Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news kind of Bloomberg Markets
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot com. Troubling headlines there a few
Speaker 1: months ago from Mari de Blasio. Now, we knew that
Speaker 1: there were certain areas in some of the boroughs of
Speaker 1: New York City that we're experiencing higher rates of infection,
Speaker 1: but certainly above three percent. It's pretty terrifying because just
Speaker 1: a couple of days ago it was below one. Yeah, exactly,
Speaker 1: So is it The question is it's simply as seasonal
Speaker 1: or is something else going on here? Right? And as
Speaker 1: Mari de Blasio said, the problem is in primarily nine
Speaker 1: of the one D forty six zip codes. But if
Speaker 1: it's an exponential spread and there's any kind of you know,
Speaker 1: bleeding over from those nine zip codes, then so suddenly
Speaker 1: it's eighteen zip codes, and suddenly it's whatever the double
Speaker 1: of eighteen is. Yep, you can do the mathful perfect
Speaker 1: time for next guest, Dr Tom Freed, and former director
Speaker 1: of the c d C and Commission of the New
Speaker 1: York City Health Department. He joins us here. Dr Freed,
Speaker 1: and thanks so much for joining us. Is just just
Speaker 1: perfect timing to get you on. We'd love to get
Speaker 1: your reaction to the news about the New York City
Speaker 1: infection rate. Well, we've been very concerned about what's happening here. Um,
Speaker 1: We've seen for the past couple of weeks UH explosive
Speaker 1: spread really in a few communities, and the question has
Speaker 1: always been is this going to spread more widely outside
Speaker 1: of the community. I've said for a couple of weeks
Speaker 1: that the chances of UH controlling it in these communities
Speaker 1: are are really slim because of the combination of a
Speaker 1: lot of crowding and lack of trust in the government.
Speaker 1: And that kind of combination is just legal to the
Speaker 1: ability to control it. So I expect that we will
Speaker 1: see big increases in these groups. And again the question
Speaker 1: is how why LEE will see cases around New York City.
Speaker 1: I'm a bit frustrated by the lack of clear information
Speaker 1: from New York City since it was taken from the
Speaker 1: Health Department. We just haven't been getting the kind of
Speaker 1: granular information that I would expect. Um, they've been sending
Speaker 1: out news releases every day, but they don't have a
Speaker 1: lot of basic information on them, not even how many
Speaker 1: tests are positive, whether people are being isolated, how long
Speaker 1: it's taken to isolate people, whether contacts are being quarantined,
Speaker 1: what portion of cases are from quarantine contacts. These are
Speaker 1: essential indicators that we really don't know about. So I'm
Speaker 1: quite as a New Yorker, I'm quite concerned about this cluster,
Speaker 1: and I'm hopeful we'll see a better response than we
Speaker 1: have so far. Just to clarify, Dr Freeden, are those
Speaker 1: questions for a city hall? Um, yes, it's basically the
Speaker 1: city government needs to provide that. And um, you know,
Speaker 1: I know they're dealing with a very challenging situation, There's
Speaker 1: no doubt about that. And the most important thing will be, too,
Speaker 1: uh game trust of the affected community and figure out
Speaker 1: ways to control COVID that are accepted by the community,
Speaker 1: and that can be very difficult. Dr Redon. So, the
Speaker 1: three percent is the daily rate of positive tests. Now,
Speaker 1: that is not the r rate, although it is triple
Speaker 1: the amount that we had just a few days ago.
Speaker 1: These are just positive tests. Does that automatically mean that
Speaker 1: the R rate around the city goes higher? And is
Speaker 1: it possible that, you know, we have different our rates,
Speaker 1: that the R rates in those communities you know, expands
Speaker 1: or gets a loss m higher, but in the rest
Speaker 1: of the city it could stay pretty low. Yeah. I'm
Speaker 1: not a huge fan of R as a as an
Speaker 1: instantaneous measure. It relies on a lot of assumptions that
Speaker 1: can be calculated in different ways. It's ironically it's very
Speaker 1: easy to understand, but if you get under the hood,
Speaker 1: it's quite difficult to calculate accurately. And if you look
Speaker 1: at the different calculations, they both vary and have wide
Speaker 1: competent intervals. So I do think present positivity is important. However,
Speaker 1: h since the city is focusing on testing high risk people,
Speaker 1: even that can be a little difficult, and that's why
Speaker 1: I'd rather see things like what proportion of the cases
Speaker 1: do you know where they got it? And how long
Speaker 1: is it taking for you to isolate people who are positive? Uh,
Speaker 1: These are outcome indicators, not process indicators. We'd also like
Speaker 1: to see UH number of infections by area we've had
Speaker 1: over a month of around three cases a day in
Speaker 1: New York City and in that month, we still haven't
Speaker 1: had this information. In fairness, this is something that very
Speaker 1: few places around the US have done, but you know,
Speaker 1: we expect more from New York City. Do you think
Speaker 1: this is going to play out over the coming months?
Speaker 1: As uh DR freed, and obviously there's concerns on a
Speaker 1: national basis about a second wave or just the fall
Speaker 1: and the winter months, you know, igniting growth rates in
Speaker 1: these infections rates and so on. Is that kind of
Speaker 1: your base case scenario? Well, I don't think we should
Speaker 1: be thinking about a second wave. We're going to see
Speaker 1: waves of this infection going on for many months. We
Speaker 1: need to chip away at the pandemic. Even a vaccine
Speaker 1: isn't going to lead to a fairy tale ending here.
Speaker 1: The challenge is to reduce spread through mask wearing and
Speaker 1: closures of crowded indoor places, and to stop cases and
Speaker 1: clusters from spreading by a strategic testing, rapid isolation, complete
Speaker 1: contact tracing, and supportive quarantine and um even when and if,
Speaker 1: if and when we have a vaccine, we're going to
Speaker 1: need to do all of those things. And in New
Speaker 1: York City, which has suffered so much in this pandemic,
Speaker 1: it's particularly important. Yeah, it's really troubling dr freedom because
Speaker 1: there was a time when it wasn't quite clear whether
Speaker 1: it was a post labor day bump, and it's I
Speaker 1: think pretty clear now that it's not that that, at
Speaker 1: least in these communities. It's just bread, right, just just
Speaker 1: general spread. Is it for sure then that things like
Speaker 1: outdoor dining and so on, that that that we'll also
Speaker 1: see spread from that or you know, other events, other gatherings,
Speaker 1: or could this be isolated. One of the reasons we
Speaker 1: need really good public health work is to get a
Speaker 1: better sense of where the virus is spreading. I was
Speaker 1: out and about over the weekend, and you know, outdoor
Speaker 1: dining can mean very open air and likely quite safe.
Speaker 1: I also saw outdoor dining that was essentially in a
Speaker 1: shed with three walls and no ventilation. That is not
Speaker 1: very different from indoor dining. So we are going to
Speaker 1: have to be careful about how we reopen and prioritize
Speaker 1: things like getting our kids back in school. It's really
Speaker 1: important and it can be done. It just means that
Speaker 1: we have to do it carefully. Make sure that teachers
Speaker 1: and students and staff who are vulnerable, continue to learn
Speaker 1: from distant get mask wearing up as close as possible
Speaker 1: in schools, work in cohorts or pods. I think um.
Speaker 1: The fact is that getting kids back to school is
Speaker 1: enormously important where they're learning for our economy, and it
Speaker 1: can be done, but only if it's done very safely.
Speaker 1: Dr Tom fried and thank you so much for joining us.
Speaker 1: A perfect timing here today as we get the news
Speaker 1: about New York City's daily positive rate over three for
Speaker 1: the first time in months. Dr Tom Frieden, former director
Speaker 1: of the CDC and Commissioner of the New York City
Speaker 1: Health Department, also president and CEO of Resolve to Save
Speaker 1: Lives Again, we appreciate your thoughts here again the news
Speaker 1: new York City's daily positive rate over three for the
Speaker 1: first time in months. That's the bed news. The good news,
Speaker 1: perhaps is that it's relatively contained in a certain geographic
Speaker 1: areas around the city. It is time for Bloomberg Opinion.
Speaker 1: We're joined today by Brooke Sutherland Deals and industrial columnists
Speaker 1: for Lumber Opinion to discuss her latest column entitled dark
Speaker 1: time for aviation is about to get darker. Not what
Speaker 1: the airlines needed to hear. Brooke what's the story right
Speaker 1: so this week is when the billion in payroll aid
Speaker 1: that was keeping a lot of those airline workers employed,
Speaker 1: is that to expire. We've had you know, numerous warnings
Speaker 1: from the United Airlines and airlines in particular about the
Speaker 1: volume of layoffs that would do if the aid is
Speaker 1: in fact allowed to expire, and right now that does
Speaker 1: seem to be where we are headed. There's no real
Speaker 1: traction out of Congress and the White House on a
Speaker 1: new deal. They're trying. There's you know, some sort of
Speaker 1: lastment attempts at securing some sort of agreement here, but
Speaker 1: we are getting really down to the wire and it's
Speaker 1: just not clear if there is enough momentum to get
Speaker 1: a deal across the line. So at the very least,
Speaker 1: you know, we may be looking at several thousand layoffs.
Speaker 1: And you know, I think what doesn't get quite as
Speaker 1: much attention because obviously job there's so much of the
Speaker 1: focus here, is that that initial payroll aid also included
Speaker 1: provisions guaranteeing a certain level of service out of these airlines.
Speaker 1: They were required to keep a certain number of flights
Speaker 1: um to locations that they had served pre pandemic. Now
Speaker 1: that did get wocked back slightly just given some of
Speaker 1: the very low demand on a lot of these routes.
Speaker 1: But there are a lot of flights out there that
Speaker 1: don't necessarily need to be kept once this payroll aid expires,
Speaker 1: and so that can have much further reaching ramifications broke.
Speaker 1: We're only at the end of September. Even if we
Speaker 1: do come to some kind of deal, how long for
Speaker 1: will it last. We're hearing now that a vaccine may
Speaker 1: not be available to everybody until you know, the middle
Speaker 1: of next year, as we knew, and that even then
Speaker 1: the original vaccine it won't be perfect right now, I mean,
Speaker 1: I think that's a religious point. Is what's being discussed
Speaker 1: is you know what potentially in a billion in payroll aid,
Speaker 1: and that would go through until March. Now, as you said,
Speaker 1: most predictions don't the vaccine widely commercially available by that point.
Speaker 1: If you look at the air space industry, in particular Boeing, Moody's, UH,
Speaker 1: the International Air Transport Association, Raytheon, take your pick, all
Speaker 1: of these companies are pointing to three four as the
Speaker 1: time period when traffic finally gets back to twenty nineteen level.
Speaker 1: So you're right, we're in for a prolonged recovery. At most, uh,
Speaker 1: an extension of the payroll Aid would just buy time,
Speaker 1: but of course that's valuable time for those thousands of
Speaker 1: airline workers that have stuck around. Um. The other point
Speaker 1: I do want to make is, you know, the payroll
Speaker 1: Aid prevented involuntary layoffs, but there are you know, probably
Speaker 1: an excess of a hundred and fifty thousand people that
Speaker 1: have taken voluntary options at the airline seas include buyouts,
Speaker 1: early retirement, reduced hours, unpaid leave. Um. So there is
Speaker 1: some question about, you know, whether it's the payroll Aid
Speaker 1: as it was initially structured, actually achieved its end ame
Speaker 1: of preserving jobs or if you know, there were a
Speaker 1: lot of workarounds and there's no discussion at this point
Speaker 1: of how just sort of them that tied, mostly just
Speaker 1: because we're having trouble getting traction on any kind of
Speaker 1: deal at all. So, Brooke, is the expectation that this
Speaker 1: will be across the board, every company in the industry,
Speaker 1: all the big airlines will in fact announce furloughs or
Speaker 1: layoffs or is it just going to be companied by company?
Speaker 1: Do you think it's really company by company and it
Speaker 1: really comes down to the number of people that took
Speaker 1: those voluntary options that I mentioned. Um so, Delta and
Speaker 1: Southwest have both said they've gotten really good participation on
Speaker 1: those from their employees and that will help them avoid
Speaker 1: layoffs for at least a little While Southwest has said
Speaker 1: it can hold off until the end of this year,
Speaker 1: Delta has said, you know, at least for its flight
Speaker 1: dependence on groundworkers, it can actually avoid layoffs until the summer.
Speaker 1: Of pilots, on the other hand, are still potentially facing
Speaker 1: cuts at Delta. So it is airline specific, and you know,
Speaker 1: I think the weaker carriers certainly have a harder time
Speaker 1: here in terms of leather during the crisis. But you know,
Speaker 1: again I go back to this does have further ramifications
Speaker 1: in the aerospace industry because of those minimum service levels.
Speaker 1: So we have seen you huge job cuts announcements out
Speaker 1: of the aerospace manufacturers and suppliers, but you could potentially
Speaker 1: see those deepen because if you're not flying as many planes,
Speaker 1: that means you don't need as much maintenance and service work.
Speaker 1: Um those numbers, maybe you know, I've been somewhat inflated
Speaker 1: just because of these minimum service levels and those companies
Speaker 1: depend more on the number of planes that are flown,
Speaker 1: not the number of people that are on them. Um,
Speaker 1: So there is some question of whether we get the
Speaker 1: deeper cuts at the manufacturers. There was a story at
Speaker 1: a Bloomberg News yesterday actually about Boeing planning some deeper
Speaker 1: cuts to its workforce and reevaluating some of its real
Speaker 1: estate holding. So I don't know that was necessarily seeing
Speaker 1: the worst of this yet in terms of the fallout
Speaker 1: on jobs, data from MYATA through July shows airline passenger
Speaker 1: traffic was down for four straight months according to your
Speaker 1: column book. I mean, it's not that all airlines are
Speaker 1: in hoots here, right, some of them have different needs
Speaker 1: to others, and it's it's it may not be in
Speaker 1: everybody's interest to work together. What's happening in Washington, d C.
Speaker 1: Who's taking the lead? You know? So there's been sort
Speaker 1: of bipartisan support for an extension of support to airlines,
Speaker 1: and I think a lot of that just comes down
Speaker 1: to it's not a great headline to have ten thousands
Speaker 1: of workers hitting you know, the unemployment figures just the
Speaker 1: months before the US election, and I don't think anybody
Speaker 1: wants that we are hearing, you know, some frustration on
Speaker 1: the part of other industries that have also been hit
Speaker 1: hard by this crisis, whether that's the motor coach industry,
Speaker 1: or hotels or restaurants or small businesses or what have.
Speaker 1: You think, Okay, well, why are these jobs more important?
Speaker 1: And I think that's factoring into the democrats plush to
Speaker 1: say any kind of and it has to be part
Speaker 1: of a broader stimulus package that we're not going to
Speaker 1: single out the airlines as deserving special treatment. Now that
Speaker 1: of course has been sort of a sticking point to
Speaker 1: getting a deal fun um and you know, we'll have
Speaker 1: to see these since there So Brookie mentioned minimum traffic levels.
Speaker 1: Where are the airlines now in terms of percentage of
Speaker 1: the flights that they are flying in? How much lower
Speaker 1: could it go if they don't have that that minimum standard. Yeah,
Speaker 1: so you know, American Airlines has already come out and
Speaker 1: said that they're planning on outright cutting some service to
Speaker 1: about fifteen cities. And now those are smaller cities, but
Speaker 1: there are companies based and some of those locations, and
Speaker 1: I think some of that, you know, reflects just how
Speaker 1: deeply business travel has dropped. Um. But you know, uh BLO.
Speaker 1: Anys actually did a really interesting analysis finding that US
Speaker 1: airlines current flight schedule for October is about half of
Speaker 1: what the carriers had been planning for that month as
Speaker 1: of August. So you're already seeing those schedules come in
Speaker 1: pretty significantly. UM. Some of that, of course, is, you know,
Speaker 1: once we got past the summer, there just wasn't necessarily
Speaker 1: to pick up in business travel, um, and we travel
Speaker 1: that you might expect, especially after we get through that
Speaker 1: sort of summer peak. But a lot of that is
Speaker 1: the minimum services levels coming off now. You know, so
Speaker 1: many smaller airports might see service cut off together, but
Speaker 1: even the larger ones are going to see flights consolidated. Um.
Speaker 1: You know, you don't need to run five direct flights
Speaker 1: from New York to Kansas City a day, probably just
Speaker 1: need one at this point, um, and even that might
Speaker 1: not even be full. And you know, I think you're
Speaker 1: going to see these flights drops pretty significantly. Brooke, We're
Speaker 1: going to leave it there, but thank you books Southerland
Speaker 1: staying on top of everything aviation related here in the
Speaker 1: United States and abroad, really because it's a it's a
Speaker 1: global industry, and as Brook says in our columns day
Speaker 1: dark time for aviation is about to get darker. Brook
Speaker 1: is Bloomberg Opinion columnists, And that was our Bloomberg Opinion segment.
Speaker 1: All right, it is time to talk. Bankruptcy is another
Speaker 1: very distressing sign of everything that's going on in the country. Well,
Speaker 1: in New York, COVID bankruptcys have spiked, and according to
Speaker 1: our next guest, they're going to spike even more. We've
Speaker 1: only just seen the beginning of the surgeon bankruptcys. Josh
Speaker 1: soul is a distressed debt reporter for Bloomberg again and
Speaker 1: collaborated on the COVID bankruptcy is New York Sports Club.
Speaker 1: But to Sizzler, Josh, thanks for joining give us an update.
Speaker 1: Where exactly are we in the in the retail, restaurant, airline,
Speaker 1: oil producer, hotel bankruptcy process? Hey Bonnie, thanks for having me. Yeah,
Speaker 1: what we saw when we looked at bankruptcy filings in
Speaker 1: the New York region, which is we saw increase in
Speaker 1: bankruptcy is when compared to the same period last year.
Speaker 1: You know, kind of March to September is the pandemic period,
Speaker 1: and we saw a big increase. Um. We also saw
Speaker 1: that about six thousand New York City businesses closed, about
Speaker 1: four thousand of those permanently. That's information from yelp. UM.
Speaker 1: That's not a complete picture, UM, but those are some
Speaker 1: of the metrics we have to show that, Um, the
Speaker 1: New York region is is really there's really suffering, and
Speaker 1: what a number of experts told us is that it's
Speaker 1: going to get worse. Wow. So it's interesting, Josh. I mean,
Speaker 1: as I came into the city a couple of weeks ago,
Speaker 1: I was just blown away, unfortunately by all the vacant
Speaker 1: store is in the signs for you know, stores for
Speaker 1: for lease and gone out of business here and working.
Speaker 1: And that was when there was some supports and fiscal
Speaker 1: stimulus still in the marketplace. What's the expectation here for
Speaker 1: some of these business Will they be permanently closed or
Speaker 1: do you think these are businesses that can come back.
Speaker 1: What's the feeling at this point? Well, exactly what you
Speaker 1: just said is so what is what some of the
Speaker 1: experts highlighted, which is that as the p PP money
Speaker 1: runs out, UM, you have more businesses that just say
Speaker 1: like well yeah, like it doesn't look like there's any
Speaker 1: more coming and there's not really any light in the
Speaker 1: light on the horizons. So I'm gonna I'm gonna now
Speaker 1: shut down. Um, I'm not going to shut down completely.
Speaker 1: And um, exactly what you saw. You can see in
Speaker 1: you know, business districts all over the city. I chose
Speaker 1: Madison Avenue. Um, you know, partly because it's so iconic,
Speaker 1: partly because it's close to my in law's house where
Speaker 1: I where I worked during the day. But I was
Speaker 1: able to walk down there on a series over there
Speaker 1: on a series of afternoons and count the number of
Speaker 1: shuttered buildings. And Madison Avenue, I mean, is a an
Speaker 1: iconic shopping district you know, the world over, glamorous, glamorous
Speaker 1: and beautiful people spending huge amounts of money. And what
Speaker 1: I saw was, um, after a careful count, you know,
Speaker 1: the stores were closed completely. Um. And the ones that
Speaker 1: were open, even the real you know, Dula and Gabana
Speaker 1: and product even like the big big names. You know,
Speaker 1: you have a couple of you know, well dressed sales
Speaker 1: salespeople and some broad shoulder and security guards kind of
Speaker 1: standing around with no customers. It was it was almost eerie,
Speaker 1: how quiet, how quiet and desolate it was. Of course,
Speaker 1: and some of this is that there are no tourists
Speaker 1: coming in, and we know that a lot of tourists
Speaker 1: would go to these areas and spend money having waited
Speaker 1: a long time to get to places like Madison Avenue, Tiffany,
Speaker 1: these all these famous names. But the problem also is
Speaker 1: that you know when you talk about a business, it's
Speaker 1: an ongoing concern, and that that's language used for a reason.
Speaker 1: So for example, California Pizza Kitchen, which you would think
Speaker 1: was a great business that would have plenty in reserve,
Speaker 1: I mean it's gone bankrupt because businesses are ongoing concerns,
Speaker 1: and if people stop eating pizza, you don't have very
Speaker 1: much time before you have to close up shop. Exactly right.
Speaker 1: And actually I happen to be covering on my bankruptcy
Speaker 1: beat three pizza, three pizza chains or pizza operators, So
Speaker 1: Chuck E Cheese. Um, I've been listening to very sad
Speaker 1: you know, as memories of going to Chuck E Cheese
Speaker 1: as a kid. I've been listening to very very sad
Speaker 1: bankruptcy hearings. Where they where they where they're like where
Speaker 1: they where you know where they talk about like your honor?
Speaker 1: We need we need permission to destroy all of these
Speaker 1: tickets because otherwise, if they get out of the market,
Speaker 1: we're gonna be on the hook for all the prizes. Um.
Speaker 1: But these are all these are all tickets that we're
Speaker 1: not going to use because no one's coming in because UM,
Speaker 1: we can't we can't be we can't be running inside.
Speaker 1: And UM. Also the biggest operator of Pizza Hut restaurants
Speaker 1: and PC also filed for bankruptcy. And then as as
Speaker 1: you mentioned, California Pizza Kitchen, and yeah, people are people
Speaker 1: aren't going out and sitting down UM. And these businesses
Speaker 1: are are really hurting. UM. So yeah, they're they're very
Speaker 1: tough out there. So Josh, is there what's the next?
Speaker 1: Is there? It? I think thinking across retail in general,
Speaker 1: are they lobbying hard downa Washington for more stimulus? I
Speaker 1: think I think people would really really like to see
Speaker 1: more stimulus, definitely. UM. Another point I wanted to wanted
Speaker 1: to make is when you mentioned tourists. UM, the point
Speaker 1: that we really uh, that we really heard about from
Speaker 1: a lot of experts is that while tourists are important
Speaker 1: office workers, when office workers aren't coming into the city,
Speaker 1: when they're staying at home and they're working at home.
Speaker 1: They're not They're not going to Chopped to pick up
Speaker 1: a quick twelve dollar salad. They're not going to Jimmy's
Speaker 1: to grab some lamb on rice. They're not stopping in
Speaker 1: to maybe buy a quick gift for their loved one.
Speaker 1: At Adults at dulce Um, there's just no there's just
Speaker 1: no foot traffic. And the number we heard, uh, you
Speaker 1: know about fifteen percent of office workers are back in Manhattan. Um.
Speaker 1: That's of the foot traffic you're used to. That is
Speaker 1: not enough to keep you know, a salad shop or
Speaker 1: a luxury retailer going. Yes, I regularly pump into Adulte
Speaker 1: for a little thing on my way home from my
Speaker 1: love to want you just to keep the family happy,
Speaker 1: you know, just to keep keep the kids happy. Weather
Speaker 1: jackets for everyone. Totally, so, Josh, how many of these
Speaker 1: will reorganize? You know, Judges allow time to sort of
Speaker 1: come up with a plan and in a few months
Speaker 1: of time, this conversation will be like it doesn't matter
Speaker 1: because we can go to jockeys again. You know. We
Speaker 1: we we're talking about some we're talking about permanent closures here. Um,
Speaker 1: the New York Uh, the Business Group in New York
Speaker 1: estimated that up to a third of New York City
Speaker 1: businesses could close completely. Um. And a lot of our
Speaker 1: favorite a lot of our favorite shops. Um, they don't
Speaker 1: even file for bankruptcy, they just lock up that They
Speaker 1: just sometimes they just locked the door and walk away.
Speaker 1: So UM, there will be some there will be some restructurings. UM,
Speaker 1: but we're also going to see some just you're never
Speaker 1: gonna have your your favorite eggs and bacon at your
Speaker 1: at your corner diner because that place is just gone. Hey, Josh,
Speaker 1: thanks so much for joining us and for this reporting.
Speaker 1: Josh Saul Distressed Debt and Bankrpacity Reporter. Uh, fantastic column today,
Speaker 1: Very very dire the economic situation in New York and
Speaker 1: likely to get worse. Well, not that the market didn't
Speaker 1: have enough to deal with in terms of external uncertainties
Speaker 1: with the pandemic and the economic fallout. Now in the
Speaker 1: US big election coming up in just a matter of weeks.
Speaker 1: To get a sense of how one of the largest
Speaker 1: institutional investors in the world is thinking about it, we
Speaker 1: welcome Andy Blocker ahead of US Government Affairs for invest go.
Speaker 1: They have over one point one trillion dollars in assets
Speaker 1: under management. He joins us in Washington, Andy, thanks so
Speaker 1: much for joining us here. Let's focus on the election.
Speaker 1: One of the key issues that I think concerns investors
Speaker 1: is what if this is not a smooth, clean, timely election.
Speaker 1: What if there's some level of UH people contesting the
Speaker 1: election and maybe even delaying the announcement of some results.
Speaker 1: How do you guys think that's going to play out? So, Paul,
Speaker 1: thanks for having me on UM. I think that's a
Speaker 1: great question. That's a question on a lot of people's
Speaker 1: mind right now. I think it's pretty clear that with
Speaker 1: mail in voting and the pandemic situation, that we may
Speaker 1: not know the ultimate winner on the night of the election,
Speaker 1: but we could know it within the next couple of
Speaker 1: days of the election. So I don't really see it
Speaker 1: as being a long term uncertainty. But for any peats
Speaker 1: uncertainty there definitely creates volatility in the market, but longer
Speaker 1: term it really doesn't have an impact. So all of
Speaker 1: the choices that you've been making for your clients and
Speaker 1: so on, are you sticking with them or is there
Speaker 1: anything that would make you change some of those There's
Speaker 1: nothing really that's helping us, making us change it right now.
Speaker 1: I think it's really we're right now saying, look, any
Speaker 1: volatility is going to happen, it's going to be more
Speaker 1: short term. And there are some issues out there visa
Speaker 1: vis Um Biden and Trump where there may be a difference,
Speaker 1: but those are on the micro level, not on the
Speaker 1: macro level. On the macro level, we don't think it
Speaker 1: matters who is the president. But on the micro level,
Speaker 1: we do think certain sectors were paying attention are definitely healthcare, tech, um,
Speaker 1: building in trades, fossil fuel. Those are things we're looking
Speaker 1: at very closely because their problicies are much different. So, Andy,
Speaker 1: how about a scenario that some people paint us, you know, possibly,
Speaker 1: certainly possible, is a democratic administration as well as a
Speaker 1: democratic Senate. How does that play out for you guys,
Speaker 1: because that is what some people are beginning to discount. Yeah, So,
Speaker 1: if if Vice President Biden is able to become president um,
Speaker 1: there's a more likely chance that he also takes the Senate.
Speaker 1: And as we know historically, when one party has all
Speaker 1: levels of power in the government, presidency, House, and Senate,
Speaker 1: that's a chance for some major legislation. We saw with
Speaker 1: Obamacare under Obama. We saw the first two years of
Speaker 1: Trump he was able to get major tax reformed through.
Speaker 1: So that will clear the way for some major palsy changes.
Speaker 1: I think, UM, Vice President Biden would would focus first
Speaker 1: and foremost on infrastructure and dealing with and dealing with
Speaker 1: COVID nineteen response UM and UM, I think that could
Speaker 1: see a lot of changes that could impact people. Healthcare
Speaker 1: is another thing we're looking at. UM. You definitely want
Speaker 1: to want to expand on Obamacare, and that's going to
Speaker 1: affect a lot of companies in those sectors enough to
Speaker 1: make you sort of want to buy those companies or
Speaker 1: sell those companies. And when do you make that decision?
Speaker 1: Is it the day after the election resulted out? Well,
Speaker 1: you try to beat it actually, so yes, UM, I
Speaker 1: think Look, I mean with last with two thousands sixteen
Speaker 1: and the surprise we had there, I think it's kind
Speaker 1: of tough on that. But I think there's some areas
Speaker 1: where UM. I don't want to be too specific on
Speaker 1: this because it's it's too fluid right now, but yes,
Speaker 1: we are making sure that the people we're revising no
Speaker 1: the right areas to go. UM. Look, health, health insurance,
Speaker 1: is even outside the election. It's really about the Supreme
Speaker 1: Court right now. If you look at the health insurance sector,
Speaker 1: how impact it would be within the discussion on Obamacare
Speaker 1: and whether it's constitutional, that's that's in the front and center.
Speaker 1: So we're looking at a lot of those areas. So, Andy,
Speaker 1: one of the areas that the market liked when President
Speaker 1: Trump was elected was the one of regulation. The expectation
Speaker 1: that a Republican president with Republican Senate, uh, would be
Speaker 1: deregulatory is the opposite, uh, kind of on your menu
Speaker 1: if the Senate and the White House go democratic here, Yeah,
Speaker 1: So I think if if the if Biden is elected president,
Speaker 1: regardless of the Senate, the regulatory burden will increase. Okay,
Speaker 1: We're gonna go from a de regulatory environment to at
Speaker 1: least a neutral in some sectors and m a reversal
Speaker 1: on others. If he has a Senate, it will happen
Speaker 1: even faster because there's something called the Congressional Review Act,
Speaker 1: which Trump used in two thousand six seventeen when he's
Speaker 1: elected to reverse some of the last minute proposals that
Speaker 1: the Obama administration put through. So anything done the second
Speaker 1: half of this year would potentially be in jeopardy of
Speaker 1: just being reversed immediately with a majority vote in the
Speaker 1: House and Senate in the signature of the president. And
Speaker 1: then from there, I think there would be an effort
Speaker 1: on some environmental policy and financial regulation to continue along
Speaker 1: a different path. What's your review right now on the
Speaker 1: possibility of stimulus and when it might get done, if
Speaker 1: at all? So as far as um, if you're talking
Speaker 1: about COVID nineteam release that's currently being debated this year
Speaker 1: before the election, Um, look, I mean there's efforts. I
Speaker 1: think Speaker Pelosi and Sectary Treasure Minution have been talking consistently. Um.
Speaker 1: I think Speaker Pelosi is gonna put a new bill
Speaker 1: on the floor this week. But right now we don't
Speaker 1: really see a leverage point for that happening. It's it's
Speaker 1: tough to get by parts and cooperation in the middle
Speaker 1: of of a full blown election season. But we do
Speaker 1: think it eventually happen. It just may not have until
Speaker 1: the after the election. But once it happens, I think
Speaker 1: it will be in you know, the one point five
Speaker 1: chillion dollar range. So, Andy, are you surprised that we
Speaker 1: haven't gotten something done here? I mean the need appears
Speaker 1: to be really acute here. We just had some news
Speaker 1: today about the difficult difficult times that the retailers in
Speaker 1: New York City are facing. It just seems to be
Speaker 1: so acute, and it seems to be an election year,
Speaker 1: why not pass it? I think there are some pressure points.
Speaker 1: I think you've mentioned one of them also, the airlines
Speaker 1: that said if they don't get relief October one, they're
Speaker 1: gonna lay offensive sounds of workers. You have those who
Speaker 1: are unemployed who are no longer getting the six hundred
Speaker 1: dollars additional each week. UM. So there are different pressure points.
Speaker 1: But politically right now, things haven't aligned, and so we're
Speaker 1: looking for those leverage points to push them. They haven't.
Speaker 1: Really it's not there yet, and but I do think
Speaker 1: it's enough there. That's why I think Speaker Pelosi is
Speaker 1: putting together another bill to pass this week. I think
Speaker 1: a lot of her UM moderate members are feeling a
Speaker 1: lot of pressure to get something done. All right, our
Speaker 1: thanks to you indeed for joining us today, and we'll
Speaker 1: hopefully talk to you again after this debate and before
Speaker 1: the election. Great chatting with you, Andy Blocker. Ahead of
Speaker 1: US Government Affairs Investco, which of course has one point
Speaker 1: one four or five trillion in assets under management. We
Speaker 1: do have some more headlines that are a little bit traveling.
Speaker 1: New York COVID patients hospitalized now are at the highest
Speaker 1: since August seventh poll. So that's five d seventy one
Speaker 1: people hospitalized. And we had the data out a few
Speaker 1: moments ago the numbers that are actually testing positive, and
Speaker 1: it was above a thousand again, so eighty nine. So
Speaker 1: yesterday was a one day reprieve and we're back up
Speaker 1: above a thousand again. Yeah, and I guess the only
Speaker 1: silver lining I can take from the story is that
Speaker 1: it's relatively regionally located in small areas, so hopefully the
Speaker 1: city can really contain it and treat it in the
Speaker 1: short term. Yeah. And indeed, you know, the mayor said
Speaker 1: that testers were sent out as well, so hopefully if
Speaker 1: if they have been out of those areas, we'll know
Speaker 1: where and be able to dampen it. Thanks for listening
Speaker 1: to Bloomberg Markets podcast. You can subscribe and listen to
Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and
Speaker 1: I'm Paul Sweeney I'm on Twitter at pt Sweeney Before
Speaker 1: the podcast. You can always catch us worldwide at Bloomberg
Speaker 1: Radio