Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Let's talk about what's going
Speaker 1: on in the markets. Business Week agenda, Let's set it.
Speaker 1: Gina Martin Adams is chief equity strategist at Bloomberg Intelligence.
Speaker 1: On the phone in New Jersey. Dave Wilson with US
Speaker 1: stocks that are a Bloomberg News on the remote access
Speaker 1: line from New Jersey as well. Gina, Let's start with
Speaker 1: you watching the churn here a little bit back and forth, um,
Speaker 1: guessing investors kind of waiting for that monthly jobs report,
Speaker 1: even though we kind of know it's going to be
Speaker 1: pretty bad. But how do you see the market internals
Speaker 1: right now? Yeah, we actually entered a little bit of
Speaker 1: a consolidation phase at the very end of April. I say,
Speaker 1: it's a just a tiny consolidation of a roaring rip,
Speaker 1: roaring April gain at least so far. I think that's
Speaker 1: actually taken quite a few investors by surprise. Many were thinking, Okay,
Speaker 1: that this can't keep going. We can't keep we can't
Speaker 1: keep putting in you know, double digit pace of games
Speaker 1: amidst economic weakness. But the reality is when the Fed
Speaker 1: is just pummeling the market with a tremendous amount of
Speaker 1: monetary policy support, quite the opposite is occurring. I do
Speaker 1: think that investors are getting pulled in and fits and
Speaker 1: starts two stocks, and that's probably going to characterize much
Speaker 1: of the summer months. So Dave Wilson, earnings still a
Speaker 1: part of this conversation. What do you see as you
Speaker 1: look at level deeper in the trade, You know, they
Speaker 1: sure are Jason and maybe one stock that's indicative of
Speaker 1: how the market's been going today, as Walt Disney, because
Speaker 1: you know results route late yesterday, uh didn't go over
Speaker 1: so well. I mean fiscal second quarter earnings and revenue
Speaker 1: coming up short of what analysts we're looking for uh,
Speaker 1: you them, They've got the theme parks closed, they got
Speaker 1: cruise ships that aren't going anywhere, they've got films that
Speaker 1: aren't coming out, and yet the stock manages to rebound
Speaker 1: and then move higher. I mean, you could focus under
Speaker 1: streaming services. I suppose certainly plenty of growth at Disney
Speaker 1: Plus and ESPN Plus and Hulu, and now you're looking
Speaker 1: at the stock that's little change. So there's definitely a
Speaker 1: back and forth to the market, and Disney is kind
Speaker 1: of indicative of that. You know. Beyond that, you see
Speaker 1: sort of the old favorites kind of leading the way,
Speaker 1: the biggest technology companies, the thanks stocks in their peers.
Speaker 1: And on the other hand, with bond yields going up
Speaker 1: as the government lines up to borrow trillions of dollars
Speaker 1: in order to pay for its deficit spending, you see
Speaker 1: utility stocks down. You see real estates shares down, financial
Speaker 1: companies as well. So some of the more interest rate
Speaker 1: sensitive areas of the market taking a bit of a
Speaker 1: hit here, Dave, you're teeing me up because I do
Speaker 1: wonder Gina. You guys have been writing some research at
Speaker 1: Bloomberg Intelligence, and you talk about this unconstrained federal spendinging,
Speaker 1: and you combine that with trade policies that pushback even
Speaker 1: more so on globalization. You've got upset supply chains. All
Speaker 1: of this could be inflationary um and we could see
Speaker 1: that start to pick up later on this year, and
Speaker 1: that could impact asset prices. Talk to us a little
Speaker 1: bit about that. Yeah, we did put a report on
Speaker 1: the terminal today just talking about the the actual results
Speaker 1: of COVID nineteen and this devastating recession could be an
Speaker 1: inflationary regime change. We've been over the last decade really
Speaker 1: in a period of time in which inflation inflation is
Speaker 1: continuously decelerated, most of that driven by the commodity complex
Speaker 1: as well as globalization of the technology specific supply chain.
Speaker 1: And obviously we have severe disruptions and energy which are
Speaker 1: likely to constrain the supply of energy going forward. At
Speaker 1: the same time, you've got a lot of disruptions to
Speaker 1: globalization in the form of trade policy as well as
Speaker 1: technology specific policy, and enormous fiscal and monetary policy packages.
Speaker 1: All of these things combined suggests that when we do
Speaker 1: get through this recession experience, as we start to recover,
Speaker 1: you might actually see an inflation outbreak, you might actually
Speaker 1: see inflation start to accelerate. I would say that the
Speaker 1: other the big unknown is what happens with supply chains.
Speaker 1: You know, obviously, companies are incentivized to produce profit growth,
Speaker 1: and the fastest mechanism for profit growth is margin growth.
Speaker 1: So they found lowest cost labor, lowest cost production facilities globally,
Speaker 1: a lot of those specifically in China in order to
Speaker 1: create that margin growth potential. But if we do see
Speaker 1: a diversification of supply chains, if we do see a
Speaker 1: deterioration of the relationship between the US and China, on
Speaker 1: top of all of these other factors, we very melt
Speaker 1: well maybe in for a much different economic climate over
Speaker 1: the next ten years. Then I think asset prices are
Speaker 1: currently prepared for, because I would argue that asset prices
Speaker 1: right now are completely captivated by economic weakness and deflationary
Speaker 1: pressures and certainly aren't thinking forward to a year or
Speaker 1: two years from now where things might be markedly different. Alright,
Speaker 1: Gina Martin Adams, thank you so much, chief equity strategist
Speaker 1: at Bloomberg Intelligence, on the phone from New Jersey, along
Speaker 1: with Dave Wilson, Stocks editor a Bloomberg News on the
Speaker 1: remote access line from New Jersey. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio. Jason,
Speaker 1: I'm not sure what this means, and maybe nothing, but
Speaker 1: our story on the Bloomberg about the latest on the
Speaker 1: virus was way down the list. It was like number
Speaker 1: sixteen or so among our most read, when it has
Speaker 1: been among the top first few on a pretty regular basis,
Speaker 1: right since all Yeah, I was kind of shocked when
Speaker 1: I went looking forward today. Um, let's keep in mind
Speaker 1: that a bravirus cases globally are past three point six
Speaker 1: million deaths, topping two fifty eight thousand. So let's get
Speaker 1: an update on where we are. Dr Ian LUs Bader
Speaker 1: is black with us, his clinical associate Professor Medicine at
Speaker 1: n y U Landgoing Medical Center. He's on the phone
Speaker 1: in New York City. Dr Lusbader, Nice to have you
Speaker 1: back with us. How are you? Always a pleasure? Thanks
Speaker 1: for having me as always so interesting developments as always?
Speaker 1: How how are how are things going? Yeah? Um, you know,
Speaker 1: I think again our tale of two cities good news
Speaker 1: and bad news in some ways, and I think for
Speaker 1: me helping in the intensive care units this weekend. UM,
Speaker 1: I was really most concerned and struck by this population
Speaker 1: of patients with COVID on ventilators who really have not recovered. Uh. Fortunately,
Speaker 1: as we've talked about, you know, the majority of patients
Speaker 1: we're gu estimating around you know, we see as out
Speaker 1: patients cost fever, chills, diarrhea, and they do well, and
Speaker 1: there's a population that unfortunately need to come into the
Speaker 1: hospital and uh ju deteriorate from these multiple clots and
Speaker 1: multiple systems. UH And in this particular ward, it's really
Speaker 1: sort of a chronic ventilator ward. UM. What I'm releasing
Speaker 1: our families that are uh not really prepared to deal
Speaker 1: with these patients who are uneventilator and with a little
Speaker 1: chance of coming off that and most have not been
Speaker 1: considering something called advanced care planning. In other words, they
Speaker 1: haven't had the conversation with their relatives. And many are older,
Speaker 1: they're sixty seventy eight and never really had this conversation
Speaker 1: with them. And I think it's just very important to
Speaker 1: you know, tell our listeners about that, uh and really
Speaker 1: at any age to have that conversation. Many websites are
Speaker 1: available CMS and a HPMU Embaricade Association of Hospital and
Speaker 1: Tality of Care Medicine to really UH find out about
Speaker 1: what are different kinds of life sustaining treatments, What treatments
Speaker 1: would the patient wants should they be diagnosed with a
Speaker 1: life limiting condition. UH to complete a directive and advanced
Speaker 1: directive which may include a healthcare proxy, so someone knows
Speaker 1: that patients wishes and they're legally empowered to make decisions
Speaker 1: when they can't do it. There are things called the
Speaker 1: most former electronic most form, which is medical orders for
Speaker 1: life sustaining treatment. So all of these things I think
Speaker 1: are uncomfortable for many people to talk about, but I
Speaker 1: think this crisis really is an opportunity for people to
Speaker 1: have that conversation. I have to say, having had conversations
Speaker 1: like that with both of my parents who I have lost,
Speaker 1: it was very difficult, but it was necessary and it
Speaker 1: was something they wanted to do as much as you
Speaker 1: know they wanted to be, you know, have some say
Speaker 1: in this, so it's really important. I agree with you
Speaker 1: that this is an important issue of all of this.
Speaker 1: It's so awkward when families um have a loved one
Speaker 1: that has deteriorated requires event a later, you know, with
Speaker 1: or without COVID, And often these patients have COVID with
Speaker 1: associated other you know, illnesses and are really unsure about
Speaker 1: what to do. The patient isn't getting better, They're very stressed,
Speaker 1: very sad. Prognosis may be very limited, they may have
Speaker 1: other issues you know, underlying cancer's, lymphoma, other other big strokes, etcetera.
Speaker 1: And it would be so much easier for the families
Speaker 1: had they had an understanding of what the patient would
Speaker 1: have wanted, had they known they would be in this situation.
Speaker 1: And I was just struck by rounds in the ICU
Speaker 1: where just had had there been a little bit of
Speaker 1: this advanced care planning, uh, patients could be made more comfortable,
Speaker 1: families could be more comfortable emotionally with what's happening and
Speaker 1: with some of the difficult decisions that sometimes has to
Speaker 1: be made, you know, when patients are in this condition well,
Speaker 1: and I would imagine it's only exacerbated. I think you
Speaker 1: alluded to this inn by the fact that oftentimes people
Speaker 1: aren't able or really all the time. In the case
Speaker 1: of COVID cases, family can't be there, and so those
Speaker 1: those conversations you know, even when you, as a doctor,
Speaker 1: I would imagine are wanting to have a conversation with
Speaker 1: with the family, Remember you're doing it over FaceTime or
Speaker 1: over the phone, and you can't sort of have that
Speaker 1: more sincere and moment where you're making some judgment calls.
Speaker 1: And I do wonder how those decisions have really changed
Speaker 1: doctors to some extent, because you know, you've been pretty
Speaker 1: clear about the fact that making some different sorts of
Speaker 1: decisions along the way, I mean, have changed doctors as
Speaker 1: human beings and maybe as professionals going forward. You're exactly right.
Speaker 1: One of the and this has been written about, one
Speaker 1: of the most sad aspects of COVID is really these
Speaker 1: patients UM dying alone or suffering somewhat. Of course you're
Speaker 1: trying to alleviate any pain or suffering UM, but but
Speaker 1: they are alone, and patients we know do better with
Speaker 1: connection and only having a connection with healthcare workers. UM
Speaker 1: that's helpful, but it is a unique situation where families
Speaker 1: can't be at the bedside, and to me, it's so
Speaker 1: we do try and do those UM visits by face
Speaker 1: time and so forth. Sometimes the patients are not always
Speaker 1: alert and so having misunderstanding having these conversations even reading
Speaker 1: about things now for healthy people, very important to get
Speaker 1: healthcare proxies early on and have think about what wishes
Speaker 1: would be helpful and make sure family members and healthcare
Speaker 1: proxies and paperwork is done so that if God forbid
Speaker 1: there's a problem, at least there's a game plan. Yeah, exactly.
Speaker 1: We're going to continue the conversation with Dr Ian lust Bada,
Speaker 1: clinical Associate Professor of Medicine at n y U Land
Speaker 1: Going Medical Center. And I do want to get his
Speaker 1: take on a headline California reports two thousand, six hundred
Speaker 1: three new virus cases largest one day jump. I do
Speaker 1: want to see what he has to say about, you know,
Speaker 1: all our many states easing the lockdown restrictions. Let's continue
Speaker 1: our conversation with Dr Ian LUs Bader, clinical Associate Professor
Speaker 1: of Medicine at the n y U Lang Going Medical Center.
Speaker 1: As I said, our go to doc when we want
Speaker 1: to really understand what's going on. He's been on the
Speaker 1: front lines, as he mentioned earlier in the conversation, working
Speaker 1: in the i c U. So Ian, I have to
Speaker 1: ask you, we are seeing continually some troubling numbers as
Speaker 1: these cases rise a record day in California. On the
Speaker 1: other side of the country, we continue to see, even
Speaker 1: though they are declining, pretty big numbers here in New
Speaker 1: York State, and yet a lot of reopening going on,
Speaker 1: a lot of reopening talk happening. How do you square that.
Speaker 1: What's the medical side of this? Well, I think we're
Speaker 1: in uncharted territory. Uh, we have not had a pandemic
Speaker 1: like this exactly. How to do this delicately and balanced
Speaker 1: the economy and people's psychology? Who are getting a little
Speaker 1: store crazy? You see them out on the street. You
Speaker 1: know there's a higher volume most people. I don't want
Speaker 1: to say people are disobeying home isolation, but people are
Speaker 1: finding excuses to go out, go to the drudge store,
Speaker 1: get a breath of fresh air. So I think the
Speaker 1: weather and time at home is uh is working against
Speaker 1: being very restrictive, which is a challenge. Governor Cuomo has
Speaker 1: commented about, uh seemingly this increased incidence of coronavirus hospitalizations
Speaker 1: with people who seemingly have stayed at home and I've
Speaker 1: had no exposure. Very hard to explain that. Uh. So
Speaker 1: there's really a push and pull with trying to be
Speaker 1: a d percent safe and reopening the economy by definition
Speaker 1: when people return without knowing their antibody status. Uh, And
Speaker 1: we're sending a lot of patients for blood testing. It's
Speaker 1: going to be impossible to send everybody to the lab
Speaker 1: for blood testing. And then what do you do if
Speaker 1: people don't have antibodies? Uh? Are they not supposed to
Speaker 1: go back to work? So I think this is a
Speaker 1: work in progress. Uh. It is disturbing because the virus
Speaker 1: is clearly not going away. There's some evidence of people
Speaker 1: with antibodies or people who seem to get better with
Speaker 1: COVID nineteen and then within a few days or a
Speaker 1: week feel sick again, and when they do nasal swabs
Speaker 1: find the virus there again. So we don't fully understand
Speaker 1: the virus. We don't understand why seemingly if you have
Speaker 1: antiboddies you you can relapse. Uh. So this is going
Speaker 1: to be a challenge. But it seems to me at
Speaker 1: least that the wave of people who want to get back,
Speaker 1: who need to get back, are going to win the
Speaker 1: tug of war, and we may have to be prepared
Speaker 1: for for more cases. Unfortunately. Well, and I well, that's
Speaker 1: what because you know, we've had certainly statements from President
Speaker 1: Trump about this in terms of you know, reopening, and
Speaker 1: I just do wonder if this is unfortunately going to
Speaker 1: have to be part of the process because we don't know,
Speaker 1: as you said, UM, and we don't know a ton
Speaker 1: about this virus, and so you know, we don't totally
Speaker 1: understand full immunity and how to get there. So I
Speaker 1: do wonder if these reopenings and unfortunately spikes are going
Speaker 1: to have to be part of the process. But do
Speaker 1: you you know, as a result of these spikes, does
Speaker 1: that mean we should then also shut down again? You know,
Speaker 1: I would defer to UH DR Fauci and and UH
Speaker 1: leadership on this. I think it's going to be very
Speaker 1: hard to send people back, and I think that would
Speaker 1: really throw the economy into a serious tail spin. UH.
Speaker 1: To me, it seems that we will have to put
Speaker 1: our toe in the water, have people wear masks, have
Speaker 1: critical services, start back and UH and then observe what
Speaker 1: the numbers are because her immunity, as we've said before,
Speaker 1: is not going to be achieved by a vaccine, which
Speaker 1: is months or longer than that away. The vaccines haven't
Speaker 1: been developed, they haven't been tested, UH, and we don't
Speaker 1: really know on a widespread scale will they even work effectively.
Speaker 1: Things like the flu shot you know, we know are
Speaker 1: not a hundred percent effective. So I think no matter
Speaker 1: what we do, a life will resume, probably with masks
Speaker 1: and social distancing, and I think the number of cases
Speaker 1: will not drop to zero. Hopefully though we will have
Speaker 1: better medications to modify the disease to give people more hope,
Speaker 1: and certainly for those patients as we said earlier in
Speaker 1: the show that um you know, are chronically on ventilators,
Speaker 1: we need to have some conversations that advance care planning
Speaker 1: that we talked about. So if people jugitary rate, or
Speaker 1: if they're older and a high risk, at least there's
Speaker 1: some sense with a family about what their wishes are. Yeah, alright, well,
Speaker 1: great stuff. As always, we really appreciated Dr Ian less Vader,
Speaker 1: Clinical Associate Professor of Medicine at n Y use Link
Speaker 1: on Medical Center. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. This is a
Speaker 1: story that both Carol and I read, and I know
Speaker 1: a lot of people have read over the last couple
Speaker 1: of days because we're all looking for answers, and those
Speaker 1: answers are increasingly hard to find. This story is just
Speaker 1: one of these great first person pieces written by one
Speaker 1: of the best writers I think across the Bloomberg Empire,
Speaker 1: Stephanie Baker. She's based in London. She joins us on
Speaker 1: the phone from They're great to catch up with you, Stephanie.
Speaker 1: Thank you all right, So tell us about this piece,
Speaker 1: because you really just outlined and documented your trials and
Speaker 1: tribulations in trying to figure out whether you had COVID
Speaker 1: nineteen right. And you know, I did this because, um,
Speaker 1: I realized that I, like many other people had, was
Speaker 1: wondering whether or not I might have had it. UM,
Speaker 1: And I think those are a lot of other people
Speaker 1: were in a similar situation. And I had written about
Speaker 1: antibody testing, as you know, being trumpeted by politicians as
Speaker 1: a way out of lockdown, but had talked to scientists
Speaker 1: who had beside these anybody's tests is being unreliable. So
Speaker 1: I thought, well, if I throw myself into this world,
Speaker 1: um and really do some research and test it on myself,
Speaker 1: I'll get to the bottom of of you know, how
Speaker 1: reliably reliable these tests are. UM. And you know, I
Speaker 1: thought well, maybe it will be really boring and I'll
Speaker 1: just get you know, a bunch of negative results a
Speaker 1: story and then um. And then so when when I
Speaker 1: started out, I got a negative test and I thought, oh, this,
Speaker 1: what's going to happen. I'm just going to get a
Speaker 1: bunch of negatives and I won't have a story or
Speaker 1: much to say. Um. And then the next test was positive,
Speaker 1: and I was really confounded. The third test was also positive,
Speaker 1: so I figured, well, two out of three, you know,
Speaker 1: the first test must be an outlier. By the time
Speaker 1: I took the fourth test, which was negative, I thought,
Speaker 1: well too positives, too negatives. I have no clue whether
Speaker 1: or not I've had it. And then I started and
Speaker 1: you have a story. You definitely have a story. There
Speaker 1: a story. I started. I could clothes or look at
Speaker 1: these tests. Why would I be getting, you know, differing results.
Speaker 1: You know, there's obviously a lot of these companies are
Speaker 1: claiming incredibly high almost perfect specificity, very high sensitivity rates.
Speaker 1: But what I realized is that some of them are
Speaker 1: testing different UH antibodies to different parts of the virus.
Speaker 1: Some tests just for antibodies against the so called spike protein,
Speaker 1: which is a sort of calling card of this novel coronavirus.
Speaker 1: Others test for antibodies against UH something called the nuclear
Speaker 1: capsid protein, which are far more abundant and easier to detect.
Speaker 1: Some tests for both, and I think that's one of
Speaker 1: the reasons why they're I got so many varying results.
Speaker 1: Oh my god, so many questions. Because what's key about this, right, Stephanie,
Speaker 1: is that so many world leaders, and you write this
Speaker 1: in your story, have said that we need these antibody
Speaker 1: tests to determine who has had the virus, who has immunity,
Speaker 1: so we can reopen up the economies and so everybody
Speaker 1: can feel safe. But what I got from your story
Speaker 1: is that there are tons of different stories, different types
Speaker 1: of tests, excuse me, out there, and there are some
Speaker 1: differences between what's done in the lab versus what you
Speaker 1: can do kind of a rapid test. And the problem
Speaker 1: is there's a lot of variation, right, So I feel
Speaker 1: like there's not a lot of certainty that comes out
Speaker 1: of these antibody tests. Yeah. Absolutely, And and look, you know,
Speaker 1: one of the things I should say at this at
Speaker 1: the start here is that UM scientists don't know if
Speaker 1: you have antibodies, how much protection they actually provide. You know,
Speaker 1: many people, many scientists, think that it will give you
Speaker 1: at least a few months of protection, perhaps several years.
Speaker 1: But the virus has only been around, um, you know
Speaker 1: that we're aware of since January. Still still so much
Speaker 1: to learn. UM. And it's hard to see to study
Speaker 1: how long immunity laughs and and what level of antibodies
Speaker 1: really provides you any protection. But my takeaway from this
Speaker 1: very unscientific little experiment I did was that these tests
Speaker 1: by and large are not ready for prime time. And UM,
Speaker 1: I'm surprised at the overwhelming number of messages I got
Speaker 1: from friends and contacts and Bloomberg users saying, UM, I
Speaker 1: got a test, is it correct or I'm going to
Speaker 1: get a test and what do you think? Um? And
Speaker 1: you know other people who like who said well, I
Speaker 1: took two tests and I had a similar experience to you.
Speaker 1: I got conflicting results. So UM, I've surprised at how
Speaker 1: much this story is kind of captured what is on
Speaker 1: so many people's minds right now. UM, And I think
Speaker 1: there needs to be a lot more research into antibodies
Speaker 1: and how to detect them before we can think about
Speaker 1: rolling this out on a wider scale, and I feel
Speaker 1: like the conversations have increasingly moved from oh my gosh,
Speaker 1: we figured it out, you know, on one level pre vaccine,
Speaker 1: to wait a minute, it's not so clear cut, um,
Speaker 1: you know. So I don't know when you see the
Speaker 1: headlines when it comes to reopening economies and you know
Speaker 1: how long it's going to take for a vaccine, I
Speaker 1: don't know what conclusions do you come to. I think
Speaker 1: everyone is going to have to be really cautious, uh,
Speaker 1: you know, for the foreseeable future, until there is a vaccine,
Speaker 1: even if they've had COVID nineteen and they've recovered and
Speaker 1: they've got perhaps a test that shows they have some
Speaker 1: level of antibodies, because we just don't know how long
Speaker 1: that will last and how much protection it will provide. Um,
Speaker 1: And you know, I would agree. I think the only
Speaker 1: real comfort is when a vaccine, uh you know, is
Speaker 1: found and is rolled out worldwide, which will take a
Speaker 1: long time. So, Sephie, I do have to ask you,
Speaker 1: since since we have you here and you talk with
Speaker 1: you know, high level sources across the world and especially
Speaker 1: there in London, like, what's your take on the return
Speaker 1: to work, especially among the financial community that we care
Speaker 1: so much about like, what are your folks telling you?
Speaker 1: What's the view on the ground there. Well, again, I
Speaker 1: think you know, there there is a lot of stock
Speaker 1: and hope put into antibody testing is one way to
Speaker 1: get back to work. Um. But you know, I think
Speaker 1: the financial community has uh, you know, done incredibly well
Speaker 1: in terms of working remotely. Um And I think some
Speaker 1: of them are looking at how to get back to work,
Speaker 1: but perhaps continuing to work two to three days at
Speaker 1: home because they've figured it out and they've found a
Speaker 1: system uh that works that and that perhaps getting back
Speaker 1: to work is not going to be the same in
Speaker 1: any shape or form that you know, do we still
Speaker 1: need these huge offices if I can you know, effectively
Speaker 1: work from home, you know, full time. Um. So I
Speaker 1: think a lot of thought is going into what does
Speaker 1: that actually look like and how do we go about
Speaker 1: doing it in the safest way and long term, what
Speaker 1: have we learned from this period of working remotely? Yeah,
Speaker 1: it's so interest I mean we're talking about it all
Speaker 1: of time in New York too, And I do feel
Speaker 1: like you know, London in New York or in many
Speaker 1: ways going to lead the way. They set the tone
Speaker 1: for for so many things, whether it is on Wall
Speaker 1: Street or the city the equivalent there in London, or
Speaker 1: when it comes to big restaurants and retail and all
Speaker 1: these different things. All right, Stephanie Baker, so good to
Speaker 1: catch up with you. Thanks for spending some of your
Speaker 1: evening with us there in London. Financial investigation see your
Speaker 1: writer for Bloomberg. Check out her story because it is
Speaker 1: a terrific synthesis, startling and a little bit worrisome, but
Speaker 1: worth reading just because she does such a nice job
Speaker 1: sort of walking you through what she experienced and as
Speaker 1: she pointed out, and unfortunately this isn't surprising a huge
Speaker 1: amount of feedback coming to her, Carol about other folks saying, yeah,
Speaker 1: that happened to me too. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. Let's
Speaker 1: shift gears because I love me some Liz McCormick. Yeah,
Speaker 1: it's one of the most read stories. I think it
Speaker 1: was the most red story all day have in Bloomberg Today.
Speaker 1: How Ken Griffins shut down playbook has kept him on
Speaker 1: top of the markets. He spoke in a rare interview
Speaker 1: about how he did it so let's bring in Liz Kapa, McCormick,
Speaker 1: Bond and FX reporter U Bloombergnew she's on the phone
Speaker 1: in New Jersey. Um, so nice to have you here
Speaker 1: with us again, Liz, so tell us about this and
Speaker 1: getting access to someone who doesn't often talk to the press. Hi.
Speaker 1: Hi to you guys. I hope you're both well. And yeah,
Speaker 1: I mean Ken was kind enough to talk to me.
Speaker 1: And you know they are a huge player. You know,
Speaker 1: treasuries are my thing, and you know their firm is
Speaker 1: very active in many markets equities as well, but Treasuries
Speaker 1: and Ken, you know, it's kind enough to speak to
Speaker 1: me because I know they were among other firms that
Speaker 1: did a lot of work to Like you guys have
Speaker 1: been talking about be able to function and make things
Speaker 1: happen with everyone at home, and like we laid out
Speaker 1: in this story, so did all securities creating you know,
Speaker 1: on a fly very you know, high chech remote offices
Speaker 1: and you know, to try to serve their clients and
Speaker 1: make market But wait, am a perspective this company, as
Speaker 1: you say in your story, li is they trade what
Speaker 1: three point three billion US shares a day? Right there?
Speaker 1: Even even though I kind of love bonds. That their
Speaker 1: main huge thing they do is equities. Like you said,
Speaker 1: they're a very big player in the equity market. And uh,
Speaker 1: and they were higher. They did like a daily average
Speaker 1: in March, which was the Mayhem months months, right, that
Speaker 1: that was higher than their highest level of So all
Speaker 1: this kind of herculean steps they took seemed to pay
Speaker 1: off for them. So Liz, you know, I have to say,
Speaker 1: I look at this as I think many do, with
Speaker 1: something of a gimlet eye, and just think, man, these
Speaker 1: guys always figure it out, and it's not necessarily a
Speaker 1: bad thing, but it really is kind of amazing that
Speaker 1: if you have the resources to do it. And look,
Speaker 1: he moved fast, to Carol's point, he moved very fast
Speaker 1: to get this done. But it it almost just feels
Speaker 1: like a different playbook for a different set of folks. Well, right,
Speaker 1: I mean, we have to be fair. You have to
Speaker 1: have the cash and capital to pull this off, because
Speaker 1: you know it's and I don't have a figure, but
Speaker 1: of course it's costly too. You know, they had to
Speaker 1: get the local cable companies with a fiber optics and
Speaker 1: do everything they do. Um, but it takes a lot.
Speaker 1: But I mean to be fair, many, I mean, you know,
Speaker 1: Ken Griffin is a special person as far as you
Speaker 1: know finances, but many on Wall Street we've all talked
Speaker 1: to them, even the dealer firms, what they're doing to
Speaker 1: try to set up at home. And you know, I
Speaker 1: think that's costing all these firms some money. But yeah,
Speaker 1: I mean Citadel Securities kind of has the heft and
Speaker 1: ability to do what what some firms just couldn't. Right,
Speaker 1: and think about I mean, right, we always talk about
Speaker 1: even in times of crisis, right or or what have you,
Speaker 1: is that those who can move very fast, uh, and
Speaker 1: definitely you know they stand to benefit, specially when it
Speaker 1: comes to the financial markets. List right, exactly exactly, and
Speaker 1: we've seen that through the years in different asset classes.
Speaker 1: Maybe treasury is the slowest, but where it's become more
Speaker 1: about speed and you know, the ability to trade and
Speaker 1: electronically and you know, kind of this became, you know,
Speaker 1: such a huge issue more than we ever even thought
Speaker 1: during this pandemic, because who realized you know, you might
Speaker 1: be at home and you'd normally be sitting next to
Speaker 1: your five year trader and you could just yell out
Speaker 1: to them and you know, you know, it's just to
Speaker 1: a new dimension. Yeah, how much it was important have
Speaker 1: the technology to do all this in the bandwidth and
Speaker 1: all that which is expert you know, so, Liz, So
Speaker 1: let's play that out, I mean look ahead, because we're
Speaker 1: all trying to understand what this business looks like on
Speaker 1: the other side of this. Obviously, Ken Griffin was able to,
Speaker 1: as they say, sort of stand up an entirely new operation,
Speaker 1: uh in many ways and and be pretty seamless. But
Speaker 1: on a broader level, we're all trying to figure out
Speaker 1: what does the workplace look like? What are trading for
Speaker 1: is look like? To your exact point that that you
Speaker 1: just made. What are folks telling you about what getting
Speaker 1: back to work really looks like? Especially when you think
Speaker 1: about the New York's and the Chicago's of the world,
Speaker 1: where proximity has been the name of the game for
Speaker 1: so long, right right, Yeah, I think, first of all,
Speaker 1: people are still trying to figure that out. But I think,
Speaker 1: and you know it's talking to some of our smart
Speaker 1: folks over in Business Week about this that you know,
Speaker 1: for the trading world, in the market makers, I think
Speaker 1: there's gonna be even more of a new normal than
Speaker 1: we saw a post like nine eleven that were a
Speaker 1: lot of firms created backup sites. I'm not saying Ken
Speaker 1: Griffin's team is eventually going to come back from Florida
Speaker 1: and stuff, but I think even the dealer firms, I
Speaker 1: think the equipment people who who got up to speed
Speaker 1: in a way they never had before of having ex
Speaker 1: percent of their employees who could work like to full
Speaker 1: capacity even at home. I don't think they're going to
Speaker 1: dial that back, you know, even if you know some
Speaker 1: of them are saying they're in the office more more often, right,
Speaker 1: But I think that investment, from what I'm hearing, is
Speaker 1: not going to go away, right um whatever they had
Speaker 1: to do to set that up. So I think there
Speaker 1: there's gonna be, like you just not that God willing
Speaker 1: we never have another pandemic corner for another thousands of
Speaker 1: years or something, but that if something does this, it's
Speaker 1: going to be easier for firms to kind of quickly
Speaker 1: on a dime, have you know, half their staff not
Speaker 1: in the office. But I do wonder to Liz the
Speaker 1: ability by Ken Griffith and Ken Griffin and his team
Speaker 1: that sit it out, you know, being able to kind
Speaker 1: of move so quickly get up be involved certainly in
Speaker 1: the trading activity of the market and helping to keep
Speaker 1: it liquid. How it helps maybe cement their place either
Speaker 1: within the Federal Reserve, whether within the government in terms
Speaker 1: of being able to help out in a future financial crisis. Well,
Speaker 1: I think so. I mean, that's something I asked Ken
Speaker 1: about because you know, and I've kind of off to
Speaker 1: them through the years. They've done a lot to lay
Speaker 1: the groundwork too, you know, you know, I mean, that's
Speaker 1: not a goal of theirs, but it's ultimate may happen
Speaker 1: that you know, the primary dealers I think you're talking
Speaker 1: about that has their primary dealers that you know, you know,
Speaker 1: work with them when they're doing open market operations. They're
Speaker 1: the counterparties. And these dealers have to bid at the
Speaker 1: Treasury auctions and you know, Citadel Securities, it seems that
Speaker 1: they they are among what I see on my radar
Speaker 1: as like the likely next players and that would help,
Speaker 1: you know, like you know, kind of talks to that
Speaker 1: in the story that you know, it would be a
Speaker 1: win all around, Like especially if you have one of
Speaker 1: the biggest dealers and Treasuries that isn't the primary dealer.
Speaker 1: It seems like inevitably it will happen. And I know
Speaker 1: even um, you know, the Treasury has a baring committee
Speaker 1: and through the years they've really change. They used to
Speaker 1: be always just the banks on there, and they've learned
Speaker 1: in recent years to add more of these electronic market
Speaker 1: makers even to the people that advise them, because they realize,
Speaker 1: like you guys are talking about that the let's call
Speaker 1: it the micro structure of these debt markets have changed.
Speaker 1: So you have to have all the relevant players, even
Speaker 1: advising the Treasury, who just announced lots of new debt
Speaker 1: because we you know, funding this pandemic, you know, economic
Speaker 1: hit another nine Yeah, yeah, I mean, you know, lots
Speaker 1: and lots a new twenty year at the size of
Speaker 1: no one expected how big it is. So I mean
Speaker 1: there's a lot of death coming. Yeah. It's so fascinating
Speaker 1: to look at this because you know, we're we're talking
Speaker 1: about you know, literally market structure here that that has
Speaker 1: been changed, you know, the way that we do business,
Speaker 1: but also the way that that trades get done and
Speaker 1: and the different players as you guys were just talking
Speaker 1: about that, you know, have really emerged from this, and
Speaker 1: you do wonder I feel like the question that we're
Speaker 1: going to be facing so much over the next few weeks, months,
Speaker 1: you know, maybe even years. Is what sticks from this pandemic.
Speaker 1: What is fundamentally uh changed. So great to catch up
Speaker 1: both Carol and I were so excited to talk to
Speaker 1: you about this story. Yeah, it's really it's really just terrific. Uh.
Speaker 1: I must read and that is demonstrated by how many
Speaker 1: people are reading it on the terminal roam a journal. Yeah,
Speaker 1: but you let me drive. Oh no, no, no, no
Speaker 1: home honey, please, I'll do the riding drivels me. I
Speaker 1: want to drive, Just drive, baby, the questions trying the
Speaker 1: drive to the globe commune. Thanks well, run on Bluebird Radio.
Speaker 1: It is time for the drive to the closed. John
Speaker 1: Padreds is with US, portfolio manager at Tookville Asset Management,
Speaker 1: joining us on the phone in New Jersey. So, John,
Speaker 1: nice to have you here with us. Uh. Interesting week, right,
Speaker 1: We're all kind of focused on that job's report. We
Speaker 1: know it's going to be staggering, and yet when you
Speaker 1: see the numbers, it's still definitely throws us off. Course,
Speaker 1: tell us a bit about your clients. You deal in
Speaker 1: wealth management, and I'm just curious about some of the
Speaker 1: phone calls you're getting and maybe any of the kind
Speaker 1: of tweaks you're doing to portfolios in this environment. Sure, well,
Speaker 1: I think the initial phone calls has really calmed down. Um,
Speaker 1: you know, we spent a lot of time and well,
Speaker 1: we spent a lot of time talking with our clients
Speaker 1: during the course of any market, but specifically in more
Speaker 1: to early April April, uh, and we had a lot
Speaker 1: of client communications. You know, PIO rallying a bit here,
Speaker 1: and I think everyone not only setting setting into their
Speaker 1: new bomble of of their own socialize and also the
Speaker 1: financial world. I think people are trying to adjust to
Speaker 1: see what the future holds. So by and large, clients
Speaker 1: has been there educated. You know, we've been through a
Speaker 1: lot over the past fifteen years with it for Great
Speaker 1: Financial Crisis, and at this point of course with other
Speaker 1: markets up and ups and downs, but buying large clients
Speaker 1: or or holding firm and and remaining calm and not panicking.
Speaker 1: Of of course, we've been through this with balanced portfolio.
Speaker 1: So the sixth income portion of our allocation is held
Speaker 1: up pretty well. And so how long do you sort
Speaker 1: of sustain that strategy, especially given what we saw in April.
Speaker 1: I know, may at least so far, it's been a
Speaker 1: little bit of a different story, and earnings obviously come
Speaker 1: into it as well. But how long do you stay
Speaker 1: relatively conservative here? Yeah, it's a great question, and I
Speaker 1: think you know, we know, buying a large you know,
Speaker 1: it goes without saying. You start day one with the
Speaker 1: client learning their UH financial objectives, goal and income needs
Speaker 1: and build the portfolio accordingly. But when you look across
Speaker 1: different asset classes, you know, I think we think yield
Speaker 1: is on sale, and we think the highest portion of
Speaker 1: the bond market has rallied or has held from where
Speaker 1: yield is not overly attractive. And if investors are overly
Speaker 1: scared about the volatility in the stock market, what do
Speaker 1: you do? And we think that there's an allocation where
Speaker 1: you take some off of the bond allocation and and
Speaker 1: and add to income oriented assets. You know, we think
Speaker 1: we like stuff in the preferred stock market. We think,
Speaker 1: and you do your due diligence, high quality, high divoten
Speaker 1: yielding stocks where they have the balance sheet to support
Speaker 1: their divot in yield. We think there's value to be
Speaker 1: had in some of the stations of the reef market.
Speaker 1: So you know, we do think there's yield portion income
Speaker 1: portion of the market that are on sale right now
Speaker 1: that are very attractive. Wait, so you're saying at this
Speaker 1: juncture to maybe take some off the fixed income side
Speaker 1: of this balanced portfolio and shift into higher dividend yielding stocks,
Speaker 1: not only just stock. But so the answer is yes,
Speaker 1: but it's not just stocks. We think with the the
Speaker 1: programs that the Federal Reserve is put in place where
Speaker 1: they're out there buying almost ever anything not nailed to
Speaker 1: the ground at this point outside of the preferred start
Speaker 1: working outside of the store market, we think that yield
Speaker 1: oriented securities are gonna outperform because you're going to have
Speaker 1: a search of hunt for yield. I mean, you know,
Speaker 1: if you want to tend year US treasure right now,
Speaker 1: you're getting seventy one basis points after emflorce F and
Speaker 1: after pass at the negative rate of return. So you
Speaker 1: start going down the credit quality stack. And with the
Speaker 1: exception really of the high yield energy portion bond market.
Speaker 1: You know, we think with with the investor grade bond
Speaker 1: market is actually open. They're having a record month in
Speaker 1: terms of issuance. On the investor grade side. There's yield
Speaker 1: to be had, and so what I guess one of
Speaker 1: the questions John I have, especially at this point, and
Speaker 1: especially as we hear political leaders talk about moving to
Speaker 1: this next phase of reopening and not just the sort
Speaker 1: of lockdown mitigation UH element. How closely do you, as
Speaker 1: an investor and someone who's advising clients, how closely do
Speaker 1: you look at the sort of tick and talk of
Speaker 1: the medical side, the development of a vaccine. How much
Speaker 1: does that ultimately drive your UH strategy. Well, the assumption
Speaker 1: is that a vaccine will be found, right, the question
Speaker 1: is the time of it. And if you figure that
Speaker 1: China went on lockdown the beginning of January, the world
Speaker 1: started the clock in my view, then to find a vaccine,
Speaker 1: or at we start the process of finding a vaccine
Speaker 1: to understand too, to solve coronavirus COVID nineteen. So you
Speaker 1: figure we're about four months into the process. You know,
Speaker 1: if it takes let's say, you know, we've accelerated the
Speaker 1: process of it. Normally takes eighteen months for a vaccine
Speaker 1: to hit the market. Let's say it comes between twelve
Speaker 1: and fifteen months. Now there's two elements to look like.
Speaker 1: There's the element of how will the stock market react?
Speaker 1: And then how the economy react and the stock market
Speaker 1: will look through the bad data if we see that
Speaker 1: the vaccine is on the time on the horizon, even
Speaker 1: though the economic data that comes in it is going
Speaker 1: to be poor. So every in our opinion, every day
Speaker 1: that moves forward is one step closer to finding a vaccine,
Speaker 1: and then the closer that we find that, the closer
Speaker 1: that we'll all be able to move on. Because once
Speaker 1: we all get the vaccine, then we're going to feel
Speaker 1: significantly more comfortable to go out to restaurants and movie right,
Speaker 1: and we know the timeline on that can be anywhere
Speaker 1: from nine months to two years depending on who you
Speaker 1: talk to. So uh tied everybody, jomp and Treats. Thank
Speaker 1: you so much, portfolio manager Toakvale Asset Management joining us
Speaker 1: on the phone in New Jersey. We appreciate all our listeners.
Speaker 1: We know cell phones can be a little tricky in
Speaker 1: this environment, so we appreciate your patients with that, thanks
Speaker 1: for listening to Bloomberg Business Week. You can subscribe to
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