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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, A market pros, and

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Speaker 1: Bloomberg experts, along with essential market moving news. Find the

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Speaker 1: Bloomberg Markets Podcast on Apple Podcasts or wherever you listen

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Speaker 1: to podcasts, and on Bloomberg dot com. You know, I'm

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Speaker 1: just looking at a one year chart for the SMP

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Speaker 1: five hundred and obviously, you know, back in March we

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Speaker 1: saw that, you know, thirty four decline in the SMP

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Speaker 1: as a pandemic, and economic impacts of the pandemic really

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Speaker 1: became apparent to investors. But you know, we've retraced much

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Speaker 1: of that decline here and we have to the SMP

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Speaker 1: at thirty one seventy. Here off a little bit today,

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Speaker 1: get a sense of kind of where we go from here.

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Speaker 1: Chris Ailman, he's a chief investment officer for the California

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Speaker 1: California State Teachers Retirement System. UM, Chris, what are you

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Speaker 1: telling your participants in your plan about the mark market here?

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Speaker 1: Given the tremendous volatility we've seen just over the past

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Speaker 1: you know, three to four months, a good to talk

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Speaker 1: to you, Paul, you know, and that's it. You back

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Speaker 1: up and take the long term view. Look at the

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Speaker 1: market over the last year. What's the prices most people

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Speaker 1: is we're actually positive. You know, if we had thought

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Speaker 1: last July that we'd have a global pandemic and that

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Speaker 1: the economy would come to a complete stop, you wouldn't

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Speaker 1: expect the market to be up, uh, you know, eight

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Speaker 1: percent from where we were roughly. So this is the

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Speaker 1: time to really back away from the daily news. I know,

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Speaker 1: you know, the p p P paytech protection loans will

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Speaker 1: dominate the headlines. But in a couple of weeks we're

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Speaker 1: gonna have April again, all of a sudden in July,

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Speaker 1: and it's a good time to back up and look

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Speaker 1: at your investment, rebalance your ats AD allocation, and not

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Speaker 1: get carried away with the volatility of this market. It

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Speaker 1: has been crazy in the first six months, that's said, Chris.

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Speaker 1: All it's really done is gone up. I mean after

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Speaker 1: that massive punge in March. So what what's to say

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Speaker 1: that that's going to keep going? I mean, really, we're

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Speaker 1: very dependent on those five companies that make up more

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Speaker 1: than a fifth of the market, arn'ty Oh, Vannie hit

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Speaker 1: it on the head. Um has everybody's been saying, this

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Speaker 1: is a market of stocks, And when you look at

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Speaker 1: the SMP five hundreds, those five six stocks are dominating. Uh.

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Speaker 1: The vast majority of the other four stocks are still

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Speaker 1: below where they started the year or just barely trending above. UM.

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Speaker 1: So it's a tough year. You know that. I'm a

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Speaker 1: big fan of index funs. I say, own the market. Um,

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Speaker 1: this is a time where normally, when you have this

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Speaker 1: kind of volatility, a drop and a rally, where the

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Speaker 1: active manager should make money. But the real economy bears

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Speaker 1: no resemblance to the stock market. It is often its

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Speaker 1: own world. So I have found the active managers are

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Speaker 1: really getting hurt. You know, growth stocks, principally, the large

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Speaker 1: growth stocks have been all the return and value stocks

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Speaker 1: are actually negative on the year. So fundamentals still make

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Speaker 1: any sense. I mean, just like warm Buffett has said,

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Speaker 1: this market is is baffling in here and it just

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Speaker 1: doesn't make a lot of sense. That said, I think

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Speaker 1: investors are better off owning the entire market as a whole.

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Speaker 1: So they get those growth stocks, but they also get

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Speaker 1: some of those value stocks that are trying to tread

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Speaker 1: water through the virus. So, Chris, you know, you hit

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Speaker 1: on a common theme that we've heard from many that

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Speaker 1: the market is not really reflective of the economy. What

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Speaker 1: is your call here as we as it relates to

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Speaker 1: the economy. Here we've thrown vs. W's l's use. Um,

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Speaker 1: as it relates to the economy, we're seeing you know,

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Speaker 1: a lot of states seeing becoming hotspots that were in

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Speaker 1: terms of the virus. How are you thinking about the

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Speaker 1: economy over the next several quarters? You know it, you

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Speaker 1: don't fight the FED. So with that in mind, and

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Speaker 1: that they're trying to stimulate the economy, the federal government

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Speaker 1: on the fiscal side is running such a big deficit.

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Speaker 1: I just don't think they can keep trying to stimulate.

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Speaker 1: So I would say a sloppy W picture of the

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Speaker 1: way a doctor typically signs a prescription note and a

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Speaker 1: picture that W. It's gonna be sloppy. I don't think

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Speaker 1: it's gonna go well in the economy. How does the

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Speaker 1: stock market react, That's a completely different question and tough

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Speaker 1: to figure out. Um, it should start to bear some

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Speaker 1: resemblance to reality, But uh, this is not your normal market.

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Speaker 1: You've got millions and millions of day traders sitting around

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Speaker 1: watching Bloomberg looking at their screens. Uh, no sports to

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Speaker 1: bed on, very few casinos to go to. So it's

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Speaker 1: suddenly become a speculative market around the world. Um, I

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Speaker 1: think it's really a time for an investor to be weary,

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Speaker 1: not try to be a day trader. And I think

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Speaker 1: that we're going to have a tough go. I mean,

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Speaker 1: there's just a huge percentage of the economy that is

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Speaker 1: still shut down. Think of the airlines, the cruise ships,

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Speaker 1: not just the restaurants, but all those people you were

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Speaker 1: talking about, the zoos um that got the p PP loans.

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Speaker 1: We still have huge unemployment, even though the statistics don't

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Speaker 1: show giant numbers. People are surviving on that six week

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Speaker 1: federal stimulus and that just can't go on forever. Chris,

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Speaker 1: you're you know, a big component of of explaining the

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Speaker 1: counsters as like a tanker when you try to to

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Speaker 1: move it to take some time. Are you already looking

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Speaker 1: at the possibility that the president will not be the

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Speaker 1: president post this election, and that maybe it will be

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Speaker 1: a Joe Biden presidency and what would you do with

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Speaker 1: portfolios in that instance, Well, Vannie, I've learned not to

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Speaker 1: try to predict politics. It's crazy, that's a whole another game.

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Speaker 1: But I have to tell you it's too early, I think,

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Speaker 1: in my view to try and position your portfolio in

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Speaker 1: anticipation about. What I am concerned about is a very

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Speaker 1: sloppy election, a contested election where we'll see it drawn

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Speaker 1: out in court. A lot of us forget the Gore

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Speaker 1: Bush election many many years ago, and while the market

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Speaker 1: managed that through that crisis because it was only the

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Speaker 1: state of Florida, I'm worried that all the key states

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Speaker 1: could end up in lawsuits, and that this could be

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Speaker 1: a really contested election, which should be bad for the market.

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Speaker 1: That level of uncertainty whether one party or the other wins,

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Speaker 1: it takes control. The market will fet that out in

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Speaker 1: in January and in February. Um I think it's still

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Speaker 1: going to be Uh, it's going to be a problem

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Speaker 1: for the market once we start hitting August in September,

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Speaker 1: then then the election becomes very clear right in their face,

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Speaker 1: and that uncertainty about who's in control will cause volatility

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Speaker 1: in the markets as a gyrate back and forth, particularly

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Speaker 1: in industries like the drug makers. UM. Uh, what happens

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Speaker 1: in terms of the federal bailoutsh it does risk tax

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Speaker 1: flaw and so many issues when we have an election. Chris,

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Speaker 1: real quick, maybe thirty seconds. How concerned are you about

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Speaker 1: the deteriorating relationship between the US and China? Paul? That

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Speaker 1: is absolutely something to watch. Our board in one is

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Speaker 1: going to do a deep dive into China and really

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Speaker 1: understand it. It is one of the few economies growing

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Speaker 1: at you know, close to eight percent when it rebounds,

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Speaker 1: but the E s G issues are enormous, and and

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Speaker 1: just the fact that it's the communist system. Are we

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Speaker 1: comfortable investing in that kind of a market? So that's

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Speaker 1: our number one trading partner, not number one in terms

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Speaker 1: of size, but I mean it's the number two economy

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Speaker 1: in the world. That relationship matters a time, Chris, It

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Speaker 1: is always a pleasure to speak with you. Chris Ellman

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Speaker 1: is the IO of Cansters more than two hundred and

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Speaker 1: thirty five billion dollars in assets under management, and he's

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Speaker 1: talked about a sloppy w type recovery, which doesn't sound

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Speaker 1: all that ampasizing sound very pleasant, does it? No? It doesn't.

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Speaker 1: Russie's ahead. According to Chris the those housing market has

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Speaker 1: been surprising economists that rallied in the middle of the pandemic.

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Speaker 1: But it's not the end of the story. Coronavirus may

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Speaker 1: drag down home values after all, this according to core Logic.

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Speaker 1: Let's bring in now our reporter who worked on the

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Speaker 1: story with Pruscian Gopal, John Gettleson. Welcome to the program. John.

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Speaker 1: In your story, you have looked at the core Logic

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Speaker 1: data and you say that through May one, prices will

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Speaker 1: fall about six point six percent. It doesn't sound like

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Speaker 1: a massive drop, given that people are out of work

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Speaker 1: and haven't even been able to look at houses. Why

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Speaker 1: six points ex percent? Well, it's a combination of factors.

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Speaker 1: I mean, there's still a lot of demand out there.

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Speaker 1: There's a lot of millennials who are moving into the

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Speaker 1: housing market. Interest rates are low, so affordability is bill

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Speaker 1: there um. Even though unemployment is high. Uh, the majority

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Speaker 1: of people are still employed, and there's a lot of

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Speaker 1: people who, uh, you know, want bigger space too. So

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Speaker 1: many factors that may have been brought into play by

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Speaker 1: the coronavirus are supporting housing prizes despite the huge impact

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Speaker 1: on the economy, John, are there you know what we've

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Speaker 1: seen in housing in the passing, including the financial crisis nine,

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Speaker 1: it was a you know, a big difference regionally in

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Speaker 1: the strength of the housing market. Are we seeing that

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Speaker 1: today as well? Oh yeah, definitely. I mean this report

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Speaker 1: broke out some major metro areas and they said, for example,

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Speaker 1: Las Vegas losing in value UM and Las Vegas is

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Speaker 1: it's a big tourism mecca obviously, and tourism is one

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Speaker 1: of the areas that's being hit hardists UM and Las

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Speaker 1: Vegas was also, according to Core Logic overvalued even before

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Speaker 1: the crisis. UM. There's other areas like San Diego to

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Speaker 1: State is only falling one point three p m. New

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Speaker 1: York area and this is the metro area, not specifically

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Speaker 1: you know, Manhattan, but they're forecasting over the next twelve

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Speaker 1: months or about a five point nine price decline. So

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Speaker 1: I guess this is the best case scenario. As you say,

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Speaker 1: some areas are going to experience huge declines, like Las

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Speaker 1: Vegas for example. Does it depend on where the jobs

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Speaker 1: are or where the jobs end up not being if

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Speaker 1: there is some structural unemployment after all, this that's definitely

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Speaker 1: a big part of the problem. Uh. And there's also

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Speaker 1: going to be sort of unforeseen impact that's playing itself

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Speaker 1: out every day. Do people want to live in suburbs,

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Speaker 1: can they work from home? Can they uh you know,

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Speaker 1: do they want to have a bigger house? And so

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Speaker 1: all of those types of things are going to affect

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Speaker 1: where people move, where they buy, and where they sell.

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Speaker 1: There's also the big demographic issue that even uh pandemic

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Speaker 1: can't stop, which is you've got aging baby boomers and

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Speaker 1: you've got millennials moving into houses. So those big shifts

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Speaker 1: in population are going to be a bigger factor even

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Speaker 1: in the pandemic as people, you know, they're not stopping

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Speaker 1: having babies, they're not stopping getting old and retiring. So, John,

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Speaker 1: one of the themes that I've heard about a lot

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Speaker 1: over the last several years, and as it relates to housing,

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Speaker 1: is there's just not enough housing, entry level housing. The

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Speaker 1: housing that's being built today is perhaps you know, more

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Speaker 1: on the higher end of the market, and there's just

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Speaker 1: not enough entry level housing being built and boomers maybe

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Speaker 1: aren't moving out as quickly as they used to, thereby

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Speaker 1: creating a supplied demand and balance on the lower end.

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Speaker 1: Is that still the case, Yeah, that's definitely the case.

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Speaker 1: Affordability is a huge issue. I mean, that's why we

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Speaker 1: have a lot of homeless people to begin with. That's

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Speaker 1: why a lot of people are living in an apartments,

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Speaker 1: people are renting single family homes. Um. But a big

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Speaker 1: contrast with now and the you know, two thousand eight

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Speaker 1: financial crisis, there was a housing bubble going on. There

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Speaker 1: was overproduction of housing men and uh, there was a

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Speaker 1: huge surplus that when people stop paying their mortgages, people

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Speaker 1: were underwater. They walked away from their homes. You don't

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Speaker 1: have people walking away from their homes now because people

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Speaker 1: have equity in their homes and because home prices have

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Speaker 1: gone up, but production has not kept pace with demand.

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Speaker 1: Does this all depend on a stock market that keeps

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Speaker 1: going higher? John, if we saw a big correction, would we,

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Speaker 1: you know, with that necessarily entail a very different housing market? Well,

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Speaker 1: I think there's you know, correlation, but not necessarily caused. Um.

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Speaker 1: The wealth effect fully makes people feel like, oh I

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Speaker 1: can afford to buy a home. I you know, I

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Speaker 1: feel like risking more. Uh. Home sales did not stop,

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Speaker 1: you know in April and May when the stock market

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Speaker 1: was tanking, so uh, you know, there were a lot

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Speaker 1: of people who said, I can afford to do this

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Speaker 1: now I got my job, and um, mortgage rates are

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Speaker 1: so low because the FED intervention that actually something that

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Speaker 1: you know, uh, cost more than I would have been

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Speaker 1: able to afford a couple of years ago, is now

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Speaker 1: actually affordable because I can get such a low interest

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Speaker 1: rate on it. A three percent mortgage is a lot

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Speaker 1: cheaper than a four percent mortgage. John, just real quickly,

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Speaker 1: how are how are the more How is the mortgage

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Speaker 1: market are people? Are? We seen a lot of delinquencies. Um,

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Speaker 1: they are definitely going up. There were like nine of

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Speaker 1: single family home loans were in forbearance. Um. Not all

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Speaker 1: of those are officially delinquent, so they are rolling into delinquencies. Um,

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Speaker 1: there's so much below the level that they were at

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Speaker 1: the peak of the post financial crisis, but they're heading

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Speaker 1: in that direction. Interesting. John Gettoson, thank you so much

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Speaker 1: for that. Just getting a real solid, across the board

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Speaker 1: update on the housing market in the United States. Uh.

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Speaker 1: John Gettlson, a real estate and investment reporter for Bloomberg News. Well,

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Speaker 1: yesterday marked a little bit of a return to what

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Speaker 1: we used to refer to as merger Monday. When you

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Speaker 1: get a lot of deals announced typically a Monday after

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Speaker 1: weekend's worth of deal talks. We had UH Warren Buffett

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Speaker 1: making a ten billion dollar bet on some energy assets

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Speaker 1: Uber UH increasing it's UH, I guess it's footprint in

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Speaker 1: the food delivery business a couple of those deals yesterday.

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Speaker 1: To get a sense of kind of what the pandemic

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Speaker 1: is doing to the M and A environment, we turn

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Speaker 1: to Rob Brown. He's a managing director and CEO of

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Speaker 1: North America for Lincoln International based in Chicago. So Rob,

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Speaker 1: give us a sense, if you will, kind of what

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Speaker 1: the M and A environment has been over the last

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Speaker 1: several months as corporate CEOs and investment bankers to try

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Speaker 1: to gauge kind of what the pandemic means for the

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Speaker 1: business climate. Sure, thanks, Paul. Um. So if you dial

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Speaker 1: back to the beginning of this year, we entered this

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Speaker 1: year really in one of the best M and A

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Speaker 1: markets um of the last probably fifty years, maybe ever,

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Speaker 1: and so it was expected that the M and A

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Speaker 1: activity would continue at that pace through this year. UH.

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Speaker 1: And then the government reactions to COVID and really the

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Speaker 1: stopping of the global economy, as you can appreciate UM

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Speaker 1: had a material effect on that. In fact, from March

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Speaker 1: through May in global M and A volume was down

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Speaker 1: over at UM and so I think there was just

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Speaker 1: a pause. Let's take away and see there were some

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Speaker 1: deals that went forward, UM for sure, UH. And I

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Speaker 1: think what we're seeing now are buyers and sellers lifting

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Speaker 1: their heads up and saying, Okay, there are going to

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Speaker 1: be deals that get done. And the two you mentioned

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Speaker 1: that we're nounce yesterday, we're obviously very large deals. But

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Speaker 1: really across the spectrum, what we're starting to see in

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Speaker 1: the three plus deals we have in backlog is that

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Speaker 1: that the M and A market is returning, and I

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Speaker 1: think the expectation is the back half of this year

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Speaker 1: is going to be materially more active than the last

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Speaker 1: three or four months. How have those deals in the

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Speaker 1: works got repriced in the previous weeks, You know many

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Speaker 1: of them, haven't they They've taken, if any reduction in price.

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Speaker 1: I think they've been small reductions. Because I think what's

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Speaker 1: happened is, UH, if you can show, hey, my business

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Speaker 1: performed well during the downturn, my sector as a sector

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Speaker 1: that may be more attractive or at least equally attractive

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Speaker 1: as it was pre COVID. UH, there's not a lot

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Speaker 1: of value deterioration there because what you what you still

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Speaker 1: have what's really driving this. There's there's as some estimates

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Speaker 1: are close to a billion five of private equity capital available,

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Speaker 1: what they call dry powder, and you layer on top

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Speaker 1: of that the cash sitting on corporate balance sheets and

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Speaker 1: a stock market that is still expecting these companies to

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Speaker 1: grow when you look at the way the stock market

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Speaker 1: and multiples are holding up. So I think the deals

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Speaker 1: that are getting done right now, for the most part,

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Speaker 1: are high quality companies that are saying, listen, I performed well,

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Speaker 1: I've shown I truly am essential. I've got a good

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Speaker 1: business model that can withstand something like COVID. So we

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Speaker 1: haven't seen a lot of value deterioration on those businesses.

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Speaker 1: There are some deals we're starting to see come to market, Bonnie,

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Speaker 1: that are lender driven deals. Maybe a company that wasn't

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Speaker 1: performing well pre COVID and then COVID hit, and now

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Speaker 1: they're really not performing well and they're overlevered, and the

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Speaker 1: lenders are starting to say, hey, we we got to

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Speaker 1: get paid. Let's sully. So we're starting to see a

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Speaker 1: little bit of what we call distressed m and A,

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Speaker 1: although interestingly less of that than we may have thought,

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Speaker 1: you know, given the real shock to the economy. So Rob,

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Speaker 1: when I think about trends in M and A, to me,

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Speaker 1: it's oftentimes a reflection of confidence, confidence from a CEO

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Speaker 1: and a board about their business, maybe their sector, the

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Speaker 1: overall economy. I can't imagine CEOs are that confident right now.

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Speaker 1: So how are they thinking about M and A. Yeah,

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Speaker 1: it's a it's a great question. And I think what

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Speaker 1: you're seeing the strategic acquires, the large corporate acquires. I

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Speaker 1: think the way they're thinking about M and A is,

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Speaker 1: you know, over the last four or five, six, seven years,

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Speaker 1: they were under pressure to grow. They'd have organic growth,

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Speaker 1: they'd supplement that with M and A. Their confidence in

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Speaker 1: their business and their outlook was putting them in a

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Speaker 1: position to maybe do acquisitions that are outside of their

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Speaker 1: core businesses, adding another to the stool, expanding things. What

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Speaker 1: we're seeing is is that ceo still feel that they

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Speaker 1: need to grow. There's pressure to grow, and they can't

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Speaker 1: hit their growth targets solely through organic, so they still

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Speaker 1: want them and to be part of that strategy. But

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Speaker 1: what we're seeing is that lens shrinking where the strategics

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Speaker 1: and the CEOs are saying, I'm going to buy businesses

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Speaker 1: that are in businesses I'm already in where I know them,

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Speaker 1: where there's really really identifiable synergies that I can price. Uh,

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Speaker 1: and I'm confident enough to do that. I think your

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Speaker 1: point is the lack of his ability and maybe a

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Speaker 1: lack of confidence in where this economy is going. I

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Speaker 1: think that's going to limit some of those Let's get

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Speaker 1: into new businesses, let's get into complementary areas for strategic

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Speaker 1: acchoirs and CEOs. Briefly, rob any vertical or horizontal concerns

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Speaker 1: regular regulation wise or will there be deals done before

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Speaker 1: November just because we may see a different administration? Uh?

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Speaker 1: Maybe I think the bigger driver for deals is we're

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Speaker 1: in a relatively low tax environment, and you know, if if, if,

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Speaker 1: if the Democrats win, there may be a view that

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Speaker 1: taxes are going to go up in capital gains taxes. Uh,

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Speaker 1: that may not take effect until So I think a

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Speaker 1: little less about the regulatory environment. We are hearing some

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Speaker 1: people say, listen, I'd rather take the gain in a

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Speaker 1: period of time where I know capital gains rates are

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Speaker 1: relatively low. So I think that could affected. You know,

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Speaker 1: you talk about regulatory um. You know what we're really

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Speaker 1: seeing now in this administration. You know, the regulatory hurdle

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Speaker 1: is really foreign investment um, and and particularly from Asia

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Speaker 1: where this administration doesn't like that so um. But but

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Speaker 1: I think from a regulatory standpoint, you know, it's not

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Speaker 1: clear how things would change if the administration changes. All right, well,

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Speaker 1: we have plenty time to talk about that. That's for

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Speaker 1: Joyal Brown is m D and CEO of North America

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Speaker 1: at Lincoln International and Middle Market pe firm. Thanks for joining.

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Speaker 1: So we got the BPP data yesterday, and loan recipients

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Speaker 1: included a law firm run by one of President Trum's

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Speaker 1: key defenders in the Russia probe. That's more cassowits. We

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Speaker 1: also had a Kushner family real estate project in there,

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Speaker 1: the publisher of the National Enquirer American media of course,

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Speaker 1: and lots lots more interesting data to mind. Eight eight

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Speaker 1: thousand loans went to religious organizations. Let's bring into people

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Speaker 1: who have mind the database now, and I know a

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Speaker 1: lot about what they're talking about. Tim O'Brien is Bloomberg

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Speaker 1: opinion columnist, and Mark Niquette joins us as well. Tim,

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Speaker 1: let's begin with you, because there are a lot of

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Speaker 1: headlines about how Trump affiliated companies or those affiliated with

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Speaker 1: at least you know, Trump's trademarks got loans. Was there

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Speaker 1: anything necessarily shady or unusual about this? Well, I think

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Speaker 1: that the broader thing to think about to begin with

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Speaker 1: is what was this program properly conceived from the beginning

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Speaker 1: and has there been enough oversight to make sure that

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Speaker 1: the most needy businesses got the money they needed to

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Speaker 1: stay afloat? And we don't have enough evidence yet to

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Speaker 1: know whether that broader goal has been reached. And the

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Speaker 1: problem with all of these stories about insiders getting first

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Speaker 1: in line to get the loans raises you know, one

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Speaker 1: facet of one set of problems around this, which is

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Speaker 1: um there weren't clear guidelines about who was the most

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Speaker 1: deserving and whether those are businesses affiliated um with Democrats

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Speaker 1: or Republicans. I think there's a real problem with anybody

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Speaker 1: from any party getting getting to the front of the

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Speaker 1: line first because they have connections in Washington, or connections

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Speaker 1: to the s s p A, or connections to the

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Speaker 1: White House. And certainly UM there was concerns about this

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Speaker 1: with Trump from the very beginning Chuck Schumer early on

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Speaker 1: when the people, when when the Care's Act was being drafted,

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Speaker 1: said there would be language in there to make sure

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Speaker 1: that Trump related entities didn't get any funding. And and

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Speaker 1: then it ended up being at the p P P funding,

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Speaker 1: which is one of the biggest arms of the bail out,

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Speaker 1: was exempt from some of that, and you have to

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Speaker 1: wonder why that occurred. Some Markie wrote just a fantastic

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Speaker 1: article kind of detailing what happened here, what's going on,

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Speaker 1: where the money is going. What are some of the

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Speaker 1: key takeaways you had, like who were some of the

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Speaker 1: big recipients that may be surprised you that received money, Well,

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Speaker 1: it was it was quite a range of companies that

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Speaker 1: did access the funding, UM, including as you mentioned, a

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Speaker 1: lot of nonprofits and religious organizations. UM. You know, we saw,

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Speaker 1: as you said, about eighty eight thousand loans for religious organizations,

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Speaker 1: including the Archdiocese of New York UM and nonprofits ranging

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Speaker 1: from universities to museums to zoos that tapped this funding.

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Speaker 1: And what were striking about is just you know that

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Speaker 1: the breadth of these companies, both nonprofit and and corporations

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Speaker 1: that tapped this loan and sort of gave you a

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Speaker 1: sense of just how you know, deep the impact was

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Speaker 1: or how frantic these companies were to apply for this aid,

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Speaker 1: particularly when this project launched. Yeah, I mean, tim, there

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Speaker 1: was money left over, and there was a lot of

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Speaker 1: problems in actually trying to apply for money. And you know,

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Speaker 1: the idea that money being left over, you know, it's

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Speaker 1: just wasteful, right. And there's another problem here as well.

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Speaker 1: We don't know who accessed the largest loans. Now we

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Speaker 1: don't know who accessed the smallest ones either, but there

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Speaker 1: were certainly sort of an effort to have small businesses

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Speaker 1: only apply for what they needed. So it does seem

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Speaker 1: like there may have been you know, different levels of

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Speaker 1: invitation to this particular program. Well, you know, there were

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Speaker 1: two tranches. Remember the first tracks there were there were

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Speaker 1: a lot of problems with the spas, computer systems, banks

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Speaker 1: being gatekeepers too small businesses to get the money. Uh.

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Speaker 1: You know, the first huge tracks of this over three

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Speaker 1: billion dollars went out the door in two weeks. Um.

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Speaker 1: I think there was a strong effort made when the

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00:24:57,920 --> 00:25:00,119
Speaker 1: second round of funding came along to make sure or

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00:25:01,000 --> 00:25:05,240
Speaker 1: that most most authentically small businesses that didn't have resources

431
00:25:05,400 --> 00:25:09,080
Speaker 1: meaning uh, you know, companies that weren't publicly traded, for example,

432
00:25:09,440 --> 00:25:13,560
Speaker 1: UM had had better channels in to get the money,

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00:25:13,840 --> 00:25:15,960
Speaker 1: and it appears that they did. And I think that

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00:25:16,040 --> 00:25:18,720
Speaker 1: the fact that there was some money left over UM,

435
00:25:19,000 --> 00:25:21,360
Speaker 1: I think suggests that at least some of the initial

436
00:25:21,840 --> 00:25:26,240
Speaker 1: bleeding was staunched. But UM, we're still in early days

437
00:25:26,240 --> 00:25:28,119
Speaker 1: in this, and I think the government's gonna have to

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00:25:28,160 --> 00:25:31,240
Speaker 1: kind of wrestle with the reality that this may have

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00:25:31,320 --> 00:25:35,359
Speaker 1: just been a stop gap measure UM, and also with

440
00:25:35,440 --> 00:25:38,680
Speaker 1: the reality that theyre just simply hasn't been enough oversight

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00:25:38,840 --> 00:25:42,159
Speaker 1: and data collection put in place for the public to

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00:25:42,200 --> 00:25:46,040
Speaker 1: really know whether or not these programs have met their goals. Mark,

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00:25:46,119 --> 00:25:48,760
Speaker 1: what's the sense of the oversight here? Is there a

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00:25:48,840 --> 00:25:50,760
Speaker 1: belief here? I know we're kind of early days, but

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00:25:51,000 --> 00:25:53,760
Speaker 1: is there a consensus or a belief that the oversight

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00:25:53,880 --> 00:25:57,600
Speaker 1: was adequate or not so much? No, I think there's

447
00:25:57,600 --> 00:26:02,600
Speaker 1: there's there's growing pushback that not enough disclosure happened here.

448
00:26:02,920 --> 00:26:04,919
Speaker 1: I mean one of the things that that occurred was

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00:26:05,080 --> 00:26:08,360
Speaker 1: the Trump administration initially said it wasn't going to disclose

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00:26:08,440 --> 00:26:12,239
Speaker 1: any data about the p PP loans, arguing that this

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00:26:12,280 --> 00:26:17,320
Speaker 1: was proprietary or confidential information UM, because payroll information was

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00:26:17,440 --> 00:26:19,159
Speaker 1: used to calculate the amount of the loans, and the

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00:26:19,200 --> 00:26:22,320
Speaker 1: idea was, you know, particularly smaller firms, you know, releasing

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00:26:22,320 --> 00:26:26,280
Speaker 1: that payroll data would be you know, proprietary or confidential.

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00:26:26,680 --> 00:26:31,600
Speaker 1: And after pushback from the public and lawmakers, uh SPA

456
00:26:31,640 --> 00:26:34,080
Speaker 1: and Treasury agreed to release sort of some of the data.

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00:26:34,400 --> 00:26:39,119
Speaker 1: We got the names of companies and other details for

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00:26:39,200 --> 00:26:41,639
Speaker 1: all loans of more than a hundred fifty thousand, But

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00:26:41,880 --> 00:26:44,320
Speaker 1: for loans under a hundred fifty thousand, all you got

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00:26:44,359 --> 00:26:48,440
Speaker 1: was a loan amount and the um um some demographic

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00:26:48,480 --> 00:26:51,840
Speaker 1: information um. And as it turns out that's that account.

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00:26:51,960 --> 00:26:55,360
Speaker 1: About a six of all of the loans follow into

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00:26:55,359 --> 00:26:58,399
Speaker 1: that category of less than a hundred fifty thousand. So

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00:26:58,480 --> 00:27:00,720
Speaker 1: we don't we don't have you know, details of who

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00:27:00,760 --> 00:27:03,960
Speaker 1: got these loans for the majority of the borrowers. And

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00:27:04,000 --> 00:27:07,320
Speaker 1: you're you're seeing pushed by Democrats in particular to say, well,

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00:27:07,400 --> 00:27:10,119
Speaker 1: you know, the disclosure is fine. Um, we see, you know,

468
00:27:10,160 --> 00:27:11,840
Speaker 1: the names of companies for the larger loans, but we

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00:27:11,880 --> 00:27:14,679
Speaker 1: need not really see who took these lower loans, just

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00:27:14,760 --> 00:27:17,520
Speaker 1: because that's the only way we're going to be able

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00:27:17,520 --> 00:27:20,359
Speaker 1: to evaluate whether this program actually reached the borrowers it

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Speaker 1: needed to. Mark Nikatt, thanks so much for joining us,

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Speaker 1: Mark as a corporate influence reporter for Bloomberg News and

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Speaker 1: of course, Tim O'Brien, senior opinion columns for Bloomberg Opinion.

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Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe

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00:27:35,119 --> 00:27:38,600
Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast

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00:27:38,640 --> 00:27:41,920
Speaker 1: platform you prefer. I'm Bonnie Quinn. I'm on Twitter at

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00:27:41,920 --> 00:27:44,280
Speaker 1: Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at

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00:27:44,280 --> 00:27:47,159
Speaker 1: pt Sweeney. Before the podcast, you can always catch us

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00:27:47,200 --> 00:27:48,600
Speaker 1: worldwide at Bloomberg Radio