Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
Speaker 1: and of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts and more than a
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Speaker 1: YouTube by searching Bloomberg Global News. Let's go a level deeper,
Speaker 1: as they say, into Dr Fauci's testimony, but also get
Speaker 1: a real sense of where we are. We've got one
Speaker 1: of our go to docs back with us, Dr Andy Pekash.
Speaker 1: She is professor of Molecular microbiology and Immunology. I practice
Speaker 1: saying that at night, just so I get it right.
Speaker 1: JOHNS Hopkins University, Blumberg School of Public Health. As you
Speaker 1: can tell by the name the Blueberg School public Health.
Speaker 1: It's supported by Mike Bloomberg, the founder of Bloomberg LP
Speaker 1: and Bloomberg Philanthropies. Dr Peckash, great to have you back
Speaker 1: with us. Thanks for having me on. Alright, so let's
Speaker 1: dive right into the Fauci testimony. Because all eyes obviously,
Speaker 1: as we've been saying, have been on Washington to the
Speaker 1: trained eye, of which you have to uh, what did
Speaker 1: you see and hear from the doctor? Uh? You know,
Speaker 1: these are the things that everybody should be really aware of. Um.
Speaker 1: When we pull back public health interventions, we expect to
Speaker 1: see some cases come up. If we pull them back
Speaker 1: too soon, the magnitude of the cases, the number of
Speaker 1: cases will be higher. Um. If we're not prepared to
Speaker 1: do testing and really good contact tracing to identify the
Speaker 1: people who have become in contact with infected people, we
Speaker 1: run the risk of having a rather large second bounce
Speaker 1: back wave. UM. So it's really going to be important
Speaker 1: for us to time it right and be prepared pull
Speaker 1: back these public health entrance so we can control a
Speaker 1: virus at a different level. Right. So I don't want
Speaker 1: to get political, that is certainly not my aim here,
Speaker 1: but I do wonder coming off a press conference yesterday
Speaker 1: that was predominantly from the President and his team about
Speaker 1: testing and saying we have enough tests out there and
Speaker 1: everything that we need. Tell me about that specific event
Speaker 1: and if we do indeed are doing the right kind
Speaker 1: of testing, and that we are doing enough testing, especially
Speaker 1: I think twenty four hours or was it this morning
Speaker 1: where Wuhan is talking about testing everybody in their city. Yeah, exactly,
Speaker 1: And and it really becomes a question of capacity. Um.
Speaker 1: You know, we're we're able to test in most parts
Speaker 1: of the country, and again this can be different in
Speaker 1: different localities. Right. UM, Here in Maryland, we're doing a
Speaker 1: good job of testing the symptomatic individuals. Um to turnaround
Speaker 1: time on tests are fairly good. Um. But what we'd
Speaker 1: like to be is a level above that. We want
Speaker 1: to be able to turn around tests really fast, within
Speaker 1: a day. You want to be able to test almost
Speaker 1: immediately people who have come in contact with the pre
Speaker 1: people who are sick, so that you can catch them
Speaker 1: before they really start showing symptoms and tell them to
Speaker 1: quarantine a little bit earlier. So we need more testing,
Speaker 1: we need more coordination, we need more contact racing to
Speaker 1: be able to deal with um the situation when we
Speaker 1: relieve our public health interventions you know, Dr pekash I
Speaker 1: saw a poll this morning that was talking about contact
Speaker 1: tracing specifically, and people's willingness to participate was largely based
Speaker 1: on their enthusiasm for it was largely based on who's
Speaker 1: doing the administering. What's the right method to go about
Speaker 1: doing that in your estimation, so you know, the best
Speaker 1: method is to have train individuals who can UM capture
Speaker 1: this information, contact you and give you the correct information
Speaker 1: in terms of what needs to be done. UM. There
Speaker 1: are people at state public health and county public health
Speaker 1: departments who were doing this. UM. We hear at Johns
Speaker 1: Hopkins Bloomer School of Public Health has had a number
Speaker 1: of professors who have started horses to try to educate
Speaker 1: people in terms of how to do that to increase
Speaker 1: the number of people that are capable of doing good
Speaker 1: social contact tracing. So there are some things that you
Speaker 1: need to know to be able to train to be
Speaker 1: do this all quite possible, UM, but you need to
Speaker 1: invest right now to increase those numbers of individuals again,
Speaker 1: so you're ready when you pull back public health interventions.
Speaker 1: So when Health and Human Services Official Admiral Britt grow
Speaker 1: says that states and territories aimed to do twelve point
Speaker 1: nine million tests over the next four weeks and represents
Speaker 1: more than about nine point four million tests that the
Speaker 1: US has done to date. Is that a lot in
Speaker 1: a nation of more than three million people. So again,
Speaker 1: you have to look at it at the local level
Speaker 1: where there's outbreaks. UM, that's where you have to be
Speaker 1: looking at the testing, because having to asked some places
Speaker 1: where there aren't any outbreaks right now or little numbers
Speaker 1: of cases maybe isn't the best way of utilizing those tests.
Speaker 1: So we need to do more. We need to be
Speaker 1: able to be testing individuals um um outside of just
Speaker 1: the CDC recommendations for symptomatic individuals to really jump ahead
Speaker 1: of this epidemic and be able to tamp it down
Speaker 1: even greater. So as you look across the world, what
Speaker 1: countries are good examples of where we should be headed in?
Speaker 1: What countries are cautionary tales? Dr Pekash, Well, you can
Speaker 1: look at a lot of the countries in Southeast Asia
Speaker 1: who were on the front lines during those first few
Speaker 1: weeks of the of the pandemic. UM countries like Singapore,
Speaker 1: countries like UM, Japan, UM, Hong Kong, um. They have
Speaker 1: all been able to stay ahead. Oh and I and
Speaker 1: Taiwan is probably even the best example of that. Right, Um,
Speaker 1: you can get ahead of the epidemic with massive amounts
Speaker 1: of testing and good interventions. And if you can muster
Speaker 1: those resources and and and put them to use effectively,
Speaker 1: then you can. It's clear that you can keep this
Speaker 1: epidemic UH down to manageable levels. All right, Charlie, thank
Speaker 1: you so much. And of course, Charlie talking to some
Speaker 1: of our great sources over John's Hopkins about how this virus,
Speaker 1: some of the symptoms, and how it has evolved. We
Speaker 1: want to continue our conversation with someone else from Johns Hopkins.
Speaker 1: Andy Pekosh still with us, professor of Molecular bank robiology
Speaker 1: and Immunology at Johns Hopkins University, Bloomberg School of Public Health,
Speaker 1: on the phone from Baltimore. So I have to ask you,
Speaker 1: Dr Pekosh about a vaccine. Anthony Facci saying, don't expect
Speaker 1: really anything by fall. He says, more likely within a
Speaker 1: year to eighteen months. We've talked with you about this before.
Speaker 1: I mean, we need to be realistic. That's the time frame,
Speaker 1: you know. Yes, I think that is a realistic timeframe. Uh.
Speaker 1: There's a chance things to go faster, there's a chance
Speaker 1: things could go slower. So I think, um, Dr Fauci
Speaker 1: brings up a good realistic time frame. I think, you know,
Speaker 1: this is all this is. This is a disease. That's
Speaker 1: about all the little steps. The last two weeks have
Speaker 1: have have shown that a couple of vaccine candidates have
Speaker 1: made it out of that first phase of testing, which
Speaker 1: is the safety phase, and are now moving into the
Speaker 1: larger scale of testing, which is to see if they
Speaker 1: actually are inducing immune responses in a large segment of
Speaker 1: the population. So we're seeing some good signs. Um, if
Speaker 1: these vaccines didn't pass the safety stage, then of course
Speaker 1: we'd be in we'd be worried a little bit more.
Speaker 1: So things are progressing. Um, everybody is trying to maximize, uh,
Speaker 1: the amount of time or minimus should have minimize the
Speaker 1: amount of time that is going through this by sort
Speaker 1: of maximizing overlap wherever that's possible. So everybody's moving as
Speaker 1: fast as they can. But we have to be sure
Speaker 1: about safety and we have to be sure about efficacy
Speaker 1: before we even start thinking about vaccination strategies. And so
Speaker 1: Dr Pekash help us understand Once we have a vaccine,
Speaker 1: what's the smart way to sort of get it to
Speaker 1: the world. Yeah, So there will be a lot of
Speaker 1: discussions about this. Will be bringing in bioethicists to discuss
Speaker 1: this as well as medical doctors as well as as
Speaker 1: well as modelers and other scientists that can help figure out, UM,
Speaker 1: what populations to immunize. UM. Clearly, we want to immunize
Speaker 1: and protect the most vulnerable populations. So in the case
Speaker 1: of COVID NINETEAM, that certainly does seem to be the elderly. UM.
Speaker 1: But we also want to immunize those people who are
Speaker 1: caring for them, so healthcare workers, frontline first responders, UM.
Speaker 1: And if the data shows us that particular sections of
Speaker 1: the population might be responsible for a lot of spread,
Speaker 1: well it might be really useful to target those sections
Speaker 1: of the populations to try to again cut these trains
Speaker 1: of transmission. I do wonder too, you know, it feels
Speaker 1: like over the last few decades we have seen certainly
Speaker 1: an increase in autoimmune illnesses. UH, and these viruses that
Speaker 1: are getting maybe tougher and tougher. Is this our new
Speaker 1: world order? And are we going to have similar viruses
Speaker 1: like COVID nineteen that are going to kind of paralyze
Speaker 1: our society in the future. Uh. You know, uh, there's
Speaker 1: so much to deal with this current one that it's
Speaker 1: hard to think forward. But um, yes, you know we shan't.
Speaker 1: We have to be constantly aware that, um, we are
Speaker 1: coming in contact with more and more viruses that are
Speaker 1: present in more and more animal reservoirs out there. And
Speaker 1: COVID nineteen is just a great example of the fact
Speaker 1: that some of those viruses are actually able to make
Speaker 1: the jump into humans, um, with relative ease. You know,
Speaker 1: the vast majority jumping to humans is a problem and
Speaker 1: they don't do that successfully. But in two thousand nine
Speaker 1: we had swine influenza become a pandemic, and now in
Speaker 1: two nineteen we had COVID nineteen. And you know, as
Speaker 1: population grows, as we come in contact with more and
Speaker 1: more unique animal reservoirs, we should expect that these things
Speaker 1: are going to be a constant threat going forward. All right, well,
Speaker 1: we really appreciate it as always. Dr Andy Pekash is
Speaker 1: Professor of molecular microbiology and Immunology at the Johns Hopkins
Speaker 1: University Bloomberg School of Public Health. That school, of course,
Speaker 1: supported by Mike Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropis.
Speaker 1: He joined us on the phone from Baltimore. Couple headlines.
Speaker 1: We want to bring you New Jersey, home state of
Speaker 1: Carol Masser. Uh, the fewest new virus cases in more
Speaker 1: than six weeks. Uh. This is a trend, a good
Speaker 1: trend that we are starting to see New York City
Speaker 1: in the Tri state area at testament to some pretty
Speaker 1: aggressive measures that the governors in this region have made. Carol. Meanwhile,
Speaker 1: we did here also from Charlie about the New York
Speaker 1: COVID nineteen cases rising four tenths of a percent versus
Speaker 1: the previous seven day average that was double that, eight
Speaker 1: tens of a percent. So but again, these trend lines
Speaker 1: have to be going for I believe a decline of
Speaker 1: two weeks right before you can really think about reopening.
Speaker 1: And that's that's a key metric. Another important thing. On
Speaker 1: a lighter note, Room Raider Anthony Fauci ten out of tens,
Speaker 1: of course zero. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. This is one
Speaker 1: of the most read stories on the Bloomberg it's about
Speaker 1: if landlords get wiped out, Wall Street wins and not renters.
Speaker 1: It is in the magazine, it's on newsstands later in
Speaker 1: the week, online and on the Bloomberg Perssont Coople is
Speaker 1: US real estate reporter at Bloomberg News on the phone
Speaker 1: from Massachusetts, along with Bloomberg Business Week editor Joel Weber
Speaker 1: on the phone from Brooklyn. And you know, Joel, like
Speaker 1: so many stories in Business Week, you guys do talk.
Speaker 1: There's always, it seems, winners and losers, that's right, UM,
Speaker 1: And this one I think is um somewhat somewhat unexpected
Speaker 1: as UM as this pandemic has sort of transpired. And obviously, UM,
Speaker 1: the hits to the job market have impact on people's
Speaker 1: abilities to pay their rent and mortgages. And there's been
Speaker 1: you know, a modest amount of relief on that front,
Speaker 1: at least it's in progress. But the maybe an unexpected
Speaker 1: victim is the landlords, especially small landlords. Not what do
Speaker 1: you find as you kind of dug into the story, Yeah,
Speaker 1: I mean like they're you know, landlords are often not
Speaker 1: the most popular group out there, but you know, and
Speaker 1: and maybe that's one of the reasons why they're not
Speaker 1: really getting help, whereas a lot of other people are. Um.
Speaker 1: You see that, you know, when people don't pay rent um,
Speaker 1: a lot of these small landlords um don't have the
Speaker 1: res verse is necessarily to kind of withstand that. Hint.
Speaker 1: If you have you know, let's say five units and
Speaker 1: three of them are not paying, that's a big percentage
Speaker 1: of your portfolio. Well and and presian. This story goes
Speaker 1: to something that you and the team have done such
Speaker 1: an amazing job over the past few years of documenting,
Speaker 1: and it goes back to you know, a lot that
Speaker 1: the magazine has done here about who the landlords really are,
Speaker 1: especially the big landlords are in the country, and a
Speaker 1: lot of them are from Wall Street. Yeah, you know,
Speaker 1: but it's interesting actually if you look at all the
Speaker 1: the the properties and all the actually if you look
Speaker 1: at the all the properties in the US, um about
Speaker 1: you know, the properties are actually owned by individuals are
Speaker 1: small land um. If you look at the individual units
Speaker 1: right then it's for it's over fifties. Still interesting, So
Speaker 1: a lot of the landlords out there are actually um,
Speaker 1: mom and pops and um. You know, so we think
Speaker 1: of you know, these very wealthy people are company companies
Speaker 1: right with deep pockets that can withstand this kind of shock.
Speaker 1: But which is they're actually just your neighbors, you know,
Speaker 1: the local dentist or you know, or somebody with less
Speaker 1: money than that. So, for shot, what is the scuttle
Speaker 1: on Wall Street? Is there is this viewed as an opportunity.
Speaker 1: Is Wall Street youre going to sweep in here much
Speaker 1: like in the financial crisis and just walk out holding
Speaker 1: all kinds of new real estate? Or is it a
Speaker 1: little bit more great than that? Well, so okay, let's
Speaker 1: take a step back because what what what's happening right
Speaker 1: now is that we have in many states their eviction
Speaker 1: bands in place, so the small landlords in general UM
Speaker 1: aren't able to evict tenants who aren't paying UM. And
Speaker 1: that's for good reason, right we don't want people out
Speaker 1: in the streets during a health crisis. But the effect
Speaker 1: of that is that they are going now month after
Speaker 1: months without income coming in and they can't really they
Speaker 1: don't have any tools to kind of convince people to
Speaker 1: pay and and many of them still have mortgages and
Speaker 1: they have to pay property taxes. There's no forbearance on
Speaker 1: property taxes. So eventually, uh, you know, they're gonna get
Speaker 1: in trouble, they're gonna have to sell, probably at the
Speaker 1: stress prices and guests. Who has the money to buy
Speaker 1: those properties? Um, it's likely going to be Wall Street
Speaker 1: in some form, private equity firms. Um. That's what happened
Speaker 1: last time. They came in and they bought up single
Speaker 1: founding homes at very low prices that pennies on the dollar,
Speaker 1: and um turn them into rentals. And this time they
Speaker 1: may just be buying rentals. I have to say. I mean,
Speaker 1: just some of the anecdotes and the people that you
Speaker 1: talked to in this story just you know, remind us,
Speaker 1: as you say, the backbone of so many of these properties.
Speaker 1: It's a lot of small businesses. Um. And it's just
Speaker 1: such a contrast to homeowners being given a break through,
Speaker 1: you know, the Washington programs. But renters are not what
Speaker 1: what are trade associations and you know, groups of landlords,
Speaker 1: you know, what are they lobbying for? What are they
Speaker 1: likely to get maybe in some kind of stimulus or
Speaker 1: you know, help from the government, federal government. It's not
Speaker 1: clear they're gonna get anything, to be honest, but right
Speaker 1: there are some bills floating out there. Um, you know,
Speaker 1: there's there's the UM some of the trade associations are
Speaker 1: kind of getting behind an idea, UH for like a
Speaker 1: hundred billion dollars UM that would go to landlords directly
Speaker 1: and UM and and that would pay for missing rent
Speaker 1: um that you know read that they're not collecting UM.
Speaker 1: But you know that at this point there's no UM.
Speaker 1: You know, I don't think they're really behind any particular bill, right,
Speaker 1: all right, Well, it's a really terrific story, one of
Speaker 1: the most read on the Blue Berger's in the magazine
Speaker 1: UH coming out this week, but you can read it
Speaker 1: now on Bloomberg dot com and the Bloomberg terminal care.
Speaker 1: I love how he writes the next housing crisis is here,
Speaker 1: and this time it's about rentals. I mean, you know,
Speaker 1: it's always the devil's in the details. When you look
Speaker 1: at things from you know, ten tho miles up, you
Speaker 1: don't always catch the nuances to a situation. And I
Speaker 1: feel like this is one of those stories. It's a
Speaker 1: typical you know, great reporting Barber Shawn and his team
Speaker 1: and Business Week, where you dig down into it you're like, oh, Okay,
Speaker 1: that's what's really going on, and that's who ultimately owns
Speaker 1: this or who doesn't and and these are the implications
Speaker 1: and started playing it out. Really nice stuff. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Jason Kelly on
Speaker 1: Bloomberg Radio. All right, you are listening to Bloomberg Business Week.
Speaker 1: Time for Business Week Economics, and today we're talking with
Speaker 1: Harvard University economist Professor UH Robert Barrow, and he looks
Speaker 1: back to history for some guidance on the lifting of
Speaker 1: restrictions put in place by COVID Nineteam. It's something that
Speaker 1: Jason Business Week Economics, thatder Peter Correy wrote about UH
Speaker 1: in the magazine. We talked about it with Peter. It's
Speaker 1: based on Professor Barrow's work, and lucky for us, Professor
Speaker 1: Barrow joins us on the phone from Maine. Welcome to
Speaker 1: Bloomberg Business Week. Thanks good to be on. So tell
Speaker 1: us a little bit about your work, because the headline
Speaker 1: on Peter's story was a lesson from the Spanish flu,
Speaker 1: don't end restrictions too soon. And as you know, it
Speaker 1: feels like there's so much in terms of conversations debate
Speaker 1: about social distancing and how long we need to stay
Speaker 1: in isolation and shut down. Tell us a little bit
Speaker 1: about what we learned from the Spanish flu and how
Speaker 1: that might help us today. Well, first, I think it
Speaker 1: is the historical example that's most relevant for today in
Speaker 1: terms of a coronavirus pandemic um of a very serious
Speaker 1: event nine eighteen to twenty worldwide, including the United States.
Speaker 1: But the work you were specifically talking about is on
Speaker 1: the so called non pharmaceutical public health interventions, and there's
Speaker 1: information about at that across UH forty three US cities
Speaker 1: in nineteen eighteen nineteen nineteen, and you can see what
Speaker 1: was the impact of things like school closings and prohibitions,
Speaker 1: on public gatherings and quarantine isolation measures, and you can
Speaker 1: see the effect of that on the flu death rates
Speaker 1: and on flattening the curve among these r g u
Speaker 1: S cities. UM. The basic finding is that these measures
Speaker 1: succeeded clearly in flattening the curve, so the relative peak
Speaker 1: in the death rate was pretty dramatically reduced when there
Speaker 1: were more of these interventions put in place. UM. But
Speaker 1: the disappointing part is that it didn't actually end up
Speaker 1: ultimately reducing the total death rates in this nineteen nineteen period.
Speaker 1: And I think that's probably because the measures were not
Speaker 1: kept in place long enough. They were typically only in
Speaker 1: place about four to five week and uh, A likely
Speaker 1: inference is that it had to be more like ten
Speaker 1: to twelve weeks to be really effective on the overall deaths.
Speaker 1: And that's the kind of debate we're having currently in
Speaker 1: the US. I would say absolutely. I mean, what you
Speaker 1: are speaking to Professor Barrow is exactly. We just heard
Speaker 1: a tidbit of this from our news guy Charlie Pellett
Speaker 1: that you know that Dr Fauci was saying earlier this
Speaker 1: morning to lawmakers on Capitol Hill. Is this just a question?
Speaker 1: You are an economist after all. Is this just a
Speaker 1: question of people being so worried about the economy that
Speaker 1: they're just they're moving too fast? You know, it's reasonable
Speaker 1: to be worried. I mean, a major economic downturn, it's
Speaker 1: going to be costly. The key thing there is not
Speaker 1: so much how deep is the contraction, but how long
Speaker 1: is it gonna last? Are we're going to have a
Speaker 1: pretty rapid rebound And I think there's a good chance
Speaker 1: of that if we can get past the disease issue.
Speaker 1: Oh well, what's interesting for people to be worrying about
Speaker 1: this well, absolutely, And what's interesting too is we keep
Speaker 1: talking about the economic cost of certainly the stimulus packages
Speaker 1: or the relief packages that are being done, and also
Speaker 1: the cost to the economy. But you also have done
Speaker 1: work on the value of a single life, right and
Speaker 1: what that person does in terms of working and economic input.
Speaker 1: I mean, I hate to put it in such kind
Speaker 1: of black and white terms, but right we all have
Speaker 1: a value to society and certainly to our economy, and
Speaker 1: if we're not alive to contribute, that's going to have
Speaker 1: an impact too. Well. There's a pretty big literature on this,
Speaker 1: not one to which I've contributed, but which I've read
Speaker 1: what a good deal of interest. So it's really about
Speaker 1: how much would people be willing to pay ex ante
Speaker 1: in order to reduce the probability of dying in order
Speaker 1: to for example, make your job safer for risk here,
Speaker 1: or to put it in other way, how much extra
Speaker 1: do you have to be paid in terms of wages
Speaker 1: to take a job that's a little riskier in terms
Speaker 1: of the risk of life and death. And people have
Speaker 1: done a lot of work backing out from that. What's
Speaker 1: the implicit so called statistical value of a life and
Speaker 1: a typical estimate for a rich country like the United
Speaker 1: States is that it's a pretty high number. It's about
Speaker 1: ten million dollars. That's a sort of current estimate. Of course,
Speaker 1: has a range that's used. Even the Environmental Protection Agency
Speaker 1: uses a number which is in that ballpark. Um. So
Speaker 1: I've tried to think about trading off the economic costs,
Speaker 1: for example, of the interventions we've been putting in place,
Speaker 1: and you know what's the loss there in GDP versus
Speaker 1: what's the gain? If you have some idea how many
Speaker 1: lives do you save and how do you value those?
Speaker 1: And when I put that together as a rough calculation,
Speaker 1: I get that even though the economic cost is large,
Speaker 1: it looks like it's worth it, and it's worth keeping
Speaker 1: the marriages in place for for longer, for another four
Speaker 1: six weeks something like that. Probably. Uh, I think that's
Speaker 1: consistent with what Dr Facci has been arguing. Right, that's
Speaker 1: exactly right. And I do wonder in the minute or
Speaker 1: so we have left, think what did you see in
Speaker 1: terms of the variants as you did this study across cities.
Speaker 1: Were there other elements other than the shutdown that that
Speaker 1: played in here? Well, you see a big variation in cities.
Speaker 1: But there was a pattern in the US because this
Speaker 1: big wave of the Great Influenza pandemic started actually in Boston,
Speaker 1: um UH in September nine, and then it gradually spread.
Speaker 1: And then the countries that were further away, particularly going
Speaker 1: towards the West Coast, had more time to prepare. They
Speaker 1: knew was coming, and they were more likely to put
Speaker 1: in these measures to try to stem the tide of
Speaker 1: the epidemic, and they did that. Uh, definitely flattened the curve.
Speaker 1: But again, and the disappointing part is it seemed to
Speaker 1: be more postponing the deaths and a worse, completely avoiding them. Yeah. Well,
Speaker 1: it's a really really interesting piece of work, and to
Speaker 1: understand it further, do check out Peter Koy's story in
Speaker 1: Bloomberg Business Week. Professor Robert Barrow, he's an economist and
Speaker 1: a professor at Harvard University, joined this on the phone
Speaker 1: from Main. Really thoughtful and look, he is exactly right
Speaker 1: that this is the epidemic that so many people are
Speaker 1: going back to to take some lessons and a very
Speaker 1: timely conversation given what we heard from Dr Fauci earlier
Speaker 1: today in Washington, and may not be the exact same,
Speaker 1: but it does give us so much information. It was
Speaker 1: interesting I saw a piece to where they were, you know,
Speaker 1: showing people back then wearing masks and going through so
Speaker 1: many of the things that we're going through. And so
Speaker 1: it really is the best historical example. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: A new segment, a new feature to some extent in
Speaker 1: Bloomberg Business Week. You know, they've always been focused to
Speaker 1: some extent on small business. But surviving in the world
Speaker 1: of small business, it is even more challenging right now, Carol,
Speaker 1: to say the least, we are so happy to have
Speaker 1: our next guest. We haven't talked to her in so long,
Speaker 1: especially in this pandemic world where we're out of the
Speaker 1: office to meet your Cassidis is an editor at Bloomberg
Speaker 1: joining us on the phone from New York City to meet.
Speaker 1: Great to have you back with us. Thanks, guys, it's
Speaker 1: great to be with you. It's great to hear your voice.
Speaker 1: So tell us about this small business survival guy. Well, um,
Speaker 1: we launched it, uh, I would say a little over
Speaker 1: a month ago at this point, maybe close to two
Speaker 1: months ago. I mean, it was very clear, as we
Speaker 1: all know and we hear these stories that small businesses
Speaker 1: we're going to be really hit hard by what was
Speaker 1: going on with the shutdown and the lockdown. They are
Speaker 1: a huge, huge driver of our economy. They employ so
Speaker 1: many millions of people across the US. When you consider
Speaker 1: a business that's a small as a one person business
Speaker 1: the sole proprietorship, you know, up to even a few
Speaker 1: hundred people. And so it was clear that this was
Speaker 1: going to be a situation where beyond covering some of
Speaker 1: the stories of the Excel businesses, we could provide a
Speaker 1: service and really get into a lot of sort of
Speaker 1: how to how to navigate the federal relief programs. Where
Speaker 1: else can people turn to for help? We want to
Speaker 1: really be a resource for these small businesses and the
Speaker 1: owners and the people who lead them to find the
Speaker 1: information they need to do the best they can to
Speaker 1: survive under very very challenging circumstances. Yeah, and circumstances where
Speaker 1: we really don't have the playbook, and you guys are
Speaker 1: certainly setting it out for everyone. So let's talk about
Speaker 1: the theme. Um are one of the themes that you've tackled,
Speaker 1: and that is small businesses accessing money that they need,
Speaker 1: and it has to do with lenders and loans. So
Speaker 1: tell us a little bit about the coverage along that line. Yes,
Speaker 1: and again, you know we're seeing that because of course
Speaker 1: we've all heard the stories about the challenges and accessing
Speaker 1: the government's p PP loans and some of the other
Speaker 1: financing options. You know, what we've looked at most recently,
Speaker 1: for example today, was to really consider that not all
Speaker 1: lenders are the same. And as a small business, you know,
Speaker 1: your your inclination might be to simply go to the
Speaker 1: bank that you know, and maybe the bank that you're
Speaker 1: banking with personally is a bigger bank. But you need
Speaker 1: to really be very creative and versatile in the ways
Speaker 1: that you're going to access capital. Capital is the name
Speaker 1: of the game right now. No matter what you're doing,
Speaker 1: you need to access it. So, you know, we've talked
Speaker 1: to various experts about how small businesses need to identify
Speaker 1: their priorities um figure out exactly what they need money
Speaker 1: for be guided by that in terms of where they're
Speaker 1: going to go seeking out lenders. Is that uh C
Speaker 1: s c I a community finance development organization. Is that
Speaker 1: a smaller community bank on midsize bank, you know, the Chase,
Speaker 1: Manhattan's and the city banks of the war world are
Speaker 1: very responsive to certain types of businesses, but they're not
Speaker 1: the right kind of thing for all of these businesses.
Speaker 1: So that is one area that we've spent quite a
Speaker 1: bit of time on and that there's been a lot
Speaker 1: of coverage out there. Um today we published a tip
Speaker 1: sheet for how to really approach this and think about
Speaker 1: how do I acces that capital? How do I not
Speaker 1: get discouraged by the first loan application that was rejected.
Speaker 1: I need to find a bank where I can go
Speaker 1: and put in a second application, and I maybe need
Speaker 1: to work with a different kind of institution or credit
Speaker 1: union or what have you. Well, and that discouragement, I mean,
Speaker 1: it is really rampant at this point, Demetro, because you
Speaker 1: know businesses and you have it right there in the
Speaker 1: title of this series. I mean, this is largely about
Speaker 1: survival in many ways. This isn't the like, well, it
Speaker 1: would be nice if I got this money. This is
Speaker 1: I need this money to basically hang on through this.
Speaker 1: You know, what are you hearing from small businesses in
Speaker 1: terms of how worried they are about survival? Well, they're
Speaker 1: they're very, very worried because you know, from day to
Speaker 1: day and week to week, so much is changing, and
Speaker 1: there are pivots that are easier for certain types of
Speaker 1: businesses than for others. You know, if they are in manufacturing,
Speaker 1: if they have machinery that can maybe produced ppe right
Speaker 1: protective equipment, if they have the type of setup as
Speaker 1: a restaurant where they can close the restaurant but open
Speaker 1: a window that faces out to the street and serve coffee, takeout,
Speaker 1: pastry takeout, food takeout. So it all depends on so
Speaker 1: many things, and sometimes you just don't have those things
Speaker 1: that fall into place where you can say, well, I
Speaker 1: can minimally run this business to some degree and still,
Speaker 1: you know, and and ensure some level of bringing money back.
Speaker 1: The reason they're also very worried is because these federal
Speaker 1: release programs, you know, for many businesses have been structured
Speaker 1: in a way that maybe doesn't help them in the moment.
Speaker 1: Rehiring right now for one business and keeping them on
Speaker 1: payroll for another month or two, um might just be
Speaker 1: money that they're spending simply to keep them around, but
Speaker 1: they can't actually do the busin this that they're typically
Speaker 1: engaged in doing so. The level of worry is very high,
Speaker 1: and it is a very paint speaking process. Like the
Speaker 1: one message that's super clear is you know you're going
Speaker 1: to commit a lot of time and energy and resources
Speaker 1: to staying on top of this situation of where you're
Speaker 1: getting money from and how you're getting it. It's going
Speaker 1: to become part of your daily routine. You're going to
Speaker 1: check in with your banker. You're going to check in
Speaker 1: with your accountant, You're going to talk to your lawyer.
Speaker 1: You're going to resubmit an application. You're gonna hear back
Speaker 1: that maybe you were rejected. You're going to start the
Speaker 1: process again. It's you know, it's not it's not fun,
Speaker 1: right right, check your temperature and then check your relationship
Speaker 1: with your banker. I mean, I mean that's what that's
Speaker 1: the new world reality. Well, it's a great series and
Speaker 1: I know there's a lot more to come and we'll
Speaker 1: be checking in with you weekly. Um to see a
Speaker 1: bathe latest angle and help for the small business community. Um, Demitri,
Speaker 1: thank you so much. Great to hear your voice, to
Speaker 1: meet your Cassaniti, she's editor with Bloomberg News on the
Speaker 1: phone from New York city and check out this coverage
Speaker 1: the small business of our Survival Guide and you can
Speaker 1: find it at Bloomberg dot com. But it's something that
Speaker 1: you and I have talked a lot about because we
Speaker 1: know small business. We've just heard about it when it
Speaker 1: comes to landlords. Right, you think you know, you own
Speaker 1: a building, you think you're among you know, the wealthiest,
Speaker 1: and yet it's a small business and it's one with
Speaker 1: you know, maybe you're not making a ton of money
Speaker 1: and some type margins, right, the margins. I think that
Speaker 1: that's really true. And there's just not a lot of
Speaker 1: cushion there. Broom a journal now. But you let me drive? No, no, no, no,
Speaker 1: who's going to drive? Honey, please, I'll do the right rival.
Speaker 1: I want to drive, Just drive, baby, the questions drying.
Speaker 1: This is the drive to the globe. Give me thanks.
Speaker 1: We'll drive up dawn on Bloomberg Radio and it is
Speaker 1: time for the drive to the close back with us.
Speaker 1: One of our guys we love talking to because he's
Speaker 1: really good at his job as fund does really well.
Speaker 1: Uh So we like to get his advice on what's
Speaker 1: going on as observations and what's happening in the market,
Speaker 1: especially on a day, where the market a little more skeptical?
Speaker 1: Eric Clark, his portfolio manager at Rational Dynamic Brands Fund
Speaker 1: Johnny Us on the phone from the West coast, San Diego.
Speaker 1: To be exact, Eric, how are you? I'm great? How
Speaker 1: are you guys? We're doing okay a little Sonny? Are
Speaker 1: here today? Uh? In New York? Not so sunny in
Speaker 1: the markets? Give us your take on on where we are.
Speaker 1: I think we talked to you a month or so ago,
Speaker 1: maybe a little bit more. How's the world changed? How's
Speaker 1: the market changed in your estimation? Well, I think the
Speaker 1: market I think this is a very consensus view. That
Speaker 1: doesn't mean that it's wrong, but I think the market
Speaker 1: is well ahead of where the economy is. And this
Speaker 1: has been a big technical move driven by stimulus and policy,
Speaker 1: accommodations and a really over sold market. And I think
Speaker 1: now we've just reached a little bit of equilibrium. You know,
Speaker 1: the rubber band got stretched way too far to the downside.
Speaker 1: It's snapped back, and not surprisingly, we kind of failed
Speaker 1: at a technical level where we should have failed at
Speaker 1: least the first time up. So we saw a big
Speaker 1: cell program. I mean, everything's going down today. When it started,
Speaker 1: you know, Staples, healthcare technology, it didn't really matter. So
Speaker 1: that's that's clearly more of a programming, programmed sell off.
Speaker 1: You know that, so, Eric, So my question to you is,
Speaker 1: Goldman says stocks are due for a drop after the rally,
Speaker 1: driven by fomo fear of missing out. We've talked about
Speaker 1: that a lot on our air, so we know we've
Speaker 1: had quite a bounce back. They're saying we need a
Speaker 1: drop from here. Do you agree that we need a
Speaker 1: drop or do you think we just kind of level
Speaker 1: off here for a while? Well, listen, need is is difficult.
Speaker 1: I mean, the market kind of does what it does,
Speaker 1: and it doesn't often do what it should do. And
Speaker 1: it's really hard to understand how the stimulus and the
Speaker 1: the accommodation is a balancing act between the actual fundamentals.
Speaker 1: If you take away the stimulus part, the market should
Speaker 1: be a lot lower than where it is today. And
Speaker 1: so I suspect we're going to find some equilibrium after
Speaker 1: this big ramp uh And maybe you know, the best
Speaker 1: thing would would be just to go sideways for a
Speaker 1: little while and work off some of these these conditions
Speaker 1: and just see how the economy opens, see what kind
Speaker 1: of virus numbers we get because of the opening, and
Speaker 1: then see what kind of consumer spending happens as people
Speaker 1: get back into the economy a little bit well. And
Speaker 1: one of the things that that we've been talking about,
Speaker 1: especially with the less couple of days or so eric
Speaker 1: as we're more or less through this earning season, and
Speaker 1: Dave Wilson pointed this out yesterday or stock Sky, when
Speaker 1: we look at the retailers that are going to come out,
Speaker 1: they're going to give us actually a better view of
Speaker 1: where people were shopping or not shopping. And it does
Speaker 1: feel like, you know, those results and then the second
Speaker 1: quarter results, the sort of calendar second quarter results are
Speaker 1: really gonna give us a better sense than the last
Speaker 1: earnings did about who's winning and losing, who's really resilient
Speaker 1: here right absolutely, you know, I think the July earnings
Speaker 1: in particular will probably the most important, most insightful earnings
Speaker 1: and commentary that we've had in many, many years, because
Speaker 1: now we get a chance to see which companies, which
Speaker 1: brands are really resonating with people either online or in
Speaker 1: person once we open up a little bit, and and
Speaker 1: which ones are somewhat naked if you will, and and
Speaker 1: and in a lot of bigger trouble. And my big
Speaker 1: issue is that a lot of these companies are raising
Speaker 1: more debts. So if your earnings are going down and
Speaker 1: your revenue is going down, and your cash flows are
Speaker 1: going down, but you're using more debt and you need
Speaker 1: to service that debt right, and you're a brand that
Speaker 1: isn't really resonating, that's the trouble. That's a troubling thing
Speaker 1: for certain companies. Did you say July earnings. I think
Speaker 1: the next earnings are going to be more important than
Speaker 1: the ones we've just seen because everybody expected the earnings
Speaker 1: to be down. Now we get a chance to see
Speaker 1: three straight months of when we've really been living with this. Yeah. Um.
Speaker 1: So what's interesting is we've had a lot of conversations
Speaker 1: about brands and that the brands that seem to do
Speaker 1: something help, you know, take a leadership position during this crisis,
Speaker 1: that consumers are going to reward them. On the other side,
Speaker 1: you look at brands and I am curious about the
Speaker 1: brands that are stepping up and helping out consumers, are
Speaker 1: helping out society and community versus those that are laying low,
Speaker 1: uh and going dark during this crisis. Are you looking
Speaker 1: at them as investment to help and make an investment
Speaker 1: decision I do. I mean, if if you are building
Speaker 1: more loyalty in a really difficult time, that loyalty is
Speaker 1: gonna stick. I mean, Amazon has just been a rock
Speaker 1: for for people and it's been the go to place,
Speaker 1: So I anticipate that's just just going to cement people's
Speaker 1: loyalty costco cement people's loyalty. You know some of the
Speaker 1: brands that that we kind of anchor to, the Roku
Speaker 1: and the Netflix, um, you know that that that we
Speaker 1: love and we've been using more of, We're we're probably
Speaker 1: gonna stay even more loyal to to those companies, and
Speaker 1: those subscription models are going to be great and we're
Speaker 1: gonna have low turn So there's definitely gonna be a
Speaker 1: this versus that in the mind of the consumer as
Speaker 1: we start to spend more. One of the names that
Speaker 1: I think you're interested in of late, which speaks to
Speaker 1: my amateur athletic endeavor, is his garment. Yeah. You know,
Speaker 1: I tried to look and say, well, if summer's approaching
Speaker 1: and we're going to get out into the world a
Speaker 1: little bit, there's gonna be an appetite for athletics, at leisure,
Speaker 1: working out, some local travel by car, and to me Garmin.
Speaker 1: You know, it's got a great balance sheet, a little
Speaker 1: over two billion in cash. The stocks pulled back, and
Speaker 1: you know, as you exercise more in your outdoors, you're
Speaker 1: gonna want the GPS and you're gonna want the nice
Speaker 1: watch because in some ways you've been pent up in spending,
Speaker 1: so you're gonna want to reward yourself a little bit.
Speaker 1: And so I'm kind of looking for those potential shorter
Speaker 1: term trades over the next couple of months. And we've
Speaker 1: been very tactical because I think you have to be
Speaker 1: more tactical and active if you're going to capture gains
Speaker 1: in a highly volatile market. And that's what we're doing.
Speaker 1: So a name, so garments, a name that you've recently purchased,
Speaker 1: we have, we have, and I'll add to it on
Speaker 1: on this this step too. What else, what what else
Speaker 1: have you added to Well? Uh, we have mostly been
Speaker 1: adding as as the market has come up to the
Speaker 1: resistance level. I've been trimming the the kind of offensive basket,
Speaker 1: you know, the Nikes and the Lulu's and the Microsoft's
Speaker 1: and the Apples and the shopifies, and I've been adding
Speaker 1: to the defense basket the Dollar General and the Costco
Speaker 1: and the healthcare names and the Procter and Gambles. So
Speaker 1: you know, top of the range, you sell the beta
Speaker 1: and you buy the defense. Bottom of the range you
Speaker 1: do the with the reverse. Alright, love catching up with you,
Speaker 1: Eric clark Uh. You're the man portfolio manager Rational Dynamic
Speaker 1: Brands Fund, one of the top performers over the past
Speaker 1: few years, so check that out on the Bloomberg e
Speaker 1: Joness on the phone from San Diego. Thanks so much
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes,
Speaker 1: South Cloud, blooberg dot com, or wherever you get your podcasts.
Speaker 1: And of course you can always listen to our radio
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