1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 2 00:00:13,960 --> 00:00:17,560 Speaker 1: we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,280 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Right now, 5 00:00:27,440 --> 00:00:30,840 Speaker 1: the immediacy that we're getting from hospital professionals, including the 6 00:00:30,920 --> 00:00:34,120 Speaker 1: leadership at monts Snay in New York and today at 7 00:00:34,120 --> 00:00:38,199 Speaker 1: Beth Israel Deaconess Lady up in Boston, we welcome all 8 00:00:38,240 --> 00:00:41,159 Speaker 1: of you on radio and television. To people in the trenches, 9 00:00:41,200 --> 00:00:43,560 Speaker 1: that would be the Lieutenant Governor of the Empire State, 10 00:00:43,920 --> 00:00:46,920 Speaker 1: Kathy Hukel joins us this morning. Kathy, if you read 11 00:00:46,960 --> 00:00:50,680 Speaker 1: the Buffalo News, it's writing your face. It's right in 12 00:00:50,680 --> 00:00:55,040 Speaker 1: our face nationwide. What is the best practice now for 13 00:00:55,200 --> 00:01:02,000 Speaker 1: politicians to contain the great hospitalization we're seeing? Well, we 14 00:01:02,080 --> 00:01:04,080 Speaker 1: have a strategy, Tom, and thank you everyone for having 15 00:01:04,200 --> 00:01:06,920 Speaker 1: back on this once again Western New York where I 16 00:01:06,959 --> 00:01:10,399 Speaker 1: live Erie County, Buffalo. We now have a nine point 17 00:01:10,520 --> 00:01:13,920 Speaker 1: four percent infection rate, and then from just two and 18 00:01:13,920 --> 00:01:16,640 Speaker 1: a half three percent of a month ago. So I 19 00:01:16,680 --> 00:01:18,399 Speaker 1: want to just point out first of all these numbers 20 00:01:18,400 --> 00:01:21,559 Speaker 1: can viral out of controls very quickly, and what that does, 21 00:01:21,720 --> 00:01:24,280 Speaker 1: it's an infection rate that leads to an increased number 22 00:01:24,280 --> 00:01:27,960 Speaker 1: of hospitalizations. And that is our greatest fear. Governor Culma 23 00:01:28,000 --> 00:01:29,760 Speaker 1: and I have said this from the beginning. Our fear 24 00:01:29,880 --> 00:01:33,400 Speaker 1: is overwhelming the hospital system. So what we're doing is 25 00:01:33,480 --> 00:01:37,080 Speaker 1: first of all calling back retired nurses and doctors, asking 26 00:01:37,120 --> 00:01:39,480 Speaker 1: them to enlist again and help us in this battle, 27 00:01:39,880 --> 00:01:43,720 Speaker 1: but also asking every single hospital to ensure that they 28 00:01:43,760 --> 00:01:47,800 Speaker 1: have surge capacity. We had to do this in the spring. 29 00:01:47,880 --> 00:01:50,240 Speaker 1: We know how it's done, and we can do this 30 00:01:50,320 --> 00:01:53,160 Speaker 1: once again. Thirdly, we also want to make sure they 31 00:01:53,160 --> 00:01:56,640 Speaker 1: have enough protective equipment. Remember how frightening it was back 32 00:01:56,720 --> 00:01:59,440 Speaker 1: when March and April we were scouring the planet in 33 00:01:59,480 --> 00:02:01,760 Speaker 1: search of something as simple as a mask. We couldn't 34 00:02:01,800 --> 00:02:04,280 Speaker 1: get them from anywhere. So we're making sure they have 35 00:02:04,400 --> 00:02:07,720 Speaker 1: those supplies. But what something we can't control, which is 36 00:02:07,840 --> 00:02:12,280 Speaker 1: very frightening, the staffing. The staffing. Now, these are individuals 37 00:02:12,320 --> 00:02:14,640 Speaker 1: who have been in this battle and the front minds 38 00:02:14,680 --> 00:02:18,000 Speaker 1: of the terrific war for month. They're exhausted, many of 39 00:02:18,040 --> 00:02:20,520 Speaker 1: them are sick themselves. May them don't want to expose 40 00:02:20,560 --> 00:02:23,280 Speaker 1: their family members any longer, and that is where we're 41 00:02:23,280 --> 00:02:26,000 Speaker 1: having a real crisis point. And early on we were 42 00:02:26,000 --> 00:02:28,960 Speaker 1: able to enlist thirty thousand people from across the country 43 00:02:28,960 --> 00:02:32,200 Speaker 1: who volunteered their time to come to the epicenter of 44 00:02:32,240 --> 00:02:35,120 Speaker 1: the pandemic, New York City. Those people are now needed 45 00:02:35,160 --> 00:02:37,960 Speaker 1: in their homes in North Dakota, doth Dakota, and Oklahoma, 46 00:02:38,120 --> 00:02:40,600 Speaker 1: places where it's surging there as well. So that's what 47 00:02:40,639 --> 00:02:43,400 Speaker 1: we're concerned about. We can create enough beds, we can 48 00:02:43,440 --> 00:02:45,840 Speaker 1: put up field hospitals if we have to, but we 49 00:02:45,880 --> 00:02:48,440 Speaker 1: have to make sure that they're properly staffed. That's the 50 00:02:48,480 --> 00:02:51,040 Speaker 1: incredible stress on the health care system that we're seeing 51 00:02:51,040 --> 00:02:54,399 Speaker 1: across the nation and increasingly yet again in New York. 52 00:02:54,440 --> 00:02:57,440 Speaker 1: From the financial perspective, there is a question of how 53 00:02:57,560 --> 00:02:59,760 Speaker 1: much money is needed, how soon. And I know you've 54 00:02:59,760 --> 00:03:01,880 Speaker 1: come the show quite a bit and talked about the 55 00:03:01,919 --> 00:03:05,520 Speaker 1: needs financially for New York State. Mitch McConnell currently putting 56 00:03:05,520 --> 00:03:07,720 Speaker 1: out a bill, a skinny bill to get done before 57 00:03:07,720 --> 00:03:09,760 Speaker 1: the end of the year that would not include funding 58 00:03:10,120 --> 00:03:12,840 Speaker 1: for our for your government in New York State or 59 00:03:12,919 --> 00:03:16,720 Speaker 1: other local governments. My question is how eminently do you 60 00:03:16,800 --> 00:03:19,680 Speaker 1: need that money. If you do not get it before 61 00:03:19,720 --> 00:03:23,560 Speaker 1: the end of the year, what gets cut first. We 62 00:03:23,600 --> 00:03:26,240 Speaker 1: needed this money yesterday. And I don't still do not 63 00:03:26,360 --> 00:03:29,440 Speaker 1: understand the life of me how Mitch McConnell and the 64 00:03:29,520 --> 00:03:32,960 Speaker 1: Center Republicans can be so stinny. This is a once 65 00:03:33,000 --> 00:03:36,880 Speaker 1: in a year event. It is global pandemic. And I 66 00:03:36,880 --> 00:03:38,520 Speaker 1: don't even know how they think we're going to get 67 00:03:38,520 --> 00:03:40,920 Speaker 1: the vaccination. About how they're going to get the vaccine 68 00:03:41,000 --> 00:03:43,280 Speaker 1: is the stupid If they don't give us money, they're 69 00:03:43,360 --> 00:03:46,840 Speaker 1: they're being The governor is governor Promo is head of 70 00:03:46,880 --> 00:03:51,760 Speaker 1: the National Governor's Associations, a bipartisan group. Yesterday they sent 71 00:03:51,880 --> 00:03:54,600 Speaker 1: a letter thing to the Settle government. We need money 72 00:03:54,680 --> 00:03:56,640 Speaker 1: to be able to distribute. You're not going to do 73 00:03:56,680 --> 00:03:59,760 Speaker 1: it nationwide. Okay, fine, you didn't help us with the testing. 74 00:04:00,120 --> 00:04:02,720 Speaker 1: You left us on our own throughout this entire pandemic. 75 00:04:03,160 --> 00:04:05,480 Speaker 1: You have to give us money to make up for 76 00:04:05,520 --> 00:04:07,800 Speaker 1: the loss in revenues and the way we've been having 77 00:04:07,800 --> 00:04:10,680 Speaker 1: extraordinary expenses. So, Lisa, I don't I'm not going to 78 00:04:10,840 --> 00:04:13,200 Speaker 1: stay here. What has to be cut. All I know 79 00:04:13,320 --> 00:04:16,000 Speaker 1: is it's not acceptable and everyone should be railing to 80 00:04:16,080 --> 00:04:19,880 Speaker 1: convince the Republicans and bitch mcconnells do this for this country. 81 00:04:19,960 --> 00:04:23,040 Speaker 1: If we don't get this crisis under control, our economy 82 00:04:23,160 --> 00:04:26,000 Speaker 1: is going to implode. Conversely, if we can wrap our 83 00:04:26,080 --> 00:04:28,760 Speaker 1: arms around this, get enough money to the states like 84 00:04:28,839 --> 00:04:31,599 Speaker 1: New York so we can have mass vaccination as soon 85 00:04:31,600 --> 00:04:35,000 Speaker 1: as it's humanly possible, we can super charge our economy 86 00:04:35,040 --> 00:04:38,520 Speaker 1: once again, and that's what everyone wants. Lustening government. A 87 00:04:38,560 --> 00:04:41,800 Speaker 1: couple of things to unpack here. One are you saying 88 00:04:42,200 --> 00:04:45,960 Speaker 1: that without state aid from the federal level, you can't 89 00:04:45,960 --> 00:04:49,880 Speaker 1: distribute this vaccine. No, I didn't say that. I'm just 90 00:04:49,920 --> 00:04:53,120 Speaker 1: saying that we definitely need money to have a robust, 91 00:04:53,360 --> 00:04:55,760 Speaker 1: aggressive plan. We will do it. This is New York, 92 00:04:56,160 --> 00:04:58,040 Speaker 1: we'll figure it out. We are left on our own 93 00:04:58,400 --> 00:05:03,040 Speaker 1: throughout this entire pandemic. Is unfortunate and it never should 94 00:05:03,080 --> 00:05:04,640 Speaker 1: have been that way. We should have had a national 95 00:05:04,720 --> 00:05:07,320 Speaker 1: response to this crisis, but we didn't. Failure of the 96 00:05:07,360 --> 00:05:10,800 Speaker 1: battle government, failure of the Trump administration. So we're the 97 00:05:10,800 --> 00:05:13,120 Speaker 1: governor and I've been working on this. We're ready for this. 98 00:05:13,200 --> 00:05:15,719 Speaker 1: We can handle this, but it's going to be very 99 00:05:15,760 --> 00:05:19,800 Speaker 1: expensive to get this vaccination out to student, to literally 100 00:05:19,880 --> 00:05:23,440 Speaker 1: twenty million people, not once, but twice. And that's the 101 00:05:23,520 --> 00:05:26,000 Speaker 1: challenge that we're facing. So the reality is, if you 102 00:05:26,080 --> 00:05:27,919 Speaker 1: want to keep funding we want to keep paying for 103 00:05:27,960 --> 00:05:29,960 Speaker 1: health care workers and people who do that, we need 104 00:05:30,000 --> 00:05:33,000 Speaker 1: money from the Settle government. We need their help. I 105 00:05:33,080 --> 00:05:35,320 Speaker 1: understand you waging lead the McConnell to come to the table. 106 00:05:35,680 --> 00:05:38,160 Speaker 1: Have you urged speaking belows you to do the same thing, 107 00:05:38,279 --> 00:05:40,839 Speaker 1: who for many people is perhaps aiming a little bit 108 00:05:40,880 --> 00:05:43,120 Speaker 1: too high, particularly over the last couple of months going 109 00:05:43,200 --> 00:05:47,360 Speaker 1: into the election. I don't know what is too high 110 00:05:47,480 --> 00:05:50,840 Speaker 1: during a global pandemic. These are extraordinary costs. We're not 111 00:05:50,920 --> 00:05:54,200 Speaker 1: asking them to help us balance our annual budget. We've 112 00:05:54,240 --> 00:05:56,400 Speaker 1: had to incur costs that no one ever could have 113 00:05:56,440 --> 00:05:58,840 Speaker 1: foreseen when they did their budgeting. And now it's not 114 00:05:58,960 --> 00:06:01,880 Speaker 1: just the Blue states. Never Mitch McConnell said, why will 115 00:06:01,960 --> 00:06:05,760 Speaker 1: we bail out the Blue states meaning New York, California, Connecticut, 116 00:06:05,800 --> 00:06:09,280 Speaker 1: New Jersey. Now it is a national phenomenon and we 117 00:06:09,320 --> 00:06:12,560 Speaker 1: need them to assist every state because this is going 118 00:06:12,600 --> 00:06:14,599 Speaker 1: to hold back our economy. And one of the problems 119 00:06:14,600 --> 00:06:17,800 Speaker 1: we have is that small businesses in particular, and I 120 00:06:17,880 --> 00:06:20,680 Speaker 1: toured the southern tier west of New York yesterday to 121 00:06:20,800 --> 00:06:24,400 Speaker 1: visit small businesses. They are barely clinging on for life, 122 00:06:24,839 --> 00:06:28,520 Speaker 1: and the programs that helped them before, the unemployment program 123 00:06:28,600 --> 00:06:31,480 Speaker 1: from the Settle government that assisted businesses as well business 124 00:06:31,480 --> 00:06:34,280 Speaker 1: owners as well as for their employees. That's all going 125 00:06:34,320 --> 00:06:37,920 Speaker 1: to expire in another within weeks. When that money's gone. 126 00:06:38,279 --> 00:06:39,760 Speaker 1: Who do you think is going to be doing the 127 00:06:39,760 --> 00:06:42,760 Speaker 1: consumer consumer purchasing. We need to keep our economy going. 128 00:06:42,800 --> 00:06:45,200 Speaker 1: It's going to all dry up. Cathey, we always appreciate 129 00:06:45,240 --> 00:06:48,080 Speaker 1: you dropping by. We appreciate it. Thank you time this morning, Cathee. 130 00:06:48,080 --> 00:06:54,560 Speaker 1: How cool that New York's lieutenant governor We're not. Julie 131 00:06:54,560 --> 00:06:57,760 Speaker 1: Norman joins us. She's a U cell in London, expert 132 00:06:57,839 --> 00:07:01,120 Speaker 1: on all sorts of issues of distress in politics, and 133 00:07:01,160 --> 00:07:03,360 Speaker 1: one of that is one of those, I should say, 134 00:07:03,440 --> 00:07:07,479 Speaker 1: is their study of activism. Professor no Norman, thank you 135 00:07:07,520 --> 00:07:11,840 Speaker 1: for joining us on the president elect. Liberals. I guess 136 00:07:11,840 --> 00:07:15,320 Speaker 1: they're called progressives now, but I like the word liberals better. 137 00:07:15,960 --> 00:07:20,040 Speaker 1: And then this idea of activism, what is the activism 138 00:07:20,160 --> 00:07:23,640 Speaker 1: this president will face? We so m I think that's 139 00:07:23,640 --> 00:07:26,760 Speaker 1: a really good question. I think that will see different 140 00:07:26,880 --> 00:07:30,880 Speaker 1: kinds of pressures on Biden from both the left and 141 00:07:31,080 --> 00:07:34,320 Speaker 1: the right. We know that there will be, um, you know, 142 00:07:34,320 --> 00:07:37,840 Speaker 1: pressure on Biden to move forward on campaign promises that 143 00:07:37,920 --> 00:07:43,480 Speaker 1: he made regarding racial justice and addressing entrenched inequalities. And 144 00:07:43,600 --> 00:07:45,440 Speaker 1: I think a lot of that will take the form 145 00:07:45,720 --> 00:07:49,720 Speaker 1: of more positive activism the sense of like political pressure. 146 00:07:50,080 --> 00:07:52,520 Speaker 1: But we'll certainly get some other kinds of pressure from 147 00:07:52,560 --> 00:07:54,520 Speaker 1: the left as well, which we've already seen in some 148 00:07:54,640 --> 00:07:58,600 Speaker 1: comments in response to his nominees so far. But I 149 00:07:58,640 --> 00:08:01,720 Speaker 1: do think he has a very pragmatic team and place. 150 00:08:02,360 --> 00:08:05,400 Speaker 1: Um He's putting in a lot of people who resonate 151 00:08:05,480 --> 00:08:08,440 Speaker 1: with UM an individual kind of across the spectrum. So 152 00:08:08,520 --> 00:08:11,240 Speaker 1: we'll see what kind of mode that takes. There's a 153 00:08:11,440 --> 00:08:16,640 Speaker 1: Washington word pragmatic in one way, Will moderate Democrats be 154 00:08:16,800 --> 00:08:24,320 Speaker 1: pragmatic pragmatic with their more boisterous brethren. Yeah, Well, I 155 00:08:24,360 --> 00:08:27,120 Speaker 1: think it's just going to be what actually what the 156 00:08:27,120 --> 00:08:31,000 Speaker 1: Biden administration is actually able to do. We know that 157 00:08:31,120 --> 00:08:34,600 Speaker 1: they will most likely be somewhat constrained to a more 158 00:08:34,720 --> 00:08:38,160 Speaker 1: moderate agenda, as it is with with looking like a 159 00:08:38,240 --> 00:08:42,640 Speaker 1: most most like Republican Congress. UM. If they are, however, 160 00:08:42,760 --> 00:08:45,920 Speaker 1: able to give some nods to some issues on the 161 00:08:45,960 --> 00:08:48,960 Speaker 1: progressive agenda. I think one area will they'll have the 162 00:08:49,120 --> 00:08:52,880 Speaker 1: most ability to do that is with climate change. We've 163 00:08:52,880 --> 00:08:55,880 Speaker 1: already saw the seen Biden a point John Terry is 164 00:08:55,920 --> 00:08:58,920 Speaker 1: a new climates are um. He will most likely use 165 00:08:59,000 --> 00:09:03,520 Speaker 1: executive action to unwind some of the regulations that Trump 166 00:09:03,559 --> 00:09:05,800 Speaker 1: put a stop in regards to the environment. So I 167 00:09:05,840 --> 00:09:08,400 Speaker 1: think so do it he can in some areas that 168 00:09:08,800 --> 00:09:11,720 Speaker 1: really are important to the progressives in the party, but 169 00:09:11,960 --> 00:09:14,160 Speaker 1: it's also clear that he probably won't move as far 170 00:09:14,200 --> 00:09:16,800 Speaker 1: in other areas that someone the left would want, and 171 00:09:16,840 --> 00:09:20,160 Speaker 1: perhaps that includes China, although this has been a pipe 172 00:09:20,240 --> 00:09:23,080 Speaker 1: artisan issue. We saw the New York Times interview with 173 00:09:23,160 --> 00:09:27,240 Speaker 1: Thomas Friedman with President elect Joe Biden talking about he 174 00:09:27,280 --> 00:09:30,400 Speaker 1: does not plan to roll back the tariffs on China 175 00:09:30,440 --> 00:09:32,880 Speaker 1: in short order. His first order of affairs will be 176 00:09:32,960 --> 00:09:36,240 Speaker 1: to re establish the ties with allies. What would the 177 00:09:36,320 --> 00:09:40,200 Speaker 1: United Front look like when it comes to tackling the 178 00:09:40,280 --> 00:09:43,920 Speaker 1: China issue as they define it? Yeah, wells, I think 179 00:09:43,960 --> 00:09:46,600 Speaker 1: this is the area where we won't see as much 180 00:09:46,640 --> 00:09:49,720 Speaker 1: of their real substantive policy shift as much as just 181 00:09:49,840 --> 00:09:53,760 Speaker 1: the shift in style. The Bien administration will most likely 182 00:09:53,840 --> 00:09:58,600 Speaker 1: maintain a somewhat tough on China approach, especially in regards 183 00:09:58,640 --> 00:10:02,600 Speaker 1: to issues like secure city and technology, but they will 184 00:10:02,679 --> 00:10:05,880 Speaker 1: be some room open for engagement again on issues like 185 00:10:05,920 --> 00:10:09,400 Speaker 1: climate change, again on issues like trade, and also doing 186 00:10:09,440 --> 00:10:12,800 Speaker 1: so in a way that's much more cooperative with allies, 187 00:10:12,880 --> 00:10:17,520 Speaker 1: especially European allies, rather than just an American first approach 188 00:10:17,640 --> 00:10:20,240 Speaker 1: or a bullying or strong arm not strong arming of 189 00:10:20,240 --> 00:10:23,880 Speaker 1: other countries. Professor, we're talking about policy in the future. Obviously, 190 00:10:24,000 --> 00:10:27,360 Speaker 1: the President elect is putting together his candidate, putting together 191 00:10:27,400 --> 00:10:29,840 Speaker 1: his cabinet, and I think we're all happy to see 192 00:10:29,840 --> 00:10:33,840 Speaker 1: a smooth transition starting to form going into one. But 193 00:10:33,920 --> 00:10:36,839 Speaker 1: when the president elect starts talking about policy in the 194 00:10:36,960 --> 00:10:40,760 Speaker 1: here and now set by officials in the Lane duck session, 195 00:10:40,800 --> 00:10:44,200 Speaker 1: do you think, Professor, that helps the formulation of policy 196 00:10:44,280 --> 00:10:47,319 Speaker 1: or hinders it. Well, I think this is a challenge 197 00:10:47,400 --> 00:10:50,640 Speaker 1: right now for Biden. He obviously wants to weigh in 198 00:10:50,800 --> 00:10:54,479 Speaker 1: on the big crisis facing Americans right now, the economic 199 00:10:54,520 --> 00:10:57,840 Speaker 1: crisis and the pandemic, of course, but he has to 200 00:10:57,880 --> 00:11:00,640 Speaker 1: do so in a way that not only me non 201 00:11:00,760 --> 00:11:03,880 Speaker 1: pinging too far in the current administration, but also on 202 00:11:04,120 --> 00:11:08,160 Speaker 1: his own democratic colleagues in Congress. Um, you know we 203 00:11:08,160 --> 00:11:12,400 Speaker 1: saw yesterday even the bipartisan framework that was put forward, 204 00:11:12,920 --> 00:11:16,240 Speaker 1: there was some pushback to that from both Republicans and 205 00:11:16,280 --> 00:11:19,440 Speaker 1: Democrats in other areas of leadership in Congress. But that 206 00:11:19,559 --> 00:11:22,760 Speaker 1: was kind of stepping on toads negotiations. But I think 207 00:11:22,800 --> 00:11:25,199 Speaker 1: the bottom line is that for Biden and for others 208 00:11:25,200 --> 00:11:27,679 Speaker 1: who just want to see some real changes on these issues, 209 00:11:28,000 --> 00:11:30,920 Speaker 1: they don't mind that pressure going forward, and they don't 210 00:11:30,960 --> 00:11:33,920 Speaker 1: mind kind of having a stronger vote in that, even 211 00:11:33,920 --> 00:11:35,640 Speaker 1: if it's a little bit um, even if it's seen 212 00:11:35,679 --> 00:11:38,240 Speaker 1: as pressure by other on their own parties. Professor, appreciate 213 00:11:38,280 --> 00:11:41,719 Speaker 1: your perspective, Jillie Norman that University of College London, professor. 214 00:11:45,960 --> 00:11:49,560 Speaker 1: What's great about David Constant is not the Brown University acuity. 215 00:11:49,920 --> 00:11:53,240 Speaker 1: What's great about him as he writes precise research notes 216 00:11:53,559 --> 00:11:57,120 Speaker 1: that actually, as an adult used to do looks out 217 00:11:57,200 --> 00:12:00,200 Speaker 1: one two in three years, you know you're is what 218 00:12:00,240 --> 00:12:02,720 Speaker 1: you need to know. Blended in one to three years 219 00:12:02,720 --> 00:12:06,880 Speaker 1: out is a constant twenty six percent lift to this market. 220 00:12:07,080 --> 00:12:09,800 Speaker 1: He is a golden sex David, good morning. I love 221 00:12:09,840 --> 00:12:12,320 Speaker 1: how you go out to two thousand, twenty two and 222 00:12:12,360 --> 00:12:14,280 Speaker 1: you get us out. I think it's sp X forty. 223 00:12:15,200 --> 00:12:17,760 Speaker 1: How do we get there? Well, I get there a 224 00:12:17,760 --> 00:12:19,880 Speaker 1: couple of ways. You get there to around thirty seven 225 00:12:19,960 --> 00:12:22,280 Speaker 1: hundred at the end of this year. Uh, you get 226 00:12:22,280 --> 00:12:25,520 Speaker 1: there are forty three hundred at the end of twenty one, 227 00:12:25,679 --> 00:12:27,559 Speaker 1: and then you get to forty six hundred at the 228 00:12:27,640 --> 00:12:31,040 Speaker 1: end of two. So that's the path and sort of 229 00:12:31,040 --> 00:12:33,520 Speaker 1: what are the building blocks behind it? Well, basically, you've 230 00:12:33,520 --> 00:12:36,840 Speaker 1: got an economy that's getting better, you have earnings that 231 00:12:36,880 --> 00:12:39,960 Speaker 1: are growing, and you have the rates that they are 232 00:12:39,960 --> 00:12:42,720 Speaker 1: staying super low. I mean, those are the three building box. 233 00:12:42,760 --> 00:12:46,360 Speaker 1: It's not so so brilliant. And it's also the tina trade. 234 00:12:46,440 --> 00:12:48,800 Speaker 1: What is the alternative? What are the all what else 235 00:12:48,880 --> 00:12:51,520 Speaker 1: is there that that that's out there? And equities becomes 236 00:12:51,520 --> 00:12:54,400 Speaker 1: the defaults opportunity. So I want to think about the 237 00:12:54,440 --> 00:12:58,760 Speaker 1: following way, Uh, Tom, break the market into two pieces. 238 00:12:59,320 --> 00:13:02,679 Speaker 1: Let's take the five big stocks that are almost a 239 00:13:02,760 --> 00:13:06,320 Speaker 1: quarter of the market, and let's take together sevent the market. 240 00:13:06,720 --> 00:13:11,120 Speaker 1: Those big five stocks, their sales we're up eighteen percent 241 00:13:11,200 --> 00:13:14,720 Speaker 1: this year, sales for everything else down five percent. So 242 00:13:14,760 --> 00:13:17,760 Speaker 1: it explains why these stocks were up around fifty percent 243 00:13:17,880 --> 00:13:19,880 Speaker 1: year today, So they had a great year. We understand 244 00:13:19,920 --> 00:13:22,960 Speaker 1: that we're looking forward. What's the what's the path forward. 245 00:13:23,000 --> 00:13:25,960 Speaker 1: These companies are expected to have revenue growth each of 246 00:13:25,960 --> 00:13:28,839 Speaker 1: the next couple of years of around fifteen percent, So 247 00:13:28,880 --> 00:13:31,800 Speaker 1: that's kind of part of your leg going forward, Tom. 248 00:13:31,920 --> 00:13:33,800 Speaker 1: And the second part, if you think of the other 249 00:13:34,160 --> 00:13:38,079 Speaker 1: four hundred and stocks, they're expected to have around six 250 00:13:38,120 --> 00:13:41,880 Speaker 1: percent revenue growth top line sales growth of each of 251 00:13:41,920 --> 00:13:44,320 Speaker 1: the next couple of years. So that's basically the story 252 00:13:44,920 --> 00:13:47,200 Speaker 1: is about an economy that's getting better, coming off the 253 00:13:47,240 --> 00:13:50,800 Speaker 1: pandemic of crisis low and generally getting better. The fed 254 00:13:50,880 --> 00:13:56,520 Speaker 1: on hold that is our our general assumptions, the vaccination 255 00:13:56,559 --> 00:14:00,679 Speaker 1: of half HERD immunity by May of next year. All 256 00:14:00,760 --> 00:14:02,760 Speaker 1: that is to the positive, and I think the market 257 00:14:02,840 --> 00:14:08,120 Speaker 1: is recognizing that and we'll continue to do so. It 258 00:14:08,200 --> 00:14:10,360 Speaker 1: just sounds like a multiple story. But when I taught 259 00:14:10,400 --> 00:14:11,960 Speaker 1: you and when I read your research, it's not just 260 00:14:12,000 --> 00:14:14,400 Speaker 1: about the multiple story. It's about better earnings that you're 261 00:14:14,400 --> 00:14:17,600 Speaker 1: looking for and above consensus earnings. To David, we walk 262 00:14:17,640 --> 00:14:19,680 Speaker 1: me through why why you're a little bit more constructive 263 00:14:19,720 --> 00:14:22,520 Speaker 1: than maybe the consensus is at the moment on earning specifically, 264 00:14:23,080 --> 00:14:25,560 Speaker 1: So if we look at the earnings, uh, Jonathan, it's 265 00:14:25,560 --> 00:14:28,400 Speaker 1: a good's a good question. So the consensus expectation it's 266 00:14:28,440 --> 00:14:32,360 Speaker 1: around one hundred sixty five dollars of SMP five hundred 267 00:14:32,400 --> 00:14:35,880 Speaker 1: earnings next year one, and we're at a hundred and 268 00:14:35,920 --> 00:14:38,600 Speaker 1: seventy five dollars. You know what explains that, Well, part 269 00:14:38,600 --> 00:14:41,920 Speaker 1: of it is a better economic backdrop. We've got GDP 270 00:14:42,040 --> 00:14:46,800 Speaker 1: growth something around five the consensus expectations of forty nine 271 00:14:46,920 --> 00:14:50,480 Speaker 1: economists and the Blueship forecast around three point eight percent, 272 00:14:50,600 --> 00:14:53,760 Speaker 1: so that's a higher level of activity. There's not much 273 00:14:53,800 --> 00:14:57,080 Speaker 1: inflation out there, inflation under control, so that's basically allowing 274 00:14:57,120 --> 00:15:01,280 Speaker 1: companies to have that broader level of of earnings growth 275 00:15:01,760 --> 00:15:04,400 Speaker 1: with not a lot of a lot of pressure on 276 00:15:04,560 --> 00:15:07,320 Speaker 1: input costs. So that's your basic Your margins are basically 277 00:15:07,520 --> 00:15:09,680 Speaker 1: part of that's recovery. And so those your two you 278 00:15:09,880 --> 00:15:12,240 Speaker 1: your billion box as we see it in our models, 279 00:15:12,360 --> 00:15:14,840 Speaker 1: and the Fed has made it very clear in our 280 00:15:14,920 --> 00:15:17,760 Speaker 1: view that they're on hold for next three years at least, 281 00:15:17,960 --> 00:15:21,320 Speaker 1: perhaps as long as five years based on the economics forecast, 282 00:15:21,400 --> 00:15:24,440 Speaker 1: and so that's a pretty benign backdrop. It's a good 283 00:15:24,440 --> 00:15:27,080 Speaker 1: backdrop for the equity market. And when you think about 284 00:15:27,080 --> 00:15:30,960 Speaker 1: the asset allocators, the portfolio managers out there, around fifty 285 00:15:31,080 --> 00:15:35,320 Speaker 1: percent of the assets are allocated to equities, about twenty little, 286 00:15:35,520 --> 00:15:38,280 Speaker 1: little little less than twenty to bonds. So what's the 287 00:15:38,320 --> 00:15:42,600 Speaker 1: alternative cash is offering zero and so that's a still 288 00:15:42,640 --> 00:15:46,600 Speaker 1: an attractive place for for the equity market. Jompan, that's 289 00:15:46,640 --> 00:15:50,400 Speaker 1: the index story beautifully, I doubt going out to let's 290 00:15:50,400 --> 00:15:52,800 Speaker 1: talk about a second level story now the other whites 291 00:15:52,840 --> 00:15:55,280 Speaker 1: and a mix for Goldman. Industrious Material has had a 292 00:15:55,280 --> 00:15:57,760 Speaker 1: lot about that. The cyclical trade of the last month, 293 00:15:57,760 --> 00:16:00,240 Speaker 1: that's played out wonderfully for so many people who had 294 00:16:00,240 --> 00:16:04,760 Speaker 1: it on You stand avoid information technology, why divid Jonathan, 295 00:16:04,800 --> 00:16:06,240 Speaker 1: I wanted you to think about it three ways. I 296 00:16:06,240 --> 00:16:08,440 Speaker 1: want to think about growth, I want to think about value, 297 00:16:08,440 --> 00:16:10,720 Speaker 1: and you want to think about cyclicals. The growth story 298 00:16:10,960 --> 00:16:14,760 Speaker 1: is basically duration equity duration, those longer term cash flows 299 00:16:14,880 --> 00:16:20,200 Speaker 1: at the zero lower bound. Those growth in mostly technology 300 00:16:20,240 --> 00:16:23,560 Speaker 1: is prized, that's worth a lot and they're likely outperformed. 301 00:16:23,800 --> 00:16:27,240 Speaker 1: You have value. The best value absolutely is in healthcare. 302 00:16:27,480 --> 00:16:31,400 Speaker 1: They are the cheapest relative to the market in forty years. 303 00:16:31,600 --> 00:16:34,960 Speaker 1: You got to go back to when when early uh 304 00:16:35,200 --> 00:16:38,320 Speaker 1: Clinton administration, when they were trying to restructure part of healthcare, 305 00:16:38,720 --> 00:16:41,560 Speaker 1: look at the Obamacare period of time and ten years ago. 306 00:16:41,720 --> 00:16:44,720 Speaker 1: Those are the only times that were similar. And actually 307 00:16:44,760 --> 00:16:47,440 Speaker 1: the valuation of healthcare is even more attractive than either 308 00:16:47,480 --> 00:16:49,840 Speaker 1: of those two times. So that's your value trade and 309 00:16:49,840 --> 00:16:52,920 Speaker 1: your value opportunity. And then the cyclical recovery, of course, 310 00:16:53,120 --> 00:16:57,080 Speaker 1: is the pandemic relief coming from the vaccinations that we 311 00:16:57,120 --> 00:16:59,960 Speaker 1: are assuming and some of the industrial companies likely to benefit. 312 00:17:00,040 --> 00:17:02,600 Speaker 1: So I think that's your three pronged approach to kind 313 00:17:02,600 --> 00:17:04,760 Speaker 1: of attacking the market. I think the other areas the 314 00:17:04,800 --> 00:17:07,719 Speaker 1: market likely to do less well, financials, challenge of the 315 00:17:07,840 --> 00:17:13,119 Speaker 1: flat yokur, energy still under a lot of pressure, consumer staples, utilities, 316 00:17:13,119 --> 00:17:15,200 Speaker 1: some of those other areas will be challenge. But those 317 00:17:15,240 --> 00:17:17,399 Speaker 1: are the ways that I would break that down. So 318 00:17:17,640 --> 00:17:20,359 Speaker 1: what I'm hearing from you, David is potentially adding on 319 00:17:20,400 --> 00:17:22,800 Speaker 1: to what Andrew Slimmon's and Morgan Stanley said earlier, which 320 00:17:22,800 --> 00:17:25,520 Speaker 1: is perhaps the rally in some of the highest beta 321 00:17:25,560 --> 00:17:29,520 Speaker 1: cyclical stocks, the travel sectors, the financials areas that have 322 00:17:29,560 --> 00:17:34,600 Speaker 1: gotten beaten up disproportionately during the pandemic that that perhaps 323 00:17:34,680 --> 00:17:37,080 Speaker 1: has gotten a little ahead of itself. Is that accurate? 324 00:17:38,560 --> 00:17:41,119 Speaker 1: I would say certainly on the on the way you 325 00:17:41,240 --> 00:17:43,159 Speaker 1: just I would I would sort of break apart your 326 00:17:43,200 --> 00:17:45,480 Speaker 1: question there at leasta, And since the financials I think 327 00:17:45,480 --> 00:17:49,639 Speaker 1: have a challenging headwinds in terms of the very flat 328 00:17:49,760 --> 00:17:53,440 Speaker 1: YO curve, the fact that there's big reserves that need 329 00:17:53,480 --> 00:17:59,080 Speaker 1: to be taken for the uncertainty on potential defaults from 330 00:17:59,080 --> 00:18:02,399 Speaker 1: the consumer as well commercial side, the Federal Reserve has 331 00:18:02,400 --> 00:18:06,760 Speaker 1: made regulations difficult to actually raise dividends. They're basically one 332 00:18:06,800 --> 00:18:09,520 Speaker 1: of the most of the banks limited to prohibited from 333 00:18:09,560 --> 00:18:11,639 Speaker 1: buying back stock at this juncture. So those are some 334 00:18:11,680 --> 00:18:15,200 Speaker 1: of the key drivers historically that have been benefiting financials 335 00:18:15,200 --> 00:18:16,919 Speaker 1: when the when those are in play, and they're not 336 00:18:16,960 --> 00:18:20,440 Speaker 1: there right now. On the industrial side, UH, the idea 337 00:18:20,560 --> 00:18:24,240 Speaker 1: of vaccination, you know, does offer some better opportunity for 338 00:18:24,320 --> 00:18:27,119 Speaker 1: some of the travel sector and some of those industrial categories. 339 00:18:27,280 --> 00:18:30,159 Speaker 1: I might point to some of the UH, some of 340 00:18:30,160 --> 00:18:33,120 Speaker 1: the aerospace defense companies as well. I think the way 341 00:18:33,160 --> 00:18:36,679 Speaker 1: to think about value opportunities is to look at the 342 00:18:37,720 --> 00:18:44,000 Speaker 1: one and two level of profits and compare those with 343 00:18:44,119 --> 00:18:47,080 Speaker 1: the pre pandemic level of profits in two thousand nineteen 344 00:18:47,280 --> 00:18:49,760 Speaker 1: to kind of make that comparison, and for the overall 345 00:18:49,840 --> 00:18:52,959 Speaker 1: market you'll be a little bit higher. Maybe you're about 346 00:18:53,040 --> 00:18:56,560 Speaker 1: seven percent higher. That's our estimates, seven percent higher between 347 00:18:56,560 --> 00:18:58,760 Speaker 1: two thousand nineteen and kind of go out to two 348 00:18:58,800 --> 00:19:01,480 Speaker 1: thousand twenty one. But you've got other areas. Some areas 349 00:19:01,520 --> 00:19:05,480 Speaker 1: we've got really depressed level of profits. Maybe they're fifty 350 00:19:05,920 --> 00:19:08,800 Speaker 1: six as much as you had two years ago. I 351 00:19:08,800 --> 00:19:12,400 Speaker 1: think that's the opportunity for a normalization. So that's where 352 00:19:12,440 --> 00:19:14,560 Speaker 1: the value look at. We look at there and see 353 00:19:14,600 --> 00:19:17,600 Speaker 1: some of the travel and the hospitality area, you know 354 00:19:17,640 --> 00:19:20,080 Speaker 1: they would fall into that into that category. Last, I 355 00:19:20,080 --> 00:19:22,080 Speaker 1: want to pick up on one thing you said earlier. 356 00:19:22,119 --> 00:19:25,240 Speaker 1: You were mentioning about credit and kind of what's happening 357 00:19:25,359 --> 00:19:29,280 Speaker 1: on the The equity market is telling a slightly uh 358 00:19:29,440 --> 00:19:33,280 Speaker 1: different story from the credit market, because if you look 359 00:19:33,359 --> 00:19:37,440 Speaker 1: at the strongest balance sheet companies, they're up twenty six 360 00:19:37,560 --> 00:19:41,560 Speaker 1: percent year to date a portfolio of those, you compare 361 00:19:41,600 --> 00:19:45,439 Speaker 1: that with a weak Balanti portfolio they're down one percent 362 00:19:45,720 --> 00:19:48,000 Speaker 1: and that sector neutral. So that's not gonna e skew 363 00:19:48,080 --> 00:19:50,960 Speaker 1: towards any one particular area. Yes, you're paying thirty five 364 00:19:51,000 --> 00:19:53,960 Speaker 1: times for a strong boundary and you're paying thirteen times 365 00:19:54,000 --> 00:19:57,040 Speaker 1: for a weaker balunty portfolio. But that's telling us that 366 00:19:57,080 --> 00:20:00,960 Speaker 1: portfolio managers are not totally embracing the idea that the 367 00:20:01,000 --> 00:20:03,719 Speaker 1: economy is solely recovering. And then we're sort of in 368 00:20:03,760 --> 00:20:06,960 Speaker 1: the clear, and so you're seeing pockets of opportunity. And 369 00:20:07,000 --> 00:20:09,119 Speaker 1: I would say, if you have a view that the 370 00:20:09,480 --> 00:20:11,840 Speaker 1: you know, there's a path towards normalization, some of the 371 00:20:11,880 --> 00:20:15,000 Speaker 1: weaker balancie companies would be attractive at this juncture. And 372 00:20:15,040 --> 00:20:17,480 Speaker 1: they tend to be a cluster around some of the 373 00:20:17,560 --> 00:20:20,480 Speaker 1: pandemic you know, companies that hurt most in the pandemic. 374 00:20:21,440 --> 00:20:23,880 Speaker 1: And David, you always make it sounds so easy the past. 375 00:20:24,840 --> 00:20:26,720 Speaker 1: It's great to catch up. So as always they have 376 00:20:26,800 --> 00:20:32,560 Speaker 1: a custom that of government sacks, thank you right now 377 00:20:32,600 --> 00:20:35,639 Speaker 1: on the domestic economy, and John mentions a DP today, 378 00:20:35,680 --> 00:20:38,280 Speaker 1: claims tomorrow then on to job today and Friday will 379 00:20:38,280 --> 00:20:41,560 Speaker 1: go beneath the headline numbers here on radio and television. 380 00:20:41,800 --> 00:20:45,280 Speaker 1: At a thirty, Michael Faroli joins with JP Morgan, who 381 00:20:45,320 --> 00:20:47,879 Speaker 1: was definitive a number of years ago, and calculating a 382 00:20:48,000 --> 00:20:52,119 Speaker 1: shocking statistic for our potential g d P. Michael, before 383 00:20:52,160 --> 00:20:55,760 Speaker 1: a job's discussion, do you have to reset your analysis 384 00:20:55,840 --> 00:21:01,880 Speaker 1: of potential GDP after a pandemic? So, I think that's 385 00:21:01,880 --> 00:21:05,359 Speaker 1: a difficult question. There are certainly aspects of the recent 386 00:21:05,400 --> 00:21:09,160 Speaker 1: economic environment that would cause one to think that potential 387 00:21:09,200 --> 00:21:12,480 Speaker 1: GDP growth may be slower. That said, we've seen a 388 00:21:12,560 --> 00:21:16,639 Speaker 1: nice recovery in capital spending, so capital formation maybe holding 389 00:21:16,680 --> 00:21:19,520 Speaker 1: in pretty well here. But I think in the long run, 390 00:21:20,000 --> 00:21:23,119 Speaker 1: just given the demographic trends, potential is probably gonna be 391 00:21:23,119 --> 00:21:25,359 Speaker 1: inching down in a little bit every couple of years, 392 00:21:25,440 --> 00:21:28,600 Speaker 1: just given slower growth in the labor force. And that's 393 00:21:28,800 --> 00:21:32,440 Speaker 1: just due to long run demographics, not necessarily short run 394 00:21:32,800 --> 00:21:34,440 Speaker 1: up and downs that we've seen over the course of 395 00:21:34,520 --> 00:21:36,520 Speaker 1: this year. So what's the run rate on non farm 396 00:21:36,600 --> 00:21:39,800 Speaker 1: payrolls of Great shock? Pre pandemic was to see such 397 00:21:39,840 --> 00:21:43,440 Speaker 1: good non farm payrolls over time? What's your new run 398 00:21:43,560 --> 00:21:47,760 Speaker 1: rate on NFP? So, uh, when we get back to 399 00:21:47,800 --> 00:21:50,000 Speaker 1: a normalized state of the world, which could be many 400 00:21:50,080 --> 00:21:53,399 Speaker 1: years from now, we think it should be under one thousand, 401 00:21:53,840 --> 00:21:56,520 Speaker 1: which is to say, the number of jobs created just 402 00:21:56,640 --> 00:21:59,679 Speaker 1: to absorb new entrants into the labor force. So I 403 00:21:59,680 --> 00:22:01,840 Speaker 1: think the days. Uh, you know when we grew up 404 00:22:01,840 --> 00:22:04,119 Speaker 1: when it was two hundred plus that we considered to 405 00:22:04,119 --> 00:22:07,880 Speaker 1: be a normal runway runway, our way are far behind us. 406 00:22:08,840 --> 00:22:10,840 Speaker 1: So we are up against a fiscal cliff, and a 407 00:22:10,920 --> 00:22:13,040 Speaker 1: number of people have come on and talked about this, 408 00:22:13,040 --> 00:22:15,600 Speaker 1: this idea that some of the unemployment benefits are running 409 00:22:15,640 --> 00:22:18,480 Speaker 1: out and will expire in the next couple of weeks. 410 00:22:18,800 --> 00:22:22,159 Speaker 1: How big of a gap is there in your expectations 411 00:22:22,200 --> 00:22:25,320 Speaker 1: for growth with an extension and without an extension of 412 00:22:25,400 --> 00:22:29,520 Speaker 1: those benefits. So the fiscal cliff in terms of jobless 413 00:22:29,520 --> 00:22:31,280 Speaker 1: benefits at the end of the year, we don't think 414 00:22:31,280 --> 00:22:33,480 Speaker 1: will be anywhere nearest severe as the one we saw 415 00:22:34,240 --> 00:22:39,720 Speaker 1: um in August when when the six dollar weekly federal 416 00:22:39,720 --> 00:22:44,359 Speaker 1: pandemic unemployment compensation payments ran Now, so what's at stake 417 00:22:44,440 --> 00:22:48,439 Speaker 1: here is two programs. Pandemic Unemployment Assistance which is for 418 00:22:48,520 --> 00:22:51,760 Speaker 1: gig workers and other types of employees who don't don't 419 00:22:51,760 --> 00:22:55,359 Speaker 1: normally qualify for benefits, and then this other program which 420 00:22:55,440 --> 00:22:58,920 Speaker 1: is called peu CE. Most of the peu CE people 421 00:22:58,960 --> 00:23:02,640 Speaker 1: will actually graduate into state extended benefit program. So it's 422 00:23:02,640 --> 00:23:06,840 Speaker 1: really uh people on pe way and they were scheduled 423 00:23:06,840 --> 00:23:09,960 Speaker 1: only at nine months of benefits anyway, So so there 424 00:23:09,960 --> 00:23:11,680 Speaker 1: will be a hit here. I don't think it's going 425 00:23:11,720 --> 00:23:14,439 Speaker 1: to be nearly a severe, as I said, as what 426 00:23:14,520 --> 00:23:17,760 Speaker 1: we saw over the summer, but certainly something we believe 427 00:23:18,400 --> 00:23:22,639 Speaker 1: will be a priority in any UH stimulus tours. Certainly 428 00:23:22,640 --> 00:23:25,960 Speaker 1: we saw that in a bipartisan proposal yesterday, as as 429 00:23:25,960 --> 00:23:28,320 Speaker 1: it should be, of course, and this is certainly extended 430 00:23:28,320 --> 00:23:32,840 Speaker 1: benefits like PUC or something that the government has instituted 431 00:23:32,840 --> 00:23:37,439 Speaker 1: in almost every recession in the post work period. Michael, 432 00:23:37,480 --> 00:23:39,080 Speaker 1: just to turn to the I M that came out 433 00:23:39,080 --> 00:23:40,520 Speaker 1: in the last twenty four hours, I think a lot 434 00:23:40,520 --> 00:23:42,720 Speaker 1: of people walked away from that a bit confused. The 435 00:23:42,760 --> 00:23:45,919 Speaker 1: number looked great, then the employment component was really really soft. 436 00:23:45,920 --> 00:23:49,040 Speaker 1: And this quote came from them. Companies and supply continue 437 00:23:49,080 --> 00:23:52,840 Speaker 1: to operate in reconfigured factories, but absentee is um. Short 438 00:23:52,960 --> 00:23:56,480 Speaker 1: term shutdowns to sanitized facilities and difficulties in returning and 439 00:23:56,560 --> 00:23:59,879 Speaker 1: hiring workers are causing strengths that will likely limit future 440 00:24:00,000 --> 00:24:03,720 Speaker 1: manufacturing growth potential. What do you think about that quote 441 00:24:03,760 --> 00:24:05,800 Speaker 1: that right there, Michael, is that's something that resonates with 442 00:24:05,800 --> 00:24:08,440 Speaker 1: you about the prospects for the labor market in the net. 443 00:24:09,920 --> 00:24:13,520 Speaker 1: So certainly there were some concerns when we had getting 444 00:24:13,520 --> 00:24:15,080 Speaker 1: back to the other question, when we had those six 445 00:24:15,119 --> 00:24:20,320 Speaker 1: hundred dollar weekly uh bonus payments, that that was hindering 446 00:24:20,640 --> 00:24:23,879 Speaker 1: the return of the workforce. But with those behind us, 447 00:24:23,920 --> 00:24:26,240 Speaker 1: we haven't been hearing as many anecdotes, so I agree 448 00:24:26,280 --> 00:24:30,280 Speaker 1: that it was a little bit um confusing those uh 449 00:24:30,400 --> 00:24:34,919 Speaker 1: the comments and that that reading and generally, uh, you know. 450 00:24:34,920 --> 00:24:37,159 Speaker 1: One thing I would say is is it's been a 451 00:24:37,160 --> 00:24:40,600 Speaker 1: little bit confusing how strong manufacturing employment has actually been 452 00:24:40,600 --> 00:24:43,800 Speaker 1: over the past few years. And actually we've seen manufacturing 453 00:24:43,920 --> 00:24:47,879 Speaker 1: productivity go down, which is pretty odd because this is 454 00:24:48,320 --> 00:24:52,240 Speaker 1: a sector where generally we expect high productivity. So I 455 00:24:52,280 --> 00:24:55,600 Speaker 1: think over time we should come to expect slower manufacturing 456 00:24:55,720 --> 00:24:58,720 Speaker 1: employment growth. I wouldn't, though, expect it all to happen 457 00:24:58,720 --> 00:25:03,800 Speaker 1: in one month. Like I sent my prahas suggest Well, Michael, 458 00:25:03,840 --> 00:25:05,439 Speaker 1: do you think it makes it difficult to get a 459 00:25:05,440 --> 00:25:09,840 Speaker 1: read on payrolls this Friday given what we heard yesterday? Well, 460 00:25:09,880 --> 00:25:12,679 Speaker 1: I think it was difficult even before yesterday. We were getting, 461 00:25:13,040 --> 00:25:15,399 Speaker 1: you know, differing signals from a number of things we 462 00:25:15,480 --> 00:25:17,920 Speaker 1: normally look at, and I think the consensus the Bloomberg 463 00:25:18,720 --> 00:25:22,720 Speaker 1: poll was somewhere between minus a hundred plus seven or 464 00:25:22,720 --> 00:25:27,040 Speaker 1: eight hundreds. Quite a wide range there. Hopefully the ADP 465 00:25:27,200 --> 00:25:30,640 Speaker 1: this morning is UM somewhat correct and saying that it's 466 00:25:30,640 --> 00:25:32,879 Speaker 1: sort of in the middle of that range. But I 467 00:25:32,880 --> 00:25:36,640 Speaker 1: think even before the I S M calling this Friday's 468 00:25:36,720 --> 00:25:41,160 Speaker 1: number has been a little trickier, certainly than normally years. 469 00:25:42,520 --> 00:25:44,600 Speaker 1: Michael John Herman of m U f G has a 470 00:25:44,640 --> 00:25:48,360 Speaker 1: great grid this morning showing his relative optimism even though 471 00:25:48,359 --> 00:25:51,080 Speaker 1: he's got a negative statistic on G d P, and 472 00:25:51,119 --> 00:25:53,439 Speaker 1: then the street and the I, M F, O, E, 473 00:25:53,560 --> 00:25:56,240 Speaker 1: C D and all the others as well. Is a 474 00:25:56,280 --> 00:26:02,600 Speaker 1: general statement this December, are we too gloomy? I think 475 00:26:02,640 --> 00:26:04,879 Speaker 1: it depends whether you're talking about the very near term 476 00:26:04,920 --> 00:26:07,760 Speaker 1: or whether you're talking about the medium term. UH. Through 477 00:26:07,800 --> 00:26:11,400 Speaker 1: the medium term, I say, I would say UM prospects 478 00:26:11,440 --> 00:26:13,879 Speaker 1: are looking pretty good, certainly given all the news on 479 00:26:13,920 --> 00:26:17,840 Speaker 1: the vaccines, which everyone, all the viewers are aware of. UH. 480 00:26:17,880 --> 00:26:21,440 Speaker 1: If we get something like the bipartisan UH stimulus deal 481 00:26:21,640 --> 00:26:23,760 Speaker 1: combined with the vaccines, I think we could be set 482 00:26:23,840 --> 00:26:28,520 Speaker 1: up for a very strong one, particularly as we get 483 00:26:28,560 --> 00:26:31,440 Speaker 1: into the spring months. But if you're talking about the 484 00:26:31,520 --> 00:26:33,600 Speaker 1: very near term, I think we could be in for 485 00:26:33,760 --> 00:26:40,840 Speaker 1: some pretty pretty rough months, particularly December January, given given 486 00:26:40,840 --> 00:26:45,879 Speaker 1: the surgeon, the virus, the presumptive surge following the Thanksgiving holiday, 487 00:26:46,280 --> 00:26:49,520 Speaker 1: and what that could mean for activity, particularly in consumer services. 488 00:26:49,600 --> 00:26:52,080 Speaker 1: So if you just have a very short term view, 489 00:26:52,119 --> 00:26:55,280 Speaker 1: I think there are certainly reasons for gloom. I think 490 00:26:55,320 --> 00:26:59,359 Speaker 1: if you look beyond a few months, I'm quite optimistic 491 00:26:59,400 --> 00:27:02,240 Speaker 1: on prospects through the US account. So Thomas just trolling 492 00:27:02,240 --> 00:27:04,199 Speaker 1: me at this point saying are we too gloomy and 493 00:27:04,200 --> 00:27:05,840 Speaker 1: then having you weigh in on it. Michael, I do 494 00:27:05,880 --> 00:27:08,159 Speaker 1: wonder though, when you talk about how it's going to 495 00:27:08,200 --> 00:27:10,119 Speaker 1: be very difficult in your term. We keep talking to 496 00:27:10,119 --> 00:27:12,880 Speaker 1: people about the potential for scarring, and there's a question 497 00:27:12,960 --> 00:27:16,040 Speaker 1: of how much people are adequately accounting for this in 498 00:27:16,080 --> 00:27:19,439 Speaker 1: their models for the future beyond the next couple of months. 499 00:27:19,840 --> 00:27:23,119 Speaker 1: Where are the pitfalls in terms of what people are 500 00:27:23,160 --> 00:27:25,639 Speaker 1: pricing in? In other words, is their weakness that's going 501 00:27:25,680 --> 00:27:29,119 Speaker 1: to be more persistent have longer lasting scars than perhaps 502 00:27:29,119 --> 00:27:32,400 Speaker 1: people are accounting for. So I think this gets back 503 00:27:32,400 --> 00:27:36,680 Speaker 1: to somewhat to Tom's question about potential GDP grood. So 504 00:27:36,720 --> 00:27:40,080 Speaker 1: there certainly will be some scarring. I think the extent 505 00:27:40,400 --> 00:27:44,640 Speaker 1: is so far the indicators are looking I would say 506 00:27:44,640 --> 00:27:48,280 Speaker 1: relative to expectations, and in saying March or April. When 507 00:27:48,280 --> 00:27:51,919 Speaker 1: it comes to things like permanent unemployment, are people who 508 00:27:51,960 --> 00:27:54,920 Speaker 1: consider themselves permanently unemployed as a share of the overall 509 00:27:54,960 --> 00:27:58,359 Speaker 1: pool of unemployed individuals that's actually not moved up as 510 00:27:58,440 --> 00:28:02,560 Speaker 1: much as certainly I here, uh there, We're still a 511 00:28:02,560 --> 00:28:06,320 Speaker 1: little depressed on labor force participation. I think if we 512 00:28:06,440 --> 00:28:09,960 Speaker 1: have strong growth next year, we can hope to bring 513 00:28:10,000 --> 00:28:13,080 Speaker 1: those people back into the labor market. H But I 514 00:28:13,080 --> 00:28:16,639 Speaker 1: think there are reasons to to say the jury is 515 00:28:16,640 --> 00:28:19,600 Speaker 1: still out. But what I would say is, yes, there 516 00:28:19,600 --> 00:28:23,439 Speaker 1: will be scarring. The degree might be less than certainly 517 00:28:23,480 --> 00:28:26,200 Speaker 1: than I have feared since or seven once ago. Michael 518 00:28:26,200 --> 00:28:28,399 Speaker 1: grig to catch up as always Marca Ferrati, that of 519 00:28:28,520 --> 00:28:31,960 Speaker 1: Jack P. Mrgan and looking ahead to payrolls Friday. Thanks 520 00:28:31,960 --> 00:28:36,240 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 521 00:28:36,440 --> 00:28:41,800 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 522 00:28:41,880 --> 00:28:46,160 Speaker 1: you prefer. I'm on Twitter at Tom Keane Before the podcast, 523 00:28:46,240 --> 00:28:49,760 Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio