WEBVTT - Hospitals Counting Beds Again 0:00:00.720 --> 0:00:03.720 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.800 --> 0:00:06.320 Jason Kelly. We're right here every day bringing you the 0:00:06.400 --> 0:00:11.160 latest news from the world's of business and finance, plus technology, politics, economics, 0:00:11.240 --> 0:00:14.280 all harnessing the power of Business Week reporters and editors. 0:00:14.440 --> 0:00:16.439 And of course Carol that's part of a team of 0:00:16.520 --> 0:00:19.959 twenty seven hundred journalists and analysts and more than a 0:00:20.040 --> 0:00:22.959 hundred and twenty countries and Jason. You can download Bloomberg 0:00:22.960 --> 0:00:26.079 Business Week on iTunes, SoundCloud, bl Bloomberg dot com. You 0:00:26.079 --> 0:00:28.280 can also listen to our radio show at two pm 0:00:28.320 --> 0:00:31.160 Eastern on Bloomberg Radio every weekday, or watch us on 0:00:31.200 --> 0:00:36.839 YouTube by searching Bloomberg Global News. Investors. They are perhaps 0:00:36.920 --> 0:00:40.120 rightly worried about this spike that we're seeing across the 0:00:40.159 --> 0:00:45.280 country in coronavirus cases, especially in the sun Belts. This 0:00:45.360 --> 0:00:48.800 is not a disease. We know that summer is going 0:00:48.840 --> 0:00:51.360 to just sort of take away from us. Uh, the 0:00:51.440 --> 0:00:54.800 numbers are scary. John Tazzi is healthcare reporter for Bloomberg. 0:00:54.800 --> 0:00:57.880 He joins us on the phone from Queens And you know, John, 0:00:58.160 --> 0:01:00.640 I grew up in Houston, and so I look at 0:01:00.720 --> 0:01:03.280 what's going on in that city. I look at Texas 0:01:03.920 --> 0:01:07.600 and it's really troubling and a little bit scary. Help 0:01:07.680 --> 0:01:12.959 us understand where we are because two months after, almost 0:01:12.959 --> 0:01:15.399 three months after we were facing this in New York City, 0:01:15.920 --> 0:01:19.440 we're back to counting beds again. Yeah, I mean, I 0:01:19.440 --> 0:01:23.119 think it's a really concerning situation, um, as you said, 0:01:23.200 --> 0:01:25.320 and you know, not just in Texas, but a number 0:01:25.360 --> 0:01:32.600 of states um Arizona, California have recently set records for 0:01:33.040 --> 0:01:36.559 new cases um and you know, we we are seeing 0:01:37.360 --> 0:01:41.920 a rise in hospitalizations as well. So you know, sometimes 0:01:42.000 --> 0:01:44.720 new cases are just an indication of more testing. But 0:01:44.840 --> 0:01:48.920 I think there are an increasing number of positive tests, uh, 0:01:48.920 --> 0:01:52.440 and an increasing number of hospitalizations. And you know, the 0:01:52.480 --> 0:01:57.040 concern I think everywhere is to avoid getting to a 0:01:57.120 --> 0:02:02.000 point where hospital systems are, uh, you know, are overwhelmed 0:02:02.080 --> 0:02:04.360 that they have you know, not that they don't have 0:02:04.440 --> 0:02:07.240 enough debts to treat the patients they have coming in right, 0:02:07.320 --> 0:02:09.720 so much so that as you you know, put in 0:02:09.760 --> 0:02:13.240 your story that late yesterday the Texas Children's Hospital System 0:02:13.240 --> 0:02:16.480 in Houston began accepting adult COVID nineteen patients because of 0:02:16.480 --> 0:02:20.320 a surging demand. I do wonder John and your reporting. 0:02:20.680 --> 0:02:24.160 Have those states that are now dealing with surges and 0:02:24.200 --> 0:02:28.520 cases and and increasing hospitalization, have they learned anything? Are 0:02:28.520 --> 0:02:31.320 they better prepared than we were potentially here on the 0:02:31.320 --> 0:02:34.079 East Coast, you know, where it just kind of I 0:02:34.120 --> 0:02:37.080 think safe to say no one expected it, you know, 0:02:37.280 --> 0:02:39.120 to to shoot up as much as it did, and 0:02:39.160 --> 0:02:41.239 I think a lot of people were caught uh not, 0:02:41.520 --> 0:02:44.200 you know, unprepared. So I just wonder our hospital systems 0:02:44.200 --> 0:02:48.560 across the country better prepared now. UM. I think there 0:02:48.560 --> 0:02:50.440 are a lot of valuables in play. I think in 0:02:50.520 --> 0:02:54.000 some ways, yes, um, you know, everybody has now had 0:02:54.120 --> 0:02:57.119 uh some time to sort of see this coming and 0:02:57.480 --> 0:03:02.320 you know, to begin uh stockpileing uh personal protective equipment, 0:03:02.800 --> 0:03:06.120 UM you know in medicines, UM, you know, and to 0:03:06.440 --> 0:03:09.880 kind of really look carefully at their plans around how 0:03:09.919 --> 0:03:13.520 they are going to create surge capacity uh if they 0:03:13.560 --> 0:03:16.640 need to, um you know. But there are some other 0:03:17.040 --> 0:03:21.240 um factors that uh, you know pulling the other direction. 0:03:21.320 --> 0:03:25.200 In New York in uh in March and early April, 0:03:25.240 --> 0:03:29.880 basically everything stopped. People were not getting uh medical care 0:03:30.040 --> 0:03:33.760 for you know, non emergent issues other than COVID. A 0:03:33.760 --> 0:03:38.000 lot of schedules. Care was just canceled for weeks um 0:03:38.040 --> 0:03:42.200 in order to give the hospital's capacity to uh, you know, 0:03:42.240 --> 0:03:46.920 to treat the COVID surge. Um. In most of the country, 0:03:47.000 --> 0:03:52.360 elective surgeries are have resumed and hospitals are treating patients 0:03:52.400 --> 0:03:55.600 you know who who couldn't put up care indefinitely for 0:03:55.720 --> 0:03:59.320 you know, really serious issues in some cases, so you know, 0:03:59.360 --> 0:04:03.760 they're balanced thing that as well, along with you know, 0:04:03.880 --> 0:04:08.600 the kind of rising number of um of coronavirus cases, 0:04:09.680 --> 0:04:14.320 so being a little bit prochial here. How much do 0:04:14.360 --> 0:04:16.400 we need to worry in the Tri state area, which 0:04:16.440 --> 0:04:19.599 is starting to get back to work, where we it 0:04:19.760 --> 0:04:24.120 feels like, have been assured along the way that New 0:04:24.200 --> 0:04:27.960 York and and states surrounding would be ready if there 0:04:28.120 --> 0:04:31.200 was a second wave. What have we learned? What do 0:04:31.240 --> 0:04:34.440 we need to be worried about, especially because of what 0:04:34.600 --> 0:04:41.240 happened uh here before? Um. Well, I think that what 0:04:41.320 --> 0:04:44.080 the epidemnologists will tell you is that the potential for 0:04:44.360 --> 0:04:48.320 more spread of the virus exists everywhere, right because most 0:04:48.320 --> 0:04:51.159 of the population is still susceptible. So even though you 0:04:51.200 --> 0:04:53.840 know in New York that the number of people testing 0:04:53.880 --> 0:04:57.400 positive is very low, now and it feels much safer 0:04:57.400 --> 0:05:00.920 than it did, certainly a couple of months go. Um, 0:05:00.960 --> 0:05:03.000 you know, there's nothing to say that, you know, we 0:05:03.080 --> 0:05:05.799 won't be in a similar situation to what we're seeing 0:05:05.880 --> 0:05:09.240 in in Texas and Arizona again at some point down 0:05:09.240 --> 0:05:12.720 the line. And I think, you know, hospital systems everywhere 0:05:12.800 --> 0:05:17.640 are you know, considering, um, you know what they have 0:05:17.800 --> 0:05:21.560 to do to prepare for for uh, that kind of situation. 0:05:21.600 --> 0:05:23.040 And you know, one of the messages I think we're 0:05:23.080 --> 0:05:27.800 hearing from Health US victuals no, no, you know what 0:05:27.839 --> 0:05:29.640 I was just gonna say, just to wrap up, is 0:05:29.680 --> 0:05:31.719 I love the way you wrap up your story. And 0:05:31.760 --> 0:05:35.839 there's a quote I believe from one physician who talks 0:05:35.920 --> 0:05:38.000 about that even if the health system is as prepared 0:05:38.040 --> 0:05:39.479 as we can be, if we see the degree of 0:05:39.520 --> 0:05:43.880 COVID cases and hospitalizations and it keeps growing exponentially, Um, 0:05:43.920 --> 0:05:45.760 this doctor says, I don't know if even the best 0:05:45.760 --> 0:05:47.560 preparation of the world would be enough. And it just 0:05:48.120 --> 0:05:51.640 is once again, Um, you know, Jason, a repeat of 0:05:52.040 --> 0:05:53.880 you know you can prepare and prepare about when those 0:05:53.960 --> 0:05:56.360 numbers go off the chart, it's really tough to keep up. 0:05:56.360 --> 0:05:58.800 And that's potentially what we could see again. Um, John, 0:05:58.880 --> 0:06:01.880 thank you so much, really appreciate the story. And you're reporting. 0:06:01.960 --> 0:06:04.600 John Tazzi, healthcare reporter at Bloomberg News, joining us on 0:06:04.640 --> 0:06:07.600 the phone in Queens, New York. And Jason, listen, you 0:06:07.640 --> 0:06:09.440 know here we are once again check out most red 0:06:09.480 --> 0:06:11.839 on the Bloomberg terminal there are. You know, for a 0:06:11.839 --> 0:06:15.600 while the virus updates was trending much lower in terms 0:06:15.640 --> 0:06:17.760 of what everybody was reading on the terminal. It's back 0:06:17.800 --> 0:06:20.159 up again. We've been here before. We've seen this movie 0:06:20.200 --> 0:06:22.320 and and I think we didn't like it the first time, 0:06:22.320 --> 0:06:24.680 and we like it even less this time. So we're 0:06:24.680 --> 0:06:26.720 gonna keep a close eye on this for sure. Eager 0:06:26.800 --> 0:06:29.039 to get some time later with the dean of the 0:06:29.120 --> 0:06:33.560 Stanford Medical School and get his perspective on what they're 0:06:33.600 --> 0:06:36.760 seeing from a medical perspective. We have leaned heavily on 0:06:37.040 --> 0:06:40.719 doctors and deans like him to give us a real 0:06:41.080 --> 0:06:44.200 reality check in terms of preparation, but also, you know, 0:06:44.320 --> 0:06:47.359 some prescriptive advice on what should we what we should 0:06:47.400 --> 0:06:49.039 be thinking about when it comes to work in life 0:06:49.040 --> 0:06:50.920 and all of it. I have advice for you, Jason, 0:06:51.200 --> 0:06:54.640 wear a mask, yeah, and social distancing. Yeah, I'm just 0:06:54.680 --> 0:06:57.440 going to put it out there. Sorry, Sorry for the sarcasm. 0:06:57.560 --> 0:07:01.599 Large family grew up on sarcasm. Alright, it's not even 0:07:01.600 --> 0:07:04.719 sure it's sarcastic at this point, it's just direct. You're 0:07:04.720 --> 0:07:08.560 absolutely right. This is Bloomberg Business Week with Carol Masser 0:07:08.680 --> 0:07:13.160 and Jason Kelly on Bloomberg Radio. Well, today was day 0:07:13.200 --> 0:07:18.040 three of Bloomberg Global Amazing event wrapping it up actually 0:07:18.160 --> 0:07:19.920 right now, I believe they're wrapping it up here in 0:07:19.960 --> 0:07:22.400 the US. So it went around the world. It was 0:07:22.480 --> 0:07:26.880 in Asia, Middle East, Europe, and the United States obviously, 0:07:27.040 --> 0:07:29.640 and during the European portion. This morning I got to 0:07:29.640 --> 0:07:32.480 catch up with Bruce Flat. You've met him. We've spent 0:07:32.560 --> 0:07:34.920 some time with him out in l a and elsewhere. 0:07:34.920 --> 0:07:36.920 He's based in New York. He was in London. He's 0:07:36.960 --> 0:07:40.440 got a global portfolio. They are a massive real estate investment, 0:07:40.760 --> 0:07:44.960 massive real estate, infrastructure, renewables. We talked about all of it. 0:07:45.520 --> 0:07:48.880 Check out a portion of this conversation. I would just 0:07:48.920 --> 0:07:53.600 say that, you know, leave aside the health um impact 0:07:53.640 --> 0:07:59.920 of everything. Um, the only thing constant in life is changed. 0:08:00.800 --> 0:08:05.360 And uh, we've witnessed from all across the world, the 0:08:05.440 --> 0:08:07.920 closing down of offices and the opening up of offices, 0:08:07.960 --> 0:08:11.520 and we're we're virtually opened up all of our offices 0:08:12.120 --> 0:08:17.200 globally and we're back up at some office in London 0:08:17.200 --> 0:08:22.840 here we're probably New York were thirty um and you know, 0:08:22.920 --> 0:08:25.040 so the numbers have been have been going back up 0:08:25.080 --> 0:08:28.360 and it's taken us three months. It's been stressful for 0:08:28.400 --> 0:08:31.880 a lot of people. But um, you know the bottom line, 0:08:31.920 --> 0:08:36.440 this will pass, and this is the crisis of the day. 0:08:36.480 --> 0:08:39.640 But we'll look back at it, um and some small 0:08:39.679 --> 0:08:42.240 things are going to change. Bought a lot of going 0:08:42.240 --> 0:08:44.400 back to where they were, and we'll have another crisis 0:08:44.400 --> 0:08:46.880 in the future. I'm sure, um that will be just 0:08:46.960 --> 0:08:48.560 as bad as this one. When you're in the middle 0:08:48.600 --> 0:08:52.240 of it. So what are those small things that have changed? 0:08:52.280 --> 0:08:56.080 Because you have a window literally in figuratively into how 0:08:56.120 --> 0:08:58.679 we work. We spent so much of our time at 0:08:58.720 --> 0:09:01.720 the office, we spent shopping, you also have a window 0:09:01.760 --> 0:09:05.240 into that. What are the things that you see that 0:09:05.320 --> 0:09:08.439 will change in the short to mid term that we 0:09:08.480 --> 0:09:14.439 should be thinking about. Yes, so for offices, once we 0:09:14.600 --> 0:09:17.880 shut down office buildings around the world and that people 0:09:17.880 --> 0:09:20.440 went home, we started thinking this three months ago. We 0:09:20.440 --> 0:09:22.960 started thinking about what is it that we need to 0:09:22.960 --> 0:09:27.400 do get those offices back open, and that has included 0:09:27.600 --> 0:09:31.000 all of the things that you have seen if you're 0:09:31.000 --> 0:09:32.719 in an office today or you will see when you 0:09:32.760 --> 0:09:36.880 shortly go back, which is there's more distancing, elevators are 0:09:37.880 --> 0:09:42.600 have spacing out, there's more cleaning. Our air is better 0:09:42.880 --> 0:09:45.880 than what you're breathing in your house because we are 0:09:46.600 --> 0:09:48.640 um taking particles out of the air that we never 0:09:48.640 --> 0:09:51.240 took out before. So all of those things are happening 0:09:51.240 --> 0:09:53.400 in office buildings today and they are going to be 0:09:53.520 --> 0:09:55.280 some of the safest places in the world to be 0:09:55.320 --> 0:09:59.280 in the future. UM In In in retail, there's no doubt. 0:09:59.320 --> 0:10:01.320 There was this trend that was going on, and the 0:10:01.360 --> 0:10:07.720 trend was online and good retail. We're moving together and 0:10:07.840 --> 0:10:11.719 retailers were using them together as one UM space to 0:10:11.840 --> 0:10:16.000 deliver goods to customers, and that's going to be accelerated. 0:10:16.040 --> 0:10:20.520 There's no doubt. Uh. With curbside pick up probably increasing 0:10:20.600 --> 0:10:26.040 and other things happening, the trends that we're happening are 0:10:26.120 --> 0:10:30.559 going to continue to UM increase, some of them exponentially 0:10:30.600 --> 0:10:34.400 as you come out of this. And it's safe to say, 0:10:34.440 --> 0:10:37.080 and I know that this is your business, but you're 0:10:37.120 --> 0:10:42.160 still long office as a way of working. You've talked 0:10:43.080 --> 0:10:45.920 several times over the past few weeks about the power 0:10:45.960 --> 0:10:48.439 of people being together and those sorts of things. I 0:10:48.520 --> 0:10:51.560 think we're seeing that manifesting even in our social lives. 0:10:52.120 --> 0:10:56.600 Help me understand that a little bit. So here's what 0:10:56.640 --> 0:10:59.480 I would say. Our our view is that office space. 0:11:00.200 --> 0:11:04.880 After talking to virtually every company that we lease space 0:11:05.120 --> 0:11:08.840 two um that they're bringing their people back. The only 0:11:09.040 --> 0:11:12.680 the only reason some are saying we're actually not bringing 0:11:12.720 --> 0:11:15.000 back everyone right now is they don't have they don't 0:11:15.000 --> 0:11:18.640 have enough space to be able to have social distancing. 0:11:18.679 --> 0:11:21.839 While that's important to bring everyone back, So they may 0:11:21.880 --> 0:11:26.240 be bringing back of the people because of that, but 0:11:26.320 --> 0:11:28.520 eventually they're going to bring them all back. And I 0:11:28.559 --> 0:11:30.920 guess the point I would make, and I think this 0:11:31.040 --> 0:11:33.600 is in our company, but it's in other companies we 0:11:33.640 --> 0:11:37.400 talked to. The office is about the social interaction of 0:11:37.440 --> 0:11:41.319 people that creates a culture in a business. The spontaneity 0:11:41.400 --> 0:11:44.720 and the collaboration that comes from an office is incredibly 0:11:44.800 --> 0:11:48.520 important to a business, and you can't create that by 0:11:48.600 --> 0:11:51.520 video conference. Uh, you can maintain it for a while, 0:11:51.559 --> 0:11:53.280 and that's what we've all done for a little while. 0:11:53.800 --> 0:11:56.440 But you really can't do that over the longer term. 0:11:56.480 --> 0:11:59.200 So offices are going to be incredibly important as they 0:11:59.200 --> 0:12:04.360 were before, and in fact today, um, Jason, we're actually 0:12:04.600 --> 0:12:07.760 releasing greater amounts of space to people than they had 0:12:07.800 --> 0:12:09.839 before because they want to accommodate all our people and 0:12:09.880 --> 0:12:13.040 get them back quickly and uh, and so they're increasing 0:12:13.040 --> 0:12:18.439 their footprints versus getting taking less. That's fascinating. But you 0:12:18.520 --> 0:12:21.800 can go either way, right Jason. People can either you know, 0:12:22.160 --> 0:12:24.440 reduce their footprint and either have people out in the 0:12:24.440 --> 0:12:27.240 suburbs or working from home, or they can increase their 0:12:27.240 --> 0:12:30.840 footprint in the big cities to give everybody more space 0:12:30.880 --> 0:12:33.640 so that they feel comfortable. So that's and I listen, 0:12:34.200 --> 0:12:36.839 I've heard the death of major cities. How many times? 0:12:36.840 --> 0:12:38.719 How many times have we heard it. I don't think 0:12:38.760 --> 0:12:40.280 that's going to happen. I just think we're gonna have 0:12:40.280 --> 0:12:42.200 to figure out new ways. I think cities are going 0:12:42.240 --> 0:12:43.839 to change. I think you're going to have you know, 0:12:43.880 --> 0:12:46.520 I was talking to some people on the heels of 0:12:46.559 --> 0:12:48.760 this conversation, you know, because lots of people wanted to 0:12:48.800 --> 0:12:52.800 talk about what Bruce had to say, and you know, 0:12:53.080 --> 0:12:55.199 it's interesting. I think we're going to be living in 0:12:55.280 --> 0:12:58.000 a hybrid world. Um. You know, I just think about 0:12:58.040 --> 0:13:00.480 my experience this week alone, you know where it's like 0:13:00.600 --> 0:13:02.560 I spent a couple days in the office here I am, 0:13:02.960 --> 0:13:04.760 I'm doing the show, you know, with you. I did 0:13:04.760 --> 0:13:08.520 the show with you yesterday in a totally different location. Um. 0:13:08.559 --> 0:13:12.360 You know. Obviously, different people's jobs require different things at 0:13:12.400 --> 0:13:16.560 different times, and you know, I just I do think 0:13:16.600 --> 0:13:18.800 though the structure of cities could change. You know, one 0:13:18.800 --> 0:13:20.800 of the things we talked about later on in the conversation, 0:13:20.840 --> 0:13:24.200 prompted by an audience question, was does the architecture and 0:13:24.280 --> 0:13:27.640 design of cities change? And this is something you've talked about, 0:13:28.120 --> 0:13:31.360 which is do we move to a place where actually 0:13:31.360 --> 0:13:33.040 we want a little more space, so we need more 0:13:33.080 --> 0:13:36.160 walkable spaces, we need more space for outdoor dining, and 0:13:36.240 --> 0:13:39.720 so does that change the way cities look and feel? 0:13:40.080 --> 0:13:42.480 I think it's possible. It's so funny. For the first 0:13:42.520 --> 0:13:45.480 time I went into our local supermarket just recently, which 0:13:45.520 --> 0:13:47.040 has been like it was kind of a big thing 0:13:47.080 --> 0:13:49.400 for me because we've just stayed away and it was 0:13:49.600 --> 0:13:51.760 I gotta say it was a clean place to begin with. 0:13:51.880 --> 0:13:54.920 It was cleaner, it was really organized, there was more space, 0:13:55.040 --> 0:13:57.400 like the aisles were open and there were you could 0:13:57.400 --> 0:14:00.000 only walk one way down, And I have to say, 0:14:00.320 --> 0:14:02.920 to some extent, maybe we need to rethink some of 0:14:03.480 --> 0:14:06.400 the way things are built and on a grander scale cities. 0:14:06.600 --> 0:14:08.600 I gotta say the city has gotten crowded. There's a 0:14:08.600 --> 0:14:11.240 lot more cars because of Uber and Lift, And I'm 0:14:11.280 --> 0:14:12.920 not saying those need to go away, because I think 0:14:12.960 --> 0:14:16.080 they have provided great services. But I think we need 0:14:16.120 --> 0:14:19.160 to think about it's a walking city, and it's become 0:14:19.240 --> 0:14:22.480 much more difficult to do that. So let's figure that out. Yeah, 0:14:22.520 --> 0:14:24.840 I think in order to do that, though, you've got 0:14:24.840 --> 0:14:27.280 to figure out public transportation. And I've yet to take 0:14:27.280 --> 0:14:31.920 public transportation, so I can't judge it um fully. But 0:14:32.000 --> 0:14:34.880 the reality is is that that has to be clean. 0:14:35.000 --> 0:14:36.880 I mean it has to be clean beyond clean. And 0:14:36.920 --> 0:14:38.960 by all accounts, the MTA has done a great job. 0:14:39.320 --> 0:14:41.520 But the thing we have to worry about is large 0:14:41.520 --> 0:14:44.760 groups of people, right listen, and it's needed to be 0:14:44.840 --> 0:14:47.680 cleaner than what it's been. Okay, I'm just gonna put 0:14:47.680 --> 0:14:49.320 that out and I know, it's really tough when you 0:14:49.360 --> 0:14:51.320 think about my husband. I were talking about the numbers 0:14:51.360 --> 0:14:53.880 that ride it on a daily basis. When everything is normal, 0:14:54.320 --> 0:14:57.800 it's unbelievable. But it can be better, and I think 0:14:57.840 --> 0:15:00.520 we need to figure that out. So um fascinating to 0:15:00.560 --> 0:15:03.120 hear his conversation. And I think stay tuned everyone in 0:15:03.200 --> 0:15:07.680 terms of how things play out. But cities I still love. 0:15:07.760 --> 0:15:11.520 They love it well. You and Bruce flat your long cities, 0:15:11.520 --> 0:15:14.920 your long offices. So we'll see where that goes. Check 0:15:14.960 --> 0:15:18.920 that whole interview out on Bloomberg Live dot com. This 0:15:19.240 --> 0:15:22.960 is Bloomberg Business Week with Carol Messer and Jason Kelly 0:15:23.160 --> 0:15:27.160 on Bloomberg Radio. In today's Bloomberg Business Week, Economics, we 0:15:27.200 --> 0:15:29.440 want to look at the interesting and complicated and often 0:15:29.520 --> 0:15:33.600 problematic relationship between the FED and acid bubbles. Great voice 0:15:33.800 --> 0:15:36.480 to have to talk about that. He put out some research. 0:15:36.560 --> 0:15:39.800 Joe Kalish is back with us. He is chief Global 0:15:39.800 --> 0:15:43.560 macro Strategist at ned Davis Research, and he joins us 0:15:43.640 --> 0:15:46.080 on the phone from Sarasota, Florida. Joe, it is so 0:15:46.120 --> 0:15:48.000 good to have you back with us. How are you. 0:15:48.960 --> 0:15:51.800 I'm doing well, Carol, Thanks for having me back. Well, 0:15:51.840 --> 0:15:53.680 it's great to have you back. And you know, it's 0:15:53.720 --> 0:15:56.600 interesting we've heard from the FED a lot lately. J 0:15:56.760 --> 0:16:00.960 Powell a lot, and certainly various FED governors you dig into. 0:16:01.120 --> 0:16:03.840 First of all, kudos and thank you because you give 0:16:03.880 --> 0:16:06.600 props to our own Mike McKee here at Bloomberg News. 0:16:06.680 --> 0:16:09.000 And the question that he asked J. Powell at the 0:16:09.080 --> 0:16:11.880 last press conference, why don't we kick off there? What? 0:16:11.880 --> 0:16:15.720 What kind of intrigued you about that question? I thought 0:16:16.200 --> 0:16:23.000 Michael really zeroed in on some really critical questions that 0:16:23.200 --> 0:16:25.920 the said is going to need to grapple with I 0:16:25.960 --> 0:16:29.920 think longer term, and what we as investors need to 0:16:29.960 --> 0:16:33.840 grapple with and policymakers need need to deal with it, 0:16:34.000 --> 0:16:38.920 and and and essentially, you know, Michael asked to two things. One, 0:16:39.360 --> 0:16:43.040 uh was on the question of acid bubbles and whether 0:16:43.040 --> 0:16:47.960 the FITS policies were helping to UM promote that. And 0:16:48.280 --> 0:16:52.800 the second one was as a consequences would have said 0:16:52.960 --> 0:16:56.200 therefore contributing to wealth inequality. There are a lot of 0:16:56.320 --> 0:17:01.080 questions at the press conference about income inequality, but Michael 0:17:01.480 --> 0:17:04.399 focused on on the wealth and equality aspect. So I 0:17:04.480 --> 0:17:09.760 think both of those were really UH important. UM questions 0:17:10.280 --> 0:17:14.520 to ask and and and and essentially, you know, the 0:17:14.600 --> 0:17:18.439 Fed chairman UH said they really didn't have much choice, 0:17:18.520 --> 0:17:22.600 that they weren't hitting their goals in terms of maximum 0:17:22.600 --> 0:17:26.200 employment and price stability. UM, that you know, they were 0:17:26.520 --> 0:17:29.320 really couldn't be concerned with the level of asset prices. 0:17:30.520 --> 0:17:33.600 And and he really kind of you know, sidestepped the 0:17:33.640 --> 0:17:38.920 whole question about um wealth inequality. UM. But he also 0:17:39.040 --> 0:17:42.159 did you know, I think Michael is also asking about um, 0:17:42.400 --> 0:17:47.120 you know, financial stability, and I thought, UH, Chairman Powell's 0:17:47.160 --> 0:17:50.919 way of framing that was to go to the banks 0:17:50.960 --> 0:17:54.080 and say, well, the banks were better capitalized. H And 0:17:54.200 --> 0:17:59.040 that's true, but in other areas of the Monetary Policy Report, 0:17:59.520 --> 0:18:03.040 they it flags some issues with households and businesses and 0:18:03.240 --> 0:18:06.800 non bank financials, so um, you know, he started put 0:18:06.880 --> 0:18:09.080 them more a little bit more of a positive and 0:18:10.760 --> 0:18:12.920 in the actual report, well, it's tricky. It gets to 0:18:12.960 --> 0:18:14.600 the heart of what we've been talking to so much 0:18:14.600 --> 0:18:18.159 about here at Bloomberg. UH. And in light of the virus, 0:18:18.280 --> 0:18:21.040 to be quite honest, and also what happened in Minneapolis 0:18:21.160 --> 0:18:23.560 and the killing of George Floyd, and again we're talking 0:18:23.640 --> 0:18:27.280 about inequalities, racism, in America and we're once again having 0:18:27.320 --> 0:18:30.960 that discussion of wealth creation versus income, you know, and 0:18:31.040 --> 0:18:34.080 where we're seeing the gaps, and there's a lot, uh 0:18:34.160 --> 0:18:36.879 and a wide gap in America when it comes to 0:18:37.040 --> 0:18:39.399 who has the wealth and who does not. And you 0:18:39.520 --> 0:18:42.680 certainly get into that, you know, lots of questions about 0:18:42.720 --> 0:18:45.919 the FED and central banks, you essential banks and their 0:18:46.000 --> 0:18:49.200 role in creating bubbles. Your point is, I mean, we 0:18:49.280 --> 0:18:51.320 can learn from the past, and I guess the past 0:18:51.760 --> 0:18:55.159 has shown us that the FED doesn't necessarily think a 0:18:55.240 --> 0:18:59.520 lot about the bubbles they're creating. Well, they may be 0:18:59.600 --> 0:19:02.320 aware from but I guess they feel there's not much 0:19:02.400 --> 0:19:05.440 they can do about it. So the most famous one 0:19:06.160 --> 0:19:10.800 was the so called a rational exuberant speech that form 0:19:10.800 --> 0:19:16.760 ofthe Chairman Greenspan gave in December ninety six. And at 0:19:16.880 --> 0:19:22.200 that time the NASDAK was around twelve hundred or so, 0:19:23.920 --> 0:19:28.080 essentially climbed to five thousand. So you know, I think 0:19:28.920 --> 0:19:32.600 the attitude on the part of the policymakers is that 0:19:32.920 --> 0:19:36.560 they really can't identify a bubble, uh, and they'll just 0:19:36.840 --> 0:19:39.600 deal with the aftermath. And we have a very similar 0:19:39.680 --> 0:19:43.320 situation two thousands with the housing bubble and you know 0:19:43.440 --> 0:19:45.560 that the said was very slow to react to that, 0:19:46.040 --> 0:19:48.240 and then they kind of let asset prices go here 0:19:48.359 --> 0:19:51.120 up until you know, the COVID crisis and just let 0:19:51.400 --> 0:19:54.639 let the you know, stack prices continue to rise and 0:19:55.080 --> 0:19:58.639 without much concern. To be fair though, and and you know, 0:19:58.880 --> 0:20:00.679 and I know you listened to the in Burg. I mean, 0:20:00.760 --> 0:20:03.560 as we've had many discussions for a long time, it 0:20:03.600 --> 0:20:06.080 felt like the FED was the only game in town. Uh. 0:20:06.119 --> 0:20:09.040 And we've certainly seen relief come from from the US government, 0:20:09.160 --> 0:20:13.520 but the FED was certainly looking at ways to calm 0:20:13.600 --> 0:20:16.560 the markets, you know, make it easy to make sure 0:20:16.640 --> 0:20:18.960 that money was flowing throughout the economy, especially in the 0:20:19.040 --> 0:20:22.200 early days of the crisis and the shutting down of 0:20:22.240 --> 0:20:24.840 the economy. And so, you know, is it fair to 0:20:24.880 --> 0:20:27.280 say that you at least you know, understand kind of 0:20:27.320 --> 0:20:29.200 what the FED is thinking about and what it's watching 0:20:29.240 --> 0:20:31.480 and maybe what it kind of almost had no choice 0:20:31.600 --> 0:20:34.159 but to do and to make it and kind of 0:20:34.240 --> 0:20:39.359 set the path for potentially creating another bubble. Well, the 0:20:39.480 --> 0:20:42.840 problem is they really didn't have a choice because if 0:20:42.880 --> 0:20:45.840 they didn't do those things would be a whole lot worse. 0:20:46.000 --> 0:20:48.240 Well that's no, but that's my point. That's my point 0:20:48.560 --> 0:20:51.840 exactly that they didn't really have a choice, right, They 0:20:51.920 --> 0:20:54.480 really didn't have a choice. They had to restore the 0:20:54.560 --> 0:20:58.639 functioning and of the financial markets number one, which I 0:20:58.720 --> 0:21:01.480 think they've done a pretty good job of doing that. Um. 0:21:01.840 --> 0:21:05.840 And then because of the huge uh you know, setback 0:21:05.920 --> 0:21:09.879 we've had in the economy, Uh, you're actually restoring some 0:21:10.080 --> 0:21:15.520 wealth can be helpful in terms of spending, and that 0:21:15.600 --> 0:21:18.720 could help support the economy. So you know, I'm not 0:21:18.840 --> 0:21:23.879 saying it's not necessary, but my point was, you know, 0:21:24.320 --> 0:21:27.760 in that the financial markets basically have a green light 0:21:28.119 --> 0:21:29.920 to go where they want to go, and the FIT 0:21:30.080 --> 0:21:32.399 is not going to come in and stop it and 0:21:33.480 --> 0:21:35.720 pop it. Well, and I just just got about thirty 0:21:35.800 --> 0:21:38.520 seconds here, Joe, So do you see a bubble and 0:21:38.640 --> 0:21:42.720 what that bubble might be at this point? Just quickly so? So, um, 0:21:43.000 --> 0:21:44.920 you know, I think there's a limit on how much 0:21:45.280 --> 0:21:48.680 uh you know, the treasury rates can go down here. Um. 0:21:48.920 --> 0:21:50.760 You know, I think we kind of explored where those 0:21:50.800 --> 0:21:54.080 lows were not just in the US, but but globally. Um. 0:21:54.480 --> 0:21:58.520 And in terms of stock market evaluations, I see those 0:21:58.640 --> 0:22:02.119 is more fairly proh. There's a measure I'd like to 0:22:02.200 --> 0:22:05.680 look at on a forward basis, right looking at the 0:22:06.920 --> 0:22:11.000 Triple Bonniels and and we're close to zero today on 0:22:11.119 --> 0:22:14.879 the equity risk premium um and we never went below 0:22:14.960 --> 0:22:17.840 that during the entire two thousand nine to two thousand 0:22:21.640 --> 0:22:25.720 That's that's great. Yeah, that's great perspective. UM, Joe, thank 0:22:25.760 --> 0:22:27.760 you so much. Nice to get some time with you 0:22:28.040 --> 0:22:30.879 on this Wednesday. Really appreciate Jo Kayleish, his chief Global 0:22:30.960 --> 0:22:33.520 macro Strategies at ned David's Research, joining us on the 0:22:33.640 --> 0:22:37.840 phone in Sarasota, Florida. This is Bloomberg Business Week with 0:22:38.040 --> 0:22:41.879