Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jai Ley.
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: Conversation with the Vice Chairman of the Fed, Richard Clara,
Speaker 1: joining me again as our chief International Lincolnomic correspondent. I'm
Speaker 1: sure that Michael McKee is with us. You know him
Speaker 1: from the press conference with Chairman Powell, usually bringing bringing
Speaker 1: the room to a bit of a quiet, and I'm
Speaker 1: thrilled that Mike could joined me, uh this morning. Every
Speaker 1: moment here is precious. It is, indeed, Mr Vice Chairman,
Speaker 1: in historic time. Let me ask the question that I
Speaker 1: saw in so much research and reading over the weekend,
Speaker 1: the confidence that the Fed can move the balance she
Speaker 1: back to normal down the road after this pandemic, after
Speaker 1: a number of years of return to economic growth, how
Speaker 1: do you get the genie back in the bottle? Well, Tom,
Speaker 1: thank you for that question, and enjoy doing your show.
Speaker 1: As always, First and foremost, I think we have to
Speaker 1: recognize that we're in a really unique situation. The coronavirus
Speaker 1: pandemic is taking a tragic human toll in the US
Speaker 1: around the world, and and we've asked people to step
Speaker 1: back from economic activity investing in public health, and so
Speaker 1: there's going to be a hit to economic activity. And
Speaker 1: what the Chair Power and We've indicated is we have
Speaker 1: put in place these lending facilities um under our authority
Speaker 1: to act under unusual and exigent circumstances. Uh. It's an
Speaker 1: ambitious and entirely appropriate, aggressive and forcefully use of monetary
Speaker 1: policy in these times. But to your specific question, yes,
Speaker 1: I am. I'm very confident that as the economy recovers
Speaker 1: from this hit and began begins to return and recover,
Speaker 1: that we at the over your time, will be able
Speaker 1: to unwind these programs. You know, Tom and Mike, there's
Speaker 1: nothing fundamentally wrong with the U s economy. It came
Speaker 1: into the year in a very strong position both in
Speaker 1: terms of employment and growth and financial markets. And I'm
Speaker 1: confident we can get back there and and at the
Speaker 1: appropriate time we can scale back these programs. Let me
Speaker 1: follow up on that, Dr Claren and ask you this,
Speaker 1: With probably billions of dollars in loans out the companies
Speaker 1: at near zero for over four years. Are you ever
Speaker 1: going to be able to raise interest rates again? Or
Speaker 1: are we looking at essentially the Fed doing yield curve
Speaker 1: control now? Well, right now, we're not doing yield curve control.
Speaker 1: But we indicated in our March statement UH is we're
Speaker 1: going to keep rates of where they are, which is
Speaker 1: basically very close to zero, until the economy is on
Speaker 1: track to achieve this maximum employment and price stabilities. And
Speaker 1: so the path of the economy is going to dictate
Speaker 1: ultimately the path of rates. But in terms of our
Speaker 1: our programs, these facilities will be in place during the
Speaker 1: period when the economy is being impacted by the virus UH.
Speaker 1: In the term sheets for these programs, you'll see that
Speaker 1: the facilities are due to to stop lending in September
Speaker 1: of this year. Obviously we can extend that has needed.
Speaker 1: Those loans will be in place, they'll have a term
Speaker 1: of several years and know at the appropriate time, I
Speaker 1: do not think that we will have that That will
Speaker 1: be a challenge to us when it's appropriate, But again
Speaker 1: that's a long way down the road. We think where
Speaker 1: rates are now is where they need to be, given
Speaker 1: where the economy is Tom mentioned the notes he's getting
Speaker 1: from people asking questions, and the one I get most
Speaker 1: often is why did you feel it necessary to go
Speaker 1: into buying junk. Well, we have put in place no
Speaker 1: fewer than nine facilities over the past several weeks, and
Speaker 1: and first and foremost are our focus in these facilities,
Speaker 1: UM is making sure that credit is flowing to businesses,
Speaker 1: UH and households. And obviously we're we're in the commercial
Speaker 1: paper market. In the talent program, will be financing auto
Speaker 1: loans and credit cards. UM in our main street lending program,
Speaker 1: we're gonna be partnering with banks to provide financing to
Speaker 1: businesses and so the really the vast bulk of these
Speaker 1: programs is really focused on new lending. There is an
Speaker 1: element of one of these programs that will UH that
Speaker 1: will be purchasing assets in the secondary market. I think
Speaker 1: an important point for your listeners and viewers to recognize
Speaker 1: UM is that several important companies in the US were
Speaker 1: investment grade up until this crisis hit. And what we
Speaker 1: said in our programs is that you know, if they've
Speaker 1: been downgraded after the after the data of the crisis,
Speaker 1: they will have access to these facilities. But that really
Speaker 1: is our focus in these programs, Mr Vice Chairman. The
Speaker 1: elasticity here the outcomes of this pandemic are extraordin and
Speaker 1: I'm not asking you to play epidemiologists today unless you'd
Speaker 1: like to. About what I would suggest is we don't
Speaker 1: know the speed of outcome. What do you do if
Speaker 1: we get a more optimistic outcome? What do you do
Speaker 1: as an institution if there's a rapidity to our recovery? Well,
Speaker 1: and obviously obviously time we are looking at a very
Speaker 1: wide range of scenarios, as I'm sure our other central
Speaker 1: banks and and policy makers. And we have gotten a
Speaker 1: lot of bad news, uh in the last several weeks
Speaker 1: in terms of the spread of the virus um and
Speaker 1: the impact obviously in the labor market with the sixteen
Speaker 1: million initial claims over the last several weeks. So the
Speaker 1: economy is taking a hit, as I've said, because there's
Speaker 1: nothing wrong with the economy. We've asked people to step
Speaker 1: back from economic activity. Uh. There are scenarios that are
Speaker 1: more optimistic, and obviously we we certainly hope and pray
Speaker 1: that they materialize. If they do, that'll be a good
Speaker 1: situation and to be in we will have in place
Speaker 1: programs that are essentially time. What we're doing is we're
Speaker 1: building a bridge until the economy can get to the
Speaker 1: other side and begin to recover. And if that happens sooner,
Speaker 1: we'll we'll certainly know what to do at that time.
Speaker 1: Let's get out on the bridge right now. Of course,
Speaker 1: you know, Michael McKee is only in charge of rude
Speaker 1: questions to the Chairman at the press conference. Let me
Speaker 1: ask a rude question to you, what does the bridge
Speaker 1: look like out here? From the FED meetings onward and
Speaker 1: from the minutes of the FED we will see how
Speaker 1: will that debate unfold within your Federal Reserve system. Well,
Speaker 1: obviously you know that those discussions are are private. We
Speaker 1: can talk, we can discuss as I do my own views,
Speaker 1: but our meetings I think serve a very useful purpose.
Speaker 1: As you know, we've had to do a couple of
Speaker 1: meetings in March by video conference, um, and that was
Speaker 1: necessary given the rapidity with which the situation was was changing.
Speaker 1: But you know, at our committee we will be discussing,
Speaker 1: i'm sure, are the new facilities that we've announced and
Speaker 1: discussed about putting them in place, and then we'll get
Speaker 1: a briefing from staff on the economic outlook and importantly
Speaker 1: looking at the scenarios both positive, UH and negative. I
Speaker 1: think the FLMC serves a very important role in in
Speaker 1: our monetary policy discussions. The MC, the committee makes those decisions,
Speaker 1: but of course the Board of Governors of which I'm
Speaker 1: a member, also plays a role in actually approving and
Speaker 1: designing these programs facilities. Well, you're the model guy, and
Speaker 1: Tom put me in charge of asking the rude question.
Speaker 1: So he asked about optimism. Let me ask you about pessimism.
Speaker 1: What do you as the worst case scenario and do
Speaker 1: you think we get a damaging disinflationary impulse out of this? Well, um,
Speaker 1: I'm not going to go through scenarios now. We only
Speaker 1: have ten minutes and that would take longer. What I
Speaker 1: will say though, and I think it's an excellent question
Speaker 1: because you'll see there were some some discussion back in
Speaker 1: January and February that were we to be hit with
Speaker 1: the Corona virus. And it's important to remember that the
Speaker 1: first fatality in the US was in very late February
Speaker 1: or early March um and and as a result, there
Speaker 1: was some speculation at the time that if we got
Speaker 1: hit with the pandemic, that that because of supply chains,
Speaker 1: that it was an averge supply shock, which would be inflationary.
Speaker 1: I never believe that. I never bought into that. I
Speaker 1: always thought if we got hit with the virus spread
Speaker 1: that it would in net be a shock to aggregate demand.
Speaker 1: And that's what I think it is, and demand is
Speaker 1: impacting very adversely. We're trying to offset that with our
Speaker 1: policies and fiscal policies playing an important role. But I
Speaker 1: think on that is disinflationary. I don't believe it's deflationary.
Speaker 1: I think we have the tools to keep the US
Speaker 1: economy out of deflation um and to and and to
Speaker 1: support the economy through this challenging period. But on the
Speaker 1: narrow question of is this more of a supplier demand shock,
Speaker 1: it's definitely more of a demand shock, I believe. Well,
Speaker 1: to follow up on top question about what the FED
Speaker 1: discussion is in the future, I know you had to
Speaker 1: put the fire out, but have you not created the
Speaker 1: mother of all moral hazard now that you will end
Speaker 1: up with a lot more dangerous risk taking because everybody
Speaker 1: knows that if something goes wrong, the FED is there
Speaker 1: to backstop them. Well, you know, my I really don't
Speaker 1: believe that's the case. I think moral hazard impassed circumstances,
Speaker 1: when it's been associated with financial accesses or private sector
Speaker 1: SS is obviously something to assess and think about. But
Speaker 1: in this case, this is entirely an exogenous event. People
Speaker 1: are not businesses are closing, and people aren't unemployed due
Speaker 1: to any fault of their their own. And I think
Speaker 1: this is a clear this is the clearest possible case
Speaker 1: that those are not relevant considerations. Again, what the Chair
Speaker 1: is indicated, and what we've said publicly is we have
Speaker 1: these lending facilities in place because of these unusual and
Speaker 1: exigent circumstances, and we'll use our authority forcefully and aggressively
Speaker 1: until we're in common the economy is recovery. But at
Speaker 1: that point we'll be prepared and we'll be able to
Speaker 1: put these tools away when the economy is well on
Speaker 1: the way to the road to recovery. And I just
Speaker 1: do not see that as being an issue in the
Speaker 1: present circumstance. Mr Vice Chairman, One more question quickly, if
Speaker 1: I could, There will be a point where things will
Speaker 1: be calmer and you will be at your Columbia University
Speaker 1: with Phelps and Stiglets and the rest talking about this,
Speaker 1: are we forever moving away from a rules based debate?
Speaker 1: Is discretion the future for any central bank? Well, it's
Speaker 1: an excellent question in you and I've discussed it many
Speaker 1: times on your show. The reality of central banking is
Speaker 1: it's always been about. I think constrained discretion and rules
Speaker 1: an important part of communication and thinking about the application
Speaker 1: of discretion. But again, obviously, in these circumstances, the central
Speaker 1: bank needs the discretion to put in place policy. He's
Speaker 1: under unusual and oxygen circumstances, and I think it's entirely
Speaker 1: appropriate that we've exercised that now, Richard Clarien to thank
Speaker 1: you so much, greatly appreciate it. This morning. A lot
Speaker 1: of people John have rationalized his theory. Dennis Gartman took
Speaker 1: it further. He said, not only should you own gold,
Speaker 1: but he said in dollars, maybe not hedge it in
Speaker 1: something that will be weaker, and that would begin in
Speaker 1: euro And it is truly without exaggeration of moonshot. Gary Shilling,
Speaker 1: I would suggest over the years, over the decades, I
Speaker 1: should say, has had the great call of long term
Speaker 1: lower interest rates. But Gartman challenges him now with an
Speaker 1: extraordinary call on gold, and he joins us snow Dennis
Speaker 1: thrilled that you could be with us on gold. Real
Speaker 1: simple here, if I didn't make the gartman like mains,
Speaker 1: can I get on board now? Absolutely? Tom. First of all,
Speaker 1: let us understand that I'm not a gold bug. I'm
Speaker 1: not one of those believers that the world is coming
Speaker 1: to an end, that that all currencies are going to zero,
Speaker 1: that governments are doing absolutely the wrong things. I'm actually
Speaker 1: an optimist. But I do think that the monetary authorities
Speaker 1: around the world, led by the FED, but the Bank
Speaker 1: of Canada, the Bank of England, the Bank, the e
Speaker 1: c B, the Bank of Japan, even the Bank even
Speaker 1: the People's Bank of China, have no choice but to
Speaker 1: remain expansionary. They are. They are expansionary. Now they shall
Speaker 1: become the expansionary. In the future, They'll become even more expansionary.
Speaker 1: And as that happens, gold probably shall be the beneficiary.
Speaker 1: So is it too late to be a buyer of gold? Actually,
Speaker 1: it's just broken out above fifteen, above sevent pounds and
Speaker 1: dollars dollar terms, and I think it's going a good
Speaker 1: deal higher. So again, as I said, I'm not a
Speaker 1: gold bug. There are times when you should own gold.
Speaker 1: There are times when you should not. This is a
Speaker 1: time where you should. Other than the answer, tiffanies Dennis Gartman,
Speaker 1: how should I own gold? What is the best UH
Speaker 1: way to own gold? To play? There are many ways
Speaker 1: to own gold. You can own gold futures, but I
Speaker 1: don't think that that's the better way. I think that
Speaker 1: there are e t f that one can own. There
Speaker 1: is at least half a dozen of them. You can
Speaker 1: hold the gold miners. I hate to give any individual
Speaker 1: recommendations as to individual stocks because the SEC gets an
Speaker 1: upset when I do that, So I'll just simply say
Speaker 1: that there are e t f s a plenty on
Speaker 1: the New York Stock Exchange and various mining companies. I
Speaker 1: prefer the e t s. I think it's a better
Speaker 1: way to go. Dennis. Your bullish call on gold is
Speaker 1: it basically a bet on inflation and the debasement of
Speaker 1: major currencies. It's at least it's not a bet on
Speaker 1: inflation yet it's it's It isn't, however, a bet on
Speaker 1: the debasement of major currencies. As I said, the FED,
Speaker 1: the Bank of Canada, the Bank of England, the ECB
Speaker 1: at all have been expansionary, and they have no choice
Speaker 1: but to remain expansionary given the current coronavirus circumstances and
Speaker 1: the lack of a better term, the recession slash depression
Speaker 1: that the world is finding itself in. So it's actually
Speaker 1: a debasement of the currencies that that is uh the
Speaker 1: driving for no question about that. So, Dennis, I'm just
Speaker 1: wondering going forward the main driver as far as who
Speaker 1: the buyers will be of gold. How much does this
Speaker 1: stem from central banks trying to move away from dollars.
Speaker 1: We've seen Russia do this, We've seen China do this,
Speaker 1: and how much does this stem from individuals just getting
Speaker 1: cold gold and putting in their mattresses. Well, first of all,
Speaker 1: you're one of the few people who really does understand
Speaker 1: that the that it has been central bank buying that has,
Speaker 1: in my opinion, has been the driving force. The Russian
Speaker 1: central banker, I'm trying to remember her name. I just
Speaker 1: won't blank. That's what happens when you're gonna be sixty
Speaker 1: nine years old, you forget important names. But she's been
Speaker 1: a huge buyer of gold. The Chinese have been a
Speaker 1: major buyer of gold, and now I think it's the
Speaker 1: retail that will come in and be a buyer of gold.
Speaker 1: The Indians have been the second largest buyer of gold individually.
Speaker 1: They've been locked down, and even with their locked down,
Speaker 1: the fact that gold has not given up any of
Speaker 1: its gains and when the when the India reopens, and
Speaker 1: it shall reopen, I think there would be a mark
Speaker 1: propensity on their part to be buyers. Again, what's the
Speaker 1: most avocation time frame for you to decide to own equities?
Speaker 1: Don't tell me ten years or twenty years, and don't
Speaker 1: tell me two days or three days. What's the time
Speaker 1: zoned dentists that you have for having a belief in
Speaker 1: the equity market? Honestly, I do think I want to Well,
Speaker 1: let me say, I hope that the lows have been seen.
Speaker 1: Do I think that the lows will be tested? Probably?
Speaker 1: But I do want to believe and I do think
Speaker 1: that the lows have probably been seeing amidst the panic
Speaker 1: of two weeks ago. So where do I think go
Speaker 1: stock prices will will go? I think I think that
Speaker 1: from here on out, if you can, if you can
Speaker 1: have not be if you missed the first five percent
Speaker 1: on the upside and you already have. I think from
Speaker 1: here on out you want to err upon the side
Speaker 1: of being a buyer, and I think you want to
Speaker 1: be a buyer for next several years. Honestly, maybe it's
Speaker 1: just hope. Maybe it's just a belief in America. Maybe
Speaker 1: it's just a hope that we'll get out of this.
Speaker 1: But I do want to think that the lows have
Speaker 1: been seen. How's the FED doing? I think the FED
Speaker 1: is doing yeoman's work, to be quite honest. I think
Speaker 1: perhaps they they bent a little bit to the president's demeanor,
Speaker 1: and and maybe they went a little overboard, but I
Speaker 1: think that they stood up with the adult in the
Speaker 1: room when nobody else was going to be the adult
Speaker 1: in the room. I think they've led the other central
Speaker 1: banks in in in acting, and I applaud them. Many people,
Speaker 1: especially those of us on the far right, take to
Speaker 1: FED the task. I think the FED should be applauded.
Speaker 1: Dennis Cartman, thank you so much for being with us.
Speaker 1: Betsy Grace Sick Morgan Stanley, Head of Banks and Diversified
Speaker 1: Finance Research, Betsy, always a pleasure to catch up with you,
Speaker 1: especially on earnings week. So let's start with the earnings.
Speaker 1: What are you looking for in the numbers this week
Speaker 1: when many people see Q onea stale and Q two
Speaker 1: three four as almost unpredictable. Thank you so much for
Speaker 1: having me this morning. UM. I look forward to next
Speaker 1: time when we can be in person. But I appreciate
Speaker 1: question here on earnings. I think what people are really
Speaker 1: going to look forward is a couple of things. Number one,
Speaker 1: what is at that earnings generation rate excluding the reserve
Speaker 1: build for credit? Just to understand what the core is
Speaker 1: going into this, you know, two three four Q downturn
Speaker 1: as you indicate. But then the second thing is how
Speaker 1: are the banks treating their reserves under the new accounting standard? Right?
Speaker 1: Because today, um, we have a new accounting standard started
Speaker 1: January one, and so we should be ready tomorrow JPM
Speaker 1: and Wells report we should be ready for um, you know,
Speaker 1: very large reserve builds to reflect you know, the bank
Speaker 1: management's estimates of lifetime losses. The history is they take
Speaker 1: the arcane accounting and they overdo it. They overreserve, they
Speaker 1: over save the money for a lousy rainy day, and
Speaker 1: then down the road they go, oops, we over saved,
Speaker 1: and they release those reserves and everybody wins. Do you
Speaker 1: predict that for these banks. You know, it's so interest
Speaker 1: doing of a question, Tom, because you know banks never
Speaker 1: over reserve. It's always adequate, right, that's the wording, alright,
Speaker 1: just want to make sure they're always adequate. And the
Speaker 1: definition of adequate is changing, actually, I should say has
Speaker 1: changed January one with this new accounting role. So so
Speaker 1: what the management teams are required to do, starting in
Speaker 1: one queue is say to themselves, what is the lifetime
Speaker 1: losses in my loan book today on March three one?
Speaker 1: In a world that has you know, flipped on its head,
Speaker 1: as we all know, so that's a big ask. As
Speaker 1: a result, people like me, we made the best estimate
Speaker 1: for what we think they'll do, but we you know,
Speaker 1: everyone on the phone should be prepared for our understanding
Speaker 1: that you know, the outcome is going to be different.
Speaker 1: Management teams will have a different point of view than
Speaker 1: all of us, you know, sell fighters and buy siders
Speaker 1: because they have the best knowledge of their customer set obviously,
Speaker 1: so it's gonna be very exciting, earning, very fighting. I
Speaker 1: can't wait, Betsy, very exciting. I'm sure. One area that
Speaker 1: a lot of people are focused on as consumer credit
Speaker 1: losses and sort of a view into just how bad
Speaker 1: the situation is there. What are you expecting on that front?
Speaker 1: Consumer credit is also exciting because the fifteenth of the
Speaker 1: month we get master Trust data, and you know, to
Speaker 1: your point earlier one cue, you know, the one key
Speaker 1: results aren't going to be really telling about what the
Speaker 1: forward look is going to be. And also the forward
Speaker 1: look numbers aren't perfect either because, um, if you have
Speaker 1: been affected by COVID and you can call your bank
Speaker 1: and request forbearance, that means that your loan will not
Speaker 1: show up as a delinquency, you know, until the pandemic
Speaker 1: and the economy is back on its feet and the
Speaker 1: banks determine, hey, you know, now is the time that
Speaker 1: I can assess whether or not you're delinquent or not.
Speaker 1: So the delinquency staff and the net charge off staffs
Speaker 1: are going to be much more modest than expected for
Speaker 1: a while until you know, the emergency is lifted. So
Speaker 1: the best data to look at for how the consumer
Speaker 1: is really doing on a month to month basis will
Speaker 1: be that master Trust data. Look for the payment rate.
Speaker 1: The payment rates back in eight for a lot of
Speaker 1: banks now at basically telling you consumers have been paying
Speaker 1: down their loans on the credit card side, that payment
Speaker 1: rate should start to fall, right, that will be your
Speaker 1: best indicator of the fifteenth of every month. Betsy, You've
Speaker 1: touched on something really important, and that's the degree to
Speaker 1: which banks have stepped in to help consumers and businesses.
Speaker 1: And there was a quote from Jamie Diamond of JP
Speaker 1: Morgan just the other week and his letter to shareholders.
Speaker 1: They really stood out for me. Knowing there will be
Speaker 1: a major recession means that we are exposing ourselves to
Speaker 1: billions of dollars of additional credit losses as we help
Speaker 1: out consumers and businesses through difficult times. There is a view, Betsy,
Speaker 1: that these banks can act countercyclically in a way that
Speaker 1: maybe they wouldn't have done in the past. Can you
Speaker 1: just talk to us about bank behavior. Will they contin
Speaker 1: you to do this or is this downturn as it
Speaker 1: extends into two, three and four, do you expect them
Speaker 1: to pull back on help and consumers and businesses on
Speaker 1: lending to these people? Yeah, I mean, we did this
Speaker 1: work on the excess capital in the banking system and
Speaker 1: how much excess capital they have to support corporates and
Speaker 1: you know their their loan box and the vast majority
Speaker 1: of banks we cover, both my names and my colleague
Speaker 1: Kins will be on the mid cap bank side. You know,
Speaker 1: they have more than enough excess capital to support line
Speaker 1: draw downs in the commercial space. Now you know, line
Speaker 1: draw downs were running it like going into this and
Speaker 1: you know we're expecting they go up significantly, but you're
Speaker 1: not going to get to a hundred. So there is
Speaker 1: excess capital and system. All the things that were put
Speaker 1: into place in O eight and post O A are
Speaker 1: there to help in this kind of environment, I have
Speaker 1: to say. So I do think that they will continue
Speaker 1: to support their customers. And importantly, look the capital markets
Speaker 1: are and you're gonna speaking with Vice chair Clara soon, um,
Speaker 1: I mean the FED is part of this as well.
Speaker 1: Being in the market and helping to support the capital
Speaker 1: markets opens that up. And we saw what a couple
Speaker 1: of weeks UM of very high issuance in i G
Speaker 1: some of that line drought down frankly could be paid
Speaker 1: down with IQ issuance. That has happened by some companies already.
Speaker 1: So I would not say it's only banks, it's banks
Speaker 1: plus FED and FED is UM helping out as well.
Speaker 1: So Betsy, just to sort of wrap this all together.
Speaker 1: I'm wondering if you're bullish on the banks and you
Speaker 1: think that their shares have gotten overly beaten up when
Speaker 1: it comes to their potential to be more profitable than
Speaker 1: people expect. On the other side of this, yeah, you know,
Speaker 1: we have an equal weight rating on the banks right now. Um,
Speaker 1: you know, both in large captin my colleagun his mid
Speaker 1: cap names, and there are certain banks that we are overweight.
Speaker 1: You know. Frankly City is our top pick right now. Um,
Speaker 1: it's trading it about half book, and we think that
Speaker 1: as we get through this, uh, they can re emerge
Speaker 1: with the ninth percent. Are are we I wouldn't say
Speaker 1: it's like minting money to Tom's words, but you know
Speaker 1: it's you know, close to earning their cost of capital
Speaker 1: back again. They were just making their cost of capital
Speaker 1: before we went into this, and you're you're sitting at
Speaker 1: the stock that's trading in a half book. We're also
Speaker 1: overweight JP and bavet Um and the m X and Discover. Betsy.
Speaker 1: Always great to catch up with you, especially on earnings
Speaker 1: weak Betsy Grisi them more in Stanley. Betsy, my best
Speaker 1: to you and to say thank you very much. For
Speaker 1: joining us this morning. Something happened this weekend, which is
Speaker 1: really important, folks, in the exhaustion of this pandemic, and
Speaker 1: of course nothing like the exhaustion of the first responders
Speaker 1: and nurses, the doctors, the endless ambulance drivers that I
Speaker 1: hear outside this Mount Sinai Hospital in New York. I
Speaker 1: realized that I had really lost track of where this
Speaker 1: pandemic is. So, Paul, I got up early this morning
Speaker 1: and I really read in on a global basis as
Speaker 1: best I could, and where we are. And what is
Speaker 1: extraordinary about this, Paul, is the complexity involved, the trends,
Speaker 1: the mathematics, the where are we in any given moment.
Speaker 1: It's extraordinary, isn't it. It really is, Tom, And it's dynamic.
Speaker 1: Is dynamic across the globe. It's dynamic across the globe.
Speaker 1: And you look at Italy, you look at China, you
Speaker 1: look at some of the UH in the US, and
Speaker 1: it's even regionally within the US as well. So it's
Speaker 1: very dynamic. And when we say that to all of
Speaker 1: you listening on Sirius x M, I guess some better
Speaker 1: news in Louisiana, but some real challenges out there. One
Speaker 1: of the experts we've spoken to is Joshua Sharfstein. He
Speaker 1: is it the Johns Hopkins University, Bloomberg School of Public Health,
Speaker 1: and of course their medical institute as well. We should
Speaker 1: say that Mr Bloomberg is a philanthropist to his Johns
Speaker 1: Hopkins University and his engineering program of years ago, and
Speaker 1: of course founder of Bloomberg GILP. In this radio and
Speaker 1: television station as well, we spoke to Dr Scherfstein about
Speaker 1: the state of this pandemic. So we are not yet
Speaker 1: at New York levels in Baltimore, UM, but I certainly
Speaker 1: have heard of what you have talked about, that there
Speaker 1: is a moment um sort of midway in the illness
Speaker 1: where some people get quite sick and at that point
Speaker 1: can even um proceeds to death UM, and that that's
Speaker 1: very scary obviously for the medical team. It's terrible tragedy
Speaker 1: in every case that had happened. And I think what
Speaker 1: people are wondering is that if there is something that
Speaker 1: can be done to focus on that moment in terms
Speaker 1: of therapeutic to prevent what maybe an overwhelming immune reaction
Speaker 1: that is leading to that second decline, help us with
Speaker 1: the idea of a secondary or reinfection. This is something
Speaker 1: out of the influenza of a hundred years ago. But
Speaker 1: do you think it's a valid wory for listeners and
Speaker 1: our viewers, this idea that there's a virus and then
Speaker 1: we re engage with society and we come up again
Speaker 1: against the same virus a second or even a third time.
Speaker 1: There's a lot we don't know about this virus, but
Speaker 1: in general is somebody who has fought the virus off
Speaker 1: and recovered is unlikely to get that same kind of
Speaker 1: infection again. I think it's to be very unusual for
Speaker 1: that to be the case. And even the reports of
Speaker 1: sometimes people may have a coverable virus later are not
Speaker 1: quite the same as saying people can really get sick twice.
Speaker 1: So I think that we'll have to see what the
Speaker 1: data is, but it's probably, um, you know, a reasonable
Speaker 1: assumption at this point that people who at least were
Speaker 1: reasonably sticking up that are unlikely to get that sick again.
Speaker 1: The Prime Minister was exceptionally eloquent. I read it in
Speaker 1: the Telegraph this morning about the nurse from New Zealand,
Speaker 1: and I believe the nurse from Portugal as well, who
Speaker 1: we literally said kept him alive. Give us an update
Speaker 1: on what you see at Johns Hopkins among the staff,
Speaker 1: the nurses and all the others assisting the doctors. Well,
Speaker 1: it's an incredible dedication, um at john Hopkins and and elsewhere.
Speaker 1: They really people you know, have felt um that this
Speaker 1: is they're calling this is a responsibility that the medical
Speaker 1: center has been very supportive in terms of making sure
Speaker 1: there's protective equipment and all kinds of other mental health
Speaker 1: resources for staff. Um. But you know, this is and
Speaker 1: it's not just the doctors and the nurses. There's a
Speaker 1: real sense of purpose really for for everybody who's working there.
Speaker 1: And I think you know, this is a moment in
Speaker 1: a way that many people have been training for, even
Speaker 1: if they didn't realize that at the time. One final question, doctor,
Speaker 1: if I could the great fear that's out there's things
Speaker 1: here in New York and particularly in the Borough of
Speaker 1: Queens have been really, really quite horrific. What's the ability
Speaker 1: of this virus to spread to secondary cities and tertiary
Speaker 1: locations across the nation. Well, it's really remarkable to me
Speaker 1: is how so many people believe that what will have
Speaker 1: what's happening there, meaning somewhere else isn't going to happen here,
Speaker 1: meaning where I live, And um, nobody should really have
Speaker 1: that sense of competence. You know, people felt like, well,
Speaker 1: in China, couldn't come to Italy. It's in Italy, couldn't
Speaker 1: come to the US. But you know it could go anywhere.
Speaker 1: Any city could be affected. UM, letting our guard down
Speaker 1: here it would be a terrible mistake. And I think that, Um,
Speaker 1: you know, certainly in Baltimore and Washington and other cities,
Speaker 1: we're seeing increases in cases and they realized how much
Speaker 1: is at stake here. And I think, um, you know,
Speaker 1: we're going to be obviously in touch with people in
Speaker 1: New York and learning a lot from New York's experience
Speaker 1: and the city. To think that they couldn't have this problem,
Speaker 1: are really risking quite a lot. Joshua Shars the Johns
Speaker 1: Hopkins University, Bloomberg School of Public Health, and of course
Speaker 1: the medical program is well. 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
Speaker 1: worldwide I'm Bloomberg Radio