WEBVTT - Largest NY Hospital System Sees Return of Patients, Surgeries 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Find the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.280 and on Bloomberg dot com. Alright, very excited for this 0:00:21.360 --> 0:00:24.280 next interview. Michael Dowling as President and CEO of north 0:00:24.360 --> 0:00:28.280 Well Health, New York State's largest healthcare provider, twenty three hospitals, 0:00:28.920 --> 0:00:32.839 more than thirteen and a half thousand affiliated physicians. And 0:00:32.840 --> 0:00:35.320 of course you will have seen Michael Dowling next to 0:00:35.840 --> 0:00:39.080 Governor Cuomo during the beginning part of this pandemic. He's 0:00:39.120 --> 0:00:42.120 been his advisor and is advising him specifically on reopening 0:00:42.159 --> 0:00:44.960 plans and so on. Michael, the gratitude of the state 0:00:45.000 --> 0:00:47.080 and country is with you. But as much as you've done, 0:00:47.080 --> 0:00:50.159 we're only part way through this whole story. Are you 0:00:50.280 --> 0:00:53.960 preparing for more cases now that New York has started 0:00:53.960 --> 0:00:59.520 to reopen, and of course as we see protests continue, Yes, 0:01:00.360 --> 0:01:03.520 the numbers of cases have dramatically dropped, and we're only 0:01:03.600 --> 0:01:07.240 seeing right now very very few new cases. Two days 0:01:07.280 --> 0:01:10.040 ago across our whole health system, we only had nine 0:01:10.200 --> 0:01:14.160 new cases. But given the reopening and giving all of 0:01:14.200 --> 0:01:19.440 the protests that recently occurred, um we are watching it 0:01:19.560 --> 0:01:21.640 very very closely to see whether or not there will 0:01:21.680 --> 0:01:24.199 be an uptick in cases over the next couple of weeks. 0:01:24.240 --> 0:01:28.120 We have not seen anything yet, but we are we 0:01:28.200 --> 0:01:30.640 are observing it very very closely, as I said, just 0:01:30.800 --> 0:01:34.360 in case that might happen. And of course we're also 0:01:34.520 --> 0:01:40.000 making plans, um uh for the potential that you could 0:01:40.000 --> 0:01:42.920 have an up surge sometime in the fall during the 0:01:42.959 --> 0:01:46.119 flu season. So we are we are prepared. I mean, 0:01:46.160 --> 0:01:48.320 we've handled the situation up to this point, I think 0:01:48.400 --> 0:01:51.880 quite well. We've learned a lot, and we definitely are 0:01:52.000 --> 0:01:54.400 prepared for anything that might hit us in the future. 0:01:54.760 --> 0:01:57.720 We hope it doesn't occur, and we hope that people 0:01:58.480 --> 0:02:01.680 you know, comply with the social distancing and wearing masks 0:02:02.240 --> 0:02:04.160 and do it do the right thing for the good 0:02:04.160 --> 0:02:06.800 of the community. And if they do that, then I 0:02:06.840 --> 0:02:08.920 think we will be in a pretty good in a 0:02:08.919 --> 0:02:11.320 pretty good situation. But we are prepared. Going back to 0:02:11.360 --> 0:02:14.919 your question, Michael North, while health Hospitals have treated more 0:02:14.960 --> 0:02:18.400 COVID nineteen patients than any others in the United States. 0:02:18.400 --> 0:02:20.040 What I want to ask you is how are your 0:02:20.040 --> 0:02:22.959 people doing? How And maybe kind of get to look 0:02:23.000 --> 0:02:25.280 back a little bit now and some of those crazy 0:02:25.400 --> 0:02:27.960 days and crazy weeks where your hospitals and others in 0:02:27.960 --> 0:02:31.400 the city, in the state were overwhelmed with patients. As 0:02:31.400 --> 0:02:33.880 you look back, how is your staff doing. The staff 0:02:33.960 --> 0:02:36.360 is doing very very well, empeed And I I do 0:02:36.560 --> 0:02:39.320 spend myself. I spent a lot of my time out 0:02:39.360 --> 0:02:41.200 on the floors of the hospital. So I am in 0:02:41.240 --> 0:02:44.800 the direct contact with staff and all of our facilities 0:02:44.840 --> 0:02:48.919 on an ongoing basis. Them allow is very very high. Um. 0:02:48.960 --> 0:02:54.160 It is extraordinary how people came together, work together, supported 0:02:54.200 --> 0:02:57.640 one another and stuck with it during the whole period 0:02:57.680 --> 0:03:02.880 of the severe cases we had. UM. Now, we we 0:03:03.000 --> 0:03:05.639 do have a lot of support programs for staff, of course, 0:03:05.919 --> 0:03:10.160 and while doing a crisis, everybody's a drillin is going 0:03:10.280 --> 0:03:14.200 and they're working very hard. But it is possible that 0:03:14.360 --> 0:03:16.600 as it slows down now that we're going to see 0:03:16.639 --> 0:03:20.880 some of the residual results of the circumstance that they 0:03:20.880 --> 0:03:24.160 were in. And so we're holding you know, meetings on 0:03:24.320 --> 0:03:28.920 mental health issues, behavioral health issues, stress reduction issues, etcetera. 0:03:29.639 --> 0:03:32.200 Just to make sure that we can accommodate any needs 0:03:32.200 --> 0:03:36.880 of the start have. But overall, among the physicians, the nurses, 0:03:36.920 --> 0:03:44.880 the social workers, etcetera, extraordinary resilience and unbelievable positivity even 0:03:44.880 --> 0:03:47.520 in the midst of a situation like this, especially since 0:03:47.560 --> 0:03:51.680 many of them themselves, you know, had six family members 0:03:51.680 --> 0:03:54.680 family members who died. I've come across a number of employees, 0:03:54.680 --> 0:03:59.320 including yesterday, were a nurse she actually took care of 0:03:59.400 --> 0:04:02.080 her brother who actually died on the floor of the 0:04:02.120 --> 0:04:06.480 same hospital that she was practicing. Again, um, but overall 0:04:07.040 --> 0:04:09.760 quite positive given the circumstances. And it says something it's 0:04:09.760 --> 0:04:13.960 shot them about healthcare workers. Yeah, it leaves you dumbfounded 0:04:13.960 --> 0:04:15.800 when you listen to some of those stories, Michael. But 0:04:17.000 --> 0:04:19.200 the other part of your problem is that with twenty 0:04:19.200 --> 0:04:24.320 three hospitals under your umbrella, seven fifty outpatient facilities, you've 0:04:24.360 --> 0:04:26.520 lost a lot of revenue during this time as well. 0:04:26.560 --> 0:04:28.360 And of course no one likes to talk about, you know, 0:04:28.480 --> 0:04:31.760 profit and making money during as tough a time as 0:04:31.800 --> 0:04:33.880 we've had. But you're going to have to look after 0:04:34.200 --> 0:04:37.839 conservations and patients who need you know, surgery immediately and 0:04:37.880 --> 0:04:40.440 so on. How do you do that when you've lost 0:04:40.480 --> 0:04:43.560 one and a half billion dollars in revenue, Well, you 0:04:43.680 --> 0:04:46.160 focus on if you focus on your stay positive and 0:04:46.240 --> 0:04:48.240 you stay up beat. I mean we we we had 0:04:48.279 --> 0:04:51.520 a circumstance to deal with. We dealt with it when 0:04:51.520 --> 0:04:53.520 not only lost revenue, but we had to spend an 0:04:53.560 --> 0:04:56.120 awful lot of new money is to just accommodate all 0:04:56.120 --> 0:04:59.040 of the new cases, and we retrofit many of our hospitals. 0:04:59.080 --> 0:05:01.600 But that's an the lens by which you look at it. 0:05:01.680 --> 0:05:04.160 During a crisis, you do what you do because it's 0:05:04.200 --> 0:05:05.760 the right thing to do, and you take care of 0:05:05.760 --> 0:05:08.760 the community. And now that we are coming out of it, 0:05:08.880 --> 0:05:11.160 at least for this stage of it, hopefully, and it 0:05:11.200 --> 0:05:15.440 will be the end stage, we are rebuilding back and 0:05:15.440 --> 0:05:18.920 we're transitioning, we're bringing back business. We're focusing a lot 0:05:19.000 --> 0:05:23.719 on the cases that were deferred that can't be deferred 0:05:23.760 --> 0:05:28.360 any longer, otherwise you can have some other serious negative effects. 0:05:28.440 --> 0:05:31.960 So give you an example. Two days ago, I mentioned 0:05:31.960 --> 0:05:35.839 that we had nine COVID patients into our facilities, but 0:05:35.960 --> 0:05:39.920 we had seven hundred and twenty intatient admissions on that 0:05:40.000 --> 0:05:43.360 very same day across our health system. So patients are 0:05:43.400 --> 0:05:46.960 coming back, surgery is being done, and we're going to 0:05:47.040 --> 0:05:49.200 build back up. And I think we're going to build 0:05:49.200 --> 0:05:51.599 back up in a stronger and will be in a 0:05:51.600 --> 0:05:53.520 stronger position in the future that we were in the 0:05:53.560 --> 0:05:57.120 past because we learn some lessons. We have to rethink 0:05:57.160 --> 0:06:01.280 our organization right now, become more product productive, become more 0:06:01.320 --> 0:06:07.440 consumers focused, become leaner and uh and use technology and 0:06:07.480 --> 0:06:10.360 awful lot more about our normable lessons that we learned here. 0:06:10.880 --> 0:06:12.680 And of course we did get some support from the 0:06:12.680 --> 0:06:15.719 federal government. So when I look forward a year from now, 0:06:16.000 --> 0:06:19.800 we will come out of this. Okay, Um, you know, circumstances, yeah, 0:06:21.160 --> 0:06:23.760 show you you know, put your into a negative circumstances 0:06:23.760 --> 0:06:26.760 for a while, but you look forward and you're going 0:06:26.800 --> 0:06:28.800 to come out of it healthy, strong, and better. I 0:06:28.839 --> 0:06:33.560 believe sometimes, you know, going through a bad experience weakens 0:06:33.600 --> 0:06:36.600 you up and gives you a new perspective, gets you 0:06:36.680 --> 0:06:39.160 to think about what's important and how to build your 0:06:39.240 --> 0:06:43.560 organization for the future. So I'm optimistic, um, And you 0:06:43.600 --> 0:06:45.880 have to be optimistic because it also is in a 0:06:46.000 --> 0:06:48.520 leadership in any organization should be optimistic at a time 0:06:48.600 --> 0:06:50.840 like this, because that's the message that you sent to 0:06:50.880 --> 0:06:54.280 your staff as well. So I thought, absolutely, Michael, just 0:06:54.279 --> 0:06:57.320 about thirty seconds left. How about some smaller market hospitals. 0:06:57.320 --> 0:06:59.880 I've seen some news reporting that, boy, a lot of 0:06:59.880 --> 0:07:02.200 the those types of facilities are really gonna have a 0:07:02.200 --> 0:07:05.640 hard time staying afloat what is what? What's your understanding there? Yes, 0:07:05.800 --> 0:07:08.880 smaller hospitals that are stand alone hospitals that are not 0:07:09.000 --> 0:07:12.000 part of the larger system, that don't have some of 0:07:12.040 --> 0:07:14.840 the you know, capabilities that places like us have. But 0:07:14.920 --> 0:07:17.840 we'll have a most more difficult circumstance. You will have 0:07:17.880 --> 0:07:20.800 some places across the country, my guests, that will close. 0:07:21.680 --> 0:07:24.160 You will have some places that will will will allie, 0:07:24.760 --> 0:07:28.000 we create alliances with other large entities. But there's going 0:07:28.080 --> 0:07:30.560 to be a shift and a change in healthcare now, 0:07:30.760 --> 0:07:32.400 and I think some of that is for the good. 0:07:33.160 --> 0:07:34.880 Some of the things we were always doing one way 0:07:34.920 --> 0:07:36.880 we would now do a different way. Especially do you 0:07:37.320 --> 0:07:41.120 telemedicine and telehealth, etcetera. So yes, um, you'll see some 0:07:41.160 --> 0:07:43.320 positives coming out of this, But like everything else that 0:07:43.360 --> 0:07:45.520 happens in circumstances like this, you're going to see some 0:07:45.560 --> 0:07:48.560 negatives as well. Michael Dowling, thank you so much for 0:07:48.800 --> 0:07:51.200 taking the time to speak with us. We really appreciate 0:07:51.280 --> 0:07:54.480 hearing your perspective from really ground zero on the very 0:07:54.520 --> 0:07:57.080 front lines of dealing with this COVID nineteen and you know, 0:07:57.120 --> 0:07:59.600 our our thanks to you into all the staff of 0:07:59.720 --> 0:08:02.600 your hospitals. Michael Dawling, President, chief executive officer of north 0:08:02.600 --> 0:08:07.520 Well Health joining us. Just some extraordinary commentary, Vanni. You know, 0:08:07.600 --> 0:08:10.000 think about the no hospital system in the country handed 0:08:10.040 --> 0:08:13.680 more COVID nineteen cases than north Well. Yeah, and saved 0:08:13.840 --> 0:08:16.040 the state and the rest of the country from you know, 0:08:16.080 --> 0:08:17.920 a lot of tragedy as well. But I'm sure that 0:08:18.000 --> 0:08:20.960 one anecdote he told he probably has hundreds more. And 0:08:21.480 --> 0:08:23.920 you wonder what it's like to lead an organization like 0:08:23.960 --> 0:08:29.280 that at a time like this. It is time to 0:08:29.360 --> 0:08:31.960 check in with Bloomberg Opinion. We're joined now by opinion 0:08:32.040 --> 0:08:35.200 columnist Sarah Holzack. Sarah, thank you for joining a great 0:08:35.200 --> 0:08:38.520 opinion piece today. On retail. We've known for some time 0:08:38.600 --> 0:08:41.920 that retail will be challenged, but there are more challenges 0:08:42.400 --> 0:08:46.440 facing retail. As the protests got underway and each of 0:08:46.679 --> 0:08:49.960 the brands were called out to have a response to 0:08:50.040 --> 0:08:52.240 what was going on in the environment. So where do 0:08:52.280 --> 0:08:56.760 we stand now with retail? What are CEO is telling you? Yeah, 0:08:56.840 --> 0:08:59.600 I think the key thing that I've been thinking about 0:08:59.760 --> 0:09:03.600 is that the clothing category in particular is in dire 0:09:03.720 --> 0:09:07.120 straits right now. Um, it's just a corner of retail 0:09:07.200 --> 0:09:11.360 that was more overstored than any other and already so 0:09:11.440 --> 0:09:13.720 many of the brands in that space were in a 0:09:13.760 --> 0:09:18.480 beleaguered position before the onset of the pandemic and the recession. 0:09:18.720 --> 0:09:22.360 The likes of Victoria's Secret, Banana Republic Gap Chico's expressed 0:09:22.480 --> 0:09:25.360 these are brands that for years have been struggling to 0:09:25.520 --> 0:09:28.559 connect with customers based on their fashion alone, and now 0:09:28.559 --> 0:09:31.840 when you add these other problems on top of it, 0:09:31.840 --> 0:09:34.240 it's going to be a very very dark time in 0:09:34.280 --> 0:09:38.640 this segment of retail for months and perhaps years to come. So, Sarah, 0:09:38.679 --> 0:09:41.960 as we think about the clothing aspect of retail again, 0:09:42.000 --> 0:09:44.600 as you mentioned, there's a lot of the fashion aspect 0:09:44.640 --> 0:09:48.320 to it. How has kind of the pandemic and changing 0:09:48.360 --> 0:09:51.200 consumer behaviors about how they actually purchase clothing, How has 0:09:51.240 --> 0:09:55.480 that changed our people more comfortable spending on fairly moderate 0:09:55.520 --> 0:10:00.680 the big ticket items strictly online. Yes, so I think 0:10:00.720 --> 0:10:04.240 that what this has done has basically meant years worth 0:10:04.400 --> 0:10:08.319 of online adoption was compressed into a matter of months um, 0:10:08.400 --> 0:10:11.280 and so people are getting more comfortable with purchasing clothing online. 0:10:11.280 --> 0:10:14.880 I've seen UH surveys that show people plan to keep 0:10:14.960 --> 0:10:17.880 buying clothing online at the rate that they've begun to 0:10:18.080 --> 0:10:22.120 now during this time of lockdowns, and that creates a 0:10:22.160 --> 0:10:25.400 unique challenge for the clothing segment that's not faced elsewhere. 0:10:25.640 --> 0:10:28.120 And that's because re terms of online purchases and this 0:10:28.200 --> 0:10:30.920 segment tends to be extremely high. We all probably know 0:10:31.000 --> 0:10:33.439 this from personal experience. You buy multiple sizes of a 0:10:33.480 --> 0:10:36.440 given pair of pants or multiple colors um, and having 0:10:36.440 --> 0:10:39.600 to foot the bill for return, shipping and restocking um 0:10:39.760 --> 0:10:42.840 is a really tricky profitability problem for these clothing retailers 0:10:42.920 --> 0:10:46.880 that just simply is not faced by retailers of electronics, toys, groceries, 0:10:47.120 --> 0:10:49.600 that kind of thing. So one of the reasons that 0:10:49.640 --> 0:10:52.080 people still do go into break and mortar stories is 0:10:52.120 --> 0:10:54.480 to avoid having to do that Sarah, to try on 0:10:54.559 --> 0:10:56.520 different sizes and to just try on something so they 0:10:56.559 --> 0:10:59.840 won't have to send it back. How will stores change 0:11:00.000 --> 0:11:04.400 their fitting room policies post pandemic. Yeah, so we're seeing 0:11:04.400 --> 0:11:06.800 a number of different approaches on this front. Coals and 0:11:06.840 --> 0:11:09.120 t J Max, for example, have their fitting rooms closed 0:11:09.120 --> 0:11:11.840 all together right now. Nords from its taking an approach 0:11:11.880 --> 0:11:14.079 where it has only a limited number of them open 0:11:14.240 --> 0:11:18.160 and they're cleaning each fitting room in between each patron um, 0:11:18.200 --> 0:11:20.080 and again you can see how this just compounds the 0:11:20.120 --> 0:11:23.000 problem of fitting rooms are a key reason that you 0:11:23.120 --> 0:11:25.199 go to do brick and mortar shopping in the first 0:11:25.200 --> 0:11:27.760 place for clothing stores, and when that option is not 0:11:27.800 --> 0:11:30.240 available to you, or when it's suddenly become a lot 0:11:30.320 --> 0:11:32.720 flunk here, you can see how that might keep people 0:11:32.720 --> 0:11:35.720 away or keep people from purchasing as many things as 0:11:35.760 --> 0:11:39.520 they might have if they were able to try them on. So, Sara, 0:11:39.640 --> 0:11:41.720 one of the things that we've heard about within retail 0:11:41.960 --> 0:11:45.840 generally speaking, is this omni channel approach to retailing. You know, 0:11:46.080 --> 0:11:49.400 the bricks and mortar plus the online being able to 0:11:49.559 --> 0:11:51.880 you know, maybe pick up something that you ordered online. 0:11:52.240 --> 0:11:55.360 Is that still seen as the best strategy for a 0:11:55.400 --> 0:11:59.640 lot of these retail segments. So I think curbs I'd 0:11:59.640 --> 0:12:02.079 pick up the getting a huge boost in the grocery 0:12:02.120 --> 0:12:04.560 category right now, and I think a lot of people 0:12:04.640 --> 0:12:07.440 are trying that for the first time and reach other's 0:12:07.480 --> 0:12:10.160 like Walmart and Target have long said that these services 0:12:10.200 --> 0:12:13.559 have extraordinarily high net promoter scores that once people, once 0:12:13.600 --> 0:12:15.640 they can get people to try them, uh, they really 0:12:15.640 --> 0:12:18.040 do stick with them and recommend them to other shoppers. 0:12:18.240 --> 0:12:20.880 So this moment of trial for curbside pickup in the 0:12:20.920 --> 0:12:23.880 grocery space in particular, I think it's going to be 0:12:23.920 --> 0:12:27.760 sticky and powerful. Um, these experiments that say a Bloomingdale' 0:12:27.840 --> 0:12:30.360 is doing with curbside pickup, I'm not sure how enduring 0:12:30.440 --> 0:12:34.440 that's going to be after the pandemic, because again, this 0:12:34.520 --> 0:12:36.920 seems like a situation where either you'd want to go 0:12:36.960 --> 0:12:39.280 to the store, try the clothes on, have that sort 0:12:39.320 --> 0:12:44.320 of social experiential moment, or you'd want to shop online. 0:12:44.320 --> 0:12:49.240 And I don't think curbside will be have lasting impacts there. Sarah, Obviously, 0:12:49.520 --> 0:12:53.080 you know a big story is rent and Gap is 0:12:53.120 --> 0:12:55.160 suing it doesn't want to pay rent and so on. 0:12:55.520 --> 0:12:58.920 What are people like MPG group and so on saying 0:12:58.960 --> 0:13:03.720 about who will up on the hook for rents? Yeah, 0:13:03.760 --> 0:13:06.360 it's a tricky question and I think it would me 0:13:06.559 --> 0:13:10.080 everyone's watching that particular lawsuit you mentioned very closely to 0:13:10.120 --> 0:13:13.440 see how it shapes out. Um. I think it's interesting 0:13:13.480 --> 0:13:16.480 to note that different retailers will have different advantages that 0:13:16.559 --> 0:13:20.160 they can bring to these lease negotiations. If you're someone 0:13:20.160 --> 0:13:23.160 who's a key traffic driver to a shopping center, so Apple, 0:13:23.280 --> 0:13:25.480 for example, uh tends to drive a lot of foot 0:13:25.480 --> 0:13:27.640 traffic to a mall. Or if you're a grocery store 0:13:27.679 --> 0:13:29.360 which has been opened this whole time and is a 0:13:29.440 --> 0:13:31.959 basics retailer, you have a lot of leverage in these 0:13:32.040 --> 0:13:35.800 negotiations with the mall operators. If you're one of these 0:13:35.880 --> 0:13:38.679 leaguer clothing stores we were talking about earlier, a Victoria's 0:13:38.720 --> 0:13:41.360 Secret and express Uh, you know, Victoria's secret is closing 0:13:41.360 --> 0:13:43.360 a quarter of its North American fleet. That does not 0:13:43.440 --> 0:13:45.880 really put you on good footing to be able to 0:13:46.360 --> 0:13:48.920 renegotiate that our terms for your leases. And so I 0:13:48.920 --> 0:13:50.600 think that is definitely going to play a role and 0:13:50.640 --> 0:13:54.319 who the ultimate survivors are after all of this tumult. 0:13:55.080 --> 0:13:57.120 Sarah Hals like, thank you so much for joining us. 0:13:57.240 --> 0:13:59.600 We're always glad to get your perspective and all things 0:13:59.640 --> 0:14:02.840 retail Cheach retail colms for Bloomberg Opinion. You can read 0:14:02.880 --> 0:14:05.160 more of Sarah's work and other stories from Bloomberg Opinion 0:14:05.200 --> 0:14:08.560 at Bloomberg dot com, slash Opinion, and on the Terminal 0:14:08.640 --> 0:14:12.320 by typing o p I n go So, Fannie, I 0:14:12.320 --> 0:14:16.600 think it's just more tough times for the retail retailers 0:14:16.600 --> 0:14:18.679 out there. It's gonna be really tough coming back from 0:14:18.679 --> 0:14:20.640 this pandemic, right, I mean, there were so many of 0:14:20.680 --> 0:14:23.440 them on the brink of bankruptcy. Anyway, if you listen 0:14:23.480 --> 0:14:25.600 to somebody like Howard Divito, Wits or whatever, he will 0:14:25.600 --> 0:14:28.560 tell you that, you know, they should have been bankrupt 0:14:28.560 --> 0:14:30.920 a long time ago, some of them. And obviously, this 0:14:31.080 --> 0:14:33.400 pivot online, as you said, Paul, is just going to 0:14:33.480 --> 0:14:37.160 accelerate and has been accelerating in the pandemic. So obviously, 0:14:37.160 --> 0:14:41.000 as we saw online shopping boosted massively, it doesn't mean 0:14:41.000 --> 0:14:42.440 that the brick and mortar stores will be able to 0:14:42.440 --> 0:14:48.240 stick around. And we are back looking forward to our 0:14:48.320 --> 0:14:52.280 chat with the illustrious David Kotag. Next. David joins us 0:14:52.760 --> 0:14:56.720 from Cumberland Advisors, where he's the chief investment Officer, chairman 0:14:56.840 --> 0:15:00.560 and of course just a friend of the show for decades. 0:15:00.560 --> 0:15:02.480 I would have to say, at this point, David, you've 0:15:02.520 --> 0:15:05.400 seen money markets sell off. David, is this a sell 0:15:05.440 --> 0:15:09.480 off based on panic, based on fundamentals, based on what 0:15:09.560 --> 0:15:13.960 FED chair Paul said yesterday, or all of the above? Oh, Vanni, 0:15:14.120 --> 0:15:16.320 thank you very much and nice to be with you 0:15:16.400 --> 0:15:22.200 and Paul, all of the above. In an extraordinary environment 0:15:22.800 --> 0:15:27.160 with a VIX, which is an indicator of volatility and 0:15:27.320 --> 0:15:32.800 risk that's contemporaneous with the markets, that has been at 0:15:32.840 --> 0:15:37.400 such a high level reflecting that volatility. You think about 0:15:37.400 --> 0:15:40.040 what we've done in three months. We went from thirty 0:15:40.040 --> 0:15:44.680 three hundred on the SMP back to thirty two hundred, 0:15:44.800 --> 0:15:49.120 and now we're somewhere around thirty one and in what 0:15:49.240 --> 0:15:54.200 looks like a very free fault. Temporarily, it's a wild time. 0:15:54.680 --> 0:15:58.960 So we're it's explainable by what you're just outlined, and 0:15:59.000 --> 0:16:02.440 there will be more, but I'm afraid to say so today, 0:16:02.480 --> 0:16:05.960 but we got another very difficult drobbles claims number today. 0:16:06.000 --> 0:16:09.480 We had FED chairman Pal yesterday calling out that a 0:16:09.600 --> 0:16:14.040 rebound in this economy will take longer than perhaps people anticipated. 0:16:14.360 --> 0:16:16.920 As you look across the credit spectrum, are you starting 0:16:16.920 --> 0:16:21.120 to see significant credit quality problems that are going to 0:16:21.160 --> 0:16:24.920 be an issue for investors going forward. Well, we worry 0:16:24.920 --> 0:16:28.480 about the credit problems, Paul. We have seen. We saw 0:16:28.560 --> 0:16:32.880 the credit spreads blowout at the end of March, and 0:16:32.960 --> 0:16:37.560 then the FED activities started to narrow them, and they 0:16:37.720 --> 0:16:42.080 narrowed wherever the market believed the FED would provide market 0:16:42.160 --> 0:16:50.920 function support and not only functioning, but liquidity to continuously functioned. 0:16:50.960 --> 0:16:55.280 So there is confidence restored in those credit spread and 0:16:55.440 --> 0:16:59.360 other credit spreads much less so. So there's a sort 0:16:59.360 --> 0:17:01.920 of a division. And I think in the market, I 0:17:01.920 --> 0:17:05.920 would draw the line at what was previously investment grade 0:17:06.600 --> 0:17:10.000 of any type. The FED is intent on trying to 0:17:10.119 --> 0:17:13.679 keep that a functioning market. If it was below if 0:17:13.720 --> 0:17:16.480 it was a junk credit, and the junk credit last fall, 0:17:16.560 --> 0:17:18.800 the FED is not going to go bail it out, 0:17:19.280 --> 0:17:22.640 but they do want market functionality. And I believe that's 0:17:22.680 --> 0:17:27.480 how you divide the credit analysis in a general thematic way. 0:17:27.840 --> 0:17:30.720 David Square off for me, the idea that this will 0:17:30.760 --> 0:17:33.840 be the shortest recession of all time with the data 0:17:33.880 --> 0:17:36.560 that we're seeing and what the FED chair said yesterday 0:17:36.560 --> 0:17:39.399 about unemployments still being just below time present by the 0:17:39.480 --> 0:17:41.359 end of the year and F one C member is 0:17:41.520 --> 0:17:43.800 not being able to forecast an interest rate increase until 0:17:43.800 --> 0:17:50.439 at least well. I can understand what j Pal tried 0:17:50.480 --> 0:17:54.320 to convey because he's feeling this so many unknowns, like 0:17:54.680 --> 0:17:57.000 how long the virus, how much damage does it do, 0:17:57.480 --> 0:18:00.960 When do we have curated treatment, super people have safety 0:18:01.000 --> 0:18:03.080 if they get sick, and when do we get a 0:18:03.160 --> 0:18:07.600 vaccine in mass distribution. We don't know that everything is 0:18:07.640 --> 0:18:10.600 being worked on. Everybody's hopeful, but we have no idea 0:18:10.640 --> 0:18:12.960 as to time. So he has to give himself a 0:18:13.080 --> 0:18:17.919 time cushion, and that would probably be a safe two years. 0:18:18.280 --> 0:18:20.040 The second thing he has to do is say, we 0:18:20.119 --> 0:18:23.000 don't know how deep and how much the damage will be. 0:18:23.240 --> 0:18:27.560 We're trying to buffer the damage. We're trying to bridge 0:18:28.000 --> 0:18:31.679 across the valley, and we cannot know how why the 0:18:31.800 --> 0:18:35.760 valley is and that was the nature of his message. 0:18:35.800 --> 0:18:38.960 I think the FED in the pal are doing a 0:18:39.400 --> 0:18:44.639 terrific job confronting something that is a once in a 0:18:44.760 --> 0:18:48.000 hundred year type of an event. So I believe they 0:18:48.000 --> 0:18:50.960 were candidate. They said what they did, They said, take 0:18:51.000 --> 0:18:56.679 this very seriously. Where markets were on this euphoric rise 0:18:57.680 --> 0:19:03.240 based upon opening up is an access market swing to 0:19:03.320 --> 0:19:06.240 access in both directions, and they did it over the 0:19:06.320 --> 0:19:10.600 last period of time, and now they're correcting the excess. 0:19:10.840 --> 0:19:13.480 If the sell off gets to the point where we 0:19:13.600 --> 0:19:18.000 think it is, it will present an entry opportunity again, 0:19:18.800 --> 0:19:22.840 because in the end of this there is recovery, and 0:19:23.000 --> 0:19:28.400 after the recovery there's a reconfiguration of economics. People forget, 0:19:28.440 --> 0:19:32.160 if I have another minute, Bunny and Paul. People forget 0:19:32.600 --> 0:19:36.159 there's a survivor bias under way here. Look at the 0:19:36.359 --> 0:19:40.480 SMP five index, for example, Macy's used to be in it. 0:19:40.960 --> 0:19:44.600 It's not in it anymore. It's still a five hundred index, 0:19:44.720 --> 0:19:49.679 but it's reconfigured by definition to capture and adjust for 0:19:49.800 --> 0:19:54.760 the changes. So, David, given that time frame that Chairman 0:19:54.800 --> 0:19:58.800 Pal suggested yesterday, perhaps a two year kind of time 0:19:58.800 --> 0:20:01.320 frame here for trying to get to the other side here, 0:20:01.800 --> 0:20:05.800 how how are you positioning your portfolio right now, given 0:20:05.840 --> 0:20:11.000 that again this may be a little bit longer to recover. Well, 0:20:11.040 --> 0:20:14.240 the first is today in the stock or FOLI we 0:20:14.280 --> 0:20:16.679 have a cash reserve, we have had it for a while. 0:20:17.440 --> 0:20:20.960 We will deploy it and reduce it on entries that 0:20:21.080 --> 0:20:25.679 appear inviting and we will raise it if markets go 0:20:25.760 --> 0:20:29.639 to access. Our biggest overweight in the United States and 0:20:29.680 --> 0:20:33.080 the US portfolio is the health care sector. We think 0:20:33.119 --> 0:20:36.439 when this is over, Paul, the healthcare sector in the 0:20:36.520 --> 0:20:40.400 United States will amount to the GDP of the country. 0:20:40.680 --> 0:20:44.680 That will be an all time record high American healthcare country. 0:20:44.920 --> 0:20:49.040 Companies in partnership with others around the world, are doing 0:20:49.080 --> 0:20:55.600 a stellar job in cooperatively developing what the tools will 0:20:55.680 --> 0:20:59.960 be to deal with the pandemic. It's this is how 0:21:00.000 --> 0:21:03.560 our biggest overweights there. We're worried about the geopolitics of 0:21:03.600 --> 0:21:06.199 the world, so we have an overweight the defense sector. 0:21:06.320 --> 0:21:09.800 I wish it weren't so. And we have a position 0:21:10.200 --> 0:21:13.760 which I really like because I think some changes are 0:21:13.800 --> 0:21:17.760 going to happen, and that's in water, wind and solar. 0:21:18.560 --> 0:21:22.520 We are overweight that package. We think there's going to 0:21:22.600 --> 0:21:26.240 be some reaction around the world. I wish there would 0:21:26.240 --> 0:21:30.800 be more to the change that's necessary to address climate change. 0:21:31.000 --> 0:21:34.520 That's a hopeful estimate, but we've got some money on 0:21:34.640 --> 0:21:37.879 it is happening. David Kotalk, thank you so much for 0:21:38.160 --> 0:21:41.040 joining us. As always, we appreciate your thoughts and commentary 0:21:41.080 --> 0:21:44.000 and your experience, the benefit of your experience. David Coo Talk, 0:21:44.080 --> 0:21:48.119 chairman and chief investment officer, a couple of advisors joining 0:21:48.200 --> 0:21:50.840 us at once again with his Sage Advice and Ronnie 0:21:50.880 --> 0:21:53.800 looking at the markets here. Uh, you know, continued weakness here. 0:21:53.800 --> 0:21:56.359 I think it's continuing the third day we've seen the 0:21:56.480 --> 0:22:00.520 sell off here, we're now uh four off on the Dow. 0:22:00.960 --> 0:22:04.320 Uh So again the market reacting to a confluence of 0:22:04.359 --> 0:22:07.640 events from the last several days. Yeah, and I mean, 0:22:07.920 --> 0:22:11.000 let's not overplay it right now because we had actually 0:22:11.200 --> 0:22:13.280 been out records before this, which was really sort of 0:22:13.320 --> 0:22:15.480 the stunning thing. But still for the year now the 0:22:15.520 --> 0:22:21.480 Dow was down about ten percent based on today's numbers included. Well, 0:22:21.520 --> 0:22:25.000 we certainly have equity markets trading off substance substantially today. 0:22:25.040 --> 0:22:28.199 The question is simply, is this something that is to 0:22:28.280 --> 0:22:30.879 be expected given the huge rebound we've had off the 0:22:30.880 --> 0:22:33.880 bottom source, it's suggesting something more. To get some color, 0:22:33.920 --> 0:22:36.920 we welcome Barry Ridholt's, founder of rit Holt's Wealth Management, 0:22:37.040 --> 0:22:40.720 is also Bloomberg Opinion calumnists and host of Masters in Business. 0:22:40.720 --> 0:22:44.160 So Barry, what say you about this market today? Yeah, 0:22:44.200 --> 0:22:48.200