Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelley. We're right here every day bringing you the
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Speaker 1: all harnessing the power of Business Week reporters and editors.
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Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Well, our next guest overseas
Speaker 1: the largest healthcare provider and private employer in New York State.
Speaker 1: We're talking about north Well Health. The health system has
Speaker 1: hospitals on Long Island as well as in Manhattan and Queens.
Speaker 1: It was hard hit by the virus pandemic. So delighted
Speaker 1: to have back with us. Michael Dowling, just to check
Speaker 1: in with him. He's president and see you at Northwell Health.
Speaker 1: He's also the author of a new book. It's called
Speaker 1: Leading Through a pandemic, the inside story of humanity, innovation,
Speaker 1: and lesson learned during the COVID nineteen Um, he joins
Speaker 1: us on the phone from Long Island. So, Michael, it
Speaker 1: is good to have you here with Alex and myself.
Speaker 1: Lots to talk about on this Tuesday. Um, how are
Speaker 1: you guys though doing as a health care system. Oh,
Speaker 1: we're doing quite well and less I'm delighted to be
Speaker 1: on with you guys again, thank you for the invite
Speaker 1: and I we're doing quite well today. We have only
Speaker 1: about ninety patients we'd COVID in all of our facilities. Um,
Speaker 1: we have only about ten people in I see us
Speaker 1: and we have nobody and on vents. So we are
Speaker 1: quite frankly in a very very good position right now.
Speaker 1: So what we have to be careful, of course, is
Speaker 1: not to get complacent, and we have to be you know,
Speaker 1: very very diligent because um, you know, we can get
Speaker 1: a surprise if people don't behave and people don't wear masks,
Speaker 1: and people don't social distance, and business doesn't do what
Speaker 1: business should be doing by forcing those standards. Um, we've
Speaker 1: just got to protect the progress that we've made, As
Speaker 1: the governors has said, We're doing quite well in New York,
Speaker 1: and we want to keep it that way and continue
Speaker 1: to get better so that we can continue to open
Speaker 1: up the economy. Folks, Michael, you sound cautious, and rightfully
Speaker 1: so in terms of what you folks in your team
Speaker 1: have seen on the front line storing these hard hit
Speaker 1: months in New York. So tell me, are you anticipating
Speaker 1: that we're going to see another wave? Are you nervous
Speaker 1: about schools reopening and if it? If it is, I'm
Speaker 1: not nervous about any of those things, if they have
Speaker 1: done properly, if people take the appropriate precautions and be
Speaker 1: extra extra cautious. Obviously, Um, you're always worried since this
Speaker 1: is one of those things that is quite invisible and
Speaker 1: it can bounce back. So this is why we have to,
Speaker 1: you know, not, as I said at the beginning, to
Speaker 1: get complacent. We do have plans in place if it
Speaker 1: goes combat. We have been organizing our plans, developing cabletop exercises, etcetera,
Speaker 1: so we know exactly what to do if it comes back.
Speaker 1: Those plans are very detailed. We're hoping, however, not to
Speaker 1: have to implement them, but if it does, happen. We
Speaker 1: are prepared, and I think the public needs to know that.
Speaker 1: So um So to that point though, to watch through, sorry,
Speaker 1: to that point, being prepared, what are you missing to
Speaker 1: be prepared? Is there anything that you need more of,
Speaker 1: any more support that would help in that next wave?
Speaker 1: And I don't nothing major at the moment. I mean,
Speaker 1: all of the hospital systems are working together Mount Sinai
Speaker 1: you know, Columbia prayers and my you not. Well, we're
Speaker 1: all working together. We talk every week, we coordinate or activities,
Speaker 1: and of course the governor has put out a lot
Speaker 1: of guidelines and directions, especially over the last couple of days,
Speaker 1: requiring that all of us have sudden amount of PPE available, um,
Speaker 1: that we've planned all of our searche planning, and that
Speaker 1: we make sure that we have the staff compliments, etcetera.
Speaker 1: So this is an ongoing process. But you know, we've
Speaker 1: gone through this and we did learn some lessons, as
Speaker 1: I recounted in the book that you just mentioned. So
Speaker 1: obviously we're in the belt a position today. Then we well,
Speaker 1: I would say, back in federally when at that time
Speaker 1: we you know, we thought it would come. We wasn't
Speaker 1: sure what it was. We didn't know how big it
Speaker 1: was going to be. Now we know that if it
Speaker 1: comes back, and it comes back with severe severity, we've
Speaker 1: just got to be optimally prepared. So we're in a
Speaker 1: good place right then. Is the public continues to do
Speaker 1: what the public should be doing. Yeah, there's definitely, you know,
Speaker 1: a base of our foundation of knowledge at this point.
Speaker 1: And I do want to get into your book, Michael,
Speaker 1: about leading through the pandemic and the COVID nighteing crisis
Speaker 1: in a moment, But I do want to ask you
Speaker 1: about some of the news that we got today about
Speaker 1: Russia registering its first Corona virus vaccine. You know you
Speaker 1: are talking to drug company, these health care systems, those
Speaker 1: folks are on the front lines in terms of developing
Speaker 1: a vaccine. What is your take on that news this morning?
Speaker 1: I would be very skepital um. First of all, you
Speaker 1: you know, you cannot let politics dictate the decisions about
Speaker 1: when the vaccine is going to be ready, and you
Speaker 1: cannot let politics tell you whether or not the vaccine.
Speaker 1: There's advocacy with the vaccine. You've got to let science speak.
Speaker 1: Kates here. It is too dangerous to the public at
Speaker 1: large to be jumping ahead to try to be the
Speaker 1: first out of the gate politically, And we have that
Speaker 1: problem in this country. We have you know, national administration.
Speaker 1: He of talking about while we're gonna have it by
Speaker 1: the fall, we're going to have it in November. We're
Speaker 1: gonna have it before the election. This is dangerous. We
Speaker 1: should let science dictate. Obviously, we need it to be
Speaker 1: done quickly, but these these vaccines have to be tested
Speaker 1: in tens of thousands of people for certain periods of time.
Speaker 1: And um, the FDA is going to have a major
Speaker 1: issue in its hand uh over the next couple of months, UM,
Speaker 1: because they're going to be under enormous pressure to tell
Speaker 1: the public that we have something that we believe works.
Speaker 1: They cannot say that. They've got to say we have
Speaker 1: something and we know it works. That's the difference. So
Speaker 1: we've got to be very careful. So with the Russian announcement,
Speaker 1: I would be very I would be quite scaptable. So
Speaker 1: I'm assuming you wouldn't take that vaccine just quickly. No,
Speaker 1: I will not take it right away now, I would.
Speaker 1: I would wait to see what happens with others. Um,
Speaker 1: have we learned anything yet about leading through the pandemic
Speaker 1: or is it too early? What's your takeaway, Oh, I
Speaker 1: think that we've learned quite a bit. When you go
Speaker 1: through something like this, which none of us have ever
Speaker 1: been through before, you learned quickly on you know, as
Speaker 1: you go through it. And when we did the book,
Speaker 1: every every weekend I worked on it with my co
Speaker 1: auth of Charles Kenny, because it was very fresh in
Speaker 1: our minds and were it as we were going through it.
Speaker 1: And each chapter of the book outlines various lessons to
Speaker 1: be learned. And the idea was to help other people
Speaker 1: when there is a crisis, whether it's a pandemic or
Speaker 1: a hurricane or another major trauma situation, and that there
Speaker 1: are cuttain things that you've got a plan for, think about,
Speaker 1: prepare for an advance plan ahead so that you don't
Speaker 1: get caught unawares when you're in the middle of something
Speaker 1: that is a major, major crisis. Michael, what was the
Speaker 1: biggest thing that you were caught unawares? Um are unaware of? Well,
Speaker 1: that the speed of the increase in the number of
Speaker 1: cases at the very beginning, I mean went we went
Speaker 1: from a couple of hundred cases and in the course
Speaker 1: of a week or so we got the three thousand,
Speaker 1: five hundred in patient cases. The acceleration in the number
Speaker 1: of cases was pretty extraordinary. So, you know, you have
Speaker 1: a hospital that one day looks like it's you know,
Speaker 1: everything is on the control, and in twenty four hours
Speaker 1: later and you know, you're just completely inundated. And if
Speaker 1: you don't have a plan in place as to how
Speaker 1: you're going to deal with that when those situations do occur,
Speaker 1: you're going to be left flat footed. And the other lesson,
Speaker 1: of course, is that you've got to spend an awful
Speaker 1: lot of time focusing on the safety of your staff,
Speaker 1: enhancing the morale of your staff, inspiring the staff, because
Speaker 1: what we see happening on a day to day basis
Speaker 1: during the course of the pandemic was extraordinary in the
Speaker 1: compassion and the dedication. But it does require that you
Speaker 1: the staff needs to know that management is with them,
Speaker 1: understands their circumstance, and has does everything possible to make
Speaker 1: sure that their safety is paramount To say, lots and
Speaker 1: lots of lessons I have to say when they jumped
Speaker 1: in and you know, we have a little chat at
Speaker 1: alex and I, you know, just so that we don't
Speaker 1: step on each other, and she's like, God, I wonder
Speaker 1: if Michael ever sleeps, and I do wonder, like, how
Speaker 1: the heck did you write a book amid all of this.
Speaker 1: I mean, you know, everybody in the medical community was
Speaker 1: talking about how exhausted they were, Like I just can't
Speaker 1: even imagine. Well, I I you know, I don't sleep
Speaker 1: much in the in the best of times anyway. I
Speaker 1: mean it's like it's like a broadcasters doctor, isn't it.
Speaker 1: Like what you're supposed to do is sleep. You need
Speaker 1: sleep now. I mean, you know, I I have never
Speaker 1: worked the day in my life. I have enjoyed every
Speaker 1: moment of it. So for me, I know, if you
Speaker 1: want to stress me out, give me time off, you know.
Speaker 1: I and writing it on the weekends, we were in
Speaker 1: the middle of it. So when you go home, you
Speaker 1: you know, you said, today we spent a lot of
Speaker 1: time talking about employee communication. So you go home and
Speaker 1: you write it, and as you write it, you think
Speaker 1: about all the things that you should do. So it
Speaker 1: was a kind of an evolving process. Um, and I'm
Speaker 1: I'm so delighted now that we did it. I mean,
Speaker 1: there were you know, tense moments trying to you know,
Speaker 1: get it all done and make sure it was correct, etcetera.
Speaker 1: But we interviewed a lot of our own employees, so
Speaker 1: there's a lot of input from employees and including frontline employees,
Speaker 1: which is very very very instructed, and hopefully for other
Speaker 1: people to read it, they will say, oh, that this
Speaker 1: is a kind of a playbook, as you mentioned earlier,
Speaker 1: that will help me to prepare for As one of
Speaker 1: my staff says, how do you prepare to be unbelievably
Speaker 1: comfortable with the uncomfortable? Yeah, which is and remember health
Speaker 1: care is we deal with crisis all the time in
Speaker 1: health care. We have trauma, we have accidents, we have
Speaker 1: car accidents, etcetera. So we deal with life and death.
Speaker 1: This was an intense, long terran issue that that was
Speaker 1: with us for three months. And if you don't write
Speaker 1: it down and you don't try to report on it,
Speaker 1: you eventually will forget about it. Right, And it's also
Speaker 1: a great lesson of the unexpected. You know, this whole
Speaker 1: idea of really thinking out of the box about the
Speaker 1: worst case scenarios and being prepared for it. You know,
Speaker 1: we all learned unfortunately, very very harshly sing lesson on that. Michael,
Speaker 1: thank you so much. Michael Dowling Presidency at Northwell Health.
Speaker 1: Check out his book Leading Through a Pandemic out this month.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio and a special vaccine issue. Bloomberg
Speaker 1: Business Week looks at the biggest challenges, promising solutions, and
Speaker 1: the weirdest science from the molecular level on up. It's
Speaker 1: all about the path to a COVID vaccine. As part
Speaker 1: of the coverage, Bloomberg Business Week Economics editor Peter coy
Speaker 1: writes about exactly where we are in the process and
Speaker 1: what's involved to getting a vaccine. He joins us on
Speaker 1: the phone in New Jersey along with the editor of
Speaker 1: the magazine, Joe Weber on the phone from Massachusetts. Joel,
Speaker 1: this is a must read for really understanding how difficult
Speaker 1: all of this is the path to a vaccine, right,
Speaker 1: And that's why we wanted to do a vaccine issue,
Speaker 1: to really sort of look at this this endeavor from
Speaker 1: as many different angles as we could possibly look at it.
Speaker 1: And Peter does such a wonderful job of just helping
Speaker 1: make sense of whorl of the world of science. Often
Speaker 1: economics and more and more I feel like I pull
Speaker 1: them in to talk about science. And you know, the
Speaker 1: thing that I just thought really stuck out to me
Speaker 1: about the introduction that he wrote is just the which
Speaker 1: is just this wonderful essay is obviously we have many,
Speaker 1: many different attempts under way here, and it's all an
Speaker 1: attempt to really just have something that sticks, because the
Speaker 1: especially in the U S. We have utterly failed at
Speaker 1: containing this thing, and a vaccine is really starting to
Speaker 1: basically be the only way out of this madness. So, Peter,
Speaker 1: you talked to many, many, many people um for this article,
Speaker 1: and I'm just curious, like, what were the what were
Speaker 1: the things that really stood up to you when you
Speaker 1: spoke to people who who work on vaccines for a living.
Speaker 1: Just the creativity that's going on now. Vaccines have been
Speaker 1: around for centuries, really going back to the cow pox
Speaker 1: vaccine that's stop smallpox, and yet in the last few decades,
Speaker 1: thanks to biotechnology, genetical engineering, there's just a profusion of
Speaker 1: new concepts, entirely different ways of producing a vaccine. One
Speaker 1: of them, I think is so cool. You actually take
Speaker 1: some of the nucleic acid that produces the the vacs
Speaker 1: the virus when it reproduces itself and you put that
Speaker 1: into the human body. The human body produces a portion
Speaker 1: of the vaccine, just some of the proteins, which is
Speaker 1: not harmful but does stimulate the immune system. So the
Speaker 1: body becomes the factory for making the vaccine. I want
Speaker 1: to know the question that I can ask Peter Core
Speaker 1: that he won't know the answer to. Oh no, no, no,
Speaker 1: I don't have it. I never have it, right, So, Peter,
Speaker 1: I guess when we try and look at the vaccine
Speaker 1: through then the economic lens and through the mark it lens,
Speaker 1: like what's the reality of one in a company says, hey,
Speaker 1: this vaccine works in phase three and then all of
Speaker 1: a sudden, everyone's great and everyone's good and we can
Speaker 1: travel in life is normal again. Well, today, I guess,
Speaker 1: if you believe what came out of Russia, we already
Speaker 1: have a vaccine. Uh well, it hasn't even started phase three,
Speaker 1: So maybe we take a pause. Yeah, exactly. So I
Speaker 1: think we're gonna probably see more of these popping up
Speaker 1: in different countries around the world. Thing we got one
Speaker 1: to go out in my Godlin, and we're just gonna
Speaker 1: have to step back and say is this trustworthy because
Speaker 1: you really want to see a vaccine go all the
Speaker 1: way through phase three for both efficacy and safety before
Speaker 1: you're gonna want to like put it into yourself or
Speaker 1: your kids or your parents. And that's gonna be months.
Speaker 1: That's gonna be month, probably either late this year or
Speaker 1: early next year. Now, the hope is that there are
Speaker 1: so many of them that even if no one of
Speaker 1: them is perfect, they'll collective league give us the amount
Speaker 1: of protection we need to be back this pandemic. You know, Peter,
Speaker 1: The part of this that I think, you know goes
Speaker 1: to what you're saying Alex about you know, a timeline
Speaker 1: and stuff, is is that there's a cost associated with
Speaker 1: the pandemic. And obviously that is what's generating headline after
Speaker 1: a headline every day, and it's also what's you know,
Speaker 1: allowing um scientists to sort of expedite some development. And
Speaker 1: you know, Peter, do you have a big number here
Speaker 1: which I think, what was it, three hundred and seventy
Speaker 1: five billion dollars, billion dollars for every month. That is
Speaker 1: just an insane amount. So so when you think about
Speaker 1: the economic implications of this and why vaccine is so relevant,
Speaker 1: can you kind of help help make sense of that
Speaker 1: for us. Yeah, So if you're thinking, why should we
Speaker 1: put money into this looney ideas somebody's got um the answers,
Speaker 1: you probably should because even if there's only a small
Speaker 1: chance of its paying off, it's it's enough to justify
Speaker 1: a fairly big expenditure of the same thing goes for manufacturing.
Speaker 1: Why would ever build a factory to make a vaccine
Speaker 1: if we don't even know if it's going to work well,
Speaker 1: Because if it does work, you don't want to be
Speaker 1: having to wait around while the factory gets built. You
Speaker 1: want to be able to go into production right away.
Speaker 1: And this whole attitude, I don't think there's quite enough
Speaker 1: of it. I think the scientists understand, I don't think
Speaker 1: funders have fully grasped it. There is some pretty generous
Speaker 1: funny but we could afford to be doing even more,
Speaker 1: and it's unleashed, just as I said before, a profusion
Speaker 1: of creativity. Which this makes this sort of a golden
Speaker 1: age for vaccinologists. So for everything that we've gotten wrong
Speaker 1: here in the US, Peter, perhaps the strategy of of
Speaker 1: actually throwing billions of dollars around it, or millions of
Speaker 1: dollars at various companies is maybe the right way. Yeah,
Speaker 1: it actually it is billions. Uh, it is. It is
Speaker 1: exactly the right thing to be doing. So that's one
Speaker 1: case where um, I mean, as I said in the article, someday,
Speaker 1: when there is a vaccine or actually probably multiple vaccines,
Speaker 1: assuming that they actually do what they're supposed to do,
Speaker 1: we're gonna look back on this as these these scientists
Speaker 1: all over the world, from India to China to the
Speaker 1: US to Germany, we're going to thank them. We're going
Speaker 1: to thank them for essentially saving our society. Be a
Speaker 1: happy day. Well. I don't want to be a debbut downer,
Speaker 1: but I mean, you do point out and the magazine,
Speaker 1: the magazine has talked about this before that we still
Speaker 1: don't have a vaccine against HIV. So I mean, and
Speaker 1: this is a complicated virus that impacts people differently. That
Speaker 1: is so true. All right, So I guess you did
Speaker 1: kind of bring down the optimism I was trying to
Speaker 1: inject into the conversation just thirty seconds to to react
Speaker 1: to that debbut down very true. We still don't have
Speaker 1: an HIV vacine. This every other viral diseases for which
Speaker 1: there are no vaccines. This one is looking though as
Speaker 1: if it does seem amenable to a vaccine. And uh,
Speaker 1: in fact, again multiple vaccines using different avenues, So something's
Speaker 1: probably going to work. Maybe not as well as say
Speaker 1: a small box actually maybe more like the influenza vaccine,
Speaker 1: but it will have something probably within a year. Well,
Speaker 1: it's a must read, and it really walks you through
Speaker 1: this whole process. And as uh, you and Alex and
Speaker 1: Joel mentioned to the economic costs and why we need
Speaker 1: this badly. Peter Coy, you're the best. We always love
Speaker 1: reading what you write, Peter Coy, Economic Stator business We
Speaker 1: can of course our thanks to Joe Weber. You're listening
Speaker 1: to Bloomberg Business Week with Carol Mazer and Jason Kelly
Speaker 1: on Bloomberg Radio. Hello everybody, I'm Alex Steele in for
Speaker 1: Jason Kelly. I can try and do an impression of him,
Speaker 1: but I don't like sports, so Carol, I don't know
Speaker 1: how much I can help you with that. Can you
Speaker 1: talk fitness, workout, running us? I can do those things
Speaker 1: and plates and I can pretend a little bit. We're
Speaker 1: joined now by Jeffrey Cleveland, his chief economist over Payton
Speaker 1: and a regal talking about how the recession now is
Speaker 1: significantly different than two thousand and eight, and then I'm
Speaker 1: assuming the prescription to fix it is also very different. Jeffrey,
Speaker 1: thank you so much for joining us. As we move
Speaker 1: out of this, it's sort of like, what do we
Speaker 1: what do we do? How do we think about the
Speaker 1: playbook when there is no playbook to think of? Well,
Speaker 1: I thought I was going to start with my impression
Speaker 1: of Jason, so oh, you can definitely please yes, start there.
Speaker 1: I wouldn't do that. It's just me to be the
Speaker 1: three of us. Nobody's gonna, you know, we will share it.
Speaker 1: I think the biggest danger really for investors is I
Speaker 1: don't know if it's recency bias or what, but you know,
Speaker 1: the tendency is to look back to the last recession
Speaker 1: and then think that this one is going to be
Speaker 1: like that, and then you should position your portfolio accordingly.
Speaker 1: And if if you look back to two thousand and
Speaker 1: eight and you look at the job market, for example,
Speaker 1: we were shedding jobs for twenty six months I think
Speaker 1: before we got to the lows, and then it didn't.
Speaker 1: It took us another six and a half, almost seven years,
Speaker 1: to get back to the pre recession levels unemployment, and
Speaker 1: so that was a really long drawn out affair, and
Speaker 1: I don't think that's what we're seeing here. I mean,
Speaker 1: you both may feel otherwise, but I think this has
Speaker 1: happened much more quickly. We we shed over twenty million
Speaker 1: jobs and then we've added back now just over nine millions,
Speaker 1: so we've retraced. If I could steal a technical analysts
Speaker 1: terminology there, we've reach retraced of the jobs lost. So
Speaker 1: this is it's just happening on a much more compressed,
Speaker 1: quicker time scale. So I think investors shouldn't be positioned
Speaker 1: for years of slow growth necessarily. Well, that's what I
Speaker 1: wanted to ask you, okay, because we I know Alex
Speaker 1: has talked to folks about, you know, when we get
Speaker 1: back to pre COVID levels in terms of the economy.
Speaker 1: I have as well, Jason has as well. Um, when
Speaker 1: do you think we get there? Because I've heard estimates
Speaker 1: of a few years, maybe two, three years. Yeah, I
Speaker 1: think it depends on what you're looking at him. If
Speaker 1: you look at the g d P level, I think
Speaker 1: you could make an argument that we won't get back
Speaker 1: there until two or three. If you're looking at the
Speaker 1: unemployment rate, Carroll. I mean it's the drop of the
Speaker 1: unemployment rate is happening much more quickly than I had anticipated.
Speaker 1: I thought we were going to get up to and
Speaker 1: stay there. We we peeked out on that U three
Speaker 1: measure of the unemployment rate just shy of fifteen percent.
Speaker 1: We're already back to ten point two. We could very
Speaker 1: easily be below nine by year end, I think, and um,
Speaker 1: and then it could again it could take another couple
Speaker 1: of years to get back to three and a half
Speaker 1: to four percent. But I think we'll get there, and
Speaker 1: I don't think it's going to take seven years or
Speaker 1: six years. And I know we talked about this all
Speaker 1: through that period of two thousand nine all the way
Speaker 1: to and it wasn't really untill we had a great
Speaker 1: labor market. And I think we can get I can
Speaker 1: think we can get back quicker. So I guess I'm
Speaker 1: I'm turning myself into an optimist here. We thank you
Speaker 1: for for that. Uh, But I mean the big difference
Speaker 1: also is that the Fed acted so quickly, so fast,
Speaker 1: and so hugely. I'm just gonna make up that word.
Speaker 1: So um. With that in mind, how do they pay
Speaker 1: for it down the road, how does the government pay
Speaker 1: for because I think that that's also going to change
Speaker 1: how we come out of this, Like do we inflate
Speaker 1: our way out of this? Do we raise taxes to
Speaker 1: cover it? Um, that's gonna be a big, a big differentiator. Yeah. Well,
Speaker 1: I mean keep in mind, we shut everything down and
Speaker 1: we provided a big amount of treasury relief to help
Speaker 1: people out in the interim, and then as we reopen,
Speaker 1: we should need less of that relief, and as people
Speaker 1: get hired back, we should be less relief. So if
Speaker 1: it's if it is confined to sort of that one
Speaker 1: time um, you know middle of relief where we we
Speaker 1: really blew out the treasury issues, we can pay for that,
Speaker 1: we can we can manage that. Uh phenominal you know,
Speaker 1: debt to GDP will will exceed the post World War
Speaker 1: two high. Yes, but we can outgrow that. I think
Speaker 1: in the near term we all we need is phenominal
Speaker 1: d DP to be faster higher than our tenure treasury yield.
Speaker 1: And even though I know tenure yields are moving up today,
Speaker 1: they're still they're still very low. And so I think
Speaker 1: we're fine. I think we can grow our way out
Speaker 1: of that. We don't need to inflate our way. We
Speaker 1: don't need to do anything special like that, in my opinion. Well, so,
Speaker 1: how worried though are you about? You talked about, you know,
Speaker 1: jobs that took what seven years or so to get
Speaker 1: back to um pre financial crisis levels. That was a
Speaker 1: long time. We had a story on the Bloomberg I
Speaker 1: think it was yesterday about you know, concerns about longer
Speaker 1: term scoring and they even talked about the July jobs
Speaker 1: report that showed an increase in the duration of unemployment.
Speaker 1: You know, I do wonder, Jeffrey, about some of those
Speaker 1: longer term implications of people who don't ever get their
Speaker 1: jobs back and what that means for economic growth that
Speaker 1: you know, it's lower for longer. Essentially, what I hear
Speaker 1: from what you're saying is, you know, concern about permanent
Speaker 1: job losses, jobs that aren't going to come back online.
Speaker 1: And you're in two thousand and eight, you looked at
Speaker 1: it was seventy percent of jobs that were lost were
Speaker 1: permanent and much smaller percentage to you know, maybe twenty
Speaker 1: or thirty percent were temporary job losses. So that's why
Speaker 1: it took so long. It takes time to retrain too,
Speaker 1: you know, retooled maybe to re leave the labor force,
Speaker 1: or time and re enter this time around. I'm still
Speaker 1: I still have pretty high hopes here. I mean, initially,
Speaker 1: I think that first job's report we got, uh in
Speaker 1: March or April, we had about eight percent of the
Speaker 1: people laid off. We're listed as temporary. As of Friday's
Speaker 1: jobs report, off top of my head, I think was
Speaker 1: about fifty six percent. We're a temporary So we still
Speaker 1: have a big chunk of people that are on temporary layoff.
Speaker 1: I have high hope that they will get back, they
Speaker 1: will get back to work here as as things do
Speaker 1: reopen um. But yeah, there is the risk that there
Speaker 1: will be some some some permanent. But I think, I
Speaker 1: really think this pales in comparison to oh eight. Oh
Speaker 1: eight was all all both all permanent job losses. But
Speaker 1: if ever pals to oh eight, it could still be
Speaker 1: kind of yucky. It could not. It's not a good
Speaker 1: technical term, but uh, you know, I'm just saying it
Speaker 1: could be pretty bad for a lot of Americans. Now, yes,
Speaker 1: I just uh, you know, yesterday's data, the Jolts data.
Speaker 1: I'm really excited about this day. I don't know. This
Speaker 1: is sort of second or third tier economic data, depending
Speaker 1: on who you ask. But h I love that report.
Speaker 1: You know, it comes out with such a leg. So
Speaker 1: we got the June data yesterday. I'm sure you talked
Speaker 1: about this, but you look at that report and it's
Speaker 1: so striking how different things are now compared to oh eight.
Speaker 1: I'm looking at hires for example. You know, you get
Speaker 1: that that monthly hires level and it tailed off in
Speaker 1: two thousand and eight, calling all the way through the session.
Speaker 1: This time around, we dropped. We did drop, you know
Speaker 1: in the month of April, but we spiked all the
Speaker 1: way back up in you know May, we hit over
Speaker 1: seven million hires and we got another six six and
Speaker 1: change million hires. So this is really outstanding compared to
Speaker 1: two thousand and eight. Well, you definitely are optimistic. So
Speaker 1: we're going to check back with you certainly in a
Speaker 1: month or so, Jeffrey, and see you know, your thoughts,
Speaker 1: and see kind of where we're going in terms of
Speaker 1: some of the trend lines. Really appreciate that your inside
Speaker 1: Business Week Economics today on this Tuesday, Jeffrey Cleveland, chief
Speaker 1: economists excuse me, at Payton and Regal joining us on
Speaker 1: the phone in l A. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. We
Speaker 1: want to get Alex to this week's edition of Bloomberg
Speaker 1: Business Week's Small Business Survival Guide, where we take a
Speaker 1: look uh this week and more lending for small businesses
Speaker 1: that are stuck really in coronavirus limbo. There are many
Speaker 1: out there back with us. As Bloomberg News editor Dimitri
Speaker 1: hessands on the phone in New York City along with
Speaker 1: Pat mackerel Uh. He is president CEO Pursuit UH and
Speaker 1: it is a company that offers lending to small business owners.
Speaker 1: Pat on the phone in Albany, New York. Demetri set
Speaker 1: it up for us. You guys have been looking, you know,
Speaker 1: a week after week at what's going on in the
Speaker 1: small business world that I really do feel like small
Speaker 1: businesses just don't have the variety of offerings to access
Speaker 1: capital like large businesses do. Yeah, Hi, Carol, thanks, I
Speaker 1: mean that's definitely true, you know, not the variety. And
Speaker 1: I mean you really are talking about um, you know,
Speaker 1: needing to know where access to funds that you need
Speaker 1: that you're bigger banks, even your medium sized banks sometimes
Speaker 1: are gonna do it, and community development finance corporations, one
Speaker 1: of which are really integral to this process, especially once
Speaker 1: like his business Pursuit, which for for for decades now
Speaker 1: has been lending to very you know, not we're not
Speaker 1: like three hundred five hundred person operations necessarily, but much
Speaker 1: much smaller and especially minority businesses, and you know, the
Speaker 1: whole thing continues to be a mess for these businesses.
Speaker 1: All the process for the loan forgiveness has just started
Speaker 1: and they're talking about how that's going to be delayed
Speaker 1: with the way the way the money was given out.
Speaker 1: So people like Pat and his business really exist to
Speaker 1: provide alternatives to help these folks out some you know,
Speaker 1: the money need and to handle it and manage that
Speaker 1: process as best they can. Yeah, so I want to
Speaker 1: bring in Pat. Pat talked us a little bit about
Speaker 1: Pursuit and tell us about what you are doing. Uh,
Speaker 1: Pursuit is we're a variety of companies for affiliated companies
Speaker 1: that have focused since nineteen strictly on small business lending
Speaker 1: and strictly on small businesses that could not get capital
Speaker 1: at reasonable rates in terms from conventional sources like financial
Speaker 1: financial institutions. Um. Most many of our transactions historically have
Speaker 1: been referred to us by financial institutions who also support
Speaker 1: our operations with you know, potic substantial lines to credit. UM.
Speaker 1: You know the what was mentioned earlier in terms of access,
Speaker 1: that is the challenge making you know, making making small
Speaker 1: businesses feel that they have opportunities to borrow. Uh. You
Speaker 1: know the comment about at the access to their ability
Speaker 1: to access credit. Um. You know, the larger companies also
Speaker 1: have more preparation and more advisors, and they have top
Speaker 1: flight accountants and top flight lawyers and internals, you know,
Speaker 1: financial people that helped guide their way through a loan process.
Speaker 1: Small businesses don't have this. There's usually one one person
Speaker 1: who's in charge of all of those departments, which makes
Speaker 1: it hard when you're also running the business so so
Speaker 1: pat so to that. I mean, if I'm a small
Speaker 1: business and and I can't get access elsewhere to capital
Speaker 1: and I go to you, I mean, is it really onerous?
Speaker 1: So the is there the rate owners? Is the payback
Speaker 1: owners or what kind of limitations do you look at
Speaker 1: from my end so you protect yourself? Well, UM, you
Speaker 1: know we have been you know, underwriting small businesses for
Speaker 1: a long, long time, uh, and you know, have managed
Speaker 1: to survive quite well. We basically limit our race to
Speaker 1: the SPA maximum rate, which is Prime plus two seventy five,
Speaker 1: So we're at you know, aren't top rate in six
Speaker 1: uh on most of our loans. I mean, what we
Speaker 1: really try to do is figure out the management, to
Speaker 1: figure out how they're gonna instructure of them in a
Speaker 1: way so that they can be you know, paid back.
Speaker 1: I mean, we're not in the online lending space. We're
Speaker 1: in a space where we offer frequent moratoriums of principles
Speaker 1: sometimes interest payments, where we offer free business advisory services.
Speaker 1: You know, I was just reading a story about one
Speaker 1: of our clients who was over the moon about a
Speaker 1: business advisor we put them in touch with in terms
Speaker 1: of you know, redoing their website to help you know,
Speaker 1: pandemic operations, all of which we provide to the business
Speaker 1: for free because we get grants to do business advisory
Speaker 1: services and provide a lot of things to those businesses.
Speaker 1: But um, I want to do you know, one thing
Speaker 1: that is a great asset for small business that is underutilized.
Speaker 1: The SBA has a great program called lender Match, and
Speaker 1: any small business can go on to the SBA website
Speaker 1: SBA dot gov access lender match, tell them what they want,
Speaker 1: and the lender match will give them five or six
Speaker 1: c D F fives. Organizations like Pursue, so they can
Speaker 1: be in Wisconsin or New Jersey, you know, anywhere, and
Speaker 1: they're going to line them up with lenders that that
Speaker 1: are going to be interested in, you know, have expressed
Speaker 1: an interest in lending to businesses like that. That's a
Speaker 1: great tool, and that's a really important point that these
Speaker 1: are localized, so you do need to do that. What
Speaker 1: Pats and Jess is very important. He focuses on New York, Pennsylvania,
Speaker 1: New Jersey, you know, across the country. This is not
Speaker 1: something that's a federal sort of approach, so it's very
Speaker 1: useful to do that, alright, So definitely check out in
Speaker 1: terms of your local area for opportunities to tap into
Speaker 1: some lending and some different opportunities, and definitely check out
Speaker 1: the story in the magazine Our thanks to Pat mccrell,
Speaker 1: he's presidency of Pursuit on the phone in Albany, New
Speaker 1: York and Bloomberg News editor Dimitri Kessa Needys on the
Speaker 1: phone in New York City. The Journal now, but you
Speaker 1: let me drive home, Ann please, I'll do the right vel.
Speaker 1: I want to drive drive the question trying. This is
Speaker 1: the drive to the globe. Thanks, we'll drying us down
Speaker 1: on Bloomberg Radio. Hey, I knew that there was Britney
Speaker 1: Spears in there, so I feel like that was kind
Speaker 1: of a vandom Alex Steel in for Jason Kelly. Thank
Speaker 1: you with Carol master At it's time for a drive
Speaker 1: to the clothes. Joining us now is Kevin Walkush. He's
Speaker 1: from Jensen Investment Management. He joins us on the phone
Speaker 1: from like Oswego, Oregon. Kevin, thanks for joining us, appreciate it.
Speaker 1: How's it going there? It's great, having a great summer,
Speaker 1: and uh, thank you for having me on today. A
Speaker 1: great summer. I feel like that's something I have not heard.
Speaker 1: It's a really great entire summer. I mean, you guys
Speaker 1: see the virus at all un or like, how what's
Speaker 1: your experience our experiences? Yes, we have it, but compared
Speaker 1: to other states, it's actually relatively low. UM. And I
Speaker 1: think you know, our government or our state government got
Speaker 1: on top of it really quick, um and so was
Speaker 1: able to help sort of steer us through this. UM.
Speaker 1: But right now. You know, we're still we're still weathering
Speaker 1: it like everyone else. We're still you know, in it together, UM,
Speaker 1: and we're working to really working together as a community.
Speaker 1: Kind you know, really, UM, stay ahead of this so
Speaker 1: and you work about it, and you also work for
Speaker 1: quality growth investing. And that's the approach to how you're
Speaker 1: looking to technology investing. You like the names like Microsoft, Apple, Google, UM,
Speaker 1: how do you see then, maybe like the last few
Speaker 1: days of market action, irrespective of the last two hours
Speaker 1: of trading, UM, when we get optimism of a vaccine,
Speaker 1: we see those names, we see tech not hold up
Speaker 1: as well, and we see more money flow into value.
Speaker 1: How do you see it? UM? You know again, I
Speaker 1: mean there's a lot of speculation, UM in terms of
Speaker 1: a round a vaccine as we know. UM. You know,
Speaker 1: I think a lot of efect names, you know, recently
Speaker 1: at least through the pandemic UM and where it really
Speaker 1: started rolling UM. And you know it's sort of the
Speaker 1: quarantine orders sort of drove that work from home UM.
Speaker 1: And we really saw was this increased demand of cloud consumption,
Speaker 1: a lot of the services that these tech companies were providing. UM.
Speaker 1: As long as we're in sort of that mode where
Speaker 1: you know, we have high degree or high opportunity of lockdowns.
Speaker 1: UM that really sort of drives at work from home.
Speaker 1: We think that's gonna you know, accelerate UH, and that
Speaker 1: demand for cloud services in the case of you know,
Speaker 1: a vaccine, a high success vaccine, which is what we
Speaker 1: all want UM, that may let the pedal off a
Speaker 1: little bit in terms of demand for those services in
Speaker 1: the short term UM. But secularly, from a long term perspective,
Speaker 1: we're really positive on cloud consumption and services and you
Speaker 1: know the types of UM value that these companies deliver. Well.
Speaker 1: So let's talk about specific names because you do like
Speaker 1: UM names like Microsoft, Apple, Google, Talk to us a
Speaker 1: little bit about that specifically, Microsoft, Obvious, slee a player
Speaker 1: when it comes to cloud. I mean, these are the
Speaker 1: names that we kind of we just talked about with
Speaker 1: Dave Wilson. We're just watching, you know, the run ups
Speaker 1: that we've seen. We're watching the valuations. UM tell us
Speaker 1: them a little bit about your thinking behind them. Sure,
Speaker 1: I mean, first and foremost, you know, as a quality investor,
Speaker 1: fundamentals matter. So company has to deliver UM and so
Speaker 1: we want to see top line deliver As a reflection
Speaker 1: of the strength of the business. In the case of Microsoft,
Speaker 1: UM it's one of the leaders and cloud as you
Speaker 1: mentioned UM, we see that as well UM and so
Speaker 1: from a value standpoint and what we see from an
Speaker 1: opportunity standpoints, Microsoft is strongly benefited UM through the pandemic
Speaker 1: UM and even leading up to it, so strong gross
Speaker 1: it doesn't look like it's really from a fundamental standpoint
Speaker 1: has skipped a beat in that regard UM. And you
Speaker 1: see strong demands UM A on enterprise cloud, but then
Speaker 1: consumer driven cloud aspects. So you see the man on office,
Speaker 1: you see demand on UM teams consumption which really supports
Speaker 1: the office. So that's sort of that collaborations software christeeing
Speaker 1: people used dramatically more UM and Microsoft has a strong
Speaker 1: gaming business UM and so from a diversification standpoint, we've
Speaker 1: really seen them hitting on all cylinders in terms of
Speaker 1: demand from COVID now, but we also see that sustainable
Speaker 1: demand carrying them through going forward. So what I found
Speaker 1: interesting is this month so far the Russell two thousands
Speaker 1: having its best month first of the Nastic one hundred
Speaker 1: and two thousand and sixteen. As I was talking about earlier,
Speaker 1: that recovery rotation. UM, does that make buying opportunities for you?
Speaker 1: Do you also need to diversifying other sort of quality
Speaker 1: growth areas for when we see these kind of shakeouts
Speaker 1: or how do you see it UM as far as
Speaker 1: tech UM, So right now we're about of the portfolio
Speaker 1: is in tech UM and so in the Russell it's
Speaker 1: even higher. It's what's interesting is is, yes, the Russell
Speaker 1: has done really well UM, but it also has a
Speaker 1: lot of concentration risk in our opinion UM, and so
Speaker 1: UM you know a handful of names are really driving
Speaker 1: incremental value within that and growth from that that benchmark UM.
Speaker 1: So it's a quality growth investors. So while through the
Speaker 1: portfolio is tech UM is an other areas that we
Speaker 1: think are can help us diversify from a wrisk standpoint,
Speaker 1: but also balanced out from an opportunity standpoint. So overall,
Speaker 1: our health scare holdings are about twenty five of the portfolio.
Speaker 1: We also have a strong UM exposure to consumer staples,
Speaker 1: which has performed really well UM through the downturn. As
Speaker 1: we know with all the UH stay at home orders
Speaker 1: in the pantry stockings so UM, so we've seen we've
Speaker 1: seen really good opportunities across the board. Well, and I'm
Speaker 1: curious how aggressively are you guys were buying Kevin in
Speaker 1: the sell off before we saw the bounce back where
Speaker 1: you're doing a lot of buying. We you know, for us,
Speaker 1: you know, we want to maintain full uh full investment.
Speaker 1: So let these our cash positions relatively low UM. So
Speaker 1: we didn't enter it with a large cash position. From
Speaker 1: a by perspective, what we did was, UM, we did
Speaker 1: see some opportunities on the tech side, We did see
Speaker 1: some opportunities on staples UM. And then we also we
Speaker 1: have a little bit of discretionary exposure, so we own Nike,
Speaker 1: t g X, a little bit of Starbucks and df
Speaker 1: and so we actually took that exposure down. So we
Speaker 1: took that a little bit off the table and then
Speaker 1: redeployed it into those areas where we thought we're hiring growth,
Speaker 1: so such as a Microsoft and Apple. What do you
Speaker 1: do if we don't get a stimulus UM. You know,
Speaker 1: it's interesting, I think we we probably we're not going
Speaker 1: to change really what we do UM from invest and standpoint,
Speaker 1: because our focus is on investing in a concentrated, high
Speaker 1: conviction portfolio of all weather durable names, and so the
Speaker 1: stimulus certainly is a near term catalyst. UM. I think
Speaker 1: there's a degree of expectation already built in to the
Speaker 1: markets in my opinion by investors UM. But at the
Speaker 1: end of the day, it kind of comes back to
Speaker 1: how business executes UM, and we think with or without stimulus,
Speaker 1: our types of businesses can continue to execute in that regard.
Speaker 1: So we view the stimulus is great for the overall economy,
Speaker 1: great care of businesses. But if it doesn't happen, which
Speaker 1: we believe is unlikely UM, but on the remote chance
Speaker 1: it doesn't, we still think our businesses continue to generate
Speaker 1: that value and that gets recognized in the market. So
Speaker 1: you're not worried about another kind of dipped lower just quickly,
Speaker 1: just got about thirty seconds here. Oh, I think the
Speaker 1: risk is definitely there, and I think from a strong
Speaker 1: focus on terms of momentum um, momentum has really had
Speaker 1: a sort of moment in the sun obviously, UM. So
Speaker 1: we we definitely view the risk of a bullback is
Speaker 1: really high UM. And so you know, again that's where
Speaker 1: I think investors need to kind of maybe reconsider their position,
Speaker 1: name um, their exposures UM, and maybe consider sort of
Speaker 1: that risk and likelihood that you know, I think there's
Speaker 1: a downturn that could potentially come up. Yeah, reminder that
Speaker 1: you know, things do go down when we're in an
Speaker 1: upwards an exactly right. That's one of the most read stories.
Speaker 1: It's really unbelievable the move that we saw today. UM
Speaker 1: Kevin Walkers over at gent and Investment Management on the
Speaker 1: phone from Oregon. Thanks so much for listening to Bluebird
Speaker 1: Business Week. Download the pot Castle on iTunes, Southcloud, Bloomberg
Speaker 1: dot com, or wherever you get your podcasts. And of
Speaker 1: course you can always listen to our radio show at
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