Speaker 1: way in the US yet. But I think that's going 464 00:22:40,600 --> 00:22:43,359 Speaker 1: to change. It's gonna have to change. Dr Benjaburry, thank 465 00:22:43,359 --> 00:22:48,439 Speaker 1: you so much. Let's Sevenjaburry is with Chatham House joining 466 00:22:48,520 --> 00:22:51,639 Speaker 1: us from Maine right now. Karen Mills her service to 467 00:22:51,680 --> 00:22:55,840 Speaker 1: the nation to President Obama is the twenty three administrator 468 00:22:55,920 --> 00:22:59,360 Speaker 1: of the Small Business Administration. We're thrilled she could Jonas 469 00:22:59,359 --> 00:23:03,080 Speaker 1: in the shadow of Bowden College, UH this morning. Karen, 470 00:23:03,160 --> 00:23:05,840 Speaker 1: Thank you so much for being with us. It is 471 00:23:06,040 --> 00:23:10,359 Speaker 1: truly an unprecedented moment because of those three point three 472 00:23:10,359 --> 00:23:13,640 Speaker 1: million claims and the many more to come. So many 473 00:23:13,680 --> 00:23:17,040 Speaker 1: are linked in and tied to small business. What do 474 00:23:17,080 --> 00:23:19,399 Speaker 1: we need to do for small business? What is the 475 00:23:19,680 --> 00:23:24,920 Speaker 1: urgency given the shock of this statistic, Well, I would 476 00:23:25,040 --> 00:23:27,880 Speaker 1: estimate that more than half of those three point three 477 00:23:27,960 --> 00:23:31,440 Speaker 1: million jobs that we saw lost in the last week 478 00:23:32,440 --> 00:23:36,200 Speaker 1: or two are from small businesses. And the reason is 479 00:23:36,800 --> 00:23:41,000 Speaker 1: that small businesses have very low cash buffers, and if 480 00:23:41,040 --> 00:23:44,080 Speaker 1: they have twenty six days of cash on hand and 481 00:23:44,240 --> 00:23:47,719 Speaker 1: you have to shut the doors, then they don't have 482 00:23:47,760 --> 00:23:51,280 Speaker 1: any choice. There's nothing coming in and in three weeks 483 00:23:51,320 --> 00:23:54,760 Speaker 1: they'll be dead. So they need to let their employees go. 484 00:23:55,280 --> 00:23:57,359 Speaker 1: And you know, half of the people who work in 485 00:23:57,400 --> 00:24:00,760 Speaker 1: this country own or work for a small busines nous, 486 00:24:00,760 --> 00:24:03,399 Speaker 1: So on a normal day, that's half the jobs. But 487 00:24:03,480 --> 00:24:05,720 Speaker 1: I bet it's more than half of the three point 488 00:24:05,760 --> 00:24:09,600 Speaker 1: three So, karenly, given what we know from some press 489 00:24:09,640 --> 00:24:12,480 Speaker 1: reports coming out about the Senate of fiscal stimulus plan, 490 00:24:12,880 --> 00:24:17,200 Speaker 1: what's in that plan for small business? Well, the good 491 00:24:17,200 --> 00:24:19,480 Speaker 1: news is that there is a lot in that plan 492 00:24:19,600 --> 00:24:23,280 Speaker 1: for small business. In the fiscal crisis in two thousand nine, 493 00:24:23,960 --> 00:24:27,000 Speaker 1: we actually lost one point eight million small business laws 494 00:24:27,119 --> 00:24:30,480 Speaker 1: of jobs in the first quarter of two thousand nine 495 00:24:30,480 --> 00:24:32,199 Speaker 1: and I had to jump up and down in the 496 00:24:32,200 --> 00:24:35,359 Speaker 1: White House to make sure they're paying attention to small businesses. 497 00:24:35,760 --> 00:24:38,840 Speaker 1: But not so today, everybody has figured out that this 498 00:24:38,960 --> 00:24:43,440 Speaker 1: is a crisis. There's three hundred and forty nine billion 499 00:24:43,800 --> 00:24:48,600 Speaker 1: dollars with a B for loans to small businesses, which 500 00:24:48,720 --> 00:24:53,679 Speaker 1: will be forgiven if they are used to pay payroll 501 00:24:54,040 --> 00:24:58,119 Speaker 1: and rent and UH interests on loans. So I think 502 00:24:58,440 --> 00:25:01,240 Speaker 1: the bill has it right which get money into the 503 00:25:01,280 --> 00:25:06,040 Speaker 1: hands of small businesses to keep them solvent. That the 504 00:25:06,359 --> 00:25:10,240 Speaker 1: eight weeks is the period where you can get loan forgiveness, 505 00:25:10,240 --> 00:25:14,359 Speaker 1: so they're planning on at least eight weeks in this bill, Karen, 506 00:25:14,480 --> 00:25:17,800 Speaker 1: The Small Business Administration is sort of like that final 507 00:25:17,880 --> 00:25:20,040 Speaker 1: scene in the movie of Raiders of a Lost Arc 508 00:25:20,040 --> 00:25:23,240 Speaker 1: where they go into you know, the cavernous building and 509 00:25:23,600 --> 00:25:26,400 Speaker 1: try to figure out where the arc is and all that. 510 00:25:26,720 --> 00:25:30,320 Speaker 1: There's there's an implied bureaucracy here. Give us the true 511 00:25:30,400 --> 00:25:37,879 Speaker 1: story of the bureaucracy of the Small Business Administration in Washington. Well, 512 00:25:37,920 --> 00:25:41,040 Speaker 1: you know, this is government, so it does not turn 513 00:25:41,160 --> 00:25:43,960 Speaker 1: on a dime. It's more like an ocean liner. But 514 00:25:44,160 --> 00:25:47,359 Speaker 1: it does know how to get money out to small businesses. 515 00:25:47,440 --> 00:25:50,520 Speaker 1: And the trick here is that it actually uses three 516 00:25:50,560 --> 00:25:55,600 Speaker 1: thousands of American's banks. So there's two questions. Can the 517 00:25:55,760 --> 00:25:59,359 Speaker 1: banks get going quickly and can the s b A 518 00:25:59,560 --> 00:26:03,680 Speaker 1: and try inasury make it easy enough to push that 519 00:26:03,720 --> 00:26:06,880 Speaker 1: money out. Usually there's a whole bunch of gating issues, 520 00:26:07,320 --> 00:26:10,119 Speaker 1: and this bill takes a lot of them away. I 521 00:26:10,160 --> 00:26:12,680 Speaker 1: think somebody was smart in that room when they were 522 00:26:12,720 --> 00:26:18,359 Speaker 1: writing it, because they're removing impediments. I'm I heard Steve 523 00:26:18,800 --> 00:26:22,119 Speaker 1: miniche and say this should be a streamline process in 524 00:26:22,160 --> 00:26:25,560 Speaker 1: a week. But frankly, I'm worried, and I'm worried about 525 00:26:25,600 --> 00:26:28,560 Speaker 1: the banks. They need to do some things on their 526 00:26:28,680 --> 00:26:31,800 Speaker 1: end to get the money out, and I'm worried that 527 00:26:31,880 --> 00:26:35,080 Speaker 1: they won't be motivated to do it quickly enough for 528 00:26:35,119 --> 00:26:38,919 Speaker 1: the small businesses. So, and Karen's interesting, So give us 529 00:26:38,960 --> 00:26:42,040 Speaker 1: your thoughts. Hearing you had experience with the two thousand 530 00:26:42,280 --> 00:26:46,680 Speaker 1: two nine recession, how bad do you think it's going 531 00:26:46,760 --> 00:26:50,320 Speaker 1: to be for small businesses here over the you know, 532 00:26:50,359 --> 00:26:53,760 Speaker 1: the next several months and throughout the year. Well, it's 533 00:26:53,760 --> 00:26:58,080 Speaker 1: gonna be terrible because their business just went away. And 534 00:26:58,160 --> 00:27:01,360 Speaker 1: as we said, like individuals, they have very little reserved 535 00:27:02,160 --> 00:27:06,880 Speaker 1: So if we can keep them solvent for the period 536 00:27:06,880 --> 00:27:10,119 Speaker 1: of time that they're closed, then we have a chance 537 00:27:10,320 --> 00:27:13,800 Speaker 1: of bringing them back or most of them back. And 538 00:27:14,359 --> 00:27:16,639 Speaker 1: one of the good pieces of this legislation is that 539 00:27:16,760 --> 00:27:21,199 Speaker 1: actually covers sole proprietorships. There's twenty four million of the 540 00:27:21,280 --> 00:27:25,080 Speaker 1: thirty million small businesses are just one person who runs 541 00:27:25,080 --> 00:27:29,639 Speaker 1: a business and that's their livelihood. So they are eligible 542 00:27:29,720 --> 00:27:33,359 Speaker 1: to pay themselves through these loans and have it all forgiven. 543 00:27:33,920 --> 00:27:37,320 Speaker 1: I think if we can keep people going, then their 544 00:27:37,359 --> 00:27:41,399 Speaker 1: business can come back when demand comes back. Nothing the 545 00:27:41,480 --> 00:27:44,119 Speaker 1: Fed can do to stimulate the economy is going to 546 00:27:44,240 --> 00:27:48,000 Speaker 1: work until these businesses can open their doors. So it 547 00:27:48,080 --> 00:27:53,280 Speaker 1: depends a lot on whether it's eight weeks or longer. Karen, 548 00:27:53,320 --> 00:27:55,280 Speaker 1: thank you so much. Karen mills with us of course 549 00:27:55,359 --> 00:27:59,920 Speaker 1: formly with a small business Administration greatly appreciate her ability 550 00:28:00,080 --> 00:28:03,200 Speaker 1: be with us by today. Thanks for listening to the 551 00:28:03,240 --> 00:28:09,680 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 552 00:28:10,080 --> 00:28:14,320 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 553 00:28:14,359 --> 00:28:18,560 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 554 00:28:19,080 --> 00:28:20,160 Speaker 1: I'm Bloomberg Radio.