WEBVTT - Surveillance: 'Extreme' Jobless Numbers With Hooper 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.200 Bloomberg dot Com, and of course on the Bloomberg. There's 0:00:28.400 --> 0:00:31.320 no one better to talk to about the quickness that 0:00:31.360 --> 0:00:35.120 we are all living and Sevida Supermannian Bank of America 0:00:35.120 --> 0:00:39.479 ahead of US equity quantitative strategy. Tell me about the 0:00:39.520 --> 0:00:42.840 Greek letters Cevita, What does Gamma? What does Delta say 0:00:42.880 --> 0:00:46.720 about this unusual time? You know, I think we've had 0:00:46.720 --> 0:00:49.880 a fast and furious comeback in the market. I think 0:00:49.880 --> 0:00:52.360 that's really interesting to look at today is just the 0:00:52.479 --> 0:00:55.760 valuation of the market. Um, so, two things have happened 0:00:55.760 --> 0:00:58.200 over the last month. The market has gone down and 0:00:58.280 --> 0:01:01.720 then up pretty quickly, and then you've also seen earnings 0:01:01.760 --> 0:01:05.880 revised down pretty aggressively. So what's happened is the pe 0:01:05.959 --> 0:01:09.280 of the market. The price to earnings ratio has has 0:01:09.360 --> 0:01:12.880 actually risen to almost the same highs that we were 0:01:12.920 --> 0:01:16.320 at in February, which means the market is again very 0:01:16.480 --> 0:01:20.200 very expensive, and this time it's because earnings are lower 0:01:20.520 --> 0:01:23.120 and the prices back to uh to to you know, 0:01:23.120 --> 0:01:26.240 pretty aggressive levels. So so I guess when we look 0:01:26.280 --> 0:01:29.120 at the market today, we think, okay, it looks just 0:01:29.160 --> 0:01:32.640 as expensive as it did about a month ago. And 0:01:32.720 --> 0:01:34.880 we're not out of the woods yet. So we've got 0:01:34.920 --> 0:01:37.600 you know, we've got employment likely to get worse before 0:01:37.640 --> 0:01:40.160 it gets better. We've got um, you know, a lot 0:01:40.200 --> 0:01:45.240 of uncertainty around timing uh in terms of business resumption. Um, 0:01:45.280 --> 0:01:48.880 we've got you know, kind of a very muddled earning 0:01:48.880 --> 0:01:51.120 season where a lot of companies are just shutting down 0:01:51.160 --> 0:01:53.320 guidance because they have, you know, kind of a no 0:01:53.520 --> 0:01:56.040 visibility in terms of what's going to happen. I don't know. 0:01:56.080 --> 0:01:58.080 When I look at this, I think, okay, we've come 0:01:58.120 --> 0:02:01.520 back pretty quickly. But do we really have the underpinnings 0:02:01.520 --> 0:02:05.640 of fundamental underpinnings of a of a strong bowlmarket from here? 0:02:06.080 --> 0:02:08.880 And I think that's the big question mark for me. Yeah, 0:02:08.919 --> 0:02:10.639 And when you talk about questions, we used to say 0:02:10.720 --> 0:02:13.480 pay attention to fundamentals, and now people are saying numbers 0:02:13.480 --> 0:02:15.960 don't matter. We're flying blind. It's bad. We don't know 0:02:16.000 --> 0:02:17.800 how bad. It doesn't matter how bad, as long as 0:02:17.800 --> 0:02:19.400 we get a sense of when it actually starts to 0:02:19.440 --> 0:02:22.440 come back. What's your compass right now for deciding whether 0:02:22.440 --> 0:02:25.680 to buy or sell? Yeah, I think it's a really 0:02:25.680 --> 0:02:28.160 good question. And I think the way we're thinking about 0:02:28.160 --> 0:02:30.960 things is more just the short term is so fraught 0:02:31.040 --> 0:02:34.120 with uh, with uncertainty, that it might just make more 0:02:34.200 --> 0:02:38.480 sense to think about a normalized earnings approach, just you know, 0:02:38.560 --> 0:02:40.720 what are earning is gonna look like over the next 0:02:40.800 --> 0:02:45.760 few years. Does the does the global pandemic change a 0:02:45.840 --> 0:02:49.560 lot for the earnings composition of the SMP five And 0:02:49.639 --> 0:02:51.480 I think there are puts and takes, you know, So 0:02:51.520 --> 0:02:56.040 I think if you think about travel and commercial real estate, 0:02:56.160 --> 0:02:59.880 we might be less inclined to UM to see those uh, 0:03:00.080 --> 0:03:04.200 those areas continue to to receive the amounts of to 0:03:04.240 --> 0:03:06.440 continue to generate the amounts of revenue they have to 0:03:06.560 --> 0:03:09.680 date um as you know this this sort of hastens 0:03:09.720 --> 0:03:13.519 the work from home less reliance on on office space 0:03:13.960 --> 0:03:16.720 aspect of the economy. But on the flip side, if 0:03:16.760 --> 0:03:19.600 companies are paying less for office space and corporate travel, 0:03:20.040 --> 0:03:23.240 then maybe that's good for margins UM. So I do 0:03:23.320 --> 0:03:26.160 think that there are you know, kind of offsets positive 0:03:26.160 --> 0:03:29.120 offsets to normalize learnings. But here's our take. We think 0:03:29.120 --> 0:03:31.160 that normalized learnings is going to be about tempers that 0:03:31.280 --> 0:03:34.880 lower than what what we were expecting prior to COVID 0:03:34.960 --> 0:03:38.240 nineteen UM And you know, and I think that that's 0:03:38.280 --> 0:03:41.120 that's not so bad. I think stocks are still offering 0:03:41.400 --> 0:03:45.520 a relatively competitive return to most other fixed income assets. 0:03:46.000 --> 0:03:48.960 And you know, kind of thinking about our quant models, uh, 0:03:49.040 --> 0:03:50.520 you know, I think one of the things that we 0:03:50.560 --> 0:03:53.400 find interesting is that valuation doesn't really matter for the 0:03:53.440 --> 0:03:56.360 short term, but it does seem to matter quite strongly 0:03:56.400 --> 0:03:58.960 for the long term. The R squared on on you know, 0:03:59.000 --> 0:04:01.040 the pe ratio of the market over the next ten 0:04:01.120 --> 0:04:04.800 years is above six. So that means that evaluation is 0:04:04.840 --> 0:04:07.320 really important in terms of describing what the market's going 0:04:07.360 --> 0:04:10.080 to look like over a ten year time horizon. And 0:04:10.240 --> 0:04:12.440 returns right now look like they could be in the 0:04:12.560 --> 0:04:14.920 you know, three to four to five percent range over 0:04:14.960 --> 0:04:17.479 the next ten years. If you add on a two 0:04:17.480 --> 0:04:21.240 to three percent dividend yield, that's you know, seven percent returns. 0:04:21.279 --> 0:04:24.800 It's not bad in an environment where where interest rates 0:04:24.839 --> 0:04:28.200 are super low and most fixed income assets aren't going 0:04:28.240 --> 0:04:31.880 to offer that type of quality adjusted return. So I 0:04:31.880 --> 0:04:34.159 think longer term stocks still look good to me, but 0:04:34.240 --> 0:04:36.320 I think they've come back a little bit too quickly 0:04:37.080 --> 0:04:39.200 to help us understand. Then, with all of this in mind, 0:04:39.279 --> 0:04:43.359 how useful earning season is, Yeah, I mean it's a 0:04:43.360 --> 0:04:45.360 it's a great question. So I think that earning season 0:04:45.400 --> 0:04:47.320 is a little bit of a guessing game. A lot 0:04:47.360 --> 0:04:50.080 of companies aren't going to give you guidance. Um, if 0:04:50.080 --> 0:04:52.719 you look at the dispersion of analysts estimates, we've reached 0:04:52.760 --> 0:04:55.880 all time highs. Nobody knows what's going on. So I 0:04:55.920 --> 0:04:58.159 think that you know what you want to pay attention 0:04:58.160 --> 0:05:00.560 to this earning season are surprises. One of the things 0:05:00.640 --> 0:05:04.039 we found interesting was that in in prior periods when 0:05:04.120 --> 0:05:08.279 dispersion of analysts estimates was this high, surprises were actually 0:05:08.320 --> 0:05:11.920 rewarded more than usual. They were rewarded three times as 0:05:12.000 --> 0:05:14.960 much as usual. So I think that earnings beats in 0:05:15.040 --> 0:05:18.440 this environment are going to be very sparse, but but 0:05:18.520 --> 0:05:21.960 they will definitely see much bigger rewards than what we've 0:05:22.279 --> 0:05:25.359 what we've experienced historically. So I think that's what we 0:05:25.400 --> 0:05:28.200 want to pay attention to this earning season. I don't 0:05:28.200 --> 0:05:30.320 know if we really want to pay attention to guidance 0:05:30.360 --> 0:05:33.200 because I think companies just like you and me don't 0:05:33.200 --> 0:05:35.240 really have a good sense of how this year is 0:05:35.279 --> 0:05:38.200 going to shape up. I'm not sure who's still providing guidance. 0:05:38.200 --> 0:05:40.239 Saveta are always great to cash out with you. Thanks 0:05:40.240 --> 0:05:41.960 for the half work from the team, especially the time 0:05:42.000 --> 0:05:55.720 like the Savita SUPERMANI in there of Bank America on 0:05:55.839 --> 0:05:58.719 this pandemic. We have been thrilled by our medical coverage. 0:05:58.760 --> 0:06:00.520 We really might try to make it come to speak 0:06:00.560 --> 0:06:03.360 to experts on this weeks and weeks and weeks ago, 0:06:03.440 --> 0:06:05.760 and we want thrilled, thrilled to have an agreement with 0:06:05.839 --> 0:06:08.920 Johns Hopkins to bring you their best and brightest across 0:06:09.040 --> 0:06:12.600 all of their facilities, including the Bloomberg School of Public Health, 0:06:12.680 --> 0:06:16.240 of course, with the philanthropy there of our founder Michael Bloomberg, 0:06:16.760 --> 0:06:19.240 founder of Bloomberg Gelpi, and of course this television and 0:06:19.320 --> 0:06:22.120 radio operation as well. But there's much more at the 0:06:22.200 --> 0:06:27.320 Johns Hopkins University, and that includes a world class nursing program. 0:06:27.440 --> 0:06:32.719 Jason Farley is a doctor at the nursing program. He 0:06:32.880 --> 0:06:36.039 is expert on the people in the trenches and we 0:06:36.120 --> 0:06:40.000 spoke today about the dynamics of this nation and nursing 0:06:40.040 --> 0:06:44.599 here is Professor Farley. So we know that when we're 0:06:44.600 --> 0:06:47.240 looking at how many people become critically yell and we're 0:06:47.240 --> 0:06:52.279 still looking at approximately of people hospitalized UH needing some 0:06:52.440 --> 0:06:56.520 form of acute care, and of that group, approximately half 0:06:56.920 --> 0:07:00.920 will need some form of mechanical ventilation. Now needing mechanical 0:07:01.000 --> 0:07:04.880 ventilation tend to be tend to skew toward our older population. 0:07:05.200 --> 0:07:07.560 And we're still seeing that data in the United States 0:07:07.560 --> 0:07:10.240 consistent with what we've seen around the world. Does our 0:07:10.280 --> 0:07:13.520 response team in the US and in other parts of 0:07:13.520 --> 0:07:17.560 the world have enough equipment, have enough personal protection to 0:07:17.720 --> 0:07:19.800 deal with the virus in the coming weeks and months. 0:07:20.320 --> 0:07:26.320 So so, the the administration has finally started to UM 0:07:27.120 --> 0:07:32.360 offer support to the states in trying to get more PPE. 0:07:32.640 --> 0:07:36.600 There have been herculean efforts by various governors across the 0:07:36.680 --> 0:07:40.440 United States to UM bring in more in maps, to 0:07:40.520 --> 0:07:43.200 bring in more gowns and gloves, to bring in face 0:07:43.200 --> 0:07:48.200 shields for our frontline healthcare workers. UH. That has been 0:07:48.240 --> 0:07:52.040 different across states, and as you've seen recording UM, different 0:07:52.120 --> 0:07:56.040 governors across the United States have had to basically barter 0:07:57.480 --> 0:08:00.440 decal in you know, for lack of a better word. UM, 0:08:00.560 --> 0:08:04.600 personal protective equipment from various agencies, including going overseas to 0:08:04.640 --> 0:08:07.640 obtain you know, maths from China and their supports mass 0:08:07.640 --> 0:08:11.760 from other countries. UM. It's also in my home state 0:08:11.800 --> 0:08:16.920 of Maryland, the governor has launched a in ninety reprocessing center, 0:08:17.520 --> 0:08:20.680 one of the largest in the country, to facilitate the 0:08:20.720 --> 0:08:23.920 reuse and cleaning of IN nine mass, which is something 0:08:23.960 --> 0:08:27.559 that's unheard of. We would never typically reuse those types 0:08:27.600 --> 0:08:31.200 of maps, so we're being very resilient in our efforts 0:08:31.200 --> 0:08:34.440 to try to make sure we have enough ppe. Dr Farrow, 0:08:34.520 --> 0:08:38.880 you are expert in the epidemiology of infectious diseases, and 0:08:38.920 --> 0:08:41.880 your Johns Hopkins is flat out done the best job 0:08:42.400 --> 0:08:48.440 of a regional, a city, almost a nationwide epidemiology and 0:08:48.640 --> 0:08:52.559 study of these statistics. The statistics, the slopes, the second 0:08:52.640 --> 0:08:57.480 derivatives for some of these regions California, Florida, they're really 0:08:57.480 --> 0:09:00.880 not very good. New New Jersey just it's not happening. 0:09:01.360 --> 0:09:05.440 Tell us about the diffusement of a virus from hot 0:09:05.520 --> 0:09:09.640 spots which get all the media attention out into the 0:09:09.760 --> 0:09:15.000 greater public. What is the experience you have of infectious 0:09:15.000 --> 0:09:20.640 disease from a hot spots out to broader geographies. Sure, 0:09:20.920 --> 0:09:23.280 so when we talk about hot spots, it's important for 0:09:23.280 --> 0:09:26.400 everyone to understand that where we have ongoing you know, 0:09:26.840 --> 0:09:31.040 replication of the virus and transmission of the virus UM. 0:09:31.120 --> 0:09:34.640 You know, when a when we know what the effectivity 0:09:35.120 --> 0:09:37.520 uh potential of the virus is, and that's what we 0:09:37.640 --> 0:09:41.360 call are not um In this case, it's between two 0:09:41.400 --> 0:09:45.920 and three. So that means for every person that you uh, 0:09:46.200 --> 0:09:49.240 in fact, that person with COVID infects, they're gonna in 0:09:49.360 --> 0:09:52.480 fact approximately two to two and a half to three 0:09:52.600 --> 0:09:56.520 people UM with the virus. And so hot spots allow 0:09:56.640 --> 0:10:01.040 that propagation or that that transmissibility to occur um ongoing 0:10:01.200 --> 0:10:03.880 in an ongoing basis. Now the trickle effect, you know, 0:10:03.880 --> 0:10:06.880 it's bleeding out into other locales and locations. It's the 0:10:06.920 --> 0:10:08.559 perfect example in the United States right now in the 0:10:08.640 --> 0:10:12.200 Rhode Island. It's been getting cases coming in from New York, 0:10:12.360 --> 0:10:14.840 from New York State as well as in from Connecticut. 0:10:15.240 --> 0:10:17.880 And it would not have deemed a hotspot, but because 0:10:18.000 --> 0:10:21.720 of you know, migration, because of contact, because of UM, 0:10:21.720 --> 0:10:25.040 you know, people's movement, it has now started to see 0:10:25.080 --> 0:10:29.680 bleed over. Jason Farley Johns Hopkins University thrilled to have 0:10:29.720 --> 0:10:42.920 him on today with their School of Nursing Mishall Meyer. 0:10:42.960 --> 0:10:46.040 Where the Bank of America, Michelle, I guess I did 0:10:46.160 --> 0:10:47.520 math there. I don't know if it's a Bank of 0:10:47.559 --> 0:10:50.880 America quality, but I took twenty two million divided by 0:10:50.880 --> 0:10:55.360 a hundred and fifty five million employed. That's really ugly. 0:10:55.400 --> 0:10:57.680 How do you fold that into a guestimate of where 0:10:57.720 --> 0:11:02.680 the unemployment rate will ahead? Um? Good morning, Good morning 0:11:02.679 --> 0:11:06.160 Tom Coom morning John so. Um. Yes, absolutely, those are 0:11:06.520 --> 0:11:10.520 disturbing numbers, UM, and your math is correct. Um, it's 0:11:10.520 --> 0:11:13.760 about fourteen per suddenly before that have already lost jobs 0:11:13.760 --> 0:11:16.320 in an extremely short order amount of time, So the 0:11:16.360 --> 0:11:20.680 unemployment is already in double digits. It's um with these numbers, 0:11:20.760 --> 0:11:24.560 if you assume one to one translation to the household 0:11:24.600 --> 0:11:28.640 survey UM from the BLS, which is probably not quite right. 0:11:28.679 --> 0:11:31.640 Probably there's some wiggle room there, but it would suggest 0:11:31.640 --> 0:11:34.000 you're probably already at about a fourteen percent fifteen percent 0:11:34.040 --> 0:11:36.560 unemployment rate. What do you think it's going to eventually 0:11:36.760 --> 0:11:39.880 end up being given the pace that we're seeing, Given 0:11:39.920 --> 0:11:42.920 the lack of clarity as far as the ability to 0:11:43.000 --> 0:11:47.320 process these claims versus the demand for unemployment benefits right now, 0:11:49.080 --> 0:11:52.360 So you know, the bulk of the loss is happening 0:11:52.440 --> 0:11:56.200 right now. I mean, that's this what this recession looks like. 0:11:56.240 --> 0:11:59.439 It's an acute crisis. It's it's shutting down of parts. 0:11:59.480 --> 0:12:02.800 They come all happens very very suddenly. So UM, you know, 0:12:02.840 --> 0:12:06.400 we certainly should assume some moderation going forward. UM. I 0:12:06.440 --> 0:12:08.480 don't think we've returned anything that you know as kind 0:12:08.520 --> 0:12:10.480 of pre COVID levels for a really long time. When 0:12:10.480 --> 0:12:13.800 it comes to claims, UM, they will remain elevated, UM, 0:12:13.880 --> 0:12:16.360 but coming up they will come off of these extraordinary 0:12:16.480 --> 0:12:20.440 levels of five six million a week UM. Nonetheless, you know, 0:12:20.520 --> 0:12:22.880 April jobs report will be clearly very ugly with what 0:12:22.920 --> 0:12:28.000 we're seeing, you know, millions of of of jobs lost. UM. 0:12:28.080 --> 0:12:30.760 They will probably also be very weak because you have 0:12:30.880 --> 0:12:34.800 some residual weakness there companies that had tried to to 0:12:34.320 --> 0:12:38.520 to stay along UM, but you know, at some point 0:12:38.800 --> 0:12:41.640 kind of decided that the math doesn't make sense anymore 0:12:41.679 --> 0:12:43.760 and their employees would probably be better if they do 0:12:43.920 --> 0:12:47.400 go on unemployment insurance. So you know, there's some laggers 0:12:47.440 --> 0:12:50.760 there as well. UM, And I do think that it's 0:12:50.800 --> 0:12:54.120 going to take some time to work through all of that, Michelle. 0:12:54.160 --> 0:12:56.680 In four weeks, we've taken out ten years of jobs 0:12:56.720 --> 0:13:01.440 growth in just four weeks, and quite clear it's easier 0:13:01.559 --> 0:13:03.679 quicker to get rid of jobs than it is to 0:13:03.760 --> 0:13:06.720 add them. Have you got any projections whatsoever at this 0:13:06.760 --> 0:13:09.680 point about how long it's going to take to heal 0:13:09.840 --> 0:13:12.600 these wounds that are deep into this labor market in 0:13:12.640 --> 0:13:16.199 just four weeks, You're absolutely right. It's a lot easier 0:13:16.200 --> 0:13:17.960 to shut the lights sticks off and put it back on, 0:13:18.240 --> 0:13:22.959 especially in this environment where you know it's it's a dramatic, 0:13:23.040 --> 0:13:26.520 quick shutdown, a lockdown, um from the shelter at home 0:13:26.600 --> 0:13:28.640 orders and then it's going to be a very slow 0:13:28.800 --> 0:13:32.720 and properly partial reopening. UM. So the one thing to 0:13:32.760 --> 0:13:34.880 look at when you talk about the job cuts is 0:13:35.160 --> 0:13:41.240 the percent that are reportedly considered temporarily unemployed. UM. You know, Esthmus, 0:13:41.240 --> 0:13:44.199 I've seen suggested to that half of the current flow 0:13:44.240 --> 0:13:48.080 and two unemployed are considered temp. So if that is 0:13:48.120 --> 0:13:51.440 the case, those workers in theories should be more attached 0:13:51.480 --> 0:13:54.240 to their employers um and they should be able to 0:13:54.440 --> 0:13:57.080 have a clearer trajectory as to when they'll be hired 0:13:57.080 --> 0:13:59.480 back on what that might look like. UM, so you'll 0:13:59.520 --> 0:14:02.920 see an initial You know, once once we go to 0:14:02.960 --> 0:14:06.520 the point where companies can start opening, businesses can start 0:14:06.920 --> 0:14:10.280 coming back, even partially, they will bring their workforce back 0:14:10.320 --> 0:14:13.600 to some content where it gets really sticky and where 0:14:13.640 --> 0:14:16.400 you see the frictions. Is that next phase. Um, So 0:14:16.480 --> 0:14:19.600 you bring back your essential workers and then what comes next, 0:14:19.680 --> 0:14:22.040 It's going to be very slow because you describing you 0:14:22.200 --> 0:14:25.520 improve your rise and claimed folks with this Michelle Meyer 0:14:25.640 --> 0:14:28.640 Bank of America h this morning, your your rise to 0:14:28.840 --> 0:14:32.160 economic acclaim. Michelle was founded on the housing market and 0:14:32.400 --> 0:14:34.960 that dying to ask you this, give us the Michelle 0:14:34.960 --> 0:14:40.000 Meyer Rent Dynamic Housing, sales dynamic housing, build dynamic. If 0:14:40.000 --> 0:14:41.960 you had to write a three page essay right now 0:14:42.400 --> 0:14:45.960 on housing amid this unemployment rate, how would you frame it? 0:14:46.760 --> 0:14:50.240 Housing is under stress? Very simply? Um. You know, housing 0:14:50.440 --> 0:14:55.480 is a sector that's heavily debt financed. So um, you 0:14:55.480 --> 0:14:58.400 know it's reliant on the ability to get leverage and 0:14:58.480 --> 0:15:01.160 the willingness suspend that debt. Both I would argue or 0:15:01.240 --> 0:15:04.400 challenged right now from the household and from the builder perspective, 0:15:04.720 --> 0:15:08.320 small builders UM and it also as respector that requires 0:15:08.360 --> 0:15:09.960 quite a lot of confidence to go out and to 0:15:10.040 --> 0:15:13.120 purchase the new property. Um to spend the money and 0:15:13.200 --> 0:15:15.840 the time and the effort in terms of making that 0:15:16.200 --> 0:15:19.720 your home of your dreams at all requires having confidence 0:15:19.720 --> 0:15:22.640 about your current and future income. And I would argue 0:15:22.680 --> 0:15:24.840 that that's certainly not the key today either. So you're 0:15:24.840 --> 0:15:28.680 going to see quite a big drowsivity. Then what's the 0:15:28.760 --> 0:15:32.640 elasticity of rent or house price? I mean, do you 0:15:32.960 --> 0:15:35.560 do we finally get how you know, we're addicted to 0:15:35.640 --> 0:15:37.800 housing always going up? Yeah, right, we learned in a 0:15:37.960 --> 0:15:42.200 seven that doesn't work. But should we anticipate now flatness 0:15:42.320 --> 0:15:47.040 or even declining cost of us living in rent or homes? 0:15:47.080 --> 0:15:49.960 So you know it? First I'll take the un rents. 0:15:50.040 --> 0:15:53.560 I mean on either rents are housing prices, they tend 0:15:53.560 --> 0:15:57.200 to be sticky, so they don't adjust immediately. They you 0:15:57.280 --> 0:16:01.040 first have to see transactions adjust er. You find the 0:16:01.120 --> 0:16:04.520 market clearing price, and then you see the price data 0:16:04.560 --> 0:16:08.240 actually um adjust. So but but what what's interesting on 0:16:08.280 --> 0:16:12.000 the rent side is that you could see in theory, 0:16:12.200 --> 0:16:14.640 you know, landlords across the boards, they look we're going 0:16:14.680 --> 0:16:17.640 to give a reduction in in in rent very quickly. 0:16:17.640 --> 0:16:21.040 Given the unprecedented nature of this shock. UM, you've seen 0:16:21.040 --> 0:16:24.160 a number of nfc s trying to push for mandated 0:16:24.560 --> 0:16:26.680 you know, rent reductions at least for a period of 0:16:26.720 --> 0:16:31.000 time to ease the burden UM on individuals. So it depends. 0:16:31.040 --> 0:16:33.440 I mean, I think given the unprecedented nature of the shock, 0:16:33.560 --> 0:16:37.320 you could see a faster reduction perhaps UM in the 0:16:37.400 --> 0:16:40.560 cost of living UM, given how much income has been reduced. 0:16:40.560 --> 0:16:44.120 But typically UM rent and home praises tend to lack. 0:16:44.240 --> 0:16:47.040 You first need to see the move in terms of transactions, 0:16:47.480 --> 0:16:51.120 and then you see it in terms of the price variable. Michell, 0:16:51.160 --> 0:16:53.200 there's a lot of people really struggling in this moment. 0:16:53.480 --> 0:16:56.560 You know that everybody listening in this very moment knows that. 0:16:56.640 --> 0:16:58.320 And I'm just wondering if this anything else we can 0:16:58.360 --> 0:17:01.040 do on the policy side to help. Is there anything left? 0:17:02.360 --> 0:17:05.120 I do think that there's more that probably will be done. 0:17:05.160 --> 0:17:08.840 I mean, the response has been aggressive, it's been targeted UM, 0:17:09.000 --> 0:17:11.359 but there are, naturally, you know, some frictions you know 0:17:11.520 --> 0:17:15.359 there the clock is ticking, particularly when it comes to 0:17:15.359 --> 0:17:17.920 small businesses who are forced to cut workers as we're 0:17:17.880 --> 0:17:20.159 seeing this morning. UM. So the quicker that funds will 0:17:20.200 --> 0:17:22.639 be distributed better. Now it's a really hard thing to 0:17:22.680 --> 0:17:24.280 do is to turn around and all of a sudden 0:17:24.359 --> 0:17:25.760 get all the money to where it needs to go. 0:17:25.800 --> 0:17:28.320 In the private sector, it's not an easy task. And 0:17:28.400 --> 0:17:32.000 naturally there's going to be some operational challenges and and 0:17:32.000 --> 0:17:34.639 and issues there, which is what what what looks to 0:17:34.640 --> 0:17:38.159 be happening to some extent, But UM I suspect we 0:17:38.160 --> 0:17:41.560 will see additional funds be allocated, so they're likely will 0:17:41.600 --> 0:17:44.320 be another round of stimulus, probably in pretty short order. 0:17:45.000 --> 0:17:48.440 UM targeting smaller meme sized businesses and trying to create 0:17:48.480 --> 0:17:52.879 the ray incentives to keep their workers on the books. Michelle, this, 0:17:53.080 --> 0:17:56.200 these numbers are brutal. They're really really depressing to see 0:17:56.280 --> 0:17:59.480 this scope of Americans lose their jobs and frankly, people 0:17:59.520 --> 0:18:02.200 worldwide I'd lose their jobs. And yet we're looking at 0:18:02.359 --> 0:18:05.960 SMP futures that are up a half percent there, Uh, 0:18:06.040 --> 0:18:09.959 they actually climbed after this data came out. Can you 0:18:10.040 --> 0:18:15.080 look to any positive economic developments that could be edifying 0:18:15.320 --> 0:18:17.800 the sort of positive sentiment that we're seeing bleed out 0:18:18.080 --> 0:18:21.600 in stocks today? So there's always a question what's priced 0:18:21.640 --> 0:18:26.600 in UM and I think. You know, presumably very weak 0:18:26.680 --> 0:18:29.080 data has been priced in, right, there's an awareness that 0:18:30.080 --> 0:18:34.480 UM with a shutdowns being enforced, you're going to see 0:18:34.480 --> 0:18:36.960 these level sets down in the data, which is exactly 0:18:37.000 --> 0:18:40.439 what's coming through UM. But no, obviously the data on 0:18:40.480 --> 0:18:43.720 the headline is absolutely UM is absolutely stunning in terms 0:18:43.720 --> 0:18:47.119 of its degree of weakness. UM. The other thing probably 0:18:47.200 --> 0:18:50.400 driving Marcus presumably is what we just talked about around stimulus. 0:18:50.400 --> 0:18:52.920 You know, how much of an offset will there be? Uh? 0:18:52.960 --> 0:18:55.880 There seems to be a large willingness from the policy 0:18:55.960 --> 0:18:59.240 side to try to counter the weakness in the private 0:18:59.240 --> 0:19:03.000 economy and try to upset the shock from the COVID pandemic. 0:19:03.119 --> 0:19:05.480 So you know, I would imagine investors there as a 0:19:05.520 --> 0:19:07.440 paying very close attention to that as well. What have 0:19:07.560 --> 0:19:09.359 the degree of stimulus and how that bleeds into the 0:19:09.359 --> 0:19:12.520 broader co Michelle quite to get your thoughts as always. 0:19:12.600 --> 0:19:26.000 Michelle Meither of Thank America Internet of Trades joins with 0:19:26.160 --> 0:19:30.480 Data Partners. I can't keep track, Henrietta the alphabet soup, 0:19:31.000 --> 0:19:35.320 but one big small business pot has already been used up. 0:19:35.840 --> 0:19:38.639 Is anybody in Washington aware that is a percent of 0:19:38.720 --> 0:19:42.000 g d P there a third or maybe halfway to 0:19:42.040 --> 0:19:45.840 where they're going to go. It's interesting. I think that 0:19:45.920 --> 0:19:49.920 they are aware of that, but they are slowly being 0:19:50.400 --> 0:19:53.000 becoming more comfortable with making it take as long as 0:19:53.040 --> 0:19:55.320 possible to get each of these stimulus bills out, so 0:19:55.320 --> 0:19:58.080 that the complicated way of saying, they get it, and 0:19:58.119 --> 0:20:00.919 they know that there's more stimulus coming. Fourth bill, a 0:20:00.920 --> 0:20:03.639 fifth bill, a sixth bill. But I've been tracking the 0:20:03.680 --> 0:20:05.760 duration of time it takes them to agree to these 0:20:05.800 --> 0:20:08.800 pieces of legislation, the first three and now three point five, 0:20:08.840 --> 0:20:11.680 which hopefully we'll get by the end of this weekend. Um, 0:20:11.680 --> 0:20:13.760 and it keeps taking them just a little bit longer 0:20:13.800 --> 0:20:16.680 each time. So they're comfortable with the spending, but they're 0:20:16.720 --> 0:20:19.800 getting more dug in politically about what points they want 0:20:19.840 --> 0:20:22.480 to make. UM. Whether they sense any kind of urgency, 0:20:22.520 --> 0:20:24.480 they it's almost like they know it's coming, so they're 0:20:24.520 --> 0:20:27.360 willing to take it slow. Do you sense urgency at 0:20:27.359 --> 0:20:32.080 the moment um? I don't sense urgency right now. No, 0:20:32.560 --> 0:20:35.200 And I think that Treasury sec Reminution tried to create 0:20:35.240 --> 0:20:38.360 some urgency starting last Wednesday, and now here we are 0:20:39.359 --> 0:20:41.280 more than a week later, and we still don't even 0:20:41.320 --> 0:20:45.160 have this urgent stimulus to the point five bill. UM. 0:20:45.200 --> 0:20:47.400 I think Republicans are trying to make a political point 0:20:47.440 --> 0:20:50.960 in the Senate, and Democrats still are the minority in 0:20:51.000 --> 0:20:53.960 the House, so eventually you're gonna have to have partisan, 0:20:54.520 --> 0:20:57.320 bipartisan conversation, and they're just not doing that at this 0:20:57.440 --> 0:21:00.920 time despite the urgent calls from Treasury. So ultimately we'll 0:21:00.920 --> 0:21:02.960 get this money spent. I think the three point five 0:21:03.000 --> 0:21:06.120 bill will be about five billion dollars, and then the 0:21:06.119 --> 0:21:09.160 fourth stimulus bill could easily get you into the one 0:21:09.160 --> 0:21:12.080 point five to two trillion dollar package. They're seeing this 0:21:12.160 --> 0:21:14.920 macro data come in. They know it's a horror show 0:21:14.960 --> 0:21:19.160 out there, and there are still political games being played. Um, 0:21:19.280 --> 0:21:21.480 and that decondo a sense that they know it's coming, 0:21:21.520 --> 0:21:23.520 but it's not urgent. And we have said that's shocking 0:21:23.600 --> 0:21:25.919 to me that in nine minutes time will have another 0:21:26.119 --> 0:21:29.720 ugly jobless claims print. And for someone like yourself who 0:21:29.720 --> 0:21:32.359 has to read the room in Washington and you don't 0:21:32.400 --> 0:21:36.080 sense urgency, I mean, how disappointing is that, in a 0:21:36.160 --> 0:21:38.360 moment like this that you don't sense that at all. 0:21:39.400 --> 0:21:42.200 It's it's really painful. It hurts my feelings. If we're 0:21:42.200 --> 0:21:44.840 being honest. I mean, there are some staff who are 0:21:44.920 --> 0:21:48.199 deeply entrenched in this and understand the daily goings on 0:21:48.200 --> 0:21:51.200 on the market, but that is not the norm. Um. 0:21:51.200 --> 0:21:54.560 And you also have you also have the problem of 0:21:54.680 --> 0:21:56.919 having these members spread across the nation, you know, so 0:21:57.080 --> 0:22:00.760 not physically in DC capable of generating a momentum for 0:22:00.840 --> 0:22:04.840 passing any specific legislation. So UM, I think we're seeing 0:22:04.880 --> 0:22:07.200 that really play out. And while the President keeps holding 0:22:07.240 --> 0:22:10.600 these daily press briefings, Um, it's almost like no one 0:22:10.600 --> 0:22:12.560 can get a word in edgewise because she sort of 0:22:12.560 --> 0:22:14.320 sucks the acute out of the room, So nobody is 0:22:14.359 --> 0:22:16.560 able to make their individual political points even if they 0:22:16.560 --> 0:22:19.080 wanted to. Let's let's take a little bit deeper into 0:22:19.119 --> 0:22:23.479 the urgency of this. We've seen figures that of the 0:22:23.640 --> 0:22:28.200 Small Business Business Administration lending facility has been already extended, 0:22:28.240 --> 0:22:30.760 it has not been delivered yet, the cash not necessarily 0:22:30.880 --> 0:22:33.800 in the hands of the businesses, but promised out. Now 0:22:34.000 --> 0:22:37.560 there's another wave of funding being requested from even smaller businesses. 0:22:37.920 --> 0:22:41.159 How urgent is it that Congress re ups the amount 0:22:41.200 --> 0:22:43.600