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

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

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

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg The

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Speaker 1: Conversation with the Vice Chairman of the Fed, Richard Clara,

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Speaker 1: joining me again as our chief International Lincolnomic correspondent. I'm

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Speaker 1: sure that Michael McKee is with us. You know him

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Speaker 1: from the press conference with Chairman Powell, usually bringing bringing

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Speaker 1: the room to a bit of a quiet, and I'm

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Speaker 1: thrilled that Mike could joined me, uh this morning. Every

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Speaker 1: moment here is precious. It is, indeed, Mr Vice Chairman,

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Speaker 1: in historic time. Let me ask the question that I

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Speaker 1: saw in so much research and reading over the weekend,

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Speaker 1: the confidence that the Fed can move the balance she

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Speaker 1: back to normal down the road after this pandemic, after

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Speaker 1: a number of years of return to economic growth, how

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Speaker 1: do you get the genie back in the bottle? Well, Tom,

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Speaker 1: thank you for that question, and enjoy doing your show.

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Speaker 1: As always, First and foremost, I think we have to

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Speaker 1: recognize that we're in a really unique situation. The coronavirus

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Speaker 1: pandemic is taking a tragic human toll in the US

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Speaker 1: around the world, and and we've asked people to step

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Speaker 1: back from economic activity investing in public health, and so

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Speaker 1: there's going to be a hit to economic activity. And

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Speaker 1: what the Chair Power and We've indicated is we have

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Speaker 1: put in place these lending facilities um under our authority

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Speaker 1: to act under unusual and exigent circumstances. Uh. It's an

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Speaker 1: ambitious and entirely appropriate, aggressive and forcefully use of monetary

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Speaker 1: policy in these times. But to your specific question, yes,

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Speaker 1: I am. I'm very confident that as the economy recovers

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Speaker 1: from this hit and began begins to return and recover,

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Speaker 1: that we at the over your time, will be able

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Speaker 1: to unwind these programs. You know, Tom and Mike, there's

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Speaker 1: nothing fundamentally wrong with the U s economy. It came

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Speaker 1: into the year in a very strong position both in

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Speaker 1: terms of employment and growth and financial markets. And I'm

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Speaker 1: confident we can get back there and and at the

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Speaker 1: appropriate time we can scale back these programs. Let me

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Speaker 1: follow up on that, Dr Claren and ask you this,

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Speaker 1: With probably billions of dollars in loans out the companies

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Speaker 1: at near zero for over four years. Are you ever

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Speaker 1: going to be able to raise interest rates again? Or

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Speaker 1: are we looking at essentially the Fed doing yield curve

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Speaker 1: control now? Well, right now, we're not doing yield curve control.

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Speaker 1: But we indicated in our March statement UH is we're

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Speaker 1: going to keep rates of where they are, which is

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Speaker 1: basically very close to zero, until the economy is on

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Speaker 1: track to achieve this maximum employment and price stabilities. And

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Speaker 1: so the path of the economy is going to dictate

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Speaker 1: ultimately the path of rates. But in terms of our

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Speaker 1: our programs, these facilities will be in place during the

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Speaker 1: period when the economy is being impacted by the virus UH.

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Speaker 1: In the term sheets for these programs, you'll see that

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Speaker 1: the facilities are due to to stop lending in September

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Speaker 1: of this year. Obviously we can extend that has needed.

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Speaker 1: Those loans will be in place, they'll have a term

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Speaker 1: of several years and know at the appropriate time, I

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Speaker 1: do not think that we will have that That will

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Speaker 1: be a challenge to us when it's appropriate, But again

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Speaker 1: that's a long way down the road. We think where

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Speaker 1: rates are now is where they need to be, given

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Speaker 1: where the economy is Tom mentioned the notes he's getting

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Speaker 1: from people asking questions, and the one I get most

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Speaker 1: often is why did you feel it necessary to go

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Speaker 1: into buying junk. Well, we have put in place no

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Speaker 1: fewer than nine facilities over the past several weeks, and

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Speaker 1: and first and foremost are our focus in these facilities,

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Speaker 1: UM is making sure that credit is flowing to businesses,

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Speaker 1: UH and households. And obviously we're we're in the commercial

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Speaker 1: paper market. In the talent program, will be financing auto

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Speaker 1: loans and credit cards. UM in our main street lending program,

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Speaker 1: we're gonna be partnering with banks to provide financing to

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Speaker 1: businesses and so the really the vast bulk of these

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Speaker 1: programs is really focused on new lending. There is an

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Speaker 1: element of one of these programs that will UH that

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Speaker 1: will be purchasing assets in the secondary market. I think

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Speaker 1: an important point for your listeners and viewers to recognize

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Speaker 1: UM is that several important companies in the US were

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Speaker 1: investment grade up until this crisis hit. And what we

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Speaker 1: said in our programs is that you know, if they've

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Speaker 1: been downgraded after the after the data of the crisis,

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Speaker 1: they will have access to these facilities. But that really

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Speaker 1: is our focus in these programs, Mr Vice Chairman. The

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Speaker 1: elasticity here the outcomes of this pandemic are extraordin and

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Speaker 1: I'm not asking you to play epidemiologists today unless you'd

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Speaker 1: like to. About what I would suggest is we don't

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Speaker 1: know the speed of outcome. What do you do if

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Speaker 1: we get a more optimistic outcome? What do you do

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Speaker 1: as an institution if there's a rapidity to our recovery? Well,

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Speaker 1: and obviously obviously time we are looking at a very

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Speaker 1: wide range of scenarios, as I'm sure our other central

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Speaker 1: banks and and policy makers. And we have gotten a

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Speaker 1: lot of bad news, uh in the last several weeks

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Speaker 1: in terms of the spread of the virus um and

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Speaker 1: the impact obviously in the labor market with the sixteen

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Speaker 1: million initial claims over the last several weeks. So the

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Speaker 1: economy is taking a hit, as I've said, because there's

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Speaker 1: nothing wrong with the economy. We've asked people to step

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Speaker 1: back from economic activity. Uh. There are scenarios that are

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Speaker 1: more optimistic, and obviously we we certainly hope and pray

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Speaker 1: that they materialize. If they do, that'll be a good

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Speaker 1: situation and to be in we will have in place

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Speaker 1: programs that are essentially time. What we're doing is we're

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Speaker 1: building a bridge until the economy can get to the

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Speaker 1: other side and begin to recover. And if that happens sooner,

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Speaker 1: we'll we'll certainly know what to do at that time.

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Speaker 1: Let's get out on the bridge right now. Of course,

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Speaker 1: you know, Michael McKee is only in charge of rude

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Speaker 1: questions to the Chairman at the press conference. Let me

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Speaker 1: ask a rude question to you, what does the bridge

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Speaker 1: look like out here? From the FED meetings onward and

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Speaker 1: from the minutes of the FED we will see how

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Speaker 1: will that debate unfold within your Federal Reserve system. Well,

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Speaker 1: obviously you know that those discussions are are private. We

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Speaker 1: can talk, we can discuss as I do my own views,

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Speaker 1: but our meetings I think serve a very useful purpose.

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Speaker 1: As you know, we've had to do a couple of

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Speaker 1: meetings in March by video conference, um, and that was

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Speaker 1: necessary given the rapidity with which the situation was was changing.

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Speaker 1: But you know, at our committee we will be discussing,

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Speaker 1: i'm sure, are the new facilities that we've announced and

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Speaker 1: discussed about putting them in place, and then we'll get

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Speaker 1: a briefing from staff on the economic outlook and importantly

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Speaker 1: looking at the scenarios both positive, UH and negative. I

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Speaker 1: think the FLMC serves a very important role in in

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Speaker 1: our monetary policy discussions. The MC, the committee makes those decisions,

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Speaker 1: but of course the Board of Governors of which I'm

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Speaker 1: a member, also plays a role in actually approving and

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Speaker 1: designing these programs facilities. Well, you're the model guy, and

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Speaker 1: Tom put me in charge of asking the rude question.

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Speaker 1: So he asked about optimism. Let me ask you about pessimism.

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Speaker 1: What do you as the worst case scenario and do

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Speaker 1: you think we get a damaging disinflationary impulse out of this? Well, um,

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Speaker 1: I'm not going to go through scenarios now. We only

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Speaker 1: have ten minutes and that would take longer. What I

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Speaker 1: will say though, and I think it's an excellent question

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Speaker 1: because you'll see there were some some discussion back in

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Speaker 1: January and February that were we to be hit with

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Speaker 1: the Corona virus. And it's important to remember that the

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Speaker 1: first fatality in the US was in very late February

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Speaker 1: or early March um and and as a result, there

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Speaker 1: was some speculation at the time that if we got

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Speaker 1: hit with the pandemic, that that because of supply chains,

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Speaker 1: that it was an averge supply shock, which would be inflationary.

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Speaker 1: I never believe that. I never bought into that. I

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Speaker 1: always thought if we got hit with the virus spread

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Speaker 1: that it would in net be a shock to aggregate demand.

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Speaker 1: And that's what I think it is, and demand is

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Speaker 1: impacting very adversely. We're trying to offset that with our

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Speaker 1: policies and fiscal policies playing an important role. But I

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Speaker 1: think on that is disinflationary. I don't believe it's deflationary.

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Speaker 1: I think we have the tools to keep the US

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Speaker 1: economy out of deflation um and to and and to

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Speaker 1: support the economy through this challenging period. But on the

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Speaker 1: narrow question of is this more of a supplier demand shock,

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Speaker 1: it's definitely more of a demand shock, I believe. Well,

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Speaker 1: to follow up on top question about what the FED

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Speaker 1: discussion is in the future, I know you had to

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Speaker 1: put the fire out, but have you not created the

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Speaker 1: mother of all moral hazard now that you will end

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Speaker 1: up with a lot more dangerous risk taking because everybody

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Speaker 1: knows that if something goes wrong, the FED is there

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Speaker 1: to backstop them. Well, you know, my I really don't

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Speaker 1: believe that's the case. I think moral hazard impassed circumstances,

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Speaker 1: when it's been associated with financial accesses or private sector

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Speaker 1: SS is obviously something to assess and think about. But

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Speaker 1: in this case, this is entirely an exogenous event. People

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Speaker 1: are not businesses are closing, and people aren't unemployed due

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Speaker 1: to any fault of their their own. And I think

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Speaker 1: this is a clear this is the clearest possible case

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Speaker 1: that those are not relevant considerations. Again, what the Chair

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Speaker 1: is indicated, and what we've said publicly is we have

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Speaker 1: these lending facilities in place because of these unusual and

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Speaker 1: exigent circumstances, and we'll use our authority forcefully and aggressively

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Speaker 1: until we're in common the economy is recovery. But at

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Speaker 1: that point we'll be prepared and we'll be able to

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Speaker 1: put these tools away when the economy is well on

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Speaker 1: the way to the road to recovery. And I just

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Speaker 1: do not see that as being an issue in the

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Speaker 1: present circumstance. Mr Vice Chairman, One more question quickly, if

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Speaker 1: I could, There will be a point where things will

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Speaker 1: be calmer and you will be at your Columbia University

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Speaker 1: with Phelps and Stiglets and the rest talking about this,

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Speaker 1: are we forever moving away from a rules based debate?

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Speaker 1: Is discretion the future for any central bank? Well, it's

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Speaker 1: an excellent question in you and I've discussed it many

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Speaker 1: times on your show. The reality of central banking is

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Speaker 1: it's always been about. I think constrained discretion and rules

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Speaker 1: an important part of communication and thinking about the application

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Speaker 1: of discretion. But again, obviously, in these circumstances, the central

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Speaker 1: bank needs the discretion to put in place policy. He's

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Speaker 1: under unusual and oxygen circumstances, and I think it's entirely

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Speaker 1: appropriate that we've exercised that now, Richard Clarien to thank

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Speaker 1: you so much, greatly appreciate it. This morning. A lot

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Speaker 1: of people John have rationalized his theory. Dennis Gartman took

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Speaker 1: it further. He said, not only should you own gold,

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Speaker 1: but he said in dollars, maybe not hedge it in

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Speaker 1: something that will be weaker, and that would begin in

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Speaker 1: euro And it is truly without exaggeration of moonshot. Gary Shilling,

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Speaker 1: I would suggest over the years, over the decades, I

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Speaker 1: should say, has had the great call of long term

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Speaker 1: lower interest rates. But Gartman challenges him now with an

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Speaker 1: extraordinary call on gold, and he joins us snow Dennis

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Speaker 1: thrilled that you could be with us on gold. Real

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Speaker 1: simple here, if I didn't make the gartman like mains,

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Speaker 1: can I get on board now? Absolutely? Tom. First of all,

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Speaker 1: let us understand that I'm not a gold bug. I'm

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Speaker 1: not one of those believers that the world is coming

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Speaker 1: to an end, that that all currencies are going to zero,

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Speaker 1: that governments are doing absolutely the wrong things. I'm actually

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Speaker 1: an optimist. But I do think that the monetary authorities

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Speaker 1: around the world, led by the FED, but the Bank

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Speaker 1: of Canada, the Bank of England, the Bank, the e

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Speaker 1: c B, the Bank of Japan, even the Bank even

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Speaker 1: the People's Bank of China, have no choice but to

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Speaker 1: remain expansionary. They are. They are expansionary. Now they shall

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Speaker 1: become the expansionary. In the future, They'll become even more expansionary.

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Speaker 1: And as that happens, gold probably shall be the beneficiary.

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Speaker 1: So is it too late to be a buyer of gold? Actually,

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Speaker 1: it's just broken out above fifteen, above sevent pounds and

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Speaker 1: dollars dollar terms, and I think it's going a good

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Speaker 1: deal higher. So again, as I said, I'm not a

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Speaker 1: gold bug. There are times when you should own gold.

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Speaker 1: There are times when you should not. This is a

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Speaker 1: time where you should. Other than the answer, tiffanies Dennis Gartman,

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Speaker 1: how should I own gold? What is the best UH

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Speaker 1: way to own gold? To play? There are many ways

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Speaker 1: to own gold. You can own gold futures, but I

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Speaker 1: don't think that that's the better way. I think that

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Speaker 1: there are e t f that one can own. There

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Speaker 1: is at least half a dozen of them. You can

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Speaker 1: hold the gold miners. I hate to give any individual

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Speaker 1: recommendations as to individual stocks because the SEC gets an

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Speaker 1: upset when I do that, So I'll just simply say

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Speaker 1: that there are e t f s a plenty on

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Speaker 1: the New York Stock Exchange and various mining companies. I

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Speaker 1: prefer the e t s. I think it's a better

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Speaker 1: way to go. Dennis. Your bullish call on gold is

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Speaker 1: it basically a bet on inflation and the debasement of

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Speaker 1: major currencies. It's at least it's not a bet on

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Speaker 1: inflation yet it's it's It isn't, however, a bet on

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Speaker 1: the debasement of major currencies. As I said, the FED,

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Speaker 1: the Bank of Canada, the Bank of England, the ECB

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Speaker 1: at all have been expansionary, and they have no choice

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Speaker 1: but to remain expansionary given the current coronavirus circumstances and

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Speaker 1: the lack of a better term, the recession slash depression

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Speaker 1: that the world is finding itself in. So it's actually

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Speaker 1: a debasement of the currencies that that is uh the

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Speaker 1: driving for no question about that. So, Dennis, I'm just

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Speaker 1: wondering going forward the main driver as far as who

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Speaker 1: the buyers will be of gold. How much does this

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Speaker 1: stem from central banks trying to move away from dollars.

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Speaker 1: We've seen Russia do this, We've seen China do this,

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Speaker 1: and how much does this stem from individuals just getting

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Speaker 1: cold gold and putting in their mattresses. Well, first of all,

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Speaker 1: you're one of the few people who really does understand

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Speaker 1: that the that it has been central bank buying that has,

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Speaker 1: in my opinion, has been the driving force. The Russian

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Speaker 1: central banker, I'm trying to remember her name. I just

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Speaker 1: won't blank. That's what happens when you're gonna be sixty

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Speaker 1: nine years old, you forget important names. But she's been

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Speaker 1: a huge buyer of gold. The Chinese have been a

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Speaker 1: major buyer of gold, and now I think it's the

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Speaker 1: retail that will come in and be a buyer of gold.

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Speaker 1: The Indians have been the second largest buyer of gold individually.

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Speaker 1: They've been locked down, and even with their locked down,

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Speaker 1: the fact that gold has not given up any of

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Speaker 1: its gains and when the when the India reopens, and

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Speaker 1: it shall reopen, I think there would be a mark

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Speaker 1: propensity on their part to be buyers. Again, what's the

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Speaker 1: most avocation time frame for you to decide to own equities?

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Speaker 1: Don't tell me ten years or twenty years, and don't

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Speaker 1: tell me two days or three days. What's the time

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Speaker 1: zoned dentists that you have for having a belief in

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Speaker 1: the equity market? Honestly, I do think I want to Well,

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Speaker 1: let me say, I hope that the lows have been seen.

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Speaker 1: Do I think that the lows will be tested? Probably?

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Speaker 1: But I do want to believe and I do think

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Speaker 1: that the lows have probably been seeing amidst the panic

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Speaker 1: of two weeks ago. So where do I think go

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Speaker 1: stock prices will will go? I think I think that

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Speaker 1: from here on out, if you can, if you can

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Speaker 1: have not be if you missed the first five percent

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Speaker 1: on the upside and you already have. I think from

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Speaker 1: here on out you want to err upon the side

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Speaker 1: of being a buyer, and I think you want to

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Speaker 1: be a buyer for next several years. Honestly, maybe it's

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Speaker 1: just hope. Maybe it's just a belief in America. Maybe

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Speaker 1: it's just a hope that we'll get out of this.

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Speaker 1: But I do want to think that the lows have

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Speaker 1: been seen. How's the FED doing? I think the FED

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Speaker 1: is doing yeoman's work, to be quite honest. I think

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Speaker 1: perhaps they they bent a little bit to the president's demeanor,

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Speaker 1: and and maybe they went a little overboard, but I

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Speaker 1: think that they stood up with the adult in the

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Speaker 1: room when nobody else was going to be the adult

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Speaker 1: in the room. I think they've led the other central

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Speaker 1: banks in in in acting, and I applaud them. Many people,

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Speaker 1: especially those of us on the far right, take to

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Speaker 1: FED the task. I think the FED should be applauded.

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Speaker 1: Dennis Cartman, thank you so much for being with us.

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Speaker 1: Betsy Grace Sick Morgan Stanley, Head of Banks and Diversified

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Speaker 1: Finance Research, Betsy, always a pleasure to catch up with you,

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Speaker 1: especially on earnings week. So let's start with the earnings.

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Speaker 1: What are you looking for in the numbers this week

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Speaker 1: when many people see Q onea stale and Q two

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Speaker 1: three four as almost unpredictable. Thank you so much for

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Speaker 1: having me this morning. UM. I look forward to next

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Speaker 1: time when we can be in person. But I appreciate

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Speaker 1: question here on earnings. I think what people are really

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Speaker 1: going to look forward is a couple of things. Number one,

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Speaker 1: what is at that earnings generation rate excluding the reserve

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Speaker 1: build for credit? Just to understand what the core is

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Speaker 1: going into this, you know, two three four Q downturn

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Speaker 1: as you indicate. But then the second thing is how

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Speaker 1: are the banks treating their reserves under the new accounting standard? Right?

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Speaker 1: Because today, um, we have a new accounting standard started

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Speaker 1: January one, and so we should be ready tomorrow JPM

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Speaker 1: and Wells report we should be ready for um, you know,

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Speaker 1: very large reserve builds to reflect you know, the bank

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Speaker 1: management's estimates of lifetime losses. The history is they take

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Speaker 1: the arcane accounting and they overdo it. They overreserve, they

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Speaker 1: over save the money for a lousy rainy day, and

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Speaker 1: then down the road they go, oops, we over saved,

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Speaker 1: and they release those reserves and everybody wins. Do you

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Speaker 1: predict that for these banks. You know, it's so interest

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Speaker 1: doing of a question, Tom, because you know banks never

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Speaker 1: over reserve. It's always adequate, right, that's the wording, alright,

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Speaker 1: just want to make sure they're always adequate. And the

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Speaker 1: definition of adequate is changing, actually, I should say has

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Speaker 1: changed January one with this new accounting role. So so

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Speaker 1: what the management teams are required to do, starting in

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Speaker 1: one queue is say to themselves, what is the lifetime

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Speaker 1: losses in my loan book today on March three one?

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Speaker 1: In a world that has you know, flipped on its head,

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Speaker 1: as we all know, so that's a big ask. As

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Speaker 1: a result, people like me, we made the best estimate

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Speaker 1: for what we think they'll do, but we you know,

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Speaker 1: everyone on the phone should be prepared for our understanding

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Speaker 1: that you know, the outcome is going to be different.

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Speaker 1: Management teams will have a different point of view than

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Speaker 1: all of us, you know, sell fighters and buy siders

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Speaker 1: because they have the best knowledge of their customer set obviously,

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Speaker 1: so it's gonna be very exciting, earning, very fighting. I

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Speaker 1: can't wait, Betsy, very exciting. I'm sure. One area that

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Speaker 1: a lot of people are focused on as consumer credit

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Speaker 1: losses and sort of a view into just how bad

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Speaker 1: the situation is there. What are you expecting on that front?

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Speaker 1: Consumer credit is also exciting because the fifteenth of the

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Speaker 1: month we get master Trust data, and you know, to

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Speaker 1: your point earlier one cue, you know, the one key

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Speaker 1: results aren't going to be really telling about what the

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Speaker 1: forward look is going to be. And also the forward

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Speaker 1: look numbers aren't perfect either because, um, if you have

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Speaker 1: been affected by COVID and you can call your bank

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Speaker 1: and request forbearance, that means that your loan will not

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Speaker 1: show up as a delinquency, you know, until the pandemic

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Speaker 1: and the economy is back on its feet and the

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Speaker 1: banks determine, hey, you know, now is the time that

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Speaker 1: I can assess whether or not you're delinquent or not.

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Speaker 1: So the delinquency staff and the net charge off staffs

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Speaker 1: are going to be much more modest than expected for

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Speaker 1: a while until you know, the emergency is lifted. So

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Speaker 1: the best data to look at for how the consumer

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Speaker 1: is really doing on a month to month basis will

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Speaker 1: be that master Trust data. Look for the payment rate.

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Speaker 1: The payment rates back in eight for a lot of

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Speaker 1: banks now at basically telling you consumers have been paying

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Speaker 1: down their loans on the credit card side, that payment

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Speaker 1: rate should start to fall, right, that will be your

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Speaker 1: best indicator of the fifteenth of every month. Betsy, You've

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Speaker 1: touched on something really important, and that's the degree to

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Speaker 1: which banks have stepped in to help consumers and businesses.

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Speaker 1: And there was a quote from Jamie Diamond of JP

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Speaker 1: Morgan just the other week and his letter to shareholders.

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Speaker 1: They really stood out for me. Knowing there will be

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Speaker 1: a major recession means that we are exposing ourselves to

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Speaker 1: billions of dollars of additional credit losses as we help

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Speaker 1: out consumers and businesses through difficult times. There is a view, Betsy,

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Speaker 1: that these banks can act countercyclically in a way that

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Speaker 1: maybe they wouldn't have done in the past. Can you

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Speaker 1: just talk to us about bank behavior. Will they contin

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Speaker 1: you to do this or is this downturn as it

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Speaker 1: extends into two, three and four, do you expect them

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Speaker 1: to pull back on help and consumers and businesses on

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Speaker 1: lending to these people? Yeah, I mean, we did this

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Speaker 1: work on the excess capital in the banking system and

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Speaker 1: how much excess capital they have to support corporates and

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Speaker 1: you know their their loan box and the vast majority

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Speaker 1: of banks we cover, both my names and my colleague

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Speaker 1: Kins will be on the mid cap bank side. You know,

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Speaker 1: they have more than enough excess capital to support line

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Speaker 1: draw downs in the commercial space. Now you know, line

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Speaker 1: draw downs were running it like going into this and

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Speaker 1: you know we're expecting they go up significantly, but you're

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Speaker 1: not going to get to a hundred. So there is

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Speaker 1: excess capital and system. All the things that were put

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Speaker 1: into place in O eight and post O A are

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Speaker 1: there to help in this kind of environment, I have

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Speaker 1: to say. So I do think that they will continue

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Speaker 1: to support their customers. And importantly, look the capital markets

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Speaker 1: are and you're gonna speaking with Vice chair Clara soon, um,

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Speaker 1: I mean the FED is part of this as well.

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Speaker 1: Being in the market and helping to support the capital

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Speaker 1: markets opens that up. And we saw what a couple

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Speaker 1: of weeks UM of very high issuance in i G

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Speaker 1: some of that line drought down frankly could be paid

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Speaker 1: down with IQ issuance. That has happened by some companies already.

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Speaker 1: So I would not say it's only banks, it's banks

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Speaker 1: plus FED and FED is UM helping out as well.

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Speaker 1: So Betsy, just to sort of wrap this all together.

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Speaker 1: I'm wondering if you're bullish on the banks and you

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Speaker 1: think that their shares have gotten overly beaten up when

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Speaker 1: it comes to their potential to be more profitable than

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Speaker 1: people expect. On the other side of this, yeah, you know,

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Speaker 1: we have an equal weight rating on the banks right now. Um,

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Speaker 1: you know, both in large captin my colleagun his mid

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Speaker 1: cap names, and there are certain banks that we are overweight.

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Speaker 1: You know. Frankly City is our top pick right now. Um,

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Speaker 1: it's trading it about half book, and we think that

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Speaker 1: as we get through this, uh, they can re emerge

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Speaker 1: with the ninth percent. Are are we I wouldn't say

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Speaker 1: it's like minting money to Tom's words, but you know

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Speaker 1: it's you know, close to earning their cost of capital

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Speaker 1: back again. They were just making their cost of capital

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Speaker 1: before we went into this, and you're you're sitting at

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Speaker 1: the stock that's trading in a half book. We're also

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Speaker 1: overweight JP and bavet Um and the m X and Discover. Betsy.

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Speaker 1: Always great to catch up with you, especially on earnings

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Speaker 1: weak Betsy Grisi them more in Stanley. Betsy, my best

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Speaker 1: to you and to say thank you very much. For

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Speaker 1: joining us this morning. Something happened this weekend, which is

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Speaker 1: really important, folks, in the exhaustion of this pandemic, and

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Speaker 1: of course nothing like the exhaustion of the first responders

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Speaker 1: and nurses, the doctors, the endless ambulance drivers that I

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Speaker 1: hear outside this Mount Sinai Hospital in New York. I

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Speaker 1: realized that I had really lost track of where this

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Speaker 1: pandemic is. So, Paul, I got up early this morning

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Speaker 1: and I really read in on a global basis as

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Speaker 1: best I could, and where we are. And what is

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Speaker 1: extraordinary about this, Paul, is the complexity involved, the trends,

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Speaker 1: the mathematics, the where are we in any given moment.

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Speaker 1: It's extraordinary, isn't it. It really is, Tom, And it's dynamic.

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Speaker 1: Is dynamic across the globe. It's dynamic across the globe.

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Speaker 1: And you look at Italy, you look at China, you

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Speaker 1: look at some of the UH in the US, and

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00:24:31,600 --> 00:24:34,040
Speaker 1: it's even regionally within the US as well. So it's

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Speaker 1: very dynamic. And when we say that to all of

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Speaker 1: you listening on Sirius x M, I guess some better

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00:24:38,600 --> 00:24:42,040
Speaker 1: news in Louisiana, but some real challenges out there. One

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Speaker 1: of the experts we've spoken to is Joshua Sharfstein. He

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Speaker 1: is it the Johns Hopkins University, Bloomberg School of Public Health,

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Speaker 1: and of course their medical institute as well. We should

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Speaker 1: say that Mr Bloomberg is a philanthropist to his Johns

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Speaker 1: Hopkins University and his engineering program of years ago, and

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Speaker 1: of course founder of Bloomberg GILP. In this radio and

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Speaker 1: television station as well, we spoke to Dr Scherfstein about

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Speaker 1: the state of this pandemic. So we are not yet

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Speaker 1: at New York levels in Baltimore, UM, but I certainly

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Speaker 1: have heard of what you have talked about, that there

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Speaker 1: is a moment um sort of midway in the illness

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Speaker 1: where some people get quite sick and at that point

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Speaker 1: can even um proceeds to death UM, and that that's

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Speaker 1: very scary obviously for the medical team. It's terrible tragedy

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Speaker 1: in every case that had happened. And I think what

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Speaker 1: people are wondering is that if there is something that

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Speaker 1: can be done to focus on that moment in terms

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Speaker 1: of therapeutic to prevent what maybe an overwhelming immune reaction

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Speaker 1: that is leading to that second decline, help us with

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Speaker 1: the idea of a secondary or reinfection. This is something

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Speaker 1: out of the influenza of a hundred years ago. But

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Speaker 1: do you think it's a valid wory for listeners and

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Speaker 1: our viewers, this idea that there's a virus and then

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Speaker 1: we re engage with society and we come up again

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Speaker 1: against the same virus a second or even a third time.

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Speaker 1: There's a lot we don't know about this virus, but

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Speaker 1: in general is somebody who has fought the virus off

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Speaker 1: and recovered is unlikely to get that same kind of

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Speaker 1: infection again. I think it's to be very unusual for

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Speaker 1: that to be the case. And even the reports of

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Speaker 1: sometimes people may have a coverable virus later are not

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Speaker 1: quite the same as saying people can really get sick twice.

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Speaker 1: So I think that we'll have to see what the

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Speaker 1: data is, but it's probably, um, you know, a reasonable

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00:26:44,040 --> 00:26:46,920
Speaker 1: assumption at this point that people who at least were

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Speaker 1: reasonably sticking up that are unlikely to get that sick again.

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Speaker 1: The Prime Minister was exceptionally eloquent. I read it in

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Speaker 1: the Telegraph this morning about the nurse from New Zealand,

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Speaker 1: and I believe the nurse from Portugal as well, who

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Speaker 1: we literally said kept him alive. Give us an update

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Speaker 1: on what you see at Johns Hopkins among the staff,

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Speaker 1: the nurses and all the others assisting the doctors. Well,

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Speaker 1: it's an incredible dedication, um at john Hopkins and and elsewhere.

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Speaker 1: They really people you know, have felt um that this

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00:27:23,760 --> 00:27:28,800
Speaker 1: is they're calling this is a responsibility that the medical

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00:27:28,840 --> 00:27:32,920
Speaker 1: center has been very supportive in terms of making sure

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Speaker 1: there's protective equipment and all kinds of other mental health

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00:27:37,920 --> 00:27:41,800
Speaker 1: resources for staff. Um. But you know, this is and

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00:27:42,080 --> 00:27:44,639
Speaker 1: it's not just the doctors and the nurses. There's a

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00:27:44,680 --> 00:27:49,200
Speaker 1: real sense of purpose really for for everybody who's working there.

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Speaker 1: And I think you know, this is a moment in

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Speaker 1: a way that many people have been training for, even

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Speaker 1: if they didn't realize that at the time. One final question, doctor,

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Speaker 1: if I could the great fear that's out there's things

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Speaker 1: here in New York and particularly in the Borough of

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Speaker 1: Queens have been really, really quite horrific. What's the ability

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Speaker 1: of this virus to spread to secondary cities and tertiary

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00:28:11,359 --> 00:28:15,720
Speaker 1: locations across the nation. Well, it's really remarkable to me

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00:28:16,160 --> 00:28:20,800
Speaker 1: is how so many people believe that what will have

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Speaker 1: what's happening there, meaning somewhere else isn't going to happen here,

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00:28:24,920 --> 00:28:29,040
Speaker 1: meaning where I live, And um, nobody should really have

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00:28:29,200 --> 00:28:32,320
Speaker 1: that sense of competence. You know, people felt like, well,

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Speaker 1: in China, couldn't come to Italy. It's in Italy, couldn't

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Speaker 1: come to the US. But you know it could go anywhere.

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Speaker 1: Any city could be affected. UM, letting our guard down

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Speaker 1: here it would be a terrible mistake. And I think that, Um,

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00:28:47,760 --> 00:28:51,040
Speaker 1: you know, certainly in Baltimore and Washington and other cities,

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00:28:51,040 --> 00:28:53,640
Speaker 1: we're seeing increases in cases and they realized how much

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00:28:53,720 --> 00:28:56,479
Speaker 1: is at stake here. And I think, um, you know,

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Speaker 1: we're going to be obviously in touch with people in

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Speaker 1: New York and learning a lot from New York's experience

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00:29:02,240 --> 00:29:06,080
Speaker 1: and the city. To think that they couldn't have this problem,

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00:29:06,200 --> 00:29:10,200
Speaker 1: are really risking quite a lot. Joshua Shars the Johns

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Speaker 1: Hopkins University, Bloomberg School of Public Health, and of course

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Speaker 1: the medical program is well. Thanks for listening to the

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Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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00:29:28,760 --> 00:29:33,000
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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00:29:33,040 --> 00:29:36,520
Speaker 1: Tom Keane before the podcast. You can always catch us

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Speaker 1: worldwide I'm Bloomberg Radio