WEBVTT - Only Way To Defeat Virus Is To Self-Isolate: Former Medicare Head 0:00:02.680 --> 0:00:05.360 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 0:00:05.400 --> 0:00:07.720 along with my co host Lisa Brahma Wicks. Each day 0:00:07.760 --> 0:00:10.280 we bring you the most noteworthy and useful interviews for 0:00:10.320 --> 0:00:12.560 you and your money. Whether at the grocery store or 0:00:12.600 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.560 --> 0:00:18.000 podcast or wherever you listen to podcasts, as well as 0:00:18.000 --> 0:00:20.840 at Bloomberg dot com. I want to go back to 0:00:21.079 --> 0:00:23.360 a statistic that really stood out to me, and it 0:00:23.400 --> 0:00:25.439 was a little bit alarming, and it has gotten about 0:00:25.440 --> 0:00:29.080 a bunch of pushback given the lack of testing. Andrew Cuomo, 0:00:29.120 --> 0:00:31.960 governor of New York State, saying the hospitalization rate for 0:00:32.080 --> 0:00:35.800 the coronavirus in New York State is fifteen to nineteen percent. 0:00:36.280 --> 0:00:40.479 He was arguing for more capacity for hospital beds for ventilators, 0:00:40.479 --> 0:00:43.199 and he was talking about the incredible strain it's going 0:00:43.240 --> 0:00:45.200 to put on the healthcare ses. To me, the United 0:00:45.200 --> 0:00:49.400 States joining US now is Andy Slavitt, former Acting Administrator 0:00:49.440 --> 0:00:51.760 for Medicare and Medicaid Services. No one better to have 0:00:51.840 --> 0:00:56.320 a frontline view on exactly how strained this could potentially be. Andy, 0:00:56.440 --> 0:00:58.840 I want to first get your idea, get your thoughts 0:00:58.960 --> 0:01:02.960 on that fifteen hospitalization rate. People are pushing back and 0:01:03.000 --> 0:01:06.039 saying that's sensational considering the fact that so many people 0:01:06.080 --> 0:01:08.440 haven't been tested. Do you think that it is an 0:01:08.440 --> 0:01:12.959 accurate reflection of just how dire this virus is when 0:01:13.000 --> 0:01:17.520 it does affect people and they do develop symptoms. So 0:01:17.800 --> 0:01:19.960 everybody is going to be hearing all sorts of data, 0:01:20.720 --> 0:01:23.720 and we should all appreciate the fact that this is 0:01:24.000 --> 0:01:27.039 a novel virus. It hasn't been with us for that long, 0:01:27.440 --> 0:01:29.280 and every data is a piece of dated only a 0:01:29.360 --> 0:01:32.920 data point, and so over time will have I think 0:01:33.000 --> 0:01:36.240 reliable forms of data. But if you listen to this data, 0:01:36.920 --> 0:01:41.880 I think we should be closer to UM. I wouldn't 0:01:41.920 --> 0:01:44.120 say anybody should panic, but we should be closer to 0:01:44.200 --> 0:01:47.560 panic than we should be to calm. On the scale 0:01:47.640 --> 0:01:50.760 of one to ten, Uh, we should be at an eight. 0:01:50.920 --> 0:01:53.680 We shouldn't be. So I tend to say every piece 0:01:53.680 --> 0:01:57.800 of data that I see, UM, I want to understand 0:01:57.800 --> 0:02:02.320 it and assume the channel until proven otherwise. Because in 0:02:02.360 --> 0:02:06.360 this environment where you're where we have no immune system 0:02:06.400 --> 0:02:09.440 for this virus, where a number of people have underlying 0:02:09.480 --> 0:02:12.200 medical conditions, where we have a number of seers who 0:02:12.200 --> 0:02:15.320 did whom this is a lethal condition. Better to be safe. 0:02:16.000 --> 0:02:19.200 And if we're wrong, and if the turns out to 0:02:19.240 --> 0:02:24.239 be um, hallelujah, someone can go back and criticize the 0:02:24.240 --> 0:02:27.000 people who said eighteen percent later. But I certainly, I 0:02:27.040 --> 0:02:31.040 certainly would rather behave on the much more cautious side. 0:02:31.880 --> 0:02:34.519 So Andy, just broadly defined, can you give us your 0:02:34.600 --> 0:02:37.120 sense of kind of how you think our U s 0:02:37.160 --> 0:02:41.120 healthcare system is prepared for what could be a surge 0:02:41.200 --> 0:02:46.280 in patients uh, from this virus. So we're not prepared. 0:02:47.040 --> 0:02:50.120 But but let me put that in context. Um. You 0:02:50.120 --> 0:02:53.320 know that that expression, um they didn't build the church 0:02:53.480 --> 0:02:58.000 for for Easter Sunday as one that comes to mind. Um, 0:02:58.040 --> 0:03:02.080 you know if we built hospitals in New York eight 0:03:02.120 --> 0:03:06.360 times the size, uh, then we would be um. You know, 0:03:06.480 --> 0:03:09.080 we know that wouldn't make a lot of sense. But 0:03:09.280 --> 0:03:12.480 there are places where we should be better prepared, things 0:03:12.560 --> 0:03:19.040 like surge capacity, the ability to bring hospitals, UM, ships, equipment, 0:03:19.600 --> 0:03:22.640 UM safety gear. Um. You know we should have been 0:03:22.680 --> 0:03:24.640 had we should have had much higher stockpiles of that. 0:03:24.720 --> 0:03:27.360 I will tell you that those recommendations have been strongly 0:03:27.400 --> 0:03:30.520 made in certain quarters for a long long time, UM, 0:03:30.520 --> 0:03:34.520 and I think dismissed um candidly by this administration. Although 0:03:34.520 --> 0:03:36.400 I'm not trying to take a shot at them. I 0:03:36.400 --> 0:03:39.960 think it's just a fact um uh. But but I 0:03:39.960 --> 0:03:45.120 will also tell you that even if we had prepared UM, 0:03:45.160 --> 0:03:48.440 I still believe, even if we were better prepared, the 0:03:48.920 --> 0:03:51.920 scope of the virus as such that I think we 0:03:51.960 --> 0:03:54.720 still would have been overwhelmed. So we're going to see 0:03:54.720 --> 0:03:58.800 a lot of parts of our hospital system understrain, most 0:03:58.880 --> 0:04:01.680 particularly the people who work in the healthcare system on 0:04:01.720 --> 0:04:05.480 the front line, who I think are are really going 0:04:05.520 --> 0:04:07.200 to end up in our real heroes in all of this, 0:04:07.400 --> 0:04:12.720 because they are going to be operating often without a playbook, UM, 0:04:12.720 --> 0:04:15.200 seeing a lot of things that is that are contagious, 0:04:15.640 --> 0:04:18.640 without without the best protective gear at times, because our 0:04:18.680 --> 0:04:21.480 supplies are running running low, and and they're going to 0:04:21.520 --> 0:04:25.200 be overwhelmed. And that group of people that I think 0:04:25.240 --> 0:04:28.880 we really have to demonstrate an immense amount of gratitude 0:04:28.880 --> 0:04:31.400 for because they're really going to be the ones that 0:04:31.440 --> 0:04:34.159 are going to have to help us get through this andy. 0:04:34.320 --> 0:04:37.400 One other thing that Governor Cuomo said was that he 0:04:37.520 --> 0:04:40.000 expects the virus to peak in New York State in 0:04:40.080 --> 0:04:43.559 forty five days, which seems like quite a long time 0:04:43.640 --> 0:04:46.800 from now for it to peak. Can you give us 0:04:46.839 --> 0:04:49.479 a sense of if that is the case, what the 0:04:49.520 --> 0:04:53.320 scope of cases could potentially be in whether asking Americans 0:04:53.360 --> 0:04:56.680 to stay home actually will help alleviate that or at 0:04:56.760 --> 0:05:01.760 least mitigate that. So it's really interes interesting. Uh. You 0:05:01.760 --> 0:05:04.400 you all of course have heard all of these expressions 0:05:04.400 --> 0:05:08.719 flattened the curve, right, all of America is becoming familiar 0:05:08.720 --> 0:05:14.080 with that expressions. Exactly. It's it's trending, and it's trending. 0:05:14.760 --> 0:05:17.679 Maybe there should be clothing lines called flattening your curves 0:05:17.760 --> 0:05:21.400 or something. But oh lord, exactly, we're gonna go all 0:05:21.480 --> 0:05:23.280 kinds of fun places with this virus. We're going to 0:05:23.400 --> 0:05:27.279 have to have some humerum in my opinion. But um, 0:05:27.400 --> 0:05:31.560 the the the truth is the implication of that means 0:05:31.640 --> 0:05:37.640 we would rather it actually take longer then have it shorter. Uh. 0:05:37.680 --> 0:05:40.040 And I know that that's a weird thing to get 0:05:40.040 --> 0:05:42.960 her hands around, because that means that the social disruption, 0:05:43.080 --> 0:05:47.800 the economic disruption, we'll go on for longer. But if 0:05:47.839 --> 0:05:52.520 we if we socially isolate um, we will reduce the 0:05:52.600 --> 0:05:55.680 number of cases to your prior question that the health 0:05:55.680 --> 0:05:58.640 care system has to handle. But it will also mean 0:05:59.240 --> 0:06:02.080 that this is going to go on for our longer 0:06:02.160 --> 0:06:05.719 a longer period of time. Uh and uh and and 0:06:05.720 --> 0:06:09.120 and we should be okay with that because we will 0:06:09.160 --> 0:06:12.240 be able to build immunity to the virus eventually, UM 0:06:12.600 --> 0:06:18.680 have some herd immunity, eventually have some uhum drugs that 0:06:18.760 --> 0:06:22.960 can combat it. But um it only it will only work. 0:06:23.360 --> 0:06:25.680 The only way it works is if people socially isolate. 0:06:25.960 --> 0:06:28.880 And I hate that expression because I don't want people 0:06:28.920 --> 0:06:32.039 to socially isolate. I want people to physically isolate. But 0:06:32.120 --> 0:06:35.560 it only works if people hashtag stay home or if 0:06:35.560 --> 0:06:37.520 you first day the ft home as is I've seen 0:06:37.560 --> 0:06:39.920 trend to get on Twitter. That's the most important thing 0:06:39.960 --> 0:06:42.960 people can do right now. Andy, how about the testing. 0:06:43.839 --> 0:06:46.200 Where are we in terms of getting test kits broadly 0:06:46.200 --> 0:06:49.679 disseminated across the country so we can really start getting 0:06:49.680 --> 0:06:54.640 accurate count as to the scope of this. Well, candidly, 0:06:54.680 --> 0:06:57.359 we're well behind where we should be. UM. You know 0:06:57.440 --> 0:07:00.920 the we had our first case the day as South 0:07:01.000 --> 0:07:04.080 Korea and their tests their tests were available ten days 0:07:04.120 --> 0:07:07.240 prior to that first test. And we are. So we're 0:07:07.760 --> 0:07:11.040 roughly a month or more behind where we need to be. 0:07:11.840 --> 0:07:14.320 And now I believe we're doing all of the right 0:07:14.400 --> 0:07:17.560 things to ramp up production. I think you'll see production 0:07:18.160 --> 0:07:23.640 double uh and test double across the country this week. Um, 0:07:23.680 --> 0:07:26.280 And I think that's a good thing. Um, It'll will 0:07:26.320 --> 0:07:28.840 still be well short if you look at a per 0:07:28.880 --> 0:07:31.200 capita basis for the rest of the world, will still 0:07:31.240 --> 0:07:36.200 be in the last place. And then I will say this, Um, 0:07:36.360 --> 0:07:38.840 we will see I suspect we'll see a bump, but 0:07:39.000 --> 0:07:41.840 we will our supply chain with things that allow us 0:07:41.840 --> 0:07:44.400 to do these tests, because it's not just a cute swab. 0:07:45.040 --> 0:07:47.160 There's a bunch of things you need in the lab, 0:07:47.320 --> 0:07:50.840 re agents and machines and so forth. Those supplies are 0:07:50.880 --> 0:07:53.520 in demand across the world and there's only so many 0:07:53.560 --> 0:07:55.160 of them and they can only be made so fast. 0:07:55.440 --> 0:07:58.960 So I suspect we will have a surge in tests 0:07:58.960 --> 0:08:00.880 and that will be a good news. But I think 0:08:00.920 --> 0:08:04.679 they will then becoming shorts supply again. Andy, just talking 0:08:04.680 --> 0:08:07.760 about hashtag flatten the curve and hashtags stay. They have 0:08:07.920 --> 0:08:10.760 home um and all the sort of social media presence 0:08:10.800 --> 0:08:13.600 you know, there's sort of sort of gallows humor out there, 0:08:13.640 --> 0:08:16.120 people coming up with innovative ways to pass the time 0:08:16.120 --> 0:08:18.640 in their homes as they isolate. But there's also talk 0:08:18.720 --> 0:08:21.760 about arise and anxiety and a and arise and sort 0:08:21.800 --> 0:08:25.320 of uh, this feeling of fear. And you said, you know, 0:08:25.960 --> 0:08:30.600 on the scale from panic to panic panic, Well, I mean, 0:08:30.840 --> 0:08:33.320 how can you can you give people a sense of Well, 0:08:33.360 --> 0:08:36.720 perhaps if people take it really seriously, it won't have 0:08:36.800 --> 0:08:40.160 to be the catastrophe that you're saying. Well, look, this 0:08:40.200 --> 0:08:42.920 will end, this will end, We will get through this 0:08:43.520 --> 0:08:46.200 the and we will have a period in our lives 0:08:46.320 --> 0:08:50.440 that will always look back on that will be um, 0:08:50.480 --> 0:08:53.400 you know, will days, will it be ninety days, will 0:08:53.440 --> 0:08:57.320 let be underneated? Well, well well we don't know that now, 0:08:57.360 --> 0:09:01.640 but we'll know that, um, and we will always look back. Uh, 0:09:01.679 --> 0:09:03.839 so it will, it will be over. We should just 0:09:03.840 --> 0:09:06.520 be thinking about this is every life lost, just like 0:09:06.559 --> 0:09:09.480 every life life lost to the flu or a hard condition. Um, 0:09:09.559 --> 0:09:13.720 we should try to prevent so. UM. That means some sacrifice, 0:09:13.800 --> 0:09:18.000 That means staying in, That means doing some things differently. 0:09:18.080 --> 0:09:21.120 That means and I and with that comes from anxiety, 0:09:21.160 --> 0:09:25.839 financial anxiety, social anxiety. UM, all of those things, and 0:09:26.080 --> 0:09:30.880 it's it's okay to to feel those things because the 0:09:30.920 --> 0:09:33.520 future is uncertain while we're in it, right, we will 0:09:33.559 --> 0:09:35.559 get through this. We're gonna have to leave it there. 0:09:35.600 --> 0:09:37.160 I could speak with you often and thank you so 0:09:37.240 --> 0:09:39.440 much for taking the time. Really appreciate it. Andy Slavitt, 0:09:39.440 --> 0:09:43.920 former Acting Administrator for Medicare and Medicaid Services, talking about 0:09:44.040 --> 0:09:50.839 the situation facing the healthcare sector. This is bloomberg as 0:09:50.880 --> 0:09:53.720 we look at the potential for a peak in New 0:09:53.800 --> 0:09:56.439 York State, one of the most heavily affected regions by 0:09:56.520 --> 0:10:00.480 coronavirus spread UH in forty five days. That's alw long time. 0:10:00.600 --> 0:10:04.760 It's a long disruption, disruptive period, and I'm wondering on 0:10:04.800 --> 0:10:08.640 the market implications. This is the unknown and a lot 0:10:08.679 --> 0:10:10.960 of people trying to game out when it's time to 0:10:11.000 --> 0:10:14.720 start getting back in as as people watch. Marcus Whipsaw 0:10:14.880 --> 0:10:17.199 and Peter Sheer has been watching it and he's been 0:10:17.200 --> 0:10:20.880 doing an incredible job really monitoring not only the macro 0:10:21.080 --> 0:10:26.199 but also the micro from Academy Securities ahead of macro strategy. Peter, 0:10:26.640 --> 0:10:29.840 where are you in terms of the risk off field 0:10:29.840 --> 0:10:32.120 that we've had in markets? The worst day in the 0:10:32.240 --> 0:10:36.400 SMP yesterday. Since seven, are we getting close to peak 0:10:36.480 --> 0:10:40.000 panic here? Yeah? So I like getting risk on Friday 0:10:40.160 --> 0:10:43.160 ahead of the president. We clearly rallied in the weekends, 0:10:43.200 --> 0:10:45.080 told off and are lower than that. Now I would 0:10:45.120 --> 0:10:47.120 be adding a little bit of risk here, but I 0:10:47.160 --> 0:10:50.320 caution people. I think it's really a bet on DC 0:10:50.880 --> 0:10:53.280 coming through with a very large stimulus program, probably in 0:10:53.280 --> 0:10:56.560 the trillion dollar stimulus program, and maybe a side bet 0:10:56.920 --> 0:11:00.640 that we make progress against the VIRU as fast than 0:11:00.640 --> 0:11:05.199 people expect. So interesting, Peter, So, I think we had 0:11:05.240 --> 0:11:08.080 the FED come in in a big way over the weekend. 0:11:08.120 --> 0:11:11.440 What did you make of that? And you think, Uh, 0:11:11.559 --> 0:11:13.520 the Fed is doing all that it needs to do 0:11:13.600 --> 0:11:15.960 here to try to stabilize markets. You know, I think 0:11:16.000 --> 0:11:21.600 the FED missed getting the commercial paper facility out on Sunday. Um, 0:11:21.640 --> 0:11:24.320 you know they've announced it today. One of my experiences 0:11:24.320 --> 0:11:28.200 with the financial crisis was that they offer, not just 0:11:28.280 --> 0:11:31.520 the FED, but politicians everyone would kind of miss deadlines. 0:11:31.520 --> 0:11:34.800 They would try and put in a firebreak, and once 0:11:34.840 --> 0:11:37.240 the fire had gone past that, the break did no good. 0:11:37.320 --> 0:11:40.640 So I think we have to act more aggressively and 0:11:40.720 --> 0:11:43.600 be ahead of the things because I think market and 0:11:43.679 --> 0:11:48.120 economic psychology kicks in and being just a little late 0:11:48.200 --> 0:11:50.360 sometimes it's almost as bad as doing nothing at all. 0:11:50.920 --> 0:11:52.600 And just to give you a little bit more detailed, 0:11:52.600 --> 0:11:55.640 the commercial paper facility is going to be that the 0:11:55.640 --> 0:11:58.160 Federal Reserve is arranging will be backed by ten billion 0:11:58.240 --> 0:12:01.360 dollars from the try sury departments. It will be ten 0:12:01.360 --> 0:12:05.880 billion dollars of credit protection UH for this facility in 0:12:06.040 --> 0:12:10.120 order to lower the short term costs for companies looking 0:12:10.120 --> 0:12:12.640 to access the commercial paper market. I'm wondering, Peter. One 0:12:12.679 --> 0:12:14.600 thing that you've done a really good job of is 0:12:14.640 --> 0:12:16.880 looking at the technicles underpinning this, and a lot of 0:12:16.880 --> 0:12:19.240 people are trying to figure out how much we're seeing 0:12:19.280 --> 0:12:24.400 just mass unwindes of risk are funds of other leverage strategies, 0:12:24.400 --> 0:12:27.559 hedge funds, you know, is that really what has been 0:12:27.640 --> 0:12:30.200 driving the activity that we've been seeing. I think it 0:12:30.240 --> 0:12:32.360 was a big part of last week. Um, you know. 0:12:32.400 --> 0:12:35.240 I think this risk parity type strategy, which ranges from 0:12:35.280 --> 0:12:39.400 the more sophisticated like a Bridgewater who uses commodities, stocks 0:12:39.400 --> 0:12:42.160 and bonds, to less of this data ones where people 0:12:42.200 --> 0:12:45.560 just own stocks versus bonds, they were getting hit. I 0:12:45.600 --> 0:12:48.199 think we are either done or very close to the 0:12:48.280 --> 0:12:50.880 end of that selling pressure coming from those funds, and 0:12:50.880 --> 0:12:52.800 those are bad because they're kind of like hitting these 0:12:52.840 --> 0:12:55.880 sell everything button. They get forced to sell stocks, bonds, 0:12:55.920 --> 0:12:58.080 and commodities, so it feels like when you're in the 0:12:58.120 --> 0:13:00.560 end of that. The thing I'm watching most closely right 0:13:00.600 --> 0:13:04.760 now is one to three year corporate bond paper. And 0:13:04.920 --> 0:13:06.440 you know, I think in golf they say, you know, 0:13:06.520 --> 0:13:08.920 you drive for show and you put for dough. To me, 0:13:09.280 --> 0:13:12.480 it's that short end that's really critical because that's what 0:13:12.520 --> 0:13:14.840 people rely on for financing. That's to me why it 0:13:14.920 --> 0:13:17.240 was so important that the FED gets this commercial paper 0:13:17.280 --> 0:13:19.960 facility up and running, that they're getting banks to board 0:13:19.960 --> 0:13:22.240 at the discount window again to alleviate pressure at that 0:13:22.280 --> 0:13:25.400 front end, because that's really where you know, it's really 0:13:25.440 --> 0:13:27.440 exciting to talk about where the long dated bonds are, 0:13:27.720 --> 0:13:31.120 but problems there are really really scary to me, and 0:13:31.160 --> 0:13:34.120 I think they can be addressed and they're being addressed. Peter, 0:13:34.160 --> 0:13:36.960 are you seeing any capitulation in the market right now 0:13:37.080 --> 0:13:42.320 or is it just too early? You know, we saw 0:13:42.360 --> 0:13:45.200 some capitulation I think last week, um and it was 0:13:45.200 --> 0:13:47.640 a bit encouraging again on Friday, where you saw things 0:13:47.679 --> 0:13:50.160 like the high yield market and leverage loan market not 0:13:50.280 --> 0:13:53.160 get dragged around quite as badly by the stock market. 0:13:53.640 --> 0:13:55.720 Right now we're back to everything being hit hard again, 0:13:55.840 --> 0:13:59.400 everything moving in tandem UM, credit spreads moving much wider 0:13:59.400 --> 0:14:02.440 as stocks struggle. Having said that, there's a bunch of 0:14:02.440 --> 0:14:05.160 new issues out today on the investment grade corporate bond market. 0:14:05.520 --> 0:14:07.160 If those can get placed, I think it's going to 0:14:07.280 --> 0:14:10.320 show that there is this kind of cash on the sidelines. 0:14:10.400 --> 0:14:14.559 Everyone's just waiting. But as a whole, you are really 0:14:14.600 --> 0:14:16.360 making a bet right now that DC is going to 0:14:16.400 --> 0:14:19.160 get its act together, because I am afraid if DC 0:14:19.280 --> 0:14:21.640 doesn't get its act together, we have a very different 0:14:21.640 --> 0:14:24.200 situation that financial crisis, because to me, this is a 0:14:24.280 --> 0:14:27.080 bottom up problem, and it's going to be small businesses 0:14:27.120 --> 0:14:30.240 and individuals losing their income because they're doing what they're 0:14:30.280 --> 0:14:32.760 being told to by the government. And if that's not replaced, 0:14:33.200 --> 0:14:35.560 I think that trickles up very quickly as people don't 0:14:35.600 --> 0:14:37.840 make rent payments, don't do this. And you know, we 0:14:38.000 --> 0:14:40.640 all look at that underemployment rate UM as well as 0:14:40.680 --> 0:14:43.560 the unemployment rate. I think that underemployment rate could sky 0:14:43.720 --> 0:14:47.760 rocket to financial crisis levels in a matter of weeks 0:14:48.360 --> 0:14:52.600 if government doesn't act. Hey, Peter, we really appreciate your thoughts. 0:14:52.600 --> 0:14:55.880 Peter to your ahead of macro strategies at Academy Securities 0:14:56.240 --> 0:14:58.400 calling us on the phone giving us his thoughts here Lisa, 0:14:58.440 --> 0:15:00.480 and thank you. It's really an issue you. I think 0:15:00.520 --> 0:15:02.520 Peter really makes a good point there right at the end, 0:15:02.520 --> 0:15:04.840 which is, uh, you know, despite that what we're hearing 0:15:04.840 --> 0:15:06.680 from Governor Cuomo about what's going on in the Tri 0:15:06.760 --> 0:15:09.840 State area, really do need potentially, I think to what 0:15:09.880 --> 0:15:12.680 the markets are telling us is a federal stimulus plan 0:15:13.160 --> 0:15:15.520 uh to really um, you know, really address some of 0:15:15.560 --> 0:15:19.280 the economic uh you know, issues that small businesses, medium 0:15:19.320 --> 0:15:22.400 sized businesses are forcing. I also think it's interesting, he pinpointed, 0:15:22.440 --> 0:15:25.120 the Exxon and Verizon issuance is coming to the investment 0:15:25.120 --> 0:15:27.640 grade cripon market. It really it'll be interesting to see 0:15:27.640 --> 0:15:30.320 how those issuances go, particularly for Exon and given the 0:15:30.360 --> 0:15:32.840 fact that they were downgraded yesterday and the price of 0:15:32.880 --> 0:15:35.320 oil is falling off a cliff, so it's an interesting 0:15:35.360 --> 0:15:39.040 time to refinance. But Verizon also coming to market interesting 0:15:39.080 --> 0:15:41.160 to see. I mean, there's a lot of cash supposedly 0:15:41.200 --> 0:15:43.600 waiting to buy this stuff, although we've seen some massive 0:15:43.600 --> 0:15:46.000 outflows record from here we have, and you know, it's 0:15:46.000 --> 0:15:47.640 just you know, a lot of stock. What I am 0:15:47.640 --> 0:15:49.760 amazed at as you look at yesterday's trading, a lot 0:15:49.840 --> 0:15:52.040 of stock was trading down at those levels. So you know, 0:15:52.080 --> 0:15:53.960 a lot of activity in the marketplace, a lot of 0:15:54.040 --> 0:15:56.480 volume in the marketplace. Uh. You wonder if this is 0:15:56.560 --> 0:15:59.040 kind of setting some type of stabilization, some type of 0:15:59.080 --> 0:16:05.440 floor we will see going forward. This is Bloomberg. We 0:16:05.480 --> 0:16:08.440 are talking about China. That's one thing John mentioned that 0:16:08.560 --> 0:16:12.720 that Blimber Economics just downgraded its expectations for the growth 0:16:12.880 --> 0:16:16.320 and it's not that surprising giving the given the dismal 0:16:16.400 --> 0:16:20.080 numbers we got over the weekend out of China, which 0:16:20.120 --> 0:16:22.640 raises a question about supply chains and just getting the 0:16:22.720 --> 0:16:25.400 materials that companies in the United States and elsewhere in 0:16:25.400 --> 0:16:29.240 the world need in order to produce and sell their products. 0:16:29.280 --> 0:16:32.320 Joining us now, Gorang shows Strey, Managing director Mergers and 0:16:32.360 --> 0:16:37.120 Acquisitions in Business services focused on logistics and transportation for 0:16:37.200 --> 0:16:41.360 Lincoln International. Gorong, I'd love to start with just how 0:16:41.520 --> 0:16:44.800 vast the disruption has been given the shutdowns that we 0:16:44.840 --> 0:16:48.280 saw in China earlier this year. How disruptive has that 0:16:48.320 --> 0:16:51.760 been to the supply chain? Sure, and it's certainly had 0:16:51.800 --> 0:16:54.520 a profound impact on the global supply chain here in 0:16:54.560 --> 0:16:56.800 particular in the first few months the year, and certainly 0:16:56.800 --> 0:17:00.360 remains an involving in dynamic situation here. Uh. You know, 0:17:00.520 --> 0:17:03.560 it really did start over worries about sourcing product from 0:17:03.640 --> 0:17:06.160 China as they were forced to shut down production, particularly 0:17:06.200 --> 0:17:09.600 here in the US, as many of our manufacturers have 0:17:09.880 --> 0:17:14.639 a significant amount of exposure to Chinese productions. Backed percent 0:17:14.840 --> 0:17:17.200 of the Fortune On companies have Tier one suppliers that 0:17:17.240 --> 0:17:21.240 are supplying parts directly into the US manufacturing process. And 0:17:21.359 --> 0:17:23.480 you know, even more worrisome is virtually all of the 0:17:23.520 --> 0:17:27.720 Fortune one companies are sourcing or have Tier two suppliers, 0:17:27.760 --> 0:17:30.560 all based in affected areas of China. I think, you know, 0:17:30.600 --> 0:17:32.520 at least for the first couple of months of the year, 0:17:33.040 --> 0:17:35.320 most US companies were able to get by here with 0:17:35.359 --> 0:17:37.160 a lot of the buffer stock that they had pre 0:17:37.240 --> 0:17:40.399 bought and anticipation of a slowdown that typically occurs with 0:17:40.400 --> 0:17:42.400 the Chinese New Year. I think what's been a little 0:17:42.400 --> 0:17:46.240 bit more worrisome is that as China came back from 0:17:46.240 --> 0:17:48.879 the holidays here, there's been some challenges really over the 0:17:48.920 --> 0:17:51.960 past few weeks um to really get goods out of 0:17:51.960 --> 0:17:54.920 the country. So production is starting to slowly restart in 0:17:54.960 --> 0:17:58.359 the country, but they're having challenges finding truck drivers and 0:17:58.440 --> 0:18:00.320 getting through a lot of the height and levels of 0:18:00.320 --> 0:18:03.320 screening that are required to get these products overseas. And 0:18:03.400 --> 0:18:06.920 certainly it's not just those suppliers and manufacturers that are 0:18:06.960 --> 0:18:09.760 looking for Finnish goods from from China, but also those 0:18:09.800 --> 0:18:12.080 that are sourcing components that are required in production. So 0:18:12.119 --> 0:18:15.680 now worries are over what does future production capacity look 0:18:15.720 --> 0:18:19.280 like here in the US as well as globally here 0:18:19.400 --> 0:18:22.320 if you can't get certain critical components that you're sourcing 0:18:22.359 --> 0:18:24.480 from China. So I think this is really highlighted the 0:18:24.600 --> 0:18:28.080 fact for many companies that were already re examining their 0:18:28.119 --> 0:18:30.760 supply chains given the trade wars, do we need to 0:18:30.800 --> 0:18:34.160 figure out alternate supplies outside of China going to other 0:18:34.200 --> 0:18:37.600 countries like Vietnam, or in Europe, going more near sourcing 0:18:37.680 --> 0:18:41.200 to Eastern Europe, or even in the US re re 0:18:41.320 --> 0:18:45.040 igniting efforts to source products from Mexico. So I think 0:18:45.080 --> 0:18:49.040 this will only heighten the level of attention that's being 0:18:49.080 --> 0:18:51.399 put on making sure you have redundancy in the supply 0:18:51.520 --> 0:18:54.880 chain and moving away from the reliance in China so 0:18:55.040 --> 0:18:56.960 go wrong. How about here in the U. S. It's 0:18:57.200 --> 0:18:59.760 very early days of trying of kind of this country 0:19:00.000 --> 0:19:02.160 of coming to grips with the virus and and shutting 0:19:02.160 --> 0:19:04.320 down in certain cities. Give us a sense of kind 0:19:04.320 --> 0:19:07.200 of how the logistics set up here in the US 0:19:07.359 --> 0:19:10.960 may play out from the I'm thinking the trucking companies, railroads, 0:19:11.280 --> 0:19:15.639 what's the status there? Sure? Sure? And I think look, fortunately, um, 0:19:15.640 --> 0:19:18.520 thus far we have been fairly resilient here, and you know, 0:19:18.720 --> 0:19:20.560 there's been a lot of panic in terms of going 0:19:20.600 --> 0:19:23.960 out there and stocking up UH inventories that you know, 0:19:24.240 --> 0:19:26.760 in terms of household goods. But um, I think the 0:19:26.800 --> 0:19:29.720 longer term where here is, if this is more pervasive, 0:19:29.760 --> 0:19:33.719 it's going to have an impact on unemployment here. You know, 0:19:33.880 --> 0:19:36.199 if you look at the ports on the West coast, 0:19:36.240 --> 0:19:38.800 for example, at the Port of Long Beach here, if 0:19:38.840 --> 0:19:42.080 we start to see a prolonged shutdown, there's gonna be 0:19:42.119 --> 0:19:44.639 millions of jobs at risk here if there's less cargo 0:19:44.760 --> 0:19:48.000 that's coming across through those ports. We've had fourteen months 0:19:48.040 --> 0:19:50.959 of consecutive declines and the shipments that are coming in 0:19:51.040 --> 0:19:54.000 from overseas, and that is going to continue here for 0:19:54.119 --> 0:19:56.879 most estimates here. And what that means is, you know, 0:19:56.920 --> 0:19:58.880 as many as one out of nine people that are 0:19:59.080 --> 0:20:02.160 kind of in those jobs at the ports will potentially 0:20:02.240 --> 0:20:04.960 lose their jobs here. But then thinking about some of 0:20:05.000 --> 0:20:08.560 the more critical supply chains that we need, including pharmaceuticals 0:20:09.000 --> 0:20:12.560 and other electronics that may be going into healthcare equipment, 0:20:12.720 --> 0:20:14.919 I think there's heightened efforts here in the US to 0:20:14.960 --> 0:20:19.239 make sure that those supply chains remain unimpacted here. So 0:20:19.320 --> 0:20:21.480 we are optimistic that that will be the case here, 0:20:21.560 --> 0:20:23.840 And certainly it's getting a lot more attention than it 0:20:23.920 --> 0:20:26.399 was getting here three or four weeks ago, when everyone's 0:20:26.400 --> 0:20:28.919 attention was just not can we get product out of China? Now, 0:20:28.960 --> 0:20:31.760 let's really let's make sure our domestic supply chains remain 0:20:31.840 --> 0:20:34.439 intact as well. Drawing Shot Street, thanks so much for 0:20:34.600 --> 0:20:36.720 joining us to really appreciate your thoughts growing as a 0:20:36.760 --> 0:20:40.320 managing director and head of Lincoln International's North American logistics. 0:20:42.960 --> 0:20:45.040 Let's bring in Max mess and he covers all things 0:20:45.160 --> 0:20:49.560 healthcare related by Bloomberg Opinion and Max. I want to 0:20:49.560 --> 0:20:53.280 start with that hospitalization rate of fifteen to nine percent. 0:20:53.800 --> 0:20:58.159 I mean, is that an accurate kind of of of 0:20:58.440 --> 0:21:01.639 rate or is it possible to actually know given the 0:21:01.680 --> 0:21:05.879 fact that there isn't that widespread of testing. UM, you 0:21:05.920 --> 0:21:08.600 know that that that rate is a little bit separate 0:21:08.680 --> 0:21:11.560 from the testing it in the sense that these are 0:21:11.600 --> 0:21:14.560 you know, the number of cases that they actually see 0:21:15.160 --> 0:21:17.680 that UM you know that that need to to actually 0:21:17.720 --> 0:21:20.680 be admitted, that need that more intensive care, and that 0:21:20.840 --> 0:21:24.760 that's not so far outside of the sort of range 0:21:24.760 --> 0:21:28.199 of numbers we've seen in other countries UM, you know, 0:21:28.240 --> 0:21:30.520 like like China and Italy. UM. You know this this 0:21:30.560 --> 0:21:35.280