1 00:00:00,160 --> 00:00:03,360 Speaker 1: This is Bloomberg Wall Street Week. What's the state of 2 00:00:03,400 --> 00:00:06,360 Speaker 1: corporate governance? Its deficit is a real issue. The US 3 00:00:06,400 --> 00:00:09,760 Speaker 1: economy continues to send mixed signals to the financial stories 4 00:00:09,800 --> 00:00:12,680 Speaker 1: that keep our world fed, action to con concerns over 5 00:00:12,760 --> 00:00:16,200 Speaker 1: dollar liquidity, and encouraging China data. The five hundred wealthiest 6 00:00:16,239 --> 00:00:18,360 Speaker 1: people in the world. Through the eyes of the most 7 00:00:18,480 --> 00:00:22,520 Speaker 1: influential voices Larry Summers, the former Treasury Secretary, star Ward CEO, 8 00:00:22,640 --> 00:00:26,360 Speaker 1: Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week 9 00:00:26,480 --> 00:00:31,200 Speaker 1: with David Weston from Bloomberg Radio, who knew equities can 10 00:00:31,200 --> 00:00:34,120 Speaker 1: go down as well as up as we head into 11 00:00:34,120 --> 00:00:38,640 Speaker 1: an uncertain election and companies continue their struggle with the coronavirus. 12 00:00:39,120 --> 00:00:42,120 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. The 13 00:00:42,200 --> 00:00:45,560 Speaker 1: White House was pleased by the strong jobs numbers this week, 14 00:00:45,920 --> 00:00:49,080 Speaker 1: but there is still weakness under the headline numbers of 15 00:00:49,120 --> 00:00:53,159 Speaker 1: one point three seven million jobs added. We asked Austin Goulsbury, 16 00:00:53,159 --> 00:00:57,000 Speaker 1: professor of economics at the University Chicago Booths School of Business, 17 00:00:57,000 --> 00:01:00,320 Speaker 1: what the numbers really show us about the economy. We've 18 00:01:00,360 --> 00:01:05,479 Speaker 1: had a nice rebound of the what were the temporary layoffs. 19 00:01:05,520 --> 00:01:08,000 Speaker 1: So again, if you look at this report, you've got 20 00:01:08,080 --> 00:01:13,880 Speaker 1: strong job growth, especially strong in temporary sensus employment from 21 00:01:13,920 --> 00:01:17,120 Speaker 1: the government that was three something thousands. And then the 22 00:01:17,240 --> 00:01:22,000 Speaker 1: two major sectors of job growth are retail and leisure 23 00:01:22,040 --> 00:01:27,120 Speaker 1: and hospitality. Where you saw the giant increases of temporary layoffs, 24 00:01:27,160 --> 00:01:30,640 Speaker 1: those people are mostly now all the way back or 25 00:01:30,800 --> 00:01:36,000 Speaker 1: pretty close to back. The question is for the permanent layoffs, 26 00:01:36,640 --> 00:01:40,560 Speaker 1: can we get them back to work? And if we 27 00:01:40,640 --> 00:01:45,200 Speaker 1: recovered to something like half where we were before, uh, 28 00:01:45,240 --> 00:01:48,440 Speaker 1: that's not really great. And so I think on the 29 00:01:48,480 --> 00:01:53,400 Speaker 1: political side, we're gonna be in this dynamic where representatives 30 00:01:53,400 --> 00:01:56,000 Speaker 1: of the Trump administration are clearly going to say, well, look, 31 00:01:56,280 --> 00:02:00,560 Speaker 1: we're having strong months, and I think other analysts are 32 00:02:00,560 --> 00:02:03,320 Speaker 1: gonna look at it and say, yeah, but the strength 33 00:02:03,440 --> 00:02:06,400 Speaker 1: is getting weaker every month, and we're not even getting 34 00:02:06,480 --> 00:02:09,800 Speaker 1: remotely close to to where we were even before the 35 00:02:10,400 --> 00:02:13,840 Speaker 1: before the COVID recession began. So Austin, in your estimation, 36 00:02:13,880 --> 00:02:15,120 Speaker 1: what was it going to take to get us to 37 00:02:15,160 --> 00:02:17,480 Speaker 1: the goal we all share reposis of Democrats alike, I 38 00:02:17,600 --> 00:02:20,240 Speaker 1: really getting back to or close to full employment. Is 39 00:02:20,240 --> 00:02:22,160 Speaker 1: it a matter of that fiscal stimulus that seems to 40 00:02:22,200 --> 00:02:24,480 Speaker 1: be hung up in Congress. Is it a matter of 41 00:02:24,520 --> 00:02:27,639 Speaker 1: really getting our arms around the coronavirus? Yet? Look, I 42 00:02:27,680 --> 00:02:30,680 Speaker 1: think everything has to do with that virus. As I've 43 00:02:30,720 --> 00:02:33,639 Speaker 1: said from the beginning, the viruses the boss, and the 44 00:02:33,680 --> 00:02:37,119 Speaker 1: first rule of virus economics is that the only way 45 00:02:37,160 --> 00:02:39,880 Speaker 1: to fix the economics is they get control of the virus. 46 00:02:39,919 --> 00:02:43,600 Speaker 1: You've seen that in other countries where they've now gotten 47 00:02:43,800 --> 00:02:46,880 Speaker 1: they've slowed the spread of the virus dramatically more than 48 00:02:46,960 --> 00:02:51,040 Speaker 1: we have, and their economies are rebounding actually faster than 49 00:02:51,280 --> 00:02:55,919 Speaker 1: than ours is. So hopefully we can get control of that. 50 00:02:56,120 --> 00:02:59,680 Speaker 1: And if we do, I think that we could get 51 00:02:59,720 --> 00:03:03,079 Speaker 1: on a faster path back to where we were and 52 00:03:03,200 --> 00:03:07,680 Speaker 1: growing like we were before. If we don't, Look, we 53 00:03:07,720 --> 00:03:11,840 Speaker 1: need relief, uh, but we shouldn't get ourselves that relief 54 00:03:11,880 --> 00:03:15,320 Speaker 1: and rescue payments trying to keep people from being evicted. 55 00:03:16,000 --> 00:03:19,040 Speaker 1: Um is going to fix the economy. It's not. I mean, 56 00:03:19,080 --> 00:03:21,720 Speaker 1: we gotta we gotta get the engine going again if 57 00:03:21,760 --> 00:03:24,160 Speaker 1: we If we don't, and we all want to really 58 00:03:24,200 --> 00:03:26,360 Speaker 1: beat this virus, but if we don't get the vaccine, 59 00:03:26,400 --> 00:03:27,800 Speaker 1: if we don't get to a world where we can 60 00:03:27,840 --> 00:03:30,400 Speaker 1: go back to something like normal again, Do we need 61 00:03:30,480 --> 00:03:33,280 Speaker 1: to lock down, because that's something that's certainly the problems. 62 00:03:33,360 --> 00:03:36,920 Speaker 1: Last week accused Vice President Biden of saying that basically 63 00:03:36,960 --> 00:03:39,440 Speaker 1: we should lock down the country. What is his view 64 00:03:39,480 --> 00:03:42,000 Speaker 1: on that. Can we keep going with the economy, even 65 00:03:42,240 --> 00:03:44,880 Speaker 1: with social distancing and masks and washing our hands and 66 00:03:44,920 --> 00:03:49,680 Speaker 1: things without actually defeating the virus? Well, I don't speak 67 00:03:49,720 --> 00:03:51,960 Speaker 1: for the Vice president. You know, you know you you 68 00:03:51,960 --> 00:03:55,080 Speaker 1: would want to ask them what their view is. I 69 00:03:55,120 --> 00:03:59,600 Speaker 1: think other countries have shown us that you don't need 70 00:03:59,640 --> 00:04:01,840 Speaker 1: to have kay there's no vaccine in Germany, there's no 71 00:04:01,920 --> 00:04:04,200 Speaker 1: vaccine in Australia. It's not in New Zealand, it's not 72 00:04:04,240 --> 00:04:07,080 Speaker 1: in Taiwan, it's not in a whole bunch of countries 73 00:04:07,360 --> 00:04:10,560 Speaker 1: where they have been able through public health measures, whether 74 00:04:10,600 --> 00:04:14,120 Speaker 1: it's mass whether it's social distancing, whether it's a lot 75 00:04:14,160 --> 00:04:16,440 Speaker 1: of testing so that you can get the people that 76 00:04:16,480 --> 00:04:19,640 Speaker 1: are contagious out of the economy, so you don't have 77 00:04:19,720 --> 00:04:22,279 Speaker 1: to shut down everyone. I don't think you have to 78 00:04:22,360 --> 00:04:26,559 Speaker 1: have universal lockdowns. Uh, you just have to be smart 79 00:04:26,560 --> 00:04:29,640 Speaker 1: about it. You've got to follow what works, and thus 80 00:04:29,680 --> 00:04:32,640 Speaker 1: far we're mostly not following what works. And we got 81 00:04:32,680 --> 00:04:35,120 Speaker 1: a lot of mixed messages coming out. We'll address that 82 00:04:35,200 --> 00:04:37,880 Speaker 1: quite specifically. If it's a matter of doing it better, 83 00:04:38,160 --> 00:04:41,040 Speaker 1: being smarter, and addressing a virus while it's with us, 84 00:04:41,520 --> 00:04:44,200 Speaker 1: What would a President Biden do which would be materially 85 00:04:44,200 --> 00:04:47,159 Speaker 1: different from what President Trump has done. President Biden has 86 00:04:47,240 --> 00:04:51,440 Speaker 1: laid out at least twenty step detailed plan on the 87 00:04:51,480 --> 00:04:53,919 Speaker 1: public health side of how you slow the rate of 88 00:04:53,960 --> 00:04:59,120 Speaker 1: spread of the virus. And I'm not an epidemiologist or 89 00:04:59,160 --> 00:05:02,680 Speaker 1: public health esk bert, I would refer everyone to those uh, 90 00:05:02,800 --> 00:05:06,720 Speaker 1: to those documents. But the center of the of the 91 00:05:06,760 --> 00:05:11,240 Speaker 1: federal response has got to be a clear, consistent approach 92 00:05:11,360 --> 00:05:15,240 Speaker 1: coming from the very top from the President himself, who 93 00:05:15,320 --> 00:05:21,599 Speaker 1: has clearly at many points downgraded what he perceives as 94 00:05:21,680 --> 00:05:24,680 Speaker 1: the danger of this virus and said it's gonna disappear 95 00:05:24,760 --> 00:05:29,159 Speaker 1: by a miracle. Initially said, oh, we have virtually no cases. 96 00:05:29,200 --> 00:05:32,159 Speaker 1: It's gonna go to none. It's it's under lockdown. Don't 97 00:05:32,240 --> 00:05:34,440 Speaker 1: worry about it. You don't need to wear masks. He 98 00:05:34,560 --> 00:05:38,200 Speaker 1: himself won't wear masks. I think that the kind of 99 00:05:38,240 --> 00:05:43,040 Speaker 1: approach got hundreds of thousands of people killed in this 100 00:05:43,160 --> 00:05:45,719 Speaker 1: country that did not need to die. That's what the 101 00:05:45,760 --> 00:05:49,520 Speaker 1: public health experts are saying that if we had moved earlier, 102 00:05:49,920 --> 00:05:53,719 Speaker 1: with consistent with a consistent approach from the federal government, 103 00:05:54,120 --> 00:05:57,640 Speaker 1: and done the testing at the beginning, we would be 104 00:05:57,680 --> 00:06:00,400 Speaker 1: in a lot better spot. But it's not too late. 105 00:06:00,600 --> 00:06:04,760 Speaker 1: That's what I don't understand. If we start more significant 106 00:06:04,800 --> 00:06:10,479 Speaker 1: testing and more significant mask wearing in public and and 107 00:06:10,640 --> 00:06:14,719 Speaker 1: in these places where people are in crowded conditions, we 108 00:06:14,800 --> 00:06:17,320 Speaker 1: spaced them out, we can get the rate of spread 109 00:06:17,320 --> 00:06:22,159 Speaker 1: of this virus down below one in their mathematical terminology. 110 00:06:22,200 --> 00:06:25,040 Speaker 1: And in countries where they've done that, which is almost 111 00:06:25,080 --> 00:06:28,120 Speaker 1: every rich country in the world, they've been able to 112 00:06:28,160 --> 00:06:31,919 Speaker 1: bring their economies back. That was Austin Goulsby, former chairman 113 00:06:31,960 --> 00:06:34,960 Speaker 1: of the National Council of Economic Advisors under President Obama 114 00:06:35,160 --> 00:06:39,600 Speaker 1: and now an advisor to the Biden Harris campaign. Coming up. 115 00:06:39,800 --> 00:06:42,640 Speaker 1: We've lost all those jobs because of the coronavirus and 116 00:06:42,640 --> 00:06:46,120 Speaker 1: the shutdowns it triggered. Dr Steve Corwin of New York 117 00:06:46,160 --> 00:06:49,480 Speaker 1: Presbyterian has fought the virus successfully but says we're not 118 00:06:49,640 --> 00:06:52,160 Speaker 1: out of the woods yet. That's next on Wall Street 119 00:06:52,200 --> 00:07:01,440 Speaker 1: Week on Bloombood. This is Bloomberg Street Week with David 120 00:07:01,480 --> 00:07:04,880 Speaker 1: Weston from Bloomberg Radio. First it was New York and 121 00:07:04,920 --> 00:07:09,200 Speaker 1: New Jersey, then California and Texas, and now the coronavirus 122 00:07:09,240 --> 00:07:12,480 Speaker 1: crisis has moved on to the Midwest. The question is 123 00:07:12,520 --> 00:07:15,320 Speaker 1: what comes next and what can we do to make 124 00:07:15,320 --> 00:07:18,960 Speaker 1: sure we can get the economy going again safely, which 125 00:07:19,000 --> 00:07:21,960 Speaker 1: is what we asked Dr Steve Corwin, CEO of New 126 00:07:22,040 --> 00:07:26,320 Speaker 1: York Presbyterian, the largest hospital group in the New York area. Well, 127 00:07:26,320 --> 00:07:28,840 Speaker 1: I think the moving average across the country is moving 128 00:07:28,920 --> 00:07:33,200 Speaker 1: down and that that is good news. I think, as 129 00:07:33,240 --> 00:07:36,280 Speaker 1: we've talked about before, David, as you start to open, 130 00:07:36,360 --> 00:07:39,800 Speaker 1: you're gonna tight trade infections. You have to be capable 131 00:07:40,000 --> 00:07:42,800 Speaker 1: of sort of dealing with those outbreaks, which is why 132 00:07:42,880 --> 00:07:46,880 Speaker 1: testing becomes so important and contact tracing to try to 133 00:07:46,960 --> 00:07:50,760 Speaker 1: keep a lid on this thing until we're capable of 134 00:07:50,800 --> 00:07:53,760 Speaker 1: treating it and having a vaccine for it. So the 135 00:07:53,760 --> 00:07:56,680 Speaker 1: moving average going down is positive. Some of these hot 136 00:07:56,760 --> 00:08:02,000 Speaker 1: spots obviously are a problem. The opening of colleges, the 137 00:08:01,560 --> 00:08:06,120 Speaker 1: the opening of schools presents a challenge, Indoor dining presents 138 00:08:06,160 --> 00:08:09,440 Speaker 1: a challenge, opening theaters presents a challenge, and we have 139 00:08:09,520 --> 00:08:12,760 Speaker 1: to be mindful of that so that we can scale 140 00:08:12,760 --> 00:08:16,400 Speaker 1: it back if it looks like we're having an outbreak 141 00:08:16,400 --> 00:08:19,600 Speaker 1: in a particular area. In New York, we're down to 142 00:08:19,680 --> 00:08:23,560 Speaker 1: about two of our COVID peak, which is very comforting. 143 00:08:24,200 --> 00:08:28,200 Speaker 1: But now we're gonna look at New York City schools reopening. Uh, 144 00:08:28,240 --> 00:08:31,160 Speaker 1: there's gonna be a push for more indoor venues as 145 00:08:31,200 --> 00:08:34,520 Speaker 1: the weather gets colder. We're gonna have influenza start in 146 00:08:34,559 --> 00:08:38,080 Speaker 1: the fall. So I think seeing that moving average go 147 00:08:38,200 --> 00:08:42,560 Speaker 1: down and seeing the daily infections go down below the 148 00:08:42,600 --> 00:08:46,000 Speaker 1: ten thou numbers what Dr Fauci has said would be 149 00:08:46,040 --> 00:08:48,959 Speaker 1: comforting if we could get to that by October. So 150 00:08:49,400 --> 00:08:52,040 Speaker 1: a lot of challenges. Are we up to meeting the challenges? 151 00:08:52,080 --> 00:08:53,720 Speaker 1: How are we doing on this because it looks like 152 00:08:53,920 --> 00:08:56,080 Speaker 1: we may have to manage this disease for a while 153 00:08:56,160 --> 00:08:59,240 Speaker 1: before there's this magical cure called a vaccine. Can't count 154 00:08:59,240 --> 00:09:01,920 Speaker 1: on that and we reopen our economy? Can we reopen 155 00:09:01,920 --> 00:09:05,520 Speaker 1: our schools to some extent prudently? I hope that we can. David, 156 00:09:05,600 --> 00:09:08,280 Speaker 1: I think that we missed the boat a little, quite frankly, 157 00:09:08,320 --> 00:09:11,640 Speaker 1: in terms of not tamping down the infection number. I 158 00:09:11,679 --> 00:09:16,160 Speaker 1: think we had the debate over masks social distancing. I 159 00:09:16,440 --> 00:09:19,560 Speaker 1: don't think that helped us as a country. We politicized it, 160 00:09:19,600 --> 00:09:24,080 Speaker 1: which was unfortunate. But I think that maintenance of masks, 161 00:09:24,160 --> 00:09:28,640 Speaker 1: maintenance of social distancing, getting the infection number dawn will 162 00:09:28,679 --> 00:09:32,920 Speaker 1: allow us to cautiously reopen the economy as we're doing. Look, 163 00:09:32,920 --> 00:09:35,920 Speaker 1: we have to reopen the economy. We can't still. We 164 00:09:35,960 --> 00:09:38,800 Speaker 1: can't say still forever. But you want to do it 165 00:09:38,880 --> 00:09:42,000 Speaker 1: in as prudent a manner as possible. Uh. You read 166 00:09:42,040 --> 00:09:45,480 Speaker 1: in the Financial Times today as well as other venues 167 00:09:45,559 --> 00:09:48,240 Speaker 1: that Germany thinks that they're having a V shaped recovery. 168 00:09:48,320 --> 00:09:50,959 Speaker 1: Part of that is because they were able to control 169 00:09:51,000 --> 00:09:54,040 Speaker 1: the pandemic to a greater extent than than than we have. 170 00:09:54,640 --> 00:09:57,400 Speaker 1: Um So I think that the two go hand and glove. 171 00:09:58,120 --> 00:10:00,600 Speaker 1: Are we making good progress on the testing front? You 172 00:10:00,640 --> 00:10:02,640 Speaker 1: mentioned testing, and it seems like almost every day we 173 00:10:02,640 --> 00:10:04,520 Speaker 1: have a new report, like Abbot Labs has something out 174 00:10:04,520 --> 00:10:06,840 Speaker 1: that texts fifteen minutes, it doesn't cost very much money. 175 00:10:06,880 --> 00:10:09,439 Speaker 1: Are we making substantial progress on testing? Not as much 176 00:10:09,480 --> 00:10:12,760 Speaker 1: as I would like. We still have issues with reagent 177 00:10:12,880 --> 00:10:15,400 Speaker 1: shortages and things of that nature, so we can't do 178 00:10:15,440 --> 00:10:18,000 Speaker 1: as much testing as we would like. But let's just 179 00:10:18,040 --> 00:10:20,480 Speaker 1: talk about the point of care testing for for for 180 00:10:20,520 --> 00:10:23,720 Speaker 1: a moment um. Some of the point of care tests 181 00:10:23,760 --> 00:10:27,280 Speaker 1: can do a test every fifteen minutes. That's for tests 182 00:10:27,320 --> 00:10:32,320 Speaker 1: an hour um. The machines that we have uh made 183 00:10:32,320 --> 00:10:36,199 Speaker 1: by sepied Ross and others, we can do batch testing 184 00:10:36,200 --> 00:10:39,240 Speaker 1: where we can do thousands of tests a day. So 185 00:10:39,400 --> 00:10:42,440 Speaker 1: if we had the reagents for it with these with 186 00:10:42,559 --> 00:10:45,160 Speaker 1: these machines, we can do turnaround in less than twenty 187 00:10:45,200 --> 00:10:47,959 Speaker 1: four hours, and we can get these things done quickly. 188 00:10:48,840 --> 00:10:51,120 Speaker 1: The public ought to be mindful that point of care 189 00:10:51,160 --> 00:10:53,960 Speaker 1: testing sounds great, but ultimately you want to be able 190 00:10:54,000 --> 00:10:57,640 Speaker 1: to do a high volume of tests on a frequent basis. 191 00:10:58,200 --> 00:11:01,040 Speaker 1: You want a low enough level of an infection so 192 00:11:01,080 --> 00:11:04,439 Speaker 1: that you know if you identifying infection, you can do 193 00:11:04,520 --> 00:11:08,080 Speaker 1: contact racing and then test the contact traces in a 194 00:11:08,120 --> 00:11:10,760 Speaker 1: three to five day period to make sure they're not infected. 195 00:11:11,160 --> 00:11:15,040 Speaker 1: That's the key. I thought it was unfortunate that the 196 00:11:15,080 --> 00:11:18,400 Speaker 1: CDC came out with guidelines for less testing. You need 197 00:11:18,480 --> 00:11:21,960 Speaker 1: more testing um, and I don't think there's much dispute, 198 00:11:22,000 --> 00:11:24,600 Speaker 1: at least in the scientific community and the people I've 199 00:11:24,600 --> 00:11:27,240 Speaker 1: been speaking to about that. Well, I wonder about that. 200 00:11:27,360 --> 00:11:29,400 Speaker 1: I mean, you're a doctor, you head up one of 201 00:11:29,400 --> 00:11:31,840 Speaker 1: the major hospitals in the country. You can sort of 202 00:11:31,840 --> 00:11:33,800 Speaker 1: sift through this. For those of us out here in 203 00:11:33,840 --> 00:11:36,079 Speaker 1: the real world, how do we figure out what the 204 00:11:36,080 --> 00:11:38,079 Speaker 1: truth is? Because, as you say, c DC came out 205 00:11:38,120 --> 00:11:40,480 Speaker 1: and said you don't need to test people who are asymptomatic. 206 00:11:40,480 --> 00:11:43,120 Speaker 1: We had a flurry of people experts come out and say, no, 207 00:11:43,200 --> 00:11:45,680 Speaker 1: that's not right at all. Are they undermining their own 208 00:11:45,679 --> 00:11:48,199 Speaker 1: credibility of some extent? And then we have this condalescent 209 00:11:48,240 --> 00:11:50,600 Speaker 1: plasma thing where the government says it's just fine now 210 00:11:50,600 --> 00:11:52,400 Speaker 1: we're here, and I says, well, I'm not sure we know. 211 00:11:52,679 --> 00:11:55,719 Speaker 1: I think it was very unfortunate and it does undermine 212 00:11:56,240 --> 00:12:00,920 Speaker 1: the credibility of of the f d A and the CDC. 213 00:12:01,679 --> 00:12:06,040 Speaker 1: The f d A mistake was egregious, that should never 214 00:12:06,120 --> 00:12:10,720 Speaker 1: have happened. You're talking about a subset of patients, and 215 00:12:10,800 --> 00:12:15,040 Speaker 1: you're talking about a misrepresentation of the statistics, even according 216 00:12:15,080 --> 00:12:18,400 Speaker 1: to the people who did the study. Um and that 217 00:12:18,480 --> 00:12:21,880 Speaker 1: then so what are the consequences of that? Then then 218 00:12:21,960 --> 00:12:25,680 Speaker 1: gives everyone to say I want convalescent plasma as opposed 219 00:12:25,679 --> 00:12:29,520 Speaker 1: to let's study this more rigorously and see whether it 220 00:12:29,559 --> 00:12:32,319 Speaker 1: works or not. And we got into that same conundrum 221 00:12:32,400 --> 00:12:36,280 Speaker 1: with hydroxy chloroquine. So I think that was very unfortunate. 222 00:12:36,600 --> 00:12:40,600 Speaker 1: I think the CDC um you know, uh, quite frankly, 223 00:12:40,679 --> 00:12:45,240 Speaker 1: that was unfortunate as well. The simple answer is, we 224 00:12:45,320 --> 00:12:49,959 Speaker 1: need to rigorously test various therapies to see if they work. 225 00:12:50,480 --> 00:12:53,400 Speaker 1: We need to do the rigorous testing on the phase 226 00:12:53,520 --> 00:12:56,920 Speaker 1: three of the vaccine trials to make sure that if 227 00:12:56,960 --> 00:12:59,920 Speaker 1: we're going to inoculate and mass inoculate, that that we're 228 00:13:00,679 --> 00:13:04,480 Speaker 1: and there can't be any appearance that this is politicized, 229 00:13:04,840 --> 00:13:08,520 Speaker 1: either for the President's benefit or the or or the 230 00:13:08,559 --> 00:13:12,520 Speaker 1: benefit of Mr Biden. It's got to be that we're 231 00:13:12,520 --> 00:13:16,480 Speaker 1: in this together and that we're trying to to improve 232 00:13:16,520 --> 00:13:18,520 Speaker 1: the public health. So I don't think we're in a 233 00:13:18,559 --> 00:13:21,480 Speaker 1: good place in terms of that. You've got now, this 234 00:13:21,559 --> 00:13:24,400 Speaker 1: is a Democrat Republican issue, and it should not be 235 00:13:24,880 --> 00:13:27,240 Speaker 1: Dr Corey. You of course are a physician, and you 236 00:13:27,280 --> 00:13:29,600 Speaker 1: were chieve a medicine before you were CEO. But you 237 00:13:29,640 --> 00:13:32,319 Speaker 1: are CEO now and you've got a really big company, 238 00:13:32,360 --> 00:13:35,520 Speaker 1: a business that to run. You've said before that your 239 00:13:35,559 --> 00:13:37,880 Speaker 1: company may lose as much as a billion dollars out 240 00:13:37,880 --> 00:13:40,720 Speaker 1: of operating come because the coronavirus this year. How are 241 00:13:40,720 --> 00:13:43,520 Speaker 1: you doing financially? And in particular, there was a hundred 242 00:13:43,600 --> 00:13:46,640 Speaker 1: billion dollars appropriated in the Cares Act to go to hospitals. 243 00:13:46,679 --> 00:13:49,360 Speaker 1: Did you see some of that money will lose uh 244 00:13:49,600 --> 00:13:52,400 Speaker 1: in the two to three hundred million dollar range through June. 245 00:13:52,440 --> 00:13:55,079 Speaker 1: And that's uh, far less than we would have lost 246 00:13:55,080 --> 00:13:58,560 Speaker 1: that we not received the Care's money. We've advocated that 247 00:13:58,640 --> 00:14:02,280 Speaker 1: the Medicare and answers for all hospitals around the country, 248 00:14:02,360 --> 00:14:05,880 Speaker 1: rural and otherwise be converted into grants that would help 249 00:14:05,920 --> 00:14:09,240 Speaker 1: as well. We still are anticipating a loss anywhere between 250 00:14:09,280 --> 00:14:12,120 Speaker 1: seven hundred million and a billion dollars towards the end 251 00:14:12,120 --> 00:14:15,560 Speaker 1: of the year. We do see our volumes coming back. 252 00:14:16,160 --> 00:14:21,040 Speaker 1: That's been very encouraging. Uh. The fact that again the 253 00:14:21,120 --> 00:14:24,600 Speaker 1: volumes are coming back, is completely coincident with the fact 254 00:14:24,640 --> 00:14:28,840 Speaker 1: that people feel safer. Um. That being said, I think 255 00:14:28,920 --> 00:14:32,440 Speaker 1: that um, you know, we're looking for a twenty that 256 00:14:32,520 --> 00:14:35,680 Speaker 1: will be rough, uh and we're hoping the twenty one 257 00:14:35,720 --> 00:14:38,800 Speaker 1: will be better, and we're looking that that by twenty 258 00:14:38,800 --> 00:14:41,120 Speaker 1: two will be out of the worst of it from 259 00:14:41,200 --> 00:14:44,560 Speaker 1: from a from a perspective of a major institution. That 260 00:14:44,640 --> 00:14:48,720 Speaker 1: was Dr Steve Corwin, CEO of New York Presbyterian coming up. 261 00:14:48,760 --> 00:14:51,880 Speaker 1: A tsunami hit the news media over the last few years, 262 00:14:51,960 --> 00:14:54,960 Speaker 1: taking much of the newspaper industry with it. We talked 263 00:14:54,960 --> 00:14:57,000 Speaker 1: with the man who led The New York Times not 264 00:14:57,160 --> 00:15:00,600 Speaker 1: just to survive, but to thrive, Mark Thompson, It's CEO 265 00:15:00,800 --> 00:15:04,920 Speaker 1: through a remarkable and a remarkably challenging time. That's next 266 00:15:04,920 --> 00:15:10,680 Speaker 1: our Wall Street Week on Bloomberg. This is Bloomberg Wall 267 00:15:10,720 --> 00:15:14,840 Speaker 1: Street Week with David Weston from Bloomberg Radio. For all 268 00:15:14,880 --> 00:15:18,640 Speaker 1: the difficulties experienced by most of the traditional newspaper business, 269 00:15:19,080 --> 00:15:21,120 Speaker 1: the New York Times over the past eight years has 270 00:15:21,160 --> 00:15:24,040 Speaker 1: managed to embrace the future. And we asked it CEO 271 00:15:24,160 --> 00:15:27,160 Speaker 1: Mark Thompson, how he went about doing it what we 272 00:15:27,320 --> 00:15:30,000 Speaker 1: decided to do. There were four revenue streams when when 273 00:15:30,040 --> 00:15:33,680 Speaker 1: I arrived at the company still are today. Print advertising, 274 00:15:33,680 --> 00:15:35,920 Speaker 1: which once had been more than eighty percent of the 275 00:15:35,960 --> 00:15:39,480 Speaker 1: total revenue of the company have been print advertizing, print subscription, 276 00:15:40,320 --> 00:15:44,120 Speaker 1: digital advertising, and digital subscription. And really my kind of 277 00:15:44,120 --> 00:15:47,720 Speaker 1: bed I narrative on on digital subscription as the as 278 00:15:47,760 --> 00:15:52,040 Speaker 1: the revenue stream we should really grow, and indeed had 279 00:15:52,080 --> 00:15:55,920 Speaker 1: to grow, because ultimately, for different reasons, all of the 280 00:15:55,960 --> 00:15:58,840 Speaker 1: other revenue streams seemed to me were in trouble potentially 281 00:15:59,120 --> 00:16:02,520 Speaker 1: and ultimately I even disappear. So we double down on 282 00:16:02,560 --> 00:16:08,040 Speaker 1: the very simple idea of great journalism packaged effectively in 283 00:16:08,040 --> 00:16:12,560 Speaker 1: good digital products, which established a very close relationship with 284 00:16:13,080 --> 00:16:16,280 Speaker 1: people who are prepared to pay to get that journalism, 285 00:16:16,320 --> 00:16:20,120 Speaker 1: and that becoming really the bedrock of the entire future 286 00:16:20,160 --> 00:16:23,760 Speaker 1: of the company. And to do that, we invested in 287 00:16:23,800 --> 00:16:25,640 Speaker 1: our news room. We actually built the news room. We've 288 00:16:25,640 --> 00:16:28,920 Speaker 1: got hundred and fifty more journalists now than then when 289 00:16:28,920 --> 00:16:31,280 Speaker 1: I walked into the building. And we also got smart 290 00:16:31,320 --> 00:16:35,040 Speaker 1: about digital product. We had hundreds of software engineers and 291 00:16:35,160 --> 00:16:40,200 Speaker 1: data scientists, machine learning people, and graphic designers and videographers 292 00:16:40,440 --> 00:16:42,840 Speaker 1: and and really worked on the digital product. And and 293 00:16:42,880 --> 00:16:44,960 Speaker 1: we've ended up with a kind of virtuous circle where 294 00:16:45,160 --> 00:16:47,960 Speaker 1: I think the content is as rich and and broaders 295 00:16:48,040 --> 00:16:51,160 Speaker 1: has ever been. It's much more effectively packaged up in products, 296 00:16:51,160 --> 00:16:53,520 Speaker 1: and people are flocking to buy the products as as 297 00:16:53,600 --> 00:16:56,240 Speaker 1: as new subscribers. So Mark, you described it as simple, 298 00:16:56,560 --> 00:16:59,200 Speaker 1: but it was far from conventional wisdom when you took 299 00:16:59,200 --> 00:17:02,400 Speaker 1: over I mean most newspaper people, as you and I 300 00:17:02,440 --> 00:17:04,119 Speaker 1: both know in the United States, and said, look at 301 00:17:04,320 --> 00:17:06,560 Speaker 1: we made the mistake early out of making this free 302 00:17:06,680 --> 00:17:09,280 Speaker 1: on the internet. There's no way we can charge with it. 303 00:17:09,320 --> 00:17:11,560 Speaker 1: With the possible exception of the Financial Times maybe the 304 00:17:11,560 --> 00:17:15,159 Speaker 1: Wall Street Journal because it's especially business publication. So what 305 00:17:15,320 --> 00:17:17,159 Speaker 1: you did may have been simple, but it was not 306 00:17:17,280 --> 00:17:19,560 Speaker 1: what most people thought would work. That's true of my industry. 307 00:17:19,560 --> 00:17:22,359 Speaker 1: But if you step back, I mean read Hastings was 308 00:17:22,520 --> 00:17:25,879 Speaker 1: thinking the same thought about about high quality TV and 309 00:17:26,000 --> 00:17:29,639 Speaker 1: in relation to Netflix. Daniel Eck and co at Spotify 310 00:17:29,720 --> 00:17:31,800 Speaker 1: were thinking the same about music, that there was a 311 00:17:31,800 --> 00:17:35,240 Speaker 1: way of getting great entertainment of great music to the 312 00:17:35,280 --> 00:17:38,199 Speaker 1: world's public, and enough people out there would pay for 313 00:17:38,240 --> 00:17:40,640 Speaker 1: it to make a great business. And really all we're 314 00:17:40,680 --> 00:17:44,080 Speaker 1: really doing I think we're part of a broader trend 315 00:17:44,600 --> 00:17:49,400 Speaker 1: towards direct digital subscription relationships with people who want really 316 00:17:49,400 --> 00:17:52,960 Speaker 1: good stuff, and that's a that's an entire sector which 317 00:17:53,000 --> 00:17:55,479 Speaker 1: is growing very rapidly, and in a way, it's a 318 00:17:55,480 --> 00:17:58,000 Speaker 1: little bit like the moment when cable TV arrived in 319 00:17:58,040 --> 00:18:00,920 Speaker 1: the US and suddenly the was a choice there was 320 00:18:00,960 --> 00:18:05,000 Speaker 1: a choice of something beyond regular broadcast TV television. And 321 00:18:05,040 --> 00:18:08,359 Speaker 1: I think that although it's true that the broadcast model 322 00:18:08,400 --> 00:18:11,120 Speaker 1: is happening to broadcast TV right now, is is post 323 00:18:11,200 --> 00:18:12,720 Speaker 1: growth and it is going to be very difficult to 324 00:18:12,720 --> 00:18:15,960 Speaker 1: stay even its current level. Um it turns out these 325 00:18:16,000 --> 00:18:19,440 Speaker 1: other forms of getting TV and music and news could grow. 326 00:18:19,720 --> 00:18:23,400 Speaker 1: There was once a really big market in in paid 327 00:18:23,440 --> 00:18:25,680 Speaker 1: news in America. And it wasn't just The New York Times. 328 00:18:25,680 --> 00:18:29,120 Speaker 1: It was local newspapers, it was metros, it was magazines. 329 00:18:29,200 --> 00:18:32,640 Speaker 1: Know that people paid billions and billions of dollars as 330 00:18:32,640 --> 00:18:36,520 Speaker 1: subscribers and buying buying these products from newsstands. There's no 331 00:18:36,600 --> 00:18:40,440 Speaker 1: reason why that market can't be recaptured. But how would 332 00:18:40,440 --> 00:18:42,920 Speaker 1: that happen? Marcus A practical markers. When you came in, 333 00:18:43,160 --> 00:18:45,720 Speaker 1: the New York Times still had a very robust newsroom 334 00:18:45,920 --> 00:18:48,879 Speaker 1: directed toward print, larger but very US newsroom. A lot 335 00:18:48,960 --> 00:18:51,479 Speaker 1: of newspapers across the country, these are regional as well 336 00:18:51,480 --> 00:18:53,639 Speaker 1: as local papers, really have had to cut back so 337 00:18:53,680 --> 00:18:56,520 Speaker 1: far they've let those newsrooms go. Is it possible this 338 00:18:56,560 --> 00:18:59,359 Speaker 1: point to rebuild that. Can your model apply beyond the 339 00:18:59,400 --> 00:19:01,119 Speaker 1: New York Time? And I guess that's what I'm asking. 340 00:19:01,359 --> 00:19:03,400 Speaker 1: And the answer is because so few people have even 341 00:19:03,440 --> 00:19:06,479 Speaker 1: tried it, I don't think we know. But but to me, 342 00:19:06,720 --> 00:19:09,720 Speaker 1: I mean, I think there's one basic, big caveat which 343 00:19:09,760 --> 00:19:11,760 Speaker 1: is this is a kind of horse and buggy to 344 00:19:12,200 --> 00:19:16,480 Speaker 1: automobile moment, and that requires capital. You have to risk 345 00:19:16,560 --> 00:19:19,720 Speaker 1: some money, you have to invest to make the change. 346 00:19:19,920 --> 00:19:23,680 Speaker 1: But assuming someone wants to invest, I don't see at 347 00:19:23,720 --> 00:19:30,280 Speaker 1: all why if you rehire your journalists, rebuild that newsroom, 348 00:19:30,600 --> 00:19:34,080 Speaker 1: start doing great reporting, and start getting smart about how 349 00:19:34,119 --> 00:19:35,560 Speaker 1: you get it to the public while you can't really 350 00:19:35,600 --> 00:19:38,280 Speaker 1: build a new business. I think the mistake made was 351 00:19:38,280 --> 00:19:40,320 Speaker 1: thinking that you could kind of eke your way to 352 00:19:40,400 --> 00:19:44,080 Speaker 1: the digital future without putting any fresh money in. And 353 00:19:44,359 --> 00:19:46,880 Speaker 1: no one could do that. Nobody could take a to two, 354 00:19:46,920 --> 00:19:50,879 Speaker 1: could take a a kind of horse carriage factory and 355 00:19:50,960 --> 00:19:54,640 Speaker 1: turn it into a car company without vast fresh investment. 356 00:19:54,720 --> 00:19:58,560 Speaker 1: And this is one of those periods in media, which 357 00:19:58,600 --> 00:20:01,239 Speaker 1: is very capital intensive, requires lots of money. But for 358 00:20:01,280 --> 00:20:03,560 Speaker 1: people who prepared to put the money in, I think 359 00:20:03,600 --> 00:20:05,600 Speaker 1: there are great businesses to be built. But the other 360 00:20:05,640 --> 00:20:08,320 Speaker 1: thing we saw was people take a look at Facebook 361 00:20:08,359 --> 00:20:10,840 Speaker 1: and Google and say they're so massive there are audience 362 00:20:10,920 --> 00:20:12,959 Speaker 1: is so large, we have no choice but to go 363 00:20:13,040 --> 00:20:15,400 Speaker 1: through them. We have to hitch our wagon to them, 364 00:20:15,400 --> 00:20:18,679 Speaker 1: even though they will have the direct relationship with our subscriber, 365 00:20:18,720 --> 00:20:21,359 Speaker 1: our customer. I mean even New York Times flirted with 366 00:20:21,400 --> 00:20:23,919 Speaker 1: that for a time. So is it possible for if 367 00:20:23,920 --> 00:20:25,560 Speaker 1: you do this directly, I mean, you have a direct 368 00:20:25,640 --> 00:20:30,920 Speaker 1: relation to the subscriber. And we believe that although um 369 00:20:31,359 --> 00:20:34,159 Speaker 1: uh digital social media, Facebook and the rest of it, 370 00:20:34,400 --> 00:20:37,840 Speaker 1: Google Search and all of these platforms are really important 371 00:20:37,840 --> 00:20:41,119 Speaker 1: in people finding our content, hearing about the Times and 372 00:20:41,400 --> 00:20:45,320 Speaker 1: making sure our journalism is really influential, that we really 373 00:20:45,359 --> 00:20:49,040 Speaker 1: needed a kind of trail of breadcrumbs from these other 374 00:20:49,080 --> 00:20:52,240 Speaker 1: platforms back to the mothership, back to the New York 375 00:20:52,280 --> 00:20:55,600 Speaker 1: Times experience. That was Mark Thompson, outgoing CEO of the 376 00:20:55,600 --> 00:20:58,560 Speaker 1: New York Times company. Coming up, we wrap up the 377 00:20:58,600 --> 00:21:02,320 Speaker 1: week with our special contributor, Larry Summers. This is Wall 378 00:21:02,359 --> 00:21:12,840 Speaker 1: Street Week on Bloomberg. This is Bloomberg Wall Street Week 379 00:21:13,040 --> 00:21:16,280 Speaker 1: with David Weston from Bloomberg Radio. It was a week 380 00:21:16,280 --> 00:21:19,440 Speaker 1: of ups and downs and sometimes just playing moving sideways. 381 00:21:19,600 --> 00:21:21,159 Speaker 1: To wrap it up for us, we welcome now our 382 00:21:21,200 --> 00:21:25,520 Speaker 1: special contributor and former Treasury Secretary Larry Summers of Harvard. So, Larry, 383 00:21:25,520 --> 00:21:27,359 Speaker 1: we had a lot of information on the stock market 384 00:21:27,359 --> 00:21:28,480 Speaker 1: towards the end of the week. I mean, in the 385 00:21:28,560 --> 00:21:30,480 Speaker 1: early week it was going up. The Latin part of 386 00:21:30,520 --> 00:21:32,400 Speaker 1: the week it really sold off quite a bit. How 387 00:21:32,480 --> 00:21:34,240 Speaker 1: much of this is signal and how much is this 388 00:21:34,280 --> 00:21:37,119 Speaker 1: as noise? To Barro from Nate Silver, you know, David 389 00:21:37,440 --> 00:21:42,200 Speaker 1: uh Bob Rubin famously told everybody in the Clinton White House, 390 00:21:42,880 --> 00:21:46,159 Speaker 1: markets go up, markets go down. I think it's a 391 00:21:46,280 --> 00:21:51,520 Speaker 1: mistake always to make judgments about deep and profound things, 392 00:21:52,119 --> 00:21:55,680 Speaker 1: even about the future of markets, from how they behave 393 00:21:55,800 --> 00:22:00,719 Speaker 1: over a period of uh several days. So I'd be 394 00:22:01,600 --> 00:22:05,840 Speaker 1: very surprised if the events of the last couple of 395 00:22:05,920 --> 00:22:12,960 Speaker 1: days are historically memorable. My uh, my son, who's in 396 00:22:13,040 --> 00:22:16,320 Speaker 1: his mid twenties, UM, sent me a note in the 397 00:22:16,320 --> 00:22:21,120 Speaker 1: middle of the day saying, uh, hell of a correction, Dad, 398 00:22:21,960 --> 00:22:27,120 Speaker 1: And I wrote back, by the standards of your young life, UM, 399 00:22:27,680 --> 00:22:32,000 Speaker 1: and he had the good grace to write back, uh 400 00:22:32,040 --> 00:22:39,080 Speaker 1: fair enough. UM. So I don't know whether where markets are. 401 00:22:39,400 --> 00:22:45,320 Speaker 1: I I have come to think that the idea that 402 00:22:45,600 --> 00:22:49,760 Speaker 1: many had early on, how can the markets be so 403 00:22:49,880 --> 00:22:54,080 Speaker 1: strong in the midst of a COVID shock, So big, 404 00:22:54,880 --> 00:22:59,720 Speaker 1: I did that idea that treats the divergence as overwhelming 405 00:22:59,720 --> 00:23:06,120 Speaker 1: av instant markets are wrong is misguided. You would expect that, uh, 406 00:23:06,240 --> 00:23:10,000 Speaker 1: when interest rates were reduced as much as they have, 407 00:23:10,720 --> 00:23:15,960 Speaker 1: when the Fed is just freely providing liquidity, when action 408 00:23:16,119 --> 00:23:21,600 Speaker 1: is shifting towards technology companies, you'd expect to see a 409 00:23:21,720 --> 00:23:26,360 Speaker 1: variety of the things we've seen. Are they overdone? Are 410 00:23:26,400 --> 00:23:29,840 Speaker 1: the movement's overdone? What fraction of that has been corrected 411 00:23:29,840 --> 00:23:32,840 Speaker 1: in the last couple of days. Each investor will have 412 00:23:32,960 --> 00:23:37,600 Speaker 1: to make uh their own judgment. But just as every 413 00:23:37,600 --> 00:23:41,800 Speaker 1: time it starts to snow, it's not a blizzard. Though 414 00:23:41,880 --> 00:23:45,480 Speaker 1: it might be h every time you have a significant 415 00:23:45,600 --> 00:23:51,600 Speaker 1: market move, it's not the beginning of something UH profound. 416 00:23:52,119 --> 00:23:55,160 Speaker 1: So I think people should be worried about whether we're 417 00:23:55,160 --> 00:23:57,760 Speaker 1: going to carry on an honest election in the United States. 418 00:23:58,240 --> 00:24:01,399 Speaker 1: They should be worried about whether we're going to have 419 00:24:01,600 --> 00:24:05,440 Speaker 1: a competent effort, which in many ways we haven't so 420 00:24:05,520 --> 00:24:10,840 Speaker 1: far to contain COVID. They should be worried about whether 421 00:24:10,880 --> 00:24:13,800 Speaker 1: we're going to find a way of making our economy function. 422 00:24:14,240 --> 00:24:20,320 Speaker 1: So it helps UH middle class UH people and large 423 00:24:20,359 --> 00:24:26,320 Speaker 1: fraction of population shares in any prosperity that's created. I 424 00:24:26,359 --> 00:24:30,760 Speaker 1: think the fundamentals are the more important things to be 425 00:24:30,880 --> 00:24:37,920 Speaker 1: worried about than UH this particular UH market fluctuation, which 426 00:24:37,960 --> 00:24:42,600 Speaker 1: I think is unlikely to be long remembered. Larry, there's 427 00:24:42,600 --> 00:24:43,760 Speaker 1: a lot of talk this week, because it was a 428 00:24:43,760 --> 00:24:46,000 Speaker 1: sell off led by big tech, that this might look 429 00:24:46,040 --> 00:24:48,200 Speaker 1: like two thousands, But as you pointed out to me, 430 00:24:48,440 --> 00:24:50,080 Speaker 1: it's very different, in part because of what you just 431 00:24:50,119 --> 00:24:52,919 Speaker 1: pointed out, which is the central bank liquidity being infused 432 00:24:52,960 --> 00:24:54,639 Speaker 1: into the marketplace, as well as the fact that the 433 00:24:54,640 --> 00:24:56,840 Speaker 1: big tech companies aren't making a lot of money unlike 434 00:24:56,880 --> 00:25:00,280 Speaker 1: some of those tech high flyers back in two thousands. Yeah, 435 00:25:00,280 --> 00:25:03,800 Speaker 1: I don't think you were not. You were talking about 436 00:25:03,960 --> 00:25:08,280 Speaker 1: pets dot com UH in two thousands. You were talking 437 00:25:08,280 --> 00:25:13,280 Speaker 1: about an era when people raised UH money before they 438 00:25:13,280 --> 00:25:16,160 Speaker 1: had their first dollar of profits, before they had their 439 00:25:16,160 --> 00:25:21,040 Speaker 1: first dollar of revenues, before they had their first coherent 440 00:25:21,600 --> 00:25:26,920 Speaker 1: UH plan. I think when you're talking about the largest 441 00:25:26,960 --> 00:25:31,840 Speaker 1: companies in the marketplace, which is what the tech companies 442 00:25:32,240 --> 00:25:37,359 Speaker 1: UH now are, you're looking at something very different than 443 00:25:37,680 --> 00:25:40,680 Speaker 1: what we were looking at in two thousands, and if 444 00:25:40,680 --> 00:25:44,520 Speaker 1: you look at price earnings ratios, they're not in the 445 00:25:44,560 --> 00:25:49,080 Speaker 1: same kind of stratospheric place that the tech sector price 446 00:25:49,119 --> 00:25:55,160 Speaker 1: earnings ratios were in uh in the year two thousands. Now, look, 447 00:25:55,200 --> 00:25:59,879 Speaker 1: that doesn't mean there isn't gonna be a substantial correction 448 00:26:00,520 --> 00:26:05,440 Speaker 1: of some sort. Uh, No one, No one can know that, 449 00:26:05,600 --> 00:26:10,000 Speaker 1: and I certainly wouldn't want to claim that. But I 450 00:26:10,000 --> 00:26:13,840 Speaker 1: think that those who have been saying it's all a 451 00:26:13,880 --> 00:26:19,880 Speaker 1: big bubble and declaring themselves vindicated right now are premature 452 00:26:19,960 --> 00:26:22,359 Speaker 1: in their declarations of victory. Larry, one of the things 453 00:26:22,400 --> 00:26:24,840 Speaker 1: that the markets don't appear to be waiting for is 454 00:26:24,920 --> 00:26:27,639 Speaker 1: a fiscal stimulus package, that so called fourth round. Otherwise 455 00:26:27,680 --> 00:26:29,800 Speaker 1: they'd be waiting for good because it keeps going on 456 00:26:29,920 --> 00:26:32,480 Speaker 1: another week this week without getting it. At the same time, 457 00:26:32,480 --> 00:26:34,640 Speaker 1: we had to report of the CBO about the level 458 00:26:34,640 --> 00:26:36,960 Speaker 1: of episode which is going to go over a g 459 00:26:37,080 --> 00:26:38,880 Speaker 1: d P for the first time since World War Two. 460 00:26:39,200 --> 00:26:41,719 Speaker 1: Do the Republicans up on Capitol Hill who are concerned 461 00:26:41,720 --> 00:26:47,520 Speaker 1: about this have a point, you know, David Um what 462 00:26:47,720 --> 00:26:53,520 Speaker 1: I learned from the CBO actually made me a little 463 00:26:53,600 --> 00:26:58,560 Speaker 1: less concerned about a fiscal crisis and made me a 464 00:26:58,600 --> 00:27:04,160 Speaker 1: little more focused on providing fiscal support for the economy 465 00:27:04,280 --> 00:27:08,119 Speaker 1: that I was before. We all know that the United 466 00:27:08,119 --> 00:27:12,800 Speaker 1: States ran a big deficit in We all know that 467 00:27:12,880 --> 00:27:16,879 Speaker 1: the debt to GDP ratio, which was around at the 468 00:27:16,920 --> 00:27:19,159 Speaker 1: beginning of the year, is going to rise to around 469 00:27:20,520 --> 00:27:24,040 Speaker 1: because of uh, that big deficit and because of the 470 00:27:24,080 --> 00:27:27,560 Speaker 1: declining g d P. The thing I didn't have a 471 00:27:27,640 --> 00:27:31,560 Speaker 1: beat on until the CBO report was what was the 472 00:27:31,680 --> 00:27:35,560 Speaker 1: path gonna be out for a decade. And what I 473 00:27:35,720 --> 00:27:38,840 Speaker 1: learned from the CBO report is while the debt to 474 00:27:38,920 --> 00:27:42,520 Speaker 1: GDP ratio is projected to go up slowly over the 475 00:27:42,560 --> 00:27:46,000 Speaker 1: next two or three years from two thousand and twenty 476 00:27:46,080 --> 00:27:50,159 Speaker 1: three to two thousand and thirty on current law and 477 00:27:50,280 --> 00:27:54,520 Speaker 1: on current projections, the debt to GDP ratio isn't exploding. 478 00:27:54,920 --> 00:27:59,520 Speaker 1: It isn't rising very rapidly at all. It's basically of 479 00:28:00,040 --> 00:28:04,240 Speaker 1: at And what that says to me is that we're 480 00:28:04,280 --> 00:28:07,760 Speaker 1: in a relatively stable situation. Now, then you can ask 481 00:28:07,800 --> 00:28:12,320 Speaker 1: the question is it a dangerous situation? Well? There, I 482 00:28:12,400 --> 00:28:14,160 Speaker 1: think the way you have to look at a debt 483 00:28:14,800 --> 00:28:17,920 Speaker 1: is to look at the interest flows that it generates, 484 00:28:18,000 --> 00:28:23,120 Speaker 1: and in fact, we're spending less on interest UM as 485 00:28:23,119 --> 00:28:26,960 Speaker 1: a share of GDP than we have historically on average 486 00:28:27,000 --> 00:28:31,000 Speaker 1: over the last decades. And if you do what economists 487 00:28:31,000 --> 00:28:33,920 Speaker 1: would tend to say you should do, which is look 488 00:28:34,000 --> 00:28:38,520 Speaker 1: at UH the real interest cost of the debt, that is, 489 00:28:38,560 --> 00:28:44,640 Speaker 1: the cost net of inflation. Real interest rates are now negative, 490 00:28:45,000 --> 00:28:49,480 Speaker 1: which makes it much much easier to carry UH debt. 491 00:28:49,840 --> 00:28:53,320 Speaker 1: So what I learned from the CBO is not the 492 00:28:53,360 --> 00:28:56,320 Speaker 1: current deficit figures there in the papers every day, there 493 00:28:56,320 --> 00:28:59,440 Speaker 1: in the treasury accounts. What I looked to the studio 494 00:28:59,640 --> 00:29:04,480 Speaker 1: for every six months is an update on the long 495 00:29:04,600 --> 00:29:10,040 Speaker 1: run debt path, and that was actually a relatively serene 496 00:29:10,800 --> 00:29:16,320 Speaker 1: um UH projection. So I feel better now than I 497 00:29:16,360 --> 00:29:18,680 Speaker 1: did then. But is that because of the Fed? Larry 498 00:29:18,720 --> 00:29:20,280 Speaker 1: to put it simply, because if the real issue is 499 00:29:20,320 --> 00:29:23,000 Speaker 1: the interest cost right now we're approaching the zero bound 500 00:29:23,040 --> 00:29:26,120 Speaker 1: and interest cost because the Fed are we essentially financing 501 00:29:26,160 --> 00:29:28,680 Speaker 1: that that that debt, is this really a form of 502 00:29:28,720 --> 00:29:32,920 Speaker 1: modern monetary theory. I don't think that's quite the right 503 00:29:32,960 --> 00:29:36,600 Speaker 1: way to think about it, David. I think that if 504 00:29:36,680 --> 00:29:40,480 Speaker 1: most economists will tell you that, yes, the Fed can 505 00:29:40,760 --> 00:29:43,320 Speaker 1: set the interest rate this year, or maybe the said 506 00:29:43,360 --> 00:29:46,520 Speaker 1: FED can set the interest rate next year, but the 507 00:29:46,600 --> 00:29:50,440 Speaker 1: interest rate on long term debt, the so called five 508 00:29:50,520 --> 00:29:53,440 Speaker 1: year five year interest rate, the interest rate that's baked 509 00:29:53,480 --> 00:29:58,040 Speaker 1: into markets for borrowing that starts five years from now 510 00:29:58,080 --> 00:30:01,480 Speaker 1: and continues for five years half after that, that's not 511 00:30:01,640 --> 00:30:07,360 Speaker 1: something that the FED can immediately control. And it's remarkably low. 512 00:30:08,000 --> 00:30:12,240 Speaker 1: I think it's fundamental factors about savings and investment that 513 00:30:12,320 --> 00:30:16,200 Speaker 1: are determining the low level of interest rates, and the 514 00:30:16,200 --> 00:30:20,320 Speaker 1: FED is basically tracking that in its effort to keep 515 00:30:21,200 --> 00:30:25,080 Speaker 1: the economy stable. And this is the secular stagnation idea 516 00:30:25,160 --> 00:30:28,280 Speaker 1: that you and I have talked about on this UH show, 517 00:30:28,520 --> 00:30:31,080 Speaker 1: or the low neutral interest rate that people in the 518 00:30:31,080 --> 00:30:33,720 Speaker 1: Federal Reserve system we've been talking about. I think they're 519 00:30:33,720 --> 00:30:37,960 Speaker 1: fundamental factors that mean we're going to have lower interest 520 00:30:38,040 --> 00:30:42,080 Speaker 1: rates and therefore can carry larger debts than we historically. 521 00:30:42,400 --> 00:30:44,320 Speaker 1: It's fascinating. Thank you so much. It's always a treat 522 00:30:44,360 --> 00:30:46,320 Speaker 1: to talk with you. Larry. That is Wall Street. We 523 00:30:46,440 --> 00:30:49,280 Speaker 1: special contribute Larry Summers of Harvard coming on a rather 524 00:30:49,360 --> 00:30:51,920 Speaker 1: remarkable week a lot of all time in the marketplace, 525 00:30:51,960 --> 00:30:55,720 Speaker 1: but maybe not telling us very much in the end, finally, 526 00:30:56,080 --> 00:31:00,240 Speaker 1: one more thought, a different kind of Labor Day. In 527 00:31:00,280 --> 00:31:03,360 Speaker 1: the United States, we celebrate Labor Day this weekend, traditionally 528 00:31:03,400 --> 00:31:06,400 Speaker 1: marking the end of summer and back to school, but 529 00:31:06,480 --> 00:31:08,800 Speaker 1: originally Labor Day had a bit more edge to it 530 00:31:08,840 --> 00:31:12,000 Speaker 1: than picnics and beach parties. Starting locally here in New 531 00:31:12,080 --> 00:31:14,920 Speaker 1: York City, in eighteen eighty two, it became a national 532 00:31:14,960 --> 00:31:18,160 Speaker 1: holiday as part of President Grover Cleveland's efforts to come 533 00:31:18,360 --> 00:31:21,000 Speaker 1: labor strife that had led to deaths in eighteen ninety four. 534 00:31:21,760 --> 00:31:24,760 Speaker 1: This year, we celebrate Labor Day with millions upon millions 535 00:31:24,760 --> 00:31:27,240 Speaker 1: of people out of work, with back to school very 536 00:31:27,280 --> 00:31:29,800 Speaker 1: much up in the air for millions of children, with 537 00:31:29,840 --> 00:31:32,200 Speaker 1: warnings about the need to wear masks and keep our 538 00:31:32,240 --> 00:31:35,600 Speaker 1: distance from one another, and with racial strife and cities 539 00:31:35,640 --> 00:31:40,440 Speaker 1: around the country triggered by police shootings. But despite all that, 540 00:31:40,440 --> 00:31:43,760 Speaker 1: we're dealing with. Happy Labor Day wherever you are, and 541 00:31:43,800 --> 00:31:47,160 Speaker 1: however you can celebrate it safely. Let's hope for holiday 542 00:31:47,200 --> 00:31:49,440 Speaker 1: next year we can go back to worrying only about 543 00:31:49,480 --> 00:31:53,520 Speaker 1: getting a sunburn and eating too much. That does it. 544 00:31:53,600 --> 00:31:56,160 Speaker 1: For this episode of Wall String Week, I'm David Weston. 545 00:31:56,360 --> 00:31:59,000 Speaker 1: This is Bloomberg see you next week.