WEBVTT - Bloomberg Wall Street Week: Lamont, Rattner & Summers 0:00:00.160 --> 0:00:03.360 This is Bloomberg Wall Street Week. What's the state of 0:00:03.400 --> 0:00:06.120 corporate government? So the deficit is a real issue. The 0:00:06.200 --> 0:00:09.800 US economy continues to send mixed signals, the financial stories 0:00:09.840 --> 0:00:12.680 that cheap our world fed action to con concerns over 0:00:12.760 --> 0:00:16.239 dollar liquidity and encouraging China data the five hundred wealthiest 0:00:16.239 --> 0:00:18.360 people in the world. Through the eyes of the most 0:00:18.480 --> 0:00:22.520 influential voices Larry Summers, the former Treasury Secretary, START CEO, 0:00:22.680 --> 0:00:26.360 Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week 0:00:26.480 --> 0:00:30.680 with David Weston from Bloomberg Radio. A cold dose of 0:00:30.720 --> 0:00:34.440 reality from the experts and equities appear to pay attention. 0:00:34.920 --> 0:00:38.760 This is Bloomberg Wall Street Week. I'm David Weston. Welcome back. 0:00:39.159 --> 0:00:41.320 Let's turn to the state of Connecticut. Now it has 0:00:41.360 --> 0:00:44.159 had more than thirty thousand COVID cases so far and 0:00:44.280 --> 0:00:46.560 very sadly were the three thousand deaths. But at the 0:00:46.600 --> 0:00:49.520 same time, hospitalizations are coming down as it looks toward 0:00:49.560 --> 0:00:52.440 a possible deadline for maybe some relief from some of 0:00:52.440 --> 0:00:54.840 the restrictions coming up on May twenty were welcome now 0:00:54.880 --> 0:00:57.520 an exclusive interview the governor of the state of Connecticut. 0:00:57.520 --> 0:00:59.280 He is ned Lamont and Mr Governor, thank you so 0:00:59.360 --> 0:01:01.520 much for joining said giving a sense, your sense of 0:01:01.560 --> 0:01:04.200 where the disease is in your state and what do 0:01:04.240 --> 0:01:06.240 you need to see between now and May twenty to 0:01:06.280 --> 0:01:08.960 relieve at least some of those restrictions. Well, Connecticut got 0:01:09.000 --> 0:01:11.200 pretty hard. We were right next to a New York 0:01:11.280 --> 0:01:14.920 city which was many ways the wuhan province of the 0:01:14.959 --> 0:01:18.520 pandemic here in the United States. And but now it's 0:01:18.640 --> 0:01:22.280 uh you know, six weeks later, all those curves are 0:01:22.319 --> 0:01:26.960 bending in the right direction. We have extra hospitalization capacity there, 0:01:27.000 --> 0:01:29.640 which was a key metric. We're finally getting the PP 0:01:29.959 --> 0:01:33.880 We delivered it ourselves, brought it from China, complicated process, 0:01:34.000 --> 0:01:36.880 I might say, we got track and trace and testing 0:01:36.920 --> 0:01:39.480 ready to go, and these are the key metrics we 0:01:39.520 --> 0:01:42.360 needed to give people confidence we could begin to reopen 0:01:42.720 --> 0:01:45.560 on May. Governor, can you give us any sense of 0:01:45.600 --> 0:01:47.960 the distribution across the state, And I mean, I guess 0:01:48.040 --> 0:01:51.800 both socio economic but also geographic. We see some differences 0:01:51.840 --> 0:01:53.680 in some states. In fact, of course New York is 0:01:53.720 --> 0:01:56.920 a larger geographic state. There's gonna be differences in the reopening. 0:01:57.000 --> 0:01:59.560 Is that going to apply in Connecticut? Well, first, of all, UM, 0:01:59.800 --> 0:02:03.160 we were hit in different ways in different regions. You know, 0:02:03.240 --> 0:02:06.160 Fairfield County, which is closest to New York City, was 0:02:06.240 --> 0:02:09.680 hit the hardest, hit the earliest, went right down Metro 0:02:09.840 --> 0:02:13.800 North and up through a Bridgeport New Haven, Hartford. That 0:02:13.919 --> 0:02:16.880 was the area that probably got hit the hardest because 0:02:16.919 --> 0:02:19.600 of the proximity to New York. And now we've got 0:02:19.600 --> 0:02:22.359 eastern Connecticut, which is the New London area, and maybe 0:02:22.400 --> 0:02:24.960 a little bit of Boston is coming down that way 0:02:25.000 --> 0:02:28.440 as well. But we're a pretty small states. So our 0:02:28.560 --> 0:02:32.960 anticipation is we're gonna open on a statewide basis, uh, 0:02:33.160 --> 0:02:35.960 on a very thoughtful way, and on some things, we 0:02:35.960 --> 0:02:38.360 want to do it in the association with our neighboring governors. 0:02:38.360 --> 0:02:41.040 It doesn't do me any good to UM close down 0:02:41.040 --> 0:02:43.600 bars and restaurants if Andrew Cuomo opens them up in 0:02:43.639 --> 0:02:47.600 Westchester County, So we're doing some things in conjunction. Yeah, 0:02:47.680 --> 0:02:50.600 govern As you mentioned, there's so much integration between Connecticut 0:02:50.680 --> 0:02:52.720 and particularly New York City and the New York City area. 0:02:53.040 --> 0:02:56.160 What about those commuter trains, well, that posed a particularly 0:02:56.200 --> 0:02:57.520 challenge for you because we have a lot of people 0:02:57.560 --> 0:02:59.639 going back and forth between Connecticut and New York every 0:02:59.639 --> 0:03:02.120 single on those trains. Uh there were a lot of 0:03:02.200 --> 0:03:05.399 people going back and forth, and we thought about that, 0:03:05.800 --> 0:03:10.440 but within a few weeks ridership was down. So I 0:03:10.440 --> 0:03:12.840 think people have voted with their feet, so to speak. 0:03:12.880 --> 0:03:15.400 They started staying at home and they started telecommuting, or 0:03:15.440 --> 0:03:18.239 they drove if they had to, which was a good thing. 0:03:18.400 --> 0:03:20.919 So um governor call and I thought about what we 0:03:20.960 --> 0:03:24.040 should do with sayt Metro North the rail system decided 0:03:24.080 --> 0:03:26.560 it was probably first responders and people that really had 0:03:26.600 --> 0:03:28.520 no other way to get to work. So we did 0:03:28.600 --> 0:03:31.720 keep it open on a limited basis. But as you reopen, 0:03:31.840 --> 0:03:34.920 as as we reopened, will we'll be looking at certain curtailment, 0:03:34.960 --> 0:03:37.720 for example, a capacity of the seating arrangement, things like that. 0:03:37.760 --> 0:03:40.520 In the commuter trains, we're certainly going to be very 0:03:40.560 --> 0:03:44.920 strict about um uh de sanitizing and making sure everything 0:03:45.000 --> 0:03:48.160 is clean on a real basis, probably gonna discourage people 0:03:48.240 --> 0:03:51.160 from going in the train for the near term, Probably 0:03:51.280 --> 0:03:54.800 gonna strongly recommended everybody used mass in the train for 0:03:54.840 --> 0:03:57.320 the near term. But I think even bigger, I think 0:03:57.320 --> 0:04:00.400 you're gonna find that um the old idea of the 0:04:00.440 --> 0:04:03.120 commuter going into New York City five days a week. 0:04:03.200 --> 0:04:05.560 Maybe an idea of this behind us. I think we 0:04:05.680 --> 0:04:09.680 found at the end of this COVID session UM that 0:04:09.760 --> 0:04:12.720 we're realizing the telecommunity in many cases work. So maybe 0:04:12.720 --> 0:04:14.680 you have a great job that seems to be a 0:04:14.720 --> 0:04:17.599 geographically located New York City you can do with two 0:04:17.640 --> 0:04:19.960 thirds of the time from you're a home in Stanford. 0:04:20.279 --> 0:04:24.360 As you look towards possible reopening, Uh, what is your 0:04:24.400 --> 0:04:27.719 situation this stick to testing sort of tracing and hospital capacity. 0:04:27.760 --> 0:04:30.080 You said you have the hospital capacity you need right now, 0:04:30.279 --> 0:04:32.800 but in case there's a flare up, how much capacity 0:04:32.800 --> 0:04:34.560 do you have to deal with it? Well, we have 0:04:35.320 --> 0:04:39.840 capacity now, and I think that's a pretty good benchmark. 0:04:39.880 --> 0:04:42.360 If there's a flare up, I would rethink things if 0:04:42.360 --> 0:04:45.599 we got the eighty or nine capacity. Obviously we have 0:04:45.720 --> 0:04:48.040 capacity now. In fact, they're going back and doing some 0:04:48.120 --> 0:04:51.560 of the so called electors, many of which were important 0:04:51.560 --> 0:04:55.040 operations that were put off and should be taking place now. 0:04:56.360 --> 0:04:59.240 The testing, UM, we've ramped that up. We're doubled it 0:04:59.279 --> 0:05:01.680 from last week. We'll double it again next week. So 0:05:01.720 --> 0:05:04.440 we'll be doing about forty two thousand tests a week 0:05:04.640 --> 0:05:07.760 starting next week. Governor. You mentioned that PPE, that personal 0:05:07.760 --> 0:05:10.440 protective equipment that you bought from China, a fair amount 0:05:10.440 --> 0:05:12.280 of it. Now, have you had any issues with the 0:05:12.400 --> 0:05:14.479 quality of that, because there have been some other places 0:05:14.520 --> 0:05:16.680 around the world and even around the country who bought 0:05:16.760 --> 0:05:18.320 things from China and it turns out it didn't work 0:05:18.320 --> 0:05:21.080 so well. Whether it's testing kits or whether it's PPE. 0:05:21.400 --> 0:05:24.400 We had to be very careful and how you vet this, 0:05:24.560 --> 0:05:27.760 that's that's a good question. And let's face it, you know, 0:05:28.000 --> 0:05:30.200 a month or so ago when people were really scrambling 0:05:30.240 --> 0:05:32.440 the globe, but everybody had a friend who had a 0:05:32.480 --> 0:05:35.040 cousin in Ukraine who did some work with Rhody Giuliani, 0:05:35.279 --> 0:05:37.479 and you didn't know where you were getting this stuff from. 0:05:38.080 --> 0:05:40.040 We didn't do any of that, but we found this. 0:05:40.200 --> 0:05:43.360 We vetted it very carefully, working closely with the government 0:05:43.440 --> 0:05:47.039 of China, working with some strong relationships we had here 0:05:47.080 --> 0:05:49.640 with the business people in Connecticut. So I have it 0:05:49.720 --> 0:05:53.039 on high confidence this is the right stuff going forward. 0:05:53.080 --> 0:05:56.040 And you've been coordinating with Governor Cuomo, Governor Murphy down 0:05:56.040 --> 0:05:57.960 in New Jersey and things like that. Do you envision 0:05:57.960 --> 0:06:00.120 a world in which those three states and maybe more 0:06:00.120 --> 0:06:03.760 really get together in the manufacturing and purchasing a ppe 0:06:03.760 --> 0:06:06.520 and stockpiling. Yeah, I think that makes all the sense 0:06:06.520 --> 0:06:09.039 in the world. You know, we've got a buying consortium now, 0:06:09.080 --> 0:06:11.920 so it's not little Connecticut going all the way to 0:06:12.000 --> 0:06:14.760 China to buy this product. But even more importantly, we 0:06:14.760 --> 0:06:17.560 ought to figure out who is good at manufacturing what. 0:06:17.760 --> 0:06:20.479 We've got a facility here in this state that makes vents. 0:06:20.640 --> 0:06:23.839 Gina Romando up in Rhode Island has a growth that's 0:06:23.880 --> 0:06:27.159 making a mass in a significant way. Phil Murphy. They've 0:06:27.200 --> 0:06:29.440 got some of the best pharma in the country and 0:06:29.480 --> 0:06:31.960 are doing the saliva tests. So I think there are 0:06:31.960 --> 0:06:34.120 a lot of ways we can mix and match. That 0:06:34.200 --> 0:06:38.960 was Connecticut Governor Ned Lamont coming up looking for green shoots. 0:06:39.400 --> 0:06:42.480 Could the auto industry point the way toward a rebound? 0:06:43.000 --> 0:06:45.400 We talked with Wall Street veteran and architect of the 0:06:45.440 --> 0:06:49.160 auto industry recovery, Steve Rattner. That's next on Wall Street 0:06:49.200 --> 0:06:58.640 Week on Bloombergo. This is Bloomberg Wall Street Week with 0:06:58.800 --> 0:07:02.919 David weston bloom Bird Radio. Whether driven by electricity or 0:07:02.960 --> 0:07:07.040 internal combustion engines, autobiles have long been an important indicator 0:07:07.080 --> 0:07:10.160 of the overall economy. And they may be showing some 0:07:10.280 --> 0:07:13.320 slight signs of a rebound. Steve Ratner is a veteran 0:07:13.320 --> 0:07:15.880 of Wall Street who also headed up Prisoner Obama's efforts 0:07:15.960 --> 0:07:18.400 to save the auto industry, and we asked him whether 0:07:18.440 --> 0:07:21.600 he could see some indications of a rebound overall economy 0:07:21.840 --> 0:07:24.400 from what we're seeing from autobiles. David, I think we 0:07:24.480 --> 0:07:28.240 have to be careful not to be misled by early 0:07:28.320 --> 0:07:30.880 signs of what may seem like spring we are going 0:07:30.960 --> 0:07:32.760 to see. And there's already a little bit of a 0:07:32.800 --> 0:07:35.720 tiny little bit of evidence of a pick up in 0:07:35.840 --> 0:07:39.600 car sales from obviously an abysmally low level in the 0:07:39.640 --> 0:07:43.520 month of a month of April. But this is this 0:07:43.680 --> 0:07:47.440 is all going to be relatively small potatoes compared to 0:07:47.600 --> 0:07:49.640 the distance we have to go to get back to 0:07:49.680 --> 0:07:52.320 where we were before all this started. And I am 0:07:52.680 --> 0:07:55.920 pretty pessimistic about our ability to get back to that 0:07:55.960 --> 0:08:00.800 point at any time in the immediate or imaginable future. Well, 0:08:00.800 --> 0:08:03.520 we heard some of the pessismism, or at least realism 0:08:03.560 --> 0:08:06.400 perhaps from the Fed chair J. Powey and his remarks 0:08:06.400 --> 0:08:10.360 where he really warned about things like mass bankruptcy and unemployment. 0:08:10.480 --> 0:08:13.640 If we don't do even more in the financial financial, 0:08:13.760 --> 0:08:16.680 the fiscal and the monetary side. Is there more that 0:08:16.840 --> 0:08:20.880 Cannon should be done to try to bring that recovery sooner? Yes, absolutely, 0:08:21.000 --> 0:08:24.880 I I am completely in agreement with Chairman Powell, not 0:08:24.920 --> 0:08:29.080 that he needs my support for his for his thoughts. Look, 0:08:29.280 --> 0:08:31.400 as I said, I think I think the notion that 0:08:31.440 --> 0:08:33.880 we are facing a V shaped recovery where it's all 0:08:33.920 --> 0:08:35.800 going to bounce back. Car sales are gonna go back 0:08:35.840 --> 0:08:38.640 to seventeen million, people are going to travel and spend 0:08:38.880 --> 0:08:40.720 and go to Disney World and all those kinds of 0:08:40.760 --> 0:08:43.880 things is frankly a fantasy. Uh. This has been an 0:08:44.000 --> 0:08:47.320 enormous shock to the economic system. There's been much permanent 0:08:47.480 --> 0:08:50.760 job loss. Factories that are never going to reopen, restaurants 0:08:50.800 --> 0:08:53.000 that are never going to reopen, companies that are never 0:08:53.040 --> 0:08:54.920 going to rehire back or at least not in the 0:08:54.960 --> 0:08:57.880 foreseeable future, all the people that they have laid off. 0:08:58.200 --> 0:09:00.280 And so we do need to do more. But I 0:09:00.320 --> 0:09:04.080 think it needs to be not just providing income support 0:09:04.160 --> 0:09:07.280 to Americans who have lost their jobs and businesses that 0:09:07.320 --> 0:09:09.720 are in danger of failing, but also we need to 0:09:09.760 --> 0:09:13.680 really rebuild America. We need to finally do something on infrastructure. 0:09:13.960 --> 0:09:16.920 We need to do something about retraining and finding jobs 0:09:17.240 --> 0:09:18.880 for the people who are not going back to their 0:09:18.920 --> 0:09:21.520 old jobs, because this whole economy is going to shift 0:09:21.559 --> 0:09:25.760 into a somewhat different focus. And so yeah, there's an 0:09:25.840 --> 0:09:28.280 enormous amount of Congress can do. The question is whether 0:09:28.320 --> 0:09:30.480 they have the will to do it. In the meantime, 0:09:30.520 --> 0:09:32.880 we have a big investors trying to decide what to do. 0:09:32.920 --> 0:09:35.560 We heard Stanley Duckomer and on temperate thing. They're very 0:09:35.600 --> 0:09:39.640 concerned with the equity markets, being overallly optimistic about the future. 0:09:39.679 --> 0:09:41.880 As an investor, what do you do in that environment 0:09:42.000 --> 0:09:44.400 where equities actually a bounced back a long way from 0:09:44.400 --> 0:09:47.120 the trial frankly, and they may not be justified by 0:09:47.120 --> 0:09:49.080 the economic data. I think many of us have been 0:09:49.080 --> 0:09:52.680 scratching our heads about the resurgence of the equity market, 0:09:52.840 --> 0:09:56.920 and we can debate the reasons for it. Uh. I 0:09:56.960 --> 0:10:00.480 think the most important reason is probably all the liquidity 0:10:00.559 --> 0:10:03.720 the FED has pumped into the system. But nonetheless, I 0:10:03.760 --> 0:10:05.920 think what Stanley Druck and Miller and David Tepper and 0:10:05.960 --> 0:10:08.840 others have been saying makes a lot of sense in 0:10:08.960 --> 0:10:11.880 terms of being concerned about the level of the equity market. 0:10:12.280 --> 0:10:14.600 How do you hedge it? Well, the simplest thing to 0:10:14.600 --> 0:10:17.720 do is simply sell. Uh. There are then if you 0:10:17.880 --> 0:10:20.640 if you for whatever reason want something more esoteric, you 0:10:20.679 --> 0:10:22.959 can do things with options. You can do things with 0:10:23.040 --> 0:10:26.400 tail risk. There are more sophisticated ways. But at the 0:10:26.440 --> 0:10:29.520 bottom line is either if you don't have a positive 0:10:29.559 --> 0:10:32.240 view about the equity market, you simply need to reduce 0:10:32.280 --> 0:10:35.600 your exposure to the equity market, give up the possible upside, 0:10:35.640 --> 0:10:38.800 and protect yourself again against the downside. We still are 0:10:38.840 --> 0:10:41.000 in a world of quite efficient markets and are no 0:10:41.440 --> 0:10:45.320 silver bullets or magic ways to take out the downside 0:10:45.600 --> 0:10:48.360 but keep the upside. So I guess it was Margaret 0:10:48.400 --> 0:10:51.439 Thatchrick to talk about Tina that there is no alternative. 0:10:51.760 --> 0:10:53.319 Is there an alternative? I mean you have to put 0:10:53.320 --> 0:10:55.920 your money somewhere. Is it better off under the mattress 0:10:56.000 --> 0:10:58.800 or there are other asset classes that offer at least 0:10:58.840 --> 0:11:01.840 some solace. I don't think there are any. Again, there's 0:11:01.880 --> 0:11:06.080 no magic bullets or simple solutions. Part of again, why 0:11:06.120 --> 0:11:09.400 the equity markets have been so robust is because people 0:11:09.440 --> 0:11:12.680 look around and see relatively interest rates relatively near zero 0:11:13.200 --> 0:11:15.640 and decide that's not a particularly attractive place to put 0:11:15.679 --> 0:11:17.920 their money. And you can make two or three percent 0:11:18.040 --> 0:11:19.760 just on the dividend yield on the S and T, 0:11:20.000 --> 0:11:22.760 so that seems pretty interesting. But then you're taking all 0:11:22.840 --> 0:11:27.000 this risk on your actual capital value. UM. So no, 0:11:27.200 --> 0:11:29.680 there are no there are again, there are unfortunately no 0:11:29.960 --> 0:11:32.280 secret places you can put your money. I don't think 0:11:32.280 --> 0:11:36.840 any of us feel that corporate credit, corporate bonds, things 0:11:36.920 --> 0:11:40.400 like that are particularly attractive at these levels either, and 0:11:40.520 --> 0:11:43.760 so I think the best advice I would give would 0:11:43.800 --> 0:11:46.960 be a mix of some equity exposure so that if 0:11:47.240 --> 0:11:49.720 in fact it turns out these levels of the stock 0:11:49.760 --> 0:11:52.640 market makes some sense, you can participate in it with 0:11:52.679 --> 0:11:57.800 good companies, combined with maintaining a very low leverage level 0:11:57.840 --> 0:12:00.120 of leverage if any at all, and a high on 0:12:00.160 --> 0:12:02.120 a high amount of a cash balance on which you 0:12:02.120 --> 0:12:04.280 should not expect to earn any interest, but you're not 0:12:04.280 --> 0:12:07.120 gonna lose any money. And what about cross border exposure. 0:12:07.160 --> 0:12:09.440 There's a lot of talk now that the supply chains 0:12:09.480 --> 0:12:11.400 may never be the same. Certainly there's a lot of 0:12:11.400 --> 0:12:14.800 focus on China right now, with the President really certainly 0:12:14.880 --> 0:12:18.040 rattling a saber about China. Does that indicate that you're 0:12:18.080 --> 0:12:21.760 better off with more domestic exposure and not as exposed 0:12:21.800 --> 0:12:25.400 to globalization. We have to see how that unfolds. There's 0:12:25.400 --> 0:12:28.040 certainly a lot of talk by the President, but frankly, 0:12:28.080 --> 0:12:31.439 with the president is mostly talked. There's some talk among 0:12:31.600 --> 0:12:33.320 c e O s and that we should pay close 0:12:33.360 --> 0:12:36.120 attention to. I think we've all learned a lesson here 0:12:36.160 --> 0:12:38.800 about long supply chains. But as we look around the 0:12:38.840 --> 0:12:43.280 world as investors, we find Europe exceedingly uninteresting. UH. They 0:12:43.280 --> 0:12:46.840 have huge structural problems. Their companies are not the companies 0:12:46.960 --> 0:12:49.600 that are most likely to do well, and in post 0:12:49.640 --> 0:12:54.280 COVID environment, a lot of old economy industrial companies. China 0:12:54.360 --> 0:12:57.720 has done and is continuing to do amazingly well, both 0:12:57.760 --> 0:13:00.560 in terms of keeping the virus under troll but in 0:13:00.600 --> 0:13:04.040 getting people back to work and in UH and in 0:13:04.120 --> 0:13:07.880 getting their economy going again. And the biggest risk in 0:13:07.960 --> 0:13:10.959 China is the one that you identified, which is essentially 0:13:10.960 --> 0:13:14.800 will they have customers either because the economies elsewhere not 0:13:14.840 --> 0:13:17.360 in great shape or because the supply lines are too long. 0:13:17.760 --> 0:13:20.640 We'll have to see how that infolds. But we have 0:13:20.800 --> 0:13:23.720 been before all this and continue to be as an 0:13:23.760 --> 0:13:27.479 economic matter, not as a political matter, not as a 0:13:27.480 --> 0:13:29.760 any other matter of that sort, but as a purely 0:13:29.800 --> 0:13:33.640 economic matter. We continue to find China very interesting as 0:13:33.679 --> 0:13:38.360 investors and are disproportionately invested. There is the big issue 0:13:38.440 --> 0:13:39.920 right now for the United States and maybe for the 0:13:39.920 --> 0:13:42.480 globe demand. I mean we hear about things like demand 0:13:42.480 --> 0:13:46.000 destruction or or a doom loop. Is that what you 0:13:46.080 --> 0:13:48.000 believe Sherman Power was talking about and he said there 0:13:48.000 --> 0:13:50.880 could be really long term, maybe even permanent damage the economy. 0:13:51.000 --> 0:13:54.400 Are we in danger of permanently destroying demand? I think 0:13:54.400 --> 0:13:56.560 we have a problem on both the supply and the 0:13:56.600 --> 0:13:59.240 demand side. We clearly have a problem on the demand 0:13:59.280 --> 0:14:02.280 side when you have what is effectively when you make 0:14:02.360 --> 0:14:05.840 the right adjustments and things, probably of Americans out of 0:14:05.840 --> 0:14:10.120 work getting their unemployment insurance but not their their real wages, 0:14:10.160 --> 0:14:14.440 and with huge uncertainty since the unemployment insurance does expire 0:14:14.480 --> 0:14:18.280 the extra six dollars after eight weeks, obviously people are 0:14:18.280 --> 0:14:20.720 going to spend less. And of course when they're essentially 0:14:20.800 --> 0:14:22.720 trapped in their houses, they're going to spend less. And 0:14:22.760 --> 0:14:25.520 you see that in the consumer spending data that was 0:14:25.560 --> 0:14:28.880 Steve Rattner, Chairman and CEO of Will and Advisers, which 0:14:28.920 --> 0:14:32.560 invests the private and filmthropic funds of Michael R. Bloomberg, 0:14:32.880 --> 0:14:36.280 the founder of our parent company, Coming Up. Oil has 0:14:36.320 --> 0:14:39.360 added to the concern over the economy overall. We talk 0:14:39.480 --> 0:14:42.720 with Dan Boreyette, Secretary of the Department of Energy, about 0:14:42.760 --> 0:14:46.360 the prospects for oil. That's next on Wall Street Week 0:14:46.640 --> 0:14:55.520 on Bloomberg. This is Bloomberg Wall Street Week with David 0:14:55.560 --> 0:14:58.880 Weston from Bloomberg Radio. Oil has been one of the 0:14:58.960 --> 0:15:03.200 darkest corners a gloomy economic picture, but with Saudi Arabia 0:15:03.280 --> 0:15:07.280 this week announcing unilateral production cuts, things may be looking up. 0:15:07.440 --> 0:15:10.320 That's what Secretary of Energy Dan Briette says, anything that 0:15:10.360 --> 0:15:13.360 applies to both the supply and the demand side. Yes, 0:15:13.400 --> 0:15:15.600 it is starting to look really good. Has the President 0:15:15.600 --> 0:15:18.240 has been saying for quite some time now. We're on 0:15:18.320 --> 0:15:20.560 the verge of a transition to greatness and we're starting 0:15:20.600 --> 0:15:22.360 to see it. We now have states that are opening, 0:15:22.600 --> 0:15:26.480 there are local economies that represents roughly the gasoline demand 0:15:26.880 --> 0:15:30.280 in the United States. We're starting to see oil prices stabilize. 0:15:30.720 --> 0:15:33.080 I think it's very important to note that, um, you know, 0:15:33.160 --> 0:15:36.440 this increase is good for consumers in the sense of 0:15:36.560 --> 0:15:39.880 jobs are protected all across the economy, and we see 0:15:39.960 --> 0:15:43.280 no dramatic impact on gasoline prices across the country, which 0:15:43.320 --> 0:15:45.680 I think is very important as well. So Mr Secretary, 0:15:45.720 --> 0:15:47.320 take us behind the scenes a little bit, if you can. 0:15:47.920 --> 0:15:50.160 We know the President Trump has a very good relationship 0:15:50.200 --> 0:15:53.000 with the Crown Princess Saudi Arabia, Mohammad ben Sell Mine 0:15:53.520 --> 0:15:55.880 was that cut at all something that the President helped 0:15:56.120 --> 0:16:00.560 encourage or even arrange. The Presidents have been personally engaged 0:16:00.600 --> 0:16:03.520 in this conversation for the last few weeks. Um. You know, 0:16:03.520 --> 0:16:07.000 as we talked about in the past, OPEC began its 0:16:07.040 --> 0:16:10.320 conversations around the March time frame, early March time frame, 0:16:10.880 --> 0:16:14.040 and Saudi Arabia and Russia got themselves into a bit 0:16:14.040 --> 0:16:18.360 of a dispute over their production numbers. And when the 0:16:18.720 --> 0:16:21.680 Saudi's decided to take some actions right at the beginning 0:16:21.680 --> 0:16:24.400 of this pandemic that led to both increased production and 0:16:24.440 --> 0:16:27.840 a reduction in the pricing of oil across the world. 0:16:27.920 --> 0:16:31.320 That impacted the U S producers very dramatically. And the 0:16:31.320 --> 0:16:33.800 President saw that early. He engaged with the head of 0:16:33.840 --> 0:16:36.920 state in both countries, both Russia. He's talked to President 0:16:36.960 --> 0:16:40.040 Putin several times, and he's also engaged personally with the 0:16:40.120 --> 0:16:43.720 King of Saudi Arabia. The point of those conversations is 0:16:43.760 --> 0:16:46.480 to bring stability to the marketplace and stability to the 0:16:46.520 --> 0:16:49.560 producing community, and that's really our goal here. Is there 0:16:49.600 --> 0:16:52.120 any risk that actually the US Prussian may come back 0:16:52.200 --> 0:16:54.920 too far, too fast? I mean, I just read there's 0:16:55.040 --> 0:16:57.240 energy transfer LP came out and said that at least 0:16:57.240 --> 0:16:59.960 in the premium basin that actually shales coming about quite fast. 0:17:00.040 --> 0:17:01.960 US that went down about eight percent, and now a 0:17:02.040 --> 0:17:04.000 full quarter that is back online. Are you at all 0:17:04.040 --> 0:17:06.679 concerned that that might undermine some of the efforts here 0:17:06.720 --> 0:17:10.480 to stabilize the price. No, I don't think so, David. 0:17:10.480 --> 0:17:12.560 I think what we're gonna see here very shortly, If 0:17:12.880 --> 0:17:15.920 if you're familiar with our Energy Information Administration what we 0:17:16.040 --> 0:17:18.399 referred to as e i A. They just put out 0:17:18.440 --> 0:17:21.879 a report. It talks about the economic boom that I 0:17:21.920 --> 0:17:23.840 think we're just on the verge of seeing. So the 0:17:23.880 --> 0:17:27.240 third and fourth quarters in twenty and certainly into twenty 0:17:27.240 --> 0:17:29.879 one are going to be very very robust. So the 0:17:29.920 --> 0:17:32.919 production will come back online as this economy begins to 0:17:33.000 --> 0:17:35.359 take off. And if you look at those numbers, I 0:17:35.400 --> 0:17:39.320 think you'll see that that that what the President has 0:17:39.359 --> 0:17:43.080 referred to as a V shaped recovery looks very clear 0:17:43.119 --> 0:17:45.280 in the charts right now, so you'll see the production 0:17:45.400 --> 0:17:48.359 tend to match that V shaped curve. So Mr. Sextually, 0:17:48.359 --> 0:17:49.840 it wasn't that long ago we were talking about what 0:17:49.920 --> 0:17:52.840 kinds of accommodations you need to make. The President designated you, 0:17:52.960 --> 0:17:55.120 along with Secretary Manution, to really help out the US 0:17:55.160 --> 0:17:58.280 oil industry, and you're talking about certain things like lending facilities. 0:17:58.400 --> 0:18:00.639 We also have the Fed now doing that well, changing 0:18:00.640 --> 0:18:03.240 their rules. Do we need that support anymore? Is that 0:18:03.280 --> 0:18:06.680 taken care of pretty much? Well, too loorally to tell, 0:18:06.720 --> 0:18:09.560 and it various company by company. But what the Secretary 0:18:09.600 --> 0:18:13.119 directed both Secretary Manuchin and myself to do was to 0:18:13.200 --> 0:18:15.760 evaluate the programs that were passed by the Congress and 0:18:15.920 --> 0:18:19.520 ensure but there is access for these energy industries to 0:18:19.640 --> 0:18:24.040 those programs. And that's what we've done. Secretary Manuchin worked 0:18:24.160 --> 0:18:27.880 very closely with the Federal Reserve. We adjusted the program, 0:18:28.000 --> 0:18:32.639 the main Street lending program, and made that program available 0:18:32.680 --> 0:18:36.600 to what we refer to as MidCap sized companies. You know, 0:18:36.600 --> 0:18:39.720 there are companies in America that are investment grade, Um, 0:18:40.119 --> 0:18:42.600 they perhaps do not need the same level of economic 0:18:42.680 --> 0:18:44.560 help that others do in the marketplace, and they have 0:18:44.680 --> 0:18:47.840 access to capital and access to liquidity perhaps others don't have. 0:18:48.520 --> 0:18:50.800 But there are many companies out there that simply didn't 0:18:50.840 --> 0:18:54.920 have that option. So making available this program that was 0:18:54.960 --> 0:18:57.760 passed by Converse was very, very important, and I applaud 0:18:57.800 --> 0:19:01.080 Secretary Manuchi in the Federal Reserve and others from moving 0:19:01.119 --> 0:19:05.560 so aggressively to do exactly that. So, Mr Secretary, when 0:19:05.600 --> 0:19:07.560 you implement a program like that, how do you deal 0:19:07.600 --> 0:19:09.600 with what a lot of people call moral hazard? As 0:19:09.640 --> 0:19:12.240 you said, the investigrade companies don't really need it so much. 0:19:12.520 --> 0:19:15.080 Others do because they're not nearly as good shape. But 0:19:15.200 --> 0:19:17.600 sometimes that's because they, let's be frank, borrowed too much. 0:19:17.640 --> 0:19:19.080 This tends to be a bit of a boom and 0:19:19.119 --> 0:19:22.080 bust business as I understand it in the oil patch. 0:19:22.200 --> 0:19:24.639 How do you make sure that we're not encouraging almost 0:19:24.680 --> 0:19:28.320 reckless behavior when it comes to financing. That's absolutely corrective. 0:19:28.400 --> 0:19:30.960 I mean, there's no question that moral hazard exists. That 0:19:31.040 --> 0:19:34.439 exists in every form of the banking industry. So you know, 0:19:34.720 --> 0:19:37.320 when we apply these types of UM you know, or 0:19:37.440 --> 0:19:40.200 we create these types of programs, we apply very strict 0:19:40.280 --> 0:19:43.520 lending standards to them. And what Secretary Manichul and I 0:19:43.600 --> 0:19:47.760 did was to identify those companies that really were impacted 0:19:47.760 --> 0:19:51.320 by COVID, I mean, but for the COVID pandemic, they 0:19:51.359 --> 0:19:55.120 would be strong ongoing concerns, and we looked at those 0:19:55.160 --> 0:19:59.760 companies for potentially UM making loans available to them. We 0:20:00.240 --> 0:20:03.399 you know, we're very very clear and very strict about this. 0:20:03.840 --> 0:20:05.600 There are some companies that were on the verge of 0:20:05.600 --> 0:20:08.640 insolvency and they were highly leveraged, and we're perhaps not 0:20:08.680 --> 0:20:12.159 going to make it under any circumstance. Those companies are 0:20:12.160 --> 0:20:15.000 going to be excluded from these types of programs, and 0:20:15.119 --> 0:20:18.080 I think rightfully so. That was Secretary of Energy Dan 0:20:18.280 --> 0:20:21.199 Briet coming up. We wrap up the week with our 0:20:21.240 --> 0:20:26.320 special contributor Larry Summers. This is Wall Street Week on Bloomber. 0:20:30.920 --> 0:20:34.240 Social distancing slows the spread of coronavirus, So stay a 0:20:34.240 --> 0:20:36.600 minimum of six ft away from others and stay home 0:20:36.640 --> 0:20:40.080 if you can. More info at Coronavirus dot gov. Let's 0:20:40.080 --> 0:20:43.480