Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. So as we focus increasingly
Speaker 1: on testing and tracing to get control of the coronavirus,
Speaker 1: technology will play a large role and really assessing lots
Speaker 1: of information. Here to talk about, specifically the digital tools
Speaker 1: to fight COVID nineteen is Dr Lane Labrick. He is
Speaker 1: an infectious disease UH epidemiologist UM and he's very well
Speaker 1: known when it comes to his work, specifically on applying
Speaker 1: information and communication technologies. Chair of the World Health Organization's
Speaker 1: Digital Health Guidelines Development Group. He's also an associate professor
Speaker 1: at Johns Hopkins Bloomberg School of Public Health, which is
Speaker 1: of course supported by Michael R. Bloomberg, founder of Bloomberg,
Speaker 1: Gulp and Bloomberg Philanthropy. He joins us Dr Lubrieg on
Speaker 1: the phone from Baltimore. Dr Lubrig, nice to have you
Speaker 1: here with us. Um, we do hear an awful lot
Speaker 1: from governors and mayors, health officials about the importance of
Speaker 1: testing and tracing technology will play a huge role at
Speaker 1: all of this. Absolutely, thank you for having me, Carol.
Speaker 1: And you know, it's important to understand that unlike the
Speaker 1: influenza pandemic of we're living in a world that's more
Speaker 1: connected than ever before. They're more cell phones than there
Speaker 1: are people on the planet. So I think you know,
Speaker 1: each each of these cell phones has the computing power
Speaker 1: that's more than what we used to send man to
Speaker 1: the Moon and the Apollo mission. So if we if
Speaker 1: we fail to leverage the power of these devices, that
Speaker 1: that most if not all of the people who are
Speaker 1: who are living with with through this pandemic are having
Speaker 1: their kits will really be uh be missing out on
Speaker 1: a major, major opportunity. Um. The real question now is
Speaker 1: is you know, we're we're entering into a phase where
Speaker 1: it's a bit like the game of whack a mole, right, UH,
Speaker 1: if we if we're not giving a mallet to whack
Speaker 1: the mold down. When each time a case pops up,
Speaker 1: we need to be able to find out as soon
Speaker 1: as possible who they may have been in contact with,
Speaker 1: and the delays around finding out those contacts and trying
Speaker 1: to shut down the spread of the virus is going
Speaker 1: to be the difference between success and failure in reopening
Speaker 1: up the economy and getting out of this pandemic phase.
Speaker 1: And so in an ideal world, Dr Labrick, how does
Speaker 1: this work? I mean, how would it look to an
Speaker 1: everyday person like me? Carol is not an everyday person,
Speaker 1: it's an extraordinary person. But for an everyday person like myself, like,
Speaker 1: how am I interacting with this? So? I think you
Speaker 1: know both of your probably extraordinary people. But what we're
Speaker 1: talking about is having a large proportion of a population
Speaker 1: downloading UH an app or a series of apps that
Speaker 1: share a common backbone technology that that basically is on
Speaker 1: all the time, so that so that in the background
Speaker 1: it's capturing information, hopefully in a very secure and and
Speaker 1: UH and protected way, about who we're interacting with on
Speaker 1: a daily basis for extended periods of time. Then if
Speaker 1: if if down the road, someone finds out that they
Speaker 1: are COVID positive without going through the laborious process of
Speaker 1: trying to go back and sink through who were all
Speaker 1: the people that person had contact with over the past
Speaker 1: week or so, the app should be automatically able to
Speaker 1: calculate all of the other people who that person was
Speaker 1: in contact with, because those are of people have the
Speaker 1: app as well. And I think that's where the challenges, right.
Speaker 1: You can imagine if I if I'm standing in a
Speaker 1: crowd of people and I'm the only one of a
Speaker 1: hundred people who have that app on their phone, it's
Speaker 1: not going to do us any good. So so yeah,
Speaker 1: that's the real challenges is adoption. How do we get
Speaker 1: as many people as possible as part of our our
Speaker 1: civic duty to download these applications that will will then
Speaker 1: allow us to speed up that process of find finding
Speaker 1: the brush fires and and shutting them down effectively. That's
Speaker 1: that's the big challenge I have to say, doctor. Part
Speaker 1: of me is like, finally we're going to have technology
Speaker 1: cooperation in our kind of healthcare environment, right because I
Speaker 1: feel like it's been so slow to happen, and I
Speaker 1: do wonder if this is the hurdle that really creates
Speaker 1: some massive systems that makes our health care system more efficient,
Speaker 1: where the system works better and we benefit as patients.
Speaker 1: On the other hand, man, what kind of privacy are
Speaker 1: we giving up? Yeah, it's absolutely That's that's the million
Speaker 1: dollar questions, right it's it's um. It's a real difference
Speaker 1: between UH, collectivists and individualist societies where how much of
Speaker 1: our privacy are we willing to give up? And who
Speaker 1: are we willing to allow to monitor this data and
Speaker 1: and have access to this information? And this is at
Speaker 1: the heart of the big debate that's going on right now. UM.
Speaker 1: Apple and Google recently made a lot of news about
Speaker 1: launching a system that would allow this data to be
Speaker 1: captured in an anonymized and secure way, UM without giving
Speaker 1: control of that data to a centralized authority. And and
Speaker 1: that's where a lot of the challenges. The UK has
Speaker 1: said they're not going to go with that system, and
Speaker 1: other countries are are struggling through this, and Germany has
Speaker 1: just said that they will accept that decentralized this them.
Speaker 1: And what this means is the data is not made
Speaker 1: available to the public health authorities. Basically, you as the
Speaker 1: holder off the app get notified if you have been
Speaker 1: potentially exposed to some anonymous person who was shedding possibly
Speaker 1: shedding virus, and so you know, as a public health professional,
Speaker 1: would I like to have access to that information so
Speaker 1: I can help those people take care of themselves and
Speaker 1: I can help make sure they have the best information possible,
Speaker 1: and I can also track the number of potential cases
Speaker 1: in context. That would be the ideal, but I think
Speaker 1: we have to make some compromises about how much data
Speaker 1: people are willing to give away versus how many people
Speaker 1: we can get involved in these systems. Well, let's continue
Speaker 1: our conversation with Dr Alan labree Key is infectious disease
Speaker 1: epidemiologists and associate professor at Johns Hopkins University Bloomberg School
Speaker 1: of Public Health. And you just heard Charlie mentioned that
Speaker 1: that school, of course, supported by Mike Bloomberg, the owner
Speaker 1: of this radio station. So Dr Labrick, you know, one
Speaker 1: of the questions that I feel like comes up. And
Speaker 1: we talked a lot about the privacy aspect to this,
Speaker 1: but I keep thinking about this notion that we live
Speaker 1: in the global world and people travel, at least in
Speaker 1: normal times all over the globe. How does this tracing
Speaker 1: work globally. It's one thing for like my little town
Speaker 1: here in you know, the New York suburbs to maybe
Speaker 1: be able to pull this off, but doing this at
Speaker 1: scale seems really hard. Yeah, I mean it's a good question, Jason.
Speaker 1: I think the there are different tools for different parts
Speaker 1: of the pandemic problem. The the application for contact tracing
Speaker 1: that that we've been talking about is really about how
Speaker 1: do we manage the bulk of the forest fire that
Speaker 1: we're dealing with here in the US. And and if
Speaker 1: as a country tree we can come together and use
Speaker 1: a technology in a way that's smart, that protects this
Speaker 1: fundamental human right to privacy that's very important in a
Speaker 1: democracy UM, and that is that is carefully overseen and
Speaker 1: in a bipartisan way, in a nonpartisan way, that the
Speaker 1: personal information is used only to protect public health and
Speaker 1: for no other purpose. And and whenever it's possible to
Speaker 1: de aggregate or de identify data, to aggregate data or
Speaker 1: to de identify data, UM, so that you know, individual
Speaker 1: identity isn't compromised. I think we have to learn from
Speaker 1: what other countries have done successfully, uh and and try
Speaker 1: to adapt things that places like Hong Kong or Singapore
Speaker 1: or South Korea have done with with varying degrees of success,
Speaker 1: but nonetheless they've they've used the power of technology to
Speaker 1: get a handle on the the pandemic in their country.
Speaker 1: So how do we adopt those strategies to the US
Speaker 1: is really the critical question at hand. I do wonder
Speaker 1: to Dr Labrick, if post nine eleven right, I feel
Speaker 1: like there's a lot of information that we've already shared, um,
Speaker 1: just because of making sure that we're safe when we
Speaker 1: get on airlines and airplanes, um, and whether it's through
Speaker 1: global entry or through two t s A. So I
Speaker 1: do wonder if we've already jumped over one hurdle and
Speaker 1: this is just another one that you know, this is
Speaker 1: the world we're living in and we need to figure
Speaker 1: out how to be safe on so many different levels.
Speaker 1: Is that fair or not? Apples to apples, I think
Speaker 1: it's it's a choice that that we have to make
Speaker 1: individually and collectively. I think this kind of access to
Speaker 1: information or special legal powers that come into play during
Speaker 1: public health emergencies is not something that doesn't have precedent. Um.
Speaker 1: There have been many, many epidemics and and outbreaks of
Speaker 1: disease in US history, where legal authority has been granted
Speaker 1: to public health UH systems to to take action and
Speaker 1: and protect the public health during an emergency. So I
Speaker 1: think it's it's important to to convey to the public
Speaker 1: that these measures are largely temporary, for for the most
Speaker 1: part um in order for us to be able to
Speaker 1: control the epidemic and move us into a state of
Speaker 1: of normalcy, relative normalcy where we can go about our
Speaker 1: daily lives without the amount of fear and concerns that
Speaker 1: has been so dominant over the past four to five weeks.
Speaker 1: So I think I think you hit the nail on
Speaker 1: the head. We have to consider how is life going
Speaker 1: to change permanently and what are some of the emergency
Speaker 1: temporary measures that we have to take as a country
Speaker 1: in order for us to get a handle on this virus.
Speaker 1: Only about thirty seconds left here. How optimistic are you
Speaker 1: at this moment that we do the right thing. I'm
Speaker 1: I'm actually quite optimistic. I think we're impatient, but we
Speaker 1: need to be more patient and more optimistic. Science science
Speaker 1: and scientists know for the most part ways to combat
Speaker 1: this pandemic, and we need to be listening to the
Speaker 1: voice of reason and the voice of science. All Right, God,
Speaker 1: I feel better. Yeah, I feel a little better. Yeah,
Speaker 1: it's a privacy thing. You're a little nervous about a
Speaker 1: little nervous about that. I have to I have to
Speaker 1: say there is part of me that's a skeptic in like,
Speaker 1: who do I trust with all of this? But you
Speaker 1: know what, I feel like so much of our information
Speaker 1: is unfortunately out there already. Yeah, totally, absolutely, Yeah, no,
Speaker 1: that is that's true. All right. Our thanks to Dr
Speaker 1: Allen Labrick, so smart infectious disease epidemiologists and Associate professor
Speaker 1: at Johns Hopkins University Bloomberg School of Public Healthy is
Speaker 1: also the chair of the World Old Health Organizations Digital
Speaker 1: Health Guidelines Development Group. On the front lines in a
Speaker 1: different way in some sense, in terms of understanding where
Speaker 1: we go from here. Yeah, on the next stage, I
Speaker 1: think in terms of dealing with the virus. Who are
Speaker 1: listening to Bloomberg Business Week, Jason Kelly, Carroll Master, Let's
Speaker 1: talk about the cover story in Bloomberg Business Week this week.
Speaker 1: It is a tour to force in many ways, and
Speaker 1: one of these stories that you really just want to
Speaker 1: seek your teeth into. And it also tells you a
Speaker 1: lot about the state of the world, including a little
Speaker 1: bit on the virus obviously because you can't touch anything
Speaker 1: without that, but the oil market and specifically the story
Speaker 1: of excellent Brian Gruley wrote it. He joins us on
Speaker 1: the phone from Florida, as does Joe Webber, the editor
Speaker 1: of Bloomberg Business Week. So Joel, you know, it was
Speaker 1: interesting because you know, we communicate with you about what
Speaker 1: the cover is going to be, and when you told
Speaker 1: us and I was like, oh yeah, sort of like
Speaker 1: put my hands together. I can't wait to get my
Speaker 1: hands on that. Tell us why now? Well, um, it's
Speaker 1: It's actually ends up being a pretty important um week
Speaker 1: for Exxon. They had a divin an announcement that they
Speaker 1: made yesterday. They have earnings on Friday. Obviously. The backdrop
Speaker 1: is the carnage that happened in the oil markets last week,
Speaker 1: where we saw basically some unprecedented action with oil prices
Speaker 1: going negative and surplus just being you know, everything that
Speaker 1: can possibly hold oil anywhere in the world of holding
Speaker 1: oil right now, all of which leads us to a
Speaker 1: company that's like basically the west most powerful oil company,
Speaker 1: and for years this is actually basically the most valuable
Speaker 1: company in the world. But as as Brian's story, and
Speaker 1: to be clearly co wrote it with Kevin Crowley, UM,
Speaker 1: it makes clear there's basically been a decade of miscalculations
Speaker 1: that UM has really gotten us to this moment and
Speaker 1: now comes cheap oil. UM with the wave of coronavirus. UM. Brian,
Speaker 1: when you guys dug into this, what what kind of miscalculations, UM,
Speaker 1: did you guys find? You know, essentially Excellent started behaving
Speaker 1: less in a less disciplined way. Then it had into
Speaker 1: you know, the early aughts where you know, they would
Speaker 1: announce a deal for some acreage or another company, and
Speaker 1: it was clear to the street, here's how they're going
Speaker 1: to make money off this in the near term. And
Speaker 1: so in oh nine they bought a really big natural
Speaker 1: gas company to get in on shale gas. And I
Speaker 1: think gas prices started dropping even before they closed the deal. UM.
Speaker 1: And they could have gone into shale oil they totally didn't,
Speaker 1: um be could have made a lot of money then
Speaker 1: at that time, but they did gas. They got creams uh.
Speaker 1: Same thing. They went into the oil sands in the
Speaker 1: Western Canada, very expensive way to get oil out of sand.
Speaker 1: Essentially it's more like mining than drilling, and that turned
Speaker 1: out to be sixteen billion dollars spent, not for not
Speaker 1: very much. Russia ano they're going to be a great
Speaker 1: big deal with the old xcen CEO Rex Phillerson, his
Speaker 1: comrad the Vladimir Putin, envisioning three to five billion dollars
Speaker 1: in the Arctic, and then Plutin went after Crimea and
Speaker 1: Obama said, you're not doing business over there anymore XN
Speaker 1: and that kind of killed that deal. And so it
Speaker 1: was going after these great, big, risky deals. And underlying
Speaker 1: this was to some degree the assumption that we all
Speaker 1: held for many, many years, decades even that oil is
Speaker 1: a finite resource and it's gonna run out, We're gonna
Speaker 1: hit peak oil. And and as as all they were
Speaker 1: doing all that, that assumption was changing radically because of
Speaker 1: the technology the navals companies to break into very tight
Speaker 1: spaces of oil and gas and bring out these huge
Speaker 1: deposits of oil and gas that just weren't acceptable before.
Speaker 1: So we went from uh scarce assumed scarcity to certain abundance.
Speaker 1: So I have to say, Brian, I feel like you
Speaker 1: and Kevin have the makings of a book here, and
Speaker 1: there have been several books written about x because I
Speaker 1: think you cite um one where they called x M
Speaker 1: one of the most powerful businesses ever produced by American capitalism.
Speaker 1: And they have been a company, right, just great, a
Speaker 1: sign of great corporate America and just have plowed ahead
Speaker 1: decade after decade. So here we are now, and they're
Speaker 1: in a tough spot on a many different levels. Can
Speaker 1: they plow ahead? Oh? Yeah? I mean, first of all, xcens,
Speaker 1: you know, they're not going bankrupt or they're not They're
Speaker 1: not in that kind of trouble. Um. Uh, they have
Speaker 1: a reasonably strong balance sheet. Given the circumstances in the
Speaker 1: market and what's going to happen in oil in the
Speaker 1: next several months, there is there is a good chance
Speaker 1: that a lot of the independent, smaller players in the
Speaker 1: shale fields in West Texas and in North Dakota are
Speaker 1: just you know, they're not gonna be able to make it,
Speaker 1: and so they're gonna look to the big boys to
Speaker 1: buy them out. And you know, the Xcens and Chevrons
Speaker 1: of the world are not gonna pay them ninety cents
Speaker 1: on the dollar. They're gonna buy them on the cheap.
Speaker 1: So that's gonna be an opportunity for them to buy
Speaker 1: some assets that they could make you useful on the
Speaker 1: cheap um. But other than that, you know, some of
Speaker 1: the investors we spoke with, they're like, so they just
Speaker 1: keep spending, expending, spending on this betting on this thing
Speaker 1: that's going to happen five years from now, and you know,
Speaker 1: it's like free beer tomorrow. They just keep pushing your
Speaker 1: back five years and at some point, you know, well
Speaker 1: the streets already expressed its frustration with that's on um.
Speaker 1: But there's some opportunity here FLA. I think one of
Speaker 1: the main challenges Jason just in the and Gerald just
Speaker 1: in that here and now is is literally just that
Speaker 1: cost of oil. Right Like, we have a pretty pretty
Speaker 1: amazing look at what their break even cost is for
Speaker 1: and it is if I just asked you, what do
Speaker 1: you think it would be? Jason, so I I unfortunately
Speaker 1: I firstually already know it because you told me as
Speaker 1: we were teeing up the fight. It's sixty right five
Speaker 1: dollars more than BT ten dollars more than Shell and Chapron.
Speaker 1: And you just think about where the constant oil is,
Speaker 1: and it just the dynamics are just moving against them.
Speaker 1: But like to Brian's point here, like this is a
Speaker 1: company that they know what they're doing and be they've
Speaker 1: missed it a couple of times. And the other thing
Speaker 1: that we're going to see now is um Texas has
Speaker 1: proven and the Permian basin has proven to be this
Speaker 1: really powerful force that can switch it on switch it off.
Speaker 1: But it's also a place that there's a lot of debt.
Speaker 1: So somebody like an next Time could come in and
Speaker 1: actually make some pretty lucrative investments and and you know,
Speaker 1: perhaps write its ship a little bit. Um. It's a
Speaker 1: it's an absolute must read. Um. I really was blown
Speaker 1: away by the story. It's the cover story this week.
Speaker 1: And the other great thing is, as we've recently started doing,
Speaker 1: you can actually hear this story later on in our
Speaker 1: podcast feed. You'll hear a professional reading. And it's not
Speaker 1: even us, more professional than us reading the story, but
Speaker 1: it is in the Bloomberg because this week, uh podcast thanks,
Speaker 1: you know, more professional than me that, But it's not you.
Speaker 1: It's a great no, it's not. And it is a
Speaker 1: wonderful way to listen to a story because there's so
Speaker 1: many interesting perspectives facts in there and information about where
Speaker 1: XN was and where it is today, so definitely check
Speaker 1: it out. Our thanks to Joel Weber, editor of Business Week,
Speaker 1: and Brian Grooley, Projects and Investigations reporter at Bloomberg News.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. This is a conversation. I've really
Speaker 1: been looking forward to this guy. I've known for a
Speaker 1: number of years, followed him and all of his adventures
Speaker 1: very closely. Steve Paliuca is of course co chairman of
Speaker 1: Being Capital, also the co owner of the Boston Celtics.
Speaker 1: Heard of him, he joins us on the phone from Boston. Steve,
Speaker 1: how are you. I'm great, how are you? We're doing okay,
Speaker 1: you know what I mean, as best as we can do.
Speaker 1: I guess, I guess we've all had better months we
Speaker 1: have we have indeed, So tell us about Boston and
Speaker 1: what you're working on, because obviously folks like you sort
Speaker 1: of rolling up their sleeves and putting together a plan
Speaker 1: that's what's got to happen, and you're part of a
Speaker 1: group there, Uh, tell us what you're up to. Well,
Speaker 1: this is uh obviously a huge systemic complicated problem. And uh,
Speaker 1: I've been fortunate to be at Bank Capital involved in
Speaker 1: healthcare investing, biotech investing for a long period of time.
Speaker 1: And uh, I've really got a great group of scientists
Speaker 1: that have pitched in this effort, along with the mass
Speaker 1: High Tech Council and incredible group with with really smart CEOs.
Speaker 1: And so we started a while back trying to think
Speaker 1: that we're gonna need a back to work plan in
Speaker 1: the face of COVID because a vaccine will be twelve
Speaker 1: d eighty months away at best case, and that somebody's
Speaker 1: gotta start thinking about that. And we had the the
Speaker 1: expertise and group to put it together, also mckensey consulting teams,
Speaker 1: so a lot of resources. So we began looking at
Speaker 1: that in earnest about three weeks ago. The focus three
Speaker 1: weeks ago and appropriate focus of the government was really
Speaker 1: keeping the hospital systems working in a fantastic job of
Speaker 1: that here in Massachusetts, Charlie Baker and uh we send
Speaker 1: Governor fleto and in the hospital leadership of an amazing
Speaker 1: job at that. But we thought we'd we'd try to
Speaker 1: get a bunch of data and get out ahead of
Speaker 1: what will happen when we are going back to work,
Speaker 1: and how do we go back to work to accomplish
Speaker 1: two things. One would be we can't have the hospital
Speaker 1: system overwhelmed again, so steps on how we would not
Speaker 1: have to be overwhelmed if if this thing's not back.
Speaker 1: And second, um, how do we have people go back
Speaker 1: to work safely? And so we focused getting data from
Speaker 1: all over the world with the best scientists and and
Speaker 1: uh and and all the resources that we have to
Speaker 1: put that into a kind of succinct presentation. Hey, Steve,
Speaker 1: I do wonder too. Okay, you know did you look
Speaker 1: at China? Did you look at South Korea? I'm curious
Speaker 1: some of the conversations that you guys had in trying
Speaker 1: to figure out how do you do this? Uh? You
Speaker 1: know the way the way you you do this is
Speaker 1: trying to segment the problem. It's a it's a huge
Speaker 1: problem that you can't it's overwhelming if you try to
Speaker 1: attack the whole problem. So you segment into those two
Speaker 1: issues on how do you keep how do you keep
Speaker 1: the hospitals of the capacity there and how do you
Speaker 1: really reduce what's called the the are not factor That
Speaker 1: that's a complicated way of saying the rate of spread
Speaker 1: of the virus. UH. And then with with with the
Speaker 1: resources we have scientists here, great scientists in Massachusetts, UM
Speaker 1: by Dr Tom Cahill, UH, we we can look over
Speaker 1: the world for their contexts and everything that's out there
Speaker 1: and review different papers and different subjects and different things
Speaker 1: that different countries have used, what the results have been,
Speaker 1: and then as best we can try to call it that,
Speaker 1: put put that together and make the best demonstrative practices
Speaker 1: to see what can benefit us in Massachusetts. And so Steve,
Speaker 1: when you look at back to work and and sort
Speaker 1: of what that's going to look like, so many conversations happening,
Speaker 1: so much speculation, what's your best guess or what's something
Speaker 1: that you're pretty confident we're going to be doing that
Speaker 1: is different from the world before. I'm pretty confident that
Speaker 1: we'll be wearing masks for for quite a while. Studies
Speaker 1: across the world are saying that masks are very effective
Speaker 1: technique for reducing that are not factor. And right now
Speaker 1: that aren't a factor for this disease is about two
Speaker 1: point five, which means it kind of grows exponentially. That's
Speaker 1: why it's such a problem. UM and and and it
Speaker 1: obviously has has had a lot of death results in
Speaker 1: that so it's a it's a very pernicious virus. So
Speaker 1: I think we'll be seeing masks. I think we'll be
Speaker 1: seeing changes in the in the workplace. UM. I think
Speaker 1: we'll be seeing having to wake up every day and
Speaker 1: go through a checklist to make sure that that you're
Speaker 1: not coming to work infected. UM. There's a lot of
Speaker 1: data out there about a high number of asymptomatic kind
Speaker 1: of people carrying the disease. Our studies have shown the
Speaker 1: studies we looked at have a showing that maybe that
Speaker 1: number is not as big as people think. It's actually
Speaker 1: that people ignore a slight virus, that they ignore a
Speaker 1: slight cough. And in other countries when people put in
Speaker 1: systems where you wake up, then you have to fill
Speaker 1: out on a cell phone, do you have a coffee
Speaker 1: of a virus? What's your temperature? All these indicators that
Speaker 1: has been very effective to people self diagnosing. So they're
Speaker 1: actually not asymptomatic, they just have very light symptoms. And
Speaker 1: and those those folks are symptomatic and ones of light
Speaker 1: systems have been super spreads because they don't know they
Speaker 1: have disease and they're seeing lots of other people. So, uh,
Speaker 1: your world will change in terms of getting ready for work,
Speaker 1: your brush your teeth, and then you're gonna have to
Speaker 1: really go to your cell phone and and and fill
Speaker 1: out a form that that that that says you self checked. Wow,
Speaker 1: And no big gatherings. I'm guessing very hard to have
Speaker 1: big gatherings with with such such an exponential growth rate
Speaker 1: of this kind of virus. This this just you know, mirrors.
Speaker 1: We've talked earlier with Dr Labrick over at Johns Hopkins
Speaker 1: and that same idea about the role of technology in
Speaker 1: all of this, that we're going to have to continue
Speaker 1: to give up some privacy or or let go some
Speaker 1: of those privacy concerns in order for Steve to get
Speaker 1: back to a quote unquote more normal way of living. Well.
Speaker 1: I think that's a really good question, an important point.
Speaker 1: All the all the programs that we're looking at, you know,
Speaker 1: would have a huge privacy component, and it's, uh, it's
Speaker 1: really a public policy issue of you know, where you
Speaker 1: draw that line, so to to. It's a tough qual
Speaker 1: it's it's it's obviously a life and death decision, and
Speaker 1: you probably will have to quote give up some privacy
Speaker 1: but hopefully very protected in the governmental um you know,
Speaker 1: encrypted type form. Uh, you know, there are all sorts
Speaker 1: of policy issues. For example, part this virus is really
Speaker 1: deadly if someone has a comorbidity condition, hypertension, hard issues.
Speaker 1: And so if you if you if you decide you're
Speaker 1: not going to come to work, because that's an issue,
Speaker 1: is that public is not public? You know, how do
Speaker 1: you do that? How do you ensure those people's safety
Speaker 1: if you have a back to work program? Um, it's
Speaker 1: a it's a it's a tough question, right, that's right,
Speaker 1: Like your full medical history has to be has to
Speaker 1: be part of this right because it makes you potentially
Speaker 1: more vulnerable or does make you more vulnerable in a
Speaker 1: situation like this. Yeah, we're lucky in Massachusetts in that
Speaker 1: in that the Governor Baker has a commission and Karen
Speaker 1: is the kind of governor Plato's is leading, and they
Speaker 1: are thinking about all these issues. So, uh, they're really
Speaker 1: on top of it, and and they're gonna come out
Speaker 1: with a plan that you know, as best as you
Speaker 1: possibly can protect privacy. The problem with this this this
Speaker 1: virus and not having a vaccine, how pernicious it is
Speaker 1: is that there there are actually no perfect solutions to
Speaker 1: go back to work. Um, even if you could test
Speaker 1: everybody every day, test the accurate, so some some people
Speaker 1: are gonna slip through in this human error and tests
Speaker 1: whether whether even if we have a home test, there's
Speaker 1: human error in all tests. So so perfect is the
Speaker 1: enemy of the good. I think we can they construct
Speaker 1: a plan that by and large will make people safe
Speaker 1: if they follow these procedures, and we can get the
Speaker 1: economy going back again. The terrible thing about this disease
Speaker 1: is it has a disproportionate impact on lower income workers,
Speaker 1: workers and restaurants UM, in the in the travel industry. Uh.
Speaker 1: And so so with no work UM, that is a
Speaker 1: terrible situation to be in. And so we've got to
Speaker 1: figure out a way to safely get people back to
Speaker 1: work and safeguard our hospital system as well. All right,
Speaker 1: only got about two minutes left, but we got to
Speaker 1: talk basketball. We're going to see an NBA season. Steve
Speaker 1: Adam Silver is uh, you know, an incredible commissioner, and
Speaker 1: he's he's on top of this every day, and I'll
Speaker 1: just say he's monitoring it, working with public safety, health officials,
Speaker 1: his access to all the data that we have, and
Speaker 1: the NBA and his incredible staff and medical group has
Speaker 1: access to all the best information from China throughout the world.
Speaker 1: And Adam's number one watch word is is the NBA
Speaker 1: will be open up when in a safe and responsible
Speaker 1: way and working with government officials to do that in
Speaker 1: saving fronds away. So um, I, like everybody else, I'd
Speaker 1: love to see the season back, but I agree with
Speaker 1: that him that that he's got to come up with
Speaker 1: with it, with a plan that's going to work for
Speaker 1: public safety, and then we'll get basketball back and he's
Speaker 1: going to take it day by day as more information
Speaker 1: pours in. The crazy thing is we're only about it
Speaker 1: seems like it seems like we've been in the situation
Speaker 1: to me, at least since I've been sitting in my
Speaker 1: office looking out the same window for thirty days now.
Speaker 1: It seems like it has been four years to me,
Speaker 1: But have been been about a couple of months. Yeah, well, Steve,
Speaker 1: but is it safe to say that probably a first
Speaker 1: step will be games being played but without fans in
Speaker 1: the stands. Uh. You know, Adam is looking at all that,
Speaker 1: and I think that's a logical conclusion. Uh if if
Speaker 1: games in all sports begin, uh, probably you want you
Speaker 1: want to make sure that that the sports are not
Speaker 1: responsible for spreading the virus. So right, obviously having fans
Speaker 1: not being the stands would would be would get you
Speaker 1: an earlier opening. Yeah, all right, well we're certainly missing basketball.
Speaker 1: I missed chatting with you earlier this year about March
Speaker 1: madness and your beloved Blue Devils. So hopefully you get
Speaker 1: back to something resembling something normal. Steve Helluka, glad you're
Speaker 1: on the case. Co Chairman of Being Capital, co owner
Speaker 1: of the Boston Celtics, Sternians on the phone from Boston,
Speaker 1: Carroll and look forward to hearing about their recovery and
Speaker 1: return to work framework, because I think this is what
Speaker 1: everybody's going to have to be sharing about what works. Um,
Speaker 1: what are the systems? You know? I thought about when
Speaker 1: we're talking with one of the you know, April tailor billions.
Speaker 1: You know, how do you do film productions? Right? I
Speaker 1: think everybody's got to be sharing this information and um,
Speaker 1: love how Boston gets together, pulls in leaders from all
Speaker 1: walks of life, life and your people, I you know,
Speaker 1: you getta love Boston magnificence, great tone, it's a great,
Speaker 1: great time. I'm road journal. Yeah, but you let me drive. No, no,
Speaker 1: who's going to drive home? Honey, please, I'll do the
Speaker 1: right drivel. I want to drive. Just drive, baby. The
Speaker 1: questions can try. This is the drive to the Globe Commune. Thanks,
Speaker 1: we'll dry up to dawn on bloom Bird Radio. All
Speaker 1: right's time take a look at the clothes. Drive to
Speaker 1: the clothes. We called Smede back with us, president portfolio
Speaker 1: manager at Smede Capital Management, roughly one point six billion
Speaker 1: in assets under management, on the phone from Phoenix on
Speaker 1: this Thursday, and on a day we're as we heard
Speaker 1: from Charlie, we've been bounced around and we are off
Speaker 1: our lows, but still down across the board on those
Speaker 1: major equity averages. Cult. Nice to have you back with us. Um,
Speaker 1: how are you doing, How how's your family doing? How?
Speaker 1: We're doing really well? I mean, all things considered, we
Speaker 1: got three kids doing uh you know, i'mline learning and um,
Speaker 1: it makes being an office look way easier. Yeah, that's
Speaker 1: that's so true. Right. Everybody's talking about, you know, if
Speaker 1: you didn't respect teachers before, which is first of all,
Speaker 1: shame on you. You definitely do now because it is tough,
Speaker 1: tough work. I remember reading something cold. You may have
Speaker 1: seen the same thing that Shonda Rhymes, of course, famous
Speaker 1: showrunner of all these amazing shows that have been on television,
Speaker 1: said after teaching it was something like, after teaching my
Speaker 1: kids for an hour and a half, I now think
Speaker 1: that every teacher should make a billion dollars a week.
Speaker 1: So it definitely checks out. Well. You know, meanwhile, what's
Speaker 1: happening in the markets from your perspective, because you know,
Speaker 1: for folks out there looking at there for one case,
Speaker 1: you know, if they dare they actually see a nice
Speaker 1: little optimistic you of some sort. Um, how should people
Speaker 1: be feeling because I'm still nervous. Yeah, and that's a great,
Speaker 1: great question. There's quite a contrast to the market. And uh,
Speaker 1: you know, you guys were just touching at this where
Speaker 1: you're you're kind of looking at blowoff tops as you
Speaker 1: just mentioned in certain names. Um, and the market just
Speaker 1: continues to get narrow and that at the same time,
Speaker 1: what the depravity of what went on the last sixty days? Um,
Speaker 1: there are just distinct areas in places that there's been losers.
Speaker 1: So you know, a couple of days ago I saw
Speaker 1: the stat was that the market was only below it's
Speaker 1: high on average. But if you look at the meeting stock,
Speaker 1: they're still gon and that shows you the chasm between
Speaker 1: the halves and the have nots, and that today is
Speaker 1: just kind of a picture of the halves in terms
Speaker 1: of you know, who reported what they're excited about. But
Speaker 1: that is not, in our opinion, where the opportunity is
Speaker 1: coming out of this. That's just that was the rear
Speaker 1: view mirror. So tell us about investment choices you have
Speaker 1: or have not been making. You run a value fun
Speaker 1: you run you know, some other funds. I'm just curious
Speaker 1: how you've been either seeing opportunities are still fighting to
Speaker 1: find some. Yeah, there's a it's a it's a wonderful question.
Speaker 1: So just to give a sense, I give you guys
Speaker 1: a sense. You know, we're entering an era where stocks
Speaker 1: are probably only going to make two percent compounded over
Speaker 1: the next two years. Um, that means roughly dividends and
Speaker 1: you know, maybe it's a dividend growth that maybe it's
Speaker 1: a little higher at three percent. And that's for the
Speaker 1: broad indices. That being said, UM, you can go into
Speaker 1: places for like the subprime auto loan market right now,
Speaker 1: and go look at a company like Credit Acceptance Corporation,
Speaker 1: who we just got involved for the first time ever
Speaker 1: in this it's an incredible high returning equity business. That
Speaker 1: what you know, You hear subprime autos and you think
Speaker 1: cool area, Are you crazy? And the answer is that
Speaker 1: space has just disappeared in terms of who's willing to
Speaker 1: provide liquidity. And so I'll never forget. Richard Burnstein many
Speaker 1: years ago said you want to invest like the mafia.
Speaker 1: You go into businesses at times when nobody else wants
Speaker 1: to be in that business, and you prove capital, but
Speaker 1: you want to extract really high returns on a legal basis.
Speaker 1: And that's what we can do with the business like
Speaker 1: that today. There's other places like the energy business. You know,
Speaker 1: the Wills Fartle comment distress that that's mafia like investing opportunities,
Speaker 1: and that's just that's there's particular places for that, and
Speaker 1: a lot of the blow off tops you're seeing, there's
Speaker 1: money is available to fly into that as possible, right
Speaker 1: rich Birds see. Of course, a long time strategist over
Speaker 1: at Meryl I used to talk to him a lot
Speaker 1: of time, and they moved on too, you think eating
Speaker 1: vance and then is now on his own. But yeah,
Speaker 1: watch the markets for a long time. Yeah, go ahead,
Speaker 1: go ahead, I was gonna I was just gonna say,
Speaker 1: willis capital scarce? Is what should make you draw out
Speaker 1: of this um? You know, I wrote a piece of
Speaker 1: this soft Week talking about the you know, effortless money,
Speaker 1: as Buffett quartered in there's two thousand shareholder letter, is
Speaker 1: what we've seen in the VC world in the last
Speaker 1: five or seven years. Effortless money is what he referred
Speaker 1: to that as. And I say that because the question
Speaker 1: is the barkets can often augment economics or create what
Speaker 1: we call financialized demand, and if that is showing up
Speaker 1: in your business, you should be very scared because funding
Speaker 1: can change quickly. As we've seen an environment where will
Speaker 1: funding change that will change the economics of industries UM.
Speaker 1: The same fragile customers that are asking for rent abatements
Speaker 1: in the commercial space right now that are in the
Speaker 1: startup lan are going to have to ask for rent
Speaker 1: abatements on hosting and maybe might be walking away from
Speaker 1: digitalized at some point if they can't fund their business.
Speaker 1: No one is pricing that risk in the markets right now. Yeah,
Speaker 1: I do think a lot about that. I mean, we're
Speaker 1: starting to see that or around the edges, I mean,
Speaker 1: especially when you look across some of the media names
Speaker 1: and things like that. You know, budgets start to shrink
Speaker 1: and you're right there, these sort of ripple effects, and
Speaker 1: we talked about it all the time from the consumer
Speaker 1: perspective to you know, a change in you know, not
Speaker 1: going out to eat has much more dramatic effect than
Speaker 1: just oh okay, well, you know, maybe people are takening
Speaker 1: their budgets a little bit, especially at the scale that
Speaker 1: we are that we are talking about here, Cole. So
Speaker 1: what do you I guess with all of that, what
Speaker 1: do you worry about the most? And how does that
Speaker 1: translate into into action or maybe in action when it
Speaker 1: comes to someone's portfolio. Yeah, I know, it's you know,
Speaker 1: what are we worry about the most? In the interim
Speaker 1: here is um you know, watching these boy off tops
Speaker 1: taking the market or higher level. It's not the average stock.
Speaker 1: So that just looks like it's going to set up
Speaker 1: some near term disappointment. We are rallying off the low
Speaker 1: um and in in kind of a bear market rally style.
Speaker 1: In our opinion, it doesn't mean you can't find great
Speaker 1: bargains out there, but that's not what's hitting wonderful new
Speaker 1: highs and taking the market higher. Where you have to
Speaker 1: go into industries like consumer, like malates. We've been a
Speaker 1: buyer a mas rich in sigment property group. Those kind
Speaker 1: of places offer wonderful potential, wonderful prices, and they can
Speaker 1: gain the benefit of the reversion of the economy back
Speaker 1: to normal. Wow, I get a jumping because it's like
Speaker 1: when my husband says to me, just because it's on sale, honey,
Speaker 1: doesn't mean it's a great deal. And I do prices.
Speaker 1: What you pay value is what you get. And when
Speaker 1: we come out of this, we do know that things
Speaker 1: are going to change. To your point, that's no question
Speaker 1: things are going to change. But how fun is it
Speaker 1: to do what we just got done doing? So we
Speaker 1: know it would be different than that. What have we
Speaker 1: been doing? We've been sitting at home trying to entertain
Speaker 1: ourselves in many ways. If we don't have a backyard
Speaker 1: or we don't have a front driveway, we're doing that
Speaker 1: in a very small area. We're gonna want to get out.
Speaker 1: This might be the summer when states open up. This
Speaker 1: might be the summer that no one wants to be home.
Speaker 1: And I will say, and Jason, I don't know how
Speaker 1: much do you think about this? I know because you
Speaker 1: have a lot of discussions round your dinner table like
Speaker 1: we do, and I'm assuming you do too. Coal is
Speaker 1: that you know, we like to be around people, and
Speaker 1: we are adaptable, and we will figure out how to
Speaker 1: do it in a safe way. And I think that's
Speaker 1: what industries and leaders um. Just like we talked with
Speaker 1: Steve Paluka. You know, we're going to all figure this
Speaker 1: out and it will be different, but we'll figure out
Speaker 1: how to get back to doing some of those things
Speaker 1: that we took for granted beforehand. Cole, we do sixteen
Speaker 1: year old girls. They're gonna want to show up at
Speaker 1: alta and they're gonna want to get their makeup done.
Speaker 1: Why it's somewhere to go, it's somewhere to be around people.
Speaker 1: It's likely to be closer to a mall. We're gonna
Speaker 1: want to go entertain ourselves because we're deprived for fun. Yeah.
Speaker 1: I just it's so interesting to try and figure out,
Speaker 1: you know, what what the patterns of behavior are gonna be,
Speaker 1: and you know whether how far back we go, and
Speaker 1: I sort of go back to what Mike McKee, the
Speaker 1: metaphor that he gave us Carol, this notion of you know,
Speaker 1: it's not a V, it's not a U, it's a swoosh.
Speaker 1: I love like that. Yeah, it's a good one, all right.
Speaker 1: Col Smid, thank you so much, President and portfolio manager
Speaker 1: for SMAED Capital Management, looking after about one point six
Speaker 1: billion dollars. Jonas on the phone from Phoenix. Thanks for
Speaker 1: listening to Bloomberg Business Week. You and subscribe to the
Speaker 1: podcast on iTunes, SoundCloud, or Bloomberg dot com. You can
Speaker 1: also listen to our radio show every weekday at two
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