Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors,
Speaker 1: not to mention our hundred journalists and analysts more than
Speaker 1: a hundred and twenty countries. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot Com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Steve Dennis joins us again,
Speaker 1: Senate reporter looking after all things Congress for Bloomberg, joining
Speaker 1: us on the phone from Maryland and a lot of
Speaker 1: politics happening down there on Capitol Hill today, Steve, bring
Speaker 1: us up to date. Yeah, so we're kind of stuck
Speaker 1: in a stalemate right now for how to replenish this
Speaker 1: small Business Fund, the Paycheck Protection Program p P p uh.
Speaker 1: You know, the Minuchan wants an extra quarter of a
Speaker 1: trillion dollars a S A P. And the Democrats basically said,
Speaker 1: but we want to make some changes and we want
Speaker 1: to add more money for hospitals in the States, and
Speaker 1: so here we are at an impast. McConnell went to
Speaker 1: the floor this morning, try to just do a clean
Speaker 1: two hundred and fifty billion dollar increase for this three
Speaker 1: fifty billion dollar program. The Democrats objected, added their own proposals.
Speaker 1: McConnell objected, So now we're sort of in this usual
Speaker 1: state of Washington of attacking each other, um for blocking things.
Speaker 1: And the next you know, it looks like this is
Speaker 1: probably gonna continue for several days over Easter, and you know,
Speaker 1: maybe next week they started negotiating something more serious. So
Speaker 1: politics aside, Steve, So, who's right, I mean, are the
Speaker 1: Democrats right to include more aid for state and local governments.
Speaker 1: I've heard from Governor Cuomo and others about the system
Speaker 1: states are going to need, or you know, the Republicans right,
Speaker 1: you know, saying we've got to get you know, money
Speaker 1: to individual work or those small businesses. Who's right about
Speaker 1: this in terms of, you know, what needs to be
Speaker 1: done first and foremost, Well, the point the Republicans are
Speaker 1: making is that this small business program is already up
Speaker 1: and running and it's going to run out of money.
Speaker 1: You know, this this program is supposed to last until
Speaker 1: Junior last, the last time these loans can go out.
Speaker 1: But just since they opened the program on Friday last Friday,
Speaker 1: approximately a hundred billion dollars has already been allocated. Now
Speaker 1: that doesn't mean it's going to get to three billion
Speaker 1: by like Monday or Tuesday. So there is a little
Speaker 1: bit of leeway here. And the Democrats are saying, uh,
Speaker 1: look this program has we like it, but it's got
Speaker 1: some problems. There are lots of small businesses, uh, that
Speaker 1: are having a hard time getting their bank or any
Speaker 1: bank to take their application, particularly if there are a
Speaker 1: smaller small business who does who don't already have sort
Speaker 1: of relationship with that inc. And so they want to
Speaker 1: see the program expanded, make the application requirements a little
Speaker 1: bit smoother and more streamlined, and say, hey, let's sit
Speaker 1: down and talk about this. And McConnell's like, look, let's
Speaker 1: just increase the money now. We can. We can deal
Speaker 1: with some of this stuff later. But you know, that's
Speaker 1: not how Congress tends to work. It's it's it's very
Speaker 1: hard for a divided Congress to parties in a situation
Speaker 1: where every single senator in every single House member needs
Speaker 1: to give consent to do anything in this age of
Speaker 1: coronavirus where they're not in session to agree on a
Speaker 1: quarter trillion dollars and you know, overnight. So this is
Speaker 1: not unusual that it's going to take sort of several
Speaker 1: rounds of parts and attacks on each other and saying, hey,
Speaker 1: you aren't helping out the workers, or your focus too
Speaker 1: much on the bigger businesses and that sort of thing.
Speaker 1: So you know, something's gonna get done. It's just a
Speaker 1: question of when, whether it's gonna be early next week,
Speaker 1: late next week, or we're gonna wait until they come back.
Speaker 1: The schedule to come back the week of April twenties.
Speaker 1: It's possible they won't even come back that week because
Speaker 1: people are worried about the virus. Yeah, it's interesting too,
Speaker 1: I mean, this is coming or we're having this conversation
Speaker 1: as a couple of red heads acrossing the Bloomberg about
Speaker 1: lockdowns and not in the United States, Spanish parliament backing
Speaker 1: and extending locked backing, extending the lockdown excuse me to April,
Speaker 1: and at the same time, the South African president extending
Speaker 1: the nationwide lockdown by two weeks. So governments are also
Speaker 1: wrestling with this notion of what do we do in
Speaker 1: the meantime? How long are we essentially going to need
Speaker 1: to be assisting these companies and the economies, the economy
Speaker 1: of the country. And Steve Dennis, I do also wonder
Speaker 1: is Steve Manut in the Treasury sectary He's continuing to
Speaker 1: sort of be the broker in all of this for
Speaker 1: the administration. And and Pelosi did get this done last time? Yeah,
Speaker 1: I think, Um, the one relationship in town that seems
Speaker 1: to be working right now is Stephen Manuchin with Chuck Schumer,
Speaker 1: the Senate Democratic Leader, and Pelosi. That that trio seems
Speaker 1: to be able to get things done lately. So you know,
Speaker 1: if Manuchan is on the phone with those two and
Speaker 1: and actually negotiating instead of sort of saying, here's our request,
Speaker 1: take it or leave it, that's when you know things
Speaker 1: are getting closer to an actual deal. Um. And you know,
Speaker 1: while there has been some good news on the virus lately,
Speaker 1: with the curve starting to flatten and social distancing is helping.
Speaker 1: I mean that's sort of like another message to people
Speaker 1: listening this is it's actually helping when you socially distance yourself.
Speaker 1: We're starting to see some evidence of that. The the
Speaker 1: the economic impact is the last a lot longer. We're
Speaker 1: already up to seventeen million, and there's lots of reports,
Speaker 1: including on Bloomberg reporting that lots of people still can't
Speaker 1: even file in a lot of these states. Their systems
Speaker 1: are so outdated, antiquated. The real number is probably higher.
Speaker 1: And you know, all these programs they just passed with
Speaker 1: a two point three trillion dollar bill, two point two
Speaker 1: trillion dollars, they're probably all going to be a lot
Speaker 1: more expensive by the time they're all said and done
Speaker 1: in the next couple of months. Alright, Steve Dennis, thank
Speaker 1: you so much, senate reporter at Bloomberg News. Joining us
Speaker 1: on the phone from Maryland. You're listening to Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: We've got Dr Chris Byra with us. He's professor of
Speaker 1: epidem epidemiology, Epidemiology, thank you very much, and public health
Speaker 1: and human Rights at Johns Hopkins Bloomberg School of Public Health,
Speaker 1: and of course we know the Bloomberg School of Public
Speaker 1: Health supported by Michael R. Bloomberg, founder Mberg LP and
Speaker 1: Bloomberg Philanthropies. Dr Byrot, nice to have you here with us.
Speaker 1: I just want to go we want to get into
Speaker 1: because you are specifically looking at prison populations. But I
Speaker 1: do want to ask you about one of the headlines
Speaker 1: that we got from Dr Fauci today. Um, the kind
Speaker 1: of go to person along with you folks at John's
Speaker 1: Hopkins really think understanding what's going on with the virus.
Speaker 1: But he's saying, you know, he really slashed those death projections,
Speaker 1: saying that maybe about sixty people may now die, almost
Speaker 1: half as many that the White House had talked about
Speaker 1: about a week ago, based on models and projections. How
Speaker 1: should we, as those of us who are still at
Speaker 1: home still social distancings, social distancing, how should we read
Speaker 1: headlines like that? Well, I think everybody ought to really
Speaker 1: feel a sense of pride and of our coming together
Speaker 1: as a country because the reason that the projections are
Speaker 1: being the numbers are being decreased is because of the
Speaker 1: really remarkable success of social distancing, of people taking it seriously,
Speaker 1: staying at home. Uh. And I think also we have
Speaker 1: to say of particularly the leadership, governors and number of
Speaker 1: states who move quickly and impose social distancing early. Um,
Speaker 1: we're still of course very concerned. Uh and uh, you know,
Speaker 1: even the downgraded numbers aren't enormous numbers loss of life
Speaker 1: for this country and the world. But really this is
Speaker 1: about the the tremendous response to social distancing on the
Speaker 1: part of the American people. And that gives us a
Speaker 1: nice segue right into you know, where you are spending
Speaker 1: a lot of your time dr Byroer and that is
Speaker 1: the fact that this is a human rights issue and
Speaker 1: in many ways, and part of the reason that the
Speaker 1: social distancing works is people are essentially able to socially
Speaker 1: distance themselves. You know, Carol and I and you and
Speaker 1: and many other people who are fortunate to be able
Speaker 1: to work from home or you know, sort of live
Speaker 1: our lives in a certain way. That one thing. But
Speaker 1: this virus is exposing just dramatic gaps and inequalities. And
Speaker 1: certainly nowhere is that more true than than in the
Speaker 1: nation's prisons. Tell us about what you're finding. Well, first
Speaker 1: of all, keep in mind that no country incarcerates more
Speaker 1: of its citizens than the United States. So this is
Speaker 1: a particular vulnerability for our country. It's about two point
Speaker 1: three million people currently in jails and prisons, and just
Speaker 1: to understand that that's close to a quarter. It's about
Speaker 1: of all people in the world in prisons and jails,
Speaker 1: so we're an outlier. We also have between thirty six
Speaker 1: and forty thousand people in immigration detention on any given day.
Speaker 1: It's a much smaller number, but the conditions they are
Speaker 1: also very worrisome. Uh So, of course, the things that
Speaker 1: we've all been asked to do to socially distanced, to
Speaker 1: keep six feet apart, to practice good hygiene, and the
Speaker 1: hand washing, all of those elements are virtually impossible for
Speaker 1: people in crowded to ten and facilities. And by people
Speaker 1: in those facilities, I don't just mean the detainees, I
Speaker 1: also mean the staff, guards, people who are in and
Speaker 1: out of those facilities. That puts everybody at risk. And
Speaker 1: it also because most of these facilities have three eight
Speaker 1: hour ships today, means that people are constantly in and
Speaker 1: out of these facilities, all the workers and staff, and
Speaker 1: exposing their families. Uh So, this is this is a
Speaker 1: very real concern, and we had been concerned about this
Speaker 1: for a while because I've done work in the past
Speaker 1: on other prison related outbreaks of other infectious diseases like
Speaker 1: tuberculosis and m d RTV, MERSA, not the cylinder's staff
Speaker 1: arius hep C, all of which have been increased in
Speaker 1: transmission and risk in in prisons. But unfortunately, what we've
Speaker 1: seen is that the responses have been too slow and
Speaker 1: too late, and now we already have outbreaks underway in
Speaker 1: prisons and jails. The most prominent one is Rikor Island
Speaker 1: in New York, of course very large outbreak, but there's
Speaker 1: one underway in Cook County in Chicago. There's a number
Speaker 1: underway in immigration detention facilities in New Jersey. Those hold
Speaker 1: many people arrested in New York, UH and UH, and
Speaker 1: we are really very concerned about those issues. UM. It's
Speaker 1: very clear that in the first outbreaks, UH, most of
Speaker 1: the people affected have been staffed. This was true in Wuhan,
Speaker 1: and it's true in Rikers, but that changes over time.
Speaker 1: There's some other things we have to recognize as well.
Speaker 1: I'm sure both of you have seen that there's emerging
Speaker 1: evidence about how much more COVID nineteen disease and death
Speaker 1: there appears to be in African Americans. And Dr Chris Biro,
Speaker 1: who has been kind enough too and patient enough to
Speaker 1: sit with us, Professor of Epidemiology, and Public Health and
Speaker 1: Human Rights at John's Hopkins Bloomberg School of Public Health. Uh,
Speaker 1: so nice of you to stay with us, Dr vir
Speaker 1: We were just going to start talking with you about
Speaker 1: how disproportionately minorities have been impacted by this virus. UM
Speaker 1: doesn't come as a surprise to me, because I feel
Speaker 1: like often minorities, when it comes to some kinds of
Speaker 1: health impact, they often get hit hardest, get hit the hardest. Um.
Speaker 1: What are your thoughts about that? How do we make
Speaker 1: a difference on the other side of this, Well, I
Speaker 1: think I think it isn't a surprise, unfortunately that we're
Speaker 1: seeing this. I think we are all surprised by the
Speaker 1: magnitude of the difference. Doesn't appear to be a modest difference.
Speaker 1: It appears to be a significantly higher rates of both
Speaker 1: severe disease and death from COVID nineteen, particularly among African Americans,
Speaker 1: but also Latinos. And this is emerging as an issue
Speaker 1: for some Native American groups, particularly the Navajos. So we're
Speaker 1: we're very concerned. I think there's several factors we have
Speaker 1: to pay attention to. So one of the very first
Speaker 1: is a report actually out of a job's position hum
Speaker 1: which Charles blown the Times noted, which is that one
Speaker 1: in five African Americans has a job for which you
Speaker 1: can telecommute and work from home. So four out of
Speaker 1: five are lower wage workers out there on the front lines.
Speaker 1: So they're occupational situation in this country is an important exposure.
Speaker 1: It's only one in six Latinos who can stay at home.
Speaker 1: The second is of course that that means many of
Speaker 1: these are workers who also are using public transportation, which
Speaker 1: is emerging of course as a risk. Then we have
Speaker 1: the issue of pre existing conditions. So African Americans in particular,
Speaker 1: we've long known have higher rates of some of the
Speaker 1: diseases that predispose you to do badly with COVID if
Speaker 1: you do get exposed, and those include things like hypertension,
Speaker 1: diabetes um UH, pre existing history of cancer UH and
Speaker 1: also heart disease, which are all elevated in African Americans.
Speaker 1: I think the other reality is something that's more on
Speaker 1: us as a society, which is of course that they
Speaker 1: have had lower access to healthcare and lower rates of
Speaker 1: health insurance. And if you look across particularly the swath
Speaker 1: of the Southeast, which has the largest African American populations,
Speaker 1: we have a lot of red state governors who did
Speaker 1: not want to extend the Affordable Care Act with Medicaid UH,
Speaker 1: and did not extend the Health Insurance Ranchise right now,
Speaker 1: as you may know, that administration did not open another
Speaker 1: round of a c A sign ups uh and UH.
Speaker 1: And so in the midst of this crisis, we're still
Speaker 1: limiting people's access to health and shure UH and that
Speaker 1: disproportionately affects low income people, and low income people in
Speaker 1: the US is always confounded by race and ethnicity. So
Speaker 1: I think all of those factors, the their employment and
Speaker 1: use of public transportation, the pre existing conditions, the lower
Speaker 1: access to healthcare, the disproportionate lack of access to the
Speaker 1: Affordable Care Act in the South and Southeast, all these
Speaker 1: factors are coming together, unfortunately, and what what we call
Speaker 1: a syndemic. It's it's an interaction of multiple factors. Well,
Speaker 1: let's hope that folks take notice. UH, and there is
Speaker 1: something that we address on the other side of this,
Speaker 1: because we certainly are having the conversation, but it would
Speaker 1: be great to see some action as well on the
Speaker 1: other side. UM, thank you, thank you so much for
Speaker 1: your time. Dr Buyer, and we really appreciate you awaiting
Speaker 1: lest we took that press conference. Dr Chris ban Byer
Speaker 1: He's professor of epidemiology and public Health and Human Rights
Speaker 1: at Johns Hopkins Bloomberg School of Public Health and of
Speaker 1: course the Bloomberg School of Public Health, supported by Michael R. Bloomberg, Founder,
Speaker 1: Bloomberg LP, and Bloomberg Philanthropies. You're listening to Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: We do want to get to the cover story of
Speaker 1: the magazine about how everyone is talking about it more
Speaker 1: notably seems to be using Zoom. Let's get right to it.
Speaker 1: It is, as we mentioned the cover story story. Drake
Speaker 1: Bennett is projects an investigations reporter, on the phone in
Speaker 1: New York along with Bloomberg Business Week editor Joe Webber.
Speaker 1: He's on the phone in Brooklyn. So Joel, Uh, this
Speaker 1: is a story. I'm so glad you guys are doing.
Speaker 1: It's a story and it's the company everybody's talking about. Yeah,
Speaker 1: this is one that the moment that we all uh
Speaker 1: you know, went on lock like wait a second, you
Speaker 1: guys see what's been going on with Zoom share price
Speaker 1: and that was actually even before the lockdown, and this
Speaker 1: was a company that you know has obviously got a
Speaker 1: product video conferencing, that is really really important right now.
Speaker 1: And I think with the beauty of the story that
Speaker 1: Drake and who co authored the story with Nico Grant,
Speaker 1: the thing that they realized was like, look, this business
Speaker 1: model was really great pre coronavirus, and now it's just
Speaker 1: been consumed by everybody using this product. And that's why
Speaker 1: we you know, I almost liken it too if this
Speaker 1: accidental social networks like and they've been growing now almost
Speaker 1: at a speed at which the pandemic has spread, and
Speaker 1: with that has come a bunch of challenges. Um, Drake,
Speaker 1: what kind of challenges stick out to you? Because the
Speaker 1: zoom the zoom lash is real. Yeah, I mean what's um,
Speaker 1: what's a little ironic is that Eric Yuan, the founder
Speaker 1: of them, was someone who was really, um, kind of
Speaker 1: paranoid about making sure that he had built in enough
Speaker 1: capacity for his network to be able to absorb kind
Speaker 1: of unheard of levels of traffic. So you always have
Speaker 1: this policy that you always want to have like twice
Speaker 1: the server capacity of their sort of highest peak use um.
Speaker 1: And so in that way, they've done a pretty good
Speaker 1: job of like managing just the numbers. But the thing
Speaker 1: that he was not prepared for in the company was
Speaker 1: not prepared for. It was just um the privacy and
Speaker 1: security issues that would emerge once you suddenly had the
Speaker 1: entire world using this and using it in a way
Speaker 1: that they had not designed it for. You know, people
Speaker 1: are putting their entire socialized as you put it on
Speaker 1: this platform which was designed for you know, like work
Speaker 1: video conferencing. And I'm just I'm fascinated by the by
Speaker 1: the Zoom lash here, uh Drake, I mean New York City,
Speaker 1: it's just been it's just been brutal, uh in terms
Speaker 1: of the response, and you know, even just talking to
Speaker 1: people around the neighborhood, you know, folks like, yeah, I
Speaker 1: want to Yeah, we should do this, But how do
Speaker 1: they sort of get people back on side, especially sort
Speaker 1: of more regulated entities. Yeah, I mean I think that,
Speaker 1: you know, just in terms of the I think it's
Speaker 1: helpful to kind of think of the problems in kind
Speaker 1: of three categories. You know. One is these issues about
Speaker 1: how what kind of data Zoom gets about you and
Speaker 1: how they use it. Another category is um security vulnerabilities
Speaker 1: that that arise um uh, where you know, Zoom can
Speaker 1: be used by hackers to get malware under your computer,
Speaker 1: or hackers could use it to take over your webcam
Speaker 1: and spy on you. Um And and the third one
Speaker 1: is is um is these incidents where people are just
Speaker 1: sort of you know, whether it's sort of board kids
Speaker 1: who are home from school or kind of white supremacist
Speaker 1: trolls are using it to kind of invade people's meetings
Speaker 1: and disrupt them in kind of horrifying ways. And so Zoom,
Speaker 1: to its credit, has been very quick to respond to
Speaker 1: almost all of the concerns that have been raised. I mean,
Speaker 1: they've they've patched these vulnerabilities, they've changed their privacy policy.
Speaker 1: You know, they've hired all these consultants. They're getting you know,
Speaker 1: sort of white hat hackers to come to penetration tests
Speaker 1: on their system. So they're trying very hard, and I
Speaker 1: think it's a good, very good faith effort to try
Speaker 1: to deal with this stuff. Um And you know, as
Speaker 1: Joel pointed out, a lot of this is just the
Speaker 1: fact that they've grown at this this kind of time
Speaker 1: scale that no other social network has had to contend with.
Speaker 1: I mean, and to get to get those numbers out there, Drake,
Speaker 1: what it was like ten million users daily, US million
Speaker 1: users in December and then two million users, probably more
Speaker 1: than that now, but when they announced it if from
Speaker 1: ten to two million, which is just you know, it's
Speaker 1: like the crazy orders of magnitude growth. And when you
Speaker 1: really think about that, it's like it's basically critical infrastructure.
Speaker 1: That's what we call it in the story, like it
Speaker 1: is the thing that you know, you're talking to your
Speaker 1: colleagues with your my kids classroom is using it for
Speaker 1: their morning check ins, it's and people are going on
Speaker 1: dates through this, We're having constant hours. It's it's just
Speaker 1: amazing how it's become sort of the software of the moment.
Speaker 1: But you know, Drake, I thought, you know, another thing
Speaker 1: that that you had been able to hit on here
Speaker 1: was that this comes from the initial idea. It was
Speaker 1: a really simple interface and the simplicity of that is
Speaker 1: actually what allowed it to meet this moment. Well. And listen,
Speaker 1: everybody needs to go to the magazine, go online to
Speaker 1: Bloomberg dot com and read the entire story. And we're
Speaker 1: gonna talk with the CEO and founder of Zoom a
Speaker 1: little bit later on. So for thanks, to Drake and
Speaker 1: to Joel. You're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. One of the
Speaker 1: big stories though today we're certainly some action by the
Speaker 1: Federal Reserve and actually hearing from fedhare J Powell uh
Speaker 1: in a webcast hosted by the Brookings Institution. Let's start
Speaker 1: right there, a little snippet of what he had to
Speaker 1: say at the FED. We're doing all we can to
Speaker 1: help shephard the economy through this difficult time. When the
Speaker 1: spread of the virus is under control, businesses will reopen
Speaker 1: and people will come back to work. There is every
Speaker 1: reason to believe that the economic rebound when it comes
Speaker 1: can be robust. All right, So let's break down with
Speaker 1: our economics team. We've got them gathered remotely as we do,
Speaker 1: as everyone does these days. Kathleen Hayes with US Global
Speaker 1: Economics and Policy Editor from Bloomberg, on the phone from Pennsylvania.
Speaker 1: Carl Wick, Donna, chief economys for Bloomberg at Economics. He's
Speaker 1: on the phone from New Jersey. Kathleen, I want to
Speaker 1: start with you hadn't heard from j. Pale since he
Speaker 1: popped up on the today show. A couple of weeks ago,
Speaker 1: we talked to you about that, uh several times. What
Speaker 1: did you hear from j pal today? That was most important?
Speaker 1: Reassurance the set is doing what it can. The FED
Speaker 1: has done more for the feed. It's not necessarily about spending,
Speaker 1: it's about lending. I think he's trying to, you know,
Speaker 1: quietly address his concern that maybe the FED could pick
Speaker 1: winners and losers with some of these new programs has
Speaker 1: put into place, and reassurance that the said knows how
Speaker 1: bad the situation is for the economy right now, how
Speaker 1: there's going to be no not even the thought of
Speaker 1: moving the key rate above zero until it's clear that
Speaker 1: the economy is launched into recovery. And finally that he
Speaker 1: thinks there's he thinks there's a chance, if things go well,
Speaker 1: that we will see a rebound in the second half
Speaker 1: of the year. I think that's the kind of reassuring
Speaker 1: fireside chat that people needed to hear. Right as we
Speaker 1: at the top of our broadcast, you know, the FED
Speaker 1: to the rescue again. What we heard, though the exact
Speaker 1: words from FED Chief j Pale was an economic rebound
Speaker 1: that will be robust. Carl Ricka Donna, do you agree
Speaker 1: with him? Well, Fed to the rescue, here, there and everywhere,
Speaker 1: We should say, Carol, because it's really unprecedented market action. Uh,
Speaker 1: not just in treasuries and mortgages, but really across the spectrum.
Speaker 1: The FED is UH putting its thumb on the scale
Speaker 1: and a whole flew of core capital markets. I think
Speaker 1: that we could see decent economic growth in the back
Speaker 1: half of the year, but we will still be in
Speaker 1: a recovery phase because we're going to see a very
Speaker 1: sharp decline in economic activity in the current quarter, a
Speaker 1: double digit decline, probably the worst going back over the
Speaker 1: entire history to World War two. And so the deeper
Speaker 1: we go in Q two, the easier it is to
Speaker 1: get some not so bad numbers in UH in the
Speaker 1: third quarter and the fourth quarter, but that still will
Speaker 1: leave us in deeply negative territory for the year as
Speaker 1: a whole. And so I don't know, Kathleen, like, what
Speaker 1: do we need to hear next from from the FED?
Speaker 1: I mean, we you and others have been hearing pretty
Speaker 1: robustly from a lot of FED speakers over the last
Speaker 1: a couple weeks. What do we need to hear next?
Speaker 1: What else? Can they tell us to continue this reassurance? Well,
Speaker 1: at this point was all the lending programs they have launched.
Speaker 1: Presumably what the good news would be for us to
Speaker 1: hear is them acknowledging them saying, look, these are working,
Speaker 1: and I think, um, we've already seen evidence that they
Speaker 1: have worked. I mean, they actually were able to say
Speaker 1: they're going to scale back the quantitative easy and the
Speaker 1: bond purchases by twenty billion in the period they're they're
Speaker 1: referring to UM because and in presumbly that's because they
Speaker 1: accomplished one thing they were really worried about in mid
Speaker 1: February going into March, that a free market it was
Speaker 1: going crazy. You see more stability, less volatility, So that
Speaker 1: just that action is reassurance that the FED things that's
Speaker 1: going well. It's clear that they're shifting their focus though,
Speaker 1: going to buy UH corporate bonds below investment grade, some
Speaker 1: of them three levels into junk tripics. Quote from Mark
Speaker 1: Futner in one of our Bloomberg stories saying, it's not
Speaker 1: that they're buying UH, they're buying fallen angels, you know,
Speaker 1: companies brought down to junk. Statisfy, what's been going on
Speaker 1: they're not dastrically devils. Right, that's the kind of thing
Speaker 1: the FED has to tell us. All right, So while
Speaker 1: the FED is out there, you know, action after action
Speaker 1: fed to the rescue. UM, we know the government Congress
Speaker 1: has past that you know, massive two trillion dollar program
Speaker 1: that included about half a trillion dollars for hard hit industries.
Speaker 1: As for the airlines, some headlines just crossing the Bloomberg
Speaker 1: terminal UH in a phone call described UH, I guess
Speaker 1: according or folks familiar talking about a phone call that
Speaker 1: the airlines I think had with the government. US airlines
Speaker 1: seeking federal aid told it will be another week. Some
Speaker 1: carriers told of the delay in that call with the Treasury.
Speaker 1: And what specifically is at issue is the Treasury Department
Speaker 1: deciding how to distribute about twenty nine million dollars. So again,
Speaker 1: this was a call that it looks like some airlines
Speaker 1: had with the Treasury Department, described to us by people
Speaker 1: familiar with that phone call. So you know, I understand
Speaker 1: the government trying to figure out how to um, you know,
Speaker 1: uh distribute it ultimately. So Carl, I want to go
Speaker 1: back to you because you laid out the scenario of
Speaker 1: what you're expecting in terms of growth or lack thereof
Speaker 1: UM going to be some staggering numbers. But do you
Speaker 1: have some confidence because of some of the massive aid
Speaker 1: packages coming from the government and probably more to come,
Speaker 1: and the FED out there doing everything and anything that
Speaker 1: it can that ultimately, when we do get a recovery,
Speaker 1: it will be a pretty dynamic one. I I still
Speaker 1: retain some reserve about that being a dynamic and robust recovery.
Speaker 1: I think that there's a real risk that we limp
Speaker 1: out of this very sharp contraction if we're not successful
Speaker 1: in containment measures. First of all, if we, you know,
Speaker 1: undo the lockdown too soon and we see another spike
Speaker 1: and we're talking about climbing up the curve again and
Speaker 1: hospitals becoming overwhelmed, that is very much within the realm
Speaker 1: of possibility. If the lockdown does not stamp out UH,
Speaker 1: you know, the risk of virus UH spreading again, So
Speaker 1: that that's something that could slowest down on the recovery. Also,
Speaker 1: it's a massive stimulus UH package, but it's right sized
Speaker 1: if it's delivered swiftly. If we're not delivering it swiftly,
Speaker 1: then the problem continues to grow and the price take
Speaker 1: continues to increase, and so things like unemployment benefits, we're
Speaker 1: working through those. The checks are arriving, the rebate checks
Speaker 1: should be arriving soon. But the longer folks have to
Speaker 1: wait for those funds, the more the economic pain intensifies.
Speaker 1: And the best example of that, h what was what
Speaker 1: you just highlighted with the airlines clamoring for the money
Speaker 1: and having to wait for it, but also with small businesses,
Speaker 1: the small business loan to grant program is stumbling out
Speaker 1: of the block. There's tremendous uncertainty. Funds are not being distributed,
Speaker 1: they don't have enough money in the system. Congress is
Speaker 1: bungling the passage of augmenting those funds, and so small
Speaker 1: businesses are sitting around waiting for the checks. They can
Speaker 1: only wait so long before they finally have to sow
Speaker 1: with their hands in the air and uh and give up.
Speaker 1: And you have the airline sector, Jason, as we know
Speaker 1: that they're looking at towards summer and they're anticipating cutting,
Speaker 1: you know, those summer flights up. They're expecting consumers are
Speaker 1: going to be slow to come back, absolutely, and we're
Speaker 1: seeing that, you know, in the traffic data already all right,
Speaker 1: really good stuff. Thank you so much to Kathleen Hayes,
Speaker 1: Global Economics and Pulsey editor for Bloomberg Joinis on the
Speaker 1: phone from Pennsylvania, and Carl ra Kadona, chios economists for
Speaker 1: Bloomberg Economics. He joined us on the phone from New Jersey.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. Well, and as the market
Speaker 1: becomes more enthusiastic and we start to think about coming back,
Speaker 1: part of what is going to be at the heart
Speaker 1: of this is testing and treatment therapeutic vaccines, the medical side.
Speaker 1: Let's understand that piece of it. For that, we turned
Speaker 1: to Brian Scorney, senior biotech and pharma analysts for Bear Johnnys,
Speaker 1: on the phone from New York City. So, Brian, you
Speaker 1: look at these pharma companies, the biotech companies, they are
Speaker 1: all scrambling, to say the least, all efforts on the
Speaker 1: medical side of this. What do we need to know?
Speaker 1: What's the latest? Yeah, so certainly I think it's I
Speaker 1: think it's all hands on deck. Um, you can't even
Speaker 1: count this at this point. How many different companies have
Speaker 1: announced press releases with throw programs to develop something UM
Speaker 1: to handle this UH epidemic that we're seeing. There's a
Speaker 1: number of things already in development, and there's multiple UM
Speaker 1: ways that people are thinking about targeting the virus. I
Speaker 1: think the most promising UM in in the near term
Speaker 1: for having effect is trying to UH just some of
Speaker 1: the downstream effects of the disease. So you know, I
Speaker 1: look at companies like Rossian Regenera on UM with their
Speaker 1: their drugstorio aisle six. UM really stops one of the biggest,
Speaker 1: UM most fatal manifestations of the disease, which is this
Speaker 1: over response of the immune system. I think those are
Speaker 1: are very promising. So a number of companies looking to
Speaker 1: target the virus it self stop stop the viral replication. UM.
Speaker 1: There's a number of those in clinical development. You know.
Speaker 1: I think those are a little more ambiguous because UM,
Speaker 1: you know, there's a new virus and we really need
Speaker 1: to kind of understand what it is and where it's
Speaker 1: replicating to design something specific for right Well, that's what
Speaker 1: I want to ask you, because if we designed specifically
Speaker 1: a vaccine for COVID nineteen, if you know it mutates,
Speaker 1: does that mean we still don't have a vaccine for
Speaker 1: you know, the mutation. I mean, so or if a
Speaker 1: lot of people have ultimately had COVID nineteen, we don't
Speaker 1: know because we haven't done enough testing Brian, that do
Speaker 1: we all have immunity and so having a vaccine isn't
Speaker 1: as important as as it as it once was. Yeah,
Speaker 1: so I think, I mean, I think that's a great question.
Speaker 1: And you know, unfortunately, I think at this point it's
Speaker 1: really too early in the disease to really know, Um,
Speaker 1: what's gonna happen you ask, you know what, We're gonna
Speaker 1: start looking at people to see if they're immune, if
Speaker 1: they've had um antibody responding to this and and their
Speaker 1: own immune system can recognize it subsequently, Um, you know,
Speaker 1: we're still in the very early stages. It doesn't seem
Speaker 1: like people who have immediately been infected are getting reinfected, uh,
Speaker 1: in any large extent. And and just based on kind
Speaker 1: of classical immunology, we would expect that you would be
Speaker 1: protected to some extent for for some minimum short period
Speaker 1: of time. But is it something like chicken pox where
Speaker 1: essentially one exposure gets you lifelong immunity, or is it
Speaker 1: influenza where um, you know, see the virus changing and
Speaker 1: the immune system really can't handle, um, the changes in
Speaker 1: the virus as it as it goes season after season.
Speaker 1: We really don't know. I mean, it's it's a much
Speaker 1: different virus than either of those. So there's reasons to believe, uh,
Speaker 1: it can find wind up balling somewhere in between. I
Speaker 1: think it's very early stage. But that and then the
Speaker 1: vaccine is you know, it's sort of the same thing.
Speaker 1: Is it's going to be something where we can develop
Speaker 1: a vaccine and they'll be something that gets adjusted every year,
Speaker 1: or is one vaccination going to give lifelong protection? I
Speaker 1: think it's just way too early to really to really
Speaker 1: know the answer to that yet. And Brian help us understand,
Speaker 1: you know, for those of us trying to get our
Speaker 1: heads around this more effort on therapeutics, vaccines, testing, like,
Speaker 1: where are you seeing the most action and where are
Speaker 1: you seeing the most promise even from an investor's perspective,
Speaker 1: And I'm going to ask you where do you think
Speaker 1: with what do you know just attack on to that?
Speaker 1: Where should the efforts be placed at this point? Is
Speaker 1: it a vaccine or is it dealing with those who
Speaker 1: come down with with the ailment. Well, I think the
Speaker 1: most near term thing that we're gonna be able to
Speaker 1: handle is people who come down with the actual ailment, right,
Speaker 1: And when you think of what happens to these patients,
Speaker 1: you know, they get pneumonia, they have immunological responses um
Speaker 1: that you know send them in very frequent cases into
Speaker 1: fatal conditions. There's ways to intervene with the downstream effects
Speaker 1: of what the virus are causing, and we know a
Speaker 1: lot of those, and like I said, Rocha's actemra is
Speaker 1: one way. Uh, people are exploring it, right and then
Speaker 1: you know, the next stage is to actually target the
Speaker 1: virus itself. I think we're a little too early for that,
Speaker 1: but that'll be something um that that that will be
Speaker 1: able to move relatively rapid UM On a vaccine I
Speaker 1: think is unfortunately a little bit more of a long
Speaker 1: termission again because you think about what what you need
Speaker 1: to do for a vaccine, for a therapeutic, you're willing
Speaker 1: to take some risk because the patient actually has the
Speaker 1: disease itself. UM. With a vaccine, I mean you're talking
Speaker 1: about to really maximize your your ficacy here. You want
Speaker 1: to inoculate virtually the whole world, right, So the safety
Speaker 1: profile has to be really, really very clean. So you
Speaker 1: really don't want to move too fast with a vaccine.
Speaker 1: You do very fast with a therapeutic. And I'll just
Speaker 1: remind everybody Jason some reporting earlier by Bloomberg News just
Speaker 1: this week, you know that a potential vaccine is still
Speaker 1: more than a year away. So despite you know, some
Speaker 1: of what we hear in the optimism, you know, creating
Speaker 1: a vaccine is not something that we can expect anytime soon. Yeah. No,
Speaker 1: it seems like testing and therapeutics are the things that
Speaker 1: are going to be on the near term horizon. Great context.
Speaker 1: We really appreciate it. Brian Scorney, senior biotech and pharma
Speaker 1: analyst Forbeard. He joined us on the phone in New
Speaker 1: York Journal. Now, but you let me drive. Oh no, no, no, no,
Speaker 1: drive home, honey, please, I'll do the right drivel ext me.
Speaker 1: I want to drive all Just drive, baby. It's good
Speaker 1: question trying. This is the drive to the globe. Thanks,
Speaker 1: we'll drive us to dawn. On Bluebird Radio, it is
Speaker 1: time for the drive to the clothes. We're just mints
Speaker 1: away from wrapping up us trading in this holiday shortened week.
Speaker 1: Back with us as Wayne Wicker, chief investment Officer Advantage
Speaker 1: Point Investment Advisors, twenty nine billion in assets under management.
Speaker 1: Wayne joining us on the phone from Washington, d C. Man,
Speaker 1: the market's depending on the day, depending on the week,
Speaker 1: We're either up a lot or down a lot. Wayne,
Speaker 1: how do you approach this type of market environment? Boy, Carl,
Speaker 1: This is as volatile period of time I've had in
Speaker 1: my thirty six year career. And uh, I think that
Speaker 1: it's reflective of the fact that because of the health
Speaker 1: crisis that's driven this problem, we just don't have a
Speaker 1: lot of information, uh, from day to day. Uh. And
Speaker 1: so you know, I think the best approach to take
Speaker 1: in a period like this is to have a very
Speaker 1: long term orientation and anchor to uh a horizon that's
Speaker 1: probably two or three years out, because you just can't
Speaker 1: manage this day by day the way the volatility is today. Yeah,
Speaker 1: it's interesting. Uh. My favorite code of the week so far,
Speaker 1: maybe you're going to win the rodeo here, Wayne was
Speaker 1: from a guesta around this time yesterday who said, treat
Speaker 1: your four oh one k like you treat your face.
Speaker 1: Don't touch it, just like leave it alone and just
Speaker 1: kind of ride this out, and and I do wonder
Speaker 1: whether enough people are going to follow that advice. And
Speaker 1: I guess I would ask you, is that the right
Speaker 1: advice at this point? Well, I think that folks that
Speaker 1: have a four O one K plan, which is all
Speaker 1: of us, so hopefully UM, are in the best position
Speaker 1: to write out the volatility that we have here. And
Speaker 1: the reason I say that is because of the systematic
Speaker 1: way that we continue to deposit money every couple of weeks.
Speaker 1: So your average in on this volatility over a long
Speaker 1: period of time, because nobody's gonna know where the bottom
Speaker 1: is or if it's bottom is already in. But if
Speaker 1: you continue to participate a week by week over a
Speaker 1: two or three or four year period of time, I
Speaker 1: think you'll be well rewarded. I gotta say there's part
Speaker 1: of me. I was reading something in about the wealthy
Speaker 1: you are. Is it selling off assets or or real estate?
Speaker 1: I think it was on the Bloomberg and then using
Speaker 1: that to buy stocks and buy into the market right
Speaker 1: now because you know, names have taken such a beating,
Speaker 1: and not everybody has that luxury. Most people do not UM.
Speaker 1: But I do wonder way and if we do look
Speaker 1: back at this time and say, boy, it was a great,
Speaker 1: you know, buying opportunity. I feel like any time things
Speaker 1: are beating up disproportionately to what ultimately will be the
Speaker 1: longer term impact, it is a great buying opportunity. Yeah, Carol,
Speaker 1: I think that that will be true if you have
Speaker 1: the look back probably two or three years from now,
Speaker 1: two or two years. Wow. Well the reason I say
Speaker 1: that is because over the next few months, uh, you know,
Speaker 1: we could experience as quickly as we've come up, and
Speaker 1: you mentioned it earlier, it's you know, we've had gain
Speaker 1: in the last twelve trading days. Um, we can get
Speaker 1: other news that the market could trade on that can
Speaker 1: take us back down by So I think in the
Speaker 1: short run, uh, you know, it's going to be a
Speaker 1: little bit more challenging for individuals to identify names, but clearly,
Speaker 1: over more than a twelve most time horizon, I think
Speaker 1: you're right, this is going to be a period of
Speaker 1: time where, at a minimum, you've been able to upgrade
Speaker 1: your portfolio in terms of the quality of the companies
Speaker 1: that you want at prices that are more attractive than
Speaker 1: they were just sixty days ago. So, Wayne, having as
Speaker 1: you said, uh, seen some volatility over your time, seen
Speaker 1: some crises, I do wonder, and this has been top
Speaker 1: of mind for Carolin myself, I think, especially today having
Speaker 1: heard from J. Powell earlier, having seen again the power
Speaker 1: of the Treasury Secretary in both sort of coming up
Speaker 1: with a lot of the fiscal side solutions and then
Speaker 1: executing them. What do you make of the fiscal and
Speaker 1: the monetary response from the US government so far? So
Speaker 1: if we compare this to the O eight oh nine
Speaker 1: time period, the response by the Fed has been unbelievable.
Speaker 1: I mean, I think they have come in, They've been
Speaker 1: rapid in terms of their reaction. Uh. J Powell I
Speaker 1: think has done a really good job, you know, trying
Speaker 1: to ensure what he's supposed to be doing, which is
Speaker 1: maintaining the financial stability of the economy. And so uh
Speaker 1: in light of the fact that this is driven not
Speaker 1: by the same types of factors as O eight oh nine,
Speaker 1: where we thought, you know, gosh, is a financial industry
Speaker 1: going to be around. This is a more open ended
Speaker 1: problem with the COVID nineteen issue, and so they can't
Speaker 1: help uh that catalyst. But what they can do is
Speaker 1: provide a significant bridge to help get us to the
Speaker 1: other side of the unknown duration that we are currently
Speaker 1: experiencing and the fiscal side. How do you feel about
Speaker 1: Minuten and Co. I think they've done an absolutely great job.
Speaker 1: They have identified a lot of places which are going
Speaker 1: to be I think very weak coming out of this
Speaker 1: two or three month period of time, and they've tried
Speaker 1: to come in to provide a backstop that in the
Speaker 1: short run, I think is going to be a critical
Speaker 1: UH for retaining some uster confidence. Now. I think later on,
Speaker 1: at some point, we're gonna have to figure out how
Speaker 1: we're repaying all this debt that's going on. But I
Speaker 1: think in the short run, UH investors are really enthused
Speaker 1: about what has been going on. I think later on
Speaker 1: the reality of the economics that UH the FETE is
Speaker 1: trying to solve for we'll come back. So it sounds
Speaker 1: like you're not doing any buying for your clients, and
Speaker 1: correct me if I'm wrong. Um, is that the case? Well,
Speaker 1: we're always in the market and uh so, so we
Speaker 1: tend to run fairly fully invested portfolios. We have a
Speaker 1: slight cash buffer. But so what are you buying? So
Speaker 1: what are you buying right now? Wing? Well, we have
Speaker 1: thirty one different UH funds, so you can pick your flavor.
Speaker 1: But I think that in general the tilts in the
Speaker 1: portfolios are still more growth oriented rather than value oriented.
Speaker 1: Yield is not actually being rewarded in this environment, or
Speaker 1: is low ball types of strategies. When growth goes to
Speaker 1: negative numbers like we have today, investors are going to
Speaker 1: tilt towards those companies that have the best growth prospects,
Speaker 1: and so that has translated into our portfolios to having
Speaker 1: more of a growth orientations the present time. All right, well,
Speaker 1: we wish you only the best, Wayne, and hopefully uh,
Speaker 1: as they say, next time in the Bloomberg Interactor Broker studio,
Speaker 1: hopefully we'll be seeing you then. In the meantime, stay well,
Speaker 1: stay healthy. Thanks for listening to Bloomberg Business Week. You
Speaker 1: can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com. You can also listen to our radio show
Speaker 1: every weekday at two pm Eastern only on Bloomberg Radio