WEBVTT - Surveillance: Historic Jobless Claims With Gapen 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.440 Bloomberg dot Com, and of course on the Bloomberg. I'm 0:00:27.440 --> 0:00:29.800 pleased to say that we can join Lori Calvasina now 0:00:29.840 --> 0:00:33.080 obviously Counital Markets head of US equity Strategy, Laurie. Great 0:00:33.120 --> 0:00:35.479 to get you on this program. As always trying to 0:00:35.520 --> 0:00:37.360 gage a couple of things in this market and one 0:00:37.400 --> 0:00:40.040 thing you can readly help us with today is sentiment. 0:00:40.320 --> 0:00:44.320 How washed out is sentiment at the moment. Well, unfortunately, 0:00:44.320 --> 0:00:46.400 I don't think it's washed out enough. John Um. We 0:00:46.479 --> 0:00:49.280 actually just released our investor survey this morning that we 0:00:49.320 --> 0:00:51.639 do every quarter, and that we we ran this from 0:00:51.640 --> 0:00:54.720 March thirty one, so it's pretty pretty fresh, as fresh 0:00:54.760 --> 0:00:57.680 as we can get. We actually were stunned to see 0:00:57.680 --> 0:01:00.480 that those describing themselves as bullish are very a bullish 0:01:00.560 --> 0:01:04.000 rose from in December to fifty eight percent in March. 0:01:04.040 --> 0:01:05.960 Now that's on a six to twelve month time frame. 0:01:06.240 --> 0:01:08.240 But what's really stunning about it is that it's the 0:01:08.280 --> 0:01:10.520 highest we've seen since we started our survey in the 0:01:10.520 --> 0:01:13.320 first quarter of and it's the exact opposite of what 0:01:13.400 --> 0:01:16.280 happened back in December when we saw the bear spike 0:01:16.319 --> 0:01:19.080 and the bullsese back. So, you know, I've talked to 0:01:19.120 --> 0:01:21.080 a lot of investors who are you know, running down 0:01:21.120 --> 0:01:23.120 their shopping lists with me talking about how this is 0:01:23.120 --> 0:01:26.120 a buying opportunity um. And we saw that in the 0:01:26.160 --> 0:01:28.679 survey results that I just don't think people are barish enough, 0:01:28.920 --> 0:01:32.000 all right, So walk us through the idea of why 0:01:32.040 --> 0:01:34.880 they should be more bearished given the fact that the 0:01:35.000 --> 0:01:37.760 US government that frankly governments around the world are pouring 0:01:37.800 --> 0:01:39.959 money into the economy to try to sustain it, and 0:01:40.000 --> 0:01:43.720 then beyond with the potential infrastructure program, isn't that enough 0:01:43.760 --> 0:01:46.480 to get things back on track and get these valuations 0:01:46.520 --> 0:01:48.960 to look better to you? Well, you know, one thing 0:01:49.000 --> 0:01:51.200 we saw was that there is clear faith in the FED, 0:01:51.280 --> 0:01:53.520 and I do think that that faith is deserved. We 0:01:53.520 --> 0:01:57.080 found that think monetary policy has been good or very good, 0:01:57.080 --> 0:01:58.559 and there's also a lot of faith in the fiscal 0:01:58.640 --> 0:02:01.560 response so far. But I think what concerns me a 0:02:01.560 --> 0:02:03.560 little bit is that if you look at the economic 0:02:03.640 --> 0:02:06.680 scenario that people are assuming there's a belief that the 0:02:06.680 --> 0:02:09.880 economic damage from the crisis will be fairly contained and 0:02:09.960 --> 0:02:13.120 fairly manageable and fairly short in duration. And so I 0:02:13.120 --> 0:02:15.600 think the real risk to markets going forward is do 0:02:15.680 --> 0:02:17.840 we test some of those assumptions. Now, we've seen a 0:02:17.919 --> 0:02:20.160 number of firms around the street come out with some 0:02:20.240 --> 0:02:22.840 pretty scary two Q GDP numbers, and thankfully I'm not 0:02:22.880 --> 0:02:24.720 an economist, so I don't have to make that call. 0:02:25.240 --> 0:02:27.000 But we did see that about two thirds of our 0:02:27.040 --> 0:02:29.560 survey respondents think that GDP is going to be contracting 0:02:29.600 --> 0:02:33.400 by or left. That assumption is starting to be tested 0:02:33.440 --> 0:02:36.080 by the market. Um. So my concern is that some 0:02:36.160 --> 0:02:39.520 of these assumptions on the economic side will be called 0:02:39.520 --> 0:02:44.079 into question. Look, Glaurie, it where we are and it's 0:02:44.080 --> 0:02:46.680 great to have a six to twelve month visibility. As 0:02:46.720 --> 0:02:49.240 we talked to average Joseph Cohen yesterday, let me ask 0:02:49.280 --> 0:02:53.399 you the same question, what is your counsel for institution 0:02:53.760 --> 0:02:57.120 or high net worth looking out three years or dare 0:02:57.160 --> 0:03:01.160 I say five years? So you know, in terms of 0:03:01.160 --> 0:03:02.800 what we want to do, in terms of what we 0:03:02.840 --> 0:03:05.320 want to buy. Um, we've been telling people to really 0:03:05.360 --> 0:03:07.160 have a balance, So we think you should have some 0:03:07.240 --> 0:03:09.440 defense in your portfolio. We think you should have some 0:03:09.520 --> 0:03:11.960 long term growth in your portfolio, and we do think 0:03:11.960 --> 0:03:14.520 you should have some cicklicality. But we're very picky about 0:03:14.520 --> 0:03:17.320 what we're choosing on each of those. I would say, sick, 0:03:17.400 --> 0:03:21.160 you pick your spots carefully, be exposed to equities, but 0:03:21.520 --> 0:03:24.120 be prepared for some additional turbulence in the near term. 0:03:24.200 --> 0:03:25.639 That's really how we think about it. And one of 0:03:25.680 --> 0:03:27.840 the reasons why we're trying to really emphasize that there 0:03:27.880 --> 0:03:30.520 could be additional turbulence in your term is we want 0:03:30.560 --> 0:03:32.640 people to be prepared for it. We do want people 0:03:32.639 --> 0:03:34.480 to be able to use it as a buying opportunity, 0:03:34.680 --> 0:03:36.720 but we think it's important to understand that there are 0:03:36.760 --> 0:03:39.280 still risks out there in the short term, risks out 0:03:39.320 --> 0:03:41.480 there that are very hard to quantify or get your 0:03:41.520 --> 0:03:44.040 hands around. Given the fact that a lot of this 0:03:44.240 --> 0:03:47.440 is an epidemiological issue, it's a health issue, and it 0:03:47.480 --> 0:03:50.360 depends on a lot of different factors, how do you 0:03:50.480 --> 0:03:54.960 even go into figuring out what to consider when determining 0:03:55.000 --> 0:03:57.920 whether we're hitting a bottom aside from just pure sentiment, 0:03:58.720 --> 0:04:00.400 So you know, sentiment, I think is one of the 0:04:00.400 --> 0:04:02.360 best things we can look at. I sort of laughed 0:04:02.360 --> 0:04:04.440 when I looked at the survey results this morning because 0:04:04.440 --> 0:04:07.360 we saw a huge number thing that valuations are attractive, 0:04:07.360 --> 0:04:09.400 and you know, people are telling me they have no 0:04:09.480 --> 0:04:11.360 idea what the earnings outlook is that how do you 0:04:11.360 --> 0:04:14.200 know if valuations are attractive or not? Um, you know, 0:04:14.240 --> 0:04:16.200 one of the things we did ask in the survey 0:04:16.440 --> 0:04:19.280 was what does the market need to see to stabilize? 0:04:19.320 --> 0:04:21.240 Just regardless of what your view is, what does the 0:04:21.279 --> 0:04:23.680 market need to happen? And one of the things we 0:04:23.800 --> 0:04:26.560 saw loud and clear in the survey results is that 0:04:26.640 --> 0:04:28.920 people think that the virus is really the key. It's 0:04:28.960 --> 0:04:31.520 taken center stage. So seventy eight percent told us that 0:04:31.520 --> 0:04:33.680 a decline in new cases in the US is needed 0:04:33.720 --> 0:04:36.039 for the market to stabilize. Now, I'm not a doctor, 0:04:36.080 --> 0:04:38.400 you know. I sympathize with John when when he doesn't 0:04:38.400 --> 0:04:40.800 like non doctors talking about medical stuff. So I'm not 0:04:40.839 --> 0:04:42.360 going to do that here because I think he's dead 0:04:42.440 --> 0:04:45.000 right on this. But I do think it's important to 0:04:45.120 --> 0:04:47.960 understand that a lot of the rally we had towards 0:04:48.000 --> 0:04:51.320 the end of March was a positive reaction to what 0:04:51.400 --> 0:04:53.599 was coming out of Washington, to the actions the FED 0:04:53.680 --> 0:04:55.640 was doing, and that was all very well and good 0:04:55.640 --> 0:04:58.440 and deserve. But our survey this morning told us investors 0:04:58.520 --> 0:05:01.520 don't think we need to really see additional fiscal response 0:05:01.560 --> 0:05:03.719 to get the market to stabilize, but they sure do 0:05:03.800 --> 0:05:06.160 think that we need this virus outlook to improve. Now. 0:05:06.200 --> 0:05:08.240 The thing that also, you know, concerned me a little 0:05:08.279 --> 0:05:11.960 bit is that also said for the market to stabilize, 0:05:12.000 --> 0:05:14.800 we need significant progress on new drugs to treat the 0:05:14.839 --> 0:05:18.359 coronavirus and or a vaccine. I'm not going to speculate 0:05:18.360 --> 0:05:21.240 when that's going to happen, but just understand that the 0:05:21.360 --> 0:05:23.680 virus in that path of that virus and all the 0:05:23.760 --> 0:05:27.120 uncertainty there, that's pivotal to market's near term. Laurie, You've 0:05:27.160 --> 0:05:29.000 had me with many things over the last couple of weeks, 0:05:29.000 --> 0:05:31.159 but one thing in particular stands out how to tailor 0:05:31.200 --> 0:05:34.520 the message for retail. This is an institutional audience that 0:05:34.560 --> 0:05:37.080 you've been speaking to, and I think for retail at 0:05:37.080 --> 0:05:39.240 the moment, it's a really confusing time because I get 0:05:39.240 --> 0:05:41.760 many people on my programs, including on this program, with 0:05:41.800 --> 0:05:44.520 all of us talking about the opportunities out there time 0:05:44.600 --> 0:05:46.560 to add a little bit more risk. How do you 0:05:46.640 --> 0:05:50.239 tailor the message for retail at a really confusing time. 0:05:51.320 --> 0:05:53.680 I think that we do. You know, what we do 0:05:53.800 --> 0:05:56.119 want people to generally do is just to sit tight, 0:05:56.720 --> 0:05:58.760 to be prepared, to understand that this is a bit 0:05:58.760 --> 0:06:00.400 of a rollers coaster and we're going to have up 0:06:00.440 --> 0:06:02.960 swings and we're going to have down swings. Um. You know. 0:06:03.080 --> 0:06:04.880 I used an analogy at the beginning of the year 0:06:04.920 --> 0:06:07.280 when I was talking about the turbulence we expected in 0:06:07.320 --> 0:06:09.720 the market, and I said, imagine that I'm the airline pilot. 0:06:09.920 --> 0:06:11.680 I'm coming on. I'm telling you that we're going to 0:06:11.800 --> 0:06:14.200 hit some bad weather. Um, please don't jump off my 0:06:14.200 --> 0:06:15.800 plane in the middle of the flight. We are going 0:06:15.839 --> 0:06:19.400 to get to our destination. I still do firmly believe that, unfortunately, 0:06:19.440 --> 0:06:22.240 the turbulence has just been a bit worse than we expected, 0:06:22.240 --> 0:06:23.840 and it could get a little bit worse than it's been. 0:06:24.440 --> 0:06:26.640 I was pretty impressed, Laurie. I had to buy some 0:06:26.680 --> 0:06:29.680 boat tie wax yesterday from the Amazon, and you know, 0:06:29.839 --> 0:06:35.800 usually it's like next day delivery. It's hold on, hold 0:06:35.800 --> 0:06:39.800 on it, you got it. You got to elaborates, you 0:06:39.839 --> 0:06:41.440 put it on your boat tie and it keeps a 0:06:41.480 --> 0:06:48.680 little fuzzies down. So anyways, it's a four day delivery, 0:06:48.680 --> 0:06:52.279 which I thought was pretty extraordinary. Laurie, Amazon has got 0:06:52.279 --> 0:06:55.760 to be the mother of all buys. Well, look, one 0:06:55.760 --> 0:06:57.400 of the things we've talked about, and I can't talk 0:06:57.440 --> 0:06:59.880 about individual stocks, but we have, you know, said in 0:07:00.000 --> 0:07:02.480 investors need to really think about how consumer habits are 0:07:02.520 --> 0:07:04.279 going to change. And there will be some good changes 0:07:04.320 --> 0:07:06.480 for some companies and there will be some bad changes 0:07:06.560 --> 0:07:10.200 from other companies. UM. But you know, my personal view is, 0:07:10.400 --> 0:07:12.840 you know, when we think about sort of the tech space, 0:07:13.320 --> 0:07:15.360 um and sort of this internet space, we we think 0:07:15.400 --> 0:07:17.880 that they're sort of you know, heroes that that are 0:07:17.920 --> 0:07:21.240 emerging in the in the investment world, um, you know, 0:07:21.320 --> 0:07:23.440 and sort of thinking about the tech companies, the banks, 0:07:23.480 --> 0:07:26.160 the healthcare companies, these are the ones that are really 0:07:26.200 --> 0:07:29.000 you know, sort of coming to the rescue to help 0:07:29.080 --> 0:07:31.640 this economy muddle through. And when I think back to 0:07:31.720 --> 0:07:35.600 past crises, the tech bubble, the financial crisis, sort of 0:07:35.600 --> 0:07:38.360 how these companies step up if they're they're viewed as 0:07:38.400 --> 0:07:40.600 being part of the solution or part of the problem, 0:07:40.720 --> 0:07:44.320 does have longer term investment implications. Nice, pretty fur To, 0:07:44.360 --> 0:07:51.880 thank you so much RBC Capital Markets and right now, folks, 0:07:51.960 --> 0:07:54.280 we bring in a gentleman has been very supportive of 0:07:54.320 --> 0:07:58.080 all our efforts. Jason Furman is a unique economists and 0:07:58.160 --> 0:08:00.800 yes there's an academic track, but far more at a 0:08:00.840 --> 0:08:05.320 young age he had the courtesy to really tackle policy 0:08:05.480 --> 0:08:11.040 and almost applied policy within the American political economy. Professor 0:08:11.120 --> 0:08:14.560 Furman at Harvard and the former chairman of President Obama's 0:08:14.960 --> 0:08:18.600 Council of Economic Advisors. Jason at this time and moment, 0:08:18.640 --> 0:08:20.840 and this is something we've gone back and forth with 0:08:20.920 --> 0:08:24.760 the economist John Farrell on at this time and moment, Jason, 0:08:25.080 --> 0:08:29.400 do you wish that America and Washington was more fiscally 0:08:29.600 --> 0:08:35.959 like Europe? I think the United States has a big 0:08:35.960 --> 0:08:39.680 advantage every Europe And what way borrows at the level 0:08:39.679 --> 0:08:42.640 of the United States and Europe right now is borrowing 0:08:42.640 --> 0:08:44.959 at the level of national economies. But then have a 0:08:45.040 --> 0:08:49.160 central bank UM at the level of the Eurozone. They need, 0:08:49.240 --> 0:08:52.280 you know, the type of fiscal federalism um in Europe 0:08:52.280 --> 0:08:56.400 that we have in the United States. Francis Borron, get 0:08:56.400 --> 0:08:58.360 pretty loud, rights, Jason, just to lab right on that 0:08:58.360 --> 0:09:00.160 a little bit. Mom but confused by that comment. They're 0:09:00.160 --> 0:09:03.160 borrowing at very low rates across Europe. Are you talking 0:09:03.160 --> 0:09:06.679 about burden sharing across the Eurozone? Yeah? No, I mean 0:09:06.760 --> 0:09:10.640 you see, yes, you see low rates in Europe because 0:09:10.640 --> 0:09:13.719 I think implicit in that is the expectation that at 0:09:13.720 --> 0:09:17.480 the end of this the ECB will be there to 0:09:17.679 --> 0:09:26.440 backstop the national borrowing and that um and that there 0:09:26.440 --> 0:09:29.080 will be some form of fiscal federalism. I think absent 0:09:29.240 --> 0:09:32.600 that expectation, UM, Europe wouldn't be borrowing at the rates 0:09:32.600 --> 0:09:35.840 that's borrowing out. Now, let's talk about the response so far. Jason, 0:09:35.880 --> 0:09:38.320 you were very early in asking for a big in 0:09:38.360 --> 0:09:42.000 fact pushing for a big fiscal package in the United States. 0:09:42.080 --> 0:09:43.760 It has come around, and I believe that you've had 0:09:43.800 --> 0:09:46.080 some part in influencing the decision to move quickly on 0:09:46.120 --> 0:09:47.760 all of that, and I congratulate for you for the 0:09:47.760 --> 0:09:50.040 effort that you've done over the last couple of months 0:09:50.040 --> 0:09:52.160 on that front. Jason, there are many people that think 0:09:52.240 --> 0:09:54.720 we will need to do more, and I'm trying to 0:09:54.800 --> 0:09:57.040 understand the easiest way of doing more. Can you top 0:09:57.120 --> 0:10:00.439 up existing packages that are already available through the bill 0:10:00.480 --> 0:10:02.400 that was produced last week, or do you need a 0:10:02.440 --> 0:10:04.520 separate bill. What's the best web policy I can go 0:10:04.559 --> 0:10:07.800 about doing that. Certainly, the most important thing in the 0:10:07.840 --> 0:10:12.439 United States is to extend and expand what's already happened. 0:10:12.800 --> 0:10:17.760 You know, the unemployment insurance ends at the end of June. 0:10:18.080 --> 0:10:20.440 There's going to be very high unemployment the rest of 0:10:20.480 --> 0:10:23.560 this year. That's gonna be very high unemployment. Next year 0:10:24.080 --> 0:10:27.040 the checks are one time. You know, incomes are going 0:10:27.080 --> 0:10:30.040 to be hit next year too, and we're gonna need, 0:10:30.240 --> 0:10:33.280 you know, a more traditional stimulus for recovery. So that's 0:10:33.320 --> 0:10:36.960 the easiest. Then identifying some of the deficiencies of what's 0:10:37.000 --> 0:10:40.240 happening so far. The biggest and most obvious one is 0:10:40.320 --> 0:10:44.080 states and localities. They're cutting their budgets right now. That's 0:10:44.200 --> 0:10:47.080 undoing some of the benefit of what's happening. At the 0:10:47.120 --> 0:10:50.959 federal level. They can't borrow for themselves, they're not allowed 0:10:51.000 --> 0:10:54.080 to UM, so they need much more money UM. And 0:10:54.120 --> 0:10:57.880 then finally, we just need to keep open the channels 0:10:57.920 --> 0:11:01.240 for anything that could help healthcare UM and fund the 0:11:01.240 --> 0:11:04.920 health response. That's probably the most important, Jason. Everyone has 0:11:04.920 --> 0:11:06.960 their hands out right now, and everybody needs money, and 0:11:07.000 --> 0:11:09.640 everybody is looking for the government to step in and 0:11:09.679 --> 0:11:13.440 plug that hole. Some people. Actually, no one right now 0:11:13.600 --> 0:11:15.840 is particularly worried about the deficit, but some people have 0:11:15.920 --> 0:11:17.960 brought it up sort of in passing. We're looking right 0:11:18.000 --> 0:11:20.520 now at a trillion dollar deficits expected to rise to 0:11:20.559 --> 0:11:24.480 three trillion dollars, especially as President Trump and even Democrats 0:11:24.520 --> 0:11:27.720 talk about sort of rolling back some of the tax 0:11:28.200 --> 0:11:32.400 provisions like the salt tax, etcetera that sort of created 0:11:32.440 --> 0:11:34.120 a little bit of cost savings in the in the 0:11:34.160 --> 0:11:38.800 previous rounds. How big can the US deficits sustainably get? 0:11:38.840 --> 0:11:44.920 In your view, you saw years of GDP deficits in 0:11:45.320 --> 0:11:49.360 fighting World War two. Um, this is like an invasion 0:11:50.000 --> 0:11:53.480 and if that's needed, I wouldn't shrink from it. I mean, 0:11:53.520 --> 0:11:59.480 the point is, the borrowing needs to happen somewhere, household states, locality, 0:11:59.640 --> 0:12:04.360 small businesses, large businesses. Somebody needs to be borrowing. And 0:12:04.600 --> 0:12:08.480 the least bad position for that borrowing right now our 0:12:08.720 --> 0:12:12.440 national government. Jayson very quickly here, this is so important. 0:12:12.480 --> 0:12:15.200 The inflation he has got it wrong coming out of 0:12:15.240 --> 0:12:18.640 two thousand nine. Are the inflation warriors going to get 0:12:18.679 --> 0:12:22.160 it wrong again? In two thous of nine, it was 0:12:22.200 --> 0:12:25.760 completely obvious that in the highly depressed economy. You weren't 0:12:25.760 --> 0:12:29.079 gonna get inflation here unless sure, you have a huge 0:12:29.120 --> 0:12:32.600 supply shock, you have a huge demand shock. Um, we 0:12:32.679 --> 0:12:36.120 are maintaining a lot of incomes, not all incomes, but 0:12:36.120 --> 0:12:39.840 we're containing a lot. So I don't know. All I 0:12:39.840 --> 0:12:42.640 can say is if we get inflish, and I think 0:12:42.679 --> 0:12:45.120 that would be good. That would be a good sign 0:12:45.320 --> 0:12:48.360 that we have adequate demand. It would help lower real 0:12:48.400 --> 0:12:52.040 interest rates, lower real wages. That would help um the 0:12:52.080 --> 0:12:54.680 economy's recovery. So I don't I don't know. I don't 0:12:54.679 --> 0:12:56.839 know what's going to happen, but I don't think we 0:12:56.840 --> 0:12:59.960 should be afraid of getting inflish. Jason Furman, thank you 0:13:00.080 --> 0:13:04.680 so much, the former chairman of President Obama's Council of 0:13:04.800 --> 0:13:11.959 Economic Advisors. Let's do this, bringing Michael Gape in a 0:13:12.120 --> 0:13:16.400 park place right now. Who's more than accomplished here on 0:13:16.480 --> 0:13:19.400 the rates of change? Michael did these stunning numbers? Is 0:13:19.480 --> 0:13:23.959 Lisa frames that beautifully? Do these numbers make you pull 0:13:24.160 --> 0:13:28.400 forward the agony? Do you pull the May job's report, 0:13:28.640 --> 0:13:32.080 you know, showing April statistics? Do you pull that forward 0:13:32.120 --> 0:13:36.000 in your analysis? We do? I mean, I think the 0:13:36.040 --> 0:13:39.160 weekly job less claims data is probably the most important 0:13:39.200 --> 0:13:42.800 piece of data that we got. Now it's it's only 0:13:42.840 --> 0:13:46.920 one week lag, it's fairly contemporaneous about what's happening in 0:13:47.000 --> 0:13:50.240 the economy. When you look at the number last week 0:13:50.280 --> 0:13:53.040 and this week and take those together, you know that 0:13:53.200 --> 0:13:57.520 that's roughly a let's call it, a six percentage point 0:13:57.679 --> 0:14:01.840 rise in the in the April unemployment rate already. And 0:14:01.920 --> 0:14:03.840 we have a few make a few more weeks ago 0:14:04.520 --> 0:14:07.880 for the April employment report, so it's it's not I mean, 0:14:07.920 --> 0:14:10.079 I think it is likely that the unemployment rate will 0:14:10.120 --> 0:14:12.880 be rising above where we saw it in O eight 0:14:12.880 --> 0:14:15.319 oh nine, and and and may come as soon as 0:14:15.360 --> 0:14:18.440 that April employment report, if not certainly into the main report. 0:14:18.520 --> 0:14:21.000 But uh, and if you kind of you know, there's 0:14:21.040 --> 0:14:24.600 a historical relationship between activity and the unemployment rate, so 0:14:24.680 --> 0:14:27.800 you can kind of reverse engineer what might be happening 0:14:27.800 --> 0:14:31.240 to the economy from these jobless claims data, and and 0:14:31.280 --> 0:14:34.760 it it paints just an awful picture. And it's just 0:14:34.800 --> 0:14:39.160 reflective of the cliff effects on economic activity from all 0:14:39.200 --> 0:14:41.680 of these statewide shut sounds that we're seeing. So it's 0:14:41.720 --> 0:14:44.400 just it's a sudden stop in the labor market and 0:14:44.440 --> 0:14:46.200 a in a sudden stop for many parts of the 0:14:46.320 --> 0:14:50.240 U S account. Michael, I'm really struck by how devastating 0:14:50.240 --> 0:14:52.600 these numbers are, because, as John and Tom keep talking 0:14:52.640 --> 0:14:55.840 about all of the human stories behind it, is there 0:14:55.880 --> 0:14:59.200 any tiny little bit of silver lining in that the 0:14:59.200 --> 0:15:03.200 people who file for unemployment benefits are actually getting unemployment 0:15:03.240 --> 0:15:05.080 benefits and at least will be able to pay the 0:15:05.120 --> 0:15:08.040 rent and buy groceries, given the fact that the US 0:15:08.120 --> 0:15:12.240 has expanded those benefits. Yes, I mean, I think that's 0:15:12.280 --> 0:15:17.200 probably you know, the secondary consideration for for the workers, 0:15:17.240 --> 0:15:21.080 but certainly it's it's a reflection of it certainly illustrates 0:15:21.080 --> 0:15:24.880 why we need to get fiscal resources two households and 0:15:24.920 --> 0:15:28.320 business immediately and and make it targeted for for where 0:15:28.360 --> 0:15:31.360 it's needed. So, yes, the fiscal plan, which which up 0:15:31.400 --> 0:15:35.400 to unemployment benefits is certainly the right move and the 0:15:35.480 --> 0:15:38.560 ideas we we need to get resources to these households. 0:15:38.880 --> 0:15:42.800 The hope is that this is a temporary surge and 0:15:43.000 --> 0:15:47.520 unemployment and and if we're successful it UH getting the 0:15:47.520 --> 0:15:50.320 coronavirus under control as we move into June and July, 0:15:50.480 --> 0:15:53.680 maybe a lot of this UH unemployment can come back. 0:15:53.880 --> 0:15:57.360 I just I just worry that, you know, I'm My 0:15:57.440 --> 0:16:00.640 main concern here is for small business that up talking 0:16:00.640 --> 0:16:04.320 about firms, let's say forty nine employees or last exactly 0:16:05.480 --> 0:16:09.800 thirty three million people employed in these businesses, like about 0:16:09.800 --> 0:16:12.920 twenty seven million of them with these services related. So 0:16:13.800 --> 0:16:16.720 my worries we don't get enough resources to those types 0:16:16.760 --> 0:16:19.520 of business. John ferrows some context here, which I think 0:16:19.560 --> 0:16:25.120 is so important. We've lost a Florida of employment. Florida's 0:16:25.160 --> 0:16:29.680 statistic is ten million employed, So in two weeks of 0:16:29.720 --> 0:16:34.400 claims is a generalization we've lost to Florida is a nation. 0:16:34.680 --> 0:16:37.280 The numbers are absolutely stunning. And Michael, where we really 0:16:37.280 --> 0:16:39.640 need to help is how to navigate some of the 0:16:39.720 --> 0:16:41.720 dates will get in the coming days. Tomorrow we'll get 0:16:41.720 --> 0:16:44.040 payrolls in around about twenty four hours time. We'll be 0:16:44.040 --> 0:16:46.640 having a conversation with an economist like yourself trying to 0:16:46.680 --> 0:16:49.400 work out how to read a labor market report that 0:16:49.440 --> 0:16:52.120 for many people is incredibly dated. What do we do 0:16:52.160 --> 0:16:56.520 with tomorrow's non farm payrolls report? Honestly, I think we 0:16:56.520 --> 0:17:00.480 we we ignore it because we claimed data are telling 0:17:00.480 --> 0:17:02.600 you what April's going to look like, and so that 0:17:03.320 --> 0:17:06.399 we're likely to see a modest some deterioration or a 0:17:06.400 --> 0:17:10.919 modest deterioration in the labor market from the March employment report. 0:17:11.000 --> 0:17:14.720 But these two initial jobless claims reports from last week 0:17:14.720 --> 0:17:16.560 to this week are telling us April is going to 0:17:16.600 --> 0:17:20.920 be monumentally worse. So honestly, I think March is already old. 0:17:20.960 --> 0:17:23.639 There's and these are the two most important pieces of 0:17:23.680 --> 0:17:28.320 information we've had. Michael, I gotta say, the emotion in 0:17:28.359 --> 0:17:32.240 this number is dramatic. Is there a sense that these 0:17:32.280 --> 0:17:34.880 people will be able to get their jobs back once 0:17:34.920 --> 0:17:37.879 the economy starts to get up and running? In other words, 0:17:38.240 --> 0:17:42.240 how sticky is this really high unemployment rate going to be? 0:17:44.280 --> 0:17:47.600 I think the way that we're thinking about it um 0:17:47.920 --> 0:17:50.840 is that some of this will will likely come back. 0:17:51.080 --> 0:17:55.080 But I think we're you know, we're maybe half of 0:17:55.119 --> 0:17:57.720 it comes back, And I'm worried that there's a longer 0:17:57.760 --> 0:17:59.439 tail from the same by and by the end of 0:17:59.440 --> 0:18:03.360 the year was so likely to have an elevated unemployment rate. 0:18:03.760 --> 0:18:06.479 H So it we can reopen the economy back up, 0:18:06.720 --> 0:18:09.760 but it may be that we're slow to unsocial distance, 0:18:09.840 --> 0:18:12.240 if you will, And I also think they'll be lagged 0:18:12.280 --> 0:18:14.960 effects from other sectors, like certainly there's there will be 0:18:15.000 --> 0:18:17.639 spill over to the energy sector for a long time 0:18:17.760 --> 0:18:20.680 because of where oil is treating UH. And I think 0:18:20.680 --> 0:18:23.919 there will be negative wealth effects on on consumption. And 0:18:23.960 --> 0:18:27.480 this is largely services activity that that we're taking away, 0:18:27.480 --> 0:18:30.520 and it's not so easy to make that up. So 0:18:30.720 --> 0:18:33.280 my certainly, my hope is a lot of this unemployment 0:18:33.280 --> 0:18:36.560 will come back relatively quickly as we move into the 0:18:36.640 --> 0:18:39.560 third quarter. I have concerns that will be a larger 0:18:39.680 --> 0:18:42.080 a large portion of it that that will linger for 0:18:42.160 --> 0:18:45.720 quite some time into next year. Make the futures on 0:18:45.720 --> 0:18:48.960 the screen right now down by eighteen points SMP five, 0:18:49.760 --> 0:18:52.520 we are rather up by sixteen points on SMP five, 0:18:52.880 --> 0:18:54.679 up by six tents of one percent, but raising some 0:18:54.720 --> 0:18:56.320 of the big games we had a little earlier on 0:18:56.720 --> 0:18:59.760 in the session. There will be people asking right now, Michael, 0:19:00.080 --> 0:19:02.520 whether the fiscal life package in Washington is big enough, 0:19:03.240 --> 0:19:05.840 even a two twenty in dollars, Is it big enough? 0:19:07.480 --> 0:19:10.040 We don't think so. We We think that there will 0:19:10.200 --> 0:19:13.760 be a phase for certainly the House wants to direct 0:19:13.760 --> 0:19:17.280 more resources to state local governments, and there's conversations around 0:19:17.320 --> 0:19:20.600 whether we could do more on infrastructure. So we certainly 0:19:20.640 --> 0:19:23.600 think Phase three was was a good down payment, and 0:19:23.720 --> 0:19:27.440 the needle in terms of willingness to support the economy 0:19:27.560 --> 0:19:31.239 flift very quickly in about seven days in Washington. So 0:19:31.320 --> 0:19:33.600 it's a it's a large package at ten percent or 0:19:33.600 --> 0:19:37.200 so of GDP, but I do think more will ultimately 0:19:37.200 --> 0:19:39.639 be needed, and I do think you'll type a number 0:19:40.040 --> 0:19:42.800 I think helps to solidify that. Michael, You've got a 0:19:42.840 --> 0:19:45.720 great international resume as well. Our David Weston is going 0:19:45.760 --> 0:19:48.879 to speak with Vice President Pence here in three hours. Okay, 0:19:48.920 --> 0:19:52.960 great a Florida just fell off the map in terms 0:19:52.960 --> 0:19:56.640 of labor economy, and as John's nation has figured out, 0:19:57.040 --> 0:20:00.800 you have to put the check in. As you brilliantly said, 0:20:00.840 --> 0:20:04.440 the small business hands a service sector that's getting crushed 0:20:04.800 --> 0:20:09.480 when you why can't we do that? Why can't politicians 0:20:09.600 --> 0:20:14.960 just say this is a natural disaster, one off, effective immediately, 0:20:15.040 --> 0:20:18.159 we're cutting blah blah blah blah blah. Why are we 0:20:18.240 --> 0:20:21.560 unable to do that? I don't know. I mean I 0:20:21.880 --> 0:20:25.520 do wish that it were geared a little more like 0:20:25.800 --> 0:20:29.440 the support provided in Europe in the UK, where where 0:20:29.280 --> 0:20:33.040 the arrangement is you keep people on payrolls and will 0:20:33.119 --> 0:20:37.239 foot you know, seventy of of the wage bill for 0:20:37.760 --> 0:20:39.560 you know, call it for three months and then we'll 0:20:39.560 --> 0:20:41.479 we visit if we need to do another three months 0:20:41.320 --> 0:20:44.280 and go from there. So I do wish we were 0:20:44.359 --> 0:20:46.880 directed a little more in that in that way. We 0:20:47.200 --> 0:20:49.199 I don't know why we don't do it. It's just 0:20:49.240 --> 0:20:52.720 not it's just not what we do. Uh. And and 0:20:52.800 --> 0:20:56.080 it's I think it's potentially a problem because I worry, 0:20:56.119 --> 0:20:58.960 as I said before, about gaps that we don't get 0:20:59.000 --> 0:21:02.280 the resources down owned the spectrum of from large firms 0:21:02.280 --> 0:21:05.359 down to small firms, and and I worry about potential 0:21:05.520 --> 0:21:08.680 cracks and gaps, and and we don't get resources to 0:21:08.720 --> 0:21:11.760 where they're needed most. But yes, if if I had 0:21:11.920 --> 0:21:15.160