1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,400 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Let's 5 00:00:27,440 --> 00:00:30,160 Speaker 1: focus on the economic it's a huge effort coming from 6 00:00:30,200 --> 00:00:33,400 Speaker 1: the monetary policy side and the fiscal side as well. 7 00:00:33,520 --> 00:00:36,040 Speaker 1: Phone again, I'm pleased to say, is Katherine Man, City 8 00:00:36,040 --> 00:00:40,360 Speaker 1: Global Chief Economist. Katherine. This is about speed. Now, how 9 00:00:40,440 --> 00:00:42,680 Speaker 1: quickly can this bill get to the President's desk and 10 00:00:42,720 --> 00:00:45,760 Speaker 1: how quickly can that bill turn into real capital that 11 00:00:45,800 --> 00:00:48,400 Speaker 1: gets injected into this economy. Are you hopeful we can 12 00:00:48,440 --> 00:00:51,479 Speaker 1: do a lot of that quickly. Well, I think we 13 00:00:51,520 --> 00:00:53,800 Speaker 1: can get the bills to the desk and so forth, 14 00:00:53,800 --> 00:00:56,000 Speaker 1: and it can get sign But it is really about 15 00:00:56,080 --> 00:00:59,280 Speaker 1: getting the financing out to the part of the economy 16 00:00:59,320 --> 00:01:02,240 Speaker 1: that is desperate in need of it. Um. You know, 17 00:01:02,280 --> 00:01:05,959 Speaker 1: there's fifty of the economy that does not UM doesn't 18 00:01:05,959 --> 00:01:09,520 Speaker 1: borrow through bonds or through equities, and of the economy 19 00:01:09,760 --> 00:01:12,840 Speaker 1: both the businesses and the workers. Those are the parts 20 00:01:12,880 --> 00:01:15,440 Speaker 1: that I really worry about because it's much more difficult 21 00:01:15,440 --> 00:01:17,880 Speaker 1: to get money to them. And if and if they 22 00:01:17,920 --> 00:01:22,160 Speaker 1: are if businesses go bankrupt, if the workers become unemployed, 23 00:01:22,319 --> 00:01:24,399 Speaker 1: then it's going to be very difficult to get to 24 00:01:24,480 --> 00:01:27,600 Speaker 1: a rebound that a lot of people are forecasting to 25 00:01:27,680 --> 00:01:30,120 Speaker 1: the economy in the second half. You cannot get to 26 00:01:30,200 --> 00:01:33,319 Speaker 1: a strong rebound. Uh, that's gonna pull the economy out 27 00:01:33,319 --> 00:01:36,400 Speaker 1: of procession unless you can keep those the lights on. 28 00:01:36,640 --> 00:01:40,520 Speaker 1: At the of the economy book, the businesses and the workers, 29 00:01:40,800 --> 00:01:43,880 Speaker 1: neither one of them have cash buffers. NATH is really 30 00:01:44,120 --> 00:01:46,000 Speaker 1: really difficult. Le's get a read on the second half 31 00:01:46,080 --> 00:01:47,560 Speaker 1: of this year. And I totally agree with you, and 32 00:01:47,560 --> 00:01:49,680 Speaker 1: I'm sure many people listening to this program due to 33 00:01:50,080 --> 00:01:51,840 Speaker 1: So let's try and assess the damage we're doing to 34 00:01:51,880 --> 00:01:54,400 Speaker 1: the globe economy, the U S economy. Right now, we 35 00:01:54,480 --> 00:01:58,360 Speaker 1: had a really ugly jobless claim sprint yesterday. Are you 36 00:01:58,400 --> 00:01:59,880 Speaker 1: saying it could get a whole lot worse from hire 37 00:01:59,920 --> 00:02:03,040 Speaker 1: but for it gets better? Thus, the general view is 38 00:02:03,080 --> 00:02:04,840 Speaker 1: that it will get worse before it gets better. And 39 00:02:04,920 --> 00:02:06,800 Speaker 1: the point is that we would that we would like 40 00:02:06,920 --> 00:02:09,440 Speaker 1: to not have it get as bad as it could. 41 00:02:09,480 --> 00:02:12,239 Speaker 1: I mean, in some sense, Uh, they're the numbers could 42 00:02:12,240 --> 00:02:14,600 Speaker 1: be much much higher because the services component of the 43 00:02:14,639 --> 00:02:19,000 Speaker 1: economy much more labor intensive, much more smaller business intensive. 44 00:02:19,240 --> 00:02:22,360 Speaker 1: And so you know, saving the big corporate obviously that 45 00:02:22,520 --> 00:02:25,360 Speaker 1: that's relevant for the stock market. That's that is a 46 00:02:25,400 --> 00:02:27,760 Speaker 1: component of the of the fiscal plan. It's a very 47 00:02:27,800 --> 00:02:30,880 Speaker 1: big component of the federal reserve program as well. But 48 00:02:30,919 --> 00:02:33,359 Speaker 1: you know the rest of the economy, the half of 49 00:02:33,400 --> 00:02:36,640 Speaker 1: the economy that is not in that category, the businesses 50 00:02:36,639 --> 00:02:38,680 Speaker 1: and the workers, those are the essential ones that we 51 00:02:38,760 --> 00:02:42,959 Speaker 1: have to have maintained in business ready to go when 52 00:02:42,960 --> 00:02:48,560 Speaker 1: the when the virus finally dissipates. Catherine dr Fauci talks 53 00:02:48,600 --> 00:02:52,799 Speaker 1: about the aspirations of the president to get back to work. 54 00:02:52,880 --> 00:02:56,280 Speaker 1: I'm not going to ask a game Easter April twelve, 55 00:02:56,840 --> 00:03:00,480 Speaker 1: but when do you suggest America as any sense of 56 00:03:00,600 --> 00:03:05,040 Speaker 1: normal g d P. Let's just say a zero percent value. 57 00:03:05,080 --> 00:03:07,680 Speaker 1: I mean, is it a two thousand twenty event or 58 00:03:07,680 --> 00:03:09,240 Speaker 1: do you have to be grimmer than that and go 59 00:03:09,320 --> 00:03:14,680 Speaker 1: out further? So the the our our U S economist 60 00:03:14,720 --> 00:03:18,680 Speaker 1: does have the year over year at growth rate in 61 00:03:19,520 --> 00:03:24,160 Speaker 1: at negative point five U. But the trajectory moves UH 62 00:03:24,320 --> 00:03:28,440 Speaker 1: the U S economy back into positive territory um by 63 00:03:28,440 --> 00:03:31,560 Speaker 1: the end of the year. So so if if in fact, 64 00:03:31,600 --> 00:03:34,720 Speaker 1: we can keep going uh keep the lights on at 65 00:03:35,480 --> 00:03:39,640 Speaker 1: the economy and keep those people uh the workers balance 66 00:03:39,720 --> 00:03:43,040 Speaker 1: sheets uh sane and that, then that's what the OA 67 00:03:43,760 --> 00:03:46,760 Speaker 1: some of these programs are is to keep the households 68 00:03:46,760 --> 00:03:49,520 Speaker 1: from going into the deep, deep pole that they went 69 00:03:49,560 --> 00:03:51,800 Speaker 1: in the global financial crisis. But you're going to tell 70 00:03:51,840 --> 00:03:54,920 Speaker 1: me the consumer. I don't know what the income shares 71 00:03:55,000 --> 00:03:58,040 Speaker 1: in the United States, but it's a huge number. To 72 00:03:58,160 --> 00:04:00,520 Speaker 1: John's point, is this just a starting point? I mean, 73 00:04:00,720 --> 00:04:05,480 Speaker 1: are we talking about twelve and fourteen trillion dollars of 74 00:04:05,560 --> 00:04:09,040 Speaker 1: stimulus to get us out to the city group trajectory 75 00:04:09,160 --> 00:04:13,000 Speaker 1: months and months away. I don't you know. It's it's 76 00:04:13,040 --> 00:04:15,800 Speaker 1: it's about to make to my view, it's it's the 77 00:04:15,840 --> 00:04:19,039 Speaker 1: money matters, of course, but it's also the speed. The 78 00:04:19,080 --> 00:04:21,680 Speaker 1: point is is if if if we can't keep the 79 00:04:21,960 --> 00:04:25,880 Speaker 1: businesses in business and the worker balance sheets uh sane 80 00:04:26,360 --> 00:04:30,479 Speaker 1: uh stable, then the recession gives is deeper, and once 81 00:04:30,520 --> 00:04:34,000 Speaker 1: the recession gets deeper, it's much more expensive and hard 82 00:04:34,040 --> 00:04:36,039 Speaker 1: to get out. So the reason we need to go 83 00:04:36,120 --> 00:04:38,760 Speaker 1: move fast to get the money out to the to 84 00:04:38,880 --> 00:04:42,280 Speaker 1: the businesses and the workers is because if they if 85 00:04:42,320 --> 00:04:45,960 Speaker 1: they go bankrupt, if the workers go on un employment conversation, UH, 86 00:04:46,000 --> 00:04:48,680 Speaker 1: if their balance sheets get messed up because you know 87 00:04:48,720 --> 00:04:50,400 Speaker 1: they don't they don't have enough money to to pay 88 00:04:50,400 --> 00:04:53,280 Speaker 1: the rent, to feed the family, then then the recession 89 00:04:53,360 --> 00:04:55,640 Speaker 1: is deeper. And once you're into the hole, then it's 90 00:04:55,760 --> 00:04:58,400 Speaker 1: much more expensive to get out. And you know, your 91 00:04:58,440 --> 00:05:00,760 Speaker 1: death sustainability, there are people out there who worry about 92 00:05:00,800 --> 00:05:03,599 Speaker 1: such things. Uh, your death sustainability is also at risk. 93 00:05:03,680 --> 00:05:05,719 Speaker 1: So do it now, do it fast, do it big, 94 00:05:06,000 --> 00:05:08,440 Speaker 1: do it fast and big well, do it fast is 95 00:05:08,480 --> 00:05:10,800 Speaker 1: sort of anathema to Congress. And we're seeing that we're 96 00:05:10,800 --> 00:05:13,039 Speaker 1: seeing the move at lightning speed, and yet they still 97 00:05:13,040 --> 00:05:14,800 Speaker 1: haven't gotten it passed. And once they get it past, 98 00:05:14,839 --> 00:05:16,520 Speaker 1: it's unclear when they can get the checks in the 99 00:05:16,520 --> 00:05:18,560 Speaker 1: mail and when they can actually get the SBA up 100 00:05:18,560 --> 00:05:20,720 Speaker 1: and running and giving those loans. Is a fact going 101 00:05:20,720 --> 00:05:24,000 Speaker 1: to be doing the heavy lifting here. So I think 102 00:05:24,200 --> 00:05:26,520 Speaker 1: one thing is it said that there's uh, there's uh. 103 00:05:27,240 --> 00:05:30,600 Speaker 1: Part of the discussion is on UM getting the financial 104 00:05:30,600 --> 00:05:34,960 Speaker 1: institutions directly into connection with firms and and and UH 105 00:05:35,000 --> 00:05:38,279 Speaker 1: bypassing the s p A UH the SBA has got 106 00:05:38,279 --> 00:05:42,240 Speaker 1: a different timetable usually for what they do. And so 107 00:05:42,360 --> 00:05:45,520 Speaker 1: the objective is to to have the financial institutions go directly, 108 00:05:46,000 --> 00:05:49,039 Speaker 1: have firms come directly to the financial institutions, uh, and 109 00:05:49,120 --> 00:05:51,760 Speaker 1: not have to go through the SBA process because the 110 00:05:51,800 --> 00:05:54,040 Speaker 1: feed is of the essence. As I say, most of 111 00:05:54,080 --> 00:05:56,560 Speaker 1: those businesses they have a cash flow buffer of maybe 112 00:05:56,560 --> 00:05:58,680 Speaker 1: a month, maybe less than a month. We're already two 113 00:05:58,760 --> 00:06:01,680 Speaker 1: or three weeks into this, so uh, you know when 114 00:06:01,680 --> 00:06:04,159 Speaker 1: they say I have to let you go, I have 115 00:06:04,200 --> 00:06:06,320 Speaker 1: to close my business. But by the way, I've been 116 00:06:06,360 --> 00:06:08,599 Speaker 1: told to close my business, and and you know you 117 00:06:08,680 --> 00:06:10,680 Speaker 1: have you have a payroll, You can't you don't have 118 00:06:10,680 --> 00:06:13,880 Speaker 1: any cash buffer. So we have to yeah, keep those 119 00:06:14,080 --> 00:06:16,480 Speaker 1: companies going. Well. I guess the reason why I say, 120 00:06:16,560 --> 00:06:19,279 Speaker 1: is the FED taking the focus here because they're supporting 121 00:06:19,279 --> 00:06:22,320 Speaker 1: the financial markets because that is the transmission of credit 122 00:06:22,560 --> 00:06:24,680 Speaker 1: that's much more efficient than trying to go through some 123 00:06:24,720 --> 00:06:27,599 Speaker 1: of the governmental agencies that from from a number of 124 00:06:27,600 --> 00:06:31,200 Speaker 1: reports have been understaffed. Even I'm just wondering what that 125 00:06:31,240 --> 00:06:33,640 Speaker 1: means for the Fed's power going forward. I mean, they 126 00:06:33,640 --> 00:06:37,400 Speaker 1: already have taken some unprecedented measures, how much more are 127 00:06:37,480 --> 00:06:39,599 Speaker 1: they going to do in taking the front role here, 128 00:06:40,880 --> 00:06:43,800 Speaker 1: So you're right there. The you know, the financial system 129 00:06:43,839 --> 00:06:46,160 Speaker 1: is the mechanism through which you get credit, but the 130 00:06:46,480 --> 00:06:49,560 Speaker 1: Federal Reserve is also taking on this role of Um. 131 00:06:49,600 --> 00:06:51,719 Speaker 1: You know, it's a policy put on every part of 132 00:06:51,760 --> 00:06:55,000 Speaker 1: your portfolio. You know, you got some funds, you know, 133 00:06:55,080 --> 00:06:57,880 Speaker 1: you've got treasuries. Uh, you know, and you get the 134 00:06:57,880 --> 00:07:00,200 Speaker 1: only very little bit that the Fed is it is 135 00:07:00,400 --> 00:07:02,360 Speaker 1: going to go out there and buy. So you know, 136 00:07:02,440 --> 00:07:03,960 Speaker 1: as I say, it used to be a policy put 137 00:07:03,960 --> 00:07:06,719 Speaker 1: on the treasuries. Now it's the entire entire portfolio. So 138 00:07:06,760 --> 00:07:09,280 Speaker 1: there's some I think going, You've got to do that 139 00:07:09,320 --> 00:07:13,560 Speaker 1: now I know that. But if I think that, uh, 140 00:07:13,920 --> 00:07:16,760 Speaker 1: it reduces the power of the Fed going in the 141 00:07:16,880 --> 00:07:20,960 Speaker 1: longer term because it ties its hands, because you end 142 00:07:21,000 --> 00:07:22,920 Speaker 1: up with a problem of how do you do monetary 143 00:07:22,960 --> 00:07:28,240 Speaker 1: policy normalization when you've got everything on your balance sheet? Um, 144 00:07:28,280 --> 00:07:31,520 Speaker 1: it makes it very difficult to to to be the 145 00:07:31,640 --> 00:07:36,040 Speaker 1: arbiter of monetary policy normalization. We're thinking about this way 146 00:07:36,040 --> 00:07:38,600 Speaker 1: out in the future. It's not something we should think 147 00:07:38,640 --> 00:07:40,640 Speaker 1: about now. But but you know, in the back of 148 00:07:40,680 --> 00:07:44,080 Speaker 1: your mind you're gonna say, you know, I'm all in here, Um, 149 00:07:44,120 --> 00:07:46,840 Speaker 1: how do I get out? Catherine Man, great you Thos 150 00:07:46,840 --> 00:07:49,040 Speaker 1: this morning special thanks to you in the same over 151 00:07:49,080 --> 00:07:52,280 Speaker 1: a city city global chief economists, A policy put on 152 00:07:52,360 --> 00:07:54,560 Speaker 1: every part of your portfolio. It felt that way for 153 00:07:54,680 --> 00:07:56,240 Speaker 1: much of this weight. We'll talk about it a little 154 00:07:56,240 --> 00:08:01,160 Speaker 1: bit later on this program. We would like to welcome 155 00:08:01,200 --> 00:08:04,600 Speaker 1: Propert Capitlan to Bloomberg Television and Radio worldwide. Thank you 156 00:08:04,640 --> 00:08:08,000 Speaker 1: for joining us this morning. Obviously only one time to 157 00:08:08,040 --> 00:08:11,200 Speaker 1: be here. Everybody's minds. The House expected to pass the 158 00:08:11,200 --> 00:08:14,200 Speaker 1: fiscal stimulus bill this morning, and then I guess you'll 159 00:08:14,200 --> 00:08:17,200 Speaker 1: be in business. But what business is that going to be? 160 00:08:17,320 --> 00:08:20,800 Speaker 1: The Treasury could give you as much as four billion 161 00:08:20,920 --> 00:08:24,960 Speaker 1: dollars from this bill, which could leverage up to four 162 00:08:25,000 --> 00:08:27,920 Speaker 1: point five trillion dollars. Even for an old Golden Sacks 163 00:08:27,960 --> 00:08:31,360 Speaker 1: guy like you. That seems like a lot of money. Yeah, 164 00:08:31,400 --> 00:08:35,679 Speaker 1: I mean. The key, the key to uh, the proposal 165 00:08:36,200 --> 00:08:38,440 Speaker 1: from the Fed point of view is there's a number 166 00:08:38,480 --> 00:08:42,839 Speaker 1: of special purpose vehicles that are being created to implement 167 00:08:42,920 --> 00:08:47,160 Speaker 1: these programs to buy assets from commercial paper to asset 168 00:08:47,240 --> 00:08:52,760 Speaker 1: backed securities, to corporate bonds to municipal commercial paper, and 169 00:08:52,840 --> 00:08:57,520 Speaker 1: so each of these special purpose vehicles requires approximate ten 170 00:08:57,559 --> 00:09:02,880 Speaker 1: billion dollars to seed, and so UH the money from 171 00:09:02,880 --> 00:09:05,640 Speaker 1: from the bill will be used to see these various 172 00:09:05,640 --> 00:09:09,000 Speaker 1: programs that we've already announced. The bill also suggests to 173 00:09:09,120 --> 00:09:12,280 Speaker 1: new lending programs from the FED, one for companies and 174 00:09:12,559 --> 00:09:16,240 Speaker 1: one for the small business or the main street lending 175 00:09:16,320 --> 00:09:19,440 Speaker 1: program that you guys talked about. What's the difference between 176 00:09:19,440 --> 00:09:22,960 Speaker 1: the two. What is the main street program? Well, it's 177 00:09:23,000 --> 00:09:25,880 Speaker 1: the details is still being worked out. That The long 178 00:09:25,960 --> 00:09:28,720 Speaker 1: and the short of it is, UH, we would help 179 00:09:29,559 --> 00:09:32,200 Speaker 1: lend to small businesses, but we would do it through 180 00:09:32,480 --> 00:09:36,800 Speaker 1: most likely through commercial banks, but we will provide credit 181 00:09:36,880 --> 00:09:41,040 Speaker 1: support to those banks so that they can h they 182 00:09:41,040 --> 00:09:43,880 Speaker 1: can step forward and make loans that that that are 183 00:09:43,920 --> 00:09:47,080 Speaker 1: that are appropriate, but they can do it with confidence 184 00:09:47,440 --> 00:09:50,160 Speaker 1: that they have credit support. That program is still being 185 00:09:50,160 --> 00:09:52,440 Speaker 1: developed and we're still working on the details of that 186 00:09:53,040 --> 00:09:55,880 Speaker 1: well still being developed. The need is immediate. How soon 187 00:09:55,920 --> 00:09:58,520 Speaker 1: do you think you can start getting cash to companies? 188 00:09:59,800 --> 00:10:03,240 Speaker 1: I we I would think very quickly. UH. I've been 189 00:10:03,280 --> 00:10:07,000 Speaker 1: careful to avoid setting exact timetable, but you can be 190 00:10:07,080 --> 00:10:12,079 Speaker 1: sure that we're working furiously here at the FED to 191 00:10:12,480 --> 00:10:15,400 Speaker 1: UH to put the team to have the teams in 192 00:10:15,440 --> 00:10:18,200 Speaker 1: place and work out the details and get those programs ready, 193 00:10:18,240 --> 00:10:20,960 Speaker 1: and you can have confidence that we will do that. 194 00:10:21,640 --> 00:10:23,439 Speaker 1: You're also going to have the ability to lend to 195 00:10:23,679 --> 00:10:26,640 Speaker 1: states and cities. Give me an idea of how that 196 00:10:26,679 --> 00:10:32,719 Speaker 1: would work. Well, primarily, Uh, we we've already announced UH 197 00:10:32,960 --> 00:10:36,280 Speaker 1: that we will be buying through another special purpose vehicle, 198 00:10:36,559 --> 00:10:42,000 Speaker 1: the commercial paper of cities and states municipalities, and that 199 00:10:42,040 --> 00:10:46,079 Speaker 1: program is already a well underway in terms of being formed. UH. 200 00:10:46,120 --> 00:10:50,640 Speaker 1: And it's going to be primarily through the purchase of 201 00:10:50,720 --> 00:10:54,240 Speaker 1: the commercial paper that's issuance that's issued. Some of this 202 00:10:54,720 --> 00:10:58,720 Speaker 1: lending seems to put monetary policy squarely in the fiscal camp. 203 00:10:58,880 --> 00:11:03,000 Speaker 1: How do you feel about that? Uh, in this environment, 204 00:11:03,080 --> 00:11:07,920 Speaker 1: it's necessary in that UM, while it's unusual and a 205 00:11:08,000 --> 00:11:12,600 Speaker 1: number of these authorities are unprecedented, I think we I 206 00:11:12,600 --> 00:11:15,560 Speaker 1: think it's critical that we adapt to the reality on 207 00:11:15,600 --> 00:11:17,840 Speaker 1: the ground and we adapt to the challenge, and that's 208 00:11:17,880 --> 00:11:21,040 Speaker 1: what we're doing. So I think it's it's in this situation, 209 00:11:21,120 --> 00:11:24,240 Speaker 1: it's quite appropriate. Can you get out of this when 210 00:11:24,280 --> 00:11:29,280 Speaker 1: it's all over, Yes, I mean, we'll obviously have to 211 00:11:29,800 --> 00:11:32,040 Speaker 1: work on how to do that. All that in an 212 00:11:32,040 --> 00:11:36,040 Speaker 1: appropriate way. But but yes, I I believe. I believe 213 00:11:36,080 --> 00:11:39,839 Speaker 1: that we will. Everybody understands our country understands this is 214 00:11:39,880 --> 00:11:43,880 Speaker 1: an unusual time. And the reason we're implementing these programs 215 00:11:44,040 --> 00:11:49,559 Speaker 1: is these either municipalities or businesses or other entities don't 216 00:11:49,600 --> 00:11:52,800 Speaker 1: have cash flow because we've asked them to shut down. 217 00:11:53,559 --> 00:11:56,600 Speaker 1: Once they're up and running again and they have their 218 00:11:56,640 --> 00:12:00,280 Speaker 1: own cash flow, UH, it will be able too, I 219 00:12:00,360 --> 00:12:04,120 Speaker 1: would think withdraw from some of these programs. But in 220 00:12:04,200 --> 00:12:08,079 Speaker 1: the void, we want to make sure that these small businesses, 221 00:12:08,600 --> 00:12:13,520 Speaker 1: big larger businesses, medium sized businesses, and municipalities continue to function. 222 00:12:13,880 --> 00:12:17,480 Speaker 1: And I think that's critical as we as we do 223 00:12:17,520 --> 00:12:20,040 Speaker 1: the things we need to do to social distance and 224 00:12:20,120 --> 00:12:23,160 Speaker 1: quarantine in some cases in order to defeat this virus. 225 00:12:23,720 --> 00:12:26,280 Speaker 1: A trillion here, a trillion there, to paraphrase Everett Dirks. 226 00:12:26,280 --> 00:12:29,920 Speaker 1: And you start to talk about real money, might billion 227 00:12:30,080 --> 00:12:33,199 Speaker 1: at the time, because when you when you look at 228 00:12:33,280 --> 00:12:36,360 Speaker 1: that kind of real money going into the economy, do 229 00:12:36,440 --> 00:12:42,640 Speaker 1: you worry about inflation? Uh so some right now I 230 00:12:42,679 --> 00:12:46,040 Speaker 1: would call what we're doing into the category of quote 231 00:12:46,120 --> 00:12:52,840 Speaker 1: unquote relief, meaning, uh, this is intended to keep uh. 232 00:12:53,720 --> 00:12:57,240 Speaker 1: All the bills, including the fiscal bills are to keep 233 00:12:57,800 --> 00:13:01,800 Speaker 1: individuals functioning and being able to pay their bills, small 234 00:13:01,840 --> 00:13:08,400 Speaker 1: businesses functioning, municipalities functioning, larger businesses functioning, so that when 235 00:13:08,720 --> 00:13:11,880 Speaker 1: the virus is defeated, we can walk and then we 236 00:13:11,960 --> 00:13:14,000 Speaker 1: can run, and then we can sprint out of this. 237 00:13:14,720 --> 00:13:18,800 Speaker 1: UH and so um UH in that regard, I don't 238 00:13:18,840 --> 00:13:22,520 Speaker 1: know how inflationary it will be, because it's more relief 239 00:13:22,600 --> 00:13:26,920 Speaker 1: than stimulus. I think a lot of the forces, unfortunately 240 00:13:26,960 --> 00:13:28,880 Speaker 1: on the other end, as we come out of this, 241 00:13:28,960 --> 00:13:32,320 Speaker 1: might in fact be deflationary, and that we're likely to 242 00:13:32,400 --> 00:13:35,960 Speaker 1: have a spike in the unemployment rate. We will work 243 00:13:36,040 --> 00:13:39,800 Speaker 1: that down, will have more excess capacity. I think a 244 00:13:39,920 --> 00:13:43,560 Speaker 1: number of those forces actually will be deflationary. We're speaking 245 00:13:43,559 --> 00:13:46,320 Speaker 1: with Robert Taplan, the Dallas Fed Bank President, on BLUEBIRG 246 00:13:46,360 --> 00:13:50,400 Speaker 1: radio and television. UH. One of your colleagues, speaking of unemployment, 247 00:13:50,440 --> 00:13:54,200 Speaker 1: says we could see and decline in GDP in the 248 00:13:54,240 --> 00:13:57,600 Speaker 1: second quarter. What kind of numbers do you see? So 249 00:13:57,679 --> 00:14:00,720 Speaker 1: our our forecast to the Dallas Fed is is not 250 00:14:00,920 --> 00:14:04,079 Speaker 1: on that scale, and that UM, we think you'll see 251 00:14:04,120 --> 00:14:08,640 Speaker 1: a substantial contraction in the second quarter. Our own estimates 252 00:14:08,760 --> 00:14:10,880 Speaker 1: is it won't be. Uh, it won't be that big, 253 00:14:11,040 --> 00:14:12,920 Speaker 1: but it will be, but it could be in the 254 00:14:13,000 --> 00:14:16,120 Speaker 1: twenties in our view on an and and just to 255 00:14:16,160 --> 00:14:19,600 Speaker 1: point out on an annualized basis, it will be in 256 00:14:19,640 --> 00:14:22,160 Speaker 1: the twenties. And we can have some decline also at 257 00:14:22,200 --> 00:14:24,480 Speaker 1: least in the first part of the third quarter. And 258 00:14:24,560 --> 00:14:27,800 Speaker 1: our own internal forecast here at the Dallas said, as 259 00:14:27,880 --> 00:14:30,840 Speaker 1: you could see the unemployment rate peak in the low 260 00:14:30,960 --> 00:14:34,520 Speaker 1: to mid teens, but we would expect that would quickly, 261 00:14:35,120 --> 00:14:40,080 Speaker 1: um be would quickly decline. We would hope to something 262 00:14:40,160 --> 00:14:43,840 Speaker 1: like seven or eight percent by the end of the year. 263 00:14:43,960 --> 00:14:50,040 Speaker 1: And then we'ld have to spend working that unemployment right down. Uh, 264 00:14:50,080 --> 00:14:53,640 Speaker 1: but we'll have an elevated level of unemployment for sure. 265 00:14:54,200 --> 00:14:56,240 Speaker 1: As as we come out of this, well, do you 266 00:14:56,320 --> 00:14:59,800 Speaker 1: see a v shaped recovery of you just be a 267 00:15:00,040 --> 00:15:06,520 Speaker 1: very long slow recovery. I listen, everything we're doing, uh, 268 00:15:06,600 --> 00:15:09,560 Speaker 1: and that and and and in addition to fiscal response, 269 00:15:10,200 --> 00:15:14,880 Speaker 1: is all with the intention that once this virus is defeated, 270 00:15:15,240 --> 00:15:19,760 Speaker 1: we will move forward as expeditiously and quickly and strongly 271 00:15:19,840 --> 00:15:23,640 Speaker 1: as possible. The thing that that I don't know and 272 00:15:23,680 --> 00:15:27,560 Speaker 1: we'll have to see as we go UM is what 273 00:15:27,680 --> 00:15:30,920 Speaker 1: will be the effect on small businesses? And I've talked 274 00:15:31,000 --> 00:15:33,320 Speaker 1: I talked to lots of small businesses as well as 275 00:15:33,400 --> 00:15:36,560 Speaker 1: larger businesses. You know, a lot of small businesses may 276 00:15:36,640 --> 00:15:40,920 Speaker 1: come out of this either smaller. Some small businesses may 277 00:15:41,000 --> 00:15:43,480 Speaker 1: conclude that they don't want to continue to operate out 278 00:15:43,520 --> 00:15:47,760 Speaker 1: of this UM given their businesses were not as strong 279 00:15:47,840 --> 00:15:51,400 Speaker 1: even going into this UH and bigger businesses are going 280 00:15:51,440 --> 00:15:53,880 Speaker 1: to have to assess how much demand do they have, 281 00:15:54,040 --> 00:15:57,960 Speaker 1: what's the size of their business? UM and and rescale 282 00:15:58,160 --> 00:16:02,120 Speaker 1: and reconfigure what they're doing and so UM and then 283 00:16:02,120 --> 00:16:05,280 Speaker 1: the consumer behavior, we're gonna have to learn what consumer 284 00:16:05,360 --> 00:16:07,960 Speaker 1: behavior is on the other side of this. I would 285 00:16:08,000 --> 00:16:10,680 Speaker 1: think consumers and we think of it elas that consumers 286 00:16:10,680 --> 00:16:13,680 Speaker 1: are liable to be more cautious, may well save more. 287 00:16:13,760 --> 00:16:17,400 Speaker 1: You can understand why UH and UH and and they're 288 00:16:17,400 --> 00:16:19,960 Speaker 1: spending habits maybe a little bit different than they were, 289 00:16:20,680 --> 00:16:23,600 Speaker 1: and they'll have a higher unemployment rate. So I think 290 00:16:23,640 --> 00:16:25,920 Speaker 1: these are all things that it's a little too soon 291 00:16:25,960 --> 00:16:29,280 Speaker 1: to gauge, but we're gonna We're gonna climb out of this. 292 00:16:29,880 --> 00:16:31,760 Speaker 1: It's just a question of how fast do we go 293 00:16:31,840 --> 00:16:36,000 Speaker 1: again from walking to running to sprinting and uh, and 294 00:16:36,000 --> 00:16:38,680 Speaker 1: we're still trying to come to groups with that question, well, 295 00:16:38,720 --> 00:16:41,600 Speaker 1: what are you seeing in Dallas in the Dallas district? 296 00:16:42,040 --> 00:16:45,400 Speaker 1: What are companies telling you they're about their prospects. So 297 00:16:46,120 --> 00:16:48,000 Speaker 1: we're hearing a lot of things, but I think that 298 00:16:48,280 --> 00:16:51,360 Speaker 1: we're hearing around the country for small businesses, they're worried 299 00:16:51,360 --> 00:16:55,200 Speaker 1: about survival UM and and that's probably true of even 300 00:16:55,240 --> 00:16:58,640 Speaker 1: small and medium sized businesses where they've just never they've 301 00:16:58,760 --> 00:17:01,400 Speaker 1: they've mapped a lot of areas, but never mapped the 302 00:17:01,440 --> 00:17:04,280 Speaker 1: scenario where literally they were asked to shut down, a 303 00:17:04,359 --> 00:17:08,720 Speaker 1: revenue just stopped. And so there's a lot of great concern, 304 00:17:09,240 --> 00:17:12,639 Speaker 1: particularly among small businesses about whether they can make it 305 00:17:12,680 --> 00:17:15,800 Speaker 1: to the other side, even with the loan assistance that 306 00:17:15,920 --> 00:17:18,879 Speaker 1: we're talking about. For even bigger businesses, detaining on what 307 00:17:18,960 --> 00:17:21,919 Speaker 1: industry and they're in, we're also having the same discussion 308 00:17:22,400 --> 00:17:25,800 Speaker 1: in that UM they're just trying to assess how long, 309 00:17:27,080 --> 00:17:29,720 Speaker 1: how to how to manage their people, how to protect 310 00:17:29,720 --> 00:17:33,240 Speaker 1: their people, but also how to manage their business during 311 00:17:33,240 --> 00:17:36,760 Speaker 1: a period where their revenue is dramatically declined and and 312 00:17:37,160 --> 00:17:41,080 Speaker 1: great concern and in particular, which is what we're working 313 00:17:41,119 --> 00:17:44,720 Speaker 1: on we'll have availability of capital. UM. The big, the 314 00:17:44,800 --> 00:17:47,600 Speaker 1: big other issue we deal with in Texas that most 315 00:17:47,640 --> 00:17:51,280 Speaker 1: states are not is energy. We had, in addition to 316 00:17:51,280 --> 00:17:56,000 Speaker 1: the coronavirus, an unprecedented energy shock that happened about two 317 00:17:56,080 --> 00:17:59,680 Speaker 1: or three weeks ago with Saudi and UH and Russia. 318 00:17:59,680 --> 00:18:02,560 Speaker 1: Is so from the coronavirus, we were going to be 319 00:18:02,600 --> 00:18:06,920 Speaker 1: globally oversupplied on energy to begin with. And the Russia 320 00:18:07,400 --> 00:18:11,720 Speaker 1: UM saw they dispute UH and and desire to pump 321 00:18:11,760 --> 00:18:15,720 Speaker 1: even more makes this oversupply even worse. So we have 322 00:18:15,800 --> 00:18:20,320 Speaker 1: a dramatic global oversupply issue for oil, which is dramatically 323 00:18:20,560 --> 00:18:23,000 Speaker 1: hurt the price of oil. And so you're gonna see 324 00:18:23,080 --> 00:18:29,760 Speaker 1: lots of restructuring, some failures, and lots of challenges in 325 00:18:29,800 --> 00:18:32,440 Speaker 1: the Permian basin. And we think we think the Permian 326 00:18:32,480 --> 00:18:35,679 Speaker 1: will actually shrink this year. We thought it would before 327 00:18:35,720 --> 00:18:38,240 Speaker 1: this happened, we thought it would grow more slowly. Now 328 00:18:38,280 --> 00:18:41,080 Speaker 1: we actually think the production from the Permian basin is 329 00:18:41,200 --> 00:18:44,040 Speaker 1: likely to shrink. And the only reason you won't see 330 00:18:44,040 --> 00:18:47,200 Speaker 1: it shrinking faster is some of these firms have forward 331 00:18:47,240 --> 00:18:50,480 Speaker 1: commitments to sell their product. But as those laps, you'll 332 00:18:50,520 --> 00:18:54,920 Speaker 1: see a shrinkage across the industry. The last question, as 333 00:18:54,960 --> 00:18:58,320 Speaker 1: everybody looks to the Federal Reserve to sort of pull 334 00:18:58,440 --> 00:19:02,760 Speaker 1: us out of this, what's your message to people who 335 00:19:02,800 --> 00:19:09,320 Speaker 1: maybe saw Chairman Powell yesterday say we're probably in recession now, Well, 336 00:19:09,400 --> 00:19:13,080 Speaker 1: the messages, we knew we were going to be in 337 00:19:13,080 --> 00:19:16,679 Speaker 1: a recession. We've it's a self mandated recession. It's a 338 00:19:16,680 --> 00:19:20,160 Speaker 1: different kind of recession. Normally, recessions are things we want 339 00:19:20,160 --> 00:19:22,880 Speaker 1: to we we avoid at all costs, or we avoid. 340 00:19:23,320 --> 00:19:26,520 Speaker 1: This is a recession that we've induced. We needed to 341 00:19:26,600 --> 00:19:30,520 Speaker 1: do this in order to fight this virus. Having said that, 342 00:19:31,040 --> 00:19:33,920 Speaker 1: we were strong before we went into this, and we 343 00:19:33,960 --> 00:19:37,000 Speaker 1: believe we've got a great chance to come out of 344 00:19:37,000 --> 00:19:41,240 Speaker 1: this very strong. But everything, the messages, everything the Federal 345 00:19:41,280 --> 00:19:45,879 Speaker 1: Reserve is doing, and in addition, all the fiscal responses 346 00:19:45,920 --> 00:19:49,200 Speaker 1: that you're seeing are with the intention of as we 347 00:19:49,400 --> 00:19:52,359 Speaker 1: as we defeat the virus and we climb out of 348 00:19:52,400 --> 00:19:55,960 Speaker 1: this situation, we do it as strong as possible and 349 00:19:56,080 --> 00:20:01,000 Speaker 1: increase the probability that we're going to be uh uh. 350 00:20:01,320 --> 00:20:03,600 Speaker 1: We'll have a new normal as we come out of this. 351 00:20:03,680 --> 00:20:06,120 Speaker 1: But we'll come out of this strong and we'll get 352 00:20:06,160 --> 00:20:09,760 Speaker 1: stronger as we end this year and go into next year. 353 00:20:10,400 --> 00:20:12,720 Speaker 1: Dallas Fed President Robert Caplan, thank you so much for 354 00:20:12,800 --> 00:20:16,040 Speaker 1: joining us this morning. Stay safe down there in Texas. 355 00:20:19,000 --> 00:20:21,360 Speaker 1: We would like to welcome the Atlanta Fed Bank President 356 00:20:21,440 --> 00:20:24,760 Speaker 1: Robai Albostic to Bluebrick Television and Radio worldwide. Thank you 357 00:20:24,800 --> 00:20:28,639 Speaker 1: for joining us this morning. Um. How expected to pass 358 00:20:28,760 --> 00:20:31,840 Speaker 1: the fiscal Stimulus Bill, then you get lots of money 359 00:20:31,920 --> 00:20:35,600 Speaker 1: from the treasury according to the bill. Uh, what is 360 00:20:35,600 --> 00:20:39,720 Speaker 1: the plan the main street lending program that you talked about, 361 00:20:40,280 --> 00:20:42,000 Speaker 1: what is that going to be? Well, first of all, 362 00:20:42,000 --> 00:20:44,360 Speaker 1: good morning, Mike, it's good to be on with you, 363 00:20:44,480 --> 00:20:48,400 Speaker 1: and good morning to everyone. Oh, just to provide some context, 364 00:20:48,560 --> 00:20:51,840 Speaker 1: you know, coming out of this crisis or coming into 365 00:20:51,840 --> 00:20:54,760 Speaker 1: the crisis. But we saw with a lot of financial 366 00:20:54,800 --> 00:20:58,480 Speaker 1: mortgage really trying to break down in terms of their funding, 367 00:20:58,920 --> 00:21:03,320 Speaker 1: and so we announced a number of facilities that we're 368 00:21:03,320 --> 00:21:06,720 Speaker 1: going to be designed to help those markets function more smoothly. 369 00:21:07,280 --> 00:21:10,000 Speaker 1: And a lot of the funding and the bill is 370 00:21:10,040 --> 00:21:13,240 Speaker 1: really oriented towards providing the backstop, so that we can 371 00:21:13,280 --> 00:21:16,080 Speaker 1: do that in an appropriate way that that meets with 372 00:21:16,119 --> 00:21:19,720 Speaker 1: our authorities. The main street Lending program is another one 373 00:21:19,760 --> 00:21:23,080 Speaker 1: of these UM that has been designed to really try 374 00:21:23,119 --> 00:21:26,440 Speaker 1: to help small businesses is you know, many small businesses 375 00:21:26,480 --> 00:21:31,640 Speaker 1: don't have an extended buffer to UH to weather weeks 376 00:21:31,720 --> 00:21:35,000 Speaker 1: of not having revenues, and so they're under a lot 377 00:21:35,000 --> 00:21:38,400 Speaker 1: of stress. And so the way the program is conceived 378 00:21:38,400 --> 00:21:41,680 Speaker 1: conceptually is to provide them with the bridge that allows 379 00:21:41,760 --> 00:21:45,840 Speaker 1: them to UH to really stay in business, keep their 380 00:21:45,880 --> 00:21:49,359 Speaker 1: employees on board and UM and get us to the 381 00:21:49,400 --> 00:21:52,439 Speaker 1: other side of the program UM, the other side of 382 00:21:52,440 --> 00:21:55,760 Speaker 1: the crisis. This hasn't fully been worked out, and you know, 383 00:21:55,840 --> 00:21:58,480 Speaker 1: I've been on calls pretty much continuously for the last 384 00:21:58,480 --> 00:22:01,560 Speaker 1: two days trying to work through all the little details. 385 00:22:01,600 --> 00:22:03,480 Speaker 1: There's a there's a lot. As you know, this is 386 00:22:03,840 --> 00:22:07,000 Speaker 1: quite unprecedented for the FED, a reserved to be trying 387 00:22:07,000 --> 00:22:08,840 Speaker 1: to do this. So we want to make sure we 388 00:22:08,880 --> 00:22:11,199 Speaker 1: do this right in a way that doesn't lead to 389 00:22:11,680 --> 00:22:14,760 Speaker 1: problems down the road, but also in a way that 390 00:22:14,760 --> 00:22:17,560 Speaker 1: that gets the money out as quickly as possible. Well, 391 00:22:17,600 --> 00:22:19,879 Speaker 1: how do you do that? Do people line up outside 392 00:22:19,920 --> 00:22:22,719 Speaker 1: the Atlanta FED with loan applications or how's this going 393 00:22:22,760 --> 00:22:27,560 Speaker 1: to work? Well, the end of the FED doesn't typically 394 00:22:27,600 --> 00:22:31,480 Speaker 1: do direct lending like that. Uh, My expectation is that 395 00:22:31,600 --> 00:22:34,720 Speaker 1: this will work through the bank institutions that already have 396 00:22:35,000 --> 00:22:37,800 Speaker 1: relationships with many of the businesses that are going to 397 00:22:37,880 --> 00:22:41,520 Speaker 1: be needing to support. So, you know, we're already working 398 00:22:41,520 --> 00:22:46,480 Speaker 1: with small businesses with banks to to address some of 399 00:22:46,520 --> 00:22:50,400 Speaker 1: the small business constraints. We're encouraging them to think about 400 00:22:50,640 --> 00:22:54,760 Speaker 1: modifying some loan terms, differring requirements or principle and interest 401 00:22:54,840 --> 00:22:58,040 Speaker 1: on those loans, extending those terms as well, all with 402 00:22:58,160 --> 00:23:02,560 Speaker 1: the idea of trying to douced the current time pressure 403 00:23:02,840 --> 00:23:05,800 Speaker 1: that these businesses are facing. So so we're going to 404 00:23:05,880 --> 00:23:08,840 Speaker 1: do more with the banks is my expectation. And uh 405 00:23:08,880 --> 00:23:11,760 Speaker 1: and I look forward to being able to announce this 406 00:23:11,800 --> 00:23:14,280 Speaker 1: as as soon as possible. How soon do you think 407 00:23:14,320 --> 00:23:16,760 Speaker 1: that is? I mean, the need is immediate. You walk 408 00:23:16,800 --> 00:23:19,400 Speaker 1: down the street anywhere and you just see the store 409 00:23:19,440 --> 00:23:24,000 Speaker 1: after store shuttered. Well, you know, there's been a lot 410 00:23:24,000 --> 00:23:27,320 Speaker 1: of focus on small businesses laying awful lot of of 411 00:23:27,720 --> 00:23:30,399 Speaker 1: their workers. But you know, we're doing a lot of 412 00:23:30,440 --> 00:23:33,280 Speaker 1: surveys here in the sixth district in the southeast, and 413 00:23:33,359 --> 00:23:35,920 Speaker 1: one thing that that has been heartening is that many 414 00:23:36,160 --> 00:23:39,320 Speaker 1: of these businesses have been saying we're going to try 415 00:23:39,320 --> 00:23:40,840 Speaker 1: to hold on as long as we can. We're not 416 00:23:41,000 --> 00:23:44,520 Speaker 1: going to make any permanent decisions about our staff or 417 00:23:44,600 --> 00:23:47,720 Speaker 1: our operations until we see the full range of support 418 00:23:47,760 --> 00:23:50,640 Speaker 1: that's happened. I think the bill that is being going 419 00:23:50,640 --> 00:23:53,280 Speaker 1: through Congress right now is a good first step to 420 00:23:53,359 --> 00:23:56,439 Speaker 1: do that. And UH we are going to work with 421 00:23:56,480 --> 00:23:59,359 Speaker 1: this lending program to make sure that we get this 422 00:23:59,440 --> 00:24:03,080 Speaker 1: out in time. We fully understand that time as of 423 00:24:03,160 --> 00:24:05,000 Speaker 1: the essence here, and we're going to do all we 424 00:24:05,080 --> 00:24:07,960 Speaker 1: can to make sure that we're not late. With this support, 425 00:24:08,560 --> 00:24:11,000 Speaker 1: you'll also have the ability to lead more UH to 426 00:24:11,160 --> 00:24:14,600 Speaker 1: states and cities. How does that work? Is this just 427 00:24:14,680 --> 00:24:19,520 Speaker 1: the program that you've announced their do you expand that? Well? 428 00:24:19,560 --> 00:24:23,000 Speaker 1: You know, one thing I would say is we're gonna 429 00:24:23,040 --> 00:24:25,400 Speaker 1: want wait and see. We're gonna watch how these markets 430 00:24:25,440 --> 00:24:28,919 Speaker 1: operate and see whether there are segments of the market 431 00:24:28,960 --> 00:24:32,480 Speaker 1: that are not still working close to where they were 432 00:24:32,720 --> 00:24:35,880 Speaker 1: under more normal times. And if we decide and determine 433 00:24:35,880 --> 00:24:40,000 Speaker 1: that those those those segments are not working well, we'll 434 00:24:40,040 --> 00:24:43,280 Speaker 1: look to set up other facilities to support them. For now, 435 00:24:43,359 --> 00:24:46,040 Speaker 1: what we're seeing with the facilities that we've set up, though, 436 00:24:46,480 --> 00:24:48,720 Speaker 1: is that many of the tensions and stresses that have 437 00:24:49,440 --> 00:24:51,800 Speaker 1: that we're rocking the market. A couple of weeks ago, 438 00:24:52,480 --> 00:24:54,639 Speaker 1: seem to be moving in the other direction, which is 439 00:24:54,720 --> 00:24:58,280 Speaker 1: quite positive. But we're going to remain diligent to make 440 00:24:58,320 --> 00:25:03,320 Speaker 1: sure that as time passes, if things do start to 441 00:25:03,359 --> 00:25:05,760 Speaker 1: MAETERI it again, we are going to be ready to 442 00:25:05,760 --> 00:25:08,000 Speaker 1: step in and try to provide whatever support we can. 443 00:25:08,840 --> 00:25:11,080 Speaker 1: You mentioned that some of the businesses in your district 444 00:25:11,080 --> 00:25:14,439 Speaker 1: are relatively optimistic or at least want to try to 445 00:25:14,480 --> 00:25:17,880 Speaker 1: be about staying around. But I'm wondering about UH cities 446 00:25:17,880 --> 00:25:19,919 Speaker 1: and states. You've got a couple of the poorer states 447 00:25:20,000 --> 00:25:22,720 Speaker 1: in your district, and there's been a lot of concern 448 00:25:22,800 --> 00:25:26,399 Speaker 1: about shrinking revenues because they're not collecting any taxes at 449 00:25:26,480 --> 00:25:31,359 Speaker 1: that at this point, how bad is that situation. Well, 450 00:25:31,400 --> 00:25:34,359 Speaker 1: we don't know for sure right now, And I would 451 00:25:34,359 --> 00:25:37,840 Speaker 1: take two things on this. One. I think that we're 452 00:25:37,880 --> 00:25:40,480 Speaker 1: going to see our coming together in the public sector 453 00:25:40,560 --> 00:25:44,760 Speaker 1: to make sure that every jurisdiction, UM at the state 454 00:25:44,840 --> 00:25:47,720 Speaker 1: and at the city level, is able to get through 455 00:25:47,720 --> 00:25:51,240 Speaker 1: this crisis and still be functioning at the end. But 456 00:25:51,359 --> 00:25:55,480 Speaker 1: the second, which is another important thing, is that UM, 457 00:25:55,560 --> 00:25:57,720 Speaker 1: this is a public health crisis. This is actually quite 458 00:25:57,760 --> 00:26:01,840 Speaker 1: different than some of the economic disruptions that we've seen 459 00:26:01,880 --> 00:26:04,760 Speaker 1: in the past, And as a consequence, I think there's 460 00:26:04,880 --> 00:26:08,560 Speaker 1: the possibility that once the public health crisis has gotten 461 00:26:08,600 --> 00:26:11,720 Speaker 1: under control and we don't have that issue anymore, the 462 00:26:11,720 --> 00:26:16,159 Speaker 1: economy may rebound actually quite robustly. And uh, you know, 463 00:26:16,240 --> 00:26:20,640 Speaker 1: the Chair said yesterday on the news that the economy 464 00:26:20,720 --> 00:26:23,360 Speaker 1: started in a good place, and I think that's exactly right, 465 00:26:23,680 --> 00:26:26,080 Speaker 1: and that's something that we all should keep in mind. 466 00:26:26,440 --> 00:26:29,199 Speaker 1: And the goal for almost all of these projects and 467 00:26:29,240 --> 00:26:32,000 Speaker 1: programs is to try to make sure that when we 468 00:26:32,040 --> 00:26:34,399 Speaker 1: get on the other side of this, the economy is 469 00:26:34,440 --> 00:26:38,080 Speaker 1: as close to that place as it as possible, so 470 00:26:38,119 --> 00:26:42,880 Speaker 1: that when recovery and and and health is not a 471 00:26:42,920 --> 00:26:46,639 Speaker 1: major concern, the economy can really start kicking back on 472 00:26:46,880 --> 00:26:50,760 Speaker 1: all the cylinders and running quite strongly. So my hope 473 00:26:50,800 --> 00:26:54,440 Speaker 1: is that if we do the responsible things and take 474 00:26:54,480 --> 00:26:57,239 Speaker 1: care of our public health problem, that the economy can 475 00:26:57,280 --> 00:27:00,440 Speaker 1: rebound and some of the short falls that you're talking about, uh, 476 00:27:00,600 --> 00:27:03,280 Speaker 1: wind up not being as as deep as as they 477 00:27:03,280 --> 00:27:05,440 Speaker 1: could be. Well, how bad do you think the short 478 00:27:05,480 --> 00:27:07,720 Speaker 1: fall could get? What is the Atlanta fantasy in terms 479 00:27:07,760 --> 00:27:12,760 Speaker 1: of unemployment in terms of GDP going forward. So, you know, 480 00:27:12,800 --> 00:27:18,480 Speaker 1: it's it's interesting. I've talked to my macro forecasters and 481 00:27:18,520 --> 00:27:20,560 Speaker 1: what they tell me is that, you know, in this 482 00:27:20,720 --> 00:27:25,359 Speaker 1: environment where we've had basically an induced UH contraction of 483 00:27:25,400 --> 00:27:29,400 Speaker 1: a sharp contraction, that forecasts are really difficult to do. 484 00:27:30,080 --> 00:27:33,359 Speaker 1: And so we're definitely expecting GDP for the second quarter 485 00:27:33,760 --> 00:27:38,080 Speaker 1: to be close to zero. Are for the first quarter 486 00:27:38,240 --> 00:27:41,800 Speaker 1: close to zero, second quarter definitely negative, But then the 487 00:27:41,840 --> 00:27:44,800 Speaker 1: third quarter there's really sort of an open question as 488 00:27:44,880 --> 00:27:50,200 Speaker 1: to how quickly we get the the public health crisis, 489 00:27:50,200 --> 00:27:54,800 Speaker 1: this coronavirus spread under control UH. And among my forecasters, 490 00:27:55,040 --> 00:27:57,400 Speaker 1: you know, there's the beta whether we'll start to see 491 00:27:57,400 --> 00:28:00,359 Speaker 1: that in early and third quarter, middle of third quarter, 492 00:28:00,800 --> 00:28:03,639 Speaker 1: or the fourth quarter. So um, So I think it 493 00:28:03,680 --> 00:28:06,880 Speaker 1: can be pretty tough for the next month or so, 494 00:28:07,680 --> 00:28:10,680 Speaker 1: But then a lot of the trajectory will will depend 495 00:28:10,880 --> 00:28:14,679 Speaker 1: on how we deal with the public health issue. You 496 00:28:14,720 --> 00:28:17,560 Speaker 1: have a background in housing. There's no money in the 497 00:28:17,600 --> 00:28:21,200 Speaker 1: stimulus bill for mortgage forgiveness or rent delays or things 498 00:28:21,240 --> 00:28:25,399 Speaker 1: like that. How do you think housing plays out here? Well, 499 00:28:25,480 --> 00:28:29,399 Speaker 1: it will depend, you know, I would say that what 500 00:28:29,480 --> 00:28:33,240 Speaker 1: we've seen through the Congress is a series of bills 501 00:28:33,640 --> 00:28:39,240 Speaker 1: trying to address various aspects of the crisis and the 502 00:28:39,400 --> 00:28:43,080 Speaker 1: economic downturn. The housing market is when we're continuing to 503 00:28:43,160 --> 00:28:47,960 Speaker 1: have conversations. You know, I've gotten contact from many in 504 00:28:48,000 --> 00:28:52,920 Speaker 1: the in the property markets and the property industry, and 505 00:28:52,960 --> 00:28:55,880 Speaker 1: they're telling me about their challenges. So we are working 506 00:28:55,960 --> 00:28:58,800 Speaker 1: right now to try to understand those better and make 507 00:28:58,840 --> 00:29:03,720 Speaker 1: sure that that there isn't collateral damage and housing markets 508 00:29:03,720 --> 00:29:07,680 Speaker 1: such that either one a bunch of companies go out 509 00:29:07,680 --> 00:29:10,320 Speaker 1: of business or to a lot of people lose their homes. 510 00:29:10,320 --> 00:29:12,760 Speaker 1: So we're going to try to make sure that as 511 00:29:12,800 --> 00:29:16,880 Speaker 1: we get through this, the housing sector, uh is not 512 00:29:17,280 --> 00:29:20,400 Speaker 1: a repeat of what happened in the Great Recession. In 513 00:29:20,440 --> 00:29:23,600 Speaker 1: this stimulus bill, the fiscal stimulus Bill, you're getting a 514 00:29:23,600 --> 00:29:26,480 Speaker 1: lot more money, a lot more power from Congress, but 515 00:29:26,480 --> 00:29:29,600 Speaker 1: they're also putting some restrictions on what you do, say 516 00:29:30,200 --> 00:29:32,160 Speaker 1: you know, in terms of the corporate loan program and 517 00:29:32,400 --> 00:29:35,200 Speaker 1: what companies are allowed to do. Does it bother you 518 00:29:35,280 --> 00:29:38,280 Speaker 1: that the line between fiscal and monetary is getting quite blurred? 519 00:29:40,720 --> 00:29:43,320 Speaker 1: So I don't think so well, person all, it doesn't 520 00:29:43,360 --> 00:29:47,160 Speaker 1: bother me. And the thing to remember is that all 521 00:29:47,200 --> 00:29:49,840 Speaker 1: of these are all of these facilities are being stood 522 00:29:49,920 --> 00:29:54,280 Speaker 1: up under emergency authorities, and I think the important context 523 00:29:54,320 --> 00:29:56,400 Speaker 1: to keep in mind here is that we're in an emergency, 524 00:29:57,000 --> 00:29:59,880 Speaker 1: and when we're an emergency, we should One of the 525 00:30:00,040 --> 00:30:02,040 Speaker 1: us is that we learned coming out of the Great 526 00:30:02,040 --> 00:30:07,880 Speaker 1: Recession was UM acts strong act, definitively attack in a 527 00:30:08,000 --> 00:30:11,760 Speaker 1: very aggressive way those parts of the market that are 528 00:30:11,800 --> 00:30:15,200 Speaker 1: weak to try to uh limit how deep or how 529 00:30:15,520 --> 00:30:19,960 Speaker 1: negative things get. So it doesn't trouble me about this UM. 530 00:30:20,080 --> 00:30:23,160 Speaker 1: We have these authorities, the Congress has given them to us, 531 00:30:23,280 --> 00:30:27,040 Speaker 1: and we'll use them in emergency, and I have every 532 00:30:27,040 --> 00:30:29,240 Speaker 1: confidence that we're going to apply them in a very 533 00:30:29,280 --> 00:30:33,000 Speaker 1: responsible way. The last question, as you stand up all 534 00:30:33,080 --> 00:30:37,680 Speaker 1: of these authorities and get deeper into this UM, what 535 00:30:37,880 --> 00:30:41,080 Speaker 1: unintended consequences do you foresee? What are you worried about 536 00:30:41,240 --> 00:30:43,360 Speaker 1: down the load road when we come out of this 537 00:30:43,480 --> 00:30:47,840 Speaker 1: on the other side. Well, I'll say, in the short run, 538 00:30:47,880 --> 00:30:51,680 Speaker 1: I'm I'm worried about just my staff we're under We're 539 00:30:51,680 --> 00:30:54,800 Speaker 1: working incredibly hard to stand these things up and across 540 00:30:54,800 --> 00:30:57,920 Speaker 1: the entire federal reserve system. Uh So I want to 541 00:30:57,960 --> 00:31:01,640 Speaker 1: make sure that that we are doing this using all 542 00:31:01,640 --> 00:31:04,000 Speaker 1: of our resources, and I'm spending a lot of my 543 00:31:04,120 --> 00:31:07,760 Speaker 1: time right now just trying to keep people, make sure, 544 00:31:08,120 --> 00:31:09,800 Speaker 1: keep an eye on people, and make sure their fame 545 00:31:09,840 --> 00:31:13,320 Speaker 1: of mind is positive. On the back side, I think 546 00:31:13,480 --> 00:31:17,960 Speaker 1: that UM one thing I'll be looking for is a 547 00:31:18,080 --> 00:31:21,440 Speaker 1: measure and a gauge of consumer confidence to see how 548 00:31:22,080 --> 00:31:25,320 Speaker 1: how consumers and households are thinking and feeling about the 549 00:31:25,400 --> 00:31:29,440 Speaker 1: U S economy UM and their prospects you know, after this, 550 00:31:29,600 --> 00:31:33,080 Speaker 1: because that will, as you know, play a very important 551 00:31:33,240 --> 00:31:37,280 Speaker 1: role in shaping people's willingness to consume and spend and 552 00:31:37,800 --> 00:31:40,720 Speaker 1: invest in themselves and in their businesses. So I'm going 553 00:31:40,800 --> 00:31:44,640 Speaker 1: to keep an eye on that UM and hopefully all 554 00:31:44,680 --> 00:31:48,240 Speaker 1: the things that we're doing today will will give people 555 00:31:48,280 --> 00:31:51,880 Speaker 1: some confidence, and that confidence will carry through into the 556 00:31:51,920 --> 00:31:55,280 Speaker 1: recovery period we can't hope. Thank you very much, Atlanta 557 00:31:55,320 --> 00:31:58,600 Speaker 1: fad Bank President Raphael Bostick for joining us on BLUEBIRG 558 00:31:58,640 --> 00:32:05,480 Speaker 1: radio and television worldwide. How about what to do with 559 00:32:05,640 --> 00:32:08,760 Speaker 1: the little pot that you have which has become a 560 00:32:08,920 --> 00:32:13,680 Speaker 1: smaller investment portfolio over the recent weeks. Darryl Kronk is 561 00:32:13,720 --> 00:32:17,320 Speaker 1: with Wells Fargo where he really thinks hard about these 562 00:32:17,400 --> 00:32:20,760 Speaker 1: kinds of things. Darryl, bonds are stocks right now. I 563 00:32:20,760 --> 00:32:23,960 Speaker 1: haven't asked that question in weeks. Do do you want 564 00:32:23,960 --> 00:32:29,560 Speaker 1: to own bonds or stocks at this moment? Well, we'd 565 00:32:29,560 --> 00:32:32,840 Speaker 1: still be a little bit conservative on stocks here, Tom. 566 00:32:32,880 --> 00:32:37,360 Speaker 1: I mean, I think if you look um decline in stocks, 567 00:32:37,880 --> 00:32:42,640 Speaker 1: um you get a retracement or rebound. Right. But history 568 00:32:42,680 --> 00:32:45,360 Speaker 1: tells us over and over again, if you look at 569 00:32:45,360 --> 00:32:52,000 Speaker 1: the thirteen big waterfall decline, since nine of those thirteen 570 00:32:52,720 --> 00:32:56,400 Speaker 1: have retested or broken the low on an average two 571 00:32:56,400 --> 00:33:00,000 Speaker 1: months later after that initial decline. So history tells us 572 00:33:00,040 --> 00:33:03,040 Speaker 1: the deeper the decline, the higher the bounce, which we've 573 00:33:03,080 --> 00:33:06,320 Speaker 1: got the last three days, and then the deeper the retest. 574 00:33:06,680 --> 00:33:10,800 Speaker 1: Even on the four instances that didn't set fresh lows 575 00:33:11,520 --> 00:33:15,320 Speaker 1: after two months later, three of those four at least 576 00:33:15,320 --> 00:33:18,360 Speaker 1: retested the lows but didn't break them. The only instance 577 00:33:18,440 --> 00:33:22,240 Speaker 1: that you can find going back decades and decades is 578 00:33:22,280 --> 00:33:25,800 Speaker 1: the December eighteen instants where we had a true v 579 00:33:26,040 --> 00:33:28,960 Speaker 1: bottom and bounce. So point is, I think you need 580 00:33:28,960 --> 00:33:30,960 Speaker 1: to be a little cautious, a little defensive. You're on 581 00:33:31,080 --> 00:33:36,040 Speaker 1: stocks below on the SMP, so let it drift back 582 00:33:36,040 --> 00:33:37,600 Speaker 1: down here and then I think there's gonna be some 583 00:33:37,640 --> 00:33:41,360 Speaker 1: phenomenal buying opportunities on the equi side. Alright, So, Daryl, 584 00:33:41,400 --> 00:33:44,280 Speaker 1: if we do want to look out to the other 585 00:33:44,400 --> 00:33:47,280 Speaker 1: side of this, what are some of the sectors you're 586 00:33:47,320 --> 00:33:49,560 Speaker 1: suggesting to your Wells Fargo clients that that maybe they 587 00:33:49,600 --> 00:33:51,720 Speaker 1: think about to the extent they want to get back 588 00:33:51,800 --> 00:33:55,560 Speaker 1: into the market or maybe put some new money to work. Yeah, 589 00:33:55,560 --> 00:33:59,440 Speaker 1: it's a great question, Paul. So right now, if if 590 00:33:59,440 --> 00:34:03,760 Speaker 1: we're favoring sectors, what we want to have is information technology, 591 00:34:03,800 --> 00:34:05,880 Speaker 1: which again is up in quality, has some of the 592 00:34:05,880 --> 00:34:08,360 Speaker 1: strongest balance sheets, some of the highest level of cash 593 00:34:08,760 --> 00:34:12,319 Speaker 1: on balance sheet, you know, fortress type balance sheets, um, 594 00:34:12,400 --> 00:34:16,360 Speaker 1: and probably recovers. We do like calm services, communication services. 595 00:34:16,840 --> 00:34:20,719 Speaker 1: We also like the consumer discretionary sector, and we think 596 00:34:20,800 --> 00:34:24,480 Speaker 1: you can actually from a value standpoint and start um 597 00:34:24,520 --> 00:34:28,120 Speaker 1: taking away at financials. Here you're getting the banks at 598 00:34:28,640 --> 00:34:30,960 Speaker 1: you know, really cheap price to book levels. Sorry, so 599 00:34:31,000 --> 00:34:34,200 Speaker 1: you're just saying Microsoft is a consumer discretionary because they 600 00:34:34,239 --> 00:34:37,640 Speaker 1: own Minecraft. Right, everybody you know, coast to coast with 601 00:34:37,760 --> 00:34:41,040 Speaker 1: these shutdowns and the kids home, they're all glued to Minecraft. 602 00:34:41,120 --> 00:34:43,640 Speaker 1: So I guess Microsoft can be like you know, Procter 603 00:34:43,760 --> 00:34:46,760 Speaker 1: and Gamble or something like that. Daryl, tell me about 604 00:34:46,760 --> 00:34:49,680 Speaker 1: the financials. That seems to be the surveillance point of 605 00:34:49,719 --> 00:34:52,600 Speaker 1: debate this week. We've got some people saying run, and 606 00:34:52,680 --> 00:34:55,200 Speaker 1: I believe you're saying, no, you see some value within 607 00:34:55,239 --> 00:34:59,680 Speaker 1: the banks. Well, obviously, um, it was time to run 608 00:35:00,040 --> 00:35:03,400 Speaker 1: prior to this, right, I mean the financial or the 609 00:35:03,480 --> 00:35:09,920 Speaker 1: KBW financial indexes on peak to trough um, but you know, again, 610 00:35:10,000 --> 00:35:14,280 Speaker 1: strongest they've been in decades from a capital and liquidity standpoint. 611 00:35:14,360 --> 00:35:16,399 Speaker 1: You guys know that, you know, if I can buy 612 00:35:16,440 --> 00:35:19,719 Speaker 1: financials less than one time's tangible book, which many of 613 00:35:19,760 --> 00:35:23,520 Speaker 1: them today are trading at point six point seven times book, 614 00:35:23,880 --> 00:35:26,319 Speaker 1: you just don't get those opportunities very frequently, Tom, And 615 00:35:26,360 --> 00:35:29,279 Speaker 1: when you do, history tells us twelve twenty four months 616 00:35:29,320 --> 00:35:33,359 Speaker 1: out there exceptional opportunities. So, Sara, we're going to see 617 00:35:33,360 --> 00:35:37,439 Speaker 1: some really really ugly economic numbers over the next several months. 618 00:35:37,480 --> 00:35:39,240 Speaker 1: We've got to taste of that with the childless claims 619 00:35:39,280 --> 00:35:43,799 Speaker 1: of you know, three point to eight million yesterday. How 620 00:35:43,840 --> 00:35:47,200 Speaker 1: can any equity portfolio stacked up against what's going to 621 00:35:47,280 --> 00:35:52,239 Speaker 1: be some rising unemployment just some just incredibly negative to 622 00:35:52,560 --> 00:35:55,520 Speaker 1: q g DP prints Um, it just seems like the 623 00:35:55,560 --> 00:35:58,600 Speaker 1: market is really going to be challenged over the next 624 00:35:58,600 --> 00:36:01,920 Speaker 1: several months. Is that digests all the data? I think 625 00:36:01,960 --> 00:36:03,680 Speaker 1: you're right, Paul, and I think that's why we want 626 00:36:03,680 --> 00:36:07,680 Speaker 1: to be a little bit patient and careful here, because again, 627 00:36:07,840 --> 00:36:10,839 Speaker 1: if you take that phase one, the initial draft down, 628 00:36:11,280 --> 00:36:16,240 Speaker 1: Phase two is often this long elongated um consolidation phase 629 00:36:16,400 --> 00:36:19,440 Speaker 1: of test and retest, volatile up and down, right, so 630 00:36:19,480 --> 00:36:21,319 Speaker 1: you have plenty of time to put capital to work 631 00:36:21,320 --> 00:36:23,479 Speaker 1: in the equity markets. It's not going to get away 632 00:36:23,480 --> 00:36:25,920 Speaker 1: from you to the upside. And then eventually phase three, 633 00:36:26,400 --> 00:36:29,799 Speaker 1: when the data improves, you start to see then you 634 00:36:29,880 --> 00:36:32,799 Speaker 1: break out into the next bowl market. It's interesting if 635 00:36:32,800 --> 00:36:38,719 Speaker 1: you go back and look historically um economic recessions, you know, 636 00:36:38,760 --> 00:36:43,800 Speaker 1: again going back to the average market bottoms four months 637 00:36:43,840 --> 00:36:47,520 Speaker 1: before the recession ends, with an average recession being thirteen months. 638 00:36:47,520 --> 00:36:49,960 Speaker 1: So if you were just worth you know, thirty days 639 00:36:49,960 --> 00:36:52,600 Speaker 1: into this recession, UM, I don't know if the if 640 00:36:52,600 --> 00:36:54,440 Speaker 1: this one's gonna last thirty months. We actually think it 641 00:36:54,480 --> 00:36:57,040 Speaker 1: may be shorter than that because of what happened and 642 00:36:57,080 --> 00:36:59,359 Speaker 1: how we moved into it. But let's just say it's 643 00:36:59,719 --> 00:37:02,680 Speaker 1: you know, four or five six months out, then you 644 00:37:02,719 --> 00:37:05,000 Speaker 1: want to look for four months prior to that is 645 00:37:05,040 --> 00:37:07,880 Speaker 1: when history tells you market from the bottom. This is 646 00:37:07,920 --> 00:37:10,120 Speaker 1: a really really I'm really glad to bring this up there. Oh, 647 00:37:10,160 --> 00:37:13,600 Speaker 1: this is an incredibly important point, and I don't think 648 00:37:13,600 --> 00:37:17,000 Speaker 1: it's ever said enough, particularly within the business media. The 649 00:37:17,080 --> 00:37:23,080 Speaker 1: markets always looking out forward and as a discount mechanism 650 00:37:23,200 --> 00:37:26,280 Speaker 1: of as a general research statement six months. Good morning, 651 00:37:26,480 --> 00:37:29,160 Speaker 1: mss Amherst, which is in Vanderbilt, which you have a 652 00:37:29,160 --> 00:37:33,160 Speaker 1: great heritage of researching. This Has that changed in the 653 00:37:33,239 --> 00:37:38,920 Speaker 1: modern day? Does the market still look out about six months? Yeah, 654 00:37:39,160 --> 00:37:42,879 Speaker 1: it actually does, and I would actually argue it's it's extended, Tom. 655 00:37:42,920 --> 00:37:44,920 Speaker 1: I mean, I think the market is almost trying to 656 00:37:44,960 --> 00:37:49,320 Speaker 1: look out more like nine eleven, maybe been approaching twelve months. 657 00:37:49,360 --> 00:37:52,320 Speaker 1: So um, but I just don't think it's realistic to 658 00:37:52,400 --> 00:37:55,640 Speaker 1: think if we're in a bear market, and we're everybody 659 00:37:55,680 --> 00:37:59,000 Speaker 1: acknowledges ourselves included, that we're in a recession, we don't 660 00:37:59,000 --> 00:38:01,560 Speaker 1: know exactly how long and how deep yet that it 661 00:38:01,600 --> 00:38:04,400 Speaker 1: would be unrealistic to think of bear market last thirty 662 00:38:04,480 --> 00:38:07,120 Speaker 1: days and a recession last thirty days, or it would 663 00:38:07,160 --> 00:38:11,160 Speaker 1: certainly be unprecedented. So Daryl, give us your assessment on 664 00:38:11,239 --> 00:38:13,000 Speaker 1: kind of what we've seen coming out of Washington. The 665 00:38:13,040 --> 00:38:16,440 Speaker 1: Fed seems to have been pretty aggressive, pretty out in front. 666 00:38:16,480 --> 00:38:19,080 Speaker 1: We now looks like we're getting some strong movement with 667 00:38:19,120 --> 00:38:21,759 Speaker 1: two trillion dollars of stimulus. Uh, how do you think 668 00:38:21,800 --> 00:38:26,400 Speaker 1: that's going to impact the economy? Well, it will impact 669 00:38:26,400 --> 00:38:29,320 Speaker 1: the economy. I mean by any means. We've had twelve 670 00:38:29,480 --> 00:38:32,879 Speaker 1: historic policy actions in the month of March. Each one 671 00:38:33,000 --> 00:38:36,600 Speaker 1: unto itself would be a massive story. Uh, Paul and Tom, 672 00:38:36,640 --> 00:38:38,279 Speaker 1: I mean just you know, you can write about this. 673 00:38:38,360 --> 00:38:40,680 Speaker 1: It will go down in the annals history. I mean 674 00:38:40,719 --> 00:38:43,800 Speaker 1: certainly if you take the two trillion dollar package is 675 00:38:43,800 --> 00:38:46,240 Speaker 1: going to get patted in the House today, that's about 676 00:38:46,320 --> 00:38:48,719 Speaker 1: ten of GDP, right, And if you were to add 677 00:38:48,760 --> 00:38:51,359 Speaker 1: in everything to fit either is doing or can do, 678 00:38:51,800 --> 00:38:55,160 Speaker 1: the total stimulus accounts to close to thirty g d P, 679 00:38:55,400 --> 00:38:58,879 Speaker 1: which is nothing like we've ever seen before. Tom, are 680 00:38:58,880 --> 00:39:03,279 Speaker 1: you brave enough to buy investment grade bonds? Yes? We 681 00:39:03,400 --> 00:39:06,400 Speaker 1: like investment grade bonds here and again with the Federal 682 00:39:06,480 --> 00:39:12,080 Speaker 1: Reserve coming in and now beginning through their multiple programs 683 00:39:12,719 --> 00:39:15,240 Speaker 1: not just buying investment grade bonds, but also buying investment 684 00:39:15,280 --> 00:39:18,640 Speaker 1: grade bond ets and everything else. There's really good support. 685 00:39:18,760 --> 00:39:22,000 Speaker 1: You now have what I call the adopted fixed income 686 00:39:22,040 --> 00:39:24,520 Speaker 1: asset groups. And you listen to you what is that? 687 00:39:24,880 --> 00:39:29,160 Speaker 1: What is that? Well, so think about the adopted groups 688 00:39:29,160 --> 00:39:32,319 Speaker 1: are places where the federal Reserve is actively buying so 689 00:39:32,680 --> 00:39:37,880 Speaker 1: municipal bond market, commercial paper, investment grade corporate bonds, asset 690 00:39:37,920 --> 00:39:41,160 Speaker 1: back comcurities. The orphan groups are places where they're not 691 00:39:41,600 --> 00:39:50,880 Speaker 1: high yield non agency CMBs, rmbs, CLO school tuitions. They're 692 00:39:50,680 --> 00:39:55,040 Speaker 1: they're not covering that. Okay, Darryl Crack, thank you so much, 693 00:39:55,040 --> 00:39:56,960 Speaker 1: as well as far ago. That was a great walk through, 694 00:39:57,000 --> 00:40:00,440 Speaker 1: folks of what to do with portfolio. Just one opinion, 695 00:40:00,520 --> 00:40:05,879 Speaker 1: but very very valuable. Paul, I want going to bring 696 00:40:05,880 --> 00:40:10,040 Speaker 1: on our next guest here as we confront this continuing crisis. 697 00:40:10,080 --> 00:40:13,520 Speaker 1: We do this on a beautiful Friday, but beneath the 698 00:40:13,520 --> 00:40:16,440 Speaker 1: beauty of this island of Manhattan and the five bureaus, 699 00:40:16,440 --> 00:40:19,360 Speaker 1: there's a lot going on. Absolutely, Tom, let's get we 700 00:40:19,400 --> 00:40:21,520 Speaker 1: want to get down into the weeds here. This virus 701 00:40:21,600 --> 00:40:25,720 Speaker 1: doctor Critiqua Copolli, infectious disease physician and fellow with John's 702 00:40:25,760 --> 00:40:29,560 Speaker 1: Hopkins Center for Health security, absolutely, no better place to 703 00:40:29,600 --> 00:40:32,760 Speaker 1: go and no better person to chat with here. So, DR, 704 00:40:32,840 --> 00:40:35,560 Speaker 1: give us a sense of kind of where we are 705 00:40:35,800 --> 00:40:39,759 Speaker 1: with the virus right now. Is the US doing what 706 00:40:39,880 --> 00:40:42,319 Speaker 1: it needs to do to slow the growth here because 707 00:40:42,320 --> 00:40:45,799 Speaker 1: the numbers just aren't showing it yet. Yeah, that's a 708 00:40:45,800 --> 00:40:49,320 Speaker 1: really great question. And so as you know, yesterday in 709 00:40:49,400 --> 00:40:53,319 Speaker 1: the US and China with having the greatest sumber of 710 00:40:53,360 --> 00:40:59,000 Speaker 1: cases with UM over eighty six thousand cases. Uh money 711 00:40:59,680 --> 00:41:03,960 Speaker 1: and uh you know that was not unpfucted at all 712 00:41:04,040 --> 00:41:08,880 Speaker 1: given what we were looking at, um, even from a 713 00:41:08,920 --> 00:41:13,120 Speaker 1: few months ago. Uh, were the US is right now? Uh? 714 00:41:13,160 --> 00:41:15,799 Speaker 1: You know, we're still in dire needs. UM. We need 715 00:41:15,840 --> 00:41:20,880 Speaker 1: diagnostics still, we need to still ramp up testing, we 716 00:41:20,920 --> 00:41:24,640 Speaker 1: need ppe for our frontline workers. UM. And so there's 717 00:41:24,640 --> 00:41:28,600 Speaker 1: still a lot of things that we need to have done. So, Dr, 718 00:41:28,719 --> 00:41:32,120 Speaker 1: you know, there's been some discussion, namely from the President, 719 00:41:32,160 --> 00:41:34,880 Speaker 1: about trying to balance the get back to work to 720 00:41:34,920 --> 00:41:38,400 Speaker 1: save the economy versus you know, continuing to shutdown to 721 00:41:39,160 --> 00:41:42,000 Speaker 1: slow the growth of the virus. How do you think 722 00:41:42,000 --> 00:41:46,799 Speaker 1: we should balance that as a country. Yeah, so you know, 723 00:41:47,440 --> 00:41:50,520 Speaker 1: I think we really need to let the numbers and 724 00:41:50,840 --> 00:41:53,600 Speaker 1: what's going on dictate what we do in terms of 725 00:41:53,680 --> 00:41:58,479 Speaker 1: getting back to work and uh reopening things, because what's 726 00:41:58,520 --> 00:42:01,919 Speaker 1: going to happen is the open things too soon. We're 727 00:42:01,960 --> 00:42:04,400 Speaker 1: just going to have a resurgence in the number of cases. 728 00:42:04,680 --> 00:42:08,680 Speaker 1: And while I understand the importance of having our economy 729 00:42:08,800 --> 00:42:12,360 Speaker 1: up and going again, we won't have a functional economy 730 00:42:12,520 --> 00:42:16,000 Speaker 1: if we don't have helping people who are alive to 731 00:42:16,480 --> 00:42:19,359 Speaker 1: interact in the economy. And so I really do think 732 00:42:19,360 --> 00:42:24,000 Speaker 1: we need to let our scientists and our modelers look 733 00:42:24,040 --> 00:42:27,520 Speaker 1: at what's going on and really help advise as to 734 00:42:27,840 --> 00:42:31,040 Speaker 1: what we do. Critiqua. You are you know the leading here. 735 00:42:31,080 --> 00:42:33,319 Speaker 1: I I am thinking of the gentleman of the name 736 00:42:33,400 --> 00:42:36,560 Speaker 1: escase me right now, a gentleman in England who has 737 00:42:36,600 --> 00:42:39,880 Speaker 1: done so much in Africa and really in the combat 738 00:42:39,960 --> 00:42:45,600 Speaker 1: warfare against virus Zeboland all the others as well. How 739 00:42:45,600 --> 00:42:49,640 Speaker 1: do you transfer the lessons learned from the continent of 740 00:42:49,760 --> 00:42:55,160 Speaker 1: Africa over to Brooklyn, New York. Yeah, you know, that's 741 00:42:55,200 --> 00:42:57,799 Speaker 1: That's something I actually have been saying for a couple 742 00:42:57,800 --> 00:42:59,680 Speaker 1: of weeks now, is that we really need to look 743 00:42:59,680 --> 00:43:04,840 Speaker 1: at our colleagues in Africa and um other resource limited 744 00:43:05,120 --> 00:43:07,799 Speaker 1: countries have done as we try and scale up our 745 00:43:07,840 --> 00:43:10,640 Speaker 1: response here. And I think, you know, these are areas 746 00:43:10,640 --> 00:43:14,920 Speaker 1: where they have been used to dealing with infectious diseases outbreaks. 747 00:43:14,920 --> 00:43:19,200 Speaker 1: They're used to having limited resources, and um, they have 748 00:43:19,800 --> 00:43:23,640 Speaker 1: been in some cases verycestball to compating these things that 749 00:43:23,680 --> 00:43:28,960 Speaker 1: we need. This is so so important. I mean, right now, 750 00:43:29,000 --> 00:43:32,520 Speaker 1: the buzz this morning is some guy with brilliant technology 751 00:43:32,560 --> 00:43:35,400 Speaker 1: has figured out where the horde of college kids on 752 00:43:35,440 --> 00:43:38,759 Speaker 1: the beach and Fort Lauderdale, and then they distributed and 753 00:43:38,760 --> 00:43:42,360 Speaker 1: could follow their cell phones across you know, a half 754 00:43:42,400 --> 00:43:46,400 Speaker 1: of America or whatever. You know, you've dealt with people 755 00:43:46,640 --> 00:43:52,160 Speaker 1: that are in dire straits in controlling the virus. How 756 00:43:52,160 --> 00:43:56,759 Speaker 1: do we transfer their seriousness and their adult nous over 757 00:43:56,760 --> 00:43:58,680 Speaker 1: to a bunch of people having a you know, a 758 00:43:58,719 --> 00:44:03,200 Speaker 1: happy hour on a each in Florida. Yeah, it's really hard. 759 00:44:03,600 --> 00:44:07,040 Speaker 1: Um Again, I think it's you know, taking people who 760 00:44:07,080 --> 00:44:11,120 Speaker 1: have the expertise that have worked in places like Africa 761 00:44:11,239 --> 00:44:15,319 Speaker 1: and other research limited country and working to advise our 762 00:44:16,520 --> 00:44:19,400 Speaker 1: governments in our administration and the people who are on 763 00:44:19,440 --> 00:44:22,400 Speaker 1: the ground right now, rather than reinventing the wheel. And 764 00:44:22,440 --> 00:44:24,560 Speaker 1: I see a lot of people trying to reinvent the 765 00:44:24,560 --> 00:44:27,799 Speaker 1: wheel because they haven't dealt with this before, and I 766 00:44:27,840 --> 00:44:30,600 Speaker 1: think they really need to leverage the experience we have 767 00:44:30,719 --> 00:44:32,920 Speaker 1: with people who have been on the forefront of these 768 00:44:32,920 --> 00:44:37,480 Speaker 1: types of outbreaks in the past. Dr Critiqua, thank you 769 00:44:37,520 --> 00:44:40,279 Speaker 1: so much for joining us a smart discussion, Tom, which 770 00:44:40,320 --> 00:44:44,160 Speaker 1: we certainly need here. Dr Capolis infectious disease physician and 771 00:44:44,160 --> 00:44:47,640 Speaker 1: fellow at Johns Hopkins Center for Health Security, and that 772 00:44:47,680 --> 00:44:50,640 Speaker 1: seems pretty appropriate right now. Thanks for listening to the 773 00:44:50,680 --> 00:44:57,160 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 774 00:44:57,520 --> 00:45:01,759 Speaker 1: or whichever podcast platform you refer. I'm on Twitter at 775 00:45:01,800 --> 00:45:06,080 Speaker 1: Tom Keene before the podcast. You can always catch us worldwide. 776 00:45:06,520 --> 00:45:07,600 Speaker 1: I'm Bloomberg Radio.