Speaker 1: Welcome to the Bloomberg Surveillance Podcast, and I'm Tom Keane Jailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
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Speaker 1: we're gonna get proportionately smarter. On a Tuesday, Mornamahangen joins
Speaker 1: us from Alians here as we consider not so much
Speaker 1: investment strategy, but the shock and awe of SMP three
Speaker 1: thousand and doubt twenty five thousand, bona. It has been
Speaker 1: an unloved bull market. How bull market? Is this or
Speaker 1: is this a pause along the way along the struggles
Speaker 1: of this pandemic? Yeah, you know, first of all, thanks
Speaker 1: for having me. This is a great new format. Enjoying
Speaker 1: it immensely. But certainly that three thousand level TOM on
Speaker 1: the SMP is something that's not only psychological, but it
Speaker 1: happens to be close to the two day moving average,
Speaker 1: so it does have some technical significance that well as well.
Speaker 1: We certainly think that if we can get through that,
Speaker 1: breakthrough that and sustain that for at least, you know,
Speaker 1: a few days, that is meaningful in terms of perhaps
Speaker 1: moving some opinions over to more bullish stands. You know,
Speaker 1: to us, clearly, this has been a bifurcated market. Um.
Speaker 1: The winners and the SMP have been tech and healthcare
Speaker 1: and the unloved cyclical sectors you know, energy, financial, industrials
Speaker 1: all still down over still very much in bear market territory. Um. Really,
Speaker 1: we think if if the market is a buyer of
Speaker 1: this reopening story, we should start to see a broadening
Speaker 1: of performance and that should include some of those cyclical sectors. Certainly,
Speaker 1: we started to see that last week as well, with
Speaker 1: industrials and energy at the top of the performance list. Um,
Speaker 1: we think that trend could continue and help carry us
Speaker 1: beyond the three thousand moves. Certainly, this morning we are
Speaker 1: seeing a buying of the reopening narrative. What kind of
Speaker 1: reopening our traders pricing in because there is the possibility
Speaker 1: that you reopen and nobody shows up because they don't
Speaker 1: have faith that they have the health controls in place
Speaker 1: that they won't get sick. Yeah, now that's a fair point.
Speaker 1: And look, as we're watching this reopening just like everyone else,
Speaker 1: we're watching the health data alongside of it. You know,
Speaker 1: one thing that's notable to us is that areas that
Speaker 1: had been the epicenter of this crisis, like New York
Speaker 1: and New Jersey, UM, really the pressure on their hospital
Speaker 1: systems has alleviated quite a bit. And so I think
Speaker 1: when we think about why we flatten this curve in
Speaker 1: the first place, is so that we wouldn't pressure the
Speaker 1: hospital systems. And some of the more southern states that
Speaker 1: we are seeing a little bit more uptick in some
Speaker 1: of the virus cases, UM, their hospital systems are generally
Speaker 1: still underutilized, I CU beds, etcetera. So to us, you know,
Speaker 1: in order to really think about re shutting the economy,
Speaker 1: or at least reshutting parts of the economy, you need
Speaker 1: to see pressure on that hospital system. So it's not
Speaker 1: another point that we are watching. The other thing I'd
Speaker 1: say briefly is just that when we think about investing
Speaker 1: in the market broadly, you know, sadly, this crisis has
Speaker 1: really impacted mom and pop businesses largely, you know, the restaurants, bars, gym's, etcetera.
Speaker 1: The SMP five hundred, however, is you know, the five
Speaker 1: hundred best capitalized, best balance sheets, biggest companies in the
Speaker 1: U S economy, and so when you think about where
Speaker 1: to put your money, perhaps that's relatively safer and it
Speaker 1: could be a driver of of what we're seeing now
Speaker 1: in the market as well. I got to lift the
Speaker 1: lid on that SMP five hundred. You did that briefly
Speaker 1: just moments ago and moment and I think that's the
Speaker 1: big topic for so many people. On the one side,
Speaker 1: we've got these crowding, stretched valuations in growth. Then on
Speaker 1: the other side we've got the potential for the value
Speaker 1: trap playing out over encyclicals. How do you draw distinction
Speaker 1: between the two at the moment and make sure you're
Speaker 1: in the right companies. Yeah, no, that's a great point,
Speaker 1: and we get that question all the time. Look, I
Speaker 1: think for a post COVID world, you need to be
Speaker 1: involved with some of these technology, particularly on the software side,
Speaker 1: that include areas like cybersecurity, cloud computing, the e gaming space,
Speaker 1: you know, the whole complex around the zoom conferencing and
Speaker 1: remote learning. Even um, it's not going to be a
Speaker 1: one year story. It's going to be a three, five,
Speaker 1: even ten year story down the road. Uh. Similarly, on
Speaker 1: the healthcare side, which may not be that long of
Speaker 1: a story, but still very important in the next probably
Speaker 1: two to five years. So I think we continue to
Speaker 1: see opportunities tactically there. So obviously it's harder to chase
Speaker 1: at these levels, but when we do get the pull backs,
Speaker 1: we've had some sideway sideways movements over the last few weeks.
Speaker 1: There has been opportunities to get involved again. On the
Speaker 1: other side, you know, we would be a little bit
Speaker 1: more selective when we think about some of the industrials, energy, financials,
Speaker 1: um there's only parts of the energy complex that are
Speaker 1: interesting to us, you know, refiners for example, or even
Speaker 1: renewable energy. On the industrial side, you know, we're we're
Speaker 1: taking a look at airlines here. I think their risk
Speaker 1: reward is interesting as well. When you think about limited
Speaker 1: downside government it might be stepping in to help bail
Speaker 1: out some of the companies and eventually we probably all
Speaker 1: will you know, have to travel again. So selective parts
Speaker 1: across both sides of the spectrum, we think makes sense.
Speaker 1: I've got to pick up on that airlines. I'm sure
Speaker 1: a lot of people set up a little bit when
Speaker 1: you said that. I know you can't do single names,
Speaker 1: but surely that's a really, really difficult decision mix when
Speaker 1: you look at that sector at the moment, some of
Speaker 1: these companies, I think it's fair to say, and I'm
Speaker 1: not being extreme saying this, some of these companies won't exist,
Speaker 1: will they. M Yeah, I certainly have to be careful
Speaker 1: across the spectrum here. Um. You know, one of the
Speaker 1: things about active management during the crisis, any crisis, but
Speaker 1: certainly this one, is there will be winners and losers,
Speaker 1: and the fundamental research will really matter. You need to
Speaker 1: look at balance sheets. You know, in a sector like airlines,
Speaker 1: you probably need to look at our the domestic internationally,
Speaker 1: you need to look at what the routes are, etcetera,
Speaker 1: etcetera UM. And you know, obviously that was one example
Speaker 1: on how to play the recovery. There are other you know,
Speaker 1: you look across hotels, gamings, that, etra, etcetera, UM, larger
Speaker 1: industrials as well, and so I think there are certainly
Speaker 1: ways to play it up. Mona, I'm not gonna buy it, Mona,
Speaker 1: I'm not gonna buy it. This is the most barbelled
Speaker 1: market we've ever had, with five or seven or ten
Speaker 1: stocks leading the way. If I'm institutional investor here in
Speaker 1: my ELPAE so far behind, I'm not going to get
Speaker 1: paid my bonus. What do I do? Buy more Amazon,
Speaker 1: buy more Apple. You know, it's interesting. I do think
Speaker 1: you make a good point about performance catch up here.
Speaker 1: You know, not many people got in at Marye and
Speaker 1: have written this move higher, and so certainly you're going
Speaker 1: to see a lot of that. I think the implications
Speaker 1: of that are more that now when you do get
Speaker 1: dips um, are they more likely to be bought or
Speaker 1: they more likely to be sold? And I think given
Speaker 1: the momentum behind the health the economy, um, and you know,
Speaker 1: just the reopening broadly, I think we're going to see
Speaker 1: a little bit more buying at this point. And so
Speaker 1: I think that's important to recting eyes as well. You know,
Speaker 1: so any opportunities you get, you know, if you can
Speaker 1: position yourself tactically during those times, it will be important.
Speaker 1: Now that being said, you know, this is a long
Speaker 1: term game here. So um, you know, while we've had
Speaker 1: a great thirty percent move, now do we expect another
Speaker 1: thirty percent you know, in the next six or eight
Speaker 1: week period or even the next quarter or two. Probably not.
Speaker 1: So you're not going to get um, you know, the
Speaker 1: quote unquote easy money once again. And so in that
Speaker 1: scenario you will get some sideways movements, you will get
Speaker 1: pull backs, you will even get those five or ten
Speaker 1: percent corrections along the way, And so those are your
Speaker 1: opportunities to get involved. Mono, what's the best hedge right now? Interesting? Yeah,
Speaker 1: you know, I think we continue to like some of
Speaker 1: those eventsive asset classes as hedges as well. So, um,
Speaker 1: we're still buyers or believers in the gold story, the
Speaker 1: US dollar. I think it's interesting still, you know, given
Speaker 1: the economy is the the U S economy has been
Speaker 1: the flight to safety asset class broadly. Um, treasuries are
Speaker 1: are somewhat interesting as well, just given you know, the
Speaker 1: support we're seeing from the Fed in the stimulus etcetera.
Speaker 1: And so I think you know, people will flock to
Speaker 1: treasures as a hedge as well. Still, so some of
Speaker 1: those as the classes, certainly parts of the high high
Speaker 1: quality investment grade bond market still makes sense to us
Speaker 1: as well. Mon Of fantastic to catch up with you.
Speaker 1: So I'm my best of the team. Well you might
Speaker 1: want to thank you for that of the job was claims.
Speaker 1: Of course, folks have been terrible. Yes, the vector is improving,
Speaker 1: but Nevertheless, it is a labor economy in America that
Speaker 1: is absolutely extraordinary. Lisa John and I said, Okay, we're
Speaker 1: gonna do a simulcast and you could get you know,
Speaker 1: Beyonce and his you know on our first show, or
Speaker 1: you know someone like that, maybe the guy that invented
Speaker 1: bed wars from Microsoft. And we said, wait, this is serious.
Speaker 1: The labor economy is imploding. So let us speak to
Speaker 1: the Secretary of Labor. He is, of course from one
Speaker 1: of the great storied conservative families of America. Eugene Scalia
Speaker 1: joins us. Now, Mr Secretary, thank you so much for
Speaker 1: starting your day with us. I want you to explain
Speaker 1: how the administration and particularly how your Cabinet office will
Speaker 1: react to twenty unemployment. What can you do from a
Speaker 1: regulation and institutional basis to protect the millions of Americans unemployed. Well, Tom,
Speaker 1: it's good to join you. Thanks for having me, and um,
Speaker 1: we have been acting on many different fronts to help
Speaker 1: the actually tens of millions Americans who have been put
Speaker 1: out a work over the last couple of months as
Speaker 1: we've idled our economy. UM, as you know, the Cares
Speaker 1: Act included a very substantial benefit for people out on
Speaker 1: unemployment six dollars a week on top of what is
Speaker 1: paid by the States. We've been working very closely with
Speaker 1: the States UH to to get those payments out and
Speaker 1: UH to help people during this challenging time. We've also
Speaker 1: been administering the paid lead provisions that Congress enacted and
Speaker 1: UH in a program that we don't administer here, but
Speaker 1: I think it's been just invaluable to American workers right
Speaker 1: now has been the Paycheck Protection Program. We estimate about
Speaker 1: fifty million American workers have been kept on payroll through
Speaker 1: that program. That said, Tom, you know we're we're pivoting
Speaker 1: now right we're reopening. I was in Florida and Georgia
Speaker 1: with the Vice President last week and and it was
Speaker 1: encouraging to see. We saw more of that over the
Speaker 1: weekend too. Secretary Scalleier, you've done a fantastic job over
Speaker 1: the last several months of providing a lot of aid
Speaker 1: to everyday Americans and companies as well down in Washington,
Speaker 1: not just the Republican Party, working with Democrats as well.
Speaker 1: I think we've all set down this program many times.
Speaker 1: What we're trying to work out though, is what happens
Speaker 1: after the reopening the help that you offered during the shutdown,
Speaker 1: Will any of that be extended at some point over
Speaker 1: the next several months. What's the current stance. Well, of course,
Speaker 1: the paid leave program UH remains in place. UH. The
Speaker 1: unemployment plus up that I mentioned in six dollars a
Speaker 1: week is in place through the end of July and UM.
Speaker 1: But as we focus on the reopening, the President is
Speaker 1: also looking at things to get the economy UH started
Speaker 1: again more broadly, not simply aid, but returning to that
Speaker 1: incredibly vibrant economy that we had through through early March.
Speaker 1: The President and I believe strongly that UH part of
Speaker 1: what was key to that economy was lightening unnecessary regulatory
Speaker 1: burdens on business. So you had the President last week
Speaker 1: signing this new executive order urging agencies to look further
Speaker 1: at ways that we can renew reduce unnecessary burdens on
Speaker 1: business so we can get businesses reopen. It was by
Speaker 1: having that vibrant business sector that we had that record
Speaker 1: low unemployment through March. So that's something that we consider
Speaker 1: a very important. Yes, we'll also look at what further
Speaker 1: support may be needed, but that this situation has been
Speaker 1: so fluid with the virus UH, and UH, you know,
Speaker 1: I'd like to see how we progress into the month
Speaker 1: of June before making decisions about what particular further measures
Speaker 1: may be needed. Secretary, the market has largely priced in
Speaker 1: an extension of those additional unemployment benefits that you were
Speaker 1: talking about in the John Ray's and I'm just wondering
Speaker 1: what metrics you're looking for that you will see in
Speaker 1: June that will make you decide that they're either needed
Speaker 1: as far as an extension goes, or not. Well. I
Speaker 1: think the six plus up was a very important support
Speaker 1: being given to American workers during a time that state
Speaker 1: and local governments were shutting down businesses and UH and
Speaker 1: telling people not to go to work. I don't see
Speaker 1: UH continuing that program in its precise form going forward
Speaker 1: from July. As we are reopening and now looking to
Speaker 1: get people UH from the sidelines back into the workplace.
Speaker 1: I think I think we'll be looking at different measures, UH,
Speaker 1: at least in terms of the things I'll be looking at.
Speaker 1: Of greatest interest will be simply how quickly we put
Speaker 1: people back to work as we reopen. We know that
Speaker 1: millions of people are starting to return to work now, UH,
Speaker 1: and we'll be getting. I think more insights into that
Speaker 1: in the coming weeks, Mr Secretary. The minimum wage is
Speaker 1: delivering my food to my house, and the elites are
Speaker 1: doing fine. I would say, as a generalization, I drove
Speaker 1: down Columbus Avenue this weekend in Manhattan and it looked
Speaker 1: like one of those movies with Bruce Willison. It was
Speaker 1: so destitute Armageddon, Like, what is your administration gonna do
Speaker 1: to get labor to get its fair share back in
Speaker 1: a spirited, open American economy. What's the strategy to stop
Speaker 1: the fifty year atomization of labor? Well all, I think
Speaker 1: before the virus struck, one of the really remarkable things
Speaker 1: about President Trump's economy was how well people lower end
Speaker 1: of the pay scale we're doing. You uh, saw the
Speaker 1: wages rising generally, but wages were rising more quickly for
Speaker 1: people in the lowest ten percent of the income scale,
Speaker 1: for people who didn't have a high school degree. We
Speaker 1: had a record low unemployment for seminarity groups who historically
Speaker 1: had been disadvantaged in the marketplace. So, you know, in
Speaker 1: all seriousness, when I look at what will be most
Speaker 1: important going forward, the single most important thing we can
Speaker 1: do for American workers, particularly those at the lower end
Speaker 1: of the pay scale is returned to the kind of
Speaker 1: vibrant economy that we had uh just just two months ago,
Speaker 1: and that was an economy driven in substantial part by
Speaker 1: a reasonable tax burden and by reducing unnecessary regulatory burden.
Speaker 1: So those will remain areas of focus, even as we
Speaker 1: also assess whether we are going to need to continue
Speaker 1: some forms of additional support, for example, for small businesses
Speaker 1: and for some workers. I think a lot of people
Speaker 1: have still going to need a lot of help, Mr Secretary,
Speaker 1: I look forward to going to be back soon so
Speaker 1: we can talk about doing just that. Because there's some
Speaker 1: real agency even as we reopened this economy, Secretary Scalia,
Speaker 1: that of the United States, the Labor Secretary. So we
Speaker 1: spoke to the Secretary of Labor, Mr Scalia. We thought
Speaker 1: we would speak to a gentleman who had the FED
Speaker 1: more than anyone in the last twenty years, his stead
Speaker 1: steadfastly on regulation and the operation of business. That is
Speaker 1: Mr Trulo now at Harvard Law, and of course the
Speaker 1: former governor of the Fellow Reserve System. Wonderful to have
Speaker 1: you with us, Professor at today. I was talking to
Speaker 1: the Secretary of Labor about the atomization of the labor economy.
Speaker 1: Now we're gonna atomize it estimated twenty three or unemployment rate.
Speaker 1: What will be the societal reaction. Well, I don't know
Speaker 1: what the public reaction will be, but I think as
Speaker 1: a macroeconomic matter, and and certainly just as a human matter,
Speaker 1: taking measures now to ensure that there is income support
Speaker 1: for the millions and millions of people who are going
Speaker 1: to remain unemployed for quite some time to come ought
Speaker 1: to be the country's highest priority right now. And I'm
Speaker 1: a bit concerned that people are are more than a
Speaker 1: bit concerned that so many people are taking what they
Speaker 1: see is a wait and see attitude. I mean, looks,
Speaker 1: as you just said, unemployment is likely to be reported
Speaker 1: in the vicinity of Remember eleven years ago, during the
Speaker 1: Great Financial Crisis, we were scrambling to try to do
Speaker 1: something a lot about ten percent unemployment. So even if
Speaker 1: you postulate a having of what the current rate probably is,
Speaker 1: would still be in a very serious position relative to
Speaker 1: the postwar econmy so, I think any in this notion
Speaker 1: of delaying and seeing whether we need to do more
Speaker 1: is really quite a bad mistake. Well, Dan, you touched
Speaker 1: on the other floor as well. It's not just about
Speaker 1: the timing, it's the composition of the next response. You're
Speaker 1: talking about a demand side effort the administration increasingly whenever
Speaker 1: I listened to them, whenever I get the chance to
Speaker 1: speak to them, a talking about a supply side response
Speaker 1: to how this economy reopen and get people back to work.
Speaker 1: What are the limitations of that down? Well, I think
Speaker 1: you don't think, Jonathan. We all recognize that this problem
Speaker 1: has been driven by epidemiology. It hasn't been driven by
Speaker 1: they're fed stepping on the branch too hard. It hasn't
Speaker 1: been driven by excessive credit, although that's probably exacerbated things.
Speaker 1: It's been driven by the epidemiology. And so getting people
Speaker 1: back to work is dependent upon the medical developments, not
Speaker 1: strictly speaking economic development. We can provide income support, but
Speaker 1: we cannot just through economic measures, make it safe for
Speaker 1: people to go out. We can't make people comfortable about
Speaker 1: going out. And I think what that means is we've
Speaker 1: got an enormous amount of uncertainty that's probably going to
Speaker 1: be with us for some time. I mean, you folks
Speaker 1: on Bloomberg have been reporting on the enormous volatility and
Speaker 1: markets over the last couple of months. We get good
Speaker 1: news on on the medical front, and everything goes up.
Speaker 1: You get some bad news, everything goes down. I think
Speaker 1: that just reflects the fact that we just don't know,
Speaker 1: and we ought to care for the possibility that things
Speaker 1: are going to be quite difficult quite some time. Dan.
Speaker 1: And to this point, this this sort of volatility that
Speaker 1: we saw in markets has basically gone away to a
Speaker 1: certain degree, in part due to what the Federal Reserve
Speaker 1: has done in terms of monetizing the debt of the
Speaker 1: United States. What's the risk for financial stability going forward,
Speaker 1: given how much debt the US is incurring, given how
Speaker 1: much the feed is interfering and pushing investors further into risk. Well,
Speaker 1: I think, you know, we we do need to acknowledge
Speaker 1: that there are going to be some risks in when
Speaker 1: everyone takes the range of fiscal and monetary measures that
Speaker 1: have been taken. But I think we need to quickly
Speaker 1: qualify that observation by saying it is absolutely necessary to
Speaker 1: do whatever we can to stop what is a very
Speaker 1: serious situation from being a chronic, highly depressed situation. In
Speaker 1: other words, we're going to have to take some risks
Speaker 1: with respect to debt levels of respect to financial stability
Speaker 1: in order to stop this thing from getting worse and
Speaker 1: staying at a at a low level. Having said that,
Speaker 1: you know, I think again we do need to recognize that, uh,
Speaker 1: there were some vulnerabilities. There were some vulnerabilities in the
Speaker 1: commercial paper market. There were some vulnerabilities in the repo market. Uh.
Speaker 1: And to return to the theme that that Jonathan was
Speaker 1: asking me about a moment ago. You know, if we're
Speaker 1: in a situation in which the FED will provide assistance
Speaker 1: to large asset managers because they have exchange traded funds
Speaker 1: with relatively illiquid assets, why why are we hesitating to
Speaker 1: provide assistance to middle and lower middle income people who
Speaker 1: are probably going to be out of many of whom
Speaker 1: are going to be out of work for a long
Speaker 1: time to come. So, yes, there are there are risks,
Speaker 1: but I don't think we need to we should be
Speaker 1: paralyzed by the risks. We've got to act to try
Speaker 1: to people floor under income of floor under the economy,
Speaker 1: and then as the medical developments permit, to start taking
Speaker 1: measures actively to build it up again. Right, Governor, have
Speaker 1: got one final question. I remember the day you joined
Speaker 1: the FED and the entire market community stood up and said,
Speaker 1: who is this guy? Why is he on the FED?
Speaker 1: They said the same thing about Chairman Powell. How's the
Speaker 1: chairman doing well? Look j J the Jed Powell has
Speaker 1: confronted a challenge that only Ben Bernankie really has confronted.
Speaker 1: The two very different kinds of challenges. Uh Ben's challenge
Speaker 1: was originating in financial markets, and everything was imploding because
Speaker 1: of the vulnerabilities in markets and in vans. Jara Powell
Speaker 1: is facing a situation in which an anxiety, an external
Speaker 1: shock has created an unprecedented situation, and you know he
Speaker 1: moved very quickly, I think to push the FED to
Speaker 1: get in place a set of emergency programs. I think
Speaker 1: he's made it clear that the Fed will do what
Speaker 1: they believe needs to be done. But I'm sure he'd
Speaker 1: be the first to say it's got a lot of
Speaker 1: work ahead of us. Down. I don't want to cause
Speaker 1: any trouble between you and your friend Jay, but I
Speaker 1: didn't want to when he first took the job at
Speaker 1: the top of the Federal Reserve, and there was a
Speaker 1: side of him where he wanted to play almost the
Speaker 1: hard guy with financial markets, the guy that was going
Speaker 1: to run the FED and not respond to where the
Speaker 1: SPX was, the SMP five was on any given day.
Speaker 1: Is there a part of you down that just feels,
Speaker 1: now that the Federal Reserve is completely capitulated, that the
Speaker 1: one mandate seems to be financial conditions. That is the
Speaker 1: exclusive channel which monety policy flows through, and therefore that
Speaker 1: is the only thing that matters right now. I don't
Speaker 1: think it. I don't think it's the only thing that matters. Um. Look,
Speaker 1: I think over a longish period of time there has
Speaker 1: been more focused on markets by all people at the FED,
Speaker 1: and perhaps some oversensitivity to markets. Having said that, though,
Speaker 1: to the degree that what happens in markets then has
Speaker 1: an impact on the real economy, it would be unwise
Speaker 1: to ignore what is going on in markets. Um. And
Speaker 1: I think what you've seen actually in the last week
Speaker 1: or so is just a little bit of pushback by
Speaker 1: the FED against that. I mean, both Vice Chair Clarida
Speaker 1: and President Williams the New York Fed, we're out last
Speaker 1: week making pretty clear that despite the requests or demands
Speaker 1: of markets for some more explicit forward guidance right now,
Speaker 1: that the FED was going to hold back and think
Speaker 1: a while longer about what it's going to say about
Speaker 1: monetary policy going for I don't know Jonathan that that
Speaker 1: that's directly and responsively concerned that that you articulated, but
Speaker 1: it's at least consistent with trying to push back Dan.
Speaker 1: How concerned are you about the Federal Reserve providing a
Speaker 1: backstop to companies that otherwise would be going bankrupt? In
Speaker 1: other words, they're offering a liquidity solution, but increasingly the
Speaker 1: problem is becoming a solvency one, and the Fed increasingly
Speaker 1: is being expected or priced in, at least by the market,
Speaker 1: as being willing to step in. Do you think that
Speaker 1: that's realistic and do you think that they should? Well,
Speaker 1: two things on any any economic um agency part of
Speaker 1: the government that is trying to respond in an emergency
Speaker 1: situation is based with the problem that on the one hand,
Speaker 1: there's an imperative to get money out the door quickly,
Speaker 1: and on the other hand, they know they'll be second
Speaker 1: guests in retrospect if any of that money has landed
Speaker 1: in a place whereupon consideration, you wouldn't have wanted it
Speaker 1: to land. So I think that, uh, you've got to
Speaker 1: expect a certain amount of under shooting and over shooting.
Speaker 1: With any program like this, you try to shape the
Speaker 1: program quickly as best you can to direct it where
Speaker 1: you want to direct it. But you have to have
Speaker 1: to understand that you're not going to have accuracy when
Speaker 1: you're trying to do things on the plot um. That's
Speaker 1: that's number one. Number two that I think after after
Speaker 1: the um economy has improved, I think everybody needs to
Speaker 1: step back and once again ask the question, what is
Speaker 1: the nature of the financial system, What have we done
Speaker 1: well and what have we not done well. I think
Speaker 1: the performance of the banks over the last couple of
Speaker 1: months has suggested that the Dodd Frank Act and the
Speaker 1: reforms that were made thereafter did indeed strengthen the facts.
Speaker 1: The banks have been a source of strength, not a
Speaker 1: vulnerability this time around, and I hope they remain that way,
Speaker 1: and that's a good thing. It's in shadow banking, it's
Speaker 1: in other parts of financial markets, asset managers, hedge funds,
Speaker 1: the repo market. That's where we've seen from vulnerabilities, and
Speaker 1: that's where the FED action uh in an effort to
Speaker 1: stabilize the economy needs to be looked at after the fact.
Speaker 1: Not to criticize the FED for maybe acting to put
Speaker 1: a floor under financial markets, to ask the question, just
Speaker 1: as we did with the banks and two thousand and
Speaker 1: nine and ten, what do we need to do now
Speaker 1: in other markets to make sure that financial instability doesn't
Speaker 1: grow outside the regulative Always thoughtful, Always appreciate your time.
Speaker 1: I've gotta get you back on soon, form a fed governor.
Speaker 1: That dance and real life, Well, you know, John, we
Speaker 1: like to do it here on television on radio, and
Speaker 1: that is cross asset data checks. But for so much
Speaker 1: of America, for so much of the world, it's still
Speaker 1: about the stock market. It can be that port Portico
Speaker 1: whatever it is, a platform at the New York Stock Exchange,
Speaker 1: or it can be the seven story video extravaganza of
Speaker 1: the NASDACK. Going I p O and going public is
Speaker 1: a good and beautiful thing. Nelson Griggs joins us. He
Speaker 1: is the president of the NASDACK. Now, so let me
Speaker 1: ask the money question right now for New York Wall Street,
Speaker 1: How will those pandemic change your NASDACK. Well, it's just
Speaker 1: quite a bit. We went from having four percent of
Speaker 1: our population working from home to in a matter of
Speaker 1: a week, and that was pretty remarkable. And I think
Speaker 1: we have seen the markets work very efficiently and effectively.
Speaker 1: There's certainly been an impact on I think you're leading
Speaker 1: there to the I p O market, So happy to
Speaker 1: discuss that. But we've been work working pretty well well. Now,
Speaker 1: So let's talk about physical trading flaws. Just touch on
Speaker 1: that topic and we can move on pretty quickly. But
Speaker 1: you think the pandemic has on the line that we
Speaker 1: don't need them anymore. Yeah. I think if you look
Speaker 1: at the equities that have a pretty simple price action
Speaker 1: up or down, we have a long believe that the
Speaker 1: best outcome for investors is to do that in electronic format.
Speaker 1: I think these last two months, the data that we
Speaker 1: see now how stocks open, the efficiently, training throughout the
Speaker 1: day and in particularly the close, we've seen better performance
Speaker 1: in the electronic market. So I think we we are
Speaker 1: of a strong belief and investors investor with an open,
Speaker 1: transparent and elect on a marketplace. But that's that's our opinion.
Speaker 1: People like to come down to the try it in
Speaker 1: floor for the big I po is, the big song,
Speaker 1: good dance, the Dalcom party show. You've seen a minion
Speaker 1: times now soon I PO is in the pipeline. Can
Speaker 1: you just give us some insight to what you're seeing
Speaker 1: just in terms of activity. Can we expect and I
Speaker 1: think anytime soon? Yeah, a great great questions. So we
Speaker 1: have performed at NASDAC fiften I p o s since
Speaker 1: the middle of March, and a lot of that has
Speaker 1: been in the healthcare space. I think the biggest challenge
Speaker 1: for an I p O is can they go out
Speaker 1: on dual road show and talk constantly about the upcoming quarters. Um,
Speaker 1: that's not as important for a healthcare or biotic I
Speaker 1: p O. So we have seen those go out and
Speaker 1: do very well. We are starting to see other companies
Speaker 1: though you saw this morning water music file up for
Speaker 1: a very large I p O. They're going on the
Speaker 1: road today and you will see more of this week
Speaker 1: actually file to start. So we are seeing some non healthcare,
Speaker 1: non what we call spack I p o s start
Speaker 1: to launch the road shows. Many of them were very
Speaker 1: close to going in the March time frame and then
Speaker 1: put their plans on holds. So these are deals that
Speaker 1: were in the works for a period of time. I
Speaker 1: will say that we are starting to see new deals
Speaker 1: pop up, and I think what we have here is
Speaker 1: we have a November election, but up from now until November.
Speaker 1: If the markets do hold, which you know again today
Speaker 1: we're seeing some pretty impressive performance, there's a chance we'll
Speaker 1: have a healthy I P O market. That's multisector Nelson.
Speaker 1: Who are the investors here, especially as we talk about
Speaker 1: an increase in retail investors coming into stocks right now? Yeah,
Speaker 1: you you are seeing to be more broad based. I
Speaker 1: think the initial rally we did not see a lot
Speaker 1: of long investors come into the marketplace. But I think
Speaker 1: as you have watched the indusseries continue to go up,
Speaker 1: you know, we're the nagic when Hunter is up almost
Speaker 1: eight percent for the year, we haven't Askeda positive almost
Speaker 1: three percent, the bots up. So we are starting to
Speaker 1: see some long investors coming into the marketplace as we're
Speaker 1: seeing the ability to get a bit more predictability in
Speaker 1: terms of what they're hearing companies say. So once we
Speaker 1: went through a obviously a pretty challenging earnings quarter where
Speaker 1: a lot of companies and Polk guidance, we are now
Speaker 1: seeing them able to go out and have a bit
Speaker 1: more pretability and what they think may happen over the
Speaker 1: coming quarters in a year. Also, Greggs one more question,
Speaker 1: if we could as well one day you're gonna get
Speaker 1: back to work. The pandemic is gonna be over, and
Speaker 1: we're gonna reinstitute I p o s. How are you
Speaker 1: going to compete with the New York Stock Exchange. What's
Speaker 1: the key distinction you have in two thousand twenty one. Yeah,
Speaker 1: our our key distinction we we obviously do very well.
Speaker 1: Last year were one seventy eight percent of I p
Speaker 1: o s. We're on that same track record this year. Um.
Speaker 1: I think our big story is life cycle support, so
Speaker 1: we do a lot to help companies the right investors
Speaker 1: uh position their story. There's obviously, as you mentioned, a
Speaker 1: lot of different media and support around that. So we've
Speaker 1: been on quite a quite a run the last handful
Speaker 1: of years, and that sev win rate and it is
Speaker 1: a very holistic splorer. We have a residents, very wealth
Speaker 1: companies now, So before we round things out quite clearly,
Speaker 1: looking at the retoric coming out of Washington and the
Speaker 1: policy too, there's got to be far more scrutiny of
Speaker 1: foreign companies listing on US exchanges. What is the role
Speaker 1: of foreign governments in those companies? Are we going to
Speaker 1: have the same auditing standards the US companies have to
Speaker 1: abide by all things that just make a whole lot
Speaker 1: of sense. What's the stance of the NASTAC on that
Speaker 1: situation at the moment. Yeah, I think you hit on
Speaker 1: the one in the middle there the auditing standards, um
Speaker 1: and and we obviously would like the US to continuity
Speaker 1: the the global focal point for growth companies to come
Speaker 1: and list. That said, there does need to be transparency
Speaker 1: in terms of reportings. So we we're happy the SEC
Speaker 1: has gotten together a group around table for a discussion
Speaker 1: of all the ecosystem on July nine. I think that
Speaker 1: was a very prudent move as we are seeing a
Speaker 1: lot more he said rhetor coming out of Washington. We
Speaker 1: need to be prepared as the ecosystem meeting the exchanges,
Speaker 1: the banks, the auditors as well as the SEC to
Speaker 1: make sure there's enough invest protection to invest in all
Speaker 1: companies that come to the US. So we're supportive of
Speaker 1: the path we're all taking. And now, so do you
Speaker 1: look into tighten your own rules before the government does
Speaker 1: it for you. We consistent look at our rules and
Speaker 1: we we have tightened the rules to some degree. We
Speaker 1: did last week. Um, it is a it's a journey.
Speaker 1: You need to work again within the ecosystem. So those
Speaker 1: were done in in concert with some feedback from other participants,
Speaker 1: but we're prepared to do when we have discussions with
Speaker 1: again that the broad based ecosystem is real important here
Speaker 1: because not just the exchanges. It's not just the bankers
Speaker 1: or the accountants, Detroy, everybody coming together and saying what
Speaker 1: makes the most sense. But we we certainly will do
Speaker 1: our our role as a producery, you know, exchange. We
Speaker 1: have a place I think that are appropriate now, so
Speaker 1: cover station. We've got to continue look forward, towny back
Speaker 1: soon Nowson Griggs, that of an Astact, the president of
Speaker 1: an Astack. The pandemic is changing. There's no question. This weekend,
Speaker 1: the three day weekend, we saw the color of the
Speaker 1: nation change, the tone of the nation change, and all
Speaker 1: the ebb and flow of his tragedy from that exceptional
Speaker 1: New York Times cover of a thousand names who have
Speaker 1: died in this pandemic to the celebrations that were beginning
Speaker 1: to see as America re engages, we need to get
Speaker 1: an update on the pandemic, and we do that at
Speaker 1: the Johns Hopkins House Hospital, Department of Medicine and their
Speaker 1: niece Earnest. Here's Miss Earnest. We have never seen anything
Speaker 1: like COVID nineteen and so there are hospitals have never
Speaker 1: seen an impact like this. Frontline nurses are in a
Speaker 1: fairly solid position. It's the nursing piece of around the
Speaker 1: front line that is subject to review. And that's as
Speaker 1: in any financial market situation. This is similar to what
Speaker 1: the I was in the hotel business. We saw this
Speaker 1: in two thousand and one with nine eleven, where the
Speaker 1: volume dropped completely and different decisions had to be made.
Speaker 1: But I do think that nursing is a in an
Speaker 1: excellent position to rebound in any way because we have
Speaker 1: a lot of professional agility. Do nurses across the country
Speaker 1: feel like they've been taking care of both from you know,
Speaker 1: physical but also mental point of view? I can speak
Speaker 1: for Johns Hopkins and I know that we are reaching
Speaker 1: out to all of our employees and encouraging them to
Speaker 1: take advantage of the many support systems that we here
Speaker 1: have here at Johns Hopkins, and I do know that
Speaker 1: other institutions are doing that as well. And I think
Speaker 1: this is one of the first times that I've seen
Speaker 1: this big push to say to people we don't know
Speaker 1: how we're supposed to feel. So we need to develop
Speaker 1: some different resiliency and emotional agility skills. I know we
Speaker 1: talked about blended rolls, so nurses actually having slightly different
Speaker 1: roles or going and moving from one department to the next.
Speaker 1: How do you think COVID nineteen will actually change the
Speaker 1: nursing world forever. I think the blended model is going
Speaker 1: to be here for quite a while. I know that
Speaker 1: we at Johns Hopkins are looking at that very seriously.
Speaker 1: That we're training a nurse who used to work on
Speaker 1: a general board two elevate her skills to an i
Speaker 1: MC level intermediate care, and the same with an intermediate
Speaker 1: care nurse to develop those skills that are needed at
Speaker 1: the i c U. I will tell you this with
Speaker 1: COVID with a big wake up call about how limited
Speaker 1: we are in the valuable I c U nursing resource.
Speaker 1: What do we still not understand about the virus? I'm varying.
Speaker 1: I'm reading various reports that, for example, of those who
Speaker 1: have recovered from coronavirus could have long lasting effects on
Speaker 1: their lungs. How much do we know about the secondary
Speaker 1: effects of this of this disease. Well, we're learning a
Speaker 1: little more every day, but you're absolutely right, Francine. The
Speaker 1: impact on the long the impact on the long long
Speaker 1: term physical condition for patients is really our next step.
Speaker 1: One of our impatient medicine units has converted into a
Speaker 1: mini rehab facility where we can start that rehabilitation for
Speaker 1: patients before they're even discharged from the hospital, because we've
Speaker 1: recognized that this is a long, long recovery process for
Speaker 1: some patients. Sir Johns Hopkins, you know we're sitting there
Speaker 1: with an update is well. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.