WEBVTT - Surveillance: Broad Virus Testing Needed, Hochul Says 0:00:09.880 --> 0:00:13.880 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.360 Bloomberg dot Com, and of course on the Bloomber Some 0:00:27.440 --> 0:00:30.400 of these numbers worldwide still not great, just to subtle 0:00:30.520 --> 0:00:33.120 a subtle sign of stabilization in some key economies, some 0:00:33.200 --> 0:00:36.080 key countries, and we hope that continues. Tom. Great lineup 0:00:36.080 --> 0:00:38.960 of guests through this morning, Bam bloom Book Surveillance as always, 0:00:39.000 --> 0:00:42.640 and we begin this morning with Troitsky of sky Bridge. Troy, 0:00:42.680 --> 0:00:44.720 always great to catch up with you. Howard Mark's putting 0:00:44.720 --> 0:00:46.960 out a memo yesterday. Let me bring you a quote 0:00:47.000 --> 0:00:49.560 from that, just to start this conversation off. The bottom 0:00:49.640 --> 0:00:53.000 line for me is that I'm not all troubled, at all, 0:00:53.040 --> 0:00:56.360 troubled saying markets may well be considerably lower sometime in 0:00:56.400 --> 0:00:58.840 the coming months, and we're buying today when we find 0:00:58.880 --> 0:01:03.000 good value. I don't find in these statements inconsistence. Your 0:01:03.040 --> 0:01:06.560 response to that, Troy, Yeah, No, I think he's right. 0:01:06.640 --> 0:01:09.600 I mean, you can never time a bottom perfectly right, 0:01:09.640 --> 0:01:12.319 and so I think the broader point there is that 0:01:12.560 --> 0:01:15.440 you know, there are many asset classes that are pricing 0:01:15.440 --> 0:01:19.720 in apocalypse and many securities um Yet at the same time, 0:01:19.920 --> 0:01:24.000 as you guys always note, you've seen unprecedented government government stimulus, 0:01:24.160 --> 0:01:27.520 both at the fiscal level and more importantly in our opinion, 0:01:27.680 --> 0:01:29.600 on the FED balance sheet level, and in terms of 0:01:29.640 --> 0:01:32.640 money supply growth. So you know, it would be nice 0:01:32.680 --> 0:01:34.520 to sit back in a perfect world and say, hey, 0:01:34.520 --> 0:01:37.280 I'm going to time the perfect bottom and every security 0:01:37.400 --> 0:01:40.319 and every asset class. But the reality is is that 0:01:40.440 --> 0:01:43.720 you have tremendous discounts. Now you could take a little 0:01:43.720 --> 0:01:45.720 bit of mark to market pain as you're legging in, 0:01:46.280 --> 0:01:48.560 but that's the price you have to be willing to 0:01:48.600 --> 0:01:51.080 take or to pay in order to have you know, 0:01:51.720 --> 0:01:54.720 extraordinary upside. And that's one of the reasons why you know, 0:01:54.800 --> 0:01:57.720 groups like oak Tree have been so successful over time, 0:01:57.760 --> 0:02:00.520 and that they're in a position to add capital and 0:02:00.720 --> 0:02:05.240 monetize dislocations, huge dislocations off the back of forced liquidation, 0:02:05.240 --> 0:02:07.200 an ugly face that draw down a number of weeks ago. 0:02:07.320 --> 0:02:10.679 Many people have been taking advantage of those dislocations, particularly 0:02:10.720 --> 0:02:12.679 in high grade credit, and a question I want to 0:02:12.720 --> 0:02:15.120 explore beginning with you this morning, Troy, is what the 0:02:15.160 --> 0:02:17.760 recovery looks like in the lower quality segments of this 0:02:17.880 --> 0:02:20.880 market towards high yield across an A M. What are 0:02:20.919 --> 0:02:23.680 you looking at the moment? Yeah, so I think that 0:02:23.680 --> 0:02:25.720 that's a million dollar question. And I think, you know, 0:02:25.760 --> 0:02:28.799 the way this has always worked historically, in the way 0:02:28.800 --> 0:02:30.880 it appears to be working now, but just at a 0:02:30.960 --> 0:02:33.440 much more rapid pace, given you know the fact that 0:02:33.480 --> 0:02:35.880 the FED response has been so much more muscular, and 0:02:36.360 --> 0:02:38.720 you know you have TALF too that's coming online and 0:02:38.760 --> 0:02:41.200 in the government stimulus. Is that you know, when you 0:02:41.280 --> 0:02:45.560 go through a deep downturn in markets and markets are 0:02:45.560 --> 0:02:48.800 pricing in you know, in some cases armageddon, in other cases, 0:02:49.200 --> 0:02:53.040 you know, severe recession, you know the upend quality always 0:02:53.040 --> 0:02:56.440 starts to move first, right. Analysts always have more confidence 0:02:56.800 --> 0:02:58.640 when they're looking at you know, a company with an 0:02:58.720 --> 0:03:01.560 unlovered balance sheet, or you're looking you know, at the 0:03:01.600 --> 0:03:04.639 top of the capital structure and commercial real estate, or 0:03:04.919 --> 0:03:08.240 or Celo said, hey, you can run math six ways 0:03:08.280 --> 0:03:11.520 to Sunday doomsday, this to the cows come home. But 0:03:11.600 --> 0:03:14.280 there's still money, good securities, and so you know, you've 0:03:14.320 --> 0:03:19.040 seen that rebound start, you know, it's slow and fitful um. 0:03:19.080 --> 0:03:21.920 And then what happens is as that liquidity starts to 0:03:22.000 --> 0:03:25.760 filter down in and some of the more you know, 0:03:25.960 --> 0:03:29.280 dire scenarios don't play out, um, you start to see 0:03:29.320 --> 0:03:31.960 lower parts of the capital structure starting catch up or 0:03:32.000 --> 0:03:35.040 lower quality. The thing that's interesting know about this is 0:03:35.080 --> 0:03:37.839 that you've already had a pretty significant rebound in high 0:03:37.920 --> 0:03:40.840 yield um. You know that. You know, dollar prices are 0:03:40.840 --> 0:03:42.720 back up to about eighty five cents and a dollar. 0:03:42.880 --> 0:03:46.400 So you know, I wouldn't get carried away right now 0:03:46.440 --> 0:03:49.360 on specific high yield because you know, so much of 0:03:49.400 --> 0:03:53.000 the potential upside has always been realized, already been realized. 0:03:53.560 --> 0:03:56.880 Try You've got a beautiful vision into the hedge fund business. 0:03:56.920 --> 0:03:58.960 And I know the media loves to try out somebody 0:03:58.960 --> 0:04:02.240 who's up a hundred in the last three days. It's 0:04:02.240 --> 0:04:06.440 all great and wonderful. What's the real story our alternative 0:04:06.480 --> 0:04:10.880 investments doing? Are they? As a general statement, surviving creating 0:04:10.920 --> 0:04:13.920 alpha here? Yeah? So I think it's a general statement 0:04:14.240 --> 0:04:17.240 that would be true. I mean it's not like, you know, 0:04:17.320 --> 0:04:21.159 the hedge fund industry has had a great run um by, 0:04:21.200 --> 0:04:24.480 but there are time you always choke around it. But 0:04:24.480 --> 0:04:26.679 but if you think of what's happened so far this year, 0:04:27.000 --> 0:04:29.960 you know, in the most part capital has been protected. 0:04:30.480 --> 0:04:33.800 I think discretionary macro managers and systematic trend followers have 0:04:33.880 --> 0:04:37.120 done fairly well. You know. Some of the bigger MULTIPM 0:04:37.240 --> 0:04:39.680 shops um you know, like you guys report on, like 0:04:39.720 --> 0:04:43.520 Citadel and Millennium have done fine. Where there's a cute pain. 0:04:44.279 --> 0:04:47.400 Um Hare's been more in the credit instructure, credit area 0:04:48.040 --> 0:04:50.960 where they got caught up in the margin calling that 0:04:51.000 --> 0:04:52.880 was hid in the reeds and a lot of their 0:04:52.880 --> 0:04:56.200 assets were sold down, you know, in sympathy. And so 0:04:56.240 --> 0:04:58.400 that's where you know, when we look at risk reward 0:04:58.520 --> 0:05:01.520 versus fundamentals, we think there's the most upside there, and 0:05:01.560 --> 0:05:04.480 we also think there's the most upside in distress corporate credit. 0:05:04.839 --> 0:05:07.480 But again you have to be selective, you know, firmly 0:05:07.600 --> 0:05:11.039 focus on good, good company with good balance sheet. You know, 0:05:11.240 --> 0:05:13.520 no reason to get involved in energy or anything of 0:05:13.560 --> 0:05:17.880 that nature. But you know, even hospitality names or you know, 0:05:18.480 --> 0:05:20.839 six Flags is a good example of a of a 0:05:20.880 --> 0:05:24.039 company that's good, good balance sheet, low dollar prices, that 0:05:24.240 --> 0:05:27.200 franchise is very strong, and we'll survive, Troy. I think 0:05:27.200 --> 0:05:29.640 it's interesting you're talking about margin calls and some of 0:05:29.680 --> 0:05:33.080 the technical stress in markets appears that we've moved from 0:05:33.120 --> 0:05:38.560 a financial market crisis going forward to a real economic crisis, 0:05:38.600 --> 0:05:41.039 which is what we're looking at trying to assess. Now 0:05:41.360 --> 0:05:43.680 there's sort of a knee jerk by the dip mentality 0:05:43.720 --> 0:05:46.279 because it's worked in the past. What's the risk that 0:05:46.360 --> 0:05:48.599 it's not going to work the same way this time 0:05:48.880 --> 0:05:51.440 as people look into the abyss of a potential downturn 0:05:51.520 --> 0:05:57.080 economically that rivals what we saw in in the nineties. Yeah, no, No, 0:05:57.400 --> 0:05:59.120 it's a great question least. And I think you hit 0:05:59.160 --> 0:06:01.640 the nail on the head with your w analysis. I mean, 0:06:01.640 --> 0:06:04.520 I think that is arguably the biggest risk or that 0:06:04.800 --> 0:06:07.880 you know and know the dreams of v shape recovery 0:06:07.920 --> 0:06:10.360 went out the window, you know, four to six weeks ago. 0:06:10.720 --> 0:06:13.680 No market participants thinks that's going to happen. But maybe 0:06:13.760 --> 0:06:16.240 the you tend to have you know, a much much 0:06:17.400 --> 0:06:20.800 longer bottom, right um So, And the other thing I'd 0:06:20.800 --> 0:06:25.040 say is, no one is really recklessly buying dips, right Uh. 0:06:25.279 --> 0:06:27.159 You know, people are trying to be very careful and 0:06:27.200 --> 0:06:31.240 calculated on again like that we talked about with credit quality, 0:06:31.279 --> 0:06:33.919 Like okay, let's start with the higher, higher top of 0:06:33.920 --> 0:06:37.040 the capital structure. You know, obviously an I G. Credit 0:06:37.080 --> 0:06:40.480 you're getting fed support directly, and then let's roll down. 0:06:40.600 --> 0:06:43.840 So no, no one's you know, I think delusional enough 0:06:43.880 --> 0:06:45.760 to think that markets are going to rebound in a 0:06:45.760 --> 0:06:48.200 straight line. And you know, we're gonna have this you 0:06:48.240 --> 0:06:52.920 know or twenty percent annualized keyword and annualized economic contraction, 0:06:53.600 --> 0:06:55.840 and you know, mortgage delinquencies are going to go from 0:06:55.880 --> 0:06:58.800 point nine percent to eight percent and then suddenly all 0:06:58.800 --> 0:07:00.880 those people are gonna start paying in you know, two 0:07:00.920 --> 0:07:03.719 weeks later. No one's doing that. People are trying to 0:07:03.720 --> 0:07:07.520 be very careful and selective. UM. But but to your point, 0:07:08.000 --> 0:07:10.920 if if things get materially worse than the economic level, 0:07:11.000 --> 0:07:14.520 like meaning we don't really bottom in Q two, which 0:07:14.560 --> 0:07:18.240 is the expectation, now, don't start to recover you know 0:07:18.320 --> 0:07:21.680 in Q three, in Q four, UM, and instead it's 0:07:21.720 --> 0:07:24.560 a it's a much longer stretch or or or a 0:07:24.600 --> 0:07:27.720 false don with a W. Then clearly you know that's 0:07:27.760 --> 0:07:31.360 the scenario where you could have more downside and markets. UM. 0:07:31.400 --> 0:07:34.200 But then again against that uh and I know you 0:07:34.200 --> 0:07:36.080 saw probably saw no it's coming over. I mean you 0:07:36.120 --> 0:07:39.840 think of what the FED is doing from a liquidity standpoint, 0:07:39.880 --> 0:07:43.800 it's just it's incredible. I mean, it's unreal. They're expanding 0:07:43.800 --> 0:07:47.960 their balance sheet at almost fifteen times the taste of 0:07:48.080 --> 0:07:52.559 q E three fifteen times. Money supply growth is growing 0:07:52.560 --> 0:07:55.920 at an analyzed rate of seventy eight percent, while the 0:07:55.920 --> 0:07:58.680 banking system excess reserves have gone up by you know, 0:07:58.680 --> 0:08:01.280 probably about seven fift billion. That data series has to 0:08:01.360 --> 0:08:03.280 come out, but that's you know, that's our estimate. So 0:08:03.640 --> 0:08:06.360 you know that is that, in our humble opinion, is 0:08:06.400 --> 0:08:09.120 what's really put a floor under market. Obviously, the fiscal 0:08:09.160 --> 0:08:12.840 stimulus is very critical. TOALTH two is very critical. An 0:08:12.840 --> 0:08:15.360 expansion of TOALTH two to include other assets like they 0:08:15.400 --> 0:08:18.120 did back you know eight, you know they gradually expanded 0:08:18.400 --> 0:08:21.040 that very critical. Hi, Troy, always great to get your 0:08:21.040 --> 0:08:22.480 thoughts on a program. So I'm my best of the 0:08:22.480 --> 0:08:29.640 team of Skybridge Anti even yours, Troyasky Skybridge Capital right 0:08:29.640 --> 0:08:32.480 now to bring us up to date on the state 0:08:32.840 --> 0:08:35.000 of the State of New York. Cathy Hokel joins us. 0:08:35.040 --> 0:08:38.760 Of course, the Lieutenant Governor of this state Kathy, these 0:08:38.760 --> 0:08:42.880 are extraordinary times. It is a test for all politicians 0:08:42.880 --> 0:08:45.880 and the test of exhaustion. How are you getting to 0:08:45.960 --> 0:08:49.480 the weekend? What is the path on this Wednesday to 0:08:49.600 --> 0:08:53.680 get to a long weekend and to Easter. Well, for 0:08:53.840 --> 0:08:56.000 those of us who are on the front lines, there 0:08:56.120 --> 0:08:58.679 is no thought that this week is going to end. 0:08:58.760 --> 0:09:02.319 So I'm looking forward to Easter to celebrate remotely with 0:09:02.360 --> 0:09:04.520 my family Lisa virtually, and I want I wish everyone 0:09:04.520 --> 0:09:06.600 a happy pass Over and happy Easter as we head 0:09:06.600 --> 0:09:08.640 into this week. But this is a week where there's 0:09:08.679 --> 0:09:13.520 tremendous temptation to uh start hearing some little glimmers of 0:09:13.559 --> 0:09:16.240 hope and saying that people could become a little more complacent, 0:09:16.320 --> 0:09:18.080 and you haven't seen Graham and Grandpa in a while, 0:09:18.120 --> 0:09:20.560 you want to catch up with your siblings because these 0:09:20.559 --> 0:09:24.160 are wonderful celebration. We have to make sure that people 0:09:24.200 --> 0:09:26.960 do not succumb to that temptation. And that is the 0:09:27.000 --> 0:09:30.480 warning that I cannot convey strongly enough that if we 0:09:30.720 --> 0:09:33.640 start going back to our old ways or even just 0:09:33.760 --> 0:09:35.880 taking a little more steps out, they're becoming a little 0:09:35.960 --> 0:09:39.640 less uh, you know, guarded in our behavior toward others. 0:09:39.679 --> 0:09:43.280 If we don't stay home, we could actually set ourselves back, 0:09:43.400 --> 0:09:46.800 and after all the sacrifice that New Yorkers in American 0:09:46.840 --> 0:09:48.800 have had to go through for the last three weeks, 0:09:49.040 --> 0:09:50.600 we do not want to go there. And that's a 0:09:50.640 --> 0:09:52.960 strong message. I wanted to make sure that everyone hears 0:09:53.240 --> 0:09:56.160 these are wonderful holidays, and we'll certainly have next year 0:09:56.200 --> 0:09:59.719 to celebrate, but let's make sure that everyone who can 0:09:59.760 --> 0:10:01.920 will be sitting at those tables with us next year 0:10:01.960 --> 0:10:04.959 because we took those preventative steps now and continued our 0:10:05.000 --> 0:10:07.960 social distancing. I will say, I'm I'm looking forward to 0:10:08.000 --> 0:10:11.440 my zoom pass a versator tonight. Lieutenant Governor. I'm wondering 0:10:11.760 --> 0:10:15.480 everyone's trying to figure out how quickly New York can 0:10:15.559 --> 0:10:19.080 restart its economy. Do you have any sense of the 0:10:19.160 --> 0:10:21.840 path for that and what the plan is to reopen. 0:10:22.960 --> 0:10:26.480 Before we can reopen, we have to have broad broadly 0:10:27.120 --> 0:10:29.800 undertaken testing. And what we're doing now in the Governor 0:10:29.840 --> 0:10:32.520 announced this yesterday, is that we are working with our 0:10:32.559 --> 0:10:36.640 businesses to try to find ways to increase the capacity 0:10:36.720 --> 0:10:40.720 for rapid testing. There are possibilities to do testing in 0:10:40.840 --> 0:10:44.000 five minutes, fifteen minutes and get results back quickly, and 0:10:44.120 --> 0:10:46.880 only when we feel secure that we can have a 0:10:47.000 --> 0:10:51.880 workforce that is free of coronavirus because they've already contracted 0:10:51.880 --> 0:10:54.280 it and they have developed the antibodies and are not 0:10:54.640 --> 0:10:56.840 vulnerable themselves, or that they would spread it to others. 0:10:56.920 --> 0:10:59.920 I think those are important scientific metrics that we're going 0:11:00.000 --> 0:11:02.800 to be focusing on as we I start to identify 0:11:02.960 --> 0:11:06.320 which industries can come back online. But again, this is 0:11:06.800 --> 0:11:09.200 a conversation we want to have because we are anxious 0:11:09.240 --> 0:11:11.880 to get this going again. But it is a little 0:11:11.920 --> 0:11:14.840 bit premature to start giving out dates, and it's certainly 0:11:14.880 --> 0:11:17.000 premature to know how that's going to look. All we 0:11:17.080 --> 0:11:20.479 do know is that we have to continue these distancing 0:11:20.520 --> 0:11:23.800 from each other, the social distance, reduced density, but the 0:11:23.880 --> 0:11:27.320 increased testing will really be the link that tells us 0:11:27.400 --> 0:11:30.200 when we were able to test enough New Yorkers to 0:11:30.360 --> 0:11:33.559 start jump starting our economy again. Kathy, premature to be 0:11:33.600 --> 0:11:35.640 thinking about many many things at this point. I'm sure, 0:11:35.679 --> 0:11:38.320 given the crisis that it's unfolding right before our eyes 0:11:38.360 --> 0:11:40.559 over the last few weeks. One thing we can discuss, 0:11:40.559 --> 0:11:42.800 though there's not too premature to discuss, is the help 0:11:42.840 --> 0:11:44.840 that you might need in the future. Kathy, what do 0:11:44.880 --> 0:11:47.080 you need from the federal level. What kind of assistance 0:11:47.080 --> 0:11:50.480 do you need from the government. We need money. Uh, 0:11:50.520 --> 0:11:53.640 this is something that the governor just yesterday rode to 0:11:53.720 --> 0:11:57.040 our congressional delegation. He's spoken to the President when there 0:11:57.200 --> 0:11:59.120 is the next stimulus plan, and there needs to be 0:11:59.200 --> 0:12:02.120 another one. They cannot overlook the fact that a place 0:12:02.160 --> 0:12:05.240 like New York City, the epicenter, has now taken a 0:12:05.360 --> 0:12:08.960 ten to fifteen billion dollar hit to our budget, and 0:12:09.000 --> 0:12:11.040 we just wrapped up a budget a couple of days ago. 0:12:11.080 --> 0:12:13.800 But it allows the governor to have flexibility to reopen 0:12:14.200 --> 0:12:17.440 if necessary based on either a decline or hopefully an 0:12:17.480 --> 0:12:20.400 increase in revenues. But we need financial assistance from the 0:12:20.400 --> 0:12:24.440 federal government. We also have been asking for them to 0:12:24.480 --> 0:12:27.679 invoke the Events Production Act much earlier than has been 0:12:27.720 --> 0:12:30.160 even used at all in a wide scale way to 0:12:30.240 --> 0:12:34.880 get us the personal protection equipment, to ramp up testing kits, 0:12:34.880 --> 0:12:37.800 the testing supplies as well. As we've been saying for 0:12:37.920 --> 0:12:40.600 weeks and liarly months, we need more ventilators to be 0:12:40.640 --> 0:12:43.719 produced in this country. I think this crisis is going 0:12:43.760 --> 0:12:47.000 to have a wholesale rethinking of where we get our 0:12:47.280 --> 0:12:51.160 life saving products, are supplies, our medical supplies, our ventilators, 0:12:51.440 --> 0:12:53.040 and I think that's going to make us wonder do 0:12:53.040 --> 0:12:56.040 we want to continue to be reliant on other countries 0:12:56.240 --> 0:12:58.880 when we have the capacity, that know how, in the 0:12:58.920 --> 0:13:00.920 ability to make those right here in New York. And 0:13:00.960 --> 0:13:02.679 I think that's going to be a conversation. They will 0:13:02.679 --> 0:13:07.000 be had sooner than later. Another thing that's not theoretical 0:13:07.400 --> 0:13:10.360 is the impact that the coronavirus and the shutdowns have 0:13:10.480 --> 0:13:14.000 had on the economy. And one area that you highlighted 0:13:14.000 --> 0:13:17.000 in a recent OpEd in The Hill was that women 0:13:17.200 --> 0:13:20.800 are hit hardest. You argue by the impact of the coronavirus. 0:13:20.840 --> 0:13:23.880 Why do you say that? In two areas, One is 0:13:23.920 --> 0:13:28.840 that seventy six percent of healthcare workers are female. That's 0:13:28.840 --> 0:13:31.319 staggering when you think about how we are honoring our 0:13:31.400 --> 0:13:34.600 frontline workers. The people are putting on uniforms and hopefully 0:13:34.600 --> 0:13:37.560 protective equipment going into their jobs, literally going into the 0:13:37.600 --> 0:13:40.920 heat of battle every day. The majority of them, vast majority, 0:13:40.920 --> 0:13:43.800 are women, and they've many of them have children, children 0:13:43.840 --> 0:13:46.920 who otherwise would be occupied in school or being watched 0:13:46.920 --> 0:13:51.680 by grandparents, So there is literally childcare crisis associated with them. Secondly, 0:13:52.040 --> 0:13:55.440 two thirds of America's minimum wage workers are women. These 0:13:55.440 --> 0:13:57.760 are the ones who worked in restaurants, and had worked 0:13:57.760 --> 0:14:00.360 in hotels, and had worked in housekeeping, and all this 0:14:00.440 --> 0:14:02.920 work that had to get done and now either laid 0:14:02.960 --> 0:14:04.920 off or they're the ones vulnerable having to go in 0:14:05.040 --> 0:14:08.480 to work every single day. Tenant Governor, you are more 0:14:08.600 --> 0:14:13.160 qualified than any politician in this country to talk about 0:14:13.200 --> 0:14:16.520 the cittiness of this pandemic. You are out of Buffalo. 0:14:16.720 --> 0:14:20.119 You know the distance to Lockport, the distance to Batavia 0:14:20.200 --> 0:14:24.240 down the US rather down the New York State Thruway system. 0:14:24.360 --> 0:14:29.160 Is well. Explain to those in smaller cities, villages in 0:14:29.520 --> 0:14:33.640 rural America why they need to support the big cities 0:14:33.920 --> 0:14:38.080 in this pandemic. Oh. Absolutely, And I've been on radio 0:14:38.120 --> 0:14:41.320 Intellivision NonStop saying, you know, we think about when there's 0:14:41.360 --> 0:14:45.440 a snowstorm that paralyzes upstate New York, those utility trucks 0:14:45.480 --> 0:14:47.960 are coming up from Long Island and New York City 0:14:48.000 --> 0:14:49.960 to get our power back on. So I'll just talk 0:14:50.000 --> 0:14:52.120 about something we all can relate to it in upstates. 0:14:53.920 --> 0:14:56.680 I represent the entire state, and I spend vacia majority 0:14:56.680 --> 0:14:58.600 of my time in New York City. So I feel 0:14:58.600 --> 0:15:01.000 I'm adapted there as well. But what I've been saying 0:15:01.040 --> 0:15:04.560 to Western New Yorkers just like we route one team 0:15:04.600 --> 0:15:06.640 up here of football seas and we are one state, 0:15:07.080 --> 0:15:11.720 and the Governor and I have said for sure, if 0:15:11.720 --> 0:15:14.760 there is any part of that state upstate boundstate that 0:15:14.880 --> 0:15:18.800 need life staving equipment, we will personally transform their ourselves. 0:15:18.880 --> 0:15:21.400 We had to reassure people, and there was some anxiety, 0:15:21.480 --> 0:15:23.600 some political people trying to make hay out of it, 0:15:23.600 --> 0:15:25.840 which I think is disgraceful. But you know, we shut 0:15:26.240 --> 0:15:28.960 exactly that. You know, that's that's not happening. We are 0:15:29.040 --> 0:15:32.600 one state, period. That's the answer. Don't be a stranger. 0:15:32.600 --> 0:15:35.440 Lieutenant Governor Oco from Buffalo and from New York, stay, 0:15:35.520 --> 0:15:41.520 thank you so much for joining Bloomberg Surveillance worldwide. I 0:15:41.560 --> 0:15:45.360 think we should carry forward into the Chairman's comments that 0:15:45.440 --> 0:15:47.920 we'll see tomorrow. Of course, we'll have a lot of 0:15:47.920 --> 0:15:51.080 details on that across all of the Bloomberg platforms. Steven 0:15:51.160 --> 0:15:53.920 Roach is identified at Yale University with China and of 0:15:53.960 --> 0:15:57.600 course his leadership at Morgan Stanley on the China Watch 0:15:57.680 --> 0:16:00.960 for many years involving his Wonderful Look the Next Asia 0:16:01.000 --> 0:16:04.840 and other efforts as well. Before that he had leadership 0:16:04.880 --> 0:16:07.320 and looking at what we do with our monetary and 0:16:07.360 --> 0:16:10.640 fiscal systems within the United States, and maybe we can 0:16:10.760 --> 0:16:14.120 focus on that today. Stephen Rotch, I know you, John, 0:16:14.160 --> 0:16:18.640 Lisa me. We never imagined this expansion of the balance 0:16:18.720 --> 0:16:22.360 sheet back to calculus one. Is there a limit to 0:16:22.480 --> 0:16:26.840 where a balance sheet can go? No, there's no limit 0:16:27.040 --> 0:16:31.320 numerically in a world of electronic or fiat currencies. The 0:16:31.440 --> 0:16:36.720 question is is there a limit economically? And um what 0:16:36.880 --> 0:16:42.440 this ultimately means for addressing the problems that are now 0:16:42.480 --> 0:16:46.000 afflicting the world. Tom The underpinning of this, and we 0:16:46.080 --> 0:16:48.560 talked to William White about this yesterday. The folks the 0:16:48.600 --> 0:16:52.520 conversation was hugely valuable was to go back to something 0:16:52.600 --> 0:16:55.720 Joe Stiglitz has talked about, which is the underpinning of 0:16:55.760 --> 0:16:58.280 this is the small G and economics, which is the 0:16:58.280 --> 0:17:00.240 growth rate could be the growth rate of it'll the 0:17:00.240 --> 0:17:02.320 growth rate of the US, it can be the growth 0:17:02.360 --> 0:17:05.119 rate of New York City for that matter. How do 0:17:05.160 --> 0:17:08.160 you Dove tell Steve Roach what we're going through right 0:17:08.200 --> 0:17:14.840 now with the small G that's in all the equations. Well, look, um, 0:17:15.080 --> 0:17:20.480 the monetary um stimulus, the fiscal stimulus. You know, the 0:17:21.119 --> 0:17:26.120 two words we described to address these actions UH during 0:17:26.160 --> 0:17:28.760 the global financial crisis of oh, you know nine was 0:17:28.880 --> 0:17:35.200 big bazooka UH. And they're effective and addressing UH financial problems, 0:17:35.240 --> 0:17:39.720 but they're not effective in addressing a pandemic. We know that, 0:17:40.000 --> 0:17:44.720 and Chairman Powell said it very clearly when he gave 0:17:44.760 --> 0:17:47.840 his rare interview on the Today Show now close to 0:17:47.880 --> 0:17:50.520 a couple of weeks ago, when he said that, you know, 0:17:50.560 --> 0:17:56.440 the FEDS actions are aimed at sparking post COVID recovery, 0:17:56.520 --> 0:18:03.000 not in addressing the downside of containment and workers being 0:18:03.680 --> 0:18:06.000 told to stay at home. So we're deluding ourselves into 0:18:06.000 --> 0:18:09.520 thinking that these actions are going to bring an end 0:18:09.880 --> 0:18:11.800 to this crisis. The only thing they can bring an 0:18:11.920 --> 0:18:15.840 end to the crisis is containing the disease. We're trying 0:18:15.880 --> 0:18:18.280 to build a bridge to the other side here, Professor, 0:18:18.520 --> 0:18:20.960 on a number of levels and help companies get through 0:18:21.320 --> 0:18:25.400 an unpresidented economic shutdown. I'm just wondering, from your perspective, Stephen, 0:18:25.760 --> 0:18:28.159 what more needs to be done on the fiscal side, 0:18:28.320 --> 0:18:31.080 both in terms of size and just calibration. The specific 0:18:31.080 --> 0:18:33.320 policies that you'd like to see in the coming weeks 0:18:33.320 --> 0:18:35.879 and months if we haven't seen them already. Well, you 0:18:35.960 --> 0:18:38.959 use the words on calibration, I mean, I don't know 0:18:39.119 --> 0:18:41.720 quite what that means, but I would take that as 0:18:43.200 --> 0:18:46.440 meaning that the fiscal actions need to be focused at 0:18:47.359 --> 0:18:51.719 providing support for our public health infrastructure which is woefully inadequate, 0:18:51.720 --> 0:18:56.600 adequate the scientific research we need for anti viral medication 0:18:56.720 --> 0:19:00.560 and ultimately the vaccine um. You know, I've I've argued 0:19:00.600 --> 0:19:04.480 that we should place as much emphasis on that as 0:19:04.520 --> 0:19:08.399 we do to bridge loans to corporations and even small 0:19:08.440 --> 0:19:12.439 and medium sized businesses. Certainly, we've got to put a 0:19:12.560 --> 0:19:15.960 floor under the economic carnage. But you know as well 0:19:15.960 --> 0:19:19.480 as I do that, the longer the shutdown exists, the 0:19:19.520 --> 0:19:21.399 more and more we're gonna have to go back to 0:19:21.440 --> 0:19:25.160 the well, uh, in dealing with the these bridge loans. 0:19:25.240 --> 0:19:28.080 We've got to get the science and the public health 0:19:28.160 --> 0:19:31.320 infrastructure right before we can hope to do anything in 0:19:31.400 --> 0:19:36.040 terms of supporting economic recovery. Stephen Roe, professor and former 0:19:36.160 --> 0:19:39.840 Morgan Stanley Asia chairman, joining us right now. I'm wondering, Stephen, 0:19:39.920 --> 0:19:43.119 taking a look at what the roadmap will be to 0:19:43.280 --> 0:19:45.840 reopen the US economy. A lot of people are looking 0:19:45.840 --> 0:19:49.040 to China. What are the initial size You're seeing a 0:19:49.080 --> 0:19:52.560 lot of people questioning, uh, the sort of veracity of 0:19:52.600 --> 0:19:55.200 the numbers that we're getting out of China. Are you 0:19:55.280 --> 0:19:59.000 optimistic about what you've seen in terms of a bounce 0:19:59.080 --> 0:20:03.960 back from the shut out over there? Look, the Chinese 0:20:03.960 --> 0:20:06.480 template tells us some important things. It told us how 0:20:06.520 --> 0:20:10.800 to address the disease, as did South Korea. And they're 0:20:10.840 --> 0:20:14.399 there are two different models, and one is about Drayconian 0:20:14.480 --> 0:20:20.040 lockdowns China, and the others about rigorous testing and contact 0:20:20.040 --> 0:20:24.240 tracing South Korea. Uh, And what they're telling us about, 0:20:24.560 --> 0:20:28.439 you know, the reopening is that, uh, it's possible to 0:20:28.520 --> 0:20:32.040 reopen the supply side, but it's very very difficult to 0:20:32.240 --> 0:20:34.960 reopen the demand side, given the shock that's occurred to 0:20:35.000 --> 0:20:40.440 behavioral norms of disease infected and fearful of people, families 0:20:40.440 --> 0:20:43.800 slash consumers. And so we've got to look very carefully 0:20:43.840 --> 0:20:48.359 at at other countries in terms of their struggles to 0:20:48.880 --> 0:20:54.639 reopen their systems and go back to anything close to normal. 0:20:54.680 --> 0:20:57.720 It's gonna be very difficult to put Humpty Dumpty back 0:20:57.720 --> 0:21:02.240 together again. The immediacy of the health crisis the entire 0:21:02.320 --> 0:21:06.000 world is facing as a sort of overwhelmed some of 0:21:06.040 --> 0:21:09.720 the tensions that seem to be percolating and ongoing between 0:21:09.760 --> 0:21:12.480 the US and China. And I'm wondering how that plays 0:21:12.520 --> 0:21:15.240 out at a time when there seems to be something 0:21:15.320 --> 0:21:17.960 of an information war with a lot of bickering going 0:21:18.040 --> 0:21:21.240 back and forth with US and China as to the 0:21:21.320 --> 0:21:25.320 message who's who's it blame and taking leadership globally and 0:21:25.359 --> 0:21:28.240 managing the health crisis. You know, look, that's a great point. 0:21:28.280 --> 0:21:32.199 I've written about that on on the Bloomberg platform and 0:21:32.200 --> 0:21:35.679 and elsewhere. Finger Pointing in the blame game is going 0:21:35.720 --> 0:21:40.320 to get us nowhere if we really aspire for a collaboration, 0:21:40.600 --> 0:21:43.720 which is what we need to address a global problem. 0:21:43.720 --> 0:21:46.600 That's what a pandemic is. And and you know, the 0:21:46.600 --> 0:21:49.600 Trump administration, you know, is backed off a little bit 0:21:50.240 --> 0:21:54.920 from naming this the Chinese virus, or Secretary of State 0:21:54.960 --> 0:21:58.240 Pompeo calls it the Wuhan virus. But you know where 0:21:58.359 --> 0:22:04.240 we continue to uh point fingers uh and one another 0:22:04.560 --> 0:22:08.960 in uh trying to assess culpability and blame and that's 0:22:09.000 --> 0:22:11.960 just not the stuff of collaborating. We gotta put that 0:22:12.080 --> 0:22:16.120 aside and UH and really work together. There's so much 0:22:16.160 --> 0:22:19.560