1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa brown Witz Jailey. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg 5 00:00:23,360 --> 00:00:28,720 Speaker 1: dot com, and of course on the Bloomberg terminal. This 6 00:00:28,880 --> 00:00:31,120 Speaker 1: is the interview of the day, folks on what we're 7 00:00:31,160 --> 00:00:34,879 Speaker 1: all witnessing, which is across the board commodities lift. Jeffrey 8 00:00:34,920 --> 00:00:38,239 Speaker 1: de Graff of Renaissance emailed me yesterday and said, hey, stupid, 9 00:00:38,640 --> 00:00:40,800 Speaker 1: look at the softs And I did that. I looked 10 00:00:40,800 --> 00:00:43,320 Speaker 1: at wheat corn and the graph is right there up 11 00:00:43,360 --> 00:00:46,880 Speaker 1: as well. Nobody's nailed this like Jeffrey currys at Goldman 12 00:00:46,920 --> 00:00:50,559 Speaker 1: Sachs Global Head of Commodities Research, and just nailed this. 13 00:00:50,640 --> 00:00:54,640 Speaker 1: Commodity lift. Jeff Curry, I want to go to your 14 00:00:54,680 --> 00:00:58,520 Speaker 1: microeconomics at Chicago. I want you to explain to our 15 00:00:58,560 --> 00:01:03,640 Speaker 1: audience the constraint so supplied build that so many commodities have. 16 00:01:04,240 --> 00:01:08,000 Speaker 1: These are tangible things and they are constrained on the 17 00:01:08,040 --> 00:01:12,800 Speaker 1: supply side, where there's some serious in elasticities. Well, we 18 00:01:12,880 --> 00:01:15,520 Speaker 1: have on the supply side. We like to call it 19 00:01:15,560 --> 00:01:18,560 Speaker 1: the revenge of the old economy. We have not invested 20 00:01:19,000 --> 00:01:22,959 Speaker 1: in old economy production capacity in some cases five to 21 00:01:23,040 --> 00:01:25,720 Speaker 1: ten years um. The reason why it returns in the 22 00:01:25,760 --> 00:01:29,440 Speaker 1: new economy were so much better that capital dot redirected 23 00:01:29,480 --> 00:01:33,399 Speaker 1: towards tech. Then you overlay E S G issues on this. 24 00:01:33,720 --> 00:01:37,839 Speaker 1: These sectors are severely start to capital and you take oil. Capex, 25 00:01:37,880 --> 00:01:39,800 Speaker 1: depending on where you are in the world, was down 26 00:01:39,880 --> 00:01:43,000 Speaker 1: foty to sevent in the first half of last year. 27 00:01:43,319 --> 00:01:46,120 Speaker 1: Tell us about the medals. I mean, I understand copper, 28 00:01:46,160 --> 00:01:49,040 Speaker 1: and we're you know, John and I arguing about Jeff Curry. 29 00:01:49,080 --> 00:01:52,240 Speaker 1: Let's stop the show. Do you quote London copper or 30 00:01:52,280 --> 00:01:59,160 Speaker 1: do you quote Chicago copper? London copper. Very good, there 31 00:01:59,160 --> 00:02:02,640 Speaker 1: we go, John, So copper, we get coppers moving up. 32 00:02:02,680 --> 00:02:05,920 Speaker 1: Tell us about the other medals where if price goes up, 33 00:02:06,000 --> 00:02:09,800 Speaker 1: supply doesn't come on, does it. Well, it takes anywhere 34 00:02:09,919 --> 00:02:12,040 Speaker 1: from five to ten years to bring on a new 35 00:02:12,080 --> 00:02:15,320 Speaker 1: copper mine. It's the last of the old school commodities 36 00:02:15,360 --> 00:02:17,639 Speaker 1: that you still dig out of the ground. And that's 37 00:02:17,680 --> 00:02:20,360 Speaker 1: where we have the real demand pushed because you have 38 00:02:20,600 --> 00:02:24,639 Speaker 1: this green capex that's starting to begin to be Um, 39 00:02:24,840 --> 00:02:28,400 Speaker 1: you know it's gonna be behind this energy transition story 40 00:02:28,400 --> 00:02:31,040 Speaker 1: because we now have a blueprint for energy transition in 41 00:02:31,080 --> 00:02:33,920 Speaker 1: the US, Europe and China now something we didn't have 42 00:02:34,000 --> 00:02:37,559 Speaker 1: eight weeks ago. We believe the capex has spanned associated 43 00:02:37,520 --> 00:02:39,800 Speaker 1: with this green capex is going to be somewhere around 44 00:02:39,880 --> 00:02:43,080 Speaker 1: sixteen trillion dollars over the next decade. Put that on 45 00:02:43,200 --> 00:02:46,320 Speaker 1: par with China in the two thousand's China spit ten trillions. 46 00:02:46,320 --> 00:02:48,720 Speaker 1: So in real times about the same, Jeff. We got 47 00:02:48,720 --> 00:02:50,600 Speaker 1: to talk about the energy transition story in just a moment. 48 00:02:50,639 --> 00:02:52,160 Speaker 1: Let's just stay on the metsos for a little bit. 49 00:02:52,280 --> 00:02:53,760 Speaker 1: We have to talk about what's happened in the last 50 00:02:53,800 --> 00:02:56,919 Speaker 1: ten years as well, and it started with joints that 51 00:02:56,960 --> 00:03:00,720 Speaker 1: shift away from volume to value. The act of investment 52 00:03:00,720 --> 00:03:03,200 Speaker 1: we've actually seen in the last decade off the back 53 00:03:03,200 --> 00:03:05,640 Speaker 1: of the top of the last supercycle. Jeff, How profound 54 00:03:05,680 --> 00:03:07,560 Speaker 1: is that when you start to think about the dynamics 55 00:03:07,720 --> 00:03:11,760 Speaker 1: from here on out? Well, I mean all these stories 56 00:03:11,800 --> 00:03:15,239 Speaker 1: have the xact same story. You had, UM, very low 57 00:03:15,360 --> 00:03:18,840 Speaker 1: prices over the last decade, very poor returns in the 58 00:03:18,919 --> 00:03:23,680 Speaker 1: sector under investment, no demand. Now we're adding demand on 59 00:03:23,800 --> 00:03:27,200 Speaker 1: top of no supply, and we're creating really tight market 60 00:03:27,280 --> 00:03:31,040 Speaker 1: whether you're talking medals, energy, agriculture, And at the core 61 00:03:31,120 --> 00:03:34,200 Speaker 1: of the demand story is where the stimulus is going. 62 00:03:34,320 --> 00:03:38,120 Speaker 1: Stimulus over the previous decade operated through the wealth channel 63 00:03:38,200 --> 00:03:42,360 Speaker 1: and benefited higher income households. Today it's benefiting lower income 64 00:03:42,400 --> 00:03:46,080 Speaker 1: households who spend more on commodities. So naturally we're seeing 65 00:03:46,120 --> 00:03:50,680 Speaker 1: a much richer, more cyclical, commodity intensitive demand growth environment. Jeff, 66 00:03:50,680 --> 00:03:53,120 Speaker 1: You've always drawn a distinction between all pace commodities and 67 00:03:53,160 --> 00:03:55,080 Speaker 1: capex commodities and the ones that would do while in 68 00:03:55,120 --> 00:03:59,120 Speaker 1: each environment, where are we now? Both are doing well. 69 00:03:59,400 --> 00:04:02,520 Speaker 1: And the reason why I say that is because at 70 00:04:02,560 --> 00:04:06,080 Speaker 1: this point right now, we have capex going whether it 71 00:04:06,240 --> 00:04:10,200 Speaker 1: is old economy in China to take urbanization from six 72 00:04:11,000 --> 00:04:14,960 Speaker 1: up to we have new economy demand through the investment 73 00:04:15,000 --> 00:04:18,479 Speaker 1: in five G networks, and then we have green economy demand. 74 00:04:18,720 --> 00:04:21,880 Speaker 1: In terms of thinking about energy transition, you overly that 75 00:04:22,240 --> 00:04:25,600 Speaker 1: on top of under investment, you end up with relatively 76 00:04:25,680 --> 00:04:28,400 Speaker 1: tight markets like we're seeing today. Well, Jeff, there is 77 00:04:28,400 --> 00:04:30,839 Speaker 1: a distinction though, going back to the early two thousands, 78 00:04:30,880 --> 00:04:33,520 Speaker 1: and we had the last commodity supercycle when it was 79 00:04:33,600 --> 00:04:36,080 Speaker 1: driven by the boom out of China and it was 80 00:04:36,160 --> 00:04:40,839 Speaker 1: all encompassing. This feels different, especially given the energy transition 81 00:04:40,880 --> 00:04:42,800 Speaker 1: that you guys have been talking about, this idea of 82 00:04:42,800 --> 00:04:46,480 Speaker 1: a transition to green energy. Where does oil fit in 83 00:04:46,720 --> 00:04:48,840 Speaker 1: on this kind of equation? If the prices go up 84 00:04:48,880 --> 00:04:52,680 Speaker 1: too high, don't the oil producers just produce more? Well, 85 00:04:52,760 --> 00:04:56,200 Speaker 1: let's first talk about what happens to oil demand. Somewhere 86 00:04:56,200 --> 00:05:02,039 Speaker 1: around two you begin a slow the demand growth and 87 00:05:02,040 --> 00:05:06,000 Speaker 1: it's not until after the demand growth actually tips over 88 00:05:06,000 --> 00:05:08,640 Speaker 1: and starts to go negative. What that means over the 89 00:05:08,680 --> 00:05:11,760 Speaker 1: next five years, the stimulus effect of all of this 90 00:05:11,920 --> 00:05:15,480 Speaker 1: green spending actually amplifies oil demand. Now, let me ask 91 00:05:15,480 --> 00:05:17,880 Speaker 1: you this. If we know we have a blueprint for 92 00:05:18,000 --> 00:05:22,000 Speaker 1: energy transition and US, Europe and China UM and the 93 00:05:22,040 --> 00:05:24,359 Speaker 1: clock is ticking on oil, are you going to invest 94 00:05:24,400 --> 00:05:28,000 Speaker 1: in long live oil production? The answers know, so, the 95 00:05:28,040 --> 00:05:30,400 Speaker 1: only thing we're going to invest in a short cycle 96 00:05:30,440 --> 00:05:33,600 Speaker 1: production in the US, Middle East and Russia. That's it. 97 00:05:33,839 --> 00:05:37,080 Speaker 1: Everything else is too risky to make investments. So the 98 00:05:37,160 --> 00:05:40,240 Speaker 1: hurdle rate to get investment in the sector substantially higher 99 00:05:40,320 --> 00:05:43,080 Speaker 1: than what it was historically. This is fascinating, this idea 100 00:05:43,160 --> 00:05:45,600 Speaker 1: that because you're going to have so much infrastructure, you 101 00:05:45,839 --> 00:05:47,760 Speaker 1: you will need that much more oil to sort of 102 00:05:47,760 --> 00:05:51,000 Speaker 1: finance it, etcetera. Where do the other commodities, the soft 103 00:05:51,040 --> 00:05:53,520 Speaker 1: commodities that we were talking about, fit into this, given 104 00:05:53,560 --> 00:05:56,640 Speaker 1: the fact that they have more elasticity as Tom was 105 00:05:56,680 --> 00:05:59,200 Speaker 1: talking about, Well, I think it goes back to the 106 00:05:59,240 --> 00:06:02,480 Speaker 1: point where who has been infitting from the current stimulus 107 00:06:02,560 --> 00:06:05,120 Speaker 1: right now? It's lower income households. In fact, if you 108 00:06:05,240 --> 00:06:09,479 Speaker 1: look at consumption by postcode in the US, and we 109 00:06:09,520 --> 00:06:12,640 Speaker 1: can divided up by low income versus high income, you 110 00:06:12,800 --> 00:06:16,719 Speaker 1: had turbo charged demand growth from low income households Darry 111 00:06:16,839 --> 00:06:19,440 Speaker 1: January and of most but most of February, So you're 112 00:06:19,480 --> 00:06:23,200 Speaker 1: seeing that filter through. That group consumes a lot more 113 00:06:23,320 --> 00:06:27,520 Speaker 1: commodities than do the high income households, and that includes livestock, 114 00:06:27,560 --> 00:06:31,080 Speaker 1: which has a big poll on grains and softs. Jeff 115 00:06:31,120 --> 00:06:33,400 Speaker 1: Kurry don't want you to get in trouble with Mr Solomon, 116 00:06:33,440 --> 00:06:35,720 Speaker 1: but I want you to go outside your remit. You're 117 00:06:35,760 --> 00:06:40,719 Speaker 1: Coinlleague Jonas over the decade has been absolutely brilliant about 118 00:06:40,800 --> 00:06:44,600 Speaker 1: pushing back against the high inflation crew the so called 119 00:06:44,640 --> 00:06:48,599 Speaker 1: inflation anistas. Do you see the inflation of your world 120 00:06:48,760 --> 00:06:53,520 Speaker 1: folding over into Jana world or is it discreet? Well, 121 00:06:53,560 --> 00:06:58,040 Speaker 1: when we think about the evidence for cost push inflation, 122 00:06:58,160 --> 00:07:01,240 Speaker 1: it just does not exist. It's always demand pull inflation. 123 00:07:01,320 --> 00:07:05,040 Speaker 1: So the factors that are driving commodity prices um end 124 00:07:05,120 --> 00:07:08,120 Speaker 1: up potentially creating some inflation risk. And I think, you know, 125 00:07:08,279 --> 00:07:10,480 Speaker 1: even yonces at getting up into that two and a 126 00:07:10,560 --> 00:07:13,720 Speaker 1: half percent range as we get into you know, April, 127 00:07:13,800 --> 00:07:16,760 Speaker 1: in in in May, when the cops start to get 128 00:07:16,800 --> 00:07:20,120 Speaker 1: relatively positive. So you know, I think the key issue 129 00:07:20,200 --> 00:07:23,280 Speaker 1: here is that you look at bond yields. Bond yields 130 00:07:23,280 --> 00:07:25,520 Speaker 1: are below two percent, and so even if you get 131 00:07:25,560 --> 00:07:29,160 Speaker 1: to two two and a half percent inflation, these portfolio 132 00:07:29,240 --> 00:07:32,320 Speaker 1: managers that hold these bond positions have a problem. And 133 00:07:32,360 --> 00:07:35,840 Speaker 1: so the demand to hedge commodity and heads that inflation 134 00:07:35,920 --> 00:07:38,680 Speaker 1: risk through commodities is quite high. I think that's part 135 00:07:38,680 --> 00:07:41,080 Speaker 1: of what you're seeing pushing these markets higher right now, 136 00:07:41,480 --> 00:07:45,360 Speaker 1: is that hedging demand to deal with even inflation creeping 137 00:07:45,440 --> 00:07:47,840 Speaker 1: up into that two percent range. Jeff, we gotta finish 138 00:07:47,880 --> 00:07:49,880 Speaker 1: up with some numbers and play the number game. Seventy 139 00:07:49,880 --> 00:07:52,000 Speaker 1: five and Q three on w c I one are 140 00:07:52,000 --> 00:07:54,360 Speaker 1: the big numbers you're looking for. Well, I think in 141 00:07:54,480 --> 00:07:57,720 Speaker 1: terms of looking at demand, demand levels were much higher. 142 00:07:58,040 --> 00:08:00,680 Speaker 1: Um you know in fourth quartering in the environment that 143 00:08:00,760 --> 00:08:03,160 Speaker 1: what we thought, and we're drawing inventory. So the key 144 00:08:03,240 --> 00:08:07,520 Speaker 1: issue is will that inventory draw began to slow down 145 00:08:07,520 --> 00:08:09,200 Speaker 1: and we get in the third quarter and will we 146 00:08:09,200 --> 00:08:11,840 Speaker 1: see a supply response. But I have to emphasize that 147 00:08:12,040 --> 00:08:15,280 Speaker 1: you're Sarreadi Arabia right now. You've already committed to keeping 148 00:08:15,280 --> 00:08:19,120 Speaker 1: production off the market till April, and supply is extremely 149 00:08:19,160 --> 00:08:21,600 Speaker 1: inelastic in the near term, which means, you know, the 150 00:08:21,680 --> 00:08:24,520 Speaker 1: upside risk until we start to see that supply response 151 00:08:24,640 --> 00:08:27,040 Speaker 1: is quite high. Jeff always a clinic and great to 152 00:08:27,080 --> 00:08:29,960 Speaker 1: catch up, sir out of London. Support in London, Jeff 153 00:08:30,000 --> 00:08:33,040 Speaker 1: carry Golmu, SAX, Global head of Commodities Research, appreciated Jeff. 154 00:08:39,080 --> 00:08:41,480 Speaker 1: In Washington, the government putting together at one point nine 155 00:08:41,520 --> 00:08:44,719 Speaker 1: trillion dollar fiscal plan and many prominent economists on the 156 00:08:44,800 --> 00:08:48,000 Speaker 1: left asking a simple question, is it too big? We 157 00:08:48,040 --> 00:08:50,920 Speaker 1: asked those questions to White House National Economic Council Director 158 00:08:50,960 --> 00:08:54,720 Speaker 1: Brian dece in our exclusive interview. We size this based 159 00:08:54,760 --> 00:08:57,679 Speaker 1: on the needs that we see to get shots and 160 00:08:57,760 --> 00:09:00,800 Speaker 1: people's arms, to get the schools reopened and get relief 161 00:09:00,880 --> 00:09:03,760 Speaker 1: to families and businesses out there. And as we look 162 00:09:03,800 --> 00:09:06,840 Speaker 1: at this, we look at the estimates out there of 163 00:09:07,280 --> 00:09:10,080 Speaker 1: not only the output gap, but also the amount of 164 00:09:10,200 --> 00:09:12,840 Speaker 1: pain we see in the labor market. Ten million people 165 00:09:13,120 --> 00:09:16,120 Speaker 1: out of work still in this economy. We think that 166 00:09:16,240 --> 00:09:19,600 Speaker 1: this is appropriately sized and frankly, the right kind of 167 00:09:20,120 --> 00:09:23,959 Speaker 1: economic prescription to what is a unique and really precarious 168 00:09:24,000 --> 00:09:26,319 Speaker 1: moment in our economy. Let's start with where the opposition 169 00:09:26,360 --> 00:09:28,520 Speaker 1: is coming from, where the questions are coming from, and 170 00:09:28,559 --> 00:09:30,800 Speaker 1: let me can talk about the economics. We're talking about 171 00:09:30,880 --> 00:09:34,800 Speaker 1: Larry Summers, a former Democratic Treasury Secretary, Olivia Blanchard for 172 00:09:34,960 --> 00:09:36,560 Speaker 1: me of the I m F and widely considered to 173 00:09:36,600 --> 00:09:39,319 Speaker 1: be a dove. These are not exactly Republican cheerleaders that 174 00:09:39,360 --> 00:09:42,559 Speaker 1: are raising the most the biggest questions of your administration 175 00:09:42,640 --> 00:09:44,439 Speaker 1: right now. And Brian, I just want to get disappointed 176 00:09:44,440 --> 00:09:46,800 Speaker 1: by that that that's where the questioning the opposition seems 177 00:09:46,800 --> 00:09:49,640 Speaker 1: to be coming from. Look, we're having this debate across 178 00:09:49,720 --> 00:09:52,640 Speaker 1: the board, and we welcome the opportunity to explain the 179 00:09:52,679 --> 00:09:54,920 Speaker 1: contours of our plan I think one of the things 180 00:09:54,960 --> 00:09:58,079 Speaker 1: that unique about this economic crisis is that this is 181 00:09:58,120 --> 00:10:02,760 Speaker 1: a unique crisis and a unique pandemic driven recession. And 182 00:10:02,840 --> 00:10:05,520 Speaker 1: so we think about this, what what the economy needs 183 00:10:05,520 --> 00:10:08,640 Speaker 1: from the perspective of more akin to a natural disaster 184 00:10:08,800 --> 00:10:13,120 Speaker 1: than a typical recession. We need to surge resources and support. 185 00:10:13,440 --> 00:10:16,240 Speaker 1: And we've also seen over the past year an approach 186 00:10:16,280 --> 00:10:19,160 Speaker 1: that says let's wait and see and and take incremental 187 00:10:19,240 --> 00:10:21,800 Speaker 1: steps has not worked and has put us in a 188 00:10:21,800 --> 00:10:24,640 Speaker 1: pretty deep hole. So we feel pretty confident on the 189 00:10:24,640 --> 00:10:27,160 Speaker 1: economics that this is the right way to go to 190 00:10:27,240 --> 00:10:29,800 Speaker 1: make the error in the direction of doing something that 191 00:10:29,840 --> 00:10:34,000 Speaker 1: will definitively get our hands around this crisis and drive 192 00:10:34,080 --> 00:10:36,920 Speaker 1: us to a stronger and more dermal recovery going forward. 193 00:10:36,920 --> 00:10:38,920 Speaker 1: Have you spoke it to summers Old Blanche out in 194 00:10:38,920 --> 00:10:41,320 Speaker 1: the last month or so. So we're reaching out to 195 00:10:42,440 --> 00:10:47,160 Speaker 1: economists and economic experts across the board, uh, including including 196 00:10:47,400 --> 00:10:49,520 Speaker 1: the folks you are mentioning. We want to make sure 197 00:10:49,559 --> 00:10:53,120 Speaker 1: that we're getting input from all sides that we're considering arguments, 198 00:10:53,320 --> 00:10:55,640 Speaker 1: and I want to be very clear we take very 199 00:10:55,720 --> 00:10:59,760 Speaker 1: seriously the risks, the economic risks that are out there. 200 00:11:00,120 --> 00:11:01,760 Speaker 1: We spent a lot of time thinking about them, a 201 00:11:01,760 --> 00:11:04,120 Speaker 1: lot of time worrying about them. That's our job. But 202 00:11:04,200 --> 00:11:07,200 Speaker 1: as we assess and balance those risks, we believe that 203 00:11:07,280 --> 00:11:11,000 Speaker 1: the risks of further scarring in the labor market, the 204 00:11:11,080 --> 00:11:16,439 Speaker 1: risk of further extending this economic pain outweigh the risks 205 00:11:16,480 --> 00:11:18,760 Speaker 1: of doing too much, which is really the theory behind 206 00:11:18,760 --> 00:11:20,520 Speaker 1: what we're trying to get done here. You clearly believe 207 00:11:20,520 --> 00:11:23,000 Speaker 1: the risks of a symmetric and Al'm blind raise that 208 00:11:23,080 --> 00:11:25,319 Speaker 1: point in an up D pace a little bit earlier 209 00:11:25,320 --> 00:11:27,480 Speaker 1: in the last week, I think, Brian, I think for 210 00:11:27,679 --> 00:11:30,560 Speaker 1: the individuals that I mentioned before Summers blanche out, the 211 00:11:30,640 --> 00:11:33,600 Speaker 1: risk that they're raising is an inflationary one. What gives 212 00:11:33,640 --> 00:11:36,240 Speaker 1: you the conviction that that's not going to be an issue. Well, 213 00:11:36,240 --> 00:11:38,360 Speaker 1: it's a risk that we're keeping our eye in, and 214 00:11:38,440 --> 00:11:42,480 Speaker 1: certainly it's it's something to consider. But if we look 215 00:11:42,520 --> 00:11:45,840 Speaker 1: at the recent history over the last couple of decades, 216 00:11:45,880 --> 00:11:50,080 Speaker 1: we've seen that the economy has the capability of running 217 00:11:50,080 --> 00:11:53,520 Speaker 1: at stronger paces, and we think that the tools exist 218 00:11:53,559 --> 00:11:57,480 Speaker 1: to manage those risks as we go forward. We can 219 00:11:57,520 --> 00:12:00,960 Speaker 1: debate different ways of measuring the output gap, measuring the 220 00:12:01,040 --> 00:12:05,160 Speaker 1: risks associated with this particular crisis. But if you sum 221 00:12:05,160 --> 00:12:08,440 Speaker 1: it all together, we are at a very precarious and 222 00:12:08,600 --> 00:12:11,840 Speaker 1: unique moment of economic crisis. And that's why we feel 223 00:12:11,880 --> 00:12:14,400 Speaker 1: pretty confident that we will be better off if we 224 00:12:14,440 --> 00:12:17,719 Speaker 1: take these actions definitively. We put ourselves on a trajectory 225 00:12:17,720 --> 00:12:19,680 Speaker 1: to growth, and then we work with the tools we 226 00:12:19,760 --> 00:12:23,079 Speaker 1: have to manage any challenges that we face going forward. 227 00:12:23,120 --> 00:12:25,000 Speaker 1: And many people in the administration of Big keen to 228 00:12:25,040 --> 00:12:27,079 Speaker 1: stress that this is about aid, it's abound relief, it's 229 00:12:27,080 --> 00:12:29,000 Speaker 1: not about stimulus. And I think a question many people 230 00:12:29,000 --> 00:12:31,120 Speaker 1: have had Brian, is how giving a check to an 231 00:12:31,120 --> 00:12:34,040 Speaker 1: individual learned seventy five thousand dollars a year should still 232 00:12:34,080 --> 00:12:37,920 Speaker 1: be considered AID relief and not stimulus. What makes that relief? 233 00:12:37,960 --> 00:12:40,240 Speaker 1: What's that line between relief and stimulus? If I have 234 00:12:40,280 --> 00:12:42,560 Speaker 1: a job and I earned seventy five thousand and you 235 00:12:42,600 --> 00:12:44,880 Speaker 1: send me a fourteen hundred dollar check, why is that relief? 236 00:12:45,080 --> 00:12:47,040 Speaker 1: What is it relief from? Well, I think you need 237 00:12:47,080 --> 00:12:48,920 Speaker 1: to look at the package in its entirety, and if 238 00:12:48,960 --> 00:12:51,480 Speaker 1: you look at the combination of the direct payments that 239 00:12:51,520 --> 00:12:57,080 Speaker 1: you're discussing, unemployment insurance extension, and then targeted support to 240 00:12:57,880 --> 00:13:01,960 Speaker 1: the lowest income families with children and essential workers without 241 00:13:02,040 --> 00:13:06,239 Speaker 1: children in the aggregate. This is a very progressive, progressively 242 00:13:06,280 --> 00:13:09,600 Speaker 1: designed package to provide aid principally to the bottom half 243 00:13:09,600 --> 00:13:12,280 Speaker 1: of the income distribution, with the respect of the families 244 00:13:12,280 --> 00:13:13,960 Speaker 1: that are out there that are middle class families that 245 00:13:13,960 --> 00:13:16,760 Speaker 1: will be getting direct payments. A lot of those people 246 00:13:16,760 --> 00:13:19,040 Speaker 1: are people who have lost jobs. Are one of the 247 00:13:19,080 --> 00:13:21,160 Speaker 1: earners in the family has lost jobs. Others are people 248 00:13:21,160 --> 00:13:25,800 Speaker 1: who are facing additional costs associated with working during a pandemic, childcare, 249 00:13:26,360 --> 00:13:30,400 Speaker 1: other other costs. And this provides a bridge. It provides 250 00:13:30,440 --> 00:13:33,680 Speaker 1: support to get families and businesses through to the other 251 00:13:33,720 --> 00:13:35,800 Speaker 1: side of this pandemic, and to do so in a 252 00:13:35,840 --> 00:13:37,880 Speaker 1: way that we don't they don't have to take on 253 00:13:37,960 --> 00:13:41,400 Speaker 1: additional risk or additional economic costs during the interim. Let's 254 00:13:41,400 --> 00:13:43,160 Speaker 1: talk about that bridge in a different way. There is 255 00:13:43,200 --> 00:13:45,960 Speaker 1: another question as to whether this plan, given its size, 256 00:13:46,320 --> 00:13:48,920 Speaker 1: removes the bridge from getting here to an infrastructure plan 257 00:13:49,240 --> 00:13:51,600 Speaker 1: further down the road now, and I just wanted from 258 00:13:51,640 --> 00:13:54,800 Speaker 1: your perspective, what are the constraints to further fiscal spending 259 00:13:55,200 --> 00:13:58,040 Speaker 1: after this package is being delivered. It goes back to 260 00:13:58,080 --> 00:14:00,920 Speaker 1: the question you raised before. This is a relief plan 261 00:14:00,960 --> 00:14:03,600 Speaker 1: that is designed to provide immediate support to try to 262 00:14:04,000 --> 00:14:06,440 Speaker 1: bridge and get us on the other side of this pandemic. 263 00:14:06,880 --> 00:14:09,480 Speaker 1: I think that there is broad consensus and we've been 264 00:14:09,520 --> 00:14:11,360 Speaker 1: hearing it over the last couple of weeks in the 265 00:14:11,360 --> 00:14:14,280 Speaker 1: outreach and the engagement we've been doing from business communities, 266 00:14:14,320 --> 00:14:18,480 Speaker 1: from labor, from members of Congress, from the Democratic and 267 00:14:18,520 --> 00:14:22,960 Speaker 1: Republican side, that we face very significant divert maintenance, whether 268 00:14:23,000 --> 00:14:26,680 Speaker 1: it's with our physical infrastructure, transportation infrastructure, energy infrastructures we're 269 00:14:26,680 --> 00:14:29,920 Speaker 1: seeing play out in the past week in the events 270 00:14:29,920 --> 00:14:33,640 Speaker 1: in Texas and other wise and otherwise, those deferred maintenance 271 00:14:33,680 --> 00:14:38,760 Speaker 1: challenges are real. They are impeding the competitiveness of our economy, 272 00:14:38,800 --> 00:14:41,800 Speaker 1: particularly in a competitive global environment, as China and other 273 00:14:41,840 --> 00:14:44,800 Speaker 1: countries are investing in their own infrastructure, and there's a 274 00:14:44,920 --> 00:14:48,560 Speaker 1: very strong case for us to be increasing our investment, 275 00:14:48,800 --> 00:14:50,600 Speaker 1: doing it in a way that will create more jobs, 276 00:14:50,640 --> 00:14:54,240 Speaker 1: better jobs, and increase the competitiveness our economy. That's a 277 00:14:54,280 --> 00:14:57,720 Speaker 1: different economic objective, but one that should we are very 278 00:14:57,760 --> 00:14:59,760 Speaker 1: focused on in the presence, very focused on. So just 279 00:14:59,760 --> 00:15:01,240 Speaker 1: with that again, Brian, just to be clear on it, 280 00:15:01,280 --> 00:15:03,280 Speaker 1: I'm just trying to understand what the constraints are in 281 00:15:03,280 --> 00:15:05,920 Speaker 1: your mind to further fiscal spending, whether it's political space, 282 00:15:06,160 --> 00:15:08,680 Speaker 1: whether it's fiscal space, whether it's inflation. What do you 283 00:15:08,680 --> 00:15:11,600 Speaker 1: think the constraints are. Loosely, the perstring is even more 284 00:15:11,600 --> 00:15:13,960 Speaker 1: in the future. Well, I think we have a fiscal 285 00:15:13,960 --> 00:15:16,600 Speaker 1: framework and the President has laid out where if we're 286 00:15:16,640 --> 00:15:20,480 Speaker 1: making permanent investments, those investments should be offset, and he's 287 00:15:20,560 --> 00:15:22,720 Speaker 1: laid out a range of different proposals for how to 288 00:15:22,760 --> 00:15:25,080 Speaker 1: do that. That makes sense in terms of our long 289 00:15:25,200 --> 00:15:28,920 Speaker 1: term fiscal trajectory. If we're looking at temporary investments, particularly 290 00:15:28,920 --> 00:15:33,160 Speaker 1: those that increase productivity UH and help put people back 291 00:15:33,160 --> 00:15:36,080 Speaker 1: to work, improve the quality of jobs, those are investments 292 00:15:36,120 --> 00:15:38,000 Speaker 1: that we need to take a hard look at UH 293 00:15:38,000 --> 00:15:41,440 Speaker 1: at making right now, and in the current interest rate environment, 294 00:15:42,000 --> 00:15:44,920 Speaker 1: we could feel confident that we could make consistent with 295 00:15:45,000 --> 00:15:47,720 Speaker 1: a long term fiscally sustainable framework. So you've brought up 296 00:15:47,720 --> 00:15:50,160 Speaker 1: the current interest right environment. As the President spoke with 297 00:15:50,280 --> 00:15:52,600 Speaker 1: Chairman Palatle, who will hear from a couple of times 298 00:15:52,640 --> 00:15:57,240 Speaker 1: this week. Look, we're we're as an administration in staying 299 00:15:57,320 --> 00:16:00,400 Speaker 1: in contistent contact with the economic officials around the illustration, 300 00:16:00,440 --> 00:16:02,320 Speaker 1: and I'm not going to read out specific conversation the 301 00:16:02,320 --> 00:16:06,120 Speaker 1: Presidence has had. But we're we're in we're in continual contact, 302 00:16:06,120 --> 00:16:08,280 Speaker 1: and we're a monitoring and assessing the markets as you 303 00:16:08,280 --> 00:16:10,640 Speaker 1: would expect, Secretary Yell and leading our efforts and doing so, 304 00:16:10,640 --> 00:16:12,800 Speaker 1: You've jumped back into the political seat very quickly, Brian, 305 00:16:12,840 --> 00:16:15,040 Speaker 1: because that was a very political response to that question. 306 00:16:15,080 --> 00:16:17,040 Speaker 1: So I'll ask it again. Forgive me for doing so. 307 00:16:17,680 --> 00:16:20,800 Speaker 1: Has he spoken to Chairman Pals specifically as the President 308 00:16:20,920 --> 00:16:23,720 Speaker 1: had that conversation with the head of the US Central Bank. 309 00:16:24,280 --> 00:16:26,200 Speaker 1: I'll give you a specific answer. I don't have any 310 00:16:26,480 --> 00:16:29,200 Speaker 1: conversations from the President to read out, so there's no 311 00:16:29,240 --> 00:16:31,600 Speaker 1: read out, there's no conversation. Don't you find that curious 312 00:16:31,600 --> 00:16:33,840 Speaker 1: that we're putting through a massive one point nine trillion 313 00:16:33,880 --> 00:16:36,800 Speaker 1: dollar plan that in the future would depend on where 314 00:16:36,800 --> 00:16:39,000 Speaker 1: interest rates may or may not be in the future, 315 00:16:39,000 --> 00:16:41,600 Speaker 1: and yet the President hasn't had a conversation with the 316 00:16:41,680 --> 00:16:45,600 Speaker 1: chairman of the Federal Reserve. Look Like, as I said myself, 317 00:16:45,640 --> 00:16:48,600 Speaker 1: Secretary Yell and other senior administration officials are staying in 318 00:16:48,680 --> 00:16:53,280 Speaker 1: consistent contact with our economic agencies. Uh, And that's what 319 00:16:53,320 --> 00:16:55,480 Speaker 1: we'll continue to do. Okay, Well, I'm just wondering how 320 00:16:55,520 --> 00:16:58,040 Speaker 1: you frame the relationship with the central Bank in the future. 321 00:16:58,120 --> 00:16:59,880 Speaker 1: Is it different to what we've seen in the previous 322 00:17:00,000 --> 00:17:01,800 Speaker 1: all years, Brian? What will it look like like? I 323 00:17:01,840 --> 00:17:04,480 Speaker 1: think we have an approach to economic policy right now 324 00:17:04,520 --> 00:17:07,560 Speaker 1: that is about addressing the current economic crisis and our 325 00:17:07,560 --> 00:17:10,080 Speaker 1: focus on the fiscal policy response that we need to 326 00:17:10,080 --> 00:17:13,080 Speaker 1: put into place. That's our our overriding focus right now, 327 00:17:13,119 --> 00:17:14,800 Speaker 1: and that's the reason why we're working to get the 328 00:17:14,840 --> 00:17:17,359 Speaker 1: American Rescue Plan passed. A little bit of time catching 329 00:17:17,480 --> 00:17:20,240 Speaker 1: up with the White House National Economic Council's director Briant 330 00:17:20,280 --> 00:17:29,879 Speaker 1: des Right now, this is a joy to give us 331 00:17:29,920 --> 00:17:33,080 Speaker 1: perspective here at a perspective moment. Michael Kushmer joins us 332 00:17:33,280 --> 00:17:36,520 Speaker 1: with Morgan Stanley, the pedigree to Princeton, London School of 333 00:17:36,520 --> 00:17:40,200 Speaker 1: Economics and Columbia. But what's so important here is he's 334 00:17:40,240 --> 00:17:43,200 Speaker 1: the rarest of rare commodities. He has enjoyed a seat 335 00:17:43,240 --> 00:17:47,399 Speaker 1: at Morgan Stanley since time began. Michael Kushma, you walked 336 00:17:47,400 --> 00:17:51,560 Speaker 1: in the door to enjoy the crash of seven. What 337 00:17:51,640 --> 00:17:56,320 Speaker 1: was your crash of seven? Like? It was quite quite interesting? 338 00:17:56,320 --> 00:17:58,520 Speaker 1: I've only been working for several months, and my first 339 00:17:58,560 --> 00:18:01,720 Speaker 1: thought was Austin first out that I was my career 340 00:18:01,760 --> 00:18:03,800 Speaker 1: in Wall Street was going to end pretty pretty quickly. 341 00:18:03,880 --> 00:18:07,200 Speaker 1: But that crisis ended very fast. It did, it got 342 00:18:07,280 --> 00:18:09,440 Speaker 1: It was amazing, folks to see how the markets cleared 343 00:18:09,480 --> 00:18:11,960 Speaker 1: him by December. It was a it was an afterthought. 344 00:18:12,000 --> 00:18:13,960 Speaker 1: Michael Christimern I want to go right now to the 345 00:18:14,040 --> 00:18:16,520 Speaker 1: changes in technology. John and Lisa have a bunch of 346 00:18:16,720 --> 00:18:21,439 Speaker 1: fancy questions. We are in a time of digital social media, 347 00:18:21,760 --> 00:18:25,080 Speaker 1: the technology, the way of the messaging works. How do 348 00:18:25,160 --> 00:18:28,919 Speaker 1: you handle a down draft now versus the way you 349 00:18:29,040 --> 00:18:33,359 Speaker 1: handled it ten years ago or thirty four years ago. Uh, well, 350 00:18:34,000 --> 00:18:36,280 Speaker 1: the whole, your whole, your whole day is longer. You've 351 00:18:36,320 --> 00:18:39,639 Speaker 1: got more information, you've got more action and markets coming 352 00:18:39,800 --> 00:18:42,440 Speaker 1: in London morning or an Asian hours, so you wake 353 00:18:42,520 --> 00:18:44,240 Speaker 1: up in the morning in New York and things can 354 00:18:44,280 --> 00:18:48,120 Speaker 1: be already happening. We see more volatility in treasury market futures, 355 00:18:48,119 --> 00:18:51,119 Speaker 1: sometimes overnight, leading the way into what happens in New 356 00:18:51,200 --> 00:18:54,240 Speaker 1: York during the day. There's large scale demand for US 357 00:18:54,359 --> 00:18:57,160 Speaker 1: dollar bonds on the coming out of Asia and lesser 358 00:18:57,200 --> 00:19:00,399 Speaker 1: degree out of Europe. On a regular basis, affecting credit spreads, 359 00:19:00,400 --> 00:19:03,960 Speaker 1: affecting the level of interest rates on the cross currency basis, 360 00:19:04,080 --> 00:19:07,119 Speaker 1: of affects a lot of demand for for US dollar assets. 361 00:19:07,240 --> 00:19:10,520 Speaker 1: Was all sorts of things going on which links financial 362 00:19:10,560 --> 00:19:13,800 Speaker 1: markets all over the world and relative value and opportunities 363 00:19:14,040 --> 00:19:16,119 Speaker 1: to what's going on everywhere in the world, not just 364 00:19:16,200 --> 00:19:19,480 Speaker 1: what's happening inside the United States borders. Well, here's an upgrade, 365 00:19:19,560 --> 00:19:21,399 Speaker 1: Tom Kaine comes from Jonathan Golub and the team over 366 00:19:21,440 --> 00:19:25,639 Speaker 1: at Credit suis raising his SP five hundred price target 367 00:19:25,560 --> 00:19:28,560 Speaker 1: of forty three hundred from forty two hundred and citing 368 00:19:28,560 --> 00:19:32,840 Speaker 1: the hottest GDP growth in some thirty five years. Forty 369 00:19:32,840 --> 00:19:35,359 Speaker 1: three hundred the new price target a credit swas and 370 00:19:35,400 --> 00:19:37,520 Speaker 1: that goes to the double digit callub Ben Laylor, and 371 00:19:37,600 --> 00:19:40,320 Speaker 1: I also mentioned John Ferroll the distinction of Credit Suite 372 00:19:40,400 --> 00:19:43,000 Speaker 1: that they still like tech. I believe that's what Mr 373 00:19:43,080 --> 00:19:45,800 Speaker 1: Glub is said over the left of being very constructive 374 00:19:46,080 --> 00:19:48,240 Speaker 1: on big tech over the last twelve months when others 375 00:19:48,280 --> 00:19:51,359 Speaker 1: have started to shift rotate towards some other sectors. Just 376 00:19:51,400 --> 00:19:53,520 Speaker 1: add to this, if you can, Michael, on the bond 377 00:19:53,560 --> 00:19:55,960 Speaker 1: side of things, we've been talking about this how self 378 00:19:56,000 --> 00:19:58,119 Speaker 1: limiting a move would be in the bond market if 379 00:19:58,160 --> 00:20:01,360 Speaker 1: it started to infect risk assets sweat. Can you weigh 380 00:20:01,400 --> 00:20:05,280 Speaker 1: in on that absolutely? You know. One of the interesting 381 00:20:05,320 --> 00:20:07,199 Speaker 1: things which has happened over the last twelve months, So 382 00:20:07,240 --> 00:20:11,119 Speaker 1: what had massive recovery in equity prices, Earnings from twelve 383 00:20:11,160 --> 00:20:14,200 Speaker 1: months ago today are probably up. Um. We've had a 384 00:20:14,240 --> 00:20:17,399 Speaker 1: traumatic rise in commodity prices from last last winter to 385 00:20:17,440 --> 00:20:19,720 Speaker 1: where we are where we are today, but many safe 386 00:20:19,720 --> 00:20:22,920 Speaker 1: haven assets are still higher in price or lower yield 387 00:20:22,920 --> 00:20:24,920 Speaker 1: with a guard to bonds, whether the US treasuries, where 388 00:20:24,920 --> 00:20:28,760 Speaker 1: it's corporate bonds, high quality corporate bonds, whether it's UM, 389 00:20:29,160 --> 00:20:31,840 Speaker 1: the yend, the Swiss frank currencies like that would typically 390 00:20:31,840 --> 00:20:34,880 Speaker 1: function as safe haven's. Well, right now we're talking about 391 00:20:34,880 --> 00:20:37,680 Speaker 1: boom times, the commodity prices rising quite sharply the next 392 00:20:37,680 --> 00:20:40,160 Speaker 1: twelve months, the fastest growth we seed in the United 393 00:20:40,200 --> 00:20:43,199 Speaker 1: States in decades. We can see a situation where the 394 00:20:43,240 --> 00:20:46,040 Speaker 1: US economy grows faster than the Chinese economy in two 395 00:20:46,040 --> 00:20:48,080 Speaker 1: thousand twenty one, which I think no one would have 396 00:20:48,119 --> 00:20:50,600 Speaker 1: believed was possible um a year or two ago or 397 00:20:50,640 --> 00:20:53,399 Speaker 1: several years ago. So all these things are are changing 398 00:20:53,440 --> 00:20:56,359 Speaker 1: the narrative of what's what's going on in the world, 399 00:20:56,440 --> 00:20:59,639 Speaker 1: and this boom conditions could could continue. What that means 400 00:20:59,800 --> 00:21:02,240 Speaker 1: is at the levels of interest rates we thought were 401 00:21:02,480 --> 00:21:06,080 Speaker 1: restrictive for the US economy may not be restrictive because 402 00:21:06,359 --> 00:21:09,000 Speaker 1: there's so much fiscal policy coming, there's so much pent 403 00:21:09,080 --> 00:21:12,040 Speaker 1: up spending coming down the pipe. We saw the savings 404 00:21:12,400 --> 00:21:15,520 Speaker 1: respike higher again in the first in January of this year, 405 00:21:15,560 --> 00:21:18,640 Speaker 1: meaning more money is available to be spent later this year. 406 00:21:18,680 --> 00:21:21,560 Speaker 1: So we're talking about a situation with the US economy, 407 00:21:21,760 --> 00:21:24,920 Speaker 1: and we see forecast being raised continuously by various analysts 408 00:21:24,920 --> 00:21:27,760 Speaker 1: on the street and elsewhere, six seven percent this year 409 00:21:27,760 --> 00:21:30,560 Speaker 1: and then again four to five percent again next year, 410 00:21:30,600 --> 00:21:34,840 Speaker 1: which is unheard of in the past years. But there's 411 00:21:34,840 --> 00:21:38,600 Speaker 1: a distinction here between higher rates crimping borrowing and crimping 412 00:21:38,600 --> 00:21:41,440 Speaker 1: growth with one point three percent treasury yields one point 413 00:21:41,480 --> 00:21:45,240 Speaker 1: four percent treasury yields probably won't do, and a reassessment 414 00:21:45,280 --> 00:21:48,440 Speaker 1: of valuations that have gotten very high and specific sectors. 415 00:21:48,440 --> 00:21:51,119 Speaker 1: And that's why Michael Showell was talking about a less 416 00:21:51,240 --> 00:21:55,400 Speaker 1: benign rotation beneath the surface within some of these equity indexes, 417 00:21:55,400 --> 00:21:57,960 Speaker 1: where you actually see some pretty significant losses in the 418 00:21:58,040 --> 00:22:01,280 Speaker 1: high flying stocks. How close are we to that just 419 00:22:01,440 --> 00:22:06,600 Speaker 1: based on valuations relative value? With treasury yields going up well, 420 00:22:06,680 --> 00:22:08,119 Speaker 1: the way the way we look at it is that 421 00:22:08,240 --> 00:22:10,600 Speaker 1: US treasury yields of thing one of the few things 422 00:22:10,600 --> 00:22:13,960 Speaker 1: which still are a lower yield than they were pre pandemic. 423 00:22:14,040 --> 00:22:17,399 Speaker 1: So one point three five tenure treasury is still lower 424 00:22:17,400 --> 00:22:20,520 Speaker 1: than it was called in January, early February, mid February 425 00:22:20,600 --> 00:22:23,320 Speaker 1: last year, what about one point five percent? Real heels 426 00:22:23,359 --> 00:22:25,320 Speaker 1: are a lot lower today, is still than they were 427 00:22:25,359 --> 00:22:28,879 Speaker 1: in September of last year. So the question is, if 428 00:22:28,880 --> 00:22:31,040 Speaker 1: the economy is going to do so well, why are 429 00:22:31,080 --> 00:22:33,880 Speaker 1: these yields so low. Shouldn't they be at least back 430 00:22:33,920 --> 00:22:35,919 Speaker 1: to where they were before? And this is kind of 431 00:22:35,920 --> 00:22:37,600 Speaker 1: why I think the market is coming around to the 432 00:22:37,600 --> 00:22:40,200 Speaker 1: idea that we didn't think yields could rise as much 433 00:22:40,240 --> 00:22:42,879 Speaker 1: as they have, But they may rise more because they 434 00:22:42,920 --> 00:22:46,800 Speaker 1: still look low relative to the imply growth forecasts we 435 00:22:46,840 --> 00:22:49,720 Speaker 1: see in other assets, and the Fed may be happy 436 00:22:49,760 --> 00:22:52,280 Speaker 1: with that. Might be they will be Michael Kushma Morgan 437 00:22:52,320 --> 00:23:01,679 Speaker 1: Stanley see of Global fixed income how much to Dolga 438 00:23:01,760 --> 00:23:04,320 Speaker 1: joins us. He's with John Hopkins Center for Health Security 439 00:23:04,400 --> 00:23:07,840 Speaker 1: has been wonderful and giving us a broader perspective on 440 00:23:07,880 --> 00:23:11,280 Speaker 1: this pandemic. Dr Dolge of The Atlantic has written up 441 00:23:11,320 --> 00:23:14,280 Speaker 1: so nicely that Johns Hopkins at work and they talk 442 00:23:14,400 --> 00:23:18,240 Speaker 1: about the path to normal. The numbers are getting better. 443 00:23:18,760 --> 00:23:22,600 Speaker 1: How do you perceive how the win of it, the 444 00:23:22,640 --> 00:23:25,560 Speaker 1: way of it that we get back to normal. I 445 00:23:25,560 --> 00:23:28,359 Speaker 1: think the first thing is really making sure that we 446 00:23:28,480 --> 00:23:31,439 Speaker 1: never get in a position where hospitals go into crisis again. 447 00:23:31,760 --> 00:23:35,399 Speaker 1: And towards that is get vaccine into the arms of 448 00:23:35,440 --> 00:23:38,800 Speaker 1: all the nursing home residents, all the vulnerable adults that 449 00:23:38,880 --> 00:23:42,040 Speaker 1: live in the community, and that will will really change 450 00:23:42,080 --> 00:23:44,920 Speaker 1: the perception because then you tame the virus. It's unable 451 00:23:45,000 --> 00:23:47,680 Speaker 1: to kill at the rate that it's doing, and that's 452 00:23:47,680 --> 00:23:51,040 Speaker 1: going to allow a lot more freedom to do things 453 00:23:51,080 --> 00:23:53,840 Speaker 1: without worrying about passing this onto somebody that could get 454 00:23:53,920 --> 00:23:56,520 Speaker 1: very ill or you yourself getting ill. Then I think 455 00:23:56,520 --> 00:24:00,200 Speaker 1: the next step is really getting cases to a or 456 00:24:00,320 --> 00:24:03,560 Speaker 1: level by vaccinating the population, just really making this more 457 00:24:03,680 --> 00:24:06,080 Speaker 1: like one of our respiratory viruses that we deal with 458 00:24:06,119 --> 00:24:07,720 Speaker 1: every year. It's not going to go away, It's just 459 00:24:07,760 --> 00:24:11,480 Speaker 1: gonna become much more manageable on deaths. If the horror 460 00:24:11,520 --> 00:24:14,920 Speaker 1: was four thousand deaths per day, we're celebrating that we're 461 00:24:15,000 --> 00:24:18,160 Speaker 1: under two thousand deaths per day. Maybe we get under 462 00:24:18,200 --> 00:24:22,919 Speaker 1: one thousand desper day nationally. That's a wonderful outcome. Is 463 00:24:22,960 --> 00:24:26,960 Speaker 1: the virus still out there? Is even if we get 464 00:24:27,080 --> 00:24:31,359 Speaker 1: vaccinated we get better, the numbers improve. Is the things 465 00:24:31,359 --> 00:24:34,840 Speaker 1: still out there? Definitely. You have to remember that this 466 00:24:34,960 --> 00:24:38,040 Speaker 1: is the seventh human coronavirus that's been discovered, and four 467 00:24:38,080 --> 00:24:42,040 Speaker 1: of those coronavirus has caused our commonhold. This is going 468 00:24:42,080 --> 00:24:44,360 Speaker 1: to become something like that. It's gonna be like our 469 00:24:44,359 --> 00:24:47,480 Speaker 1: fifth seasonal coronavirus, and we will still see cases. We 470 00:24:47,480 --> 00:24:49,879 Speaker 1: will still see outbreaks, we will still see debts, but 471 00:24:49,920 --> 00:24:52,200 Speaker 1: they will be nowhere near the levels that we saw 472 00:24:52,440 --> 00:24:54,840 Speaker 1: during the height of this pandemic, or even now once 473 00:24:54,880 --> 00:24:58,080 Speaker 1: we get our mulnerable populations vaccinated. Once it is defanged 474 00:24:58,080 --> 00:25:00,679 Speaker 1: in and more like other respiratory vi but it's not 475 00:25:00,720 --> 00:25:03,800 Speaker 1: going away. It's established itself in the human population. It's endemic. 476 00:25:04,000 --> 00:25:06,439 Speaker 1: There's an animal host that we don't know, an intermediate 477 00:25:06,440 --> 00:25:08,679 Speaker 1: between bats and humans. We still don't know what that is. 478 00:25:09,080 --> 00:25:12,480 Speaker 1: This is not an irradicable or an alimitable disease. Dr Adulga, 479 00:25:12,520 --> 00:25:15,240 Speaker 1: I'm gonna say something that will make John Farrell fall 480 00:25:15,280 --> 00:25:17,439 Speaker 1: office chair and perhaps Tom Keene as well, and be 481 00:25:17,520 --> 00:25:21,520 Speaker 1: really optimistic about the potential here, especially as they come 482 00:25:21,600 --> 00:25:24,640 Speaker 1: up with new advances for the vaccines. The FDA yesterday 483 00:25:24,680 --> 00:25:27,480 Speaker 1: indicating that they would allow a fast track process to 484 00:25:27,680 --> 00:25:32,160 Speaker 1: adapt the vaccines available to any new strains of coronavirus 485 00:25:32,240 --> 00:25:34,920 Speaker 1: as they come out. Are we getting close like securing 486 00:25:34,960 --> 00:25:37,439 Speaker 1: the common cold or being able to vaccinate for a 487 00:25:37,480 --> 00:25:40,280 Speaker 1: whole host of other coronaviruses that are out there. I 488 00:25:40,359 --> 00:25:42,720 Speaker 1: definitely think that the technology that was used to make 489 00:25:42,760 --> 00:25:45,120 Speaker 1: the COVID nineteen vaccine messenger are an air m rn 490 00:25:45,119 --> 00:25:49,120 Speaker 1: A vaccine technology has really made it much a much 491 00:25:49,160 --> 00:25:52,720 Speaker 1: easier process to make vaccines for targets that people hadn't pursued. 492 00:25:52,840 --> 00:25:55,400 Speaker 1: And I do think that we're going to probably see 493 00:25:55,440 --> 00:25:59,200 Speaker 1: somebody go after those coronaviruses that cause our common cold. 494 00:25:59,240 --> 00:26:01,159 Speaker 1: So it won't be all of our common colds, but 495 00:26:01,240 --> 00:26:04,959 Speaker 1: a substantial proportion could be reachable with this new technology. 496 00:26:05,000 --> 00:26:07,720 Speaker 1: With the fact now that we have human coronavirus vaccines, 497 00:26:07,840 --> 00:26:10,560 Speaker 1: but remember the common cold is not just caused by coronavirus. 498 00:26:10,600 --> 00:26:14,360 Speaker 1: Is there a rhinoviruses, metneuma viruses, pair influenza viruses. It's 499 00:26:14,400 --> 00:26:17,080 Speaker 1: a whole group of viruses which will which will still 500 00:26:17,080 --> 00:26:19,600 Speaker 1: be around, so you will still likely still get the cold, 501 00:26:19,600 --> 00:26:22,160 Speaker 1: which is probably less likely to get it from coronaviruses 502 00:26:22,359 --> 00:26:24,800 Speaker 1: once we get more coronavirus vaccines. I gotta say, as 503 00:26:24,840 --> 00:26:26,959 Speaker 1: you talk, it doesn't make me want to go and 504 00:26:27,000 --> 00:26:29,359 Speaker 1: touch people again and hug them and go face to 505 00:26:29,359 --> 00:26:31,600 Speaker 1: face with raises A question of how confident people will 506 00:26:31,640 --> 00:26:34,000 Speaker 1: be once we do get a heart immunity of some 507 00:26:34,040 --> 00:26:36,600 Speaker 1: sort another. I know it's controversial and get out there, 508 00:26:36,600 --> 00:26:38,520 Speaker 1: and it's a question of services and how much they 509 00:26:38,520 --> 00:26:41,320 Speaker 1: can research. Can we go back to the life that 510 00:26:41,359 --> 00:26:44,920 Speaker 1: we lived once or will life be just absolutely changed 511 00:26:44,960 --> 00:26:47,840 Speaker 1: with people having a new awareness of health and spreading 512 00:26:47,880 --> 00:26:50,280 Speaker 1: and an inability to control some of these viruses. I 513 00:26:50,359 --> 00:26:52,680 Speaker 1: definitely think that after any kind of pandemic or infectious 514 00:26:52,680 --> 00:26:56,359 Speaker 1: disease emergency, the population is going to change their perception 515 00:26:56,440 --> 00:26:59,000 Speaker 1: of risk and disease. We've lived pretty much in luxury 516 00:26:59,359 --> 00:27:00,960 Speaker 1: in the United as in many of the developed worlds, 517 00:27:00,960 --> 00:27:03,119 Speaker 1: where we don't worry about infectious diseases every time we 518 00:27:03,160 --> 00:27:05,600 Speaker 1: step out the door interact with the other individuals. So 519 00:27:05,640 --> 00:27:07,520 Speaker 1: there are going to be people who are still reticent 520 00:27:07,600 --> 00:27:10,440 Speaker 1: to get back into it, that may still wear masks 521 00:27:10,440 --> 00:27:13,200 Speaker 1: and face coverings when they're in crowded and congregated places 522 00:27:13,200 --> 00:27:16,240 Speaker 1: on public transportation, even after the rules may may change. 523 00:27:16,240 --> 00:27:17,920 Speaker 1: So I do think that you're going to see people 524 00:27:18,240 --> 00:27:20,720 Speaker 1: just much more attuned to the risk of respiratory viral 525 00:27:20,720 --> 00:27:23,760 Speaker 1: infections after this, and that may take some time to dissipate, 526 00:27:23,800 --> 00:27:25,959 Speaker 1: but many people will get back to what they were doing. 527 00:27:25,960 --> 00:27:28,120 Speaker 1: They're already sort of getting back to what they were doing, 528 00:27:28,320 --> 00:27:30,240 Speaker 1: but it's going to be a different population because we 529 00:27:30,280 --> 00:27:32,800 Speaker 1: had five hundred thousand Americans die and the whole world 530 00:27:32,840 --> 00:27:35,520 Speaker 1: turned upside down by a by a virus. This was 531 00:27:35,600 --> 00:27:38,960 Speaker 1: Lesia's version of Sunshine and Rainbows on a Tuesday morning. 532 00:27:39,400 --> 00:27:42,760 Speaker 1: I'm ixparted to catch out these sam down Jones health kids. 533 00:27:42,760 --> 00:27:47,080 Speaker 1: Thank you. This is the Bloomberg Surveillance Podcast. Thanks for listening. 534 00:27:47,440 --> 00:27:50,800 Speaker 1: Join us live weekdays from seven to ten AMI Eastern 535 00:27:51,040 --> 00:27:55,040 Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from 536 00:27:55,119 --> 00:27:59,240 Speaker 1: six to nine am for insight from the best and economics, 537 00:27:59,359 --> 00:28:03,720 Speaker 1: finance and astment and international relations. And subscribe to the 538 00:28:03,920 --> 00:28:08,560 Speaker 1: Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and 539 00:28:08,640 --> 00:28:11,919 Speaker 1: of course, on the terminal. I'm Tom keene In. This 540 00:28:13,000 --> 00:28:13,719 Speaker 1: is Bloomberg.