WEBVTT - Surveillance: Brexit Hope Tempers Virus Concern 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:16.960 we bring you insight from the best in economics, finance, 0:00:17.040 --> 0:00:23.480 investment and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.600 Bloomberg dot Com and of course, on the Bloomberg Right now, 0:00:27.680 --> 0:00:31.200 Joshua Hardy joins us. He is with the Confederation of 0:00:31.680 --> 0:00:35.920 British Industry in London, their deputy Director at General. But 0:00:36.040 --> 0:00:39.519 his he is uniquely qualified to talk about what we're 0:00:39.560 --> 0:00:43.320 witnessing at Dover because for eight years before working with 0:00:43.360 --> 0:00:46.600 the c IB he was with Tesco, which is a 0:00:46.640 --> 0:00:50.400 small grocery store with headaches every day. I'm getting produced 0:00:50.720 --> 0:00:55.480 out there. Josh Hardy, you are uniquely qualified to speak 0:00:55.760 --> 0:01:00.680 about the position of business in England right now, a 0:01:00.760 --> 0:01:04.479 Tier four lockdown, Tesco just trying to get things done 0:01:04.480 --> 0:01:07.720 as it is. What do you perceived to be business 0:01:07.720 --> 0:01:12.399 into the end of the year and into January. Well, 0:01:12.440 --> 0:01:14.800 I mean we're all on tender hooks here in the UK. 0:01:15.440 --> 0:01:17.160 We've been we've been waiting for four and a half 0:01:17.240 --> 0:01:20.039 years for a Brexit deal and for clarity um and 0:01:20.120 --> 0:01:23.320 now well we've been hours away for about twenty four 0:01:23.319 --> 0:01:26.960 hours so we're the first thing is we are just 0:01:27.080 --> 0:01:29.959 desperately hoping that by the end of the day we 0:01:30.080 --> 0:01:33.720 get an announcement on that deal because that matters so 0:01:33.800 --> 0:01:37.480 much for businesses. It is that certainty about the trading 0:01:37.480 --> 0:01:41.319 relationship with our biggest trading partner. What will that look like, 0:01:41.560 --> 0:01:44.559 whether you're in food, whether or you're in farmer, whether 0:01:44.560 --> 0:01:48.360 you're in services. Absolutely critical. So let's get that deal 0:01:48.400 --> 0:01:51.960 over the line, because it is so better than no deal. 0:01:52.160 --> 0:01:54.280 The United Kingdom clothes that we see here, and of 0:01:54.320 --> 0:01:57.400 course sterling is what everybody's watching. Euro Sterling is so 0:01:57.520 --> 0:02:01.960 important to all in this great Tontal debate. But the 0:02:02.040 --> 0:02:04.960 cable we look at as well, one six earlier and 0:02:04.960 --> 0:02:07.640 it's ebbed away here on doubts of a press conference 0:02:07.880 --> 0:02:11.040 and over fishing rights as well. Josh Hardy, we're fighting 0:02:11.080 --> 0:02:14.919 for stimulus in America. Some would say it is income substitution. 0:02:15.560 --> 0:02:20.520 Is business receiving aid from the government in the United Kingdom, 0:02:20.639 --> 0:02:25.359 quite different from what we see in the United States. UM, 0:02:25.400 --> 0:02:28.639 I think the principles are often the same in that 0:02:28.680 --> 0:02:31.280 there's there's a principle that we set up here very 0:02:31.280 --> 0:02:34.880 early with the government around COVID and the pandemic much 0:02:34.919 --> 0:02:37.880 more than around Brexit, of course, which was we're going 0:02:37.919 --> 0:02:40.320 to have to recover from this, and to recover you 0:02:40.480 --> 0:02:44.520 need businesses ready to grow when the lockdown keease, and 0:02:44.560 --> 0:02:47.040 they're going to need your help. So we've got wage 0:02:47.080 --> 0:02:50.280 subsidy schemes here, we've got tax deferrals, we've got a 0:02:50.320 --> 0:02:53.680 broad package of measures. But of course we've now gone 0:02:53.919 --> 0:02:57.440 into this thing called Tier four lockdown and across the 0:02:57.480 --> 0:03:00.440 majority of the country, which is which is a pretty 0:03:00.520 --> 0:03:03.080 full lockdown. So we need to keep an eagle eye 0:03:03.120 --> 0:03:07.119 business resilience stripped away through the pandemic of court everybody everywhere, 0:03:07.320 --> 0:03:09.760 not just here, um if with it to be in 0:03:09.760 --> 0:03:13.120 this situation for the next few months as that vaccine 0:03:13.240 --> 0:03:16.119 is rolled out, we need to protect as many businesses 0:03:16.120 --> 0:03:19.480 as possible, because they will what will power that recovery. 0:03:19.480 --> 0:03:23.320 On the other side, is there a frustration Josh that fishing, 0:03:23.480 --> 0:03:26.160 even though it accounts for such a small proportion of 0:03:26.200 --> 0:03:29.120 the economy and the overall trade with the European Union, 0:03:29.440 --> 0:03:32.560 has dominated talks that have made life so difficult for 0:03:32.600 --> 0:03:36.720 the CFOs of the businesses you speak with. I mean 0:03:36.800 --> 0:03:39.160 yes and no. Of course, did you just put an 0:03:39.240 --> 0:03:43.040 economic lens on this UM. Fishing is not a substantial 0:03:43.080 --> 0:03:45.680 part of the UK economy UM, and the rest of 0:03:45.680 --> 0:03:48.760 the economy can feel like it's being held hostage by 0:03:48.800 --> 0:03:53.160 something that is economically relatively small. But we know we've 0:03:53.200 --> 0:03:55.320 been in this game for a long time. This is 0:03:55.360 --> 0:03:59.480 not just about economics. This is about sovereignty UM, and 0:03:59.560 --> 0:04:02.480 that is something that the government have to respect and 0:04:02.520 --> 0:04:05.160 have to have to work with. So having that control 0:04:05.520 --> 0:04:08.560 over fishing rights, being able to show that you do 0:04:08.680 --> 0:04:13.120 have sovereignty is we understand important. But it feels like 0:04:13.240 --> 0:04:16.360 we are we are in those final last yards. They're 0:04:16.360 --> 0:04:18.919 always the hardest, aren't they. But it feels like a 0:04:18.960 --> 0:04:21.960 deal can be done where that sovereignty has maintained and 0:04:22.000 --> 0:04:24.839 where the rest of the economy can actually get benefits 0:04:24.880 --> 0:04:27.599 and grow. So I can't say too much about it 0:04:27.640 --> 0:04:30.680 now because there will be two thousand pages of LEI 0:04:30.880 --> 0:04:33.320 legal texts that we get in our in our Christmas 0:04:33.320 --> 0:04:38.400 stocking to go through. But we we hope that's there 0:04:38.400 --> 0:04:40.440 and we hope it's over the line. Josh Hardy, thank 0:04:40.480 --> 0:04:47.000 you so much. We see IBC this morning. We have 0:04:47.080 --> 0:04:50.479 taken pride in our coverage of this pandemic starting in 0:04:50.560 --> 0:04:53.400 February and March really with the leadership of the United 0:04:53.480 --> 0:04:57.279 Kingdom medical community over to Johns Hopkins, and part of 0:04:57.279 --> 0:05:01.680 that discussion has been Albert co of University. He is 0:05:01.960 --> 0:05:07.080 expert in the diseases across this world that involved bacteria 0:05:07.160 --> 0:05:11.800 and virology. He's also expert in understanding the need for vaccine. 0:05:12.320 --> 0:05:14.880 He will have the courage to be vaccinated, I believe 0:05:15.000 --> 0:05:20.440 on Monday. Albert Co. You know that Yale University ages ago, 0:05:20.600 --> 0:05:24.760 beginning in eighteen ninety seven and out of nine invented 0:05:24.800 --> 0:05:29.120 the syringe with the Beckton and Dickinson company. We take 0:05:29.120 --> 0:05:34.279 it for granted. Today tell us the medical evolution of 0:05:34.320 --> 0:05:39.600 getting that shot and why we should not be afraid today. 0:05:39.800 --> 0:05:41.600 All right, Tom, Well, thank you very much for having 0:05:41.600 --> 0:05:44.599 me back on. It's the stories of pleasure. So with 0:05:44.680 --> 0:05:47.360 respect to the medical evolution, you know, we have a 0:05:47.440 --> 0:05:51.280 hundred years or more of experiences vaccines and if you 0:05:51.520 --> 0:05:56.200 if we think of of one medical success story that 0:05:56.200 --> 0:05:59.039 that really changed our lives, it's been vaccinations in terms 0:05:59.040 --> 0:06:03.400 of prolonging life expectancy, decreasing childhood mortality. And now we 0:06:03.520 --> 0:06:06.799 come to COVID and you know there were the amazing 0:06:06.880 --> 0:06:09.320 work that has been done, the progress in you know, 0:06:09.600 --> 0:06:12.880 less than a year, we have a vaccine where you know, 0:06:12.960 --> 0:06:16.640 current clinical trials have you know, exhaustive studies have shown 0:06:16.680 --> 0:06:19.480 that it's a safe and effective vaccine. And I think 0:06:19.520 --> 0:06:21.440 that's a message that we really need to get out 0:06:21.480 --> 0:06:24.400 to everyone. It's on everyone's mind, whether you know this 0:06:24.480 --> 0:06:27.080 is we're in a pandemic that has been developed quickly. 0:06:27.360 --> 0:06:30.120 Is a vaccine safe and effective? And all the evidence 0:06:30.160 --> 0:06:33.400 we have, you know, UH points to a really another 0:06:33.800 --> 0:06:36.599 major medical success story in to make what is the 0:06:36.640 --> 0:06:40.040 most efficacious way to line up the ducks to get 0:06:40.080 --> 0:06:42.720 this done? How do we get millions of people most 0:06:42.760 --> 0:06:47.120 efficiently to get the vaccine. Yeah, So the first you know, 0:06:47.360 --> 0:06:50.839 the first step, you know, which was a tremendous amount 0:06:50.880 --> 0:06:53.120 of work, was to do all the research and development 0:06:53.120 --> 0:06:55.800 to get a vaccine. The hard work is now coming on. 0:06:56.160 --> 0:07:01.040 We have to now get um you know, raunches or 0:07:01.120 --> 0:07:04.640 swabs of populations vaccinated. And I think there's a couple 0:07:04.640 --> 0:07:08.240 of issues that are really important to UH to emphasize. 0:07:08.240 --> 0:07:10.520 The first is that we have to certainly protect our 0:07:10.560 --> 0:07:13.920 healthcare workers, essential workers, those that most risk for the 0:07:14.040 --> 0:07:16.320 disease we have to take care of the population here 0:07:16.680 --> 0:07:19.120 in the United States, and we're gonna have to vaccinate 0:07:19.520 --> 0:07:22.040 up to eight percent or more of the population so 0:07:22.080 --> 0:07:24.840 we can get back to normal or some semblance to normality. 0:07:25.280 --> 0:07:27.160 But the biggest issue is that we're going to have 0:07:27.200 --> 0:07:29.640 to protect the whole world. This is not just an 0:07:29.680 --> 0:07:32.600 American problems, not just the European problems. This is the 0:07:32.640 --> 0:07:36.760 problem that affecting the livelihoods of all people in the 0:07:36.760 --> 0:07:39.400 world at seven point eight billion people, And we're gonna 0:07:39.440 --> 0:07:41.080 have to think about the long run and how we're 0:07:41.120 --> 0:07:44.720 going to protect the populations across the world. In the 0:07:44.760 --> 0:07:48.960 medium run, as we unroll the vaccine into the general population, 0:07:49.200 --> 0:07:52.120 people keep getting the virus. We now have a total 0:07:52.160 --> 0:07:54.880 death count in access of three d and twenty thousand 0:07:55.200 --> 0:07:57.680 all right in the United States. We have a case 0:07:57.720 --> 0:08:00.920 count that is climbing every single day, and there is 0:08:00.960 --> 0:08:03.400 a question of what we can do to prevent death. 0:08:03.440 --> 0:08:06.920 How good have some of the remedies been. Has the 0:08:06.920 --> 0:08:10.400 therapeutics been to deal with the virus once people get 0:08:10.440 --> 0:08:14.600 it and get very sick from it. So so I think, 0:08:14.680 --> 0:08:18.320 you know, the Lisa, really the important issues that we're 0:08:18.320 --> 0:08:20.640 going to have to use you know, what we know 0:08:20.800 --> 0:08:22.920 is tried and true and work for the public health 0:08:22.920 --> 0:08:25.800 prevention in order to get ourselves into that phase where 0:08:25.800 --> 0:08:30.120 the vaccinine starts kicking in and decreases transmission. We do 0:08:30.240 --> 0:08:32.440 have improved, We've learned a lot in the last year 0:08:32.520 --> 0:08:35.760 about how to treat patients. We have, you know, therapies 0:08:35.800 --> 0:08:39.800 and mortalities such as steroids which decreases the risk of mortality. 0:08:40.000 --> 0:08:44.600 These to reduce the risk of mentality. So we don't 0:08:44.640 --> 0:08:47.520 have any game changers or home runs on the forefront 0:08:47.559 --> 0:08:50.439 of therapeutics at this point, and so we're going to 0:08:50.559 --> 0:08:53.880 have to rely on public health, you know, sound public 0:08:53.880 --> 0:08:57.199 health prevention to get over over this period. And we're 0:08:57.200 --> 0:08:59.440 going to have there's going to be a difficult next 0:08:59.520 --> 0:09:02.040 several months during these winter months as the surge is 0:09:02.040 --> 0:09:04.959 occurring not only you know, across the United States, but 0:09:05.160 --> 0:09:07.480 in many parts of the world. Can we get to 0:09:07.520 --> 0:09:10.120 her immunity if we can't get kids vaccinated, because from 0:09:10.120 --> 0:09:12.600 my understanding, they won't be able to get vaccinated likely 0:09:13.040 --> 0:09:16.560 until potentially late next year at the outset, based on 0:09:16.600 --> 0:09:20.160 the studies currently out there. Yeah, so, as you know, 0:09:20.400 --> 0:09:22.840 since the beginning where there's just been debate about her 0:09:22.920 --> 0:09:26.680 immunity and whether natural infection and we can get you know, 0:09:26.800 --> 0:09:30.600 enough people you know infected that there get they become 0:09:30.600 --> 0:09:34.320 immune due to natural and faction, and that would protect 0:09:34.360 --> 0:09:37.000 the rest of the population. You know, I worked in 0:09:37.040 --> 0:09:40.679 Brazil for twenty five years. One of the cities in Brazil, 0:09:40.840 --> 0:09:44.080 city of Monoits, which is hit the hardest. You know, 0:09:44.240 --> 0:09:49.319 I had an epidemic that affected seventy of the population. 0:09:50.080 --> 0:09:52.720 So if we're thinking about her immunity, those are the 0:09:52.800 --> 0:09:55.800 levels of people who are going to be affected to 0:09:55.840 --> 0:10:00.319 reach herd immunity. And that's that's a that's a rica, 0:10:00.559 --> 0:10:05.440 that's a disaster that we just can't can't accept. That 0:10:05.559 --> 0:10:08.320 also provides us a benchmark of how much how many 0:10:08.360 --> 0:10:10.360 people we need to vaccinate. We're going to have to 0:10:10.480 --> 0:10:15.320 vaccinate over seventy's my own, my own judgment at this moment, 0:10:15.400 --> 0:10:17.240 and we're learning more. We have to be humble and 0:10:17.280 --> 0:10:19.720 we're learning more each time, but we're gonna have to 0:10:19.800 --> 0:10:23.160 vaccinate large numbers are population to protect to get to 0:10:23.200 --> 0:10:28.600 that magic herd immunity threshold. Dr co thank you so 0:10:28.720 --> 0:10:30.880 much for being with us. Best of luck when you 0:10:30.920 --> 0:10:34.240 go get your vaccine. Are you worried? Are you excited 0:10:34.280 --> 0:10:37.880 for it? I'm not worried, and I'm excited and uh 0:10:37.920 --> 0:10:40.880 and I think we're really, you know, entering a new 0:10:40.920 --> 0:10:43.320 phase of how we're going to be able to deal 0:10:43.360 --> 0:10:46.120 with this vaccine now, and I'm just proud to be 0:10:46.240 --> 0:10:49.520 part of that. Albert Cole, thank you so much, greatly, 0:10:49.559 --> 0:10:56.920 greatly appreciate it. With a Yale School of Medicine, let 0:10:56.960 --> 0:10:59.680 us get here to an important conversation, jeff For you 0:11:00.080 --> 0:11:03.800 synthesizes what we see in economics and markets in a 0:11:03.880 --> 0:11:06.480 wonderful and delicate way. He's with B and Y. Melon 0:11:06.880 --> 0:11:10.840 to say he's their senior strategist doesn't give justice to 0:11:10.920 --> 0:11:14.920 what he grasped here. Of the dynamics as well, Jeffrey, 0:11:14.960 --> 0:11:18.640 you are disconced in tier four, Tier five, Tier six, 0:11:19.360 --> 0:11:24.200 somewhere in the vicinity of the microcosm of trucks stacked 0:11:24.240 --> 0:11:29.679 top in Southern England as well. Sometimes our macro economics 0:11:30.120 --> 0:11:34.880 are overcome by micro events. Tell us about the micro 0:11:35.040 --> 0:11:39.560 event of business investment and animal spirit in the next year, 0:11:40.640 --> 0:11:47.520 um next year, in one word, vaccine vaccinations. If that works, 0:11:47.679 --> 0:11:51.600 If the Biden administration can bring through a hundred million 0:11:51.679 --> 0:11:53.839 doses and a hundred days or out the form that 0:11:54.040 --> 0:11:56.920 be that Tony blads walking about giving additional dosage or 0:11:57.000 --> 0:11:59.839 ready to speed up the process if that works, and 0:12:00.080 --> 0:12:02.800 more spirits are going to let that. I've heard people 0:12:02.840 --> 0:12:05.320 talking into the roaring twenties again, are we going to 0:12:05.360 --> 0:12:09.600 have thees? So that's what people are hoping for, But 0:12:09.720 --> 0:12:15.280 so far government competence globally, I think still caution is needed. Jeff, 0:12:15.320 --> 0:12:17.760 you you were weaned on the ose. The history of 0:12:17.800 --> 0:12:20.000 the linkage of history and all of this from Lionel 0:12:20.080 --> 0:12:23.240 Robbins and of course the great Magna Decide among others, 0:12:23.400 --> 0:12:27.120 is well within this historical moment and all that we 0:12:27.200 --> 0:12:30.160 mumber babble about each and every day. Do you have 0:12:30.280 --> 0:12:34.280 an optimism that we get back to normality after the vaccine? 0:12:34.640 --> 0:12:38.040 Is it not V shaped, but is it literally stochastic 0:12:38.040 --> 0:12:42.040 where we explode back to a normal economy. It will 0:12:42.080 --> 0:12:44.920 be V shaped for some, it may not be the 0:12:45.000 --> 0:12:47.320 shape for others, and that again is going to be 0:12:47.360 --> 0:12:49.920 the policy challenge for some time. Remember a few months 0:12:49.920 --> 0:12:52.400 ago when we first talked about this. There will be 0:12:52.679 --> 0:12:56.560 winners and losers out of the recovery, and then governments 0:12:56.559 --> 0:12:59.440 will need to grapple with how do you ensure that 0:12:59.480 --> 0:13:04.520 the district ution is not too much concentrated within those 0:13:04.520 --> 0:13:07.360 who've done relatively okay out of the lockdown, out of 0:13:07.400 --> 0:13:11.199 social disruption already. Otherwise you're going to grow social issues. 0:13:11.200 --> 0:13:13.319 But I think we're seeing that UK. So is it 0:13:13.360 --> 0:13:15.120 going to be be for some the society is going 0:13:15.120 --> 0:13:16.600 to be okay or is it going to be an 0:13:16.760 --> 0:13:19.280 l for others or even worse. I think that's going 0:13:19.360 --> 0:13:21.800 to be much more important than what the broader GDP 0:13:21.920 --> 0:13:23.679 number is going to be. Jeff. A lot of people 0:13:23.720 --> 0:13:27.280 say that these fundamental arguments don't really matter for risk appetite, 0:13:27.280 --> 0:13:29.959 that the animal spirits will prevail regardless because you're getting 0:13:30.000 --> 0:13:33.200 penalized for putting your money in cash. The negative real 0:13:33.280 --> 0:13:37.400 yields that keep getting negative or globally and particularly in 0:13:37.440 --> 0:13:40.040 the United States. But there are two components here, right, 0:13:40.080 --> 0:13:44.080 There's the actual yield and then their inflation expectations. Do 0:13:44.160 --> 0:13:47.439 you think that the inflation expectations have gotten ahead of 0:13:47.480 --> 0:13:50.960 themselves and that the actual phenomenal yield is what's telling 0:13:50.960 --> 0:13:53.320 the right story, and that's one of slow growth and 0:13:53.360 --> 0:13:58.960 more moderate expectations ahead. I think the pace has caught 0:13:59.000 --> 0:14:01.400 many by surprise, I would, including myself. We look at 0:14:01.400 --> 0:14:03.240 the five year, five year forward break even right now 0:14:03.400 --> 0:14:05.640 it's getting back to two. You know, we haven't been 0:14:05.640 --> 0:14:08.080 here since July last year when we were thinking about 0:14:08.120 --> 0:14:11.800 additional they're easy. But in terms of levels then from 0:14:11.840 --> 0:14:14.000 central banks point of view, and nowhere there where the 0:14:14.040 --> 0:14:16.560 central banks wanted to be. They want them. They want 0:14:16.559 --> 0:14:18.880 central bank that they want economies to run hot, bea 0:14:18.960 --> 0:14:20.800 the CB, be it the FED. They want to see 0:14:20.840 --> 0:14:23.480 yields go through to twenty five. Those are the highs 0:14:23.520 --> 0:14:26.520 in two thousand seventy, two thousand and eighteen. So what 0:14:26.560 --> 0:14:28.360 are you looking for as a central banker right now? 0:14:28.360 --> 0:14:30.280 A pace or levels? I think they're going to go 0:14:30.320 --> 0:14:32.800 for levels, which means you keep things easy and that's 0:14:32.800 --> 0:14:35.520 going to help risk appetite. So how local negative yields 0:14:35.520 --> 0:14:40.800 get well? So if well, we do get to twenty 0:14:40.840 --> 0:14:43.280 five and the ten years so stays at a hundred 0:14:43.320 --> 0:14:46.360 basis points, then if you just use that, then we're 0:14:46.360 --> 0:14:48.400 looking at well below a hundred basis points in terms 0:14:48.400 --> 0:14:51.680 of negative yields. And again that's something that central bankers 0:14:51.720 --> 0:14:54.160 they want to enforce them right now. In their view, 0:14:54.360 --> 0:14:56.640 this is the only way to lift animal stops for 0:14:56.680 --> 0:14:59.280 getting investment back into the economy, to move all that 0:14:59.360 --> 0:15:03.520 cash the US British savings rates above Germany's think about 0:15:03.560 --> 0:15:06.600 that it needs to be spent extraordinary, Jeffrey like, very 0:15:06.600 --> 0:15:10.040 good insight. Jeff you mentioned pacient levels and mathematically folkus 0:15:10.120 --> 0:15:14.840 this is so, so, so important. When do you presume, 0:15:15.000 --> 0:15:18.840 given vaccination that we get to the glide path of 0:15:18.960 --> 0:15:22.800 January and February of this year, When do we see 0:15:22.880 --> 0:15:26.560 a level jump that gets us back on stream that 0:15:26.680 --> 0:15:31.200 seemed comfortable for so many of the public. I think 0:15:31.240 --> 0:15:33.880 it would be around mid year, and I might venture 0:15:33.960 --> 0:15:36.880 to say probably right after mid year rather right before. 0:15:37.000 --> 0:15:38.920 So I'm going to borrow from the u c B here. 0:15:39.200 --> 0:15:42.480 They've already shifted their language. They had a maxine being 0:15:42.560 --> 0:15:47.280 available mid year twenty one and then distribution towards the 0:15:47.400 --> 0:15:51.120 end of one that has entirely been shifted forward by 0:15:51.200 --> 0:15:53.800 six months. So that's good. That's why we've seen such 0:15:53.840 --> 0:15:56.440 a strong move since November. But the next phase is 0:15:56.480 --> 0:15:59.800 the normalization phase. Then it's going to be on individual governments, 0:15:59.800 --> 0:16:01.880 and then you're going to start to see dispersion French 0:16:01.920 --> 0:16:06.200 authorities vaccinations today so it will be different in different places. 0:16:06.240 --> 0:16:11.080 But do we have the political economic architecture to begin 0:16:11.160 --> 0:16:15.600 to reverse policies in these dire times? Do we have 0:16:15.680 --> 0:16:19.400 the ability to reverse and in some way get our 0:16:19.600 --> 0:16:24.200 policies back to normal? Short answer is no. Central banks 0:16:24.200 --> 0:16:26.520 certainly are not going to do that. Again, let's borrow 0:16:26.560 --> 0:16:28.360 from the r b A and the ECB. They've given 0:16:28.360 --> 0:16:31.760 you their time phrase, you'll kind of control in Australia 0:16:31.960 --> 0:16:35.480 three years. That's your policy time like no normalization for 0:16:35.560 --> 0:16:38.160 three years and then from the CBS point of view, 0:16:38.200 --> 0:16:41.560 investment plan fistal boasts for the next two years. That's 0:16:41.600 --> 0:16:43.600 the political world. So for the next two to three years, 0:16:43.720 --> 0:16:45.320 I think we're looking at the status square in terms 0:16:45.320 --> 0:16:48.240 of policy. That's good for risk appetite. Jeffrey, you thank 0:16:48.280 --> 0:16:50.920 you so much for all of us at Bloomberg Surveillance, 0:16:50.960 --> 0:16:58.320 including John, John uh m hm Falerio, including John Falerio. Jeffrey, 0:16:58.360 --> 0:17:00.480 you thank you so much with being why thank you 0:17:00.560 --> 0:17:03.880 Mellen for just great, great conversation through the year, perspective 0:17:04.400 --> 0:17:12.960 and wisdom is well right now my most painful interview 0:17:13.000 --> 0:17:16.280 of the year, which always will need a description. On 0:17:16.400 --> 0:17:20.760 Bloomberg Radio, John writing is really one of our first, 0:17:20.960 --> 0:17:24.399 first and strongest supporters of Bloomberg on the economy in 0:17:24.520 --> 0:17:28.760 Bloomberg uh surveillance and I can only say that Mr 0:17:28.800 --> 0:17:31.919 Writing wore this get up once at a bear Stern 0:17:32.040 --> 0:17:35.199 party and and Ace Greenberg threw him out of the 0:17:35.320 --> 0:17:38.159 room long ago and far away. For those of you 0:17:38.400 --> 0:17:42.080 fortunate on radio, he is decked in Santa Claus gala 0:17:42.720 --> 0:17:48.120 and an LFC Liverpool Football Club sweater. Just to let 0:17:48.119 --> 0:17:50.359 me know that the Tops took down to the big 0:17:50.400 --> 0:17:54.119 defeat uh the other day, John. The Premier League is 0:17:54.160 --> 0:17:56.760 one of the few things that seem to have run 0:17:56.760 --> 0:18:01.399 correctly in this miserable two thousand money. How did the 0:18:01.480 --> 0:18:05.880 Premier League do it? In Championship League like Preston North 0:18:06.000 --> 0:18:08.919 End and that do it and so many others in 0:18:09.000 --> 0:18:15.560 sports failed. Um, it's not entirely clear, but it was. 0:18:15.840 --> 0:18:20.440 They had a comeback plan. Uh, they had bubbles, they 0:18:20.480 --> 0:18:25.840 had frequent testing. There have been issues, uh, and apart 0:18:25.880 --> 0:18:31.120 from one or two games, there have been no crowds. Unfortunately, 0:18:31.280 --> 0:18:34.879 they're able to continue even though the entire country seems 0:18:34.920 --> 0:18:38.359 to be heading towards Tier four lockdown. UH. These sports 0:18:38.359 --> 0:18:40.439 won't be locked down, so at least we'll have something 0:18:40.480 --> 0:18:45.760 to watch on the boxing day, which is a huge 0:18:46.200 --> 0:18:51.280 soccer fixture day in the UK. I make jokes here, 0:18:51.280 --> 0:18:54.439 but there's a huge mystery to the underlying theories that 0:18:54.480 --> 0:18:58.040 have gone out the window into the mechanics of coming 0:18:58.040 --> 0:19:01.840 out of this crisis. If we get a vaccination, do 0:19:01.920 --> 0:19:07.040 you see normative, traditional macro economics out of this crisis 0:19:07.160 --> 0:19:11.360 or will it be something different? Well, we do have 0:19:11.400 --> 0:19:15.080 two vaccines, and hopefully all three of us will get 0:19:15.119 --> 0:19:18.679 those vaccinations soon and then we won't have to be 0:19:19.080 --> 0:19:25.040 remote um. And at that point, when we enough people 0:19:25.119 --> 0:19:27.720 I mean the terms heard immunity, and it's going to 0:19:27.800 --> 0:19:31.760 be vaccines into at least seventy of the arms of 0:19:31.840 --> 0:19:35.200 people in the country. Then those parts of the country 0:19:35.240 --> 0:19:39.000 that those parts of the economy in leisure and hospitality 0:19:39.240 --> 0:19:43.800 where we've got some four million job losses since February, 0:19:43.800 --> 0:19:46.400 When the when when when that business can come back 0:19:46.720 --> 0:19:49.000 we can start to think of a more normal economy. 0:19:49.320 --> 0:19:52.719 The question is how many of those businesses will remain. 0:19:53.720 --> 0:19:57.199 And so it's very important what is going on with 0:19:57.359 --> 0:20:02.040 this bizarre situation over the fiscal support package. And there 0:20:02.200 --> 0:20:05.199 is a certain person who has to decide does he 0:20:05.280 --> 0:20:07.399 want to play the grinch or does he want to 0:20:07.400 --> 0:20:11.239 play Santa uh. And if we do not get that 0:20:11.280 --> 0:20:14.919 fiscal support package, which has two hundred eighty billion dollars 0:20:14.920 --> 0:20:18.840 in for supporting small businesses, there's going to be far 0:20:19.160 --> 0:20:25.480 fewer businesses around come June, July August, when the economy 0:20:25.520 --> 0:20:27.840 should be able to get back to a more normal footing. 0:20:27.920 --> 0:20:32.280 So what happens now is very important in answering your question. 0:20:32.480 --> 0:20:37.480 And um, honestly, I have to think, like like the 0:20:37.600 --> 0:20:40.040 Brexit deal today, that the theme is we've got to 0:20:40.080 --> 0:20:43.400 go to the eleventh minute of the eleventh hour. What's 0:20:43.400 --> 0:20:45.679 not the eleventh month, it's the twelfth month now. But 0:20:45.680 --> 0:20:48.200 but but you get the point there. Well, then there's 0:20:48.240 --> 0:20:51.080 a question also of what the longer term damages, because 0:20:51.320 --> 0:20:53.480 what you're saying is somewhat contrarian. A lot of people 0:20:53.480 --> 0:20:56.159 have been shrugging off a lot of the recent weakening data, 0:20:56.440 --> 0:21:00.399 shrugging off the prospects of a prolonged d all that 0:21:00.560 --> 0:21:03.720 perhaps doesn't get struck before the money runs out on 0:21:03.760 --> 0:21:06.800 the twenty six, And you're saying it does matter. At 0:21:06.840 --> 0:21:09.520 what point should people take stock and start to downgrade 0:21:09.520 --> 0:21:12.280 their expectations for next year based on some of the 0:21:12.320 --> 0:21:15.919 weakness that we're seeing now. Um at the point we 0:21:15.960 --> 0:21:18.320 don't get a deal. If we get to that point, 0:21:18.400 --> 0:21:21.240 you need to downgrade expectations for the first half of 0:21:21.320 --> 0:21:22.680 next year because next year is going to be a 0:21:22.760 --> 0:21:26.400 year of two halfs, just like a any good soccer match, 0:21:26.560 --> 0:21:28.760 and the first half of the year is going to 0:21:28.840 --> 0:21:33.000 be one where we're still struggling with the virus. Uh. 0:21:33.200 --> 0:21:36.720 We all know the infections data. We unfortunately all know 0:21:36.880 --> 0:21:41.000 the death toll from this virus, and we need to 0:21:41.640 --> 0:21:46.199 protect ourselves to the point where that vaccine is widely available. 0:21:46.680 --> 0:21:49.240 And what was key, and we can look back in 0:21:49.400 --> 0:21:53.480 April and May time frame, what was key was the 0:21:53.560 --> 0:21:59.400 income support that the government provided. But employment needs employers 0:21:59.680 --> 0:22:05.200 and businesses will a lot of small businesses will struggle. 0:22:05.280 --> 0:22:07.119 You know. It's great. We can look at the stock market. 0:22:07.240 --> 0:22:10.000 We can see the SMP five economy that looks a 0:22:10.040 --> 0:22:12.879 pretty good economy, But more than half of people in 0:22:13.000 --> 0:22:16.560 employment are employed by small businesses that aren't listed on 0:22:16.600 --> 0:22:19.119 the stock market, that are struggled, that don't have the 0:22:19.160 --> 0:22:23.320 same access to capital markets. And that's why a renewal 0:22:23.560 --> 0:22:27.199 of the p p P program and other support for 0:22:27.280 --> 0:22:31.040 businesses is just absolutely vital to make sure that those 0:22:31.080 --> 0:22:35.680 employers are there for when employment can return for that 0:22:35.720 --> 0:22:38.080 sector of the economy. All right, John, since you're making 0:22:38.240 --> 0:22:40.199 you're making a lot of football metaphors here, and you 0:22:40.240 --> 0:22:43.480 really do want to rub the victories of Liverpool in 0:22:43.560 --> 0:22:46.080 Tom Kaine's face as much as possible. That two have 0:22:47.359 --> 0:22:49.840 of of the year sort of like a football game. 0:22:49.920 --> 0:22:53.440 So let's make an additional sort of two halves analogy 0:22:53.560 --> 0:22:57.200 here where you've got a binary outcome. Either Liverpool wins 0:22:57.320 --> 0:23:00.800 the title or it doesn't, depending on what bins during 0:23:01.480 --> 0:23:06.840 the weeks ahead. With inflation. Does that work at all? Tom, 0:23:07.359 --> 0:23:09.399 I don't know. You know, I'll see all I know, 0:23:09.560 --> 0:23:15.240 Spurs revenge January two. We'll get there. We'll get there. 0:23:15.320 --> 0:23:17.280 But in terms of inflation, I mean a lot of 0:23:17.320 --> 0:23:19.680 people are saying that it's going to remain muted next year. 0:23:20.040 --> 0:23:22.760 What's the sort of binary event that could cause the 0:23:23.119 --> 0:23:27.880