1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,640 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Right now, 5 00:00:27,720 --> 00:00:29,920 Speaker 1: we are really going to dive into not only the 6 00:00:29,960 --> 00:00:33,480 Speaker 1: market response, but what the market is saying to the FED. 7 00:00:33,680 --> 00:00:37,479 Speaker 1: With us is Michael Darta of m CAM Partners. His 8 00:00:37,680 --> 00:00:41,760 Speaker 1: work particularly on demand and supply dynamics across the greater 9 00:00:41,840 --> 00:00:45,920 Speaker 1: economy out of Wisconsin or near legendary for such a 10 00:00:45,960 --> 00:00:48,440 Speaker 1: young guy, and we're gonna talk to him now because 11 00:00:48,479 --> 00:00:52,320 Speaker 1: he is an outlier with Mr Kachola Coode of Minnesota 12 00:00:52,800 --> 00:00:54,920 Speaker 1: on what a FED needs to do. And Michael, your 13 00:00:55,040 --> 00:00:59,960 Speaker 1: basic theme is it's not a FED in a static environment. 14 00:01:00,000 --> 00:01:04,000 Speaker 1: In this is dynamic economics and cultula quota is correct. 15 00:01:04,360 --> 00:01:07,320 Speaker 1: They've got a cut because it's a moving target right 16 00:01:07,360 --> 00:01:10,120 Speaker 1: now for the FED on real rates. That's exactly right, 17 00:01:10,160 --> 00:01:14,119 Speaker 1: Tom so um By new by doing nothing, the central 18 00:01:14,160 --> 00:01:18,000 Speaker 1: banks are doing something. They're actually allowing monetary conditions to tighten. 19 00:01:18,800 --> 00:01:21,399 Speaker 1: Because if you have a big shock to confidence in 20 00:01:21,440 --> 00:01:26,120 Speaker 1: the neutral interest rate collapses and central banks stay steady 21 00:01:26,160 --> 00:01:30,080 Speaker 1: with the policy rate. That's effectively a tightening of monetary policy. 22 00:01:30,360 --> 00:01:32,360 Speaker 1: How do we know that's the case. Look at the 23 00:01:32,400 --> 00:01:36,039 Speaker 1: bond market, Look at inflation expectations. They're plunging. If this 24 00:01:36,080 --> 00:01:41,120 Speaker 1: were a first order textbook supply side shock, inflation expectations 25 00:01:41,160 --> 00:01:43,640 Speaker 1: would be going up as real rates fell. That is 26 00:01:43,680 --> 00:01:47,200 Speaker 1: not what's happening. So yes, the first order effect is 27 00:01:47,240 --> 00:01:50,680 Speaker 1: a supply side shock from the coronavirus, but the second 28 00:01:50,960 --> 00:01:53,960 Speaker 1: order effect can be a monetary shock of central books 29 00:01:54,120 --> 00:01:57,960 Speaker 1: don't respond to this and a timely enforce beautifully explained. 30 00:01:58,000 --> 00:01:59,680 Speaker 1: But then go to the x axis and take the 31 00:01:59,720 --> 00:02:02,760 Speaker 1: part wi differential of the time function across those first 32 00:02:02,760 --> 00:02:07,440 Speaker 1: and second ordered functions. The answer is nobody's talking about 33 00:02:07,440 --> 00:02:12,720 Speaker 1: the sequential path of when the disinflation clicks in. Is 34 00:02:12,720 --> 00:02:15,720 Speaker 1: it weeks, months or do we have to wait quarters 35 00:02:15,760 --> 00:02:18,040 Speaker 1: for the evidence for them to move. I said this 36 00:02:18,160 --> 00:02:21,079 Speaker 1: last year when the FED was presiding over an inverted 37 00:02:21,120 --> 00:02:24,080 Speaker 1: yield curve, and my view was they really need to 38 00:02:24,120 --> 00:02:27,720 Speaker 1: act sooner rather than later, and much more forcefully rather 39 00:02:27,800 --> 00:02:30,320 Speaker 1: than in a tepid fashion. The longer they wait, the 40 00:02:30,360 --> 00:02:32,720 Speaker 1: more they'll have to do in the less effective it 41 00:02:32,760 --> 00:02:36,600 Speaker 1: will likely be because they're allowing a situation in which 42 00:02:36,639 --> 00:02:39,080 Speaker 1: the neutral interest rate is moving down. You know, this 43 00:02:39,160 --> 00:02:41,079 Speaker 1: happened in two thousand and eight when the FED got 44 00:02:41,160 --> 00:02:45,480 Speaker 1: so distracted fighting the financial crisis they forgot about monetary policy. 45 00:02:45,880 --> 00:02:48,600 Speaker 1: The neutral interest rate collapsed through the floor. The FED 46 00:02:48,760 --> 00:02:52,679 Speaker 1: was late, and nominal GDP one off a cliff. By definition, 47 00:02:52,760 --> 00:02:57,119 Speaker 1: if you have a nominal GDP shock, monetary policy failed. 48 00:02:57,440 --> 00:02:59,760 Speaker 1: So the first order of business is to avoid that. 49 00:03:00,160 --> 00:03:01,639 Speaker 1: Come Mike. What I hate from you though, is that 50 00:03:01,680 --> 00:03:03,360 Speaker 1: the most important thing for them to do is manage 51 00:03:03,400 --> 00:03:07,280 Speaker 1: financial conditions. Is that what I'm hearing? Well, financial conditions 52 00:03:07,280 --> 00:03:09,520 Speaker 1: are sort of you know, it's a bit of a 53 00:03:09,520 --> 00:03:14,360 Speaker 1: slippery concept, and you know that's a byproduct of of 54 00:03:14,000 --> 00:03:17,600 Speaker 1: a of a monetary shock taking place, and most people 55 00:03:17,680 --> 00:03:19,480 Speaker 1: end up looking at the stock market. You know, a 56 00:03:19,560 --> 00:03:22,840 Speaker 1: lot of these financial conditions into seas are a little 57 00:03:22,919 --> 00:03:26,040 Speaker 1: strange because sometimes they have interest rate levels in them 58 00:03:26,080 --> 00:03:28,800 Speaker 1: and conditions than ease in the models of you know, 59 00:03:28,960 --> 00:03:32,639 Speaker 1: discount risk free rates fall and that may not actually 60 00:03:33,000 --> 00:03:36,360 Speaker 1: be the proper way to to think about this um 61 00:03:36,400 --> 00:03:40,960 Speaker 1: But if you have inflation expectations moving lower because you've 62 00:03:40,960 --> 00:03:44,640 Speaker 1: had a shock, and that's associated with risk spreads widening 63 00:03:44,640 --> 00:03:46,880 Speaker 1: and now a big plunge in equity prices. Yes, you 64 00:03:46,920 --> 00:03:49,880 Speaker 1: can define that as a tightening in financial conditions, and 65 00:03:49,920 --> 00:03:53,840 Speaker 1: so to stay neutral, policy rates need to come down. 66 00:03:53,920 --> 00:03:58,120 Speaker 1: That's my point. By doing nothing, central banks are doing something. 67 00:03:58,360 --> 00:04:01,560 Speaker 1: They're actually presiding over a typing of monetary conditions, and 68 00:04:01,640 --> 00:04:06,040 Speaker 1: that's how you end up creating a situation where, um, 69 00:04:06,080 --> 00:04:10,440 Speaker 1: you know, the coronavirus actually can morph into my recession. 70 00:04:10,520 --> 00:04:13,400 Speaker 1: How the lower rights cascade through an economy like the 71 00:04:13,480 --> 00:04:17,320 Speaker 1: United States that could face a supply shock and demands 72 00:04:17,360 --> 00:04:20,160 Speaker 1: shock as well in this environment, which is very very unique, 73 00:04:20,160 --> 00:04:23,640 Speaker 1: it's a health situation, a public health situation. How the 74 00:04:23,720 --> 00:04:26,760 Speaker 1: lower rights cascade through the economy, Well, the markets are 75 00:04:26,880 --> 00:04:30,560 Speaker 1: already doing it. But if the Fed does not follow suit, 76 00:04:30,800 --> 00:04:34,640 Speaker 1: and it's holding its policy rate above market rates, which 77 00:04:34,640 --> 00:04:37,280 Speaker 1: is what's happening now right, we've had a reinversion of 78 00:04:37,320 --> 00:04:39,840 Speaker 1: the of the yield curve, the entire curve, the short 79 00:04:39,920 --> 00:04:43,520 Speaker 1: dated curve was already inverted coming into the year. Now 80 00:04:43,560 --> 00:04:47,159 Speaker 1: the tenure yield is plunged back below the FED funds 81 00:04:47,240 --> 00:04:50,400 Speaker 1: rate and and the t build rate um So that 82 00:04:50,520 --> 00:04:53,920 Speaker 1: tells you that the Fed is actually holding interest rates 83 00:04:54,040 --> 00:04:57,680 Speaker 1: at levels that are too high for the economy to survive. Now, 84 00:04:57,960 --> 00:04:59,840 Speaker 1: you know, some guests will come on here and say, oh, 85 00:04:59,839 --> 00:05:02,360 Speaker 1: that doesn't matter. The yield curve doesn't matter anymore as 86 00:05:02,360 --> 00:05:06,000 Speaker 1: an indicator. But take a look at business cycle history, 87 00:05:06,040 --> 00:05:08,440 Speaker 1: and this is not something you want to play Russian 88 00:05:08,520 --> 00:05:10,480 Speaker 1: roulette with right now. If you look at the FED 89 00:05:10,520 --> 00:05:13,960 Speaker 1: funds futures market pricing in almost four rate cuts by 90 00:05:13,960 --> 00:05:16,280 Speaker 1: the end of January, to your point, just to put 91 00:05:16,279 --> 00:05:19,880 Speaker 1: a number on the diminishing inflation expectations, the break even 92 00:05:20,000 --> 00:05:22,560 Speaker 1: rate over the next five ten years has fallen to 93 00:05:22,600 --> 00:05:25,560 Speaker 1: the lowest sixteen one and a half percent, now well 94 00:05:25,600 --> 00:05:28,880 Speaker 1: below the two percent target of the Federal Reserve. I'm wondering, 95 00:05:29,000 --> 00:05:32,680 Speaker 1: if the Federal Reserve comes out and confirms market expectations 96 00:05:32,760 --> 00:05:35,839 Speaker 1: for this many rate cuts, do you expect longer term 97 00:05:35,880 --> 00:05:39,599 Speaker 1: inflation expectations to go up? You know, that is a 98 00:05:39,640 --> 00:05:42,680 Speaker 1: great question, and that is basically the problem. And and 99 00:05:42,720 --> 00:05:46,880 Speaker 1: so you know, we came into this crisis with you know, 100 00:05:46,920 --> 00:05:49,840 Speaker 1: already low inflation expectations. Why is that the case? A 101 00:05:49,880 --> 00:05:51,640 Speaker 1: lot of people say, well, the FED tried to raise 102 00:05:51,680 --> 00:05:54,279 Speaker 1: inflation and couldn't do it. Are you trying to raise 103 00:05:54,320 --> 00:05:57,400 Speaker 1: inflation when you raise rates eight times and cut the 104 00:05:57,440 --> 00:06:00,160 Speaker 1: balance sheet by half a trillion dollars when inflation is 105 00:06:00,200 --> 00:06:02,719 Speaker 1: only a two pent of the time, which was the 106 00:06:05,520 --> 00:06:08,320 Speaker 1: rate hiking and monetary tightening environment. So the FED is 107 00:06:08,320 --> 00:06:11,360 Speaker 1: a tremendous amount of credibility and keeping inflation low but 108 00:06:11,440 --> 00:06:14,920 Speaker 1: not in raising inflation to ur above its target. And 109 00:06:14,960 --> 00:06:17,479 Speaker 1: now we're dealing with limited ammunition. And if you go 110 00:06:17,560 --> 00:06:21,279 Speaker 1: back to FED New York FED President John Williams speech 111 00:06:21,320 --> 00:06:24,240 Speaker 1: of you know a year or so ago, in an 112 00:06:24,360 --> 00:06:27,520 Speaker 1: environment where you're in the vicinity of the zero lower bound, 113 00:06:28,160 --> 00:06:32,120 Speaker 1: preserving ammunition is exactly what you don't do. That's a 114 00:06:32,160 --> 00:06:35,280 Speaker 1: way to fail. You want to move sooner and much 115 00:06:35,320 --> 00:06:39,479 Speaker 1: more aggressively, or your actions may be totally inadequate. And 116 00:06:39,520 --> 00:06:41,640 Speaker 1: to your point, if they do move now, if it's 117 00:06:41,640 --> 00:06:44,159 Speaker 1: twenty five basis points, you may not see a big 118 00:06:45,120 --> 00:06:48,760 Speaker 1: recovery and inflation expectations, but it's certainly better than than 119 00:06:48,800 --> 00:06:52,279 Speaker 1: doing nothing, in which you know these expectations could continue 120 00:06:52,279 --> 00:06:55,840 Speaker 1: to roll over. Recession risks are elevated, they were still 121 00:06:55,880 --> 00:06:58,840 Speaker 1: elevated coming into the year, and now they've they've moved 122 00:06:58,920 --> 00:07:01,560 Speaker 1: up even more so. Afraid when I listened to a 123 00:07:01,560 --> 00:07:04,440 Speaker 1: lot of other commentators, they're just simply missing the boat 124 00:07:04,520 --> 00:07:06,760 Speaker 1: on this telling you know, the fed not to not 125 00:07:06,839 --> 00:07:09,640 Speaker 1: to act, not to panic. No, in this environment, you 126 00:07:09,680 --> 00:07:12,920 Speaker 1: actually move aggressively and sooner rather than later. I Mike 127 00:07:13,040 --> 00:07:14,840 Speaker 1: got to catch out with your Mike data of m 128 00:07:14,840 --> 00:07:20,680 Speaker 1: camp fount is, let's get the view on the straight show. 129 00:07:20,720 --> 00:07:22,920 Speaker 1: We Stave Lighting joining us on the phone. City Private 130 00:07:22,920 --> 00:07:26,160 Speaker 1: Bank Global Chief Investment strategist, Stay fantastic to have you 131 00:07:26,200 --> 00:07:28,600 Speaker 1: with us. Walk me through your message for clients on 132 00:07:28,600 --> 00:07:31,760 Speaker 1: a morning like this morning. What do you tell them? Well, look, 133 00:07:31,760 --> 00:07:36,240 Speaker 1: I think it's just getting through the initial message that 134 00:07:36,600 --> 00:07:41,000 Speaker 1: the success that China seemed to have in slowing down 135 00:07:41,040 --> 00:07:45,480 Speaker 1: the coronavirus gave a false impression that this could be 136 00:07:45,560 --> 00:07:49,720 Speaker 1: contained to a regional event. So what we learned over 137 00:07:49,760 --> 00:07:52,200 Speaker 1: the weekend with for example, just to start of this 138 00:07:52,440 --> 00:07:55,600 Speaker 1: Italy and Korea, but going from a very small number 139 00:07:55,640 --> 00:07:59,600 Speaker 1: of infections to something that was more in love with 140 00:07:59,760 --> 00:08:02,760 Speaker 1: vir bologists had thought that this was not going to 141 00:08:02,840 --> 00:08:09,760 Speaker 1: be containable, right, that there would be widespread it's not infections, 142 00:08:09,760 --> 00:08:13,040 Speaker 1: but but certainly exposure to the virus that that changed 143 00:08:13,080 --> 00:08:16,119 Speaker 1: this from a regional story to a global one. And 144 00:08:16,320 --> 00:08:19,640 Speaker 1: so therefore some of the economic effects, the disruption effects 145 00:08:19,640 --> 00:08:23,280 Speaker 1: that we've seen in China, which were been very severe, um, 146 00:08:23,320 --> 00:08:25,600 Speaker 1: but some of that that we would see in other 147 00:08:25,640 --> 00:08:28,560 Speaker 1: parts of the world. So that's the thing. This is 148 00:08:28,600 --> 00:08:33,920 Speaker 1: a much larger than simply regional uh disruption effect, but 149 00:08:33,960 --> 00:08:35,840 Speaker 1: it's going to be something that's much more widespread, and 150 00:08:35,880 --> 00:08:38,800 Speaker 1: that's going to mean greater uncertainty about the economic outlook 151 00:08:38,840 --> 00:08:43,680 Speaker 1: and greater depressing effects uh in economies. UM, you know, 152 00:08:43,920 --> 00:08:49,719 Speaker 1: just trying to avoid uh, the dispersion of virus for 153 00:08:49,800 --> 00:08:53,320 Speaker 1: the economy. So our outlook has changed from the economy, UH, 154 00:08:53,360 --> 00:08:56,200 Speaker 1: and what we would think, you know, earnings do, what 155 00:08:56,520 --> 00:08:59,440 Speaker 1: you know activity in the economy does, and uh, therefore 156 00:08:59,559 --> 00:09:02,559 Speaker 1: what financial assets would do. Here for a while, so 157 00:09:02,679 --> 00:09:05,520 Speaker 1: Steve walk us through that the idea of the economic 158 00:09:05,640 --> 00:09:08,400 Speaker 1: effect and how you price that in and how you 159 00:09:08,480 --> 00:09:11,199 Speaker 1: measure that against the market effect where there seems to 160 00:09:11,240 --> 00:09:13,640 Speaker 1: be fear being baked in that does not seem to 161 00:09:13,640 --> 00:09:18,320 Speaker 1: be abating this morning. So figuring out exactly how to 162 00:09:18,360 --> 00:09:20,800 Speaker 1: measure this is not something that's going to be to 163 00:09:20,880 --> 00:09:23,000 Speaker 1: be easily done. I mean, we're just going to assume 164 00:09:23,040 --> 00:09:27,480 Speaker 1: that travel transport, uh, that those industries will see double 165 00:09:27,559 --> 00:09:31,920 Speaker 1: digit declines uh and in very similar to what you 166 00:09:31,960 --> 00:09:35,280 Speaker 1: might see in a severe recession. But this much more, 167 00:09:36,160 --> 00:09:40,240 Speaker 1: very deliberate. Um that this is like having you could 168 00:09:40,240 --> 00:09:42,760 Speaker 1: almost say, like a national strike effect and r big 169 00:09:42,800 --> 00:09:47,480 Speaker 1: industrial activity or natural disaster that that's probably going to 170 00:09:47,559 --> 00:09:50,480 Speaker 1: happen a bit over time, and in region by region, 171 00:09:50,480 --> 00:09:53,360 Speaker 1: country by country to predict unpredictable way. What I heard 172 00:09:53,400 --> 00:09:56,320 Speaker 1: just talking about really about what economic data points you 173 00:09:56,320 --> 00:10:00,040 Speaker 1: can look at, and honestly, very little data outside of 174 00:10:00,160 --> 00:10:02,360 Speaker 1: perhaps from the China data. But but this is much 175 00:10:02,400 --> 00:10:05,439 Speaker 1: more than a China story. Um, very little data is 176 00:10:05,480 --> 00:10:07,600 Speaker 1: going to reflect any of this. Yet. I think some 177 00:10:07,679 --> 00:10:11,680 Speaker 1: of the consumable commodities are the things that you're going 178 00:10:11,679 --> 00:10:13,680 Speaker 1: to say that, look, we have to use this or 179 00:10:13,800 --> 00:10:16,760 Speaker 1: will it will show up in storage. Those types of 180 00:10:17,080 --> 00:10:20,320 Speaker 1: commodities will be used for tracking real come activity. Stave. 181 00:10:20,559 --> 00:10:22,599 Speaker 1: How would you respond if the Feds down to the 182 00:10:22,679 --> 00:10:24,720 Speaker 1: signal they make a move in March? So far little 183 00:10:24,760 --> 00:10:27,400 Speaker 1: signal of that whatsoever. I'm just interested in trying to 184 00:10:27,480 --> 00:10:30,200 Speaker 1: get my head around how investors would respond to a 185 00:10:30,240 --> 00:10:32,640 Speaker 1: central bank willing to step back in because so far 186 00:10:32,920 --> 00:10:35,440 Speaker 1: seeing little signal, little sign of that coming from the 187 00:10:35,440 --> 00:10:37,320 Speaker 1: e c B, all the Federal Reserve, how would you 188 00:10:37,360 --> 00:10:41,040 Speaker 1: respond to that stage positively? So they're not in an 189 00:10:41,120 --> 00:10:44,400 Speaker 1: easy place. And and clearly they would be correct to 190 00:10:44,400 --> 00:10:49,080 Speaker 1: say that a monetary policy response, which has long labs 191 00:10:49,200 --> 00:10:52,920 Speaker 1: in terms of its impact on the economy, UM, is 192 00:10:53,640 --> 00:10:56,240 Speaker 1: uh not something that's going to sort of cure a disease. 193 00:10:56,760 --> 00:10:59,079 Speaker 1: At the same time, what you have to think about 194 00:10:59,160 --> 00:11:02,400 Speaker 1: is what if they don't move and um, if the 195 00:11:02,440 --> 00:11:05,760 Speaker 1: Federal Reserve or other central banks would stand in the 196 00:11:05,800 --> 00:11:09,880 Speaker 1: way of a market adjustment right, um, and keep policy 197 00:11:10,000 --> 00:11:12,880 Speaker 1: rates higher than the market is looking for, then they 198 00:11:12,920 --> 00:11:16,720 Speaker 1: create an artificial tightening. Um. And you know what we 199 00:11:16,760 --> 00:11:18,480 Speaker 1: have to think about. And if you want people to 200 00:11:18,559 --> 00:11:21,440 Speaker 1: look over the valley, UM, it's that, Yes, if the 201 00:11:21,480 --> 00:11:25,200 Speaker 1: Federal Reserve eases, it probably will be easier too long. 202 00:11:25,280 --> 00:11:28,480 Speaker 1: It's not going to tighten when the when the impact 203 00:11:28,480 --> 00:11:30,560 Speaker 1: of the coronavirus is over. But in a way we 204 00:11:30,600 --> 00:11:33,400 Speaker 1: need that. Um. We just simply say, well, let's suspend 205 00:11:33,400 --> 00:11:35,880 Speaker 1: the Fed funds rate for a while um and lower 206 00:11:35,920 --> 00:11:38,640 Speaker 1: borrowing costs and on the way out of this and 207 00:11:38,880 --> 00:11:43,040 Speaker 1: certainly doesn't stand the way of an adjustment and financial conditions. 208 00:11:43,080 --> 00:11:46,240 Speaker 1: That's that's less severe than what otherwise would Stephen Whiting 209 00:11:46,360 --> 00:11:49,120 Speaker 1: when you look at your expertise, which is linking profits 210 00:11:49,200 --> 00:11:52,720 Speaker 1: in into market performance and into economics as well. What 211 00:11:52,840 --> 00:11:56,480 Speaker 1: if I'm fascinating is what portion of this slowdown and 212 00:11:56,559 --> 00:12:01,040 Speaker 1: revenue revenue growth, earnings, flat earnings, negative earnings, whatever it is, 213 00:12:01,440 --> 00:12:04,760 Speaker 1: what portion of that will be recoverable down the road? 214 00:12:04,800 --> 00:12:08,160 Speaker 1: Have you in City group done any work on that, yes, 215 00:12:08,240 --> 00:12:10,800 Speaker 1: and and it's it would tend to be a large 216 00:12:11,200 --> 00:12:16,200 Speaker 1: part of it. And exactly when is not clear. Um, 217 00:12:16,400 --> 00:12:19,079 Speaker 1: But again if you are so, so, a couple of 218 00:12:19,080 --> 00:12:21,000 Speaker 1: things need to happen. Now some of the pale risks 219 00:12:21,040 --> 00:12:24,959 Speaker 1: that you can talk about again have increased. That credit 220 00:12:25,120 --> 00:12:30,400 Speaker 1: would negatively affect the economy even in a scenario in 221 00:12:30,440 --> 00:12:34,920 Speaker 1: which the coronavirus dissipates. That that is what central banks 222 00:12:34,920 --> 00:12:39,000 Speaker 1: should want to avoid, and that's why fiscal policymakers need, um, 223 00:12:39,040 --> 00:12:42,120 Speaker 1: you know, disaster relief, right, that's the kind of thing 224 00:12:42,160 --> 00:12:45,760 Speaker 1: that happens in a great, big natural disaster. Um, you 225 00:12:45,880 --> 00:12:50,199 Speaker 1: need fiscal easing to address weak creditors. I think China 226 00:12:50,280 --> 00:12:52,360 Speaker 1: will do that, for example, very easily. I think that 227 00:12:52,400 --> 00:12:55,839 Speaker 1: other authorities should be considering that when the time comes, 228 00:12:55,840 --> 00:12:58,560 Speaker 1: they think that they will. And if you do that, 229 00:12:58,679 --> 00:13:03,000 Speaker 1: then you don't really damage economic potential, this longer term 230 00:13:03,040 --> 00:13:09,000 Speaker 1: ability to recover. And you know, again we you know, ideally, um, 231 00:13:09,160 --> 00:13:11,800 Speaker 1: there's some break in as virus, and then people have 232 00:13:11,840 --> 00:13:15,000 Speaker 1: short memories and suddenly they go back to travel, purchasing 233 00:13:15,000 --> 00:13:19,120 Speaker 1: things that they would otherwise, and economic activity can normalize 234 00:13:19,120 --> 00:13:22,559 Speaker 1: pretty fast. Always great gay thoughts stay wanting their city 235 00:13:22,559 --> 00:13:29,360 Speaker 1: Private Bank global chief investment strategist, speaking as we do 236 00:13:29,440 --> 00:13:33,520 Speaker 1: any credit group chief economists, typically constructive. We usually drained 237 00:13:33,600 --> 00:13:36,679 Speaker 1: the drama and the hyperbole from the conversation with Eric, 238 00:13:36,679 --> 00:13:39,200 Speaker 1: and I look forward to doing that now. Eric. March twelfth, 239 00:13:39,440 --> 00:13:43,240 Speaker 1: the ECB convenes. What is the house view on that 240 00:13:43,320 --> 00:13:48,160 Speaker 1: meeting as things stand from your perspective, Well, good morning, yeah, 241 00:13:48,280 --> 00:13:51,760 Speaker 1: I I don't think they're gonna do anything. Christine Lagat 242 00:13:51,840 --> 00:13:55,160 Speaker 1: said according to the Financial Times that that so far 243 00:13:55,720 --> 00:13:58,240 Speaker 1: they haven't seen any things that would have sort of 244 00:13:58,280 --> 00:14:01,920 Speaker 1: a material longer term impact. Uh. Now it's not on 245 00:14:01,960 --> 00:14:03,959 Speaker 1: their website as far as I can see, So I'm 246 00:14:04,000 --> 00:14:06,720 Speaker 1: not sure there's been a big discussion inside the ECB. 247 00:14:06,920 --> 00:14:10,079 Speaker 1: But but I I I it's clear that Europe is 248 00:14:10,120 --> 00:14:11,960 Speaker 1: going to take a serious hit on growth in the 249 00:14:12,000 --> 00:14:15,520 Speaker 1: first quarter. But there's a big question what a sense 250 00:14:15,520 --> 00:14:18,719 Speaker 1: of bank can do and what the e c B 251 00:14:18,960 --> 00:14:21,640 Speaker 1: should do this earlier. So my guess is that we 252 00:14:21,680 --> 00:14:25,280 Speaker 1: will get some some wording on being nervous or watching 253 00:14:25,280 --> 00:14:27,880 Speaker 1: it carefully, but but no action. He should follow up 254 00:14:27,920 --> 00:14:29,800 Speaker 1: paric what kind of policy leavers do you need to 255 00:14:29,840 --> 00:14:34,160 Speaker 1: pull it in an environment like the one we're going into. Well, 256 00:14:34,240 --> 00:14:36,920 Speaker 1: that's a very good question. Number one. If it's a 257 00:14:36,960 --> 00:14:41,400 Speaker 1: supply shock, which it is predominantly U, there's really not 258 00:14:41,480 --> 00:14:43,960 Speaker 1: much you can do. If you are, for for a reason, 259 00:14:44,040 --> 00:14:47,040 Speaker 1: the virus shotting down movie theaters. You can put any 260 00:14:47,080 --> 00:14:50,120 Speaker 1: amount of money or or credit to people, they will 261 00:14:50,120 --> 00:14:52,320 Speaker 1: not go to the movie theater period, right. So it's 262 00:14:52,560 --> 00:14:55,040 Speaker 1: so if it's a supply shock, there is not much 263 00:14:55,080 --> 00:14:57,880 Speaker 1: you can do apart from providing liquidity to companies so 264 00:14:57,960 --> 00:15:00,560 Speaker 1: that don't go bust. If that takes two, it turns 265 00:15:00,600 --> 00:15:04,040 Speaker 1: into bad loans. The problem potentially in particular in China 266 00:15:04,520 --> 00:15:07,560 Speaker 1: but there's also there is also a demand side, particularly 267 00:15:07,560 --> 00:15:11,120 Speaker 1: in Europe where a lot of of of restrained traveling. 268 00:15:11,160 --> 00:15:13,560 Speaker 1: Now we started to come into place, and some of 269 00:15:13,600 --> 00:15:17,800 Speaker 1: that travel may take place may if you had more 270 00:15:17,840 --> 00:15:21,480 Speaker 1: money on your hand. I cannot doubt it. So this 271 00:15:21,640 --> 00:15:25,000 Speaker 1: comes down to potentially supporting the market a bit, and 272 00:15:25,040 --> 00:15:28,200 Speaker 1: there it is balance sheet expansion rather than interest rates. 273 00:15:28,240 --> 00:15:31,320 Speaker 1: You need to use um. But we're not there yet. Eric. 274 00:15:31,480 --> 00:15:35,800 Speaker 1: What's the likelihood of a global recession from here? I 275 00:15:35,840 --> 00:15:38,360 Speaker 1: wouldn't put a percentage on, but it's if you if 276 00:15:38,400 --> 00:15:40,920 Speaker 1: you record it technically, if you will, then it's I 277 00:15:40,920 --> 00:15:44,160 Speaker 1: think it's very high now because China is going to 278 00:15:44,200 --> 00:15:47,320 Speaker 1: take a big hit in the first course. Also, our 279 00:15:47,560 --> 00:15:50,920 Speaker 1: very sort of preliminary guests is that you're seeing something 280 00:15:50,960 --> 00:15:53,320 Speaker 1: like a growth rate of maybe half of what you 281 00:15:53,360 --> 00:15:55,600 Speaker 1: had coming out last years or maybe three. This is 282 00:15:55,640 --> 00:15:58,680 Speaker 1: a coincroal five percent drop, but they're about then that 283 00:15:58,920 --> 00:16:03,640 Speaker 1: automatically it's into Europe with a bit of a negative number. Small, 284 00:16:03,840 --> 00:16:07,280 Speaker 1: but then you have the European effected itself and the 285 00:16:07,400 --> 00:16:09,800 Speaker 1: US also. I mean, may I say here from Europe 286 00:16:09,800 --> 00:16:12,600 Speaker 1: on one word on on the US, yes, to fall 287 00:16:12,760 --> 00:16:16,280 Speaker 1: look good, but it was all this knit export effect, right, 288 00:16:16,320 --> 00:16:18,920 Speaker 1: that complete right, right? The number so the US is 289 00:16:18,960 --> 00:16:22,840 Speaker 1: a lot weaker than people realized. So so yes, high probability. 290 00:16:22,880 --> 00:16:25,880 Speaker 1: Now that's a really important observation on the dynamics of 291 00:16:26,000 --> 00:16:29,960 Speaker 1: exports and imports. Eric Nielsen. One thing we've missed this 292 00:16:30,000 --> 00:16:32,280 Speaker 1: week or talked less about with the market news and 293 00:16:32,320 --> 00:16:34,800 Speaker 1: of course things front and center, is the effect on 294 00:16:34,920 --> 00:16:38,320 Speaker 1: em UniCredit has a real Eastern Europe and Southern Europe 295 00:16:38,360 --> 00:16:41,880 Speaker 1: feel as well. I've got Turkish lira out, the new weakness, 296 00:16:41,920 --> 00:16:45,560 Speaker 1: six point to three, Brazilian relics, etcetera. What are the 297 00:16:45,640 --> 00:16:48,720 Speaker 1: knock on effects of this pandemic and the knock on 298 00:16:48,800 --> 00:16:55,760 Speaker 1: effects of the big economies onto the lesser smaller economies. Well, 299 00:16:55,800 --> 00:16:58,600 Speaker 1: it's a good question, tom, and and it's and it's significant, right, 300 00:16:58,640 --> 00:17:01,560 Speaker 1: I mean, And and here's the ublem we're facing is 301 00:17:01,680 --> 00:17:04,480 Speaker 1: it's too effect. We are shutting down businesses in the 302 00:17:04,640 --> 00:17:07,399 Speaker 1: in the big or the G seven economies and China, 303 00:17:08,040 --> 00:17:11,639 Speaker 1: and that by definition has this spill ful effect. And 304 00:17:11,640 --> 00:17:15,040 Speaker 1: then there's the financial monet effect, which it comes with 305 00:17:15,080 --> 00:17:18,399 Speaker 1: this move to safer assets. We saw your dollar now 306 00:17:18,560 --> 00:17:20,240 Speaker 1: is coming back a little bit again. But we have 307 00:17:20,320 --> 00:17:23,840 Speaker 1: seen them generally speak speaking risk conversion coming on. Look 308 00:17:23,880 --> 00:17:26,119 Speaker 1: at how your credit for example, and that hits the 309 00:17:26,119 --> 00:17:29,280 Speaker 1: e merchandise as for example. You also pointed out so 310 00:17:29,560 --> 00:17:33,200 Speaker 1: this this would be an accelerator out there. Unfortunately, Eric 311 00:17:33,320 --> 00:17:35,400 Speaker 1: great to get your viewers aunts olwise, Erry Nelson, there 312 00:17:35,440 --> 00:17:40,440 Speaker 1: only great a Crow chief economist calling son potentially botannical recession. 313 00:17:44,960 --> 00:17:47,000 Speaker 1: This is the interview of the day. If you need 314 00:17:47,040 --> 00:17:50,000 Speaker 1: a synthesis of what's going on, and I will advise 315 00:17:50,040 --> 00:17:52,760 Speaker 1: you that. If you need a reason to sign up 316 00:17:52,800 --> 00:17:56,720 Speaker 1: for linked In, it is James Bianco of Bianco Research 317 00:17:57,040 --> 00:17:59,840 Speaker 1: l l C. What's the l l C man, It's 318 00:17:59,840 --> 00:18:02,760 Speaker 1: like only fancy people that the people that go to 319 00:18:02,800 --> 00:18:05,640 Speaker 1: Wrigley Field do that. Jim Bianco with us right now, 320 00:18:05,760 --> 00:18:09,400 Speaker 1: his feet on LinkedIn is a must read for Global 321 00:18:09,960 --> 00:18:12,720 Speaker 1: Wall Street and of course is good research as well. Um, 322 00:18:12,760 --> 00:18:15,399 Speaker 1: I just did the mathematics gym, which I usually don't do, 323 00:18:15,480 --> 00:18:19,199 Speaker 1: and eighteen down bear markets twenty four thousand, two hundred, 324 00:18:20,560 --> 00:18:24,159 Speaker 1: bear markets twenties three thousand, six hundred. Are we going 325 00:18:24,200 --> 00:18:26,479 Speaker 1: to get there? Are we going to a bear market? 326 00:18:27,880 --> 00:18:30,000 Speaker 1: You'd almost have to say that we are, and I 327 00:18:30,000 --> 00:18:32,159 Speaker 1: wouldn't even be surprised if we were to see it 328 00:18:32,359 --> 00:18:34,399 Speaker 1: in the next day or two at the rate that 329 00:18:34,480 --> 00:18:38,080 Speaker 1: this market seems to be plunging right now. I think 330 00:18:38,119 --> 00:18:41,520 Speaker 1: what we need to understand is that, first of all, 331 00:18:42,160 --> 00:18:45,160 Speaker 1: if the market made a mistake or is making mistake, 332 00:18:45,359 --> 00:18:48,360 Speaker 1: it was after it sold off in early in late 333 00:18:48,440 --> 00:18:52,359 Speaker 1: January on the in the original cornervious spheres. It rallied 334 00:18:52,400 --> 00:18:56,280 Speaker 1: to new highs by February. That was the mistake. So 335 00:18:56,320 --> 00:18:58,480 Speaker 1: it has to correct that, and it has to now 336 00:18:59,280 --> 00:19:03,400 Speaker 1: price in a new era. I think I'm with Scott Minored. 337 00:19:03,960 --> 00:19:06,480 Speaker 1: This might be a bigger deal than the financial crisis. 338 00:19:07,280 --> 00:19:10,160 Speaker 1: This is a change in the way that the global 339 00:19:10,160 --> 00:19:12,680 Speaker 1: economy is going to work. There was a serious break 340 00:19:12,720 --> 00:19:15,680 Speaker 1: that just happened. We're not going back to the way 341 00:19:15,720 --> 00:19:19,000 Speaker 1: we used to work pre January with the global but 342 00:19:19,119 --> 00:19:25,159 Speaker 1: we get viruses end, Jim, Yes, but not the attitude 343 00:19:25,240 --> 00:19:28,320 Speaker 1: that it will bring won't end. We're going to deglobalize, 344 00:19:28,359 --> 00:19:30,720 Speaker 1: We're going to change things. We are not going to 345 00:19:30,880 --> 00:19:33,439 Speaker 1: have a collapse. We're not going to have a great depression. 346 00:19:33,960 --> 00:19:36,840 Speaker 1: Let me put it to your market terms. The S 347 00:19:36,920 --> 00:19:39,480 Speaker 1: and P was trading in a forward rate pe ratio 348 00:19:39,560 --> 00:19:43,440 Speaker 1: of twenty before this virus hit. It's going to trade 349 00:19:43,480 --> 00:19:47,280 Speaker 1: at attendant Fife ratio coming out of it. It's not 350 00:19:47,359 --> 00:19:50,760 Speaker 1: going back to that heavy twenty growth and that optimism 351 00:19:51,000 --> 00:19:54,760 Speaker 1: that we're going to have this booming global economy like 352 00:19:54,840 --> 00:19:58,000 Speaker 1: we had before. We're going to deglobalize. That's going to 353 00:19:58,080 --> 00:20:00,840 Speaker 1: mean to pull big things back from China. That's gonna 354 00:20:00,840 --> 00:20:05,240 Speaker 1: bean more inflation, that's gonna be more friction in business. 355 00:20:04,960 --> 00:20:09,119 Speaker 1: That's what the President Sanders is gonna come in. He's 356 00:20:09,119 --> 00:20:12,320 Speaker 1: gonna eliminate the terroiffs like first eight he's in office. 357 00:20:12,359 --> 00:20:14,880 Speaker 1: You know, things that we can't predict, they're gonna happen. 358 00:20:15,200 --> 00:20:17,320 Speaker 1: And I'm not saying we go to twenty multiple or 359 00:20:17,359 --> 00:20:20,200 Speaker 1: twelve multiple. That's our job. But I am going to say, 360 00:20:20,200 --> 00:20:24,680 Speaker 1: on a medical basis, there's an ample history that viruses end. 361 00:20:24,800 --> 00:20:28,160 Speaker 1: And you're saying we can't go back. No, I'm saying 362 00:20:28,200 --> 00:20:32,040 Speaker 1: we can't go back to a p e sky is 363 00:20:32,119 --> 00:20:36,960 Speaker 1: the limit um global economy. That's where we were. I'm 364 00:20:36,960 --> 00:20:39,200 Speaker 1: saying we're gonna go back to a little bit more 365 00:20:39,240 --> 00:20:46,000 Speaker 1: circumspecte maybe a twelve pe if you will, economy. That's 366 00:20:46,160 --> 00:20:51,439 Speaker 1: enough to knock down the stock mar not not a 367 00:20:51,480 --> 00:20:54,720 Speaker 1: great depression, but we're going to take the starch out 368 00:20:54,720 --> 00:20:57,840 Speaker 1: of this market right now. That's what you're seeing the 369 00:20:57,920 --> 00:21:02,720 Speaker 1: market do an immediate rep. Markets don't explain, they don't complain, 370 00:21:03,240 --> 00:21:07,000 Speaker 1: they say, oh, I got it wrong, new era, let's 371 00:21:07,040 --> 00:21:10,240 Speaker 1: just reprice the new era. That's exactly what we're seeing 372 00:21:10,240 --> 00:21:13,680 Speaker 1: happen in the market right now. Now there's a possibility 373 00:21:13,960 --> 00:21:17,920 Speaker 1: it's getting it wrong. And getting it wrong means China 374 00:21:18,000 --> 00:21:21,560 Speaker 1: comes back and we go back by this summer to 375 00:21:21,680 --> 00:21:24,399 Speaker 1: thinking how do we continue to close every job in 376 00:21:24,440 --> 00:21:27,639 Speaker 1: the United States that we can and send it to China. 377 00:21:28,160 --> 00:21:31,040 Speaker 1: We go back to that attitude, which is lower cost, 378 00:21:31,160 --> 00:21:34,159 Speaker 1: faster growth. We'll get back to the highs. But I 379 00:21:34,200 --> 00:21:36,640 Speaker 1: think what we're seeing in the market saying we're not 380 00:21:36,680 --> 00:21:39,879 Speaker 1: going back to that attitude. This is a new era 381 00:21:40,240 --> 00:21:43,760 Speaker 1: that we're going into, not a disastrous era, but a 382 00:21:43,880 --> 00:21:48,640 Speaker 1: new era of slower growth, a more circumspect kind of world. Hey, Jim, 383 00:21:48,640 --> 00:21:51,000 Speaker 1: can you give us a sense of the delta you're 384 00:21:51,040 --> 00:21:53,480 Speaker 1: thinking about, because you know, we were already thinking about 385 00:21:53,520 --> 00:21:57,040 Speaker 1: a lower growth four longer in terms of global GDP, 386 00:21:57,200 --> 00:22:00,560 Speaker 1: and you know one to two kind of what do 387 00:22:00,640 --> 00:22:05,600 Speaker 1: you think the new era might be post crisis. Well, 388 00:22:05,640 --> 00:22:07,800 Speaker 1: I think that there's two steps with it. First of all, 389 00:22:07,840 --> 00:22:10,720 Speaker 1: we have to get through the crisis. The immediate thing 390 00:22:10,760 --> 00:22:14,159 Speaker 1: that's going to happen in the next two weeks or so, 391 00:22:14,480 --> 00:22:19,119 Speaker 1: we will find out if this virus does start to 392 00:22:19,280 --> 00:22:23,200 Speaker 1: spread widely in the United States, that is a palpable 393 00:22:23,280 --> 00:22:27,320 Speaker 1: fear and we see widespread school closures and disclosures like 394 00:22:27,359 --> 00:22:30,720 Speaker 1: we've seen in other countries. If that happens, we could 395 00:22:30,720 --> 00:22:36,080 Speaker 1: see an immediate contraction of GDP in the second quarter. Now, 396 00:22:36,160 --> 00:22:38,640 Speaker 1: if and if that does happen, coming out of that, 397 00:22:39,040 --> 00:22:42,960 Speaker 1: you're going to get attitudes a lot more conservative then 398 00:22:43,000 --> 00:22:45,639 Speaker 1: you would if we don't see that. So I do 399 00:22:45,720 --> 00:22:48,080 Speaker 1: think you're going to get conservative attitudes, but they could 400 00:22:48,080 --> 00:22:50,880 Speaker 1: be a lot worse if we have to go through 401 00:22:51,240 --> 00:22:53,680 Speaker 1: what say Japan is going through South Korea is going through. 402 00:22:53,760 --> 00:22:56,280 Speaker 1: Right now, Jim Bianca with US Bianco Research, let me 403 00:22:56,280 --> 00:22:58,000 Speaker 1: do a day to check here quickly. We're a negative 404 00:22:58,040 --> 00:23:01,560 Speaker 1: six plus on the UH out on negative for fifty 405 00:23:02,040 --> 00:23:04,879 Speaker 1: trading here. We are open for business twenty five thousand, 406 00:23:04,920 --> 00:23:09,560 Speaker 1: three fifty one in the Dow SPX, decisively below that 407 00:23:10,160 --> 00:23:13,520 Speaker 1: three thousand level. The VIX went out forty seven I 408 00:23:13,520 --> 00:23:16,440 Speaker 1: believe it was forty one point one six. Now on 409 00:23:16,760 --> 00:23:19,760 Speaker 1: the VIX the action was in the two year yield 410 00:23:19,800 --> 00:23:22,359 Speaker 1: down to a point nine one handle. Again, we've had 411 00:23:22,359 --> 00:23:25,120 Speaker 1: a bounce here in the last number of minutes. Uh 412 00:23:25,160 --> 00:23:28,920 Speaker 1: and uh, I'll just mentioned oil for thirty three. Jim Bianco, 413 00:23:29,040 --> 00:23:31,520 Speaker 1: you show this on LinkedIn today within your good research, 414 00:23:32,240 --> 00:23:34,280 Speaker 1: which has been our theme of the morning, which is 415 00:23:34,320 --> 00:23:38,280 Speaker 1: gaming FED prospects and Marianna Cucho Dakota of Minnesota and 416 00:23:38,400 --> 00:23:41,880 Speaker 1: Rochester and Michael Darta MKM Partners and Bob Michael JP 417 00:23:42,000 --> 00:23:46,160 Speaker 1: Morgan sit enough. The FED has to act because even 418 00:23:46,200 --> 00:23:51,280 Speaker 1: if they staypat with disinflation, they're tightening in an indirect manner. 419 00:23:51,520 --> 00:23:53,400 Speaker 1: Do you agree that the FED needs to get out 420 00:23:53,440 --> 00:23:55,920 Speaker 1: front of this. Yeah. I think they need to get 421 00:23:55,920 --> 00:23:58,560 Speaker 1: out front of this in one of two ways that 422 00:23:59,200 --> 00:24:03,879 Speaker 1: there talk of. We have to wait to see the data. Uh. 423 00:24:04,040 --> 00:24:06,800 Speaker 1: Jim Bullard's speech that was released a little while ago, 424 00:24:06,920 --> 00:24:10,240 Speaker 1: he's the dove. I'm not ready to move just yet. 425 00:24:11,080 --> 00:24:13,760 Speaker 1: Smacks of them hiding under their desk and shell shock. 426 00:24:14,280 --> 00:24:19,080 Speaker 1: And they need to recognize what the markets think and 427 00:24:19,119 --> 00:24:23,760 Speaker 1: that there is something significant that's happening in terms of 428 00:24:23,800 --> 00:24:27,560 Speaker 1: the attitudes of the global economy, in the U S economy, 429 00:24:27,720 --> 00:24:31,399 Speaker 1: and start to at least acknowledge that they don't have 430 00:24:31,520 --> 00:24:34,439 Speaker 1: to move today. But I think that they need to 431 00:24:34,640 --> 00:24:39,960 Speaker 1: at least acknowledge that something significant is going on. And eventually, yes, 432 00:24:40,119 --> 00:24:44,320 Speaker 1: I'm with them that if this economy pulls back, the 433 00:24:44,440 --> 00:24:47,639 Speaker 1: act of doing nothing is a tightening and that they 434 00:24:47,640 --> 00:24:50,840 Speaker 1: will have to think about moving down with the economy. 435 00:24:50,840 --> 00:24:53,200 Speaker 1: And kind yeah, I want to bring this up. It's 436 00:24:53,200 --> 00:24:55,159 Speaker 1: amazing how I missed the stuff. You know, I'm supposed 437 00:24:55,160 --> 00:24:56,600 Speaker 1: to be all wired up. You know, I've got four 438 00:24:56,640 --> 00:24:59,240 Speaker 1: log ins and on all the upper east side dims 439 00:24:59,240 --> 00:25:01,800 Speaker 1: out when I come in the morning. But I missed this. 440 00:25:01,920 --> 00:25:04,200 Speaker 1: And thank you to Ian Shepherdson free of AMIS and 441 00:25:04,240 --> 00:25:08,199 Speaker 1: all at Pantheon. They mentioned the Bloomberg Financial Conditions Index. 442 00:25:08,240 --> 00:25:10,960 Speaker 1: I call it the Michael Rosenberg Index, which was many 443 00:25:11,080 --> 00:25:13,840 Speaker 1: standard deviations ugly in two thousand and eight. We're nowhere 444 00:25:13,920 --> 00:25:17,280 Speaker 1: near that. But we've really come in from a positive 445 00:25:17,320 --> 00:25:21,840 Speaker 1: benign financial conditions we're now down one standard deviation. I 446 00:25:21,880 --> 00:25:25,520 Speaker 1: didn't know that it's it's starting to the data. It's 447 00:25:25,560 --> 00:25:29,840 Speaker 1: just migrating end a week towards a point of Oh, really, Jim, 448 00:25:29,880 --> 00:25:32,760 Speaker 1: do you think the federal you think there needs to 449 00:25:32,760 --> 00:25:35,119 Speaker 1: be some type of fiscal stimulus on a part of 450 00:25:35,119 --> 00:25:38,440 Speaker 1: the US government if this gets uh, you know, more 451 00:25:38,480 --> 00:25:40,280 Speaker 1: widespread in the US. And again we have it. It's 452 00:25:40,280 --> 00:25:42,560 Speaker 1: been very limited in the US to date this virus, 453 00:25:42,600 --> 00:25:45,320 Speaker 1: but to the extent that we see similar migrations that 454 00:25:45,359 --> 00:25:47,840 Speaker 1: we've seen in some other countries. Do you think fiscal 455 00:25:47,880 --> 00:25:51,000 Speaker 1: stimulus may be needed by the government. Well, don't do it. 456 00:25:51,280 --> 00:25:53,359 Speaker 1: I mean, there's no doubt that they will attempt to 457 00:25:53,400 --> 00:25:56,400 Speaker 1: do it, and especially if it if it migrates into 458 00:25:56,400 --> 00:25:59,800 Speaker 1: this country, the fiscal stimulus might just be combating with 459 00:26:00,000 --> 00:26:03,879 Speaker 1: the virus itself and what they'll um, what they'll have 460 00:26:03,960 --> 00:26:08,160 Speaker 1: to spend at least in terms of testing and identification 461 00:26:08,440 --> 00:26:11,879 Speaker 1: and trying to mitigate the slowdown in the economy and 462 00:26:11,920 --> 00:26:14,520 Speaker 1: the like. So yeah, I think they will not. A 463 00:26:14,600 --> 00:26:17,720 Speaker 1: question is will it be effective, because what you've got 464 00:26:17,720 --> 00:26:21,840 Speaker 1: going on now is an immediate supply shock that could 465 00:26:21,920 --> 00:26:24,960 Speaker 1: also turn into a demand shock if the virus comes 466 00:26:24,960 --> 00:26:27,399 Speaker 1: to United States. I don't think we've ever seen both 467 00:26:27,560 --> 00:26:30,600 Speaker 1: at the same time to this degree, which is what 468 00:26:30,760 --> 00:26:33,400 Speaker 1: the risk is that we face Jim. Thank you so much, 469 00:26:33,480 --> 00:26:35,680 Speaker 1: Jim Bianco. And again, folks, I can't say enough. First 470 00:26:35,680 --> 00:26:38,000 Speaker 1: thing you sign up for on LinkedIn after Paul Sweeney's 471 00:26:38,000 --> 00:26:41,920 Speaker 1: glorious site is Jim Bianco is just really extraordinary out 472 00:26:41,920 --> 00:26:46,040 Speaker 1: on LinkedIn with Bianco Research LLC is well. Thanks for 473 00:26:46,160 --> 00:26:50,560 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 474 00:26:50,680 --> 00:26:56,439 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 475 00:26:57,000 --> 00:27:00,160 Speaker 1: I'm on Twitter at Tom Keane before the podcas as 476 00:27:00,280 --> 00:27:03,760 Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio