Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: I'm pleased to say is David Kelly of JP Morgan
Speaker 1: Asset Management, Lead Chief Global Strategist. David always great to
Speaker 1: catch up with you in a round about one hour
Speaker 1: and a half. We're going to have some dreadful data
Speaker 1: in the United States for America. It won't surprise many
Speaker 1: people that it's ugly. It will be ugly. But how
Speaker 1: should we be thinking about some of these data points
Speaker 1: as they come in through the next couple of weeks. David, Well,
Speaker 1: I think we should not overreact to them. What we've
Speaker 1: they are going to be ugly. I mean, we could
Speaker 1: get two million new unemployment claims that would be three
Speaker 1: times the highest number we've ever scene. That could be
Speaker 1: followed up by another few weeks of similar things. So
Speaker 1: I think the unemployee rate could quickly go above ten
Speaker 1: percent UM. Ten point eight percent is the highest that
Speaker 1: we've seen since the Great depression. We could we could
Speaker 1: hit that. That's all pretty ugly, But look at what's
Speaker 1: going on in terms of government action here to try
Speaker 1: and take the sting and the pain out of this.
Speaker 1: I think the release build of the Senate just passed
Speaker 1: earlier this morning will provide the ability for a lot
Speaker 1: of workers to to get past this period and be
Speaker 1: able to pay their rent and pay their their bills. Um.
Speaker 1: And I think the idea is to rehold the economy
Speaker 1: and suspended animation until we get control of this virus.
Speaker 1: And we will eventually do that. I mean, that's the
Speaker 1: other thing. It's it's a long time, you know, A
Speaker 1: year seems like a long time to wait for a vaccine.
Speaker 1: But when we get a vaccine, this thing is done. Um.
Speaker 1: So it's not endless, um, but it is obviously painful
Speaker 1: in the interim. Let's think a little bit more deeply
Speaker 1: about that particular package. There as some people out there
Speaker 1: saying that it won't prevent a recession. While it's not
Speaker 1: designed to prevent a recession. It's about limiting the damage
Speaker 1: and building a bridge through this very very tough time
Speaker 1: and over some very troubled waters. So two big objectives
Speaker 1: for a plan like this prevent more defaults and obviously
Speaker 1: limit layoffs. Do you think it can do that? Well,
Speaker 1: I'm not sure there's actually gonna limit the layoffs. I
Speaker 1: mean it may for some companies because there is obviously
Speaker 1: a lot of this in which there's small business loans
Speaker 1: which you're which essential you get, um, you can you
Speaker 1: can the read small business grants, you can use them
Speaker 1: for payroll. So I think that may actually limit some
Speaker 1: layoffs and they may have some impact on the unemployment rate.
Speaker 1: But as you say, I mean, you know, I regard
Speaker 1: this kind of as night quill for the social distancing recession,
Speaker 1: you know, I mean, we don't actually have something that's
Speaker 1: going to cure the common Code where we can reduce
Speaker 1: its symptoms. And this is the way of reducing the symptoms,
Speaker 1: the painful symptoms of recession. Um, we'll have to see
Speaker 1: on the layoffs, because it works two ways. Yes, we've
Speaker 1: given incentives to small businesses not to file front employment
Speaker 1: or the layoff workers. But actually that's six hundred dollar
Speaker 1: payment um per week on eployment benefits that actually gives
Speaker 1: an incentive to workers to actually get laid off. I mean,
Speaker 1: the average unemployment benefit being paid in January five dollars.
Speaker 1: Now you're saying it's going to be nine five dollars
Speaker 1: a week. That's basic a thousand dollars a week, fifty
Speaker 1: two dollars a year. There are an awful lot of workers,
Speaker 1: particularly these uh these industries that are most effectives. We
Speaker 1: weren't making anything like fifty two dollars a year. So
Speaker 1: it actually technically makes sense for them to say the employee,
Speaker 1: thank you so much for keeping on the books, would
Speaker 1: you mind firing me please so I can connect these
Speaker 1: unemployment benefits the next four weeks four months and then
Speaker 1: and then let's talk David Kelly brilliantly said, and this
Speaker 1: goes you know, Lindsey Graham of the Carolinas was talking
Speaker 1: about this as well, which is the incentives in the
Speaker 1: perverse incentives and the constructive and that we're setting up.
Speaker 1: What is your reading on the history of this wall
Speaker 1: of money and what it does to the incentives of
Speaker 1: a nation. Well, I think I mean, at least it's
Speaker 1: temporary because you know, you want you want to prevent hardship,
Speaker 1: and if you send out a check to people in cash, um,
Speaker 1: you know at the start, that does help. But there
Speaker 1: is there is some perverse incentive there. And you do
Speaker 1: want people who can work work from home or work
Speaker 1: remotely or whatever. You know, as you say you're gonna
Speaker 1: do yoga instruction over the internet, fine do it. You
Speaker 1: shouldn't have an incentive to say, well, I can't do
Speaker 1: is because I have to go down to claim unemployment benefits.
Speaker 1: So I think there are some problems in it. I
Speaker 1: understand the creaky system. This is the only way they
Speaker 1: could actually get the money out fast, and I get that,
Speaker 1: but there is there is that problem. And and also
Speaker 1: you know, all this cash, it's not actually going to
Speaker 1: stimulate economic activity because what are you gonna do with
Speaker 1: the money? I mean, what can people do that all
Speaker 1: the fun stuff in life have been closed down. So
Speaker 1: I think we're gonna sit on it. But that also
Speaker 1: means that when the virus, when we have a vaccine
Speaker 1: and people can actually spend the money, we're gonna have
Speaker 1: a real surgeon economic activity. I have a huge problem
Speaker 1: with this, folks. And so much of this is anecdotal
Speaker 1: incomes from you know, the experience along the way. How
Speaker 1: is it a a David Kelly a zillion years ago
Speaker 1: on a Livia blanch Yard still it up and put
Speaker 1: up a chart and he said, look, there's been a
Speaker 1: huge drop here in nominal GDP and real g d P.
Speaker 1: Here's the glide path back and someday out there we
Speaker 1: get back to normal. Can we just assume that X
Speaker 1: number of quarters or years out everything gets back to
Speaker 1: normal and the government basically gets to lower the depth
Speaker 1: that wasn't cured in the heart of this crisis. Well
Speaker 1: we could. So the first part. Can the economy get
Speaker 1: back to normal? Absolutely? Once you know, they may be
Speaker 1: slightly different companies. There will be some companies that die
Speaker 1: in there some companies that's that will be born. But
Speaker 1: once we have the old clear here on the disease,
Speaker 1: this economy will want to get back to full employment.
Speaker 1: And I think it can do that now, whether the
Speaker 1: government has the discipline to fade to fade out all
Speaker 1: these these things and take the hard choices which it
Speaker 1: hasn't taken to this point. I mean, remember in the
Speaker 1: last few years before this, we were running a boom
Speaker 1: economy and we ran up a depit to almost five
Speaker 1: percent of GDP, which is utterly reckless. So we do
Speaker 1: that in the best of times, Do we really think
Speaker 1: that we're going to have the splene to Washington to
Speaker 1: cut the depth afterwards. I'm pretty skeptical of that. So
Speaker 1: the economy and get back to normal, But I don't
Speaker 1: think that's Washington is going to be disciplined, John, Tom,
Speaker 1: you say yeah that many times I ask you, we're
Speaker 1: going to ask a question, you can ask you a question.
Speaker 1: I'm just joined David Kelly. John, I'm getting used to
Speaker 1: this working at home. I bet you are, and I'm
Speaker 1: sure ever one of the studio I was getting used
Speaker 1: to it too. It might not want your home, they
Speaker 1: might want to keep you there, David. Great to have
Speaker 1: you with us on the program. Key of JP Morgan
Speaker 1: Asset Management. Let's bring a temple Sally shown. We NBC
Speaker 1: Capital Markets chief US economist Tom We knew the number
Speaker 1: was going to be bad. There's a lot of economic
Speaker 1: pain behind that economic statistic. Walk me through how we
Speaker 1: should be processing a number like that in the weeks
Speaker 1: to come. I mean, let let me first start by saying, honest, see,
Speaker 1: we thought that there was a risk and that we
Speaker 1: could be even worse than that. Um, you know, we're
Speaker 1: we're we're trying to I's we're in a period where
Speaker 1: sort of the standard economic data that we all like
Speaker 1: to look at, economists like to look at. UM. You know,
Speaker 1: that's that's not really gonna be very helpful right now.
Speaker 1: So we're trying to find sort of you know, let's
Speaker 1: call it alternative data that that we can sort of
Speaker 1: scour to try to get a sense for you know,
Speaker 1: how how how the backdrop is UM evolving on a
Speaker 1: on a live basis. UM. And you know, one thing
Speaker 1: we found was this this sort of interesting piece of
Speaker 1: data from something called home Base. UM. The whole home
Speaker 1: Base is basically a company that that allows UH small
Speaker 1: businesses to to you know, manage schedules and etcetera, etcetera. UM.
Speaker 1: And so when when when we were looking at that
Speaker 1: recently UM. And the great thing about this data it
Speaker 1: actually comes in daily UM. And when we were looking
Speaker 1: at that data, I mean that that data really started
Speaker 1: to scare the heck out of us. I mean we
Speaker 1: we literally thought that you could see a five to
Speaker 1: ten million claims number today. UM. So so three million UM. Honest,
Speaker 1: I think relative to expectations, UH is is actually pretty modest.
Speaker 1: And in fact, you know, I think that's the futures
Speaker 1: are even responding to it. I mean futures are taking
Speaker 1: back some under decline. So, um, look, I think the
Speaker 1: reality is as we go forward on a go on
Speaker 1: a go forward basis, you know, I think that this
Speaker 1: is just the beginning of claims remaining incredibly elevated. Um. Again,
Speaker 1: I think that will like this home base, I think
Speaker 1: are are are really indicative of some real payment labor
Speaker 1: back drop, Tom Persolle, what is the average income of
Speaker 1: those three points three million people? What kind of jobs
Speaker 1: are those? You have a some rough statistic of what
Speaker 1: the average take home pay is of all this? Well,
Speaker 1: you know what what I would say. What I would
Speaker 1: say is this if you look at you sort of
Speaker 1: where some of the again, if we if we were
Speaker 1: just using this, I mean, I'm giving these guys this
Speaker 1: free plug, you know, if we keep on using this
Speaker 1: home base. Um, I think it's really interesting if if
Speaker 1: you look at some of where where the really big
Speaker 1: declines came from, some of the really big declines came
Speaker 1: and see what we would define a sort of more
Speaker 1: of the you know, the lower income areas. So you know,
Speaker 1: food and drink, um, you know that saw some very
Speaker 1: sizable declines. Um, personal care saw some very sizable declines.
Speaker 1: So right now. I think it's very easy to make
Speaker 1: the case that a lot of the jobs that are
Speaker 1: being lost are in the lower income spectrum. Tom. One
Speaker 1: thing that we've been talking a lot about is the
Speaker 1: speed of this happening and the speed of the response
Speaker 1: or lack thereof, in terms of trying to prevent companies
Speaker 1: from laying people off to start with. And perhaps one
Speaker 1: way to read this number is the layoffs have already
Speaker 1: begun to such a degree in mass that there is
Speaker 1: a question how much is reversible At this point, we
Speaker 1: are expecting the bill to pass in Congress shortly. But
Speaker 1: from that perspective, given the fact that we're seeing the
Speaker 1: layoffs already taking place in a mass way, how concerning
Speaker 1: is it that this damage is irreversible in the short term? No,
Speaker 1: I I I yeah, I wouldn't take that that that
Speaker 1: tapped on this. I would say that if in fact,
Speaker 1: I would even take the opposite view. I think if
Speaker 1: you actually you can seem the massive amount of layoffs
Speaker 1: straight away, and then you can start to plane out
Speaker 1: on on some level. Right, So the question then becomes
Speaker 1: how long is social distancing going to remain in place? Um,
Speaker 1: you know, again, the degree which it is in place
Speaker 1: right now. Um, and and and that's where this is
Speaker 1: a very time sensitive conversation, which again I think it's
Speaker 1: an idea that is being is elusive to a lot
Speaker 1: of folks. So if this goes until the end of April, right,
Speaker 1: let's say, you know, extreme social distancing in the United
Speaker 1: States goes to the end of April, um, you know,
Speaker 1: then it's really easy, you know easy, then you can
Speaker 1: actually come to a reasonable conclusion on what sort of
Speaker 1: growth is going to be um, you know, and and
Speaker 1: so again this is really illustrative. So so just bear
Speaker 1: with me for a second. So right now we're looking
Speaker 1: for you know about let's just end say round numbers
Speaker 1: about ten percent decline in Q two growth. And that's
Speaker 1: assuming that severe social distancing basically starts to come to
Speaker 1: an end towards the end of April, you know, sort
Speaker 1: of beginning of May. If we slide that out, we
Speaker 1: slide out social distancing, extreme social distance to the to
Speaker 1: the end of May instead, then all of a sudden,
Speaker 1: O minus ten becomes minus right, So do you see
Speaker 1: the time center. So there's sort of a sliding scale
Speaker 1: on this, and that's why I say time sensitivities is
Speaker 1: critical because if all of a sudden, you know, uh,
Speaker 1: you know Dr Fauci or or um uh, you know,
Speaker 1: any of the other folks that that are talking about
Speaker 1: the numbers, if all of a sudden they say, hey,
Speaker 1: it looks like the numbers are starting to um stabilize. Um,
Speaker 1: you know, we're getting toward the peak. Once you get
Speaker 1: toward the peak, whenever that might be, that's when you
Speaker 1: you can actually start to have the conversation of Okay,
Speaker 1: now we can talk about how we're going to reopen things, um.
Speaker 1: And so to me, that's that's that's a critical part
Speaker 1: part of this conversations all about time. So if all
Speaker 1: of a sudden that happens in the next handful of weeks, UM,
Speaker 1: then I don't think this necessarily has to keep on
Speaker 1: going south. I think you can actually get some stabilization.
Speaker 1: To be clear here, then you can't really have a
Speaker 1: second half call until we get to the end of April.
Speaker 1: Would that be fair? I mean, well, I have to
Speaker 1: have a second half call getting a really clear look
Speaker 1: at the outlook. Yeah, Jonathan, I think you're you're hitting
Speaker 1: the nail on the head. It's really difficult to know
Speaker 1: what the second half is going to be until we
Speaker 1: all know what what social distancing and the degree to
Speaker 1: which we are willing to take that UM is going
Speaker 1: to look like UM. But right now, again, if if
Speaker 1: our view that you know, this is basically an end
Speaker 1: of April beginning of May UM issue, then you know
Speaker 1: you can easily have a rebound in in the second
Speaker 1: half of the year. Can we just talk about where
Speaker 1: we've got to in the space of a month, Tom,
Speaker 1: It is absolutely remarkable. We started this month with FED
Speaker 1: funds in and around where once seventy five, and we've
Speaker 1: cut down a hundred and fifty basis points. We've got
Speaker 1: Quee helicopter money and an initial jobless claims print three
Speaker 1: four or five million that some people think we might
Speaker 1: get in the coming weeks as well, in the space
Speaker 1: of a couple of waste. Tom, Yeah, it's been dramatic.
Speaker 1: And again, I think the others have tried to make
Speaker 1: this point, UM, including us and and and I'll try
Speaker 1: to make it again. I think what we have to
Speaker 1: keep in mind is that you know, this is something
Speaker 1: that that we're forcing, right, We're forcing this right, We're
Speaker 1: we're we're making people stay home. I mean, it's it's
Speaker 1: it has a critical idea. You know, if this was
Speaker 1: a stand you know, standard recessions are are very different
Speaker 1: than than than what we're living through right right now. Um.
Speaker 1: You know, this is something in a lot of ways
Speaker 1: because of social distancing. You know, we have we have
Speaker 1: created a dynamics obviously for our health. I mean, it's
Speaker 1: something we obviously need to do. Um. So again that's
Speaker 1: why I say it depends how long that goes on
Speaker 1: for because you can unwind it. Um, It's just this
Speaker 1: a question of time. The longer it goes, the more
Speaker 1: damage you're gonna you're gonna leave in its wake. Yeah. Well,
Speaker 1: Tom Vinnydale Juda is making a really good point. Hats
Speaker 1: off to the state agencies for processing all of these
Speaker 1: claims and the idea that you know, all of these
Speaker 1: people did file to receive unemployment benefits and they are
Speaker 1: going to be receiving some income in very short order.
Speaker 1: Is there any silver lining in that that you can
Speaker 1: take away? You mean, meaning what the fact that they're
Speaker 1: going to be receiving their unemployment insurance benefits. I mean
Speaker 1: that that basically is long that it's not a huge
Speaker 1: disruption completely to the point where people won't be able
Speaker 1: to afford food unless you live on the Upper east
Speaker 1: Side next to Tom. I mean, you know, far be
Speaker 1: it for me to um to to you know, judge
Speaker 1: how other people are going to deal with any situation
Speaker 1: that I'm not here to do that. You know, I'm
Speaker 1: sure that this is going to be extremely painful for
Speaker 1: for some people, and some people will be able to
Speaker 1: endure it. I'm just fine. You know that that's for
Speaker 1: other people to comment on. But what I would say
Speaker 1: is it's very clear given some of the plans that
Speaker 1: have been coming out of Washington d c UM that
Speaker 1: you know, obviously individuals are focused. I mean, they're going
Speaker 1: to upsize unemployment insurance claims, uh, the the amount that
Speaker 1: you can get. They're also going to extend out the
Speaker 1: period over which you get unemployment insurance claims. So there, there,
Speaker 1: there's a lot, there's a lot being done. Chairman Palm
Speaker 1: and NBC earlier this morning speaking to Main Street Tom
Speaker 1: for Sally Tom, we've been critical of the chairman in
Speaker 1: the past. Your take on his performance and the Federal
Speaker 1: reserves moves over the last couple of weeks, it's not
Speaker 1: need to see some signs of success. Yeah, No, Jonathan
Speaker 1: I'm a I'm a fan. I like what they've done, um,
Speaker 1: you know, and I'm i'm I'm obviously not talking about
Speaker 1: is today's show appearance. Um, you know, I mean in
Speaker 1: just terms of the bigger the programs up there laying
Speaker 1: out there, I think that they were aggressive. Um. You know.
Speaker 1: They they didn't wait. Um, they had a lot of
Speaker 1: these teat up already because of the the financial crisis. Um,
Speaker 1: and so they just started unloading. I mean in a
Speaker 1: lot of ways. It was funny in a lot of ways.
Speaker 1: They put that these some of these programs so quickly. Um.
Speaker 1: I got a phone call from from one of our
Speaker 1: front end traders and they said, hey, we don't know
Speaker 1: what the settlement instructions are for one of these programs. Um.
Speaker 1: Because the programs were just coming out with in mass
Speaker 1: and so quick, um that some of the data weren't
Speaker 1: um easy to find. So I'm I'm a fan. I
Speaker 1: think a lot of what they have put a lot
Speaker 1: of stimulus in place between monetary and fiscal authorities. And
Speaker 1: and again, if we're right that this thing can actually
Speaker 1: if we can start to see easing, not not a
Speaker 1: completely going away, but in easing and social distancing UM
Speaker 1: by the end of April beginning of May. UM, there's
Speaker 1: so much stimulus in place, and I think calling for
Speaker 1: a pretty a pretty good rebound in the second half
Speaker 1: a year. It's not a stretch what in the second half.
Speaker 1: Quite clearly, the FETES objective would be to provide some
Speaker 1: stimulus for recovery, but in the media term, it's to
Speaker 1: provide some easy to financial conditions and to really target
Speaker 1: what's happening with market functioning ill market functioning. Tom. Some
Speaker 1: of the problems of last couple of weeks, have they
Speaker 1: eased a lot a little bit. What's your assessment of that?
Speaker 1: You know, my my assessment speaking with some of our
Speaker 1: traders is that they're they're starting the process of easing. UM.
Speaker 1: There's there, there's no question about that. That That doesn't mean
Speaker 1: that the problems are gone, but you have to start
Speaker 1: somewhere UM and and the somewhere as things things seem
Speaker 1: to be getting better from a from a liquidity perspective, UM,
Speaker 1: it's not that they're they're they're they're completely healed, but
Speaker 1: they're they're starting the process of getting better. Top of obvious.
Speaker 1: My best to you in the team over obviously anti
Speaker 1: you and yours as well. Tom always great to get
Speaker 1: your thoughts on this program or just cough a lot.
Speaker 1: Let's go this is important. I had a lot of
Speaker 1: really good emails about coughing. And the good news is
Speaker 1: they brought in a nurse. Surveillance brought in a nurse
Speaker 1: and she's from an island self of Manila for one
Speaker 1: of the tribes, the Manyan tribe, and it's I'm drinking
Speaker 1: some teeth. It's absolutely undrinkable. I mean, dr Leslie vinjer Murray,
Speaker 1: would this teeth it's got it's got in its stuff
Speaker 1: from the Central Park reservoir and what's kidding? That's it's
Speaker 1: why your coffee totally drink up any something stronger than that.
Speaker 1: This morning, let's bring in lens of Leslie Vinja Murray
Speaker 1: Showery Channel House head of US in America's program, Leslie.
Speaker 1: Fantastic to catch up with you. The Senator grink on
Speaker 1: a bill with this guy through the house with these
Speaker 1: oh absolutely, you know. I think there was a question
Speaker 1: of whether it would go through without anybody needing to
Speaker 1: come back. It looks like that's not going to happen,
Speaker 1: but it sounds like they will vote tomorrow morning. It
Speaker 1: will go right through and UM the President Trump will
Speaker 1: find it office. Is an extraordinary package comes out an
Speaker 1: extraordinary time. UM. There have been a lot of concessions
Speaker 1: on both sides have been up. It's bipartisan, you know,
Speaker 1: some of the lessons of two thousand and eight. But
Speaker 1: the Democrats have drawn that have and they've used to
Speaker 1: push for oversight of that money that's going to be
Speaker 1: used to you know, to give loans two small and
Speaker 1: medium sized businesses to to you know, think about helping
Speaker 1: the airlines industry. The woul have been incorporated into UM,
Speaker 1: into the package. So I think we're seeing a lot
Speaker 1: of you know, a lot of concessions because people recognize
Speaker 1: that there needs to be a response to an economy
Speaker 1: that's basically being shut down by this pandemic. Dr Vin Jamura.
Speaker 1: A lot of eyes are on the United States, in
Speaker 1: part because it is the becoming quickly becoming the epicenter
Speaker 1: of the coronavirus, and also because it is the world's
Speaker 1: biggest economy. There is a question about calling it a stimulus,
Speaker 1: that that is inaccurate. This is an effort to plug
Speaker 1: a bit of the whole. How much of the whole
Speaker 1: will this plug if this is it, if this is
Speaker 1: the stimulus, if you want to call it that that
Speaker 1: we get, how much does it sort of stave off
Speaker 1: the decline? Well, look, we can't answer that question until
Speaker 1: we have some sense of how effective the response will
Speaker 1: be to dealing with the real problem, which you've rightly noted,
Speaker 1: is the health crisis caused by this pandemic. And so
Speaker 1: if we don't have a push on testing, on ventilators,
Speaker 1: on coordinating the product and distribution of protective equipment that
Speaker 1: we need in the hospital desperately in New York, in California,
Speaker 1: in other parts of the United States, if that response
Speaker 1: doesn't do what it needs to do in a timely way,
Speaker 1: then of course the economic question is going to come
Speaker 1: right back to us, because it's a it's a result
Speaker 1: of of America's drive to actually deal with um, the
Speaker 1: the pressure on our hospitals and the pressure on our
Speaker 1: communities and the people that are you know, staying home
Speaker 1: not because they don't have jobs, but because businesses are closed.
Speaker 1: I want to talk also about the state response, but
Speaker 1: his New York State has come out and slam the bill,
Speaker 1: saying that it was completely inadequate. The amount that was
Speaker 1: attributed to New York. Uh, they're basically saying that this
Speaker 1: virus is not hitting all regions evenly. What's your sense
Speaker 1: of that in terms of how much the support was
Speaker 1: skewed toward different interests, toward different groups or is it
Speaker 1: sort of a very fair look at the virus, it's
Speaker 1: impact and how to stop some the decline look. I
Speaker 1: think the first thing to note is that it is
Speaker 1: an extraordinary package. We have never seen anything like that.
Speaker 1: And the focus on direct cash payments to people who
Speaker 1: are out of work, the focus on unemployment, the focus
Speaker 1: on getting supporting businesses so that they can keep people
Speaker 1: you know, not turning up every day, but they don't
Speaker 1: have to get rid of their jobs. That if they
Speaker 1: do that the loans will be you know, forgiven. As
Speaker 1: there's oversight. This is all extraordinarily important. Of course, there
Speaker 1: were lots of interest pushing for different things. We saw
Speaker 1: the size of the package double and you know, virtually
Speaker 1: double over the course of you know, several several days.
Speaker 1: New York State isn't a difficult position, and the need
Speaker 1: for the medical equipment is the number one concern, and
Speaker 1: not only the money for it, but actually get firms
Speaker 1: directing them to put their effort into manufacturing those those
Speaker 1: products and distributing them in a way that is cognizant
Speaker 1: at a very different needs. Right now across the country.
Speaker 1: The trend, the trend here, the ramp up of this
Speaker 1: fiscal support is tangible. John has mentioned that, of course,
Speaker 1: folks over the last number of days, Leslie vin Ja
Speaker 1: Murray's with us with Chad a mouse. Leslie, you're maybe
Speaker 1: the most qualified person I can imagine, working out of London,
Speaker 1: of understanding the social differences of how politicians are approaching
Speaker 1: this in America versus in Europe. What's the major distinction
Speaker 1: of the pandemic debate among politicians in America versus what
Speaker 1: you observe on continental Europe in the United Kingdom. Well,
Speaker 1: I mean, I think there are two things. You know, Europeans,
Speaker 1: you know, it's it's sweeping generalization, but it does hold
Speaker 1: true have been more committed to national health systems, to
Speaker 1: UH responses that are coordinated from the center. UM And
Speaker 1: in some ways you can argue know America coming closer
Speaker 1: to Europe, it's moving to the left, moving closer to Europe.
Speaker 1: And questions of unemployment, unemployment insurance. But the big difference
Speaker 1: still is that we are seeing a federally driven response
Speaker 1: responsiveness in the in the U S. And that's very
Speaker 1: different from what's happening in Europe and Europe it's coming
Speaker 1: from the center. The States, the fifty states you know,
Speaker 1: across the United States are taking very horrent policies that
Speaker 1: driving resources. They're making good decisions about medical responses, so
Speaker 1: that we don't see a central response in the same
Speaker 1: way in the US yet. But I think that's going
Speaker 1: to change. It's gonna have to change. Dr Benjaburry, thank
Speaker 1: you so much. Let's Sevenjaburry is with Chatham House joining
Speaker 1: us from Maine right now. Karen Mills her service to
Speaker 1: the nation to President Obama is the twenty three administrator
Speaker 1: of the Small Business Administration. We're thrilled she could Jonas
Speaker 1: in the shadow of Bowden College, UH this morning. Karen,
Speaker 1: Thank you so much for being with us. It is
Speaker 1: truly an unprecedented moment because of those three point three
Speaker 1: million claims and the many more to come. So many
Speaker 1: are linked in and tied to small business. What do
Speaker 1: we need to do for small business? What is the
Speaker 1: urgency given the shock of this statistic, Well, I would
Speaker 1: estimate that more than half of those three point three
Speaker 1: million jobs that we saw lost in the last week
Speaker 1: or two are from small businesses. And the reason is
Speaker 1: that small businesses have very low cash buffers, and if
Speaker 1: they have twenty six days of cash on hand and
Speaker 1: you have to shut the doors, then they don't have
Speaker 1: any choice. There's nothing coming in and in three weeks
Speaker 1: they'll be dead. So they need to let their employees go.
Speaker 1: And you know, half of the people who work in
Speaker 1: this country own or work for a small busines nous,
Speaker 1: So on a normal day, that's half the jobs. But
Speaker 1: I bet it's more than half of the three point
Speaker 1: three So, karenly, given what we know from some press
Speaker 1: reports coming out about the Senate of fiscal stimulus plan,
Speaker 1: what's in that plan for small business? Well, the good
Speaker 1: news is that there is a lot in that plan
Speaker 1: for small business. In the fiscal crisis in two thousand nine,
Speaker 1: we actually lost one point eight million small business laws
Speaker 1: of jobs in the first quarter of two thousand nine
Speaker 1: and I had to jump up and down in the
Speaker 1: White House to make sure they're paying attention to small businesses.
Speaker 1: But not so today, everybody has figured out that this
Speaker 1: is a crisis. There's three hundred and forty nine billion
Speaker 1: dollars with a B for loans to small businesses, which
Speaker 1: will be forgiven if they are used to pay payroll
Speaker 1: and rent and UH interests on loans. So I think
Speaker 1: the bill has it right which get money into the
Speaker 1: hands of small businesses to keep them solvent. That the
Speaker 1: eight weeks is the period where you can get loan forgiveness,
Speaker 1: so they're planning on at least eight weeks in this bill, Karen,
Speaker 1: The Small Business Administration is sort of like that final
Speaker 1: scene in the movie of Raiders of a Lost Arc
Speaker 1: where they go into you know, the cavernous building and
Speaker 1: try to figure out where the arc is and all that.
Speaker 1: There's there's an implied bureaucracy here. Give us the true
Speaker 1: story of the bureaucracy of the Small Business Administration in Washington. Well,
Speaker 1: you know, this is government, so it does not turn
Speaker 1: on a dime. It's more like an ocean liner. But
Speaker 1: it does know how to get money out to small businesses.
Speaker 1: And the trick here is that it actually uses three
Speaker 1: thousands of American's banks. So there's two questions. Can the
Speaker 1: banks get going quickly and can the s b A
Speaker 1: and try inasury make it easy enough to push that
Speaker 1: money out. Usually there's a whole bunch of gating issues,
Speaker 1: and this bill takes a lot of them away. I
Speaker 1: think somebody was smart in that room when they were
Speaker 1: writing it, because they're removing impediments. I'm I heard Steve
Speaker 1: miniche and say this should be a streamline process in
Speaker 1: a week. But frankly, I'm worried, and I'm worried about
Speaker 1: the banks. They need to do some things on their
Speaker 1: end to get the money out, and I'm worried that
Speaker 1: they won't be motivated to do it quickly enough for
Speaker 1: the small businesses. So, and Karen's interesting, So give us
Speaker 1: your thoughts. Hearing you had experience with the two thousand
Speaker 1: two nine recession, how bad do you think it's going
Speaker 1: to be for small businesses here over the you know,
Speaker 1: the next several months and throughout the year. Well, it's
Speaker 1: gonna be terrible because their business just went away. And
Speaker 1: as we said, like individuals, they have very little reserved
Speaker 1: So if we can keep them solvent for the period
Speaker 1: of time that they're closed, then we have a chance
Speaker 1: of bringing them back or most of them back. And
Speaker 1: one of the good pieces of this legislation is that
Speaker 1: actually covers sole proprietorships. There's twenty four million of the
Speaker 1: thirty million small businesses are just one person who runs
Speaker 1: a business and that's their livelihood. So they are eligible
Speaker 1: to pay themselves through these loans and have it all forgiven.
Speaker 1: I think if we can keep people going, then their
Speaker 1: business can come back when demand comes back. Nothing the
Speaker 1: Fed can do to stimulate the economy is going to
Speaker 1: work until these businesses can open their doors. So it
Speaker 1: depends a lot on whether it's eight weeks or longer. Karen,
Speaker 1: thank you so much. Karen mills with us of course
Speaker 1: formly with a small business Administration greatly appreciate her ability
Speaker 1: be with us by today. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.