1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 2 00:00:13,960 --> 00:00:17,560 Speaker 1: we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,240 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. There 5 00:00:27,360 --> 00:00:31,159 Speaker 1: is no speculation that definitive on our World Order is 6 00:00:31,200 --> 00:00:34,440 Speaker 1: Ian Grammer of Eurasia Group. We enjoy so much our 7 00:00:34,520 --> 00:00:37,320 Speaker 1: beginning of the year analysis with his Eurasia Group, and 8 00:00:37,360 --> 00:00:40,520 Speaker 1: we're thrilled Dr Bremer could join us this morning. And 9 00:00:40,600 --> 00:00:42,400 Speaker 1: I'm going to start with Lebanon. I know there are 10 00:00:42,400 --> 00:00:45,239 Speaker 1: many other themes to touch here as well. I want 11 00:00:45,280 --> 00:00:48,840 Speaker 1: to go to Henry Kissinger's World Order, that wonderful book 12 00:00:49,159 --> 00:00:52,960 Speaker 1: of a few years ago where Dr Kissinger uh speaks 13 00:00:53,000 --> 00:00:57,680 Speaker 1: about the decline of the state. Lebanon is a card 14 00:00:57,880 --> 00:01:02,240 Speaker 1: carrying decline of the state right now? How do they 15 00:01:02,400 --> 00:01:05,399 Speaker 1: right the ship of what was once the jewel of 16 00:01:05,440 --> 00:01:09,280 Speaker 1: the Levant? And my God, Tom, I mean any of 17 00:01:09,360 --> 00:01:11,560 Speaker 1: us that have been to Beirut. You know, it's our 18 00:01:11,600 --> 00:01:14,440 Speaker 1: favorite city in the Middle East. It's so cosmopolitan and 19 00:01:14,600 --> 00:01:18,920 Speaker 1: so lively. It brings together so many different civilizations and cultures. 20 00:01:19,280 --> 00:01:22,440 Speaker 1: But the government is a disaster, and I mean, frankly, 21 00:01:22,840 --> 00:01:27,240 Speaker 1: you know, coronavirus doesn't even hit their top three right now, 22 00:01:27,400 --> 00:01:31,280 Speaker 1: right it's a massive financial crisis, incredible economic contraction and 23 00:01:31,520 --> 00:01:37,080 Speaker 1: social descent across the country, big corruption and now uh 24 00:01:37,400 --> 00:01:40,280 Speaker 1: likely through mismanagement. I mean, if you see what they've 25 00:01:40,319 --> 00:01:42,640 Speaker 1: done with the banking system, if you've seen what they're 26 00:01:42,640 --> 00:01:46,440 Speaker 1: done with their sanitation system, it shouldn't surprise anyone that 27 00:01:46,520 --> 00:01:49,800 Speaker 1: they have no capacity to deal with has of the 28 00:01:49,960 --> 00:01:54,880 Speaker 1: materials um and you see the the the untold deaths, 29 00:01:55,520 --> 00:01:59,520 Speaker 1: the destruction of a good swat of of the jewel 30 00:01:59,560 --> 00:02:04,680 Speaker 1: of the tree end of the region just leveled yesterday, 31 00:02:04,800 --> 00:02:08,840 Speaker 1: and it's it's horrifying what they can do. I mean, 32 00:02:08,840 --> 00:02:10,560 Speaker 1: they're not gonna have it's hard for them to have 33 00:02:10,639 --> 00:02:12,960 Speaker 1: hesblaws in the government. The IMAX has a hard time 34 00:02:13,040 --> 00:02:16,400 Speaker 1: working with them, and the Gulf States are are certainly 35 00:02:16,400 --> 00:02:19,280 Speaker 1: not going to provide the kind of support that they've 36 00:02:19,320 --> 00:02:21,880 Speaker 1: been able to historically. How are they going to rebuilding 37 00:02:21,919 --> 00:02:24,280 Speaker 1: that environment? They to go back into your book of 38 00:02:24,320 --> 00:02:28,160 Speaker 1: two thousand fifteen superpower. We need to make a choice 39 00:02:28,200 --> 00:02:32,960 Speaker 1: of how we project from Istanbul down to those Gulf states. 40 00:02:33,000 --> 00:02:35,679 Speaker 1: How do we project what is a choice that a 41 00:02:35,800 --> 00:02:39,280 Speaker 1: second term Trump or first term Biden will have to make. 42 00:02:40,280 --> 00:02:43,320 Speaker 1: It feels like less involvement in the Middle East. I mean, 43 00:02:43,360 --> 00:02:48,280 Speaker 1: Biden had a very solid, uh non controversial tweet yesterday 44 00:02:48,360 --> 00:02:50,760 Speaker 1: is saying his heart goes out to these people. The 45 00:02:50,880 --> 00:02:55,200 Speaker 1: United States needs to provide humanitarian aid. Absolutely, But I mean, 46 00:02:55,240 --> 00:02:58,360 Speaker 1: compared to when my book came out, the United States 47 00:02:58,480 --> 00:03:02,799 Speaker 1: is now the world's largest energy producer. Um, We're much 48 00:03:02,880 --> 00:03:05,239 Speaker 1: less interested in what's going on in the Middle East 49 00:03:05,240 --> 00:03:07,639 Speaker 1: than we used to. We're much more concerned about China, 50 00:03:07,800 --> 00:03:12,360 Speaker 1: much more on the Pacific. So I just whether it's okay. 51 00:03:13,200 --> 00:03:15,280 Speaker 1: I think it's hard to imagine the US is going 52 00:03:15,320 --> 00:03:18,360 Speaker 1: to be increasing its footprint anytime soon in this region. 53 00:03:18,520 --> 00:03:20,720 Speaker 1: Ian let's moved to China then, And of course the 54 00:03:20,800 --> 00:03:23,040 Speaker 1: provocative act of a member of the cabinet of the 55 00:03:23,080 --> 00:03:27,240 Speaker 1: Trump administration will attend Taipei, maybe the first major visit 56 00:03:27,480 --> 00:03:30,760 Speaker 1: of a US representative in forty years. How will that 57 00:03:30,840 --> 00:03:35,880 Speaker 1: be taken by Beijing? Well, less badly than if it 58 00:03:36,120 --> 00:03:42,880 Speaker 1: was say Secretary of State Pompeo or Secretary of Defense Esper. 59 00:03:43,040 --> 00:03:45,680 Speaker 1: I mean, you know you're not You're not talking about 60 00:03:45,760 --> 00:03:50,000 Speaker 1: someone who is in particularly controversial in his mandate. You're 61 00:03:50,000 --> 00:03:53,320 Speaker 1: gonna go over talking about coronavirus and the great response 62 00:03:53,600 --> 00:03:57,040 Speaker 1: the Taiwan indeed was behind. But what we should recognize 63 00:03:57,080 --> 00:04:00,520 Speaker 1: is this is all of the escalations out This is 64 00:04:00,560 --> 00:04:06,360 Speaker 1: completely gratuitous, is completely unnecessary. It's not like the response 65 00:04:06,440 --> 00:04:10,480 Speaker 1: on TikTok, which has a real national security concerned Huawei, 66 00:04:10,480 --> 00:04:13,400 Speaker 1: where the Americans are behind in five get we need 67 00:04:13,400 --> 00:04:16,120 Speaker 1: to do something. I mean those you understand why the 68 00:04:16,200 --> 00:04:19,200 Speaker 1: Americans are doing that, why they're doing it now we're 69 00:04:19,240 --> 00:04:23,480 Speaker 1: in the case of Taiwan, it's purely rallied around the flag, 70 00:04:24,120 --> 00:04:29,719 Speaker 1: drive a spike into China's core interests right before American elections, 71 00:04:29,720 --> 00:04:32,239 Speaker 1: and it makes the next couple of months very dangerous. 72 00:04:32,240 --> 00:04:35,559 Speaker 1: The Chinese will certainly respond. They might respond by hitting 73 00:04:35,560 --> 00:04:39,279 Speaker 1: some American companies doing business in Taiwan. They might respond 74 00:04:40,200 --> 00:04:43,400 Speaker 1: with a show of military force in the region. And 75 00:04:43,640 --> 00:04:46,880 Speaker 1: let's keep in mind an anti Chinese sentiment, anti mainland 76 00:04:47,000 --> 00:04:50,279 Speaker 1: Chinese sentiment in Taiwan, especially on the back of the 77 00:04:50,360 --> 00:04:54,719 Speaker 1: new National Security law impost in Hong Kong is incredibly 78 00:04:54,880 --> 00:04:59,160 Speaker 1: high right now, So you really didn't need these tensions. 79 00:04:59,200 --> 00:05:02,840 Speaker 1: I tweeted last night, let's not start a war. Let's 80 00:05:02,839 --> 00:05:05,080 Speaker 1: not get into a war over Taiwan. We had a 81 00:05:05,279 --> 00:05:08,040 Speaker 1: problems with China right now that we didn't need to 82 00:05:08,080 --> 00:05:10,760 Speaker 1: take this step. But and you understand better than most 83 00:05:10,760 --> 00:05:12,840 Speaker 1: people that come on this program, the People's Republic of 84 00:05:12,920 --> 00:05:16,000 Speaker 1: China is frozen Taiwan out of multilateral organizations. And for 85 00:05:16,040 --> 00:05:19,960 Speaker 1: most people in the medical industry, here's a place that 86 00:05:20,040 --> 00:05:24,200 Speaker 1: seems to have handled this pandemic fantastically. They have reported 87 00:05:24,240 --> 00:05:27,080 Speaker 1: just seven deaths for a population at twenty four million. 88 00:05:27,440 --> 00:05:31,320 Speaker 1: And because China insists that they have no part in 89 00:05:31,400 --> 00:05:34,919 Speaker 1: multilateral organizations, there has been very little done to find 90 00:05:34,920 --> 00:05:38,200 Speaker 1: out why Taiwan has been successful. Isn't it a good 91 00:05:38,240 --> 00:05:42,040 Speaker 1: thing the Secretary asar is actually going there to find out. 92 00:05:44,360 --> 00:05:47,880 Speaker 1: I think you could do that much more effectively by 93 00:05:47,920 --> 00:05:51,880 Speaker 1: having a lot of engagement at the less than secretary level. 94 00:05:51,920 --> 00:05:55,120 Speaker 1: You don't need the symbolism of a cabinet secretary to 95 00:05:55,200 --> 00:05:58,400 Speaker 1: do exactly what you just suggested. Also, let's keep in 96 00:05:58,440 --> 00:06:01,800 Speaker 1: mind that yes, Taiwan is not allowed to join the 97 00:06:01,839 --> 00:06:06,000 Speaker 1: World Health Organization or they can exchange some information because 98 00:06:06,360 --> 00:06:10,000 Speaker 1: China keeps them out. And I think that's an appalling reality. 99 00:06:10,360 --> 00:06:15,440 Speaker 1: Having said that, President Trump has said he's withdrawing from 100 00:06:15,480 --> 00:06:19,880 Speaker 1: the World Health Organization because they're in China's pocket, And 101 00:06:19,960 --> 00:06:22,600 Speaker 1: the idea that the United States president would leave the 102 00:06:22,760 --> 00:06:26,640 Speaker 1: wh show in the middle of a pandemic shows that 103 00:06:26,720 --> 00:06:29,800 Speaker 1: the argument that you're making is probably not at the 104 00:06:29,839 --> 00:06:32,520 Speaker 1: top of President Trump's in gender right now. And there 105 00:06:32,560 --> 00:06:34,520 Speaker 1: is a strange double standard here though, that I know 106 00:06:34,640 --> 00:06:37,320 Speaker 1: resonates with you. When we talk about things like TikTok, 107 00:06:37,640 --> 00:06:41,120 Speaker 1: the Chinese talk about theft, and people everywhere else outside 108 00:06:41,120 --> 00:06:43,840 Speaker 1: of China basically laughing saying you want to talk about 109 00:06:43,839 --> 00:06:46,440 Speaker 1: the theft of technology, you want to talk about these 110 00:06:46,520 --> 00:06:49,360 Speaker 1: kind of things, talk about irony, And then I think 111 00:06:49,400 --> 00:06:52,960 Speaker 1: it's a delicate moment whereby if you have business in China, 112 00:06:53,040 --> 00:06:55,159 Speaker 1: you can no longer talk about what is happening in China. 113 00:06:55,320 --> 00:06:56,960 Speaker 1: And I'm sure this is something that resonates with you 114 00:06:57,040 --> 00:06:59,240 Speaker 1: directly because as far as I understand, and you have 115 00:06:59,279 --> 00:07:02,080 Speaker 1: no business in China and you're able to speak company 116 00:07:02,080 --> 00:07:04,960 Speaker 1: about China, and you know that if you have business there, 117 00:07:05,160 --> 00:07:08,520 Speaker 1: you wouldn't be would you trying to be much more difficult? 118 00:07:08,600 --> 00:07:10,640 Speaker 1: And I think it's a real problem. I mean for 119 00:07:10,680 --> 00:07:12,800 Speaker 1: the banks, for the consulting firms, for all the people 120 00:07:12,840 --> 00:07:16,440 Speaker 1: that ostensibly do independent research, but what can they say 121 00:07:16,480 --> 00:07:18,880 Speaker 1: about China because it's going to undermine their business. I mean, 122 00:07:18,880 --> 00:07:23,080 Speaker 1: you saw Lebron James, huge advocate for Black Lives Matter, 123 00:07:23,120 --> 00:07:26,560 Speaker 1: but on Hong Kong he's towing the PRC line, and 124 00:07:26,680 --> 00:07:28,679 Speaker 1: not that he knows anything about it. But the point 125 00:07:28,800 --> 00:07:32,000 Speaker 1: is everyone that does business in China understands it's a 126 00:07:32,000 --> 00:07:35,800 Speaker 1: big market and the rules change. They determine what the 127 00:07:35,880 --> 00:07:39,680 Speaker 1: rules will be on TikTok specifically. You know, we need 128 00:07:39,760 --> 00:07:43,160 Speaker 1: to understand that it's not just about China's national security 129 00:07:43,920 --> 00:07:47,240 Speaker 1: issues and their control of data um, which you know, 130 00:07:47,320 --> 00:07:49,400 Speaker 1: you have to prove that we have evidence as an 131 00:07:49,400 --> 00:07:53,120 Speaker 1: open question. But it's also a reciprocity. The Chinese government 132 00:07:53,160 --> 00:07:56,880 Speaker 1: does not allow key American tech firms to do business 133 00:07:56,960 --> 00:08:00,480 Speaker 1: as usual in the world's largest data market. Whether you're 134 00:08:00,480 --> 00:08:04,000 Speaker 1: talking about Facebook, whether you're talking about Google, whether you're 135 00:08:04,000 --> 00:08:07,720 Speaker 1: talking about Wikipedia or Reddit, none of them are allowed 136 00:08:08,200 --> 00:08:11,800 Speaker 1: um inside mainland China with you know, a billion one 137 00:08:11,880 --> 00:08:15,200 Speaker 1: point for a billion people, uh, and a majority of 138 00:08:15,240 --> 00:08:20,040 Speaker 1: them online. So I mean, why would you allow Chinese 139 00:08:20,080 --> 00:08:24,000 Speaker 1: tech firms to have openness with the United States in 140 00:08:24,040 --> 00:08:26,680 Speaker 1: that environment. You asked me about my book Superpower, But 141 00:08:26,720 --> 00:08:28,400 Speaker 1: you know, the book that I think is more relevant 142 00:08:28,400 --> 00:08:30,160 Speaker 1: for this is one I wrote about ten years ago 143 00:08:30,200 --> 00:08:33,120 Speaker 1: called the End of the Free Market. And if you're 144 00:08:33,200 --> 00:08:36,119 Speaker 1: in a world where the soon to the largest economy 145 00:08:36,520 --> 00:08:40,000 Speaker 1: is authoritarian and state capitalists, you don't have a global 146 00:08:40,040 --> 00:08:42,640 Speaker 1: free market anymore, and I did. The United States is 147 00:08:42,640 --> 00:08:45,000 Speaker 1: gonna pretend that we do, and we're gonna give the 148 00:08:45,080 --> 00:08:49,840 Speaker 1: Chinese complete access to the American consumer base and database. 149 00:08:50,200 --> 00:08:54,240 Speaker 1: This ludicrous on its space. Iana, There's a question about 150 00:08:54,320 --> 00:08:58,280 Speaker 1: how markets priced these rising US China tensions. They've been 151 00:08:58,360 --> 00:09:00,800 Speaker 1: more general in nature, and when you talk about five 152 00:09:00,920 --> 00:09:04,760 Speaker 1: G or tech predominance, it's it's hard to price that in. 153 00:09:04,960 --> 00:09:07,960 Speaker 1: It's easier to price in a trade deal, or a 154 00:09:08,000 --> 00:09:10,600 Speaker 1: trade deal that's falling apart. In Senior US and Chinese 155 00:09:10,600 --> 00:09:13,360 Speaker 1: officials are getting together to discuss the progress of the 156 00:09:13,360 --> 00:09:16,040 Speaker 1: Phase one trade deal. Do you expect it to be 157 00:09:16,080 --> 00:09:19,160 Speaker 1: thrown out? Well, I mean, first of all, I think 158 00:09:19,200 --> 00:09:23,160 Speaker 1: that the Phase one trade deal is increasingly marginal to 159 00:09:23,280 --> 00:09:26,079 Speaker 1: the US China relationship. And I'm glad you've framed the 160 00:09:26,200 --> 00:09:28,760 Speaker 1: question and the interview you've done with me that way, 161 00:09:28,800 --> 00:09:31,959 Speaker 1: because most of the times you're talking to you guys, Um, 162 00:09:32,000 --> 00:09:34,320 Speaker 1: you know, it's in the last few months, it's all 163 00:09:34,400 --> 00:09:37,200 Speaker 1: been about what about the Phase one trade deal? And 164 00:09:37,240 --> 00:09:39,640 Speaker 1: I understand that if we get rid of it, the 165 00:09:39,679 --> 00:09:42,000 Speaker 1: tariffs are going up and that's going to affect American 166 00:09:42,120 --> 00:09:46,319 Speaker 1: voters American consumers. But the reality is that the moment, no, 167 00:09:46,800 --> 00:09:49,800 Speaker 1: it may well get thrown out in the next three months, 168 00:09:49,880 --> 00:09:53,880 Speaker 1: especially if Trump feels like he's losing as we get 169 00:09:53,920 --> 00:09:57,640 Speaker 1: closer to the election. But much more concerning is the 170 00:09:57,679 --> 00:10:01,080 Speaker 1: potential that we really come to blows with the Chinese, 171 00:10:01,120 --> 00:10:05,200 Speaker 1: that the mistakes lead to escalation, and then you're not 172 00:10:05,240 --> 00:10:07,840 Speaker 1: talking about the Phase one deal. You're talking about you know, 173 00:10:07,960 --> 00:10:11,839 Speaker 1: Ken large swats of Americans travel to China still, but 174 00:10:11,960 --> 00:10:14,040 Speaker 1: we have to pull our expats out. Will it be 175 00:10:14,040 --> 00:10:17,760 Speaker 1: a dangerous environment for them? Um? You know? Will will 176 00:10:17,840 --> 00:10:22,040 Speaker 1: baseline trade between our two countries be disrupted? Will companies 177 00:10:22,360 --> 00:10:26,400 Speaker 1: have non terror UH moves against them that make it 178 00:10:26,440 --> 00:10:29,960 Speaker 1: impossible for large US companies to still do business in China? 179 00:10:30,040 --> 00:10:33,120 Speaker 1: What's the future of owl? You know, for example, companies 180 00:10:33,120 --> 00:10:36,280 Speaker 1: like that those things are so much broader and deeper 181 00:10:36,480 --> 00:10:40,480 Speaker 1: than the continued existence of an important but you know, 182 00:10:40,600 --> 00:10:43,800 Speaker 1: still modest and incremental phase one trade deal. What we 183 00:10:43,840 --> 00:10:46,040 Speaker 1: do know is that there ain't no phase to trade deal. 184 00:10:46,240 --> 00:10:48,520 Speaker 1: That's pretty clear. I think we can don't agree on that. 185 00:10:48,640 --> 00:10:56,800 Speaker 1: And right to catch up if you're checking notes at home, 186 00:10:56,880 --> 00:10:59,520 Speaker 1: all these back and foresters in Lisa Johnomy, what their 187 00:10:59,600 --> 00:11:02,160 Speaker 1: talks of out as correlations and there's no one better 188 00:11:02,200 --> 00:11:05,000 Speaker 1: to speak to and Andrews Sheets and Morgan Stanley not 189 00:11:05,120 --> 00:11:07,840 Speaker 1: so much on bonds, not so much on equities, but 190 00:11:07,920 --> 00:11:10,760 Speaker 1: the linkage is of equities, bonds, currencies come out and 191 00:11:10,800 --> 00:11:13,720 Speaker 1: these Mr Sheets joins us uh this morning, Andrew Sheets, 192 00:11:13,720 --> 00:11:16,280 Speaker 1: what correlations did you see in the market that give 193 00:11:16,320 --> 00:11:20,319 Speaker 1: you some form of signposts to the end of the year. Yeah. 194 00:11:20,440 --> 00:11:23,280 Speaker 1: So I think what's actually really fascinating is that you know, 195 00:11:23,360 --> 00:11:25,320 Speaker 1: so much of the market, as you just alluded to, 196 00:11:25,520 --> 00:11:28,320 Speaker 1: is is driving off of the same trade, is driving 197 00:11:28,320 --> 00:11:31,600 Speaker 1: off of a long duration trade. And I think that's 198 00:11:31,600 --> 00:11:36,040 Speaker 1: wrapped up everything from from the NASDAK to gold even 199 00:11:36,080 --> 00:11:39,120 Speaker 1: things like emerging markets, right which I think we're historically 200 00:11:39,160 --> 00:11:43,840 Speaker 1: associated as you know, these kind of deep cyclical a 201 00:11:43,920 --> 00:11:46,440 Speaker 1: deep cyclical asset class. But if you look at what's 202 00:11:46,520 --> 00:11:50,480 Speaker 1: driving e m uh, it's it's a very narrow rally 203 00:11:50,720 --> 00:11:54,800 Speaker 1: driven by very large technology names in some ways kind 204 00:11:54,800 --> 00:11:57,079 Speaker 1: of similar to to what's happening in the US. So 205 00:11:57,600 --> 00:12:01,360 Speaker 1: I think there remains a dominant theme that investors are 206 00:12:01,360 --> 00:12:04,800 Speaker 1: are very confident in in the yield outlook. Are are 207 00:12:04,840 --> 00:12:08,760 Speaker 1: still very concerned about growth, but are are optimistic around 208 00:12:08,800 --> 00:12:11,040 Speaker 1: the idea that real yields remain low for a long 209 00:12:11,080 --> 00:12:13,520 Speaker 1: period of time. Well said, in the M space, turkishly 210 00:12:13,640 --> 00:12:15,920 Speaker 1: or just moments ago weakens out to a seven or three. 211 00:12:15,960 --> 00:12:18,439 Speaker 1: For the pros, that's a big deal, Andrew Sheets, that's 212 00:12:18,480 --> 00:12:21,800 Speaker 1: all great, But the juxtaposition here is ample and Amazon 213 00:12:21,840 --> 00:12:25,000 Speaker 1: to the moon versus Gold to the moon. How are 214 00:12:25,120 --> 00:12:29,000 Speaker 1: safe havens playing right now? Well, I think what's actually 215 00:12:29,120 --> 00:12:32,520 Speaker 1: very kind of fascinating is the way that those real 216 00:12:32,640 --> 00:12:36,880 Speaker 1: yields are falling right because the nominal yield is more 217 00:12:36,960 --> 00:12:39,840 Speaker 1: or less stable or just can't fall very much. And 218 00:12:39,920 --> 00:12:44,920 Speaker 1: so the driver of those lower real interest rates has 219 00:12:44,920 --> 00:12:48,520 Speaker 1: actually been inflation expectations going up. And and I would 220 00:12:48,559 --> 00:12:52,280 Speaker 1: consider those higher inflation expectations actually consistent with kind of 221 00:12:52,280 --> 00:12:56,360 Speaker 1: a better economy within more normal recovery than than the opposite. 222 00:12:56,440 --> 00:12:58,560 Speaker 1: And and where I think that's important is if I 223 00:12:58,600 --> 00:13:00,400 Speaker 1: think you take an asset like goal, I think a 224 00:13:00,400 --> 00:13:02,640 Speaker 1: lot of people view it as as a hedge. I'm 225 00:13:02,679 --> 00:13:04,920 Speaker 1: buying this because I'm worried about the state of the economy. 226 00:13:04,920 --> 00:13:06,440 Speaker 1: I'm worried about the state of the world. It's going 227 00:13:06,440 --> 00:13:09,560 Speaker 1: to protect my portfolio things do worse. But actually, I 228 00:13:09,559 --> 00:13:12,360 Speaker 1: think the way that gold is performing is performing much 229 00:13:12,400 --> 00:13:14,880 Speaker 1: more like a cyclical asset. It's it's benefiting from higher 230 00:13:14,880 --> 00:13:17,840 Speaker 1: inflation expectations. It's going up when the market's going up 231 00:13:17,920 --> 00:13:20,120 Speaker 1: like like is happening today. So I think that's an 232 00:13:20,120 --> 00:13:21,839 Speaker 1: important thing to keep in mind with some of these 233 00:13:21,880 --> 00:13:24,880 Speaker 1: assets that that they are, they might be less diversifying 234 00:13:24,920 --> 00:13:27,720 Speaker 1: to each other than expected because of how they're they're 235 00:13:27,720 --> 00:13:30,160 Speaker 1: performing relative to some of these factors. Andrew, you looking 236 00:13:30,200 --> 00:13:33,400 Speaker 1: to reduce risk exposure At the moment, we are, Yes, 237 00:13:33,480 --> 00:13:35,920 Speaker 1: I think that we still remain quite comfortable with the 238 00:13:35,920 --> 00:13:39,160 Speaker 1: the overall economic recovery. And we at Morgan Stanley have 239 00:13:39,320 --> 00:13:41,840 Speaker 1: been and remain and I think kind of an out 240 00:13:41,840 --> 00:13:45,200 Speaker 1: of consensus V shaped recovery camp. But you know, we 241 00:13:45,200 --> 00:13:48,640 Speaker 1: were coming off of a very strong performance, certainly up 242 00:13:48,640 --> 00:13:51,439 Speaker 1: through July, and and you know, we've we've voiced concerned 243 00:13:51,480 --> 00:13:55,040 Speaker 1: that August and September look like a more difficult environment. 244 00:13:55,080 --> 00:13:57,640 Speaker 1: That I think we're losing some of the positive catalysts 245 00:13:57,679 --> 00:14:00,920 Speaker 1: we had last month. We're obviously higher and prices leaving 246 00:14:01,000 --> 00:14:04,280 Speaker 1: less upside to our our price targets. And even though 247 00:14:04,440 --> 00:14:07,600 Speaker 1: I think overall the economic momentum is still sustainable, I'm 248 00:14:07,640 --> 00:14:09,880 Speaker 1: probably most worried that we see some pausing of that 249 00:14:10,000 --> 00:14:12,720 Speaker 1: economic momentum over the last over the next two months, 250 00:14:12,840 --> 00:14:15,839 Speaker 1: especially in the US, where you have seen a worse 251 00:14:16,000 --> 00:14:19,440 Speaker 1: COVID dynamic than our initial forecast expected. So, Andrew, what 252 00:14:19,520 --> 00:14:22,400 Speaker 1: to find interesting about the thinking of more Can Stanley 253 00:14:22,440 --> 00:14:24,600 Speaker 1: at the moment is that even if the recovery slows, 254 00:14:24,600 --> 00:14:27,160 Speaker 1: so long as the momentum is positive and things go 255 00:14:27,200 --> 00:14:30,280 Speaker 1: in the right direction, you think that sufficient for risk. 256 00:14:30,680 --> 00:14:33,560 Speaker 1: Andrew Y, Well, I do think, you know, I think 257 00:14:33,560 --> 00:14:36,080 Speaker 1: a couple of factors are going on. I think first 258 00:14:36,200 --> 00:14:38,600 Speaker 1: is I think we kind of step back, and especially 259 00:14:38,680 --> 00:14:41,000 Speaker 1: kind of step back from from the next month or so. 260 00:14:41,080 --> 00:14:43,480 Speaker 1: I think I think big picture, I think we're still 261 00:14:43,520 --> 00:14:49,000 Speaker 1: seeing a lot of relatively encouraging early cycle dynamics in 262 00:14:49,040 --> 00:14:52,120 Speaker 1: the market. You have very easy policy, you have weak 263 00:14:52,200 --> 00:14:56,760 Speaker 1: but improving data, you have relatively light investor positioning. You know, 264 00:14:56,800 --> 00:14:59,560 Speaker 1: I think a reasonable amount of investor caution. These are all, 265 00:14:59,600 --> 00:15:02,760 Speaker 1: I think aacteristics that are very common, you know, during 266 00:15:03,080 --> 00:15:05,800 Speaker 1: or right after recessions, and I think that they ultimately 267 00:15:05,840 --> 00:15:07,600 Speaker 1: mean that I think the recovery that we're seeing is 268 00:15:08,200 --> 00:15:11,160 Speaker 1: going to be sustainable. That um, that this is not, 269 00:15:11,360 --> 00:15:13,920 Speaker 1: you know, just a flash in the pan um. And 270 00:15:13,960 --> 00:15:16,480 Speaker 1: so yes, I think the market that I would expect 271 00:15:16,560 --> 00:15:19,200 Speaker 1: to have a more challenging environment over the next couple 272 00:15:19,240 --> 00:15:21,320 Speaker 1: of months, but I think stepping back from that, a 273 00:15:21,360 --> 00:15:25,880 Speaker 1: sustainable recovery, a very supportive policy response, I think relatively 274 00:15:26,000 --> 00:15:29,560 Speaker 1: kind of balanced investor positioning. All I think argue that 275 00:15:29,640 --> 00:15:32,080 Speaker 1: this will be ultimately be a sustainable recovery if we 276 00:15:32,120 --> 00:15:34,400 Speaker 1: look out over the next six or twelve months. Six 277 00:15:34,480 --> 00:15:36,160 Speaker 1: or twelve months is a long term and the short 278 00:15:36,240 --> 00:15:39,280 Speaker 1: term we face a lot of volatility. President Trump is 279 00:15:39,280 --> 00:15:41,400 Speaker 1: saying on Fox and Friends this morning that a big 280 00:15:41,520 --> 00:15:45,120 Speaker 1: job number is coming on Friday, putting aside this sort 281 00:15:45,160 --> 00:15:48,520 Speaker 1: of breaking with former protocol of presidents and people administration 282 00:15:48,600 --> 00:15:51,800 Speaker 1: not talking about jobs data before it comes out. I'm 283 00:15:51,840 --> 00:15:55,080 Speaker 1: curious about the trading activity or seeing yields on thirty 284 00:15:55,120 --> 00:15:58,120 Speaker 1: year treasuries breaking out to the upside. Not much action 285 00:15:58,600 --> 00:16:02,360 Speaker 1: in stock futures. How do you trade an upside surprise 286 00:16:02,440 --> 00:16:04,560 Speaker 1: and labor data at this point? Does it just mean 287 00:16:04,840 --> 00:16:08,520 Speaker 1: higher inflation and already baked into equities? Yeah? So, I 288 00:16:08,520 --> 00:16:10,800 Speaker 1: I actually think, you know, the price action that we're 289 00:16:10,800 --> 00:16:14,800 Speaker 1: seeing this morning, the price action that we saw on Monday, 290 00:16:14,880 --> 00:16:19,600 Speaker 1: where you saw yields higher, yield curve steeper, and and 291 00:16:19,720 --> 00:16:22,040 Speaker 1: market and equity markets higher, I think that's actually the 292 00:16:22,080 --> 00:16:25,360 Speaker 1: much healthier dynamic. I think that's the much more normal dynamic. 293 00:16:25,440 --> 00:16:27,160 Speaker 1: And and I think you know, we've done a lot 294 00:16:27,200 --> 00:16:29,520 Speaker 1: of analysis that's all very consistent with the idea that 295 00:16:29,600 --> 00:16:33,520 Speaker 1: markets are completely fine with the yields being higher uh 296 00:16:34,120 --> 00:16:37,240 Speaker 1: many times, because those yields are rising in response to 297 00:16:37,360 --> 00:16:40,920 Speaker 1: better economic optimism, and that better economic optimism can can 298 00:16:40,960 --> 00:16:44,160 Speaker 1: easily offset challenges that might come from that slightly higher 299 00:16:44,160 --> 00:16:48,880 Speaker 1: discount rate. So I actually don't see any uh inconsistency there. 300 00:16:48,880 --> 00:16:52,680 Speaker 1: And I think actually the more abnormal environment is where 301 00:16:52,680 --> 00:16:56,240 Speaker 1: we've been, where you've seen rising markets and really declining yields. 302 00:16:56,280 --> 00:16:58,800 Speaker 1: I think that's much more unusual than the market often 303 00:16:58,800 --> 00:17:01,400 Speaker 1: gives credit for the dynamic that we're seeing either this 304 00:17:01,440 --> 00:17:04,119 Speaker 1: morning or or on Monday is a more normal, I 305 00:17:04,119 --> 00:17:07,119 Speaker 1: think sustainable, robust dynamic for the market. And Andrew, this 306 00:17:07,160 --> 00:17:08,679 Speaker 1: is one of the key narratives of the market right 307 00:17:08,680 --> 00:17:11,359 Speaker 1: now that equities are pricing in optimism, that bond markets 308 00:17:11,359 --> 00:17:13,360 Speaker 1: are simply ignoring, and that yields are going to rise, 309 00:17:13,359 --> 00:17:16,160 Speaker 1: particularly on the longer end. But at what point does 310 00:17:16,160 --> 00:17:19,040 Speaker 1: the rise and longer end yields lead to a sell 311 00:17:19,080 --> 00:17:21,679 Speaker 1: off and equities based on the relative value argument that 312 00:17:21,720 --> 00:17:23,960 Speaker 1: people say, where you're just there is no alternative and 313 00:17:24,000 --> 00:17:26,159 Speaker 1: you've got to go into risk assets. Well, I I 314 00:17:26,440 --> 00:17:28,639 Speaker 1: still think, I think big picture, I think we're actually 315 00:17:28,680 --> 00:17:30,640 Speaker 1: still some ways away from that, you know. I think 316 00:17:30,840 --> 00:17:32,720 Speaker 1: given where we are in the US, you know, ten 317 00:17:32,760 --> 00:17:35,560 Speaker 1: year at at around fifty basis points, it certainly real 318 00:17:35,680 --> 00:17:38,399 Speaker 1: yields as as you mentioned earlier, at minus a hundred 319 00:17:38,400 --> 00:17:41,040 Speaker 1: basis points. I think, you know, I think you actually 320 00:17:41,080 --> 00:17:44,399 Speaker 1: have you know, fifty fifty basis points plus. I think 321 00:17:44,440 --> 00:17:47,400 Speaker 1: where those yields can go before you're I think generating 322 00:17:47,480 --> 00:17:50,399 Speaker 1: you know, any sort of real valuation pressure and again 323 00:17:50,440 --> 00:17:52,840 Speaker 1: that there's just an enormous amount of market history that 324 00:17:52,880 --> 00:17:57,760 Speaker 1: if yields arising because of higher economic enthusiasm, then then 325 00:17:58,000 --> 00:18:00,680 Speaker 1: you know, equity markets, credit markets can be completely fine 326 00:18:00,680 --> 00:18:02,720 Speaker 1: with that. Now. I do think that dynamic you and 327 00:18:02,880 --> 00:18:05,639 Speaker 1: you you mentioned though, could involve a major shift in 328 00:18:05,920 --> 00:18:09,080 Speaker 1: leadership right because that the types of stocks that people 329 00:18:09,119 --> 00:18:11,200 Speaker 1: are buying because they think yields will remain low for 330 00:18:11,240 --> 00:18:13,240 Speaker 1: a very long period of time, I think are very 331 00:18:13,280 --> 00:18:15,919 Speaker 1: different stocks than they would buy if they thought, actually 332 00:18:15,920 --> 00:18:18,320 Speaker 1: the recovery was sustainable. Things are getting but maybe it 333 00:18:18,400 --> 00:18:20,520 Speaker 1: might get back to normal next year, and I think 334 00:18:20,600 --> 00:18:22,840 Speaker 1: that would be the big story that you've seen, you know, 335 00:18:22,920 --> 00:18:25,520 Speaker 1: within the market this year, a huge divergence, a very 336 00:18:25,600 --> 00:18:28,439 Speaker 1: kind of narrow market that I think a more sustainable, 337 00:18:28,760 --> 00:18:31,439 Speaker 1: the more sustainable the recovery, the broader that should be, 338 00:18:31,480 --> 00:18:34,080 Speaker 1: and I think it would drive potentially major leadership shifts 339 00:18:34,119 --> 00:18:36,760 Speaker 1: both in the U S and globally and right to 340 00:18:36,800 --> 00:18:39,200 Speaker 1: catch up. So Andre states for more constanley on the 341 00:18:39,280 --> 00:18:46,720 Speaker 1: view there to reduce risk in the NIT right now, 342 00:18:47,000 --> 00:18:51,480 Speaker 1: a really really important conversation if you're worried about the 343 00:18:51,520 --> 00:18:55,439 Speaker 1: stresses of this pandemic Louisiana has been incredibly hit with 344 00:18:55,520 --> 00:19:00,280 Speaker 1: a legitimate second spike in cases and deaths as well. 345 00:19:00,440 --> 00:19:04,040 Speaker 1: They have the correct Senator to monitor his Louisiana and 346 00:19:04,080 --> 00:19:08,160 Speaker 1: that is William Cassidy. Bill Cassidy, the Republican from Louisiana 347 00:19:08,200 --> 00:19:11,280 Speaker 1: who long ago and far away studied medicine and long 348 00:19:11,320 --> 00:19:16,320 Speaker 1: ago far away supported Mike Delcocus and Paul Sagas. Dr Cassidy, 349 00:19:16,320 --> 00:19:18,760 Speaker 1: we are thrilled to have you with us today, and 350 00:19:18,800 --> 00:19:22,760 Speaker 1: I want to speak about your Louisiana State University. They 351 00:19:22,800 --> 00:19:25,879 Speaker 1: want to get their football season started, they want to 352 00:19:25,920 --> 00:19:30,080 Speaker 1: open their college, and yet you have a pandemic. You're 353 00:19:30,119 --> 00:19:34,000 Speaker 1: the expert on this in Congress. Should l s U 354 00:19:34,480 --> 00:19:38,199 Speaker 1: have a football season? They're delay in the season and 355 00:19:38,440 --> 00:19:41,479 Speaker 1: up until September. Obviously they're taking it as it should, 356 00:19:41,960 --> 00:19:45,800 Speaker 1: but keep in mind, this pandemic may stay with us 357 00:19:45,840 --> 00:19:48,960 Speaker 1: for another year or a year and a half. We're 358 00:19:49,080 --> 00:19:53,679 Speaker 1: hoping vaccines become available. We don't know that. We're really 359 00:19:53,720 --> 00:19:57,560 Speaker 1: asking ourselves, are we going to put everything on hold 360 00:19:57,600 --> 00:19:59,760 Speaker 1: for a year and a half or are we gonna 361 00:19:59,800 --> 00:20:02,760 Speaker 1: say you're out how to safely live with this and 362 00:20:02,800 --> 00:20:05,640 Speaker 1: conduct our lives? I think we need to figure out 363 00:20:05,680 --> 00:20:08,200 Speaker 1: how to safely live with it. It's going to take 364 00:20:08,240 --> 00:20:10,600 Speaker 1: a lot of adjustment, but we have to figure out 365 00:20:11,480 --> 00:20:14,480 Speaker 1: with it. Dr Cassidy our David Weston will be speaking 366 00:20:14,480 --> 00:20:17,560 Speaker 1: with Dr Fauci here uh in a bit. Do you 367 00:20:17,640 --> 00:20:22,920 Speaker 1: support Dr Faucci and Dr Berks's efforts on the pandemic. Yes. 368 00:20:23,280 --> 00:20:25,240 Speaker 1: On the other hand, you can see that they have 369 00:20:25,400 --> 00:20:28,640 Speaker 1: learned as they have gone along. I once asked Dr Fauci, 370 00:20:28,720 --> 00:20:31,520 Speaker 1: do we really expect five and six year old not 371 00:20:31,600 --> 00:20:34,480 Speaker 1: to go to school for another year? And within three 372 00:20:34,520 --> 00:20:37,080 Speaker 1: weeks after considering, he goes No, they must go back 373 00:20:37,080 --> 00:20:40,560 Speaker 1: to school. That is a wise decision. So we see 374 00:20:40,600 --> 00:20:44,240 Speaker 1: the two of them evolving as we understand the scope 375 00:20:44,359 --> 00:20:47,480 Speaker 1: of the epidemic. Senator, right now in Washington, d C. 376 00:20:47,760 --> 00:20:50,640 Speaker 1: Everyone is focused on the idea of a second round 377 00:20:50,640 --> 00:20:53,359 Speaker 1: of stimulus, of fiscal bailout for the states and local 378 00:20:53,400 --> 00:20:57,600 Speaker 1: governments as the Democrats want. I'm wondering from the Republican standpoint, 379 00:20:57,640 --> 00:20:59,879 Speaker 1: has the view shifted on the six hundred dollar and 380 00:21:00,000 --> 00:21:03,880 Speaker 1: hands unemployment benefit extra benefit that people are getting based 381 00:21:03,880 --> 00:21:06,360 Speaker 1: on the fact that President Trump has come out seemingly 382 00:21:06,359 --> 00:21:11,199 Speaker 1: in support of that. So um Republicans in the Senate 383 00:21:11,320 --> 00:21:14,840 Speaker 1: understand one, you have to support families through this rough patch. 384 00:21:15,400 --> 00:21:17,639 Speaker 1: But if you pay people a lot more not to 385 00:21:17,720 --> 00:21:20,480 Speaker 1: work than the work, that's a distance in it the work, 386 00:21:20,560 --> 00:21:23,399 Speaker 1: and that's negative for the person, negative for their future 387 00:21:23,440 --> 00:21:27,560 Speaker 1: employment possibilities, etcetera. Keep in mind some people, depending on 388 00:21:27,600 --> 00:21:32,760 Speaker 1: your state, we're making two are more relative to what 389 00:21:32,880 --> 00:21:36,000 Speaker 1: they would have earned a working now. That's not good 390 00:21:36,040 --> 00:21:38,360 Speaker 1: for them. If you if you say that, oh wait, 391 00:21:38,400 --> 00:21:41,560 Speaker 1: I'm not gonna work. Short term decision, that's wise. Long 392 00:21:41,680 --> 00:21:45,320 Speaker 1: term you loose sen you already you lose your job skills. Statistically, 393 00:21:45,320 --> 00:21:48,040 Speaker 1: the longer you're unemployed, the harder it is to render 394 00:21:48,119 --> 00:21:51,840 Speaker 1: the workforce, the worse your life becomes. Sat Hold on 395 00:21:51,840 --> 00:21:55,040 Speaker 1: one second there, because zealous FED President Robert Kaplan came 396 00:21:55,040 --> 00:21:57,159 Speaker 1: on and said that he has heard from certain business 397 00:21:57,160 --> 00:21:59,720 Speaker 1: officials that this is a concern that people aren't coming 398 00:21:59,760 --> 00:22:01,920 Speaker 1: back to the workforce because of how much they're getting 399 00:22:01,920 --> 00:22:05,000 Speaker 1: paid on unemployment. However, there is no data to support that, 400 00:22:05,040 --> 00:22:07,600 Speaker 1: and he said in the long run, the increase in 401 00:22:07,600 --> 00:22:11,080 Speaker 1: income would offset the detraction that could be felt in 402 00:22:11,119 --> 00:22:13,680 Speaker 1: the short run. Is there any evidence that you've seen 403 00:22:13,960 --> 00:22:16,600 Speaker 1: that points to people not entering the workforce, that businesses 404 00:22:16,840 --> 00:22:20,639 Speaker 1: are unduly hampered with rehiring people due to the size 405 00:22:20,640 --> 00:22:24,119 Speaker 1: of the inhanesc unemployment benefit. You know, sometimes things are 406 00:22:24,160 --> 00:22:26,280 Speaker 1: so self evident that you shouldn't have to prove it. 407 00:22:26,520 --> 00:22:29,879 Speaker 1: If you're paying somebody two more than they would working 408 00:22:30,640 --> 00:22:33,399 Speaker 1: did not work, they're not going to work, by the way, 409 00:22:33,480 --> 00:22:36,520 Speaker 1: that has been previously written about by Larry Summers and 410 00:22:36,600 --> 00:22:41,040 Speaker 1: Paul Krugman, two left of center economists. And in my hometown, 411 00:22:41,080 --> 00:22:43,800 Speaker 1: in my home state, you will see signs we are 412 00:22:43,880 --> 00:22:47,680 Speaker 1: hiring uh. And if you talk to employers, they will 413 00:22:47,680 --> 00:22:52,560 Speaker 1: talk about job applicants that are just refusing to be interviewed. Now, 414 00:22:52,640 --> 00:22:56,919 Speaker 1: at some point, common sense has to rain two times 415 00:22:56,920 --> 00:22:59,359 Speaker 1: more than you would make working to not work. People 416 00:22:59,400 --> 00:23:01,800 Speaker 1: are going to make a rational short term decision. Why 417 00:23:01,840 --> 00:23:05,520 Speaker 1: can't we compromise? I mean, you're sitting in a hospital, Dr. Cassidy, 418 00:23:05,520 --> 00:23:08,480 Speaker 1: and you've got to compromise every day with a grievously 419 00:23:08,520 --> 00:23:12,240 Speaker 1: ill patient. Where is the art of compromise? Where? Where? 420 00:23:12,280 --> 00:23:16,440 Speaker 1: Where did it go? You know? Right now? Pelosius said 421 00:23:16,440 --> 00:23:20,639 Speaker 1: that she wants her heroes act period and she's a 422 00:23:20,680 --> 00:23:23,280 Speaker 1: lot and so when when Republicans. When the White House says, 423 00:23:23,320 --> 00:23:26,160 Speaker 1: we will allow a six hundred dollar a week continuing 424 00:23:26,240 --> 00:23:30,040 Speaker 1: for a week while we negotiate, she says no. When 425 00:23:30,080 --> 00:23:32,640 Speaker 1: Republicans say, wait a second, we will allow a four 426 00:23:32,720 --> 00:23:35,800 Speaker 1: hundred dollar for several for two months. Uh so, well 427 00:23:35,840 --> 00:23:39,480 Speaker 1: we negotiate, she says no. She wants her entire package, 428 00:23:39,720 --> 00:23:42,479 Speaker 1: a package, by the way, that mentions marijuana more than 429 00:23:42,480 --> 00:23:45,119 Speaker 1: it mentions jobs. So there's a lot of policy in 430 00:23:45,160 --> 00:23:48,640 Speaker 1: their unrelated to COVID that Republicans are looking at, saying, wait, 431 00:23:48,800 --> 00:23:52,000 Speaker 1: we're gonna do long term policy on a short term issue. No, 432 00:23:52,160 --> 00:23:55,520 Speaker 1: that okay, But Sender Cassidy, you've taken a real middle 433 00:23:55,560 --> 00:23:59,160 Speaker 1: ground over even though Louisiana is now dominantly Republican, you've 434 00:23:59,200 --> 00:24:03,800 Speaker 1: got an inter steing cross party heritage. Does President Trump 435 00:24:04,320 --> 00:24:08,439 Speaker 1: and frankly the leader leader McConnell, do they risk giving 436 00:24:08,560 --> 00:24:12,360 Speaker 1: up the Senate to the Democrats? Well, of course, we're 437 00:24:12,400 --> 00:24:14,159 Speaker 1: in a tough year and it's gonna be tough one 438 00:24:14,200 --> 00:24:17,560 Speaker 1: incumbents people expect more and I think that's from Pelosi's 439 00:24:17,560 --> 00:24:20,359 Speaker 1: banking on again. She would rather the pain be on 440 00:24:20,440 --> 00:24:24,120 Speaker 1: the unemployed. So she gets her bigger package at some point, 441 00:24:24,160 --> 00:24:26,639 Speaker 1: I just remember my doctor roots we take care of 442 00:24:26,640 --> 00:24:29,320 Speaker 1: the patient right now. The patient is the person who 443 00:24:29,400 --> 00:24:31,720 Speaker 1: doesn't have a job and needs help, and so how 444 00:24:31,720 --> 00:24:33,920 Speaker 1: do we best help them? And we can argue about 445 00:24:34,000 --> 00:24:37,280 Speaker 1: marijuana at a later point. And that's my perspective. Senator, 446 00:24:37,320 --> 00:24:39,600 Speaker 1: Thank you so much. Senator Cassidy there with an update 447 00:24:39,640 --> 00:24:42,000 Speaker 1: on l s U football and a few other matters 448 00:24:42,400 --> 00:24:50,480 Speaker 1: as well. The gentleman from Louisiana. Right now, we're gonna 449 00:24:50,520 --> 00:24:52,959 Speaker 1: do what we haven't done today. We looked at the stimulus, 450 00:24:52,960 --> 00:24:56,119 Speaker 1: We've looked at all the different news and horrific tragedy 451 00:24:56,119 --> 00:24:58,480 Speaker 1: in Beirut, and there is this idea I made a 452 00:24:58,560 --> 00:25:01,000 Speaker 1: joke about it earlier of tick talk in Microsoft to 453 00:25:01,040 --> 00:25:03,840 Speaker 1: get a broader view, uh, Sarah Hendley joins US with 454 00:25:03,920 --> 00:25:07,240 Speaker 1: mcquarie group on software, but a broader view, not so 455 00:25:07,320 --> 00:25:10,320 Speaker 1: much bi hold cell here, but sort of on where 456 00:25:10,359 --> 00:25:12,960 Speaker 1: the industry is going. Sarah, let me start with a 457 00:25:13,040 --> 00:25:17,600 Speaker 1: million dollar question. There's a lot of angst about China, Huawei, 458 00:25:18,200 --> 00:25:22,359 Speaker 1: TikTok and many more. Is it justified? Do we have 459 00:25:22,640 --> 00:25:29,040 Speaker 1: evidence that they're playing with our software? That's a very 460 00:25:29,080 --> 00:25:33,919 Speaker 1: fair question, and yes, we actually have seen history in 461 00:25:34,000 --> 00:25:40,320 Speaker 1: the past of Chinese corruption of supply chain um issues, 462 00:25:40,640 --> 00:25:44,400 Speaker 1: and we've a longstanding had an issue with with piracy 463 00:25:44,480 --> 00:25:47,320 Speaker 1: over in China as well. But I think what you're 464 00:25:47,320 --> 00:25:51,040 Speaker 1: seeing here in this particular station a situation where we're 465 00:25:51,080 --> 00:25:55,320 Speaker 1: talking about TikTok is the government's perspective is that because 466 00:25:55,440 --> 00:25:59,840 Speaker 1: TikTok is built using a series of algorithms that lever 467 00:26:00,160 --> 00:26:02,920 Speaker 1: is the data that users are uploading into the system 468 00:26:02,960 --> 00:26:06,760 Speaker 1: around their short videos, that they can apply that AI 469 00:26:07,240 --> 00:26:13,000 Speaker 1: to that data for potentially nefarious purposes facial recognition, you're 470 00:26:13,040 --> 00:26:16,320 Speaker 1: giving them access to your camera, You're giving them access 471 00:26:16,359 --> 00:26:21,119 Speaker 1: to your microphone, location tracking, and search history tracking. So 472 00:26:21,240 --> 00:26:25,879 Speaker 1: we do, indeed have a history of concerns with data privacy, 473 00:26:26,040 --> 00:26:30,560 Speaker 1: software usage, software piracy with the Chinese government, and I 474 00:26:30,600 --> 00:26:35,040 Speaker 1: think there are some legitimate reasons for the US government 475 00:26:35,200 --> 00:26:40,760 Speaker 1: to be concerned about US consumer data usage, especially given 476 00:26:40,760 --> 00:26:45,120 Speaker 1: the escalating tensions with China occurring right now. Sarah not there. 477 00:26:45,320 --> 00:26:47,879 Speaker 1: Certainly there's a geopolitical issue, and this is something that 478 00:26:47,920 --> 00:26:50,600 Speaker 1: President Trump has talked about and there will be discussions ongoing. 479 00:26:50,640 --> 00:26:53,679 Speaker 1: But then there's a business element. Microsoft coming in and 480 00:26:53,720 --> 00:26:56,560 Speaker 1: saying that it is interested in purchasing the US arm 481 00:26:56,600 --> 00:27:00,679 Speaker 1: of TikTok. Yesterday, Axis reporting that Apple was getting in 482 00:27:00,720 --> 00:27:03,520 Speaker 1: on it and had expressed interest. Apple rebutted that and 483 00:27:03,560 --> 00:27:06,240 Speaker 1: sod that that was not the case. Sarah, do you 484 00:27:06,359 --> 00:27:09,640 Speaker 1: buy that Apple would get involved or perhaps should get 485 00:27:09,680 --> 00:27:13,840 Speaker 1: involved based on their efforts to get into content. I 486 00:27:13,960 --> 00:27:18,560 Speaker 1: do think that every single major technology player at this 487 00:27:18,640 --> 00:27:21,239 Speaker 1: point in time, when there's a forced sale of an 488 00:27:21,240 --> 00:27:24,399 Speaker 1: asset that's scaling to what they're reporting to be roughly 489 00:27:24,400 --> 00:27:29,240 Speaker 1: a billion dollars in revenues with fifty of US teenagers 490 00:27:29,240 --> 00:27:32,560 Speaker 1: on the application, should call their bankers and should ask 491 00:27:32,680 --> 00:27:35,880 Speaker 1: to be either engaged in a conversation or at least 492 00:27:35,960 --> 00:27:39,760 Speaker 1: understand what the dynamics of the deal flow are in 493 00:27:39,800 --> 00:27:42,879 Speaker 1: regards to the force sale of TikTok. So, certainly, I 494 00:27:42,920 --> 00:27:46,120 Speaker 1: do believe that most tech companies will, should, or can 495 00:27:46,200 --> 00:27:48,679 Speaker 1: take a look at this asset. But it is my 496 00:27:48,760 --> 00:27:52,639 Speaker 1: opinion that Microsoft would be the most viable buyer given 497 00:27:52,680 --> 00:27:57,320 Speaker 1: its history of extraordinary performance with its recent acquisitions under 498 00:27:57,359 --> 00:28:00,919 Speaker 1: Satia Nadela, including LinkedIn and GitHub. What's the price that 499 00:28:00,960 --> 00:28:04,480 Speaker 1: you think would be adequate for TikTok? Are the US operations? 500 00:28:04,480 --> 00:28:07,160 Speaker 1: I should say I think it will be something north 501 00:28:07,200 --> 00:28:10,840 Speaker 1: of billion. I mean, it isn't just stressed for sale. 502 00:28:11,880 --> 00:28:14,919 Speaker 1: Time sales is a pretty large multiple, but it's not 503 00:28:14,960 --> 00:28:17,359 Speaker 1: out of the ballpark of where Microsoft has paid in 504 00:28:17,400 --> 00:28:20,119 Speaker 1: the past, especially if you look at geth hub and 505 00:28:20,160 --> 00:28:22,320 Speaker 1: by the way, it hearkens back to what Facebook did 506 00:28:22,359 --> 00:28:25,960 Speaker 1: in two thousand and fourteen was WhatsApp throwing down eighteen 507 00:28:25,960 --> 00:28:30,000 Speaker 1: billion dollars on a company pre monetization. Sarah. One final 508 00:28:30,080 --> 00:28:33,040 Speaker 1: question by old Sell, what's your favorite effort right now? 509 00:28:33,040 --> 00:28:35,639 Speaker 1: With the moon shot we've seen in technology? Can you 510 00:28:36,160 --> 00:28:41,720 Speaker 1: can you still be enthusiastic about one security? Absolutely? I 511 00:28:41,800 --> 00:28:44,160 Speaker 1: think that there is a reason to look at the 512 00:28:44,200 --> 00:28:47,520 Speaker 1: software sector and say, listen, this is the sector of 513 00:28:47,560 --> 00:28:50,280 Speaker 1: it's enabling work from home, this is the sector of 514 00:28:50,320 --> 00:28:54,320 Speaker 1: it's enabling school from home. Business continuity planning is going 515 00:28:54,360 --> 00:28:59,480 Speaker 1: to continue to remain very dependent on ongoing cloud usage, security, 516 00:28:59,520 --> 00:29:03,920 Speaker 1: and all linds of other important features that technology is bringing. Yes, 517 00:29:03,960 --> 00:29:06,440 Speaker 1: the sector is rich, but that's driven by, as you've 518 00:29:06,480 --> 00:29:10,080 Speaker 1: talked about on your show, this incredible fiscal and monetary 519 00:29:10,200 --> 00:29:12,960 Speaker 1: environments that we're living in today. So yeah, there are 520 00:29:13,040 --> 00:29:15,160 Speaker 1: names that I would own. I happen to really like 521 00:29:15,320 --> 00:29:18,400 Speaker 1: Microsoft here and think it's a compelling buy. I also 522 00:29:18,480 --> 00:29:21,800 Speaker 1: really like Service now and think it's a very very valuable, 523 00:29:22,040 --> 00:29:26,440 Speaker 1: powerful recurring SASS assets in the I T operation space. 524 00:29:27,000 --> 00:29:30,240 Speaker 1: Very good, Sarah Hendon, and thank you so much. With McCary, 525 00:29:30,320 --> 00:29:36,640 Speaker 1: I grew up here on TikTok and the gentle politics 526 00:29:36,760 --> 00:29:40,000 Speaker 1: of Massachusetts. That would be Joe Morkley, and that would 527 00:29:40,040 --> 00:29:42,600 Speaker 1: be Tip O'Neil of another time and place where it 528 00:29:42,640 --> 00:29:47,720 Speaker 1: was about negotiation and compromise. The former Treasury secretary joins 529 00:29:47,800 --> 00:29:51,240 Speaker 1: us this morning, Jack, is the process change is a 530 00:29:51,320 --> 00:29:55,480 Speaker 1: negotiation and compromise. Now the same on the hill is 531 00:29:55,520 --> 00:30:00,120 Speaker 1: when you worked for the Massachusetts contingent. Well, the to 532 00:30:00,160 --> 00:30:04,200 Speaker 1: be with your time of fan Seine and the negotiation 533 00:30:04,400 --> 00:30:09,040 Speaker 1: has always been hard, um. But the refutal to talk 534 00:30:09,200 --> 00:30:13,000 Speaker 1: when there's a crisis coming is different. Um. You know, 535 00:30:13,080 --> 00:30:15,880 Speaker 1: respond to the beginning of this crisis a kind of 536 00:30:15,920 --> 00:30:19,240 Speaker 1: reversion to the old by carters in spirit that when 537 00:30:19,240 --> 00:30:22,320 Speaker 1: there's a crisis would come together. And in this round 538 00:30:22,520 --> 00:30:25,800 Speaker 1: it's been months months that you know, the House Democrats 539 00:30:25,800 --> 00:30:28,160 Speaker 1: passed the bill and the Republicans wouldn't take it up, 540 00:30:28,200 --> 00:30:31,760 Speaker 1: wouldn't talk. They waited until days before people were going 541 00:30:31,800 --> 00:30:34,840 Speaker 1: to lose their unemployment checks, days before they were gonna 542 00:30:34,880 --> 00:30:38,520 Speaker 1: lose their protection against eviction, in order to start a conversation, 543 00:30:38,840 --> 00:30:40,760 Speaker 1: and now they're surprised that they're running out of time. 544 00:30:41,200 --> 00:30:43,360 Speaker 1: This is not something that you can easily do. And 545 00:30:43,440 --> 00:30:45,480 Speaker 1: it's there too. They should have been working on this 546 00:30:45,680 --> 00:30:47,960 Speaker 1: for two months. But now not the time to look back. 547 00:30:48,040 --> 00:30:50,480 Speaker 1: It's the time to look forward. There was a little 548 00:30:50,480 --> 00:30:54,240 Speaker 1: bit of encouraging news that yesterday's meeting the parties were 549 00:30:54,400 --> 00:30:58,240 Speaker 1: coming together to talk about compromise, and compromise means addressing 550 00:30:58,240 --> 00:31:01,040 Speaker 1: the problem, doing but things that are most important and 551 00:31:01,160 --> 00:31:04,200 Speaker 1: showing the country the government from work at a time 552 00:31:04,240 --> 00:31:07,800 Speaker 1: when you've got millions, millions of children living in households 553 00:31:07,840 --> 00:31:10,520 Speaker 1: that can't pay the rent, and millions of children living 554 00:31:10,520 --> 00:31:12,880 Speaker 1: in households that don't have enough food to crown the table. 555 00:31:13,280 --> 00:31:15,880 Speaker 1: This is an emergency. We need to respond, and we 556 00:31:15,920 --> 00:31:19,120 Speaker 1: need to respond now. It's already too late. It's going 557 00:31:19,200 --> 00:31:22,200 Speaker 1: to take weeks for states to get benefits back up 558 00:31:22,200 --> 00:31:25,280 Speaker 1: and running once they've last jack Low. The heart of 559 00:31:25,280 --> 00:31:27,640 Speaker 1: the matter here, and we saw it in the primaries 560 00:31:27,720 --> 00:31:31,959 Speaker 1: last night, is a reassertion of the middle ground. Do 561 00:31:32,040 --> 00:31:35,880 Speaker 1: you have an optimism that the the nascent middle ground 562 00:31:35,920 --> 00:31:39,000 Speaker 1: of the Democratic Party called on the edge of Scoop Jackson, 563 00:31:39,320 --> 00:31:42,160 Speaker 1: the nascent middle ground of the Republican Party, which is 564 00:31:42,200 --> 00:31:45,280 Speaker 1: pretty dim. Do you have an optimism they can recover 565 00:31:45,400 --> 00:31:49,240 Speaker 1: through this crisis to a better place in our polity. 566 00:31:50,080 --> 00:31:53,920 Speaker 1: So I think the results last night and I have 567 00:31:54,000 --> 00:32:00,240 Speaker 1: to apologize and not have all the latest facts give 568 00:32:00,400 --> 00:32:05,600 Speaker 1: some competing pieces of results. I was pleased to see 569 00:32:05,640 --> 00:32:11,160 Speaker 1: event bothan primary and Missouri went towards a more moderate candidate, because, 570 00:32:11,160 --> 00:32:13,760 Speaker 1: frankly that the thing that has driven our politics to 571 00:32:13,840 --> 00:32:16,760 Speaker 1: the place where at is not equally on both sides. 572 00:32:17,200 --> 00:32:20,320 Speaker 1: It's that the Republican Party has become an extreme party, 573 00:32:20,520 --> 00:32:23,480 Speaker 1: meeting on its primary politics to take it to a 574 00:32:23,480 --> 00:32:26,880 Speaker 1: place that makes it impossible to govern in an effective 575 00:32:26,880 --> 00:32:31,120 Speaker 1: way working across party lines. I know that we've seen 576 00:32:31,160 --> 00:32:34,719 Speaker 1: a number of Democratic issues shift, including you know the 577 00:32:34,760 --> 00:32:40,080 Speaker 1: district the Mr O'Neill uh you know represented in part 578 00:32:40,760 --> 00:32:46,000 Speaker 1: in the last cycle, two more assertive candidates who are 579 00:32:46,040 --> 00:32:49,400 Speaker 1: more from the left, progressive and of the party. I 580 00:32:49,440 --> 00:32:52,120 Speaker 1: think we'll see some movement in both residents. I hope 581 00:32:52,120 --> 00:32:54,840 Speaker 1: the Democratic Party stays the party of the Big Tent 582 00:32:55,240 --> 00:33:01,840 Speaker 1: where moderate and progressives and you know, extremes to keep 583 00:33:01,880 --> 00:33:04,400 Speaker 1: focused on working together on things they can all agree on. 584 00:33:05,360 --> 00:33:07,240 Speaker 1: I think that's possible. I think that the way in 585 00:33:07,280 --> 00:33:12,320 Speaker 1: Antholosi is master and masterful bringing this coalition together to 586 00:33:12,560 --> 00:33:15,840 Speaker 1: function effectively. So it can't happen. But it's not equal 587 00:33:15,880 --> 00:33:20,360 Speaker 1: on both sides. But Mr Leui, is the democrats strategy 588 00:33:20,400 --> 00:33:24,240 Speaker 1: on an unemployment benefits a smart tactic or could it 589 00:33:24,240 --> 00:33:30,320 Speaker 1: actually backfire politically? Well? I think the pressure can't take 590 00:33:30,440 --> 00:33:35,360 Speaker 1: of being days in man hours away from expiration created 591 00:33:35,680 --> 00:33:39,719 Speaker 1: um this sense uh that let's do something to just 592 00:33:39,880 --> 00:33:43,479 Speaker 1: get it through another week. When you look behind the curtain, 593 00:33:43,680 --> 00:33:46,880 Speaker 1: it doesn't work that way. We have fifty three state 594 00:33:47,000 --> 00:33:51,200 Speaker 1: and territory unemployment programs. They run on computer systems that 595 00:33:51,240 --> 00:33:54,840 Speaker 1: are probably older than you are, and they can't be 596 00:33:55,000 --> 00:33:59,360 Speaker 1: reprogrammed overnight you turned them off. It takes a while 597 00:33:59,360 --> 00:34:01,680 Speaker 1: to turn them back time. You can't say we're gonna 598 00:34:01,920 --> 00:34:04,160 Speaker 1: do this, We're gonna need that. You know, you need 599 00:34:04,200 --> 00:34:06,840 Speaker 1: to find people can program and cope on basics to 600 00:34:07,000 --> 00:34:10,239 Speaker 1: change the way they work. So the idea of a 601 00:34:10,280 --> 00:34:15,040 Speaker 1: week extension once it's laughs, I don't even think works. 602 00:34:15,560 --> 00:34:18,000 Speaker 1: So it was it was a tactic on the other side. 603 00:34:18,400 --> 00:34:20,680 Speaker 1: But the Democrats have been doing and I think correctly 604 00:34:21,160 --> 00:34:23,800 Speaker 1: is saying that it's a matter of macro economic policy. 605 00:34:23,880 --> 00:34:27,520 Speaker 1: We cannot take away to support the families that can 606 00:34:27,640 --> 00:34:29,560 Speaker 1: spend the money because they need to spend the money 607 00:34:29,600 --> 00:34:33,400 Speaker 1: without having a terrible economic impact and in the household 608 00:34:33,840 --> 00:34:38,520 Speaker 1: creating complete crisis in terms of failure and inability to 609 00:34:38,560 --> 00:34:43,560 Speaker 1: feed a family and pay one. Where do these massive deficits, 610 00:34:43,760 --> 00:34:45,440 Speaker 1: What are they going to do to the country's long 611 00:34:45,520 --> 00:34:49,839 Speaker 1: term finances? When should we start worrying about that? Look, 612 00:34:50,040 --> 00:34:52,160 Speaker 1: and I said, most of my career trying to live 613 00:34:52,200 --> 00:34:55,240 Speaker 1: in that narrow middle ground is a progressive who believes 614 00:34:55,280 --> 00:34:59,239 Speaker 1: government has a huge role to play, believing that would 615 00:34:59,239 --> 00:35:01,280 Speaker 1: have to be able to over time player of bills 616 00:35:01,320 --> 00:35:06,000 Speaker 1: in order to sustain the economy and the effort of government. Yeah, 617 00:35:06,120 --> 00:35:09,239 Speaker 1: in in my view, a crisis like this is the 618 00:35:09,320 --> 00:35:12,759 Speaker 1: moment when you need to dig deep into the reserves, 619 00:35:12,880 --> 00:35:16,400 Speaker 1: because if you don't and the economy slows down further 620 00:35:16,560 --> 00:35:20,000 Speaker 1: or goes into a depression, it causes more damage, more 621 00:35:20,120 --> 00:35:23,920 Speaker 1: loss of revenue than you're spending in terms of keeping 622 00:35:23,920 --> 00:35:27,480 Speaker 1: things moving, leave aside the human hardship just in terms 623 00:35:27,600 --> 00:35:31,399 Speaker 1: of the economics now it can go on forever. At 624 00:35:31,400 --> 00:35:33,520 Speaker 1: the end of the crisis, we're going to have a 625 00:35:33,560 --> 00:35:36,600 Speaker 1: pile of bills to pay, and yes it's going to 626 00:35:36,680 --> 00:35:40,080 Speaker 1: take our get to over GDP faster than the striative. 627 00:35:40,760 --> 00:35:42,719 Speaker 1: That's not the end of the world, if we get 628 00:35:42,760 --> 00:35:45,719 Speaker 1: back on our economic fee and have then a balanced 629 00:35:45,760 --> 00:35:50,120 Speaker 1: economic program and fiscal policy going forward. I was mult 630 00:35:50,120 --> 00:35:54,040 Speaker 1: troubled by the tax cut in seventeen, which spent two 631 00:35:54,080 --> 00:35:58,560 Speaker 1: trillion dollars without any real purpose in my view, and 632 00:35:58,640 --> 00:36:01,279 Speaker 1: doug a hole that we didn't need to dig. This 633 00:36:01,360 --> 00:36:04,640 Speaker 1: is what macro economic policy is for. This is what 634 00:36:04,960 --> 00:36:08,520 Speaker 1: fiscal space is for. I think we can afford it now, 635 00:36:08,920 --> 00:36:11,000 Speaker 1: and frankly, I think we can afford to do what 636 00:36:11,040 --> 00:36:12,879 Speaker 1: we need to do to get out of this. What 637 00:36:12,880 --> 00:36:15,480 Speaker 1: we can afford to do is very much depression that happened. 638 00:36:15,760 --> 00:36:19,360 Speaker 1: Secretary Louy, I'm assuming that Tip O'Neill and Joe Maulkeley 639 00:36:19,480 --> 00:36:22,800 Speaker 1: never worried about the zero bound, but here we are 640 00:36:22,840 --> 00:36:26,600 Speaker 1: at the zero bound. The markets are speaking, Jack, I'd 641 00:36:26,640 --> 00:36:29,080 Speaker 1: like you to speak to the Wall Street right now 642 00:36:29,440 --> 00:36:32,960 Speaker 1: and the global markets who have priced bonds to perfection? 643 00:36:33,520 --> 00:36:36,360 Speaker 1: Is John Templeton put it years ago? What is it 644 00:36:36,600 --> 00:36:42,200 Speaker 1: signal to you to see bonds priced to perfection? Look, 645 00:36:42,239 --> 00:36:46,400 Speaker 1: I I think that the expectations for growth and inflation 646 00:36:46,600 --> 00:36:51,360 Speaker 1: remain very moderate. Um to the extent that the large 647 00:36:51,480 --> 00:36:57,800 Speaker 1: increases in debt to support government fiscal policy are concerned. 648 00:36:57,880 --> 00:37:01,080 Speaker 1: It's not showing up yet in bond price is um. 649 00:37:01,200 --> 00:37:03,719 Speaker 1: You know, what I think we have to be attuned 650 00:37:03,760 --> 00:37:07,480 Speaker 1: to is that things are fine until they're not. And 651 00:37:07,760 --> 00:37:11,160 Speaker 1: you know, my advice, which I offer to those who 652 00:37:11,280 --> 00:37:14,600 Speaker 1: ask for it, is spend what you need to spend now, 653 00:37:14,920 --> 00:37:18,160 Speaker 1: but be prepared to stop when the crisis is over. 654 00:37:18,440 --> 00:37:20,319 Speaker 1: And you have to be clear, the crisis won't end 655 00:37:20,360 --> 00:37:23,879 Speaker 1: the minute there's a vaccine. There's likely to be a 656 00:37:23,920 --> 00:37:27,959 Speaker 1: recession that goes beyond the health crisis because we're gonna 657 00:37:28,000 --> 00:37:31,840 Speaker 1: have a demand induced, you know, a business cycle to 658 00:37:31,880 --> 00:37:34,279 Speaker 1: deal with. I mean, if people are not working and 659 00:37:34,360 --> 00:37:37,520 Speaker 1: not spending normally, that's going to have an impact that 660 00:37:37,600 --> 00:37:41,200 Speaker 1: goes beyond the day you get back to normal, which won't, 661 00:37:41,239 --> 00:37:43,799 Speaker 1: as we know, be a day. So I think the 662 00:37:43,800 --> 00:37:47,160 Speaker 1: bond markets are are are you know, looking at the 663 00:37:47,200 --> 00:37:51,440 Speaker 1: current state of affairs and making the judgments that we see. 664 00:37:51,800 --> 00:37:54,480 Speaker 1: What I don't understand is the equity markets. You know, 665 00:37:54,560 --> 00:37:59,160 Speaker 1: where where uh, there's kind of because of being near 666 00:37:59,200 --> 00:38:02,399 Speaker 1: the zero back on, there's a sense that values that 667 00:38:02,440 --> 00:38:06,520 Speaker 1: can go up forever. You know. I think, I think 668 00:38:06,560 --> 00:38:09,280 Speaker 1: that if I was looking for a place to caution, 669 00:38:09,360 --> 00:38:13,000 Speaker 1: that's what good caution. Well stockbroker jacklu helping us out today, 670 00:38:13,040 --> 00:38:17,400 Speaker 1: equity strategist Jack Blue Jack, I want to talk about 671 00:38:17,440 --> 00:38:22,080 Speaker 1: the voice of conservative concern over the burgeoning debt and deficit. 672 00:38:22,200 --> 00:38:25,960 Speaker 1: You've been very clear there will be a price to pay. 673 00:38:26,000 --> 00:38:29,959 Speaker 1: What is the political mechanism you see to pay down 674 00:38:30,000 --> 00:38:33,319 Speaker 1: the debt? As Secretary Guitner said years ago, time will 675 00:38:33,360 --> 00:38:36,000 Speaker 1: heal a lot of wounds. Is it just time marching 676 00:38:36,080 --> 00:38:39,520 Speaker 1: on or will there need to be an overt policy 677 00:38:39,640 --> 00:38:43,759 Speaker 1: to pay down these trillions of dollars of debt. Well, Tom, 678 00:38:43,840 --> 00:38:46,960 Speaker 1: let's let's just remember that while we're in this period 679 00:38:47,000 --> 00:38:49,960 Speaker 1: of very low interest rates, there is the ability to 680 00:38:50,040 --> 00:38:54,319 Speaker 1: support more debt than there would have benefits period of 681 00:38:54,600 --> 00:38:57,640 Speaker 1: three or four percent interest rate. So if we're able 682 00:38:57,680 --> 00:39:00,680 Speaker 1: to pivot when the crisis is over, and if the 683 00:39:01,560 --> 00:39:06,840 Speaker 1: you know, average maturities have have have been managed to 684 00:39:07,000 --> 00:39:09,279 Speaker 1: have a lot of the debt, you know, on a 685 00:39:09,320 --> 00:39:13,120 Speaker 1: longer term, which they are being managed to have a 686 00:39:13,160 --> 00:39:15,360 Speaker 1: lot of the debt on a longer term basis. We 687 00:39:15,440 --> 00:39:18,960 Speaker 1: have some time to deal with the overhang issue. What 688 00:39:19,080 --> 00:39:22,480 Speaker 1: has to happen, and this is true in any any 689 00:39:22,719 --> 00:39:25,960 Speaker 1: UH fiscal scenario, is there has to be a moment 690 00:39:25,960 --> 00:39:29,360 Speaker 1: when you say stop. And to me, that moment is 691 00:39:29,360 --> 00:39:32,160 Speaker 1: when the economy is back on its seat, unemployment is 692 00:39:32,440 --> 00:39:36,640 Speaker 1: back headed towards a normal place, when the economy can 693 00:39:36,680 --> 00:39:39,839 Speaker 1: function health in a healthy way on its own. It's hard, 694 00:39:40,160 --> 00:39:42,719 Speaker 1: it's hard to change if you're used to spending three 695 00:39:42,760 --> 00:39:45,319 Speaker 1: and five trillion dollars, you know, to deal with the 696 00:39:45,320 --> 00:39:48,040 Speaker 1: things that people think need to be dealt with. It's 697 00:39:48,040 --> 00:39:49,680 Speaker 1: hard to say, now we have to start paying for 698 00:39:49,760 --> 00:39:52,279 Speaker 1: what we're doing before you reduce the episode. You have 699 00:39:52,360 --> 00:39:55,200 Speaker 1: to not let it become a habit to do this 700 00:39:55,360 --> 00:39:58,040 Speaker 1: two years from now, three years from now. But it's 701 00:39:58,040 --> 00:40:01,560 Speaker 1: not in the next three to six months. It's longer 702 00:40:01,600 --> 00:40:04,759 Speaker 1: than that, I believe. And on the longer term, how 703 00:40:04,840 --> 00:40:08,080 Speaker 1: much of the damage to to the workforce and businesses 704 00:40:08,320 --> 00:40:14,560 Speaker 1: do you think is actually forever? That is permanent damage. Well, 705 00:40:14,600 --> 00:40:17,440 Speaker 1: I think that there's different ways to look at the 706 00:40:17,560 --> 00:40:21,280 Speaker 1: damage on an individual basis. You know, I worry about 707 00:40:21,680 --> 00:40:24,200 Speaker 1: people who are starting out, who are losing the beginning 708 00:40:24,200 --> 00:40:26,560 Speaker 1: of their career. We know that that sets you back 709 00:40:26,600 --> 00:40:30,160 Speaker 1: and another generation, you know, gets there before you did, 710 00:40:30,280 --> 00:40:33,000 Speaker 1: and and sometimes you never catch up, and we have 711 00:40:33,080 --> 00:40:35,520 Speaker 1: to make sure we don't let that happen. I worry 712 00:40:35,560 --> 00:40:38,879 Speaker 1: about people who are advanced in in their careers, who 713 00:40:39,480 --> 00:40:43,000 Speaker 1: who's work that they had before the crisis may not 714 00:40:43,120 --> 00:40:46,480 Speaker 1: come back and adjustment becomes more difficult. So there's going 715 00:40:46,520 --> 00:40:49,560 Speaker 1: to be a lot of individual challenges to deal with. 716 00:40:49,600 --> 00:40:52,600 Speaker 1: If you look at the workplace, some of these changes 717 00:40:52,760 --> 00:40:56,399 Speaker 1: that we're seeing will have a lingering impact. I don't know, 718 00:40:56,520 --> 00:41:00,000 Speaker 1: and no one knows whether remote work will become the norm. 719 00:41:00,040 --> 00:41:02,480 Speaker 1: My own view, there's going to be a hybrid that's different. 720 00:41:02,840 --> 00:41:04,880 Speaker 1: What does that mean in terms of real estate and 721 00:41:05,160 --> 00:41:08,319 Speaker 1: office work. So there's going to be changes, But if 722 00:41:08,360 --> 00:41:10,359 Speaker 1: we get to the point where the crisis is over, 723 00:41:10,680 --> 00:41:13,360 Speaker 1: it will be managed through the normal, healthy processes of 724 00:41:13,400 --> 00:41:16,440 Speaker 1: the economy. Um, we can't manage it until we get 725 00:41:16,440 --> 00:41:18,799 Speaker 1: the health crisis under control, and we're not near that. 726 00:41:18,920 --> 00:41:21,319 Speaker 1: The United States, Jack Louis, You're a trooper to come 727 00:41:21,320 --> 00:41:24,399 Speaker 1: to us in the blackout of the Eastern Seaboard off 728 00:41:24,440 --> 00:41:27,360 Speaker 1: of this horrific tropical storm. Jack Louill making the effort 729 00:41:27,400 --> 00:41:30,240 Speaker 1: to be with us today. We greatly appreciate that. Thanks 730 00:41:30,239 --> 00:41:34,520 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 731 00:41:34,719 --> 00:41:40,040 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 732 00:41:40,160 --> 00:41:44,480 Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast. 733 00:41:44,520 --> 00:41:48,040 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.