Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: of these numbers worldwide still not great, just to subtle
Speaker 1: a subtle sign of stabilization in some key economies, some
Speaker 1: key countries, and we hope that continues. Tom. Great lineup
Speaker 1: of guests through this morning, Bam bloom Book Surveillance as always,
Speaker 1: and we begin this morning with Troitsky of sky Bridge. Troy,
Speaker 1: always great to catch up with you. Howard Mark's putting
Speaker 1: out a memo yesterday. Let me bring you a quote
Speaker 1: from that, just to start this conversation off. The bottom
Speaker 1: line for me is that I'm not all troubled, at all,
Speaker 1: troubled saying markets may well be considerably lower sometime in
Speaker 1: the coming months, and we're buying today when we find
Speaker 1: good value. I don't find in these statements inconsistence. Your
Speaker 1: response to that, Troy, Yeah, No, I think he's right.
Speaker 1: I mean, you can never time a bottom perfectly right,
Speaker 1: and so I think the broader point there is that
Speaker 1: you know, there are many asset classes that are pricing
Speaker 1: in apocalypse and many securities um Yet at the same time,
Speaker 1: as you guys always note, you've seen unprecedented government government stimulus,
Speaker 1: both at the fiscal level and more importantly in our opinion,
Speaker 1: on the FED balance sheet level, and in terms of
Speaker 1: money supply growth. So you know, it would be nice
Speaker 1: to sit back in a perfect world and say, hey,
Speaker 1: I'm going to time the perfect bottom and every security
Speaker 1: and every asset class. But the reality is is that
Speaker 1: you have tremendous discounts. Now you could take a little
Speaker 1: bit of mark to market pain as you're legging in,
Speaker 1: but that's the price you have to be willing to
Speaker 1: take or to pay in order to have you know,
Speaker 1: extraordinary upside. And that's one of the reasons why you know,
Speaker 1: groups like oak Tree have been so successful over time,
Speaker 1: and that they're in a position to add capital and
Speaker 1: monetize dislocations, huge dislocations off the back of forced liquidation,
Speaker 1: an ugly face that draw down a number of weeks ago.
Speaker 1: Many people have been taking advantage of those dislocations, particularly
Speaker 1: in high grade credit, and a question I want to
Speaker 1: explore beginning with you this morning, Troy, is what the
Speaker 1: recovery looks like in the lower quality segments of this
Speaker 1: market towards high yield across an A M. What are
Speaker 1: you looking at the moment? Yeah, so I think that
Speaker 1: that's a million dollar question. And I think, you know,
Speaker 1: the way this has always worked historically, in the way
Speaker 1: it appears to be working now, but just at a
Speaker 1: much more rapid pace, given you know the fact that
Speaker 1: the FED response has been so much more muscular, and
Speaker 1: you know you have TALF too that's coming online and
Speaker 1: in the government stimulus. Is that you know, when you
Speaker 1: go through a deep downturn in markets and markets are
Speaker 1: pricing in you know, in some cases armageddon, in other cases,
Speaker 1: you know, severe recession, you know the upend quality always
Speaker 1: starts to move first, right. Analysts always have more confidence
Speaker 1: when they're looking at you know, a company with an
Speaker 1: unlovered balance sheet, or you're looking you know, at the
Speaker 1: top of the capital structure and commercial real estate, or
Speaker 1: or Celo said, hey, you can run math six ways
Speaker 1: to Sunday doomsday, this to the cows come home. But
Speaker 1: there's still money, good securities, and so you know, you've
Speaker 1: seen that rebound start, you know, it's slow and fitful um.
Speaker 1: And then what happens is as that liquidity starts to
Speaker 1: filter down in and some of the more you know,
Speaker 1: dire scenarios don't play out, um, you start to see
Speaker 1: lower parts of the capital structure starting catch up or
Speaker 1: lower quality. The thing that's interesting know about this is
Speaker 1: that you've already had a pretty significant rebound in high
Speaker 1: yield um. You know that. You know, dollar prices are
Speaker 1: back up to about eighty five cents and a dollar.
Speaker 1: So you know, I wouldn't get carried away right now
Speaker 1: on specific high yield because you know, so much of
Speaker 1: the potential upside has always been realized, already been realized.
Speaker 1: Try You've got a beautiful vision into the hedge fund business.
Speaker 1: And I know the media loves to try out somebody
Speaker 1: who's up a hundred in the last three days. It's
Speaker 1: all great and wonderful. What's the real story our alternative
Speaker 1: investments doing? Are they? As a general statement, surviving creating
Speaker 1: alpha here? Yeah? So I think it's a general statement
Speaker 1: that would be true. I mean it's not like, you know,
Speaker 1: the hedge fund industry has had a great run um by,
Speaker 1: but there are time you always choke around it. But
Speaker 1: but if you think of what's happened so far this year,
Speaker 1: you know, in the most part capital has been protected.
Speaker 1: I think discretionary macro managers and systematic trend followers have
Speaker 1: done fairly well. You know. Some of the bigger MULTIPM
Speaker 1: shops um you know, like you guys report on, like
Speaker 1: Citadel and Millennium have done fine. Where there's a cute pain.
Speaker 1: Um Hare's been more in the credit instructure, credit area
Speaker 1: where they got caught up in the margin calling that
Speaker 1: was hid in the reeds and a lot of their
Speaker 1: assets were sold down, you know, in sympathy. And so
Speaker 1: that's where you know, when we look at risk reward
Speaker 1: versus fundamentals, we think there's the most upside there, and
Speaker 1: we also think there's the most upside in distress corporate credit.
Speaker 1: But again you have to be selective, you know, firmly
Speaker 1: focus on good, good company with good balance sheet. You know,
Speaker 1: no reason to get involved in energy or anything of
Speaker 1: that nature. But you know, even hospitality names or you know,
Speaker 1: six Flags is a good example of a of a
Speaker 1: company that's good, good balance sheet, low dollar prices, that
Speaker 1: franchise is very strong, and we'll survive, Troy. I think
Speaker 1: it's interesting you're talking about margin calls and some of
Speaker 1: the technical stress in markets appears that we've moved from
Speaker 1: a financial market crisis going forward to a real economic crisis,
Speaker 1: which is what we're looking at trying to assess. Now
Speaker 1: there's sort of a knee jerk by the dip mentality
Speaker 1: because it's worked in the past. What's the risk that
Speaker 1: it's not going to work the same way this time
Speaker 1: as people look into the abyss of a potential downturn
Speaker 1: economically that rivals what we saw in in the nineties. Yeah, no, No,
Speaker 1: it's a great question least. And I think you hit
Speaker 1: the nail on the head with your w analysis. I mean,
Speaker 1: I think that is arguably the biggest risk or that
Speaker 1: you know and know the dreams of v shape recovery
Speaker 1: went out the window, you know, four to six weeks ago.
Speaker 1: No market participants thinks that's going to happen. But maybe
Speaker 1: the you tend to have you know, a much much
Speaker 1: longer bottom, right um So, And the other thing I'd
Speaker 1: say is, no one is really recklessly buying dips, right Uh.
Speaker 1: You know, people are trying to be very careful and
Speaker 1: calculated on again like that we talked about with credit quality,
Speaker 1: Like okay, let's start with the higher, higher top of
Speaker 1: the capital structure. You know, obviously an I G. Credit
Speaker 1: you're getting fed support directly, and then let's roll down.
Speaker 1: So no, no one's you know, I think delusional enough
Speaker 1: to think that markets are going to rebound in a
Speaker 1: straight line. And you know, we're gonna have this you
Speaker 1: know or twenty percent annualized keyword and annualized economic contraction,
Speaker 1: and you know, mortgage delinquencies are going to go from
Speaker 1: point nine percent to eight percent and then suddenly all
Speaker 1: those people are gonna start paying in you know, two
Speaker 1: weeks later. No one's doing that. People are trying to
Speaker 1: be very careful and selective. UM. But but to your point,
Speaker 1: if if things get materially worse than the economic level,
Speaker 1: like meaning we don't really bottom in Q two, which
Speaker 1: is the expectation, now, don't start to recover you know
Speaker 1: in Q three, in Q four, UM, and instead it's
Speaker 1: a it's a much longer stretch or or or a
Speaker 1: false don with a W. Then clearly you know that's
Speaker 1: the scenario where you could have more downside and markets. UM.
Speaker 1: But then again against that uh and I know you
Speaker 1: saw probably saw no it's coming over. I mean you
Speaker 1: think of what the FED is doing from a liquidity standpoint,
Speaker 1: it's just it's incredible. I mean, it's unreal. They're expanding
Speaker 1: their balance sheet at almost fifteen times the taste of
Speaker 1: q E three fifteen times. Money supply growth is growing
Speaker 1: at an analyzed rate of seventy eight percent, while the
Speaker 1: banking system excess reserves have gone up by you know,
Speaker 1: probably about seven fift billion. That data series has to
Speaker 1: come out, but that's you know, that's our estimate. So
Speaker 1: you know that is that, in our humble opinion, is
Speaker 1: what's really put a floor under market. Obviously, the fiscal
Speaker 1: stimulus is very critical. TOALTH two is very critical. An
Speaker 1: expansion of TOALTH two to include other assets like they
Speaker 1: did back you know eight, you know they gradually expanded
Speaker 1: that very critical. Hi, Troy, always great to get your
Speaker 1: thoughts on a program. So I'm my best of the
Speaker 1: team of Skybridge Anti even yours, Troyasky Skybridge Capital right
Speaker 1: now to bring us up to date on the state
Speaker 1: of the State of New York. Cathy Hokel joins us.
Speaker 1: Of course, the Lieutenant Governor of this state Kathy, these
Speaker 1: are extraordinary times. It is a test for all politicians
Speaker 1: and the test of exhaustion. How are you getting to
Speaker 1: the weekend? What is the path on this Wednesday to
Speaker 1: get to a long weekend and to Easter. Well, for
Speaker 1: those of us who are on the front lines, there
Speaker 1: is no thought that this week is going to end.
Speaker 1: So I'm looking forward to Easter to celebrate remotely with
Speaker 1: my family Lisa virtually, and I want I wish everyone
Speaker 1: a happy pass Over and happy Easter as we head
Speaker 1: into this week. But this is a week where there's
Speaker 1: tremendous temptation to uh start hearing some little glimmers of
Speaker 1: hope and saying that people could become a little more complacent,
Speaker 1: and you haven't seen Graham and Grandpa in a while,
Speaker 1: you want to catch up with your siblings because these
Speaker 1: are wonderful celebration. We have to make sure that people
Speaker 1: do not succumb to that temptation. And that is the
Speaker 1: warning that I cannot convey strongly enough that if we
Speaker 1: start going back to our old ways or even just
Speaker 1: taking a little more steps out, they're becoming a little
Speaker 1: less uh, you know, guarded in our behavior toward others.
Speaker 1: If we don't stay home, we could actually set ourselves back,
Speaker 1: and after all the sacrifice that New Yorkers in American
Speaker 1: have had to go through for the last three weeks,
Speaker 1: we do not want to go there. And that's a
Speaker 1: strong message. I wanted to make sure that everyone hears
Speaker 1: these are wonderful holidays, and we'll certainly have next year
Speaker 1: to celebrate, but let's make sure that everyone who can
Speaker 1: will be sitting at those tables with us next year
Speaker 1: because we took those preventative steps now and continued our
Speaker 1: social distancing. I will say, I'm I'm looking forward to
Speaker 1: my zoom pass a versator tonight. Lieutenant Governor. I'm wondering
Speaker 1: everyone's trying to figure out how quickly New York can
Speaker 1: restart its economy. Do you have any sense of the
Speaker 1: path for that and what the plan is to reopen.
Speaker 1: Before we can reopen, we have to have broad broadly
Speaker 1: undertaken testing. And what we're doing now in the Governor
Speaker 1: announced this yesterday, is that we are working with our
Speaker 1: businesses to try to find ways to increase the capacity
Speaker 1: for rapid testing. There are possibilities to do testing in
Speaker 1: five minutes, fifteen minutes and get results back quickly, and
Speaker 1: only when we feel secure that we can have a
Speaker 1: workforce that is free of coronavirus because they've already contracted
Speaker 1: it and they have developed the antibodies and are not
Speaker 1: vulnerable themselves, or that they would spread it to others.
Speaker 1: I think those are important scientific metrics that we're going
Speaker 1: to be focusing on as we I start to identify
Speaker 1: which industries can come back online. But again, this is
Speaker 1: a conversation we want to have because we are anxious
Speaker 1: to get this going again. But it is a little
Speaker 1: bit premature to start giving out dates, and it's certainly
Speaker 1: premature to know how that's going to look. All we
Speaker 1: do know is that we have to continue these distancing
Speaker 1: from each other, the social distance, reduced density, but the
Speaker 1: increased testing will really be the link that tells us
Speaker 1: when we were able to test enough New Yorkers to
Speaker 1: start jump starting our economy again. Kathy, premature to be
Speaker 1: thinking about many many things at this point. I'm sure,
Speaker 1: given the crisis that it's unfolding right before our eyes
Speaker 1: over the last few weeks. One thing we can discuss,
Speaker 1: though there's not too premature to discuss, is the help
Speaker 1: that you might need in the future. Kathy, what do
Speaker 1: you need from the federal level. What kind of assistance
Speaker 1: do you need from the government. We need money. Uh,
Speaker 1: this is something that the governor just yesterday rode to
Speaker 1: our congressional delegation. He's spoken to the President when there
Speaker 1: is the next stimulus plan, and there needs to be
Speaker 1: another one. They cannot overlook the fact that a place
Speaker 1: like New York City, the epicenter, has now taken a
Speaker 1: ten to fifteen billion dollar hit to our budget, and
Speaker 1: we just wrapped up a budget a couple of days ago.
Speaker 1: But it allows the governor to have flexibility to reopen
Speaker 1: if necessary based on either a decline or hopefully an
Speaker 1: increase in revenues. But we need financial assistance from the
Speaker 1: federal government. We also have been asking for them to
Speaker 1: invoke the Events Production Act much earlier than has been
Speaker 1: even used at all in a wide scale way to
Speaker 1: get us the personal protection equipment, to ramp up testing kits,
Speaker 1: the testing supplies as well. As we've been saying for
Speaker 1: weeks and liarly months, we need more ventilators to be
Speaker 1: produced in this country. I think this crisis is going
Speaker 1: to have a wholesale rethinking of where we get our
Speaker 1: life saving products, are supplies, our medical supplies, our ventilators,
Speaker 1: and I think that's going to make us wonder do
Speaker 1: we want to continue to be reliant on other countries
Speaker 1: when we have the capacity, that know how, in the
Speaker 1: ability to make those right here in New York. And
Speaker 1: I think that's going to be a conversation. They will
Speaker 1: be had sooner than later. Another thing that's not theoretical
Speaker 1: is the impact that the coronavirus and the shutdowns have
Speaker 1: had on the economy. And one area that you highlighted
Speaker 1: in a recent OpEd in The Hill was that women
Speaker 1: are hit hardest. You argue by the impact of the coronavirus.
Speaker 1: Why do you say that? In two areas, One is
Speaker 1: that seventy six percent of healthcare workers are female. That's
Speaker 1: staggering when you think about how we are honoring our
Speaker 1: frontline workers. The people are putting on uniforms and hopefully
Speaker 1: protective equipment going into their jobs, literally going into the
Speaker 1: heat of battle every day. The majority of them, vast majority,
Speaker 1: are women, and they've many of them have children, children
Speaker 1: who otherwise would be occupied in school or being watched
Speaker 1: by grandparents, So there is literally childcare crisis associated with them. Secondly,
Speaker 1: two thirds of America's minimum wage workers are women. These
Speaker 1: are the ones who worked in restaurants, and had worked
Speaker 1: in hotels, and had worked in housekeeping, and all this
Speaker 1: work that had to get done and now either laid
Speaker 1: off or they're the ones vulnerable having to go in
Speaker 1: to work every single day. Tenant Governor, you are more
Speaker 1: qualified than any politician in this country to talk about
Speaker 1: the cittiness of this pandemic. You are out of Buffalo.
Speaker 1: You know the distance to Lockport, the distance to Batavia
Speaker 1: down the US rather down the New York State Thruway system.
Speaker 1: Is well. Explain to those in smaller cities, villages in
Speaker 1: rural America why they need to support the big cities
Speaker 1: in this pandemic. Oh. Absolutely, And I've been on radio
Speaker 1: Intellivision NonStop saying, you know, we think about when there's
Speaker 1: a snowstorm that paralyzes upstate New York, those utility trucks
Speaker 1: are coming up from Long Island and New York City
Speaker 1: to get our power back on. So I'll just talk
Speaker 1: about something we all can relate to it in upstates.
Speaker 1: I represent the entire state, and I spend vacia majority
Speaker 1: of my time in New York City. So I feel
Speaker 1: I'm adapted there as well. But what I've been saying
Speaker 1: to Western New Yorkers just like we route one team
Speaker 1: up here of football seas and we are one state,
Speaker 1: and the Governor and I have said for sure, if
Speaker 1: there is any part of that state upstate boundstate that
Speaker 1: need life staving equipment, we will personally transform their ourselves.
Speaker 1: We had to reassure people, and there was some anxiety,
Speaker 1: some political people trying to make hay out of it,
Speaker 1: which I think is disgraceful. But you know, we shut
Speaker 1: exactly that. You know, that's that's not happening. We are
Speaker 1: one state, period. That's the answer. Don't be a stranger.
Speaker 1: Lieutenant Governor Oco from Buffalo and from New York, stay,
Speaker 1: thank you so much for joining Bloomberg Surveillance worldwide. I
Speaker 1: think we should carry forward into the Chairman's comments that
Speaker 1: we'll see tomorrow. Of course, we'll have a lot of
Speaker 1: details on that across all of the Bloomberg platforms. Steven
Speaker 1: Roach is identified at Yale University with China and of
Speaker 1: course his leadership at Morgan Stanley on the China Watch
Speaker 1: for many years involving his Wonderful Look the Next Asia
Speaker 1: and other efforts as well. Before that he had leadership
Speaker 1: and looking at what we do with our monetary and
Speaker 1: fiscal systems within the United States, and maybe we can
Speaker 1: focus on that today. Stephen Rotch, I know you, John,
Speaker 1: Lisa me. We never imagined this expansion of the balance
Speaker 1: sheet back to calculus one. Is there a limit to
Speaker 1: where a balance sheet can go? No, there's no limit
Speaker 1: numerically in a world of electronic or fiat currencies. The
Speaker 1: question is is there a limit economically? And um what
Speaker 1: this ultimately means for addressing the problems that are now
Speaker 1: afflicting the world. Tom The underpinning of this, and we
Speaker 1: talked to William White about this yesterday. The folks the
Speaker 1: conversation was hugely valuable was to go back to something
Speaker 1: Joe Stiglitz has talked about, which is the underpinning of
Speaker 1: this is the small G and economics, which is the
Speaker 1: growth rate could be the growth rate of it'll the
Speaker 1: growth rate of the US, it can be the growth
Speaker 1: rate of New York City for that matter. How do
Speaker 1: you Dove tell Steve Roach what we're going through right
Speaker 1: now with the small G that's in all the equations. Well, look, um,
Speaker 1: the monetary um stimulus, the fiscal stimulus. You know, the
Speaker 1: two words we described to address these actions UH during
Speaker 1: the global financial crisis of oh, you know nine was
Speaker 1: big bazooka UH. And they're effective and addressing UH financial problems,
Speaker 1: but they're not effective in addressing a pandemic. We know that,
Speaker 1: and Chairman Powell said it very clearly when he gave
Speaker 1: his rare interview on the Today Show now close to
Speaker 1: a couple of weeks ago, when he said that, you know,
Speaker 1: the FEDS actions are aimed at sparking post COVID recovery,
Speaker 1: not in addressing the downside of containment and workers being
Speaker 1: told to stay at home. So we're deluding ourselves into
Speaker 1: thinking that these actions are going to bring an end
Speaker 1: to this crisis. The only thing they can bring an
Speaker 1: end to the crisis is containing the disease. We're trying
Speaker 1: to build a bridge to the other side here, Professor,
Speaker 1: on a number of levels and help companies get through
Speaker 1: an unpresidented economic shutdown. I'm just wondering, from your perspective, Stephen,
Speaker 1: what more needs to be done on the fiscal side,
Speaker 1: both in terms of size and just calibration. The specific
Speaker 1: policies that you'd like to see in the coming weeks
Speaker 1: and months if we haven't seen them already. Well, you
Speaker 1: use the words on calibration, I mean, I don't know
Speaker 1: quite what that means, but I would take that as
Speaker 1: meaning that the fiscal actions need to be focused at
Speaker 1: providing support for our public health infrastructure which is woefully inadequate,
Speaker 1: adequate the scientific research we need for anti viral medication
Speaker 1: and ultimately the vaccine um. You know, I've I've argued
Speaker 1: that we should place as much emphasis on that as
Speaker 1: we do to bridge loans to corporations and even small
Speaker 1: and medium sized businesses. Certainly, we've got to put a
Speaker 1: floor under the economic carnage. But you know as well
Speaker 1: as I do that, the longer the shutdown exists, the
Speaker 1: more and more we're gonna have to go back to
Speaker 1: the well, uh, in dealing with the these bridge loans.
Speaker 1: We've got to get the science and the public health
Speaker 1: infrastructure right before we can hope to do anything in
Speaker 1: terms of supporting economic recovery. Stephen Roe, professor and former
Speaker 1: Morgan Stanley Asia chairman, joining us right now. I'm wondering, Stephen,
Speaker 1: taking a look at what the roadmap will be to
Speaker 1: reopen the US economy. A lot of people are looking
Speaker 1: to China. What are the initial size You're seeing a
Speaker 1: lot of people questioning, uh, the sort of veracity of
Speaker 1: the numbers that we're getting out of China. Are you
Speaker 1: optimistic about what you've seen in terms of a bounce
Speaker 1: back from the shut out over there? Look, the Chinese
Speaker 1: template tells us some important things. It told us how
Speaker 1: to address the disease, as did South Korea. And they're
Speaker 1: there are two different models, and one is about Drayconian
Speaker 1: lockdowns China, and the others about rigorous testing and contact
Speaker 1: tracing South Korea. Uh, And what they're telling us about,
Speaker 1: you know, the reopening is that, uh, it's possible to
Speaker 1: reopen the supply side, but it's very very difficult to
Speaker 1: reopen the demand side, given the shock that's occurred to
Speaker 1: behavioral norms of disease infected and fearful of people, families
Speaker 1: slash consumers. And so we've got to look very carefully
Speaker 1: at at other countries in terms of their struggles to
Speaker 1: reopen their systems and go back to anything close to normal.
Speaker 1: It's gonna be very difficult to put Humpty Dumpty back
Speaker 1: together again. The immediacy of the health crisis the entire
Speaker 1: world is facing as a sort of overwhelmed some of
Speaker 1: the tensions that seem to be percolating and ongoing between
Speaker 1: the US and China. And I'm wondering how that plays
Speaker 1: out at a time when there seems to be something
Speaker 1: of an information war with a lot of bickering going
Speaker 1: back and forth with US and China as to the
Speaker 1: message who's who's it blame and taking leadership globally and
Speaker 1: managing the health crisis. You know, look, that's a great point.
Speaker 1: I've written about that on on the Bloomberg platform and
Speaker 1: and elsewhere. Finger Pointing in the blame game is going
Speaker 1: to get us nowhere if we really aspire for a collaboration,
Speaker 1: which is what we need to address a global problem.
Speaker 1: That's what a pandemic is. And and you know, the
Speaker 1: Trump administration, you know, is backed off a little bit
Speaker 1: from naming this the Chinese virus, or Secretary of State
Speaker 1: Pompeo calls it the Wuhan virus. But you know where
Speaker 1: we continue to uh point fingers uh and one another
Speaker 1: in uh trying to assess culpability and blame and that's
Speaker 1: just not the stuff of collaborating. We gotta put that
Speaker 1: aside and UH and really work together. There's so much
Speaker 1: we can do together. Stephen the China Watch. Elizabeth Economy
Speaker 1: at c FAR I thought was way away out front
Speaker 1: on the challenges domestically that Mr g has in China.
Speaker 1: Minxing Pay of Claremont wrote a fabulous article for Foreign
Speaker 1: Affairs in the last ten days on the Chinese Communist
Speaker 1: Party on the future for we've given the shocks that
Speaker 1: we've seen in the Chinese system. Do you share with
Speaker 1: doctor Economy this worry about the stability of of of
Speaker 1: president She's rain No, I don't. I think she's overblown that,
Speaker 1: And I've felt that it was a case um before
Speaker 1: this crisis, and I certainly feel that's the case now. Certainly,
Speaker 1: the Chinese leadership did not necessarily perform admirably during the
Speaker 1: early days of this horrific disease, and there's a there's
Speaker 1: a lot of questions that are being raised both inside
Speaker 1: of China, especially outside of China and looking back on that,
Speaker 1: but you know, to to view this as an existential
Speaker 1: threat to his leadership into the party I think goes
Speaker 1: well beyond what is um actually accurate in the current situation. Professor,
Speaker 1: you say we should collaborate with China. According to our reporting,
Speaker 1: China is still concealing the cases and deaths and they're
Speaker 1: intentionally leaving those cases and the reporting of those cases incomplete.
Speaker 1: How can we collaborate with a country that intelligence of
Speaker 1: fishals in this country think we shouldn't trust. Well, that's
Speaker 1: a great question, and so you know, you've got to
Speaker 1: look at, you know, what what the results are in
Speaker 1: terms of how the Chinese economy is getting back to
Speaker 1: UM at least production and what they're attempting to do
Speaker 1: on consumption. If the numbers were as poor as you're reporting,
Speaker 1: uh suggests, then UM, they would not have reopened Wuhan,
Speaker 1: they would not have made progress in normalizing and bringing
Speaker 1: production back and the travel back that they're doing right now.
Speaker 1: So certainly there's issues of accuracy down to the last
Speaker 1: decent point. We have problems with that in our country
Speaker 1: as well, because we don't have data on testing and
Speaker 1: the incidence of the disease. And you know, I just
Speaker 1: think we have to be careful in um pointing fingers
Speaker 1: at others. It's like the pot calling the kettle black hair.
Speaker 1: Stephen roaches, thank you so much. With the university greatly
Speaker 1: appreciated that. Today. What we've tried to do here, not
Speaker 1: all the time, but throughout Bloomberg Surveillance is to bring
Speaker 1: you the smartest asked, the most informed that we can.
Speaker 1: Within the medical community. That's been someone like Dollar Bernheim
Speaker 1: here Dr Brenheim, i should say, rather at Mount Sinai
Speaker 1: and radiology Dr Hotez at Baylor University, Stephen Reiley, the
Speaker 1: great epidemiologist over at Imperial College in London. And now
Speaker 1: for the emergency room, she is Lauren Sour. She is
Speaker 1: at the Johns Hopkins University and their medical system out
Speaker 1: of their Bloomberg School of Public Health. And of course
Speaker 1: we have to mention that Mr Bloomberg, of course is
Speaker 1: with Bloomberg LP and a great benefactor of his engineering
Speaker 1: school Johns Hopkins. And with that said, Laurence Sour is
Speaker 1: exceptionally competent in emergency medicine and on the doings of
Speaker 1: emergency rooms. Here is Lauren Soer. I think the key
Speaker 1: is to actually not walk into the emergency room unless
Speaker 1: you're absolutely critically ill. Um We want to keep people
Speaker 1: out of the emergency department to make sure that the
Speaker 1: space is there for the patients. We need this critical
Speaker 1: resource the road. You're going to see stick patients in
Speaker 1: the emergency department now, Um, a lot of emergency departments
Speaker 1: are separating patients using KENT to separate out COVID likely
Speaker 1: patients and COVID unlikely patients to reduce the risk of
Speaker 1: spread in waiting rooms and things like that. Lauren, we
Speaker 1: have seen in the last couple of days the beginning
Speaker 1: of an understanding of this virus with the ebbs and
Speaker 1: the flows, and of course all focused on the Prime
Speaker 1: Minister of the United Kingdom, but for each and every
Speaker 1: virus patient, there seems to be a point where they
Speaker 1: get better and then they get worse as well. What
Speaker 1: have you learned with the Johns Hopkins medical team about
Speaker 1: the ebb and flow of the virus the day to
Speaker 1: day of this pathogen. One of the things we've seen
Speaker 1: about these patients is that they have to be watched
Speaker 1: really carefully. UM. Their oxygen saturation can look like it's
Speaker 1: going to be fine and then go uh, then really
Speaker 1: go off the rails. We've seen these patients. We really
Speaker 1: we really need to pay a close eye to them
Speaker 1: to make sure that they're at the right resource level
Speaker 1: for managing them, so trying not to move them out
Speaker 1: of the CU into a step down unit too early
Speaker 1: with the risk that they might get worse and then
Speaker 1: have to be moved back to the I c U.
Speaker 1: We want to avoid transferring patients as much as possible
Speaker 1: and reduce the number of transfers within our public health system.
Speaker 1: With a belinguered New York and yes there's other geographies
Speaker 1: across this country. They're just overwhelmed right now. It's a
Speaker 1: movement from the emergency room to a hospital bed and
Speaker 1: then as the Prime Minister, to an intensive care unit.
Speaker 1: Explain the differences of I see you. Explain the nuances
Speaker 1: there that we need to know. Sure, So when the
Speaker 1: patients move from the emergency department, depending on how sick
Speaker 1: they are, they may go to a regular floor that
Speaker 1: or up to the I see you and that I
Speaker 1: see you level of care is really important for these
Speaker 1: patients who may need mechanical ventilation or other higher level care.
Speaker 1: That mechanical ventilation piece is really important. So if someone
Speaker 1: can't breathe on their own and it's going to need
Speaker 1: to be intibated and mechanically ventilated, which we've talked a
Speaker 1: lot about with these patients, UM, you need that I
Speaker 1: see you level of care because the staffing is higher.
Speaker 1: So UM, you have more nurse to patient, higher nurse
Speaker 1: to patient race vio, higher level of critical care doctors,
Speaker 1: and you have the respiratory therapist you need to need
Speaker 1: to manage the ventilators, and you have the antise geologists
Speaker 1: there to manage the levels of medication that these patients require.
Speaker 1: Explain to us your view on this debate of the
Speaker 1: protection of nurses, the protection of doctors, and indeed of
Speaker 1: all of hospitals in America. It's a ranging debate right
Speaker 1: now about getting per tective gear in give us your perspective. Please.
Speaker 1: We absolutely have to keep our medical staff are frontline
Speaker 1: healthcare workers healthy because the patients are going to keep coming,
Speaker 1: whether the physicians and the nurses and the respiratory therapist
Speaker 1: and everyone else to keep the hospital running is there
Speaker 1: and healthy or not. So the personal protective equipment or
Speaker 1: we call it PPE is critical to protecting these these
Speaker 1: healthcare workers. We need the masks or the pappers, the
Speaker 1: personal air purifying devices, UM, so that you can safely
Speaker 1: come and go from these patients rooms. You can safely
Speaker 1: do the procedures you need to do to keep the
Speaker 1: patients UH breathing. A lot of our procedures that we
Speaker 1: do for these respiratory patients generate air assaults or smart
Speaker 1: small particles that have the virus in it. So the
Speaker 1: PPE is critical to keeping healthcare workers safe and and
Speaker 1: the hospital running. Laurence with the Johns Hopkins University in
Speaker 1: their Bloomberg School of Public Health just in Paul I thought,
Speaker 1: there's just an extraordin ordinary time interview. She's truly in
Speaker 1: the trenches. She's out of Boston University, and of course
Speaker 1: Johns Hopkins as well, in her whole career is focused
Speaker 1: on that room. We hate to go in. You know,
Speaker 1: every parent dreads it for all sorts of reasons. I
Speaker 1: hate to go on emergency rooms and these people to
Speaker 1: spend their whole careers in them. I'm one block away
Speaker 1: or from Mount Sinai's acclaimed emergency room, and it's it's
Speaker 1: a science under its own within hospitals. Yeah, it's a
Speaker 1: special calling I think for for those types of people.
Speaker 1: Tom and they and they really are on the front
Speaker 1: lines here. And you know Dr Sowers commentary there at
Speaker 1: the end about the importance of PPE having the proper
Speaker 1: equipment to protect our healthcare providers, particularly on the front lines,
Speaker 1: is really critical. And that's something we've seen called out
Speaker 1: by you know lots of politicians and speakers, whether it's
Speaker 1: Andrew Cuomos talking about initially we have to have the
Speaker 1: ppe UH and we have to have ventilators. And those
Speaker 1: are the two key issues we've heard from you know
Speaker 1: leaders around the country, around the world as they talk
Speaker 1: about their response to this from the health care system.
Speaker 1: Let me U move this to oil and this is extraordinary, folks.
Speaker 1: It's off the radar to a great many of us
Speaker 1: as we focus on this pandemic, we focus on this
Speaker 1: massive economic contraction. I read not one, not too but
Speaker 1: three Bloomberg hydrocarbon articles today on Alberta and it is
Speaker 1: a depression. Paul sanky has been following this for years.
Speaker 1: He's with MISSOOO. He is one of the best best
Speaker 1: best is taking the microeconomics of oil and dovetailing it
Speaker 1: into some vision of where oil and natural guests are heading.
Speaker 1: Paul Sanki joins us UH this morning. Paul I was
Speaker 1: flabbergasted by the financial price boosted by all that money
Speaker 1: betting on higher oil prices. And rebound versus the physical price,
Speaker 1: witnessing Western Canada oil plunging from ten and eight dollars
Speaker 1: a barrel down under five dollars a barrel. Are we
Speaker 1: actually going to be giving oil away for nothing? It's
Speaker 1: getting close, I mean, certainly elaborates which doesn't as you know,
Speaker 1: have a traditionally strong hand of cards when dealing with Russia.
Speaker 1: But there are reports that Belarius offered four dollars a
Speaker 1: barrel and and and the bid was hit by Russia. Though. Yeah,
Speaker 1: things are obviously extraordinarily low and will remain that way
Speaker 1: because obviously the demand environment here is unlike anything other
Speaker 1: than ever seen times five for tomorrow, Okay, plus is
Speaker 1: mating that we're talking about supply. Can they do enough
Speaker 1: on the supply side to offset this massive drop we've
Speaker 1: had in demand over the last several months. Obviously not
Speaker 1: in the short term, but I think the markets very
Speaker 1: focused on the level of inventory build, which will follow
Speaker 1: obviously from from excess production over lack of demands. The
Speaker 1: question is, um, you know, how long does the inventory overhang?
Speaker 1: And there's a risk which really tom was reference thing,
Speaker 1: which is that if you ultimately exceed storage capacity, which
Speaker 1: is within the parameters of the current market. That's when
Speaker 1: you could go negative on price. We've talked about this
Speaker 1: since the Opaque meeting early March, that if the cost
Speaker 1: of storage is above the price of a barrel, the
Speaker 1: price will be negative. And we've seen it with natural gas,
Speaker 1: and you know, we've seen it actually with barking creues.
Speaker 1: Further to what Tom was saying as recently as a
Speaker 1: couple of weeks ago. So the key question here is
Speaker 1: is the extent to which imagery overhang can be mitigated.
Speaker 1: It's not very bullish for the old price because you
Speaker 1: then have specupacity for production. But at least we don't
Speaker 1: have a total cataclysm in terms of um, you know,
Speaker 1: just the inability to manage this black fiscus, you know,
Speaker 1: somewhat dangerous liquid. Paul to that point, I think of
Speaker 1: my favorite, my favorite story on the Bloomberg is about
Speaker 1: the cost to rent out supertankers. In six months, it
Speaker 1: has surged to more than seventy thousand dollars a day,
Speaker 1: from thirty to forty thousand a day earlier last month.
Speaker 1: And I'm wondering when din't we reach that tipping point.
Speaker 1: Let's say there is a ten million barrel per day
Speaker 1: production cut which some people are hoping for between Saudi
Speaker 1: Arabia and Russia. How long do we still have before
Speaker 1: we sort of tip the scales and and and exceed capacity. Um, well,
Speaker 1: actually there's a slew to that. There's an interesting development
Speaker 1: this week, which is that with a lack of need
Speaker 1: for pipelines in the US, Phillips sixty thinks, for example,
Speaker 1: is offering its new pipeline is a storage facility. So this,
Speaker 1: you know, this is a very innovativety know in the
Speaker 1: industry that can manage the extreme situations. So there's we
Speaker 1: always thought that there would be a lot of different ways.
Speaker 1: Filling train cars is another one, but as you can imagine,
Speaker 1: and the old joke is the starts swimming filling swimming
Speaker 1: pools around Houston. But you know that the fact is
Speaker 1: that by by June, at the current rate, assuming that
Speaker 1: New York is at a lockdown twenty eighth of April,
Speaker 1: you would still be that the Saudi oil is on
Speaker 1: the water, as you know, so that hits in May.
Speaker 1: Um that May period is the one where you have
Speaker 1: the lowest refining utilization with the highest supply, and that's
Speaker 1: the point where you think that maybe we'll go over
Speaker 1: the top of the tanks beyond that, hopefully demanded snapping back,
Speaker 1: I think, you know, and I'm sure you guys have
Speaker 1: a stronger you than me, But I don't think you
Speaker 1: can keep the US economy, New York economy shutdown much
Speaker 1: beyond the twenty eight I'd add that Tom would be
Speaker 1: very interested by the combination here of OPEC plus and
Speaker 1: then an emergency meeting of G twenty energy ministers on
Speaker 1: Good Friday is also a very interesting moment the loyal history. Well, Paul,
Speaker 1: let's talk about it. What do you expect the outcome
Speaker 1: of that meeting to actually be? And when the Russians
Speaker 1: start talking about US participation, I think a question we've
Speaker 1: had on a program like this is what does US
Speaker 1: participation in any cuts actually look like? Well, from the
Speaker 1: Russian point of view, less sanctions, I think you can.
Speaker 1: I don't think it will be explicitly, you know, I
Speaker 1: don't think anyone's going to be dumb enough to link
Speaker 1: it directly to the outcome of the meeting, But I
Speaker 1: think in a few weeks time you might find, you know,
Speaker 1: things are a bit easier for Russians around the world,
Speaker 1: But in all seriousness, it's it's obviously a very big deal.
Speaker 1: And it was described to me by your own truly
Speaker 1: excellent journalists. Have you a Blast was saying this is
Speaker 1: actually too big to fail. You know, Saudi's got so
Speaker 1: much on the line here. If obviously it's annoyedly go ahead.
Speaker 1: But I was just gonna say, it's enormously risky to
Speaker 1: bring together the G twenty energy ministers at a time
Speaker 1: like now and not deliver on Good Friday, exactly deliver
Speaker 1: a big deal. You know. Well, let's help Pavey Blast
Speaker 1: with his next story. Paul, we can all do that
Speaker 1: together here. What is your recommendation of the correct approach
Speaker 1: of the State Department and I guess our Energy Department
Speaker 1: in Washington in these two sets of talks, what is
Speaker 1: the most efficacious way for the US to help the
Speaker 1: world out of this mess? Well, I think the optics
Speaker 1: that they point to yesterday's short term energy Outlook published
Speaker 1: by the US Department of Energy, and and they've got
Speaker 1: production down, you know, a million, million and a half
Speaker 1: barrels a day this year, and say, there you go,
Speaker 1: that's the market and we will be cutting and that's
Speaker 1: good enough for Stauity quite frankly, and then it becomes
Speaker 1: a question of Russia versus Sauty, which is another very
Speaker 1: interesting issue which surrounds a the fact that Staudi is
Speaker 1: at search levels, so they're at over twelve million. Are
Speaker 1: they cutting from there or are they cutting from where
Speaker 1: they were before they searched. That's the problem for the Russians.
Speaker 1: The Russians are physically constrained that they're going to have
Speaker 1: to cut anyway, so they're starting with a cut offer.
Speaker 1: But the understanding is the Russia is only down I
Speaker 1: think only down about a million barrels a day. But
Speaker 1: also it doesn't have storage, you know, they're short storage
Speaker 1: where Staudy is not. Additionally, technically, Snawity can just flick
Speaker 1: a switch. They've signed this system to be uh you know,
Speaker 1: they can just turn it off and there's no damage,
Speaker 1: whereas if Russia cuts hard, that's going to damage that
Speaker 1: productive capacity, which is a key point. So you know,
Speaker 1: there's a ton of things here. And then of course,
Speaker 1: as you mentioned, Albertsa is cutting a million. I think
Speaker 1: Brazil is struggling to so so there's a lot of
Speaker 1: optical cut to the market driven West Saudi. Okay, it's
Speaker 1: really just Russia versus Saudi that we're worried about. Paul,
Speaker 1: thank you, thank you so much. Let us know in
Speaker 1: a gallon a guest gets under a dollar gallon that
Speaker 1: would like to know that as well. He is with missool.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
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Speaker 1: Radio