Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio. One headline, They're just starting to
Speaker 1: cross and I think, you know, let's remind everybody that
Speaker 1: there these are the minutes from two FED meetings, both
Speaker 1: on March three, that emergency meeting that we got and
Speaker 1: then again that earlier than expected March fifteenth meeting that
Speaker 1: happened over the weekend. One headline, I've got extremely large
Speaker 1: degree of uncertainty on the outlook that is coming from
Speaker 1: that FED meeting and also that rates at zero until
Speaker 1: the economy, weather, the virus, So some initial thoughts on
Speaker 1: all of that. Let's get to our team. Kathleen Hayes
Speaker 1: is with US Global Economics and Policy editor at Bloomberg New.
Speaker 1: She's on the phone from the Poconos. Dave Wilson also
Speaker 1: with US, Stocks editor at Bloomberg News, also with us
Speaker 1: from New Jersey. So, Kathleen, initial thoughts here, as you
Speaker 1: see these minutes, you know this is interesting because um,
Speaker 1: you know, we have our entire he said, ECO team
Speaker 1: UM Washington d C based in any lock up that
Speaker 1: occurs when the minutes are released. I've been in this
Speaker 1: lock up, and generally speaking, you go in about an
Speaker 1: hour forty five minutes before the minutes are released, and
Speaker 1: you have time to read them and really vet them
Speaker 1: and make sure whatever headlines you put out, whatever story is,
Speaker 1: is fully thought over, you know, when you put the
Speaker 1: most important things first, and the two headlines you read
Speaker 1: are all we have so far. I have been looking around.
Speaker 1: I see that Dow Jones, one of our competitors, who
Speaker 1: also covers a FED very closely, has a brief story out.
Speaker 1: Not this this outpouring up. Here's what the FED was thinking.
Speaker 1: It was obviously unusual because there was the unscheduled emergency
Speaker 1: meeting on March second. So presumably, as we see more
Speaker 1: headlines are more of a recounting of what the minutes say,
Speaker 1: we're going to find out, you know, what the debate
Speaker 1: was there, how urgently they felt they had to act,
Speaker 1: and of course they cut the key rate. Then they
Speaker 1: made it very clear that, you know, quantitative using bond purchases,
Speaker 1: whatever it takes, basically is going to be done. Then
Speaker 1: we got the minutes of the March fifteenth meeting. So
Speaker 1: it's something I think it's a bit different today in
Speaker 1: terms of how the information has been given to the
Speaker 1: press and what we're waiting to see. But um, it's
Speaker 1: pretty clear from what we have seen rates at zero
Speaker 1: until the economy has weathered the virus. So in other words,
Speaker 1: we have to see and I think that is the question,
Speaker 1: doesn't it, you guys, that whether what is weathering the virus,
Speaker 1: is it getting to the point where the virus peaks
Speaker 1: and comes down, is it having the economy show it's
Speaker 1: gotten through it? A lot of unanswered questions, Yeah, exactly.
Speaker 1: And I'm just looking through some of the notes too,
Speaker 1: and it's talking about, you know, the pace of economic
Speaker 1: growth abroad was already subdued before the appric I mean
Speaker 1: they were also looking at, you know that this wasn't
Speaker 1: just a u S thing that this was obviously a
Speaker 1: global thing as well, and just looking at you know,
Speaker 1: uncertainty in the markets, volatility in the markets, conditions in
Speaker 1: short term funding markets also deteriorated sharply amid a decline
Speaker 1: in market liquidity and challengers and dealer intermediation. They were
Speaker 1: specifically going into the weeds of how the financial markets
Speaker 1: are working or not working, and that is why you
Speaker 1: saw those unprecedented actions and also the expansion of the
Speaker 1: balance sheet to make sure that there was liquidity in
Speaker 1: the markets. It was all about making sure also that
Speaker 1: those markets were operating accurately. Jason, all right, so Dave Wilson,
Speaker 1: come on in here. It looks like we're seeing equities
Speaker 1: take a little bit of a tick up. Not nothing
Speaker 1: dramatic going on here, but tell us what's underneath. Uh,
Speaker 1: this trade based on the FED, but also based on
Speaker 1: everything else that is happening in the world, well back
Speaker 1: toward its highs of the day, and sort of backed
Speaker 1: off a bit before the minutes were released. So clearly
Speaker 1: that's being taken as a positive. Now a whole lot
Speaker 1: of a positive, but certainly kind of helping things along.
Speaker 1: You know, what jumps out today's trading. I mean, we
Speaker 1: were seeing the travel related shares rally as we have
Speaker 1: for a couple of days. Now, what's different this time?
Speaker 1: At least it got my attention, And one is we're
Speaker 1: seeing the home builders with some pretty substantial gains. Poultigroup
Speaker 1: notable in that score. It's up ten percent in today's trading,
Speaker 1: uh Leonora, Dr Horton also in the SMP five hundred
Speaker 1: also showing some pretty substantial gains as well. But even
Speaker 1: more so, what's going on with the hospital chains? And
Speaker 1: if you think about an area that's being affected by
Speaker 1: the virus, I mean you figure that's front and center
Speaker 1: at this point. You know you've got h C A Healthcare,
Speaker 1: biggest owner of hospitals on a for profit basis, up
Speaker 1: more than eleven percent in today's training, and smaller companies
Speaker 1: doing even better. Community health systems up seventeen and a
Speaker 1: half percent, ten at Healthcare more than twenty six percent.
Speaker 1: So whatever is happening, it looks like it's being interpreted
Speaker 1: as a positive for the hospitals here. Yeah, and I
Speaker 1: want to talk more about the markets, but I do,
Speaker 1: and also go back to those FED minutes, and I'm
Speaker 1: looking at the bond market, because it does look like
Speaker 1: a slight uptick in yields, if ever so slightly ten
Speaker 1: years yielding about point seven too before the Fed minutes
Speaker 1: now up to point seven four. Again minuscule, but nonetheless
Speaker 1: a little bit of a movement. Five year note was
Speaker 1: yielding about point four three. Now we're with the yield
Speaker 1: of point four five two year note, that shorter end
Speaker 1: of the yield curve res yielding yielding point zero two.
Speaker 1: It's now I mean sorry, point to uh, it's now
Speaker 1: yield point to one. It's now yielding point to four.
Speaker 1: So a little bit of an uptake to uptake. Um, Kathleen,
Speaker 1: As you said, you know, all of this stuff is
Speaker 1: just coming across and we're all trying to make sense
Speaker 1: of it. Um, So treasury is a little bit lower
Speaker 1: after that Fed mission. Fed minutes officials advocated quote forceful
Speaker 1: monetary response. That is truly what we got, Kathleen. Well,
Speaker 1: and we certainly did. And apparently according to the minutes. UM.
Speaker 1: We're looking at our market live blog, a few preferred
Speaker 1: to um do a fifty basis point. That's interesting meeting.
Speaker 1: I get some people saying, hey, let's don't wait. You know,
Speaker 1: let's let's be as aggressive as we can, etcetera, etcetera. UM.
Speaker 1: I think for the bond market, UM, what they would
Speaker 1: fear in something like us is any hint that the
Speaker 1: FED didn't say what we all we were just talking about,
Speaker 1: you're going to keep this response in place. You want
Speaker 1: a forceful monetary response, and you want to keep it
Speaker 1: in place until the virus has been vanquished. And you know,
Speaker 1: be FED officials UM have said since then that they
Speaker 1: know that they can't sure the virus, they can't get
Speaker 1: test kits out faster, they can't do that. But what
Speaker 1: they can do is do everything they can to bolster
Speaker 1: the economy, both to the financial markets throughout so that
Speaker 1: we don't get a bad financial crisis. There's been all
Speaker 1: those tresses and strain, but we've also seen that that
Speaker 1: just you know, you look every day to see if
Speaker 1: there's another headline on a new FED program. Right, well,
Speaker 1: and we're going to hear from Sorry to interrupt, Kathleen,
Speaker 1: but we're running a shot in time. We are going
Speaker 1: to hear from Jpale tomorrow, right, that's right, And a
Speaker 1: webinar at ten a m. We heard from Charlie Evans
Speaker 1: from Chicago, FED speaking to Econo Club of Chicago, by
Speaker 1: the way, um, and he also sees some you know,
Speaker 1: long drawn out damage to the economy, so it will
Speaker 1: be very important to hear what he tells us. All right, Well,
Speaker 1: thank you both so much. Kathleen Hayes, Global Economics and
Speaker 1: Policy Editor, joining us with her analysis of the FED mins.
Speaker 1: We're gonna have more on that coming up in just
Speaker 1: a few minutes, Carol our. Thanks to Dave Wilson as well.
Speaker 1: He'll be back a little bit later on with his
Speaker 1: chart and stock of the day. You're listening to Bloomberg
Speaker 1: Business Week Karl Masser along with Jason Kelly, and our
Speaker 1: top story certainly at this hour is the release of
Speaker 1: those minutes from the latest FED meeting meetings March three
Speaker 1: and also March fifteenth. Let's gettle bit more analysis. Steeplitz
Speaker 1: is back with US chief US economist at TS Lombard
Speaker 1: on the phone from New York City. So Steve, hopefully
Speaker 1: you've had a few minutes to digest it. Although it
Speaker 1: was a live release, so all of us were scrambling
Speaker 1: to kind of make sense of it, because usually they're
Speaker 1: released a little bit of ahead of time. We can
Speaker 1: you know kind of figure out. Certainly are our journalists
Speaker 1: are in the lock up? The key points? Um, what
Speaker 1: stands out for you from what you've read so far? Well, honestly,
Speaker 1: what's first of all, Hi, everybody, I didn't What stands
Speaker 1: out to me is it's sort of a time capsule,
Speaker 1: you know. It's it's like reading the minutes today from
Speaker 1: something that happened in two thousand and eight. I mean,
Speaker 1: so much as occurred from the time at which they
Speaker 1: met in terms of their own actions, as well as, uh,
Speaker 1: what happened to the economy since then. Uh, it has
Speaker 1: more of a it's an interesting slice of what they
Speaker 1: were thinking at the moment. And Uh, I think one
Speaker 1: of the things that jumps out at me, which I
Speaker 1: was saying at the time, was there are a number
Speaker 1: of FOC members who said, well, with all everything that
Speaker 1: you're doing, don't cut the rate to zero right now,
Speaker 1: just cut a fifty basis points in leasing room so later.
Speaker 1: And and I think that was a valid point that
Speaker 1: that they were making, because everything that fed is done right. Um.
Speaker 1: To use a phrase that was popular in two thousand
Speaker 1: and eight was to ring fence. In effect, the government
Speaker 1: mandated contraction. Uh. And that and the and the financial
Speaker 1: impact that that created, and to ring fence it from
Speaker 1: basically spilling into the broader economy to the point that
Speaker 1: something even worse, you know, gets created. But you can't
Speaker 1: do that with this right right, The broader economy was
Speaker 1: impacted from day one pretty much, right right. So what
Speaker 1: you try and do is by ring fencing, what I
Speaker 1: mean is make sure all these good businesses that have
Speaker 1: been are now shuttered or severely impacted, make sure that
Speaker 1: they have cash that they can open with and that
Speaker 1: they don't actually go out of business. Um. And then
Speaker 1: on the market side, make sure that everybody who is
Speaker 1: stressed in their positions who needed to raise cash could
Speaker 1: sell securities, that there could be a market price and securities,
Speaker 1: which if you remember was part of the problem with
Speaker 1: Bearer with Lahman um that there's a price for these
Speaker 1: securities and if they have to be in the bid
Speaker 1: on the office side of the market, that is the
Speaker 1: FED they will be to allow that. So if you
Speaker 1: allow that to occur and you push credit where where
Speaker 1: firms are shuttered, then you the presumption is you have
Speaker 1: something that's still viable so that when they mandated shut
Speaker 1: down ends or as it ends, because it's not going
Speaker 1: to just end to one fell swoop. We know that.
Speaker 1: But as it ends, then these businesses can come back
Speaker 1: to life again. Whereas if you don't do that, and
Speaker 1: this is what I mean by by the uh rein fencing,
Speaker 1: if you don't do that, then this thing just cascades through.
Speaker 1: And then when everyone goes back to work, that's great,
Speaker 1: but so many business will just just be permanently closed.
Speaker 1: And so what do you want to hear? So we're
Speaker 1: gonna hear at least from a speech perspective from j
Speaker 1: Pale tomorrow, we're continuing to hear from FED speakers. What
Speaker 1: more do you want to hear that? Maybe more up
Speaker 1: to date and relevant that the FED is thinking about
Speaker 1: or doing, Given as you say, Steve, that you know this.
Speaker 1: This feels a little bit outdated these minutes at this
Speaker 1: moment in time, given how fast the world is moving. Yeah.
Speaker 1: I think there's two things here, and I think one is, um,
Speaker 1: what's the simulus plan? Right? So everything they've done is
Speaker 1: to keep everything together, and I guess the stimulus plan
Speaker 1: is through the SPVs, and I like to hear more
Speaker 1: about that and more about we keep getting bits of
Speaker 1: pieces of information about this lending to main street business
Speaker 1: and I'd like to hear a little bit more specifically
Speaker 1: about what that is and how that's gonna work. Um.
Speaker 1: And but then I guess the stimulus is just for
Speaker 1: them to support whatever the fiscal side is because there's
Speaker 1: no more stimulus that they can really offer. And then
Speaker 1: while it's early to think about this, and I admit that,
Speaker 1: but triage is not policy. And what is your policy?
Speaker 1: That that is the FED? What is the FENS policy
Speaker 1: as we reopened? Because death Comb is on the scales
Speaker 1: of capital market prices everywhere, they're the both sides of
Speaker 1: the market almost everywhere. Um, what is their plan? What
Speaker 1: is their thought to unwind where they are? And are
Speaker 1: they going to go back to what they were over
Speaker 1: the last expansion, which is being the leverage for the system,
Speaker 1: their balance. It was a level of a system to
Speaker 1: allow um borrowing and and and and an equity issue
Speaker 1: was to occur at the same time, washing financial sector
Speaker 1: leverage to be fair, and Steve, we've just got about
Speaker 1: forty five seconds left here. I mean, the Fed's going
Speaker 1: to have to watch how this evolves on the other side,
Speaker 1: just like the rest of us. We don't know what
Speaker 1: the longer term impact will be. What kind of behavior
Speaker 1: will we see, you know, in individuals and companies. We
Speaker 1: just don't know yet. I mean, we were talking to
Speaker 1: John Worth, I'm well known to the sports industry and
Speaker 1: saying that is kind of a loss when it comes
Speaker 1: to sports at this point. So, UM, just got about
Speaker 1: thirty seconds left here. I I agree with you completely,
Speaker 1: and I don't expect him to answer that, but I think, um,
Speaker 1: I think it's something though that we should be thinking
Speaker 1: about as the economy solely does recover. And remember, our
Speaker 1: view is that the lows aren't into the equity market.
Speaker 1: We're looking eighteen dreds thousand. I still see a negative
Speaker 1: GDP for the third quarter. Um, the overhang of what's
Speaker 1: occur ard is going to extend basically into the third quarter,
Speaker 1: very slow return and GDP doesn't get back to where
Speaker 1: it was in the fourth quarter twenty nineteen until late
Speaker 1: all Right, we really appreciate that instant analysis. Fast moving
Speaker 1: this afternoons ficial without that lockout. Steve litz c us
Speaker 1: economist for T s Lambard joining us on the phone
Speaker 1: from New York City. Stay safe. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: Let's turn to the doc our guy. Dr Ian LUs Bader,
Speaker 1: clinical Associate Professor of Medicine at n y U s
Speaker 1: Lango Medical Center, joining us on the phone from New
Speaker 1: York City. We love checking in with him because he
Speaker 1: gets it to a straight Dr leus Bader, how you doing, Hi, Thanks,
Speaker 1: thanks for having me. Definitely challenging times out there today,
Speaker 1: having done twenty telemedicine visits many patients with you know,
Speaker 1: really classic COVID symptoms so loss of smell and see
Speaker 1: or clough. I personally know about twenty friends and colleagues
Speaker 1: with diagnosed COVID, A number of physicians who have acquired it,
Speaker 1: some fortunately, most doing fairly well. Some has unfortunately been hospitalized.
Speaker 1: So very challenging. Times are really it's all hands on deck.
Speaker 1: Are friends who are in dermatology, urology are being called
Speaker 1: into the hospital to really help manage the huge volume
Speaker 1: of patients. So it's it's a challenge. So when you
Speaker 1: read are you know here Anthony Faucci as we know
Speaker 1: at the National Institute of Allergy and Infectious Diseases, you
Speaker 1: know very well known now because of the virus updates
Speaker 1: and SEANTA daily basis. When he says, um Dr les
Speaker 1: Bader that the start of a turnaround in the fight
Speaker 1: against the virus could come after this week, how do
Speaker 1: you see that? How do you interpret it? Because I
Speaker 1: think it is important that we not run into fast
Speaker 1: But how do you interpret that? Thinking? Well, Dr Faucci
Speaker 1: is is a legend. I remember him from the HIV
Speaker 1: days back in the eighties, and so he is. He
Speaker 1: is a very credible expert for a long time. And uh,
Speaker 1: and and hopefully the models are correct, and hopefully the
Speaker 1: numbers are correct. I can tell you the system, certainly,
Speaker 1: the hospital system is that max capacity and certainly very strained.
Speaker 1: UM it's always challenging when when some of your colleagues
Speaker 1: are succumbing to the same disease that that you're treating.
Speaker 1: And I think we have frustrations. I think a lot
Speaker 1: of the numbers we have are inaccurate because we really
Speaker 1: don't have testing. Getting um Miley symptomatic patients tested, UH
Speaker 1: is very difficult. You know, what's advertised as sort of
Speaker 1: the fifteen minute turnaround is very very limited. People are
Speaker 1: asking intelligently, I must say, patients asking about antibody testing
Speaker 1: they think they had it. Is it safe to go
Speaker 1: out those i GM early antibodies and i G G antibodies.
Speaker 1: So many people, including physicians, would like to be tested,
Speaker 1: and I think when we do test all those people
Speaker 1: were going to see the case number much much higher
Speaker 1: than what's officially reported. So hopefully he's right. Hopefully the
Speaker 1: the peak is sort of cresting at this time because
Speaker 1: the system certainly is is strained. I myself will be
Speaker 1: on call on the hospital next weekend, so certainly I
Speaker 1: would it would be great if the numbers begin to
Speaker 1: come down. And we also really need better, better treatment.
Speaker 1: A lot of patients are in studies for that plaquinal
Speaker 1: hydroxy chloroquine and zpac io sex inhibitors, but we really
Speaker 1: also are lacking data on what's the right approach to
Speaker 1: treat people. So that's a lot of supportive care. My senses,
Speaker 1: when all this data is in and all the ventilators
Speaker 1: have arrived, the storm will have passed and in June
Speaker 1: or July will have ten thousand extra ventilators and lots
Speaker 1: of studies and uh, you know, most of the storm
Speaker 1: will have passed. Unfortunately, so only got about a minute left.
Speaker 1: Dr les Bader, I gotta ask you just from a
Speaker 1: very practical perspective, because we're talking about it in our house.
Speaker 1: When do we are a mask? You know, in general,
Speaker 1: I think it's good to be safe. Most people in
Speaker 1: their household, if they've had it, they've probably exposed to
Speaker 1: other people. So unless someone for sure in the house
Speaker 1: knows you're in quarantine, you haven't no one else did,
Speaker 1: that's reasonable. It is reasonable to wear outside, although I
Speaker 1: must say there are so few people on the street
Speaker 1: you haven't more you know you've got. But I think
Speaker 1: if you're going into a closer space, that's reasonable if
Speaker 1: you're sure you haven't had it to where it play
Speaker 1: it safe. You know, Gloves, if you wash your hands regularly,
Speaker 1: are probably unnecessary. So I think it more is better
Speaker 1: when it comes comes to masks, I think that's reasonable
Speaker 1: to do. I'm going to replay that from my teenage
Speaker 1: daughter who keeps fighting me on it, like I can't
Speaker 1: breathe through it. I'm like, just put it on or
Speaker 1: just wear it. Figure it out. Figure it out. You
Speaker 1: do get used to it, and I think this is
Speaker 1: also a time to think about I hate to say
Speaker 1: it advanced directives many patients who are older who are sick.
Speaker 1: We know they get in the I c U. It's
Speaker 1: a mortality to the I see you think about it
Speaker 1: doesn't hurt to sort of say, what do I want
Speaker 1: to important to think about that? All Right, We're gonna
Speaker 1: put We're gonna talk with you more about that the
Speaker 1: next time we catch up. And we've been very fortunate
Speaker 1: that you're able to spend some time with us just
Speaker 1: about every week. We really appreciate Dr Ian Lesibator, stay
Speaker 1: safe out there, Clinical Associate Professor of Medicine over at
Speaker 1: Lango Medical Center. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. I also think
Speaker 1: it's notable, and I just want to take a moment
Speaker 1: to point out that Newsom also has been doing some
Speaker 1: fairly remarkable things in terms of not just allocating his
Speaker 1: states resources within the state, but also reallocating them when
Speaker 1: they're not needed, sending ventilators to New Yorks. Yeah. I mean,
Speaker 1: it's really just amazing to think about how important New York,
Speaker 1: California and all of this is, especially as we move on,
Speaker 1: as you say, to this next phase, it's really um
Speaker 1: it's an important thing to to keep track of. And
Speaker 1: as you say, it's it's ventilators, but you know the
Speaker 1: PPE and everything else. Yeah, exactly. I mean they said
Speaker 1: their initial goals were five hundred million PPE, you know,
Speaker 1: and it's all its various forms. And then of course
Speaker 1: as the you know, the trendline and how the virus um,
Speaker 1: you know, the models, how they played out has given
Speaker 1: them an opportunity to kind of take a second look
Speaker 1: at that, and then that's how they've been able to
Speaker 1: certainly spread out the equipment not just to their state,
Speaker 1: but to other states. So I think I don't listen
Speaker 1: to you. I listened to you, listen to feel free
Speaker 1: to tweet me. Does he always listen to me? And
Speaker 1: don't think I mostly listen to you? You know who
Speaker 1: I always listen to and read? Though? Is Michelle what
Speaker 1: a rock star during all of this? Because we're always
Speaker 1: interested in what's going on in Wall Street, maybe now
Speaker 1: more than ever because at the crux of this geographically
Speaker 1: but also in terms of the recovery, really important to
Speaker 1: understand what's going on there. She joins us on the
Speaker 1: phone from Vermont. Michelle Davis does Financial Reporter her story yesterday.
Speaker 1: I feel like set the tone for everything that's happening.
Speaker 1: Greed and fear collide. Wall Street calls traders back to
Speaker 1: the office. So Michelle, help us understand what's going on
Speaker 1: when it comes to Wall Street people going to work,
Speaker 1: not going to work. What do you find? So we
Speaker 1: have been hearing from traders across Wall Streets that they
Speaker 1: are getting pressure from managers to go back into the
Speaker 1: office even as you know, infections rise around them, you know,
Speaker 1: not only around New York City, but in some cases
Speaker 1: on the trading floors that they had been working on UM.
Speaker 1: And I think this is a really important story because
Speaker 1: when we talk about Wall Street and traders, you know,
Speaker 1: these are white collar workers that you know, they're not
Speaker 1: a group of people that tends to realizeit much empathy
Speaker 1: from the public, but there are people who are facing
Speaker 1: serious pressure here to choose between you know, keeping their
Speaker 1: jobs in some cases that they're if people senior to
Speaker 1: them are pressuring them to come in UM and putting
Speaker 1: themselves and their families at risk, or training are straining
Speaker 1: the health system. I gotta tell you, greed and fear collide.
Speaker 1: That has been our theme since we saw it on
Speaker 1: the Bloomberg terminal because it does feel like as there
Speaker 1: are more Michelle, you know, optimistic trend lines when it
Speaker 1: comes to the virus, hardly are we out of it?
Speaker 1: But um, you can see that folks are saying, I
Speaker 1: saw it in my neighborhood. My daughter and I were
Speaker 1: walking your dog and there were more people out yesterday
Speaker 1: and we were like, what's going on here? Because we
Speaker 1: still you know, we've still got to be in this
Speaker 1: shutdown mode in order to make sure that the models
Speaker 1: you know, work for us here. So, um, you know,
Speaker 1: what are you so what are you hearing from individuals?
Speaker 1: Are they they're feeling pressured? Um? What are you hearing
Speaker 1: from the firms who say, wait, we're not pressuring them.
Speaker 1: So it's of course, uh, very mixed. There are some
Speaker 1: firms like Goldmen Stocks that have said publicly that you know,
Speaker 1: very high percentage more than nine of their employees are
Speaker 1: working from home and have been able to successfully do that.
Speaker 1: At JP Morgan for for the trading workforce, that it's
Speaker 1: closer to eight percent working from on the trading floor.
Speaker 1: And you know, the banks say that this is all
Speaker 1: a balancing act. They are trying to juggle keeping markets
Speaker 1: functioning like traders are an essential part of market stability
Speaker 1: and and people say that if we were to just
Speaker 1: close markets everyone could stay home, it would lead to
Speaker 1: way deeper issues in terms of stability and and you
Speaker 1: know of the market structure and liquidity. But the people
Speaker 1: I'm talking to sday at least at JP Morgan, we
Speaker 1: got our hands on this email that showed that UM
Speaker 1: senior credit head had told his employees that even though
Speaker 1: overall at the firm, you know that the directive has
Speaker 1: been please work from home if you can. UM this
Speaker 1: manager had said, you are you have to be on
Speaker 1: the trading floor. You have to be in the office
Speaker 1: unless you have a condition and you have a doctor's note.
Speaker 1: So the banks are saying, you know, they would never
Speaker 1: force anyone to come in who doesn't feel comfortable coming in.
Speaker 1: But yeah, but you know how that is. Jason and
Speaker 1: I talked about that's the thing. So that is the
Speaker 1: thing that I keeps your in on Carol and I
Speaker 1: both Michelle, which is this notion of there is a
Speaker 1: very big difference. I think we're all learning it between
Speaker 1: someone saying, listen, if you don't feel comfortable, you don't
Speaker 1: have to come in and basically saying, look, we are
Speaker 1: doing this for your own good and for the good
Speaker 1: of the firm, and for the good of society. Candidly,
Speaker 1: I do feel like that's a vast difference that you
Speaker 1: guys really zeroed in on this story. And we know
Speaker 1: about ambition, we know about you know, people wanting to
Speaker 1: do a good job and provide for their families and
Speaker 1: all those different things. But at what cost. And this
Speaker 1: isn't just about you know, someone saying well, I'm a
Speaker 1: tough guy. This is about like the number of people
Speaker 1: who are out in social distance and and the spread
Speaker 1: of this virus. Right yeah, And and I talked to
Speaker 1: people who who pushed back on this idea that you know,
Speaker 1: they needed to be at the office to be able
Speaker 1: to to you know, appropriately do their jobs. Some of
Speaker 1: the people I talked to you had been working from
Speaker 1: home already, and and things had been going smoothly, and
Speaker 1: then they got calls from manager or pressure from other
Speaker 1: people to come back and just I guess, to differentiate
Speaker 1: themselves from other terms that that maybe had a larger
Speaker 1: workforce at home. I think this is going to be
Speaker 1: so fascinating to watch, you know, especially again, like this
Speaker 1: is our sandbox that we plan Wall Street and you
Speaker 1: cover it as we said so well, Michelle, but you know,
Speaker 1: as a lot of New York, especially when it goes
Speaker 1: comes to finance, as New York finance goes, so goes
Speaker 1: a lot of the rest of the world, And you
Speaker 1: do just wonder what this looks like on the other side,
Speaker 1: and whether you do have a meaningful number of people, Carol,
Speaker 1: who stand up and say, you know what, No, I'm
Speaker 1: not going to do that. That's not it's not good
Speaker 1: for me, it's not good for my family, and I
Speaker 1: can't I can't do this anymore. Yeah, exactly. And we've
Speaker 1: seen this in organizations right where this has gone on,
Speaker 1: where you know, it's not until we feel like a
Speaker 1: number of people or our managers are doing it that
Speaker 1: we feel comfortable about doing it. Setting the tone absolutely
Speaker 1: all right, Michelle Davis, Thank you so much. Always good
Speaker 1: to catch up with you. Michelle Davis, finance reporter, rock
Speaker 1: star for Bloomberg. Been all over this story joining us
Speaker 1: on the phone from Vermont, Carol, Yeah, I think it's
Speaker 1: really important, and I just think this is going to
Speaker 1: be key in terms of when we get on the
Speaker 1: other side of this and how we all go back
Speaker 1: to it, and I think there's going to have to
Speaker 1: be some coordination between companies and organizations and certainly within governments,
Speaker 1: even though states are going to probably do it at
Speaker 1: different times. This is Bloomberg Business Week with Carol Masser
Speaker 1: and Jason Kelly on Bloomberg Radio. Well, I feel like
Speaker 1: we've just been been having the show of like our
Speaker 1: favorites in in many ways home coming it really is
Speaker 1: and virus COVID nineteen version. I know, we go from
Speaker 1: Michelle Davis to to now one of our one of
Speaker 1: my long term friends, a friend of the show, uh
Speaker 1: Dan Morgan, down with Senovis in Atlanta. Known him for
Speaker 1: a long time and looking at the markets and he's
Speaker 1: really done some thoughtful analysis. So Dan, great to have
Speaker 1: you with us. And first of all, how are you doing.
Speaker 1: How's it going down in Atlanta? Oh? Thanks are good?
Speaker 1: Hi Jason and Carol. It's a little quiet down here
Speaker 1: when you're driving around on the streets. I don't know
Speaker 1: if it's like that in New York, but uh, uh yeah,
Speaker 1: it's like that everywhere. I guess, yeah, I do wonder,
Speaker 1: you know, just to dwell for a minute on this,
Speaker 1: Uh Dan, you know, Atlanta. Obviously it's been different in
Speaker 1: our listeners and and poor Carroll have had me listening
Speaker 1: to had to listen to me, you know, talk about maybe, uh,
Speaker 1: the governor of Georgia being a little bit but behind
Speaker 1: the curve in terms of closing things down and sheltering
Speaker 1: in place. But it sounds like Atlanta is taking a
Speaker 1: little more seriously these days in Georgia. Yeah, you're right, Jason.
Speaker 1: I think initially it was kind of a thought that
Speaker 1: there were these kind of epicenters like New York City
Speaker 1: in San Francisco, and it wasn't quite as a big
Speaker 1: deal here in Georgia. But you know, the number of
Speaker 1: cases picked up and it's become more of an issue,
Speaker 1: and I think they have taken on pretty much the
Speaker 1: same precautions now they're just pretty much everywhere. Eld Hey,
Speaker 1: you know, Dan, is there an understanding like, you know,
Speaker 1: it's hard for us certainly here in New York. You know,
Speaker 1: we see it firsthand. We understand how serious it is,
Speaker 1: and we're all in lockdown. But I do wonder how
Speaker 1: other states are feeling when they're like, you know, it's
Speaker 1: not so bad here, but do we all understand kind
Speaker 1: of we're all in this together, do you think. Yeah?
Speaker 1: I think so, Carol. I mean, you know, like initially,
Speaker 1: I think it was thought that it was kind of
Speaker 1: a separatist type of thing, but I think now, um,
Speaker 1: you know, we have the Disease Center here in downtown Atlanta,
Speaker 1: so you know President Trump is down here very often
Speaker 1: doing conferences. So I think, you know, I think at
Speaker 1: this point, like you said, Carol, I think we all
Speaker 1: feel like it's something that everyone has to fight together.
Speaker 1: All right. So you're an investor. At the end of
Speaker 1: the day, you look at the markets, you look at
Speaker 1: individual stocks. Dan, what do you make of this? And
Speaker 1: as I alluded to, you've been doing this for some time.
Speaker 1: You've seen some downturns, you've seen some crises. How do
Speaker 1: you approach this one maybe a little bit differently? Well,
Speaker 1: you are right, Jason, I mean you think about it.
Speaker 1: I hate to admit this on the air in front
Speaker 1: of everyone, but I've been in the business since nineteen
Speaker 1: and when I started, the Dow was at two thousand,
Speaker 1: and I went to Black Monday, and the Dow is
Speaker 1: now with twenty two thousand. So I have a little
Speaker 1: different perspective than maybe somebody who just got in the
Speaker 1: market maybe the last five or ten years ago. But
Speaker 1: you know, this is obviously a huge pullback. It's you know,
Speaker 1: in terms of you know, from top to bottom. You know,
Speaker 1: it's about a third. It wasn't quite as bad as
Speaker 1: the housing bubble. You know, that was what fifty six
Speaker 1: percent from the top to the bottom. So you know,
Speaker 1: it's it's not as bad. But you know, I don't
Speaker 1: know about you guys, but I'm kind of taking and
Speaker 1: stride um. You know, it's it is a huge negative.
Speaker 1: There's sectors that have been absolutely obliterated, but there's also
Speaker 1: you know, there's also some interesting opportunities out there in
Speaker 1: terms of various stocks and sectors that UH investors could
Speaker 1: kind of think about, you know, going forward in this
Speaker 1: kind of new COVID nineteen environment. So tell us about
Speaker 1: some of those What are you thinking about? Yeah, well,
Speaker 1: you know, technology, you know, that's my eerie of focus. Um,
Speaker 1: you know, and again it's you know a lot of
Speaker 1: the core themes that we kind of started off the
Speaker 1: year talking about Jason McCarroll I think are still in place.
Speaker 1: I mean, you think about you know, the big build
Speaker 1: out in terms of the data center space in terms
Speaker 1: of infra structure as a service, in terms of cloud.
Speaker 1: I mean that's still I don't expect to really change um,
Speaker 1: so that should be a good area going forward. You
Speaker 1: also think about the roll out of five G. Everybody's
Speaker 1: saying now that Apple is going to probably push that
Speaker 1: into the first quarter of calendar twenty one, but I
Speaker 1: still expect that to continue to roll forward. So even
Speaker 1: though we know about all the bad stuff that's going
Speaker 1: to happen, right you know, and some of these sectors
Speaker 1: that you can just keep reporting about it all day long,
Speaker 1: it's so depressing, it's nice to kind of take a
Speaker 1: step back and say, wait a minute, you know, it's
Speaker 1: not all that bad. There are some certain things that
Speaker 1: are good out there, and there are some certain sectors
Speaker 1: and companies that are actually going to benefit from this. Dan,
Speaker 1: I gotta ask you because one of the stories that
Speaker 1: Jason I talked about specifically for our New York audience
Speaker 1: was about the creation of a w f H e
Speaker 1: t F Work from Home e t F, about the
Speaker 1: expectations that more people will ultimately be working from home
Speaker 1: after we get through this virus, and that's going to
Speaker 1: benefit cloud companies and a few others do you buy
Speaker 1: into that? Well, Carol, can I be a part of
Speaker 1: this so that I can be like saying and get
Speaker 1: a code name and get some sort of copyright off
Speaker 1: you know, that would be awesome? Yeah, I think so.
Speaker 1: I mean if you think about the names in that group, right,
Speaker 1: we all know them, right, Zoom Video Technology, which did
Speaker 1: an I p O you know recently and it's just
Speaker 1: done fabulous, right, That's been one of the plays in
Speaker 1: that space. Um, you know you think of Microsoft with
Speaker 1: their team's app. That's another area, Slack, which isn't quite profitable,
Speaker 1: and then like you said, Carol, you start to kind
Speaker 1: of take that out and say, well what does that
Speaker 1: mean for the cloud? Right? And then you think of
Speaker 1: like Amazon and a w S and Aser with Microsoft,
Speaker 1: and then you look down at the grandeur level in
Speaker 1: terms of who's producing the data center chips like Nivada
Speaker 1: and a m D and so forth. So I think
Speaker 1: you could put something together like that that would be
Speaker 1: really cool and uh, you know, trade market or code
Speaker 1: name it and uh then everyone will refer it to that,
Speaker 1: and then you can have the trademark, you know, revenue
Speaker 1: that comes off of it. And so how much do
Speaker 1: you worry. I guess Dan that some of these gains
Speaker 1: when it comes to some of the tech names and
Speaker 1: are are short lived only because the world sort of
Speaker 1: reverts back. How do you sort of make the call
Speaker 1: between what is? And you and I used to talk
Speaker 1: about this, and we talked about something conductors, like what
Speaker 1: cyclical and what secular in terms of you know, these changes.
Speaker 1: How wary are you of the of the world snapping back?
Speaker 1: Are you so convinced like many are, that the world
Speaker 1: has just fundamentally changed? Well, I think it has to
Speaker 1: some degree, Jason. And like the names that we just
Speaker 1: talked about in some of these themes, they were in
Speaker 1: place before and now we're kind of saying, Wow, it's
Speaker 1: even bigger than we thought. So I would expect that
Speaker 1: to continue going forward. And you know, I would agree
Speaker 1: with you. I think it's gonna be a little bit
Speaker 1: slower coming out of the second quarter than people would
Speaker 1: have originally expected. I think most of research I was
Speaker 1: seeing initially was going to be like a V shape recovery.
Speaker 1: But now we go back and we see what's happening
Speaker 1: over in China and we see how kind of slow
Speaker 1: they are to get back on board. You start to
Speaker 1: wonder if this thing is going to really linger throughout
Speaker 1: the remainder of the year. So I would agree with
Speaker 1: your first point, Jason, and that is that, you know,
Speaker 1: this is kind of a post COVID nineteen environment, and
Speaker 1: I don't know if we're ever going to go back
Speaker 1: to the way it was before and our thinking and
Speaker 1: you know, these are still fundamentally sound themes that I
Speaker 1: think will play out even if we see that reversion,
Speaker 1: like you met, going back to the more traditional legacy sectors.
Speaker 1: So Dan, when you sit back and just take a
Speaker 1: break and you think about like you know, you, like Jason,
Speaker 1: like myself, like a lot of others. You know, we
Speaker 1: have seen different crises, whether it was not eleven, whether
Speaker 1: it was certainly the financial crisis, you know, other economic
Speaker 1: and market meltdowns. This one, though, like folks are saying,
Speaker 1: you're gonna be telling your grandkids about this one, you know,
Speaker 1: provided that your grandkids, you know, aren't giving you the
Speaker 1: next version of COVID. You know, that was the Michael
Speaker 1: Lewis line, right, Yeah, thank you for giving him credit
Speaker 1: because it was like classic, Like I read it this
Speaker 1: morning and I'm thinking, yeah, like I don't know how
Speaker 1: do you see this when you when your brain is
Speaker 1: a moment to breathe and you just think about kind
Speaker 1: of what we're going through and the impact it's having
Speaker 1: and will have maybe longer term. I don't know what
Speaker 1: comes to mind. Well, you're right, Carol, because you know,
Speaker 1: you go back and you look at all these other
Speaker 1: so called pandemics, right, that have occurred recently, right that
Speaker 1: we can remember, right, the stars, you know, you think
Speaker 1: of the bowla, you think of all these different things
Speaker 1: are out there yet bird flu Zeka. So this is
Speaker 1: kind of you know, I think initially that's how we
Speaker 1: looked at it. Right when the news started coming out
Speaker 1: of China. We're kind of like, okay, well, yeah I
Speaker 1: get that, and yeah we may get a little bit
Speaker 1: of a pull back, and but I don't you know,
Speaker 1: like you said, Carol, I don't think we could ever
Speaker 1: have anticipated, you know, kind of the complete shutdown of
Speaker 1: the economy for the next couple of months, and you
Speaker 1: know what would be the impact of that. So, you know,
Speaker 1: if you go back and you think in terms of
Speaker 1: you know, these previous huge corrections, and of course the
Speaker 1: one that always comes to mind because you know, basically
Speaker 1: the fact that it's the most recent that most people
Speaker 1: can you know, rem member is obviously the big housing bubble.
Speaker 1: And yeah, you know, the only thing I can say,
Speaker 1: and again it's it's kind of strange because everybody's so negative.
Speaker 1: But I'm I'm trying to stay positive. And that is that,
Speaker 1: you know, if we look at where the economy was
Speaker 1: back then, let's say, you know, in two thousand seven,
Speaker 1: around this in twenty seconds, my friend, Okay, I'm sorry,
Speaker 1: the economy is in much better shape than it was
Speaker 1: back then if we look at unemployment and other things
Speaker 1: such as household debt and all these other variables that
Speaker 1: we look at. So I'm I'm still optimistic, guys, and
Speaker 1: I hope you guys can stay on the show. Right, well,
Speaker 1: we can talk. You're optimistic having talked to you, absolutely
Speaker 1: all right, Happy Easter, Dan worried. Hope you get to
Speaker 1: at least virtually celebrated down there at Christ the King
Speaker 1: brother Journal. But you let me drive? Oh no, no, no no, no, please,
Speaker 1: I'll do the ridings. I want to drive. Just drive, baby,
Speaker 1: good question, trying. This is the drive to the globe.
Speaker 1: Thanks well, drying us on Bloomberg Radio. Yes, and do
Speaker 1: need time for the drive to the close on this
Speaker 1: Wednesday or twice is with US chief investment Officer Multi
Speaker 1: Assets Strategies at American Century Investments, some four billion in
Speaker 1: assets under management. He joins us on the phone in
Speaker 1: Los Angeles. Rich, nice to have you here with the
Speaker 1: here with us. How are you doing. Oh, we're hanging
Speaker 1: in out here. You know. The wave hasn't come out yet.
Speaker 1: We're obviously watching you guys very closely, but we're doing Okay,
Speaker 1: you're doing it. Yeah, it's it's been interesting. I feel
Speaker 1: like to watch from across the country what's going on
Speaker 1: out there, and probably vice versa. There, Rich, you know,
Speaker 1: we've got and Carol and I've talked a lot about this.
Speaker 1: You've got Andrew Cuomo here, Gavin Newsom there. Um, you know,
Speaker 1: two guys who've really seemingly stepped to the fore and
Speaker 1: and obviously for similar reasons, because heavily populated states very
Speaker 1: critical to the economy and critical for for the economies
Speaker 1: of both states to to get back on their feet.
Speaker 1: Clearly that is on their minds as well, I would imagine.
Speaker 1: Oh yeah, no question, we're very appreciative of the actions
Speaker 1: of both governors of both states. But you know, we're
Speaker 1: not taking it for granted out here. I can't speak
Speaker 1: for everyone, but we're definitely preparing for the world and
Speaker 1: hoping for the best like everyone else. Well, I'm curious then,
Speaker 1: you know how your clients are feeling at this point too.
Speaker 1: I mean, this has been you know, we have seen crises.
Speaker 1: We've all lived through the financial crisis, but the volatility,
Speaker 1: the swings that we saw certainly in the market, and
Speaker 1: then to see our economy, not just a sector of
Speaker 1: the economy, but the economy in the United States really
Speaker 1: come to a standstill that is unprecedented, certainly in our lifetime. Oh,
Speaker 1: no question. And investor reactions as you'd expect, or running
Speaker 1: the gamut or spanning the full spectrum from fear to
Speaker 1: greed and back again. Um. And it's it's following a
Speaker 1: number of things, not the least of which is the
Speaker 1: trajectory of the coronavirus. Right that this is an unusual
Speaker 1: situation where the cause and the remedies are from outside
Speaker 1: the realm of the economic and financial world. Right, it's
Speaker 1: if you want a good forecast of stock earnings, you
Speaker 1: really need to ask a medical doctor at this point. Well,
Speaker 1: that's exactly right. I mean, and and that fear versus greed.
Speaker 1: You know, we were trying to we were taping Caroline,
Speaker 1: I were our weekend show Are we Can Radio show
Speaker 1: this morning, sort of piecing together some of the good
Speaker 1: interviews that we've had this week. And you know, the
Speaker 1: two things that we identified were fear versus greed and
Speaker 1: markets versus medical. You know, those seem to be the
Speaker 1: things that everyone's wrestling with. So as an investor, and
Speaker 1: now we've had the FED you know, sort of retroactively
Speaker 1: in with these minutes today, what do you make of it?
Speaker 1: What do you do at this moment in terms of
Speaker 1: helping folks manage a portfolio? Sure, well, a number of things,
Speaker 1: you know, if you if you look out at the environment. Um,
Speaker 1: there's some good news more recently, the easing of the
Speaker 1: credit crunch, the hoped for oil deal being imminent, the
Speaker 1: likelihood that this is a V shape as opposed to
Speaker 1: a U shape recovery. Uh, there's good news coming out
Speaker 1: from uh, you know, a number of countries and states
Speaker 1: on the trajectory of the virus, the medical front regarding treatment,
Speaker 1: massive monetary and fiscal stimulus, and and likely another phase
Speaker 1: phase four to come. But a lot of that good
Speaker 1: news is not so much good news as it is
Speaker 1: an attenuation of the bad news. You know, it's not
Speaker 1: as bad as we thought, kind of like red meat
Speaker 1: or my high school friends. You know, it's not as
Speaker 1: bad as we thought, but it's still pretty bad. And
Speaker 1: there's a big difference between um turning the corner and
Speaker 1: just seeing the light at the end of the tunnel.
Speaker 1: It is likely, we believe that we haven't hit the
Speaker 1: true bottom yet. It's still pretty murky down. Their credit
Speaker 1: downgrades keep coming. Uh, there's rising defaults and bankruptcies, supply
Speaker 1: chain disruptions economically around the world are really not fully
Speaker 1: fleshed out. There's many secondary and tertiary effects to come.
Speaker 1: So we are we are not jumping back into this
Speaker 1: market um full bore. Now. If if there are speculative
Speaker 1: moneys and you have clients that have a very high
Speaker 1: tolerance for risk by all means, and they have some
Speaker 1: powder that they kept dry, there's a lot of bottom
Speaker 1: feeding going on. But for many of our clients, especially
Speaker 1: in our one choice target eight funds, these are retirement assets.
Speaker 1: As we've said many times, you want to treat your
Speaker 1: four oh one K like you treat your face and
Speaker 1: not touch it. That's good. That's really good. I'm going
Speaker 1: to use that. That's really really working on that one. Uh. Actually,
Speaker 1: to be honest, they barred it, but it's a good one. Interview. No,
Speaker 1: but I do wonder, you know every time we you know,
Speaker 1: so many folks though, do come on and say, well,
Speaker 1: it's a long term you're you know, your folks for
Speaker 1: the long term, you know, not a time to sell. Well,
Speaker 1: certainly not time to sell at the bottom. But you know,
Speaker 1: people lost a lot of money even though we've bounced back.
Speaker 1: I mean, this whole idea of preservation of capital that
Speaker 1: needs to be you know, part of your investment thesis,
Speaker 1: no question. Now, you know, hoping or assuming your portfolio
Speaker 1: is well set up from the get go. Uh. You
Speaker 1: know that is in terms of its asset allocation. You
Speaker 1: it's not that you want to stick your head in
Speaker 1: the sand and not do anything. Um. Certainly we would
Speaker 1: not advise knee jerk reacting or selling in a panic,
Speaker 1: but managing your asset allocation through a steady or methodical
Speaker 1: rebalancing algorithm is a tried and true way to navigate
Speaker 1: times like these. In other words, as the market moves
Speaker 1: and your portfolio drifts away from your strategic or normal
Speaker 1: or targeted asset allocation, you want to rebalance back to
Speaker 1: that target periodically so that you stay true to your
Speaker 1: appropriate asset allocation and risk tolerance. You now, if you
Speaker 1: if you do it ad hoc or knee jerk, it's
Speaker 1: not gonna work. If if you do it too often,
Speaker 1: you're too frequently, then incur a lot of transaction costs
Speaker 1: and just you don't be subject to whip sign But
Speaker 1: a steady, methodical program of rebalancing your asset allocation is
Speaker 1: always a smart move, especially in volatile times. All right, well,
Speaker 1: we really appreciate the time you've given us. Uh some nice,
Speaker 1: nice little quotable quotes, some sound bites were definitely gonna
Speaker 1: be stealing from you going forward. Shirts and bumper stickers
Speaker 1: and exactly, I really, I really like it. All right.
Speaker 1: Rich Wise is chief investment officer of multi assets Strategies
Speaker 1: for American Century Investments. They look after about a hundred
Speaker 1: fifty four billion dollars. He joined us on the phone
Speaker 1: from California. So a big money manager, and you've gotta listen.
Speaker 1: They're managing so much money for so many different people.
Speaker 1: You've got to have some pretty coaching advice I would mage,
Speaker 1: but this is another reminder and lesson that. Right, you know,
Speaker 1: when the markets are constantly hitting record high after record high,
Speaker 1: it doesn't mean it's going to always go that way,
Speaker 1: and you never know when something can come out you
Speaker 1: know that nobody was predicting, like the virus and really
Speaker 1: bring down your investments a lot. So if you're closer
Speaker 1: to retirement, you have to make sure that you're protecting
Speaker 1: yourself against these unforeseen stresses on the market. Thanks for
Speaker 1: listening to Bloomberg Business Week. You can subscribe to the
Speaker 1: podcast on iTunes, SoundCloud, or Bloomberg dot com. You can
Speaker 1: also listen to our radio show every weekday at two
Speaker 1: pm Eastern only on Bloomberg Radio