WEBVTT - Trillions In Stimulus Going Out The Door Without Any Oversight 0:00:01.360 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:09.200 we bring you interviews from CEOs, A, market pros, and 0:00:09.400 --> 0:00:12.800 Bloomberg experts, along with essential market moving news. Find the 0:00:12.800 --> 0:00:16.320 Bloomberg Markets Podcast on Apple Podcasts or wherever you listen 0:00:16.360 --> 0:00:20.799 to podcasts, and on Bloomberg dot com. Well, the US 0:00:20.920 --> 0:00:23.959 has spent more than half of three trillion dollars in 0:00:24.000 --> 0:00:27.479 economic rescue funds passed by Congress, however, with little of 0:00:27.560 --> 0:00:30.600 the oversight intended to ensure that the money goes to 0:00:30.640 --> 0:00:33.000 the right places. To get more color on this, we 0:00:33.080 --> 0:00:35.600 welcome lad Davison Sherroda, a fantastic story on this city's 0:00:35.640 --> 0:00:39.040 congressional tax reporter for Bloomberg News, joining us from on 0:00:39.080 --> 0:00:41.559 the phone from Washington, d C. So, Laura, how can 0:00:41.600 --> 0:00:44.400 a billion and a a half dollars be spent with little 0:00:44.400 --> 0:00:49.360 to know oversight? Well, part of this was the way 0:00:49.360 --> 0:00:51.280 that Congress designed it is. They wanted to get a 0:00:51.280 --> 0:00:54.040 bunch of money into the economy really quickly. You know 0:00:54.040 --> 0:00:56.040 those stimulus checks that went out, use those p P 0:00:56.200 --> 0:00:59.000 P loans, all of these things, because people and businesses 0:00:59.040 --> 0:01:02.160 needed money right away is basically ground to a halt 0:01:02.240 --> 0:01:04.800 in March. The problem though, is, as we're finding out, 0:01:05.640 --> 0:01:08.800 is that when you move quickly, you sometimes break things 0:01:08.840 --> 0:01:11.679 and there are problems and and there's no one there 0:01:11.720 --> 0:01:14.120 watching how the money is being spent. Who is going 0:01:14.160 --> 0:01:16.479 to so it opens up a lot of doors for 0:01:16.480 --> 0:01:19.040 for potential for fraud um or as well as just 0:01:19.080 --> 0:01:21.000 you know, things that that aren't spent in the in 0:01:21.040 --> 0:01:25.520 the best way. So Laura, who was supposed to be 0:01:25.840 --> 0:01:29.200 watching this UM, well it's not just Secretary Manu and 0:01:29.280 --> 0:01:32.800 there were supposed to be somebody's watching this right Yes, Yeah, 0:01:32.800 --> 0:01:34.640 there's actually a bunch of different groups. So there's a 0:01:34.720 --> 0:01:37.720 there's a group in Congress that that's overseeing this UM. 0:01:37.760 --> 0:01:41.319 They are really just getting started that the it's a 0:01:41.319 --> 0:01:44.600 bipartisan group. Both Pelosi and McConnell get to appoint people, 0:01:44.920 --> 0:01:46.920 but there's been a lot of disagreement over who should 0:01:46.959 --> 0:01:49.360 be chairman. It has to be a bipartisan pick. They've 0:01:49.400 --> 0:01:51.880 been back and forth on this for several months and 0:01:51.920 --> 0:01:54.160 they haven't been able to agree on someone. So so 0:01:54.200 --> 0:01:56.480 that group is well, it exists, has has not really 0:01:56.480 --> 0:01:59.280 been able to do much yet. There's also a new 0:01:59.400 --> 0:02:02.320 special and Factor General that will be overseeing a lot 0:02:02.400 --> 0:02:05.680 of this money. Um that pick was just approved earlier 0:02:05.720 --> 0:02:08.040 this month. He really doesn't even have an office space yet. 0:02:08.280 --> 0:02:10.799 So this is a you know, you're you're really talking 0:02:10.800 --> 0:02:12.920 about people that don't have letterhead paper, they don't have 0:02:13.000 --> 0:02:15.519 you know, a phone system set up. There's there's really 0:02:15.520 --> 0:02:18.320 not infrastructure for them to even you know, send emails, 0:02:18.360 --> 0:02:21.320 much less conduct a lot of big oversight work. Yeah, 0:02:21.440 --> 0:02:23.920 the sp A reporting that loans have been approved for 0:02:23.960 --> 0:02:28.880 four point six million small businesses already, Laura five billion 0:02:28.919 --> 0:02:31.160 dollars worth. So there's still about a hundred and thirty 0:02:31.160 --> 0:02:34.600 billion and funding remaining. Will it be all you know, 0:02:35.480 --> 0:02:38.639 applied for if you like, because what do you get 0:02:38.680 --> 0:02:40.560 like two months son, you have to keep everybody on 0:02:40.600 --> 0:02:43.160 your staff, and you know a lot of small businesses 0:02:43.240 --> 0:02:46.080 aren't not even applying for it because in two months 0:02:46.120 --> 0:02:48.160 time it may not may not be worth it for 0:02:48.160 --> 0:02:50.200 them to have some two high percent of their staff 0:02:50.400 --> 0:02:54.560 on their payrolls. Still. Yes, Yeah, so there's as you mentioned, 0:02:54.560 --> 0:02:56.680 there's about a hundred and thirty billion dollars left in 0:02:56.720 --> 0:02:59.360 that pot of funds and and applications for that money 0:02:59.400 --> 0:03:01.079 closed at the end of the month. And it's it's 0:03:01.280 --> 0:03:03.600 very likely that there will be tens of billions, if 0:03:03.600 --> 0:03:06.360 not more than a hundred billion dollars um left um 0:03:06.600 --> 0:03:08.400 of that money. So the question is sort of what 0:03:08.520 --> 0:03:11.880 happens with it? Does Congress reappropriate that for for other purposes. 0:03:11.919 --> 0:03:14.720 Maybe businesses who have already gotten some money could come 0:03:14.720 --> 0:03:17.000 back for for a second loan. Those are all, you know, 0:03:17.040 --> 0:03:18.920 kind of things that that Congress is still having to 0:03:18.919 --> 0:03:22.320 think about right now. Um and and but it's it's 0:03:22.400 --> 0:03:24.760 very likely that that there will be some money left 0:03:24.760 --> 0:03:26.880 because a lot of businesses have decided that it's either 0:03:27.320 --> 0:03:29.959 to apply for this money or uh you know. There's 0:03:29.960 --> 0:03:32.160 also some political risk because we saw with with larger 0:03:32.160 --> 0:03:35.200 companies who applied qualified for the money, but uh you know, 0:03:35.240 --> 0:03:38.080 shake shack and pot bellies who were then um, you know, 0:03:38.160 --> 0:03:40.640 shamed by by politicians saying, hey, this is really should 0:03:40.640 --> 0:03:44.160 be for the for the little guys. So Laura is there. 0:03:44.840 --> 0:03:46.880 Tim O'Brien was on with us earlier today. He has 0:03:46.920 --> 0:03:48.840 a column out suggesting that a lot of this money 0:03:48.880 --> 0:03:51.880 is not getting to the small business owner, maybe the 0:03:51.960 --> 0:03:54.640 small business owner of color, some of the folks who 0:03:54.720 --> 0:03:58.000 really needed the most is there concern within Washington that 0:03:58.560 --> 0:04:01.400 this program is not being uh, the money is not 0:04:01.400 --> 0:04:05.880 being spent correctly or wisely. There's a lot of concern, 0:04:05.960 --> 0:04:09.760 particularly from Democrats on the um the minority issue of 0:04:10.120 --> 0:04:13.600 is this money going to rural communities, to my minority communities, uh, 0:04:13.640 --> 0:04:16.800 to to underserve communities. UH. There's been several hearings on 0:04:16.839 --> 0:04:21.279 Capitol Hill and there's a big push UH on Secretary 0:04:21.360 --> 0:04:24.880 Magnution to release sort of the granular levels data on 0:04:24.920 --> 0:04:27.239 the program. You know, which businesses have received this money 0:04:27.400 --> 0:04:29.880 and how much they've gotten. Monution said last week that 0:04:29.920 --> 0:04:32.040 he was not planning to release that instance. Then you 0:04:32.160 --> 0:04:35.760 seed a big outcry from remembers of both parties saying, hey, 0:04:35.800 --> 0:04:37.679 you know this is this is taxpayer money. We should 0:04:37.680 --> 0:04:39.680 be able to see where it's going. I mean, the 0:04:39.720 --> 0:04:43.120 problem with opening an investigation now is that, as you say, 0:04:43.240 --> 0:04:45.320 you know, more than five billion dollars of this has 0:04:45.360 --> 0:04:48.560 already been dispersed. So if there has been fraud, what 0:04:48.680 --> 0:04:50.280 happens to that money? And will it be too late 0:04:50.320 --> 0:04:52.280 for the small businesses that ended up having to chose 0:04:52.360 --> 0:04:54.400 because they weren't able to get access to some of 0:04:54.400 --> 0:04:57.280 that money in the early days. You know that that's 0:04:57.320 --> 0:04:59.479 a really good question. There's a lot of unknowns there, 0:04:59.520 --> 0:05:01.400 you know, inter terms of recouping some of the money. 0:05:01.440 --> 0:05:04.080 You know, if there is you know, cases of outline fraud, 0:05:04.440 --> 0:05:06.839 you know, the government could go and pursue legal action 0:05:06.880 --> 0:05:09.159 against that. But if it's just sort of a you know, 0:05:09.200 --> 0:05:12.000 the money didn't maybe wasn't allocated in the best way possible, 0:05:12.080 --> 0:05:15.080 and um, some businesses got fell through the cracks. That's 0:05:15.120 --> 0:05:16.840 really more of a question for Congress of do they 0:05:16.839 --> 0:05:20.240 want to have a second loan program for for some 0:05:20.279 --> 0:05:22.880 of these businesses that didn't get helped the first round. Um, 0:05:22.960 --> 0:05:25.600 that's certainly possible, that that would be very politically difficult 0:05:25.680 --> 0:05:27.719 right now is there's lots of debate in Washington about 0:05:27.960 --> 0:05:30.280 if there should be another stimulus bill and if so, 0:05:30.360 --> 0:05:33.799 how much should that encompass. Yeah, it's a great story, Laura. 0:05:34.080 --> 0:05:36.240 I mean we've we've heard, you know, some hedge funds 0:05:36.240 --> 0:05:37.719 have applied for this and so on. But you you 0:05:37.800 --> 0:05:40.640 point to the reality television personality who tapped a two 0:05:40.680 --> 0:05:44.360 million dollar loan from the p p P and actually 0:05:44.360 --> 0:05:46.599 went and Boltz and Diamond Jutlry under roll lex Watch 0:05:46.800 --> 0:05:50.320 because we can't who can't have a role Lex Watch 0:05:50.320 --> 0:05:53.000 and Diamond jutlry together at the same time. Lauras, thank 0:05:53.080 --> 0:05:56.200 you for joining us today. There's Laura Davison, Congressional tax 0:05:56.240 --> 0:05:59.080 reporter for Bloomberg. Boy is she going to be busy. 0:05:59.320 --> 0:06:02.599 But he now November and then beyond November, no doubt 0:06:02.640 --> 0:06:04.719 as well. Paul, Yeah, because I think there's, you know, 0:06:04.760 --> 0:06:06.599 the next thing coming down, Bonnie, is another piece of 0:06:06.640 --> 0:06:09.200 fiscal stimulus coming from Congress, so and that will be 0:06:09.320 --> 0:06:11.880 much more political than I think this most recent package 0:06:11.880 --> 0:06:15.039 of three trillion dollars exactly, And you know, you you 0:06:15.160 --> 0:06:16.880 just have to wonder if it's going to be as 0:06:17.520 --> 0:06:20.760 big a package and when it will come, and you know, 0:06:20.800 --> 0:06:23.520 if it will start to to get into election season 0:06:23.600 --> 0:06:27.840 at that point, and how that will impact things. Time 0:06:27.880 --> 0:06:30.839 now to look ahead to the FED chairs second day 0:06:30.880 --> 0:06:34.320 of his Humphrey Hawkins testimony on Capitol Hill Today, we'll 0:06:34.440 --> 0:06:37.240 digest what he said yesterday and also pose some questions 0:06:37.240 --> 0:06:39.960 and pointed questions to our next guest, who is Christina Hooper, 0:06:40.279 --> 0:06:43.520 Chief Global Market Strategies. To add Investco assets under management 0:06:43.520 --> 0:06:46.760 there of more than a trillion dollars. Christina you were 0:06:46.800 --> 0:06:50.279 watching the FED chairs performance last week very very closely, 0:06:50.360 --> 0:06:54.880 as is everybody. Right now, what do you think the 0:06:54.920 --> 0:06:58.200 FED is responsible for in these markets? Not the economy, 0:06:58.240 --> 0:07:00.160 but just in these markets. I was reading or to 0:07:00.279 --> 0:07:02.360 pearently of Cornerstone the other day and he talks about 0:07:02.760 --> 0:07:06.000 looking at more than ten million different valuation models for 0:07:06.000 --> 0:07:07.920 the S and P five hundred and finding that nine 0:07:09.680 --> 0:07:12.720 of them, say, the SMP five D is overvalued today 0:07:12.760 --> 0:07:16.480 by a weighted average about twelve percentage points. What say you, 0:07:18.080 --> 0:07:22.600 I would agree, Uh, there is a lot that FED 0:07:22.640 --> 0:07:26.120 share Powell is responsible for. He has created an enormous 0:07:26.160 --> 0:07:29.920 amount of confidence in markets UM. But in doing so, 0:07:30.160 --> 0:07:35.080 he has also created UM or I should say, has 0:07:35.160 --> 0:07:39.280 skewed risk reward profiles for different asset classes. Now this 0:07:39.400 --> 0:07:42.200 is nothing new. We saw this happen during the global 0:07:42.240 --> 0:07:46.280 financial crisis when the FED stepped in with what was 0:07:46.360 --> 0:07:50.320 then very extraordinary monetary policy, and it really altered the 0:07:50.440 --> 0:07:55.400 risk reward profiles up. Treasuries UM were altered as well 0:07:55.440 --> 0:07:58.760 as stocks UM. What's interesting is this time around, the 0:07:58.800 --> 0:08:02.920 FED has been more expansive and the kind of policy 0:08:02.960 --> 0:08:05.840 tools it's using, and so it's altering a lot of 0:08:05.960 --> 0:08:09.240 risk assets, not just stocks, but in particular stocks have 0:08:09.400 --> 0:08:13.560 certainly benefited, and I would argue the FED has decoupled 0:08:13.560 --> 0:08:18.040 the stock market from the economy. So, Christina, given that 0:08:18.120 --> 0:08:20.640 last comment that perhaps the fetis de coupled the stock 0:08:20.680 --> 0:08:24.000 market from the economy. As an equity investor, what are 0:08:24.000 --> 0:08:27.400 you doing now? Well, what you need to do is, 0:08:27.440 --> 0:08:30.600 of course, maintain a focus on the long term, be 0:08:30.760 --> 0:08:34.840 well diversified, but have adequate exposure to risk assets. We're 0:08:34.840 --> 0:08:36.800 actually in a better place than we were during the 0:08:36.840 --> 0:08:40.400 global financial crisis, just because we saw how that played 0:08:40.400 --> 0:08:45.000 out UM, and of course investors need to maintain exposure 0:08:45.000 --> 0:08:47.840 to risk assets. In fact, perhaps the biggest lesson learned 0:08:47.880 --> 0:08:51.160 from the global financial crisis was to not get out 0:08:51.679 --> 0:08:56.360 when you get scared UM, stay in, stay diversified UM, 0:08:56.400 --> 0:08:59.720 but don't lock in your losses and stand on the sidelines. 0:09:00.200 --> 0:09:04.120 One thing we know about stretched valuations is that they 0:09:04.160 --> 0:09:08.000 are not predictive of performance in the short run, and 0:09:08.120 --> 0:09:11.640 so it's one of those things where investors need to 0:09:11.679 --> 0:09:16.679 be well diversified, hold their nose and maintain long term allocations. 0:09:17.679 --> 0:09:21.120 How do you define the short term in these times, Christina? 0:09:21.360 --> 0:09:24.080 Is there a different definition of time when we're in 0:09:24.120 --> 0:09:28.920 a pandemic. Well, that could very well be the case. 0:09:29.040 --> 0:09:31.199 But what we have and what we have to recognize, 0:09:31.360 --> 0:09:34.800 is that there is not a lot of insight into 0:09:34.840 --> 0:09:37.960 what's going to happen in the coming months. Right, we 0:09:38.000 --> 0:09:40.959 have more than one in three companies in the SMP 0:09:42.040 --> 0:09:46.480 have dispensed with earnings guidance this year. Now, that really 0:09:46.480 --> 0:09:51.400 sends a message about how cloudy um things are. And 0:09:51.480 --> 0:09:55.400 so of course investors need to look longer term because 0:09:55.400 --> 0:09:58.160 it is very very difficult to look in the short run, 0:09:58.400 --> 0:09:59.880 and we need to look at a variety of the 0:10:00.000 --> 0:10:04.280 a factors because the shape of this economic recovery will 0:10:04.320 --> 0:10:07.800 be dictated by the events that unfold from here in 0:10:07.920 --> 0:10:11.200 terms of the kind of fiscal stimulus that is past 0:10:11.400 --> 0:10:15.160 going forward, as well as the kind of developments we 0:10:15.280 --> 0:10:17.559 see on the health front. We still know so little 0:10:17.559 --> 0:10:20.840 about this virus. We're learning more and more each day 0:10:20.840 --> 0:10:23.920 about how it can be controlled. Uh, and we're learning 0:10:23.960 --> 0:10:25.920 more and more based on the kind of events that 0:10:25.960 --> 0:10:30.600 are occurring black Black Lives Matter protests and the kind 0:10:30.720 --> 0:10:33.199 of infection rates coming out of that, on the kind 0:10:33.240 --> 0:10:35.840 of infection rates coming out of reopening of economy. So 0:10:35.880 --> 0:10:38.200 we're learning more each day, and we're also working on 0:10:38.240 --> 0:10:42.000 the development of therapies and ultimately an effective vaccine. So 0:10:42.160 --> 0:10:44.600 all those different factors are going to dictate the course 0:10:44.640 --> 0:10:47.280 of the economic recovery. But one key thing to remember 0:10:47.360 --> 0:10:51.280 is that the stock market has largely decoupled from that economy. 0:10:51.520 --> 0:10:53.760 So Christina, how do you feel about valuation right here? 0:10:53.800 --> 0:10:56.839 We've had a really strong rebound off the bottom that 0:10:56.880 --> 0:10:59.920 we saw kind of late March early April. Yet you know, 0:11:00.040 --> 0:11:02.480 the earnings have just been dismal there in the first 0:11:02.520 --> 0:11:03.960 quarter are going to be even worse here in the 0:11:04.000 --> 0:11:08.280 second quarter. How do you feel about valuation? Well, evaluations 0:11:08.360 --> 0:11:13.000 are certainly stretched, UM, but this is an environment where 0:11:13.200 --> 0:11:16.720 UM much it has been altered by what the FED 0:11:16.800 --> 0:11:21.559 has done, and especially in an environment where yield has 0:11:21.600 --> 0:11:25.400 become even more scarce, Investors have to make trade offs. 0:11:25.720 --> 0:11:28.720 They need to be well diversified, but they can't walk 0:11:28.760 --> 0:11:32.319 away from exposure to risk assets like stocks. So it's 0:11:32.360 --> 0:11:37.120 about finding pockets of attractive valuations to balance out the 0:11:37.160 --> 0:11:40.720 more expensive parts of the market. UM. That includes exposure 0:11:40.760 --> 0:11:43.400 outside the US. There are parts of emerging markets that 0:11:43.480 --> 0:11:48.280 look very attractive from evaluation standpoint, and also look attractive 0:11:48.520 --> 0:11:51.480 in terms of where they are with regards to the 0:11:51.480 --> 0:11:54.880 economic recovery. Christina, thank you so much for joining us. 0:11:54.920 --> 0:11:58.480 We really appreciate your thoughts and perspective. As always, Christina Hoover, 0:11:58.920 --> 0:12:04.040 Chief Global Strategies for Investco, based in Atlanta. Solovanni, I 0:12:04.040 --> 0:12:05.839 think you know the issue here is, you know, this 0:12:05.880 --> 0:12:08.880 market has moved higher off the bottom earnings, you know, 0:12:08.960 --> 0:12:11.679 not necessarily there. But I think my key takeaway from 0:12:11.720 --> 0:12:15.760 Christina's comments was how she feels like the market is 0:12:15.800 --> 0:12:20.240 really disconnected, perhaps from the underlying economy. Yeah, and I 0:12:20.280 --> 0:12:22.560 think that you'll see that reflected in a lot of 0:12:22.640 --> 0:12:26.320 commentary these days. Even Roberto Party, who I quoted at 0:12:26.320 --> 0:12:28.800 the beginning of the interview, even he says that from 0:12:28.880 --> 0:12:32.079 a purely statistical perspective, we would expect only three percent 0:12:32.120 --> 0:12:34.960 of the correndover evaluation to adjust over the next month 0:12:35.040 --> 0:12:36.800 all else equals. So I think the lesson is, with 0:12:36.840 --> 0:12:41.360 the FED basically under writing this market costs all asset classes, 0:12:41.600 --> 0:12:44.360 there's really not much to do until something changes. Yeah. 0:12:44.400 --> 0:12:47.400 I like the I like the characterization that the FED 0:12:47.520 --> 0:12:53.360 is backstopping uh this market. Here. It seems like we're 0:12:53.360 --> 0:12:57.400 talking more and more about pharmaceutical companies, biotech companies, as 0:12:57.440 --> 0:13:01.520 we talk about treatments for COVID and potently vaccines. Of course, 0:13:01.520 --> 0:13:03.440 there's always a lot of M and A in this space, 0:13:03.480 --> 0:13:06.600 and there's always new drugs coming onto the market that 0:13:06.600 --> 0:13:08.880 can really impact the market. And when we do talk 0:13:08.920 --> 0:13:11.959 about these things, there's nobody better to chat with them about. 0:13:12.000 --> 0:13:14.240 In San Fazelli, he's a director of research in Europe 0:13:14.240 --> 0:13:16.600 for Bloomberg Intelligence, but as I like to say, his 0:13:16.720 --> 0:13:18.600 day job is that he is one of the best 0:13:19.000 --> 0:13:21.640 healthcare analysts in the city of London. Sam, thanks so 0:13:21.679 --> 0:13:24.600 much for joining us here. Let's start with Lily here. 0:13:24.679 --> 0:13:28.080 They that stock had a pop recently on some breast 0:13:28.120 --> 0:13:32.640 cancer data coming out. What's the latest on Eli Lily? First, 0:13:32.679 --> 0:13:34.760 thank you very much for your very kind words, Paul 0:13:35.040 --> 0:13:37.840 um Eli Lily. Well, there's not very often that you 0:13:37.880 --> 0:13:42.120 see a large farmer company share price jump fifteen sixteen. 0:13:42.160 --> 0:13:45.839 At one point it was up like eight yesterday. So 0:13:46.240 --> 0:13:48.400 they had a success where I think most people have 0:13:48.559 --> 0:13:51.599 decided there was not going to be one m A 0:13:51.679 --> 0:13:55.640 drug they have for breast cancer succeeded earlier, I must say, 0:13:55.800 --> 0:13:58.880 a year early earlier than expected. In terms of the 0:13:58.960 --> 0:14:06.320 readoubt preventing reducing the recordance of disease UM in a 0:14:06.440 --> 0:14:09.760 post operative breast cancer patients in high risk post operative 0:14:09.800 --> 0:14:12.760 breast cancerpation. So that's that's that's the positive. And of 0:14:12.800 --> 0:14:15.520 course the reason people were I think being negative about 0:14:15.559 --> 0:14:20.240 the possibility was because Fiser failed in the same setting. Now, 0:14:20.280 --> 0:14:23.720 this adds significantly to the revenue potential for this drug. 0:14:24.120 --> 0:14:27.360 Some people calculate up to four billion potentially and that 0:14:27.520 --> 0:14:30.520 has a major impact of margins. So the rest of 0:14:30.560 --> 0:14:32.520 the story falls into place. There are people now going 0:14:32.600 --> 0:14:35.000 up to you know, staying still. There's another teen per 0:14:35.000 --> 0:14:38.120 cent or so upside on the stock on the cell side. 0:14:38.160 --> 0:14:40.720 So that's what drove that one up a complete surprise. 0:14:41.440 --> 0:14:44.080 Not only did Visor failed, but it failed having already 0:14:44.120 --> 0:14:47.280 had a head start on ELI Lily by what at 0:14:47.320 --> 0:14:52.920 least two years, And there was also no varteses cascali treatment. 0:14:53.160 --> 0:14:57.000 Some what's happening with that? Yes, So so there just 0:14:57.080 --> 0:14:59.680 quick to touch on this. There's two ways or reasons 0:14:59.720 --> 0:15:03.080 why I really might have worked UM and where fights 0:15:03.080 --> 0:15:05.120 it did and finds it went into a much earlier 0:15:05.160 --> 0:15:10.360 patient group patients with much less advanced or lower risk disease, 0:15:10.800 --> 0:15:14.640 so to a degree, really loaded the dice in its favor. 0:15:14.800 --> 0:15:17.480 Not a problem, It just it's that means a smaller 0:15:17.520 --> 0:15:21.000 population of patients. And also the drug is different um 0:15:21.080 --> 0:15:23.240 and that is dost constantly as opposed to having to 0:15:23.240 --> 0:15:26.200 take a drug holiday with the other two including no Artist. 0:15:26.240 --> 0:15:30.000 Now Novartist is running a similar trial to to Lily, 0:15:30.160 --> 0:15:33.120 not completely the same, but similar, And they're expecting data 0:15:33.480 --> 0:15:37.040 by two which therefore why now we mean that it 0:15:37.080 --> 0:15:40.920 should also read that early. So this is not without competition, alright, Sam, 0:15:40.960 --> 0:15:42.880 Let's switch cares a little bit to the topic of 0:15:42.920 --> 0:15:46.240 the day, COVID nineteen. You know, folks in the Trump 0:15:46.280 --> 0:15:50.000 administration certainly talked they continue to talk about a vaccine 0:15:50.040 --> 0:15:54.160 availability this calendar year. And as i've you know, talked 0:15:54.160 --> 0:15:56.560 to you and read your research and other healthcare research, 0:15:57.840 --> 0:15:59.680 it's just been years and years and years again a 0:15:59.760 --> 0:16:02.680 drug kind of to market here. What is your sense 0:16:02.720 --> 0:16:06.640 for you know, the likelihood of the timing of some 0:16:06.720 --> 0:16:09.800 type of vaccine into the market here. Yes, so I 0:16:09.840 --> 0:16:11.680 love the phrase you just used at the end, the 0:16:11.760 --> 0:16:14.720 timing of some type of vaccine. I think the timing 0:16:14.720 --> 0:16:17.200 of some type of vaccine is very possible to be 0:16:17.280 --> 0:16:19.480 by the end of this year. The question is, will 0:16:19.560 --> 0:16:21.760 we have a vaccine that's been through the best and 0:16:21.880 --> 0:16:26.320 most rigorous safety and long term testing. No, it's impossible. 0:16:26.640 --> 0:16:29.840 Will we have a vaccine that's available for treating people 0:16:30.560 --> 0:16:34.160 in a world which God forbid has a real hardcore 0:16:34.280 --> 0:16:38.760 second wave in the winter? Um and take some risk 0:16:38.840 --> 0:16:42.320 in terms of accept some potential longer term safety issues. 0:16:42.680 --> 0:16:45.640 That is something that government and regulators have to accept 0:16:45.800 --> 0:16:48.200 if they want to inject people with these vaccines that 0:16:48.240 --> 0:16:51.120 are just being developed. So will there be one that 0:16:51.320 --> 0:16:55.280 looks like it's working. Yes, yeah, And as you say, 0:16:55.280 --> 0:16:58.680 we'll likely need several some During this whole time, I've 0:16:58.720 --> 0:17:03.000 been wondering why it has been easier to change supply chains, 0:17:03.200 --> 0:17:05.600 ramp up production and what's needed send it to the 0:17:05.640 --> 0:17:08.320 parts of the world that needed. And it seems like 0:17:08.359 --> 0:17:11.560 all these months later, there is still a shortage of 0:17:11.600 --> 0:17:15.720 things like nine masks and places where they're needed, despite 0:17:15.800 --> 0:17:18.320 all sorts of companies, including three M saying that they will, 0:17:18.400 --> 0:17:21.680 you know, swap some of their machines out and retool 0:17:21.760 --> 0:17:24.160 some other machines. Why is this happening in this day 0:17:24.160 --> 0:17:27.359 and age? Well, I think you know, I think we 0:17:27.760 --> 0:17:31.000 potentially underestimate the effort that's required to get these things 0:17:31.480 --> 0:17:34.199 actually moving. You know, we did it with companies that 0:17:34.240 --> 0:17:37.280 are equivalents of Juggernauts, and all he think is to 0:17:37.359 --> 0:17:41.119 try and move them quickly. It is very difficult. Just 0:17:41.400 --> 0:17:45.719 give you the opposite argument. Biotech company Moderna wasn't really 0:17:45.760 --> 0:17:48.879 spending an enormous amount of time just on vaccines. They 0:17:48.920 --> 0:17:52.360 were working quite a lot on on on cancer therapies 0:17:52.400 --> 0:17:54.639 with their technology. But they can turn on a on 0:17:54.720 --> 0:17:56.800 a dime and just say right, we're just ware company. 0:17:56.840 --> 0:17:58.320 We could do what we want. Next thing we're gonna 0:17:58.320 --> 0:18:01.960 do is work on um the copy vaccines. Whereas where 0:18:02.000 --> 0:18:05.280 you've got a massive company that that needs to retool, etcetera, 0:18:05.400 --> 0:18:07.680 it takes time. And let's not forget it's only been 0:18:07.760 --> 0:18:10.919 five months. So I don't want to beat them up 0:18:10.960 --> 0:18:13.120 for this. I think it just takes a lot of time. 0:18:13.280 --> 0:18:15.280 Raw materials got to be in the right place, just 0:18:15.320 --> 0:18:17.439 takes a lot of time. Yeah, No, I don't certainly 0:18:17.480 --> 0:18:19.040 don't mean to be the moup. I'm just I just 0:18:19.080 --> 0:18:21.119 find the whole thing so curious that if there's a 0:18:21.160 --> 0:18:24.280 market for us, you know that it won't come. I 0:18:24.280 --> 0:18:27.080 mean Maderna for example, it may not make anything from 0:18:27.080 --> 0:18:31.520 from making the pivot to to COVID treatments and COVID research. 0:18:31.840 --> 0:18:34.119 But anyway, Sam, it's a conversation. We will continue. So 0:18:34.160 --> 0:18:37.320 thanks for joining us today. Sam Fazali, Bloomberg Intelligence, London. 0:18:37.600 --> 0:18:41.200 He's they're pharmaceutical expert over there, and a great one 0:18:41.280 --> 0:18:47.879 he is too. As the US economy continues to reopen, 0:18:47.880 --> 0:18:50.600 we're getting some mixed economic signals. We had retail sales 0:18:51.040 --> 0:18:55.200 surprised to the upside, but we also had industrial production 0:18:55.320 --> 0:18:57.880 weaker than expected. And now we have fed shair Pal 0:18:58.040 --> 0:19:02.000 once again warning of uncertainty surrounding the timing and strength 0:19:02.040 --> 0:19:04.200 of the recovery. So what is an economist to do? 0:19:04.560 --> 0:19:07.080 We'll put that the car Winburg, Chief economists at High 0:19:07.080 --> 0:19:10.520 Frequency Economics. Carl, thanks so much for joining us here. 0:19:10.920 --> 0:19:13.439 What is your sense of kind of where we are in, 0:19:14.080 --> 0:19:16.840 you know, starting to build perhaps a little bit of 0:19:16.920 --> 0:19:21.560 recovery coming out of the pandemic. Hi, Paul Hiboni, good morning. 0:19:21.560 --> 0:19:23.760 Thanks for having me on the show. So you know, 0:19:23.880 --> 0:19:27.800 recovery is a relative thing right now rather than an 0:19:27.840 --> 0:19:31.399 absolute thing. You take that retail sales number and compared 0:19:31.440 --> 0:19:35.119 to expectations, it certainly was stronger than expected, and it 0:19:35.240 --> 0:19:39.560 certainly was was up, but on compared to the averages 0:19:39.600 --> 0:19:42.080 of what we've seen for retail sales in the months 0:19:42.119 --> 0:19:45.680 of the quarters going into the pandemic, we're still way 0:19:45.720 --> 0:19:48.160 below where we were before, and that's where we're going 0:19:48.240 --> 0:19:50.359 to be for a long time. We're going to see 0:19:50.400 --> 0:19:53.119 some growth from month to months, from quarter to quarter, 0:19:53.200 --> 0:19:55.680 from week to week, we'll see improvement, but we're going 0:19:55.680 --> 0:20:00.280 to remain in a depressed state for quite some time. Yeah, 0:20:00.320 --> 0:20:03.040 I mean, I'm surprised there isn't more concentration on the 0:20:03.080 --> 0:20:06.480 idea that much of the better economic data recently has 0:20:06.560 --> 0:20:13.240 been thanks to fiscal stimulus as well as monetary policy obviously, Carl, 0:20:13.359 --> 0:20:17.040 But once the employment benefits for people that are not 0:20:17.119 --> 0:20:19.520 employed run out, you're going to have twenty million people 0:20:19.520 --> 0:20:22.399 out there trying to find jobs when they can't even work. 0:20:23.000 --> 0:20:25.760 What happens, that's what? Yeah, Well, that's good high freaking 0:20:25.800 --> 0:20:28.639 see economics warned about in our note the clients this morning. 0:20:28.920 --> 0:20:32.280 You know that when the supplemental unemployment benefit comes out, 0:20:32.320 --> 0:20:35.000 there will be a reduction in fiscal stimulus, and that 0:20:35.040 --> 0:20:38.000 will have to be replaced by something in less or, 0:20:38.040 --> 0:20:41.000 I should say, or there will be a reduction in 0:20:41.160 --> 0:20:44.680 detail spending and householding comes and so forth. The PPT, 0:20:45.359 --> 0:20:47.239 you can look at it in two different ways. One 0:20:47.280 --> 0:20:49.959 way is to look at it as a an increase 0:20:50.000 --> 0:20:52.439 in cash flow the businesses. That's temporary, and when that 0:20:52.480 --> 0:20:55.879 goes away, then the benefit goes goes with it. Another 0:20:55.920 --> 0:20:57.880 way to look at it, which I prefer, to look 0:20:57.920 --> 0:21:01.160 at it as a recapitalization, which is a permanent increase 0:21:01.200 --> 0:21:05.040 in the cash balances these companies that are being used 0:21:05.040 --> 0:21:07.199 to get through the pandemic, for sure, but it's a 0:21:07.240 --> 0:21:10.760 capital increase. It's an injection and investment by the government, 0:21:10.960 --> 0:21:13.280 and for many companies that will last for a long time. 0:21:13.560 --> 0:21:16.240 That's a plus. But of course there's the income LUs 0:21:16.280 --> 0:21:19.040