Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: no one better to talk to about the quickness that
Speaker 1: we are all living and Sevida Supermannian Bank of America
Speaker 1: ahead of US equity quantitative strategy. Tell me about the
Speaker 1: Greek letters Cevita, What does Gamma? What does Delta say
Speaker 1: about this unusual time? You know, I think we've had
Speaker 1: a fast and furious comeback in the market. I think
Speaker 1: that's really interesting to look at today is just the
Speaker 1: valuation of the market. Um, so, two things have happened
Speaker 1: over the last month. The market has gone down and
Speaker 1: then up pretty quickly, and then you've also seen earnings
Speaker 1: revised down pretty aggressively. So what's happened is the pe
Speaker 1: of the market. The price to earnings ratio has has
Speaker 1: actually risen to almost the same highs that we were
Speaker 1: at in February, which means the market is again very
Speaker 1: very expensive, and this time it's because earnings are lower
Speaker 1: and the prices back to uh to to you know,
Speaker 1: pretty aggressive levels. So so I guess when we look
Speaker 1: at the market today, we think, okay, it looks just
Speaker 1: as expensive as it did about a month ago. And
Speaker 1: we're not out of the woods yet. So we've got
Speaker 1: you know, we've got employment likely to get worse before
Speaker 1: it gets better. We've got um, you know, a lot
Speaker 1: of uncertainty around timing uh in terms of business resumption. Um,
Speaker 1: we've got you know, kind of a very muddled earning
Speaker 1: season where a lot of companies are just shutting down
Speaker 1: guidance because they have, you know, kind of a no
Speaker 1: visibility in terms of what's going to happen. I don't know.
Speaker 1: When I look at this, I think, okay, we've come
Speaker 1: back pretty quickly. But do we really have the underpinnings
Speaker 1: of fundamental underpinnings of a of a strong bowlmarket from here?
Speaker 1: And I think that's the big question mark for me. Yeah,
Speaker 1: And when you talk about questions, we used to say
Speaker 1: pay attention to fundamentals, and now people are saying numbers
Speaker 1: don't matter. We're flying blind. It's bad. We don't know
Speaker 1: how bad. It doesn't matter how bad, as long as
Speaker 1: we get a sense of when it actually starts to
Speaker 1: come back. What's your compass right now for deciding whether
Speaker 1: to buy or sell? Yeah, I think it's a really
Speaker 1: good question. And I think the way we're thinking about
Speaker 1: things is more just the short term is so fraught
Speaker 1: with uh, with uncertainty, that it might just make more
Speaker 1: sense to think about a normalized earnings approach, just you know,
Speaker 1: what are earning is gonna look like over the next
Speaker 1: few years. Does the does the global pandemic change a
Speaker 1: lot for the earnings composition of the SMP five And
Speaker 1: I think there are puts and takes, you know, So
Speaker 1: I think if you think about travel and commercial real estate,
Speaker 1: we might be less inclined to UM to see those uh,
Speaker 1: those areas continue to to receive the amounts of to
Speaker 1: continue to generate the amounts of revenue they have to
Speaker 1: date um as you know this this sort of hastens
Speaker 1: the work from home less reliance on on office space
Speaker 1: aspect of the economy. But on the flip side, if
Speaker 1: companies are paying less for office space and corporate travel,
Speaker 1: then maybe that's good for margins UM. So I do
Speaker 1: think that there are you know, kind of offsets positive
Speaker 1: offsets to normalize learnings. But here's our take. We think
Speaker 1: that normalized learnings is going to be about tempers that
Speaker 1: lower than what what we were expecting prior to COVID
Speaker 1: nineteen UM And you know, and I think that that's
Speaker 1: that's not so bad. I think stocks are still offering
Speaker 1: a relatively competitive return to most other fixed income assets.
Speaker 1: And you know, kind of thinking about our quant models, uh,
Speaker 1: you know, I think one of the things that we
Speaker 1: find interesting is that valuation doesn't really matter for the
Speaker 1: short term, but it does seem to matter quite strongly
Speaker 1: for the long term. The R squared on on you know,
Speaker 1: the pe ratio of the market over the next ten
Speaker 1: years is above six. So that means that evaluation is
Speaker 1: really important in terms of describing what the market's going
Speaker 1: to look like over a ten year time horizon. And
Speaker 1: returns right now look like they could be in the
Speaker 1: you know, three to four to five percent range over
Speaker 1: the next ten years. If you add on a two
Speaker 1: to three percent dividend yield, that's you know, seven percent returns.
Speaker 1: It's not bad in an environment where where interest rates
Speaker 1: are super low and most fixed income assets aren't going
Speaker 1: to offer that type of quality adjusted return. So I
Speaker 1: think longer term stocks still look good to me, but
Speaker 1: I think they've come back a little bit too quickly
Speaker 1: to help us understand. Then, with all of this in mind,
Speaker 1: how useful earning season is, Yeah, I mean it's a
Speaker 1: it's a great question. So I think that earning season
Speaker 1: is a little bit of a guessing game. A lot
Speaker 1: of companies aren't going to give you guidance. Um, if
Speaker 1: you look at the dispersion of analysts estimates, we've reached
Speaker 1: all time highs. Nobody knows what's going on. So I
Speaker 1: think that you know what you want to pay attention
Speaker 1: to this earning season are surprises. One of the things
Speaker 1: we found interesting was that in in prior periods when
Speaker 1: dispersion of analysts estimates was this high, surprises were actually
Speaker 1: rewarded more than usual. They were rewarded three times as
Speaker 1: much as usual. So I think that earnings beats in
Speaker 1: this environment are going to be very sparse, but but
Speaker 1: they will definitely see much bigger rewards than what we've
Speaker 1: what we've experienced historically. So I think that's what we
Speaker 1: want to pay attention to this earning season. I don't
Speaker 1: know if we really want to pay attention to guidance
Speaker 1: because I think companies just like you and me don't
Speaker 1: really have a good sense of how this year is
Speaker 1: going to shape up. I'm not sure who's still providing guidance.
Speaker 1: Saveta are always great to cash out with you. Thanks
Speaker 1: for the half work from the team, especially the time
Speaker 1: like the Savita SUPERMANI in there of Bank America on
Speaker 1: this pandemic. We have been thrilled by our medical coverage.
Speaker 1: We really might try to make it come to speak
Speaker 1: to experts on this weeks and weeks and weeks ago,
Speaker 1: and we want thrilled, thrilled to have an agreement with
Speaker 1: Johns Hopkins to bring you their best and brightest across
Speaker 1: all of their facilities, including the Bloomberg School of Public Health,
Speaker 1: of course, with the philanthropy there of our founder Michael Bloomberg,
Speaker 1: founder of Bloomberg Gelpi, and of course this television and
Speaker 1: radio operation as well. But there's much more at the
Speaker 1: Johns Hopkins University, and that includes a world class nursing program.
Speaker 1: Jason Farley is a doctor at the nursing program. He
Speaker 1: is expert on the people in the trenches and we
Speaker 1: spoke today about the dynamics of this nation and nursing
Speaker 1: here is Professor Farley. So we know that when we're
Speaker 1: looking at how many people become critically yell and we're
Speaker 1: still looking at approximately of people hospitalized UH needing some
Speaker 1: form of acute care, and of that group, approximately half
Speaker 1: will need some form of mechanical ventilation. Now needing mechanical
Speaker 1: ventilation tend to be tend to skew toward our older population.
Speaker 1: And we're still seeing that data in the United States
Speaker 1: consistent with what we've seen around the world. Does our
Speaker 1: response team in the US and in other parts of
Speaker 1: the world have enough equipment, have enough personal protection to
Speaker 1: deal with the virus in the coming weeks and months.
Speaker 1: So so, the the administration has finally started to UM
Speaker 1: offer support to the states in trying to get more PPE.
Speaker 1: There have been herculean efforts by various governors across the
Speaker 1: United States to UM bring in more in maps, to
Speaker 1: bring in more gowns and gloves, to bring in face
Speaker 1: shields for our frontline healthcare workers. UH. That has been
Speaker 1: different across states, and as you've seen recording UM, different
Speaker 1: governors across the United States have had to basically barter
Speaker 1: decal in you know, for lack of a better word. UM,
Speaker 1: personal protective equipment from various agencies, including going overseas to
Speaker 1: obtain you know, maths from China and their supports mass
Speaker 1: from other countries. UM. It's also in my home state
Speaker 1: of Maryland, the governor has launched a in ninety reprocessing center,
Speaker 1: one of the largest in the country, to facilitate the
Speaker 1: reuse and cleaning of IN nine mass, which is something
Speaker 1: that's unheard of. We would never typically reuse those types
Speaker 1: of maps, so we're being very resilient in our efforts
Speaker 1: to try to make sure we have enough ppe. Dr Farrow,
Speaker 1: you are expert in the epidemiology of infectious diseases, and
Speaker 1: your Johns Hopkins is flat out done the best job
Speaker 1: of a regional, a city, almost a nationwide epidemiology and
Speaker 1: study of these statistics. The statistics, the slopes, the second
Speaker 1: derivatives for some of these regions California, Florida, they're really
Speaker 1: not very good. New New Jersey just it's not happening.
Speaker 1: Tell us about the diffusement of a virus from hot
Speaker 1: spots which get all the media attention out into the
Speaker 1: greater public. What is the experience you have of infectious
Speaker 1: disease from a hot spots out to broader geographies. Sure,
Speaker 1: so when we talk about hot spots, it's important for
Speaker 1: everyone to understand that where we have ongoing you know,
Speaker 1: replication of the virus and transmission of the virus UM.
Speaker 1: You know, when a when we know what the effectivity
Speaker 1: uh potential of the virus is, and that's what we
Speaker 1: call are not um In this case, it's between two
Speaker 1: and three. So that means for every person that you uh,
Speaker 1: in fact, that person with COVID infects, they're gonna in
Speaker 1: fact approximately two to two and a half to three
Speaker 1: people UM with the virus. And so hot spots allow
Speaker 1: that propagation or that that transmissibility to occur um ongoing
Speaker 1: in an ongoing basis. Now the trickle effect, you know,
Speaker 1: it's bleeding out into other locales and locations. It's the
Speaker 1: perfect example in the United States right now in the
Speaker 1: Rhode Island. It's been getting cases coming in from New York,
Speaker 1: from New York State as well as in from Connecticut.
Speaker 1: And it would not have deemed a hotspot, but because
Speaker 1: of you know, migration, because of contact, because of UM,
Speaker 1: you know, people's movement, it has now started to see
Speaker 1: bleed over. Jason Farley Johns Hopkins University thrilled to have
Speaker 1: him on today with their School of Nursing Mishall Meyer.
Speaker 1: Where the Bank of America, Michelle, I guess I did
Speaker 1: math there. I don't know if it's a Bank of
Speaker 1: America quality, but I took twenty two million divided by
Speaker 1: a hundred and fifty five million employed. That's really ugly.
Speaker 1: How do you fold that into a guestimate of where
Speaker 1: the unemployment rate will ahead? Um? Good morning, Good morning
Speaker 1: Tom Coom morning John so. Um. Yes, absolutely, those are
Speaker 1: disturbing numbers, UM, and your math is correct. Um, it's
Speaker 1: about fourteen per suddenly before that have already lost jobs
Speaker 1: in an extremely short order amount of time, So the
Speaker 1: unemployment is already in double digits. It's um with these numbers,
Speaker 1: if you assume one to one translation to the household
Speaker 1: survey UM from the BLS, which is probably not quite right.
Speaker 1: Probably there's some wiggle room there, but it would suggest
Speaker 1: you're probably already at about a fourteen percent fifteen percent
Speaker 1: unemployment rate. What do you think it's going to eventually
Speaker 1: end up being given the pace that we're seeing, Given
Speaker 1: the lack of clarity as far as the ability to
Speaker 1: process these claims versus the demand for unemployment benefits right now,
Speaker 1: So you know, the bulk of the loss is happening
Speaker 1: right now. I mean, that's this what this recession looks like.
Speaker 1: It's an acute crisis. It's it's shutting down of parts.
Speaker 1: They come all happens very very suddenly. So UM, you know,
Speaker 1: we certainly should assume some moderation going forward. UM. I
Speaker 1: don't think we've returned anything that you know as kind
Speaker 1: of pre COVID levels for a really long time. When
Speaker 1: it comes to claims, UM, they will remain elevated, UM,
Speaker 1: but coming up they will come off of these extraordinary
Speaker 1: levels of five six million a week UM. Nonetheless, you know,
Speaker 1: April jobs report will be clearly very ugly with what
Speaker 1: we're seeing, you know, millions of of of jobs lost. UM.
Speaker 1: They will probably also be very weak because you have
Speaker 1: some residual weakness there companies that had tried to to
Speaker 1: to stay along UM, but you know, at some point
Speaker 1: kind of decided that the math doesn't make sense anymore
Speaker 1: and their employees would probably be better if they do
Speaker 1: go on unemployment insurance. So you know, there's some laggers
Speaker 1: there as well. UM, And I do think that it's
Speaker 1: going to take some time to work through all of that, Michelle.
Speaker 1: In four weeks, we've taken out ten years of jobs
Speaker 1: growth in just four weeks, and quite clear it's easier
Speaker 1: quicker to get rid of jobs than it is to
Speaker 1: add them. Have you got any projections whatsoever at this
Speaker 1: point about how long it's going to take to heal
Speaker 1: these wounds that are deep into this labor market in
Speaker 1: just four weeks, You're absolutely right. It's a lot easier
Speaker 1: to shut the lights sticks off and put it back on,
Speaker 1: especially in this environment where you know it's it's a dramatic,
Speaker 1: quick shutdown, a lockdown, um from the shelter at home
Speaker 1: orders and then it's going to be a very slow
Speaker 1: and properly partial reopening. UM. So the one thing to
Speaker 1: look at when you talk about the job cuts is
Speaker 1: the percent that are reportedly considered temporarily unemployed. UM. You know, Esthmus,
Speaker 1: I've seen suggested to that half of the current flow
Speaker 1: and two unemployed are considered temp. So if that is
Speaker 1: the case, those workers in theories should be more attached
Speaker 1: to their employers um and they should be able to
Speaker 1: have a clearer trajectory as to when they'll be hired
Speaker 1: back on what that might look like. UM, so you'll
Speaker 1: see an initial You know, once once we go to
Speaker 1: the point where companies can start opening, businesses can start
Speaker 1: coming back, even partially, they will bring their workforce back
Speaker 1: to some content where it gets really sticky and where
Speaker 1: you see the frictions. Is that next phase. Um, So
Speaker 1: you bring back your essential workers and then what comes next,
Speaker 1: It's going to be very slow because you describing you
Speaker 1: improve your rise and claimed folks with this Michelle Meyer
Speaker 1: Bank of America h this morning, your your rise to
Speaker 1: economic acclaim. Michelle was founded on the housing market and
Speaker 1: that dying to ask you this, give us the Michelle
Speaker 1: Meyer Rent Dynamic Housing, sales dynamic housing, build dynamic. If
Speaker 1: you had to write a three page essay right now
Speaker 1: on housing amid this unemployment rate, how would you frame it?
Speaker 1: Housing is under stress? Very simply? Um. You know, housing
Speaker 1: is a sector that's heavily debt financed. So um, you
Speaker 1: know it's reliant on the ability to get leverage and
Speaker 1: the willingness suspend that debt. Both I would argue or
Speaker 1: challenged right now from the household and from the builder perspective,
Speaker 1: small builders UM and it also as respector that requires
Speaker 1: quite a lot of confidence to go out and to
Speaker 1: purchase the new property. Um to spend the money and
Speaker 1: the time and the effort in terms of making that
Speaker 1: your home of your dreams at all requires having confidence
Speaker 1: about your current and future income. And I would argue
Speaker 1: that that's certainly not the key today either. So you're
Speaker 1: going to see quite a big drowsivity. Then what's the
Speaker 1: elasticity of rent or house price? I mean, do you
Speaker 1: do we finally get how you know, we're addicted to
Speaker 1: housing always going up? Yeah, right, we learned in a
Speaker 1: seven that doesn't work. But should we anticipate now flatness
Speaker 1: or even declining cost of us living in rent or homes?
Speaker 1: So you know it? First I'll take the un rents.
Speaker 1: I mean on either rents are housing prices, they tend
Speaker 1: to be sticky, so they don't adjust immediately. They you
Speaker 1: first have to see transactions adjust er. You find the
Speaker 1: market clearing price, and then you see the price data
Speaker 1: actually um adjust. So but but what what's interesting on
Speaker 1: the rent side is that you could see in theory,
Speaker 1: you know, landlords across the boards, they look we're going
Speaker 1: to give a reduction in in in rent very quickly.
Speaker 1: Given the unprecedented nature of this shock. UM, you've seen
Speaker 1: a number of nfc s trying to push for mandated
Speaker 1: you know, rent reductions at least for a period of
Speaker 1: time to ease the burden UM on individuals. So it depends.
Speaker 1: I mean, I think given the unprecedented nature of the shock,
Speaker 1: you could see a faster reduction perhaps UM in the
Speaker 1: cost of living UM, given how much income has been reduced.
Speaker 1: But typically UM rent and home praises tend to lack.
Speaker 1: You first need to see the move in terms of transactions,
Speaker 1: and then you see it in terms of the price variable. Michell,
Speaker 1: there's a lot of people really struggling in this moment.
Speaker 1: You know that everybody listening in this very moment knows that.
Speaker 1: And I'm just wondering if this anything else we can
Speaker 1: do on the policy side to help. Is there anything left?
Speaker 1: I do think that there's more that probably will be done.
Speaker 1: I mean, the response has been aggressive, it's been targeted UM,
Speaker 1: but there are, naturally, you know, some frictions you know
Speaker 1: there the clock is ticking, particularly when it comes to
Speaker 1: small businesses who are forced to cut workers as we're
Speaker 1: seeing this morning. UM. So the quicker that funds will
Speaker 1: be distributed better. Now it's a really hard thing to
Speaker 1: do is to turn around and all of a sudden
Speaker 1: get all the money to where it needs to go.
Speaker 1: In the private sector, it's not an easy task. And
Speaker 1: naturally there's going to be some operational challenges and and
Speaker 1: and issues there, which is what what what looks to
Speaker 1: be happening to some extent, But UM I suspect we
Speaker 1: will see additional funds be allocated, so they're likely will
Speaker 1: be another round of stimulus, probably in pretty short order.
Speaker 1: UM targeting smaller meme sized businesses and trying to create
Speaker 1: the ray incentives to keep their workers on the books. Michelle, this,
Speaker 1: these numbers are brutal. They're really really depressing to see
Speaker 1: this scope of Americans lose their jobs and frankly, people
Speaker 1: worldwide I'd lose their jobs. And yet we're looking at
Speaker 1: SMP futures that are up a half percent there, Uh,
Speaker 1: they actually climbed after this data came out. Can you
Speaker 1: look to any positive economic developments that could be edifying
Speaker 1: the sort of positive sentiment that we're seeing bleed out
Speaker 1: in stocks today? So there's always a question what's priced
Speaker 1: in UM and I think. You know, presumably very weak
Speaker 1: data has been priced in, right, there's an awareness that
Speaker 1: UM with a shutdowns being enforced, you're going to see
Speaker 1: these level sets down in the data, which is exactly
Speaker 1: what's coming through UM. But no, obviously the data on
Speaker 1: the headline is absolutely UM is absolutely stunning in terms
Speaker 1: of its degree of weakness. UM. The other thing probably
Speaker 1: driving Marcus presumably is what we just talked about around stimulus.
Speaker 1: You know, how much of an offset will there be? Uh?
Speaker 1: There seems to be a large willingness from the policy
Speaker 1: side to try to counter the weakness in the private
Speaker 1: economy and try to upset the shock from the COVID pandemic.
Speaker 1: So you know, I would imagine investors there as a
Speaker 1: paying very close attention to that as well. What have
Speaker 1: the degree of stimulus and how that bleeds into the
Speaker 1: broader co Michelle quite to get your thoughts as always.
Speaker 1: Michelle Meither of Thank America Internet of Trades joins with
Speaker 1: Data Partners. I can't keep track, Henrietta the alphabet soup,
Speaker 1: but one big small business pot has already been used up.
Speaker 1: Is anybody in Washington aware that is a percent of
Speaker 1: g d P there a third or maybe halfway to
Speaker 1: where they're going to go. It's interesting. I think that
Speaker 1: they are aware of that, but they are slowly being
Speaker 1: becoming more comfortable with making it take as long as
Speaker 1: possible to get each of these stimulus bills out, so
Speaker 1: that the complicated way of saying, they get it, and
Speaker 1: they know that there's more stimulus coming. Fourth bill, a
Speaker 1: fifth bill, a sixth bill. But I've been tracking the
Speaker 1: duration of time it takes them to agree to these
Speaker 1: pieces of legislation, the first three and now three point five,
Speaker 1: which hopefully we'll get by the end of this weekend. Um,
Speaker 1: and it keeps taking them just a little bit longer
Speaker 1: each time. So they're comfortable with the spending, but they're
Speaker 1: getting more dug in politically about what points they want
Speaker 1: to make. UM. Whether they sense any kind of urgency,
Speaker 1: they it's almost like they know it's coming, so they're
Speaker 1: willing to take it slow. Do you sense urgency at
Speaker 1: the moment um? I don't sense urgency right now. No,
Speaker 1: And I think that Treasury sec Reminution tried to create
Speaker 1: some urgency starting last Wednesday, and now here we are
Speaker 1: more than a week later, and we still don't even
Speaker 1: have this urgent stimulus to the point five bill. UM.
Speaker 1: I think Republicans are trying to make a political point
Speaker 1: in the Senate, and Democrats still are the minority in
Speaker 1: the House, so eventually you're gonna have to have partisan,
Speaker 1: bipartisan conversation, and they're just not doing that at this
Speaker 1: time despite the urgent calls from Treasury. So ultimately we'll
Speaker 1: get this money spent. I think the three point five
Speaker 1: bill will be about five billion dollars, and then the
Speaker 1: fourth stimulus bill could easily get you into the one
Speaker 1: point five to two trillion dollar package. They're seeing this
Speaker 1: macro data come in. They know it's a horror show
Speaker 1: out there, and there are still political games being played. Um,
Speaker 1: and that decondo a sense that they know it's coming,
Speaker 1: but it's not urgent. And we have said that's shocking
Speaker 1: to me that in nine minutes time will have another
Speaker 1: ugly jobless claims print. And for someone like yourself who
Speaker 1: has to read the room in Washington and you don't
Speaker 1: sense urgency, I mean, how disappointing is that, in a
Speaker 1: moment like this that you don't sense that at all.
Speaker 1: It's it's really painful. It hurts my feelings. If we're
Speaker 1: being honest. I mean, there are some staff who are
Speaker 1: deeply entrenched in this and understand the daily goings on
Speaker 1: on the market, but that is not the norm. Um.
Speaker 1: And you also have you also have the problem of
Speaker 1: having these members spread across the nation, you know, so
Speaker 1: not physically in DC capable of generating a momentum for
Speaker 1: passing any specific legislation. So UM, I think we're seeing
Speaker 1: that really play out. And while the President keeps holding
Speaker 1: these daily press briefings, Um, it's almost like no one
Speaker 1: can get a word in edgewise because she sort of
Speaker 1: sucks the acute out of the room, So nobody is
Speaker 1: able to make their individual political points even if they
Speaker 1: wanted to. Let's let's take a little bit deeper into
Speaker 1: the urgency of this. We've seen figures that of the
Speaker 1: Small Business Business Administration lending facility has been already extended,
Speaker 1: it has not been delivered yet, the cash not necessarily
Speaker 1: in the hands of the businesses, but promised out. Now
Speaker 1: there's another wave of funding being requested from even smaller businesses.
Speaker 1: How urgent is it that Congress re ups the amount
Speaker 1: of money to this program in order to stave off
Speaker 1: another round of bankruptcies. I think that's exactly the question.
Speaker 1: We don't have any oversight er data about what Treasury
Speaker 1: is doing, who's getting these loans, how effective it's been,
Speaker 1: its stemming payroll cuts, UM, and I think a lot
Speaker 1: of members want that information and they want to see
Speaker 1: it roll out. What the Democrats are trying to do
Speaker 1: is not necessarily delay the PPP from being replenished, but
Speaker 1: they want to steer the funding into specific baskets, which
Speaker 1: members like Marco Rubio have an issue with. So, for instance,
Speaker 1: if you can't oversee exactly who's getting these loans and
Speaker 1: you don't know if it's really reaching the hands of
Speaker 1: the folks who need it, what you can do is
Speaker 1: you can streamline and say, all right, we want, you know,
Speaker 1: a hundred and fifty billion dollars this money directly to
Speaker 1: go to businesses with fewer than five people UM in
Speaker 1: specific locations, UM, minority owned, women owned, you know, kind
Speaker 1: of try to direct it in that regard. And that's
Speaker 1: what Democrats have tried to put into their pieces of legislation.
Speaker 1: But the Republicans are essentially saying, look, we just need
Speaker 1: to get this money out there, and we don't have
Speaker 1: time for these games. Let's just put the money in
Speaker 1: this basket and get it spent um. So it's it's
Speaker 1: a competing view of how to control where this money
Speaker 1: is delivered and how effectively it's used. And when you
Speaker 1: see the Fed and Treasury can saying we're just trying
Speaker 1: to shovel money out the door right now, it's really
Speaker 1: difficult to exert oversight in a specific time of crisis.
Speaker 1: That should really come later, and it will. Is there
Speaker 1: more urgency with respect to coming up with a plan
Speaker 1: to reopen the economy. The plan to reopen the economy
Speaker 1: is really just a mess um, if we're being honest.
Speaker 1: There is a really haphazard effort going on at the
Speaker 1: administration level, and almost nothing in that main going on
Speaker 1: to bet the House or the Senate. Obviously, we have
Speaker 1: some select governors who are in states you've been deeply
Speaker 1: hit and are trying to coordinate amongst each other to
Speaker 1: try to bring their states out of this shutdown. But
Speaker 1: the administration is creating a situation where people have different
Speaker 1: senses of different dates. So May first is the thing,
Speaker 1: May seventh is a thing. Jam onest is the thing.
Speaker 1: There's no cohesion and the you know, quote unquote opening
Speaker 1: our city Council that the administration has been um, you know,
Speaker 1: sort of dangling in front of us. How as no members,
Speaker 1: It has no concrete plan, it is not unified. A
Speaker 1: most importantly, it has nothing to do um with providing
Speaker 1: testing to the extent that we need. You know, no
Speaker 1: state has been able to test one in two point
Speaker 1: seven of its population. That's just not going to cut it.
Speaker 1: You know, if you're President Trump and you can walk
Speaker 1: down to that and you shoot somebody, that's different. Henrietta,
Speaker 1: that's the statistical theday. Thank you for bringing us that
Speaker 1: wisdom of under three percent testing right now. Certainly that's
Speaker 1: what everyone's talking about this Thursday morning. Henrietta trace with
Speaker 1: Veta Partners. Well, in the United States we have Uber
Speaker 1: we have left for our rides sharing. In China, they
Speaker 1: have a company by the name of d D. David
Speaker 1: Rubinstein Carlisle co chairman, sat down with the president of
Speaker 1: d D and part of his latest peer to peer conversations,
Speaker 1: let's take a listen. Uber is now publicly traded and
Speaker 1: it's losing a fair amount of money every year, a
Speaker 1: billion dollars plus a year or something like that or more. Um,
Speaker 1: are you thinking of going public and are you losing
Speaker 1: money or are you making money? Well, um, we do
Speaker 1: have a specific type of timetable has put it that
Speaker 1: way and back to the upper point. I'm sure it's
Speaker 1: temporary and they would go through it. There is very
Speaker 1: diligent CEO and a very experience for us. We think
Speaker 1: profitability is natural result of the value usually create. And
Speaker 1: there are two things in China very different from the
Speaker 1: other market. First, the right share is cheaper than car ownership,
Speaker 1: so that's the huge value creation you provide to your users.
Speaker 1: And secondly, in China we're going through a transition that people,
Speaker 1: you know, people urged for better life quality, better lives.
Speaker 1: Jean Lou of d D. David Rubinstein joins us SNOW
Speaker 1: and of course he's pure to pure. Conversations are just
Speaker 1: superb and they're always names we know, except not now, David.
Speaker 1: I want you to sell miss Lou to our audience.
Speaker 1: Why do we care about this interesting investor from China.
Speaker 1: It's a very interesting woman. She's educated in China. Her
Speaker 1: father is a prominent business person. He he started Lenovo,
Speaker 1: which is a major computer factor. She later went to
Speaker 1: Harvard got a computer science degree and then did what
Speaker 1: many Chinese educated United States do. They went to work
Speaker 1: in Wall Street. She went to work for Goldman Sachs
Speaker 1: in in Hong Kong and um she became an investor
Speaker 1: and she wanted to invest in a company called d
Speaker 1: D and they wouldn't take her money Goldman sachses money.
Speaker 1: Eventually she said, let me just join the company. She did.
Speaker 1: Now she rose up to be the president. We think
Speaker 1: in the United States that were the center of the
Speaker 1: universe very often. But d D is bigger than Uber. Now.
Speaker 1: D D is not publicly traded, so we don't know
Speaker 1: completely the value. But it has more customers than Uber does,
Speaker 1: and it just has a bigger base than than Uber does.
Speaker 1: Get people there. That scream you heard last night, uh
Speaker 1: David Rubinstein was Paul Sweeney screaming at Uber left or
Speaker 1: one of them in New Jersey as well. What's the
Speaker 1: ability to bring d D over to America. Well, interestingly,
Speaker 1: many of the Chinese companies that are the dominant in
Speaker 1: China don't really do that well in the United States
Speaker 1: are having become major presences here. So like Ali Bob
Speaker 1: was not a major presence here, at least not yet.
Speaker 1: Uh d D actually is owned in part by Huber.
Speaker 1: Uber is an investorent at Uber tried to be a
Speaker 1: major presence in China and ultimately couldn't beat d D,
Speaker 1: so it basically invested in d D. A d D
Speaker 1: is uh is really the dominant partner there and Uber
Speaker 1: will not really compete in China with him. Whether d
Speaker 1: D will come to the United States, I think right
Speaker 1: now probably they've got their hands full with China. So, David,
Speaker 1: what did ms lou suggest to you, as you know
Speaker 1: the key challenge for continuing the growth of d D. Well,
Speaker 1: of course this was done before the coronavirus. The interview
Speaker 1: was done a little while ago. Um, now everybody has
Speaker 1: the channel. Is that nobody's traveling though though China is
Speaker 1: coming back online and therefore China is um more using
Speaker 1: these kind of divide these kind of things than they
Speaker 1: are in the United States right now because people are
Speaker 1: going back to work. So it's not like the United
Speaker 1: States where nobody's traveling. D D basically is a company
Speaker 1: like Ali Baba, which has become a major presence in China.
Speaker 1: Everybody knows it, everybody likes it. And interestingly, what she
Speaker 1: does very often is she drives the car herself. She
Speaker 1: wants to see what our customers are thinking. So she
Speaker 1: drives the car and very often, uh, you know, she
Speaker 1: gets comments from people saying, you're not a very good driver,
Speaker 1: I'm gonna report you to the company or something like that,
Speaker 1: or sometimes people say she's very good. So what's what's
Speaker 1: the competitive landscape in China for the ride sharing business?
Speaker 1: Here in the States, We've got Uber, We've got Liver
Speaker 1: duking it out. When this when when they started, when
Speaker 1: he was started in China, there were roughly thirty of
Speaker 1: these companies and in the end they got down to
Speaker 1: it just a few and d D is the dominant
Speaker 1: one there, just says Uber Withlift or the two dominant
Speaker 1: ones here. Um, but DD has a much bigger presence
Speaker 1: than Huber really has in the United States. It's much
Speaker 1: more dominant and many more customers. And I just think
Speaker 1: it's likely to expand in the other areas. And it's
Speaker 1: it's it's extremely well respected for their service and their
Speaker 1: their ability to kind of take care of customers various needs.
Speaker 1: David Rubinstein, thank you so much, greatly appreciated the Carlisle
Speaker 1: Cole Chairman and of course UH interviewer extraordinaire. I can't
Speaker 1: say enough folks about the David Rubinstein Show. Peer to
Speaker 1: Peer Conversation, seven pm Friday in New York. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
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Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio