WEBVTT - Why Lockdowns Haven’t Proved They’re Worth the Havoc 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.720 along with my co host Lisa Brahma wits. Each day 0:00:07.760 --> 0:00:10.280 we bring you the most noteworthy and useful interviews for 0:00:10.320 --> 0:00:12.560 you and your money, whether at the grocery store or 0:00:12.600 --> 0:00:15.520 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.560 --> 0:00:18.000 podcast or wherever you listen to podcasts, as well as 0:00:18.000 --> 0:00:22.239 that Bloomberg dot Com. Time for Bloomberg Opinion. You're joined 0:00:22.239 --> 0:00:25.640 by Bloomberg Opinion columnist Joe and the Sarah. Joe, thanks 0:00:25.680 --> 0:00:27.520 so much for joining us. You got a fascinating column 0:00:27.520 --> 0:00:30.080 a couple of days ago talking about you know, this 0:00:30.160 --> 0:00:33.600 whole concept of a lockdown and quarantine. This is something 0:00:33.600 --> 0:00:37.800 that we haven't necessarily done in some past epidemics in 0:00:37.840 --> 0:00:40.599 this country. And I guess as people think about opening 0:00:40.680 --> 0:00:43.560 up the economy, now there's really two camps out there. 0:00:43.840 --> 0:00:45.800 Those that are probably a little bit more aggressive about 0:00:45.840 --> 0:00:47.880 opening up the economy and those that are a little 0:00:47.880 --> 0:00:50.960 bit more conservative. Talk to us a little bit about 0:00:51.200 --> 0:00:54.280 kind of lockdowns and how effective they've proven to be 0:00:54.880 --> 0:00:58.840 in the past. Well, they've never been used in the past. 0:00:58.920 --> 0:01:02.440 This is the first time they never became uh, sort 0:01:02.440 --> 0:01:07.240 of uh policy, pandemic policy until two thousand six when 0:01:07.240 --> 0:01:10.400 George bush Um asked the government to come up with 0:01:10.440 --> 0:01:13.160 a pandemic plan, and the and the scientists who came 0:01:13.240 --> 0:01:16.560 up with the lockdown idea, Um, they were not infectious 0:01:16.600 --> 0:01:19.480 disease scientists. Um. Uh. And there was a lot of 0:01:19.520 --> 0:01:23.160 controversy about it at the time. Uh. There've been pandemics 0:01:23.160 --> 0:01:25.720 in nineteen fifty seven, there was one in nineteen sixty eight, 0:01:25.760 --> 0:01:29.600 of course the famous one in eighteen. Absolutely a lot 0:01:29.640 --> 0:01:32.720 of people stayed inside because they were terrified, but there 0:01:32.760 --> 0:01:36.640 was never an official and official lockdown. So so the 0:01:36.680 --> 0:01:41.240 answer is, um, there's no there's no previous science to 0:01:41.400 --> 0:01:45.120 know what good the lockdown does. And although it makes 0:01:45.120 --> 0:01:48.040 a lot of intuitive sense that you would stay inside 0:01:48.080 --> 0:01:50.559 and therefore avoid the virus, there's a lot of downsides, 0:01:50.600 --> 0:01:53.160 as we're about to find out when the economy starts 0:01:53.160 --> 0:01:56.280 to open. Yeah, this is what people are saying that basically, 0:01:56.360 --> 0:01:59.120 we don't know how effective it is to limit the spread, 0:01:59.160 --> 0:02:00.680 and we know that it creates it's a lot of 0:02:00.760 --> 0:02:04.320 problems when it comes to when it when it comes 0:02:04.320 --> 0:02:07.800 to the economy. That said, we are seeing a pretty 0:02:07.840 --> 0:02:11.400 strong correlation and I know, correlation is not causation, but 0:02:11.480 --> 0:02:16.080 it is becoming scientifically accepted that the economy is that 0:02:16.160 --> 0:02:19.640 shut down more aggressively and more quickly were those that 0:02:19.720 --> 0:02:23.359 managed to stave off some of the worst effects of 0:02:23.400 --> 0:02:26.320 this virus that we've seen in places like New York 0:02:26.360 --> 0:02:30.000 and Milan. So from that perspective, how can you dismiss 0:02:30.040 --> 0:02:35.400 that as showing the efficacy of this type of of shutdown. Well, 0:02:35.440 --> 0:02:37.680 I don't. I don't dismiss it. But you know, there's 0:02:37.720 --> 0:02:41.120 also this mass the social distancing. There's the fact that 0:02:42.040 --> 0:02:45.160 literally of the people who have died in this pandemic 0:02:45.160 --> 0:02:47.760 have been the elderly, you know, whether you're inside or 0:02:47.800 --> 0:02:50.400 outside um. And then you have states like Texas and 0:02:50.440 --> 0:02:54.160 Florida which have been very lax on lockdowns and and 0:02:54.200 --> 0:02:58.200 their numbers of death are extremely low. So I mean, 0:02:58.280 --> 0:03:04.400 I would argue that, you know, it's really unclear as 0:03:04.480 --> 0:03:06.959 to whether the lockdown is saving a lot of lives 0:03:07.080 --> 0:03:10.400 or not. All right, right there, where are you? Where 0:03:10.400 --> 0:03:14.919 where are you staying right now? I'm in Southampton, Okay, 0:03:14.960 --> 0:03:18.760 So you're not in the city, right correct? Okay? And 0:03:18.840 --> 0:03:21.840 my question is, let's say there were no state mandated 0:03:21.880 --> 0:03:25.880 locktowns of any sort. Would you feel comfortable going about 0:03:25.960 --> 0:03:27.640 your business the way that you had in the past 0:03:27.639 --> 0:03:32.720 and going on the subway? Um, I don't know. That's 0:03:32.720 --> 0:03:35.480 a good question. I think that I if I think 0:03:35.520 --> 0:03:37.320 if I had a mask and gloved, I would, And 0:03:37.360 --> 0:03:39.320 I also think that I would probably have to. I'm 0:03:39.320 --> 0:03:41.720 also sixty eight years old, so I'm in the high 0:03:41.800 --> 0:03:45.880 risk group. Um, there's a lot of Look. Look, you know, 0:03:46.000 --> 0:03:48.560 in March, there's no question I came out to the 0:03:48.560 --> 0:03:51.440 Hamptons because I was scared. But you know, you watch, 0:03:51.520 --> 0:03:54.120 you watch data, you watch things happening, you watch what's 0:03:54.120 --> 0:03:56.280 going to happen to the economy, and you think to yourself, 0:03:56.800 --> 0:04:01.000 you know, is this really the right way to continue 0:04:01.040 --> 0:04:04.960 to proceed. And one distinction that I've been making is 0:04:05.040 --> 0:04:10.120 between the hotspot states and cities like Detroit, UH and 0:04:10.200 --> 0:04:13.640 New York and New Orleans and places like Houston and 0:04:13.720 --> 0:04:19.400 Miami and San Diego which have very very very few Um. 0:04:19.560 --> 0:04:22.160 Death Yeah, well, look, Joe, he raised a really good point, 0:04:22.240 --> 0:04:24.040 and Paul, this I think is a really important thing. 0:04:24.040 --> 0:04:26.280 And I think that Joe, I feel like you want 0:04:26.279 --> 0:04:29.640 to chop my head off, you know. I I honestly, 0:04:29.760 --> 0:04:33.600 I've I'm totally jealous that you're in the Hampton's. I 0:04:33.640 --> 0:04:35.880 also think this is such a politically fraught issue, and 0:04:35.920 --> 0:04:39.000 the question is if they okay, I want to talk 0:04:39.040 --> 0:04:41.120 about that. That is so right, This is the big 0:04:41.120 --> 0:04:44.800 problem here, here's the big problem. It has become a 0:04:44.920 --> 0:04:47.720 political issue. And it's and and and It's like if 0:04:47.839 --> 0:04:51.080 my political party believes in lockdowns, and I believe in lockdowns, 0:04:51.080 --> 0:04:53.800 if my political party says lockdowns and BS, then I 0:04:53.960 --> 0:04:57.800 say that's BS. Nobody on either side is willing to 0:04:57.839 --> 0:05:01.040 just sit down and say, let's look at this with 0:05:01.160 --> 0:05:04.599 fresh eyes, let's think about this from a from a 0:05:04.600 --> 0:05:07.960 point of view of neutrality and science. It's not happening. 0:05:08.400 --> 0:05:11.559 Everybody on both sides says, you know, I'm following the science. 0:05:11.600 --> 0:05:13.559 I'm following the science. Well, what does that even mean 0:05:14.440 --> 0:05:16.919 with a lockdown? Where where? Where? There is where? The 0:05:16.960 --> 0:05:21.960 science is unclear? It's no. I think the issue here 0:05:22.200 --> 0:05:24.560 right now, you know, the conversation Joe is just, you know, 0:05:24.640 --> 0:05:27.200 the cost of the economic cost of lockdown versus the 0:05:27.880 --> 0:05:30.080 cost in lives. And that's kind of what the reopening 0:05:30.120 --> 0:05:34.640 debate seems to be evolving to. I think that's absolutely true. 0:05:35.080 --> 0:05:37.880 And um, let me let me let me ask you this. 0:05:37.880 --> 0:05:40.400 This is kind of how I ended my column yesterday. 0:05:40.680 --> 0:05:44.800 You know, it's quite likely that the virus will will 0:05:44.839 --> 0:05:49.200 fade in the summertime, because that's often what happens, and 0:05:49.200 --> 0:05:51.880 then it will probably come back with a vengeance in October. 0:05:52.480 --> 0:05:55.680 And if that happens and we're reopening the economy, are 0:05:55.720 --> 0:05:58.080 you gonna say, well, let's shut everything down again for 0:05:58.120 --> 0:06:01.680 three months, because back, I don't know that's gonna be 0:06:02.080 --> 0:06:04.719 really tough. I don't think. I don't think anybody's going 0:06:04.760 --> 0:06:06.599 to agree to that. I just don't think the society 0:06:06.640 --> 0:06:08.160 is gonna agree to that. And I think we're gonna 0:06:08.160 --> 0:06:10.400 have to learn to live with this thing with with 0:06:10.560 --> 0:06:15.120 measures like masks and social distancing that are less severe 0:06:15.160 --> 0:06:17.680 than a lockdown, we could wind up in a depression. 0:06:17.839 --> 0:06:20.120 Thanks so much for us. We gotta run, Joe, Joe No. 0:06:20.240 --> 0:06:22.760 Sarah Colums for Bloomberg Opinion. It's an awesome column. Check 0:06:22.760 --> 0:06:25.680 it out on Bloomberg dot Com, slash Opinion. All his 0:06:25.920 --> 0:06:31.919 great work. This is Bloomberg Markets with Lisa Abramowitz and 0:06:31.960 --> 0:06:35.919 Paul Sweeney on Bloomberg Radio. What I mean listening to 0:06:36.040 --> 0:06:39.000 healthcare officials, the big, big thing right now is to 0:06:39.040 --> 0:06:43.080 continue to test for the virus and then contact trace 0:06:43.440 --> 0:06:46.359 to see to kind of contain, uh, this spread of 0:06:46.400 --> 0:06:48.680 the virus. That's certainly important now and will be even 0:06:48.720 --> 0:06:51.000 more important. Ty Center is a second wave. And when 0:06:51.000 --> 0:06:53.120 you talk about the contact tracing, there's been a lot 0:06:53.120 --> 0:06:56.159 of apps that people have been talking about, mostly the 0:06:56.279 --> 0:06:59.120 Apple and Google approach, kind of a joint venture there, 0:06:59.160 --> 0:07:01.359 which is really in and of itself, has been getting 0:07:01.360 --> 0:07:03.640 most of the press, but a startup out there has 0:07:03.720 --> 0:07:06.640 also been they think they might have a better mouse trap, 0:07:06.720 --> 0:07:09.040 and that is a Jared all Good, co founder and 0:07:09.120 --> 0:07:11.600 chief strategy officer for the firm twenty. They're based in 0:07:11.640 --> 0:07:14.600 San Francisco. They've got their own app, Healthy Together, and 0:07:14.640 --> 0:07:18.400 in fact, the state of Utah is actually adopting it. Jared, 0:07:18.400 --> 0:07:21.640 thanks so much for joining us here. Tell us about 0:07:21.800 --> 0:07:25.320 your app and why say a state like Utah would 0:07:25.360 --> 0:07:29.480 select your app versus at Apple Google, which would seem 0:07:29.520 --> 0:07:33.800 to be the easy choice. Yeah, good, good morning, Paul 0:07:33.840 --> 0:07:36.200 and Liza, thanks for having me on um. Yeah. So, 0:07:37.360 --> 0:07:41.000 Healthy Together was developed to work in partnership and in 0:07:41.080 --> 0:07:43.640 conjunction with the public Health Department of the State of 0:07:43.720 --> 0:07:47.440 Utah UM. So they approached us several weeks ago UM 0:07:47.600 --> 0:07:50.720 and saw that we had some technology that was unique 0:07:50.720 --> 0:07:54.240 for helping to augment and automate certain parts of the 0:07:54.280 --> 0:07:57.200 manual contact tracing process. So we partner with them to 0:07:57.320 --> 0:08:00.480 develop the Healthy Together application both as a friend end 0:08:00.520 --> 0:08:03.960 application and also has back in services and tools that 0:08:04.040 --> 0:08:07.160 we deploy back into the Department of Health UM. So really, 0:08:07.200 --> 0:08:10.880 what we've built as a way for residents to UH 0:08:10.920 --> 0:08:15.320 to help the manual public health contact tracing effort by 0:08:15.440 --> 0:08:18.560 using an app on their phone that helps us UH 0:08:18.600 --> 0:08:21.720 and them identify where they've been and who they've been 0:08:21.760 --> 0:08:26.600 in contact with should they come out positive with COVID nineteen, 0:08:27.440 --> 0:08:31.040 so that manual contact go ahead. No. I find this 0:08:31.160 --> 0:08:34.240 so fascinating, this idea that people are are going to 0:08:34.280 --> 0:08:37.720 help the effort by volunteering to be tracked on their phones. 0:08:38.120 --> 0:08:40.800 It strikes me that the scope of data is important 0:08:40.800 --> 0:08:43.560 for this to be effective, that the greatest number of 0:08:43.600 --> 0:08:46.040 people need to be registered and tracked for this to 0:08:46.080 --> 0:08:50.720 actually prevent the virus from spreading. What's your advantage over 0:08:50.840 --> 0:08:53.680 say Google and Apple who also have an app and 0:08:53.760 --> 0:08:57.600 also have the host of data in the footprint. Yeah. 0:08:57.600 --> 0:08:59.960 So something that I would say to that is, first 0:09:00.000 --> 0:09:02.640 of all, Healthy Together is more than just a contact 0:09:02.640 --> 0:09:06.560 tracing application. UM. The State of Utah's strategy is to 0:09:06.640 --> 0:09:10.560 do assessing, testing and tracing. So the Healthy Together platform 0:09:10.600 --> 0:09:13.720 allows residents to assess themselves to find out if they 0:09:13.720 --> 0:09:16.440 should get tested for COVID nineteen uh and then if 0:09:16.480 --> 0:09:18.720 they should and we can refer them to, you know, 0:09:18.760 --> 0:09:22.160 the nearest testing resource through the application. And so just 0:09:22.200 --> 0:09:25.280 shortening the time from somebody becoming symptomatic to getting them 0:09:25.280 --> 0:09:27.800 into the testing process and then finding out if they're 0:09:27.800 --> 0:09:30.640 positive and then quarantining themselves is a huge part of 0:09:30.640 --> 0:09:34.240 the value proposition that we've delivered with the State of Utah. Now, 0:09:34.240 --> 0:09:37.840 as it pertains to contact tracing UM, our approach is 0:09:37.880 --> 0:09:41.080 actually not an opposition with the Google and Apple approach. UM. 0:09:41.120 --> 0:09:44.040 Google and Apple are, at least as we understand or not, 0:09:44.240 --> 0:09:46.760 coming out with applications. What they have built up as 0:09:46.800 --> 0:09:50.000 a set of APIs the application developers like us can 0:09:50.040 --> 0:09:53.520 integrate with to to tap into a broader network of 0:09:53.559 --> 0:09:56.360 contact tracing. And that's something that we see as a 0:09:56.360 --> 0:09:59.280 as a huge value add uh. We hope to to 0:09:59.360 --> 0:10:01.200 find a way to work and partner with Apple and 0:10:01.240 --> 0:10:03.560 Google to use those API s UM so that we 0:10:03.600 --> 0:10:07.679 can augment our current process. So you're in the state 0:10:07.880 --> 0:10:12.439 of Utah. Are there other states you're in discussions with? Yeah, 0:10:12.520 --> 0:10:14.800 of course. Look since UM, since we released just a 0:10:14.840 --> 0:10:16.720 few weeks ago in the state of Utah, UM, we've 0:10:16.720 --> 0:10:19.880 had a tremendous amount of inbound from other states who 0:10:19.880 --> 0:10:23.040 are interested, who are doing similar strategies in terms of 0:10:23.080 --> 0:10:26.360 standing up more manual contact tracing and then looking for 0:10:26.440 --> 0:10:30.280 tools and technology to augment and expedite that process. UM. 0:10:30.320 --> 0:10:32.800 So we had several conversations with other states. UM. We 0:10:32.840 --> 0:10:36.560 will be announcing some partnerships with other states coming soon. UM. 0:10:36.640 --> 0:10:38.600 And something that's been interesting to us that you know, 0:10:38.640 --> 0:10:41.280 we we we learned as we got into this UM 0:10:41.400 --> 0:10:45.040 is that businesses are also participating in contact tracing UM. 0:10:45.080 --> 0:10:48.319 Companies now have UH. You know, they're feeling the pressure 0:10:48.360 --> 0:10:50.679 to bring their employees back to work UM, and they 0:10:50.679 --> 0:10:52.360 need to do it in a safe way, and they 0:10:52.400 --> 0:10:54.920 need to communicate to their team members UM that they 0:10:54.920 --> 0:10:57.080 have a plan and a strategy for dealing with the 0:10:57.080 --> 0:11:00.600 occasion UM that somebody in their workforce turns out to 0:11:00.600 --> 0:11:03.600 be positive for COVID nineteen. And so we're seeing, um, 0:11:03.640 --> 0:11:06.320 you know, lots of interest from companies as well who 0:11:06.400 --> 0:11:08.560 want to implement tools and and just figure out the 0:11:08.559 --> 0:11:11.760 way to respond to this effort using manual and technological 0:11:11.800 --> 0:11:14.760 contact tracing as well. There's a tension for anyone who's 0:11:14.760 --> 0:11:18.440 creating a business in order to help facilitate the social 0:11:18.480 --> 0:11:21.199 distancing and prevention at this proNT of the pandemic. How 0:11:21.320 --> 0:11:23.480 you make money at a time when you're providing a 0:11:23.559 --> 0:11:26.719 service for the social good. How does that tension get 0:11:26.760 --> 0:11:31.200 resolved with you? Hi, Yeah, that's a great question. Look, UM, 0:11:31.360 --> 0:11:33.480 you know, as uh, you know, as you know, this 0:11:33.600 --> 0:11:35.960 was not our business. UM. You know, coming into this 0:11:36.520 --> 0:11:38.920 UM and we did not raise our hand and say, 0:11:38.960 --> 0:11:41.120 you know, we want to build contact tracing and sell 0:11:41.160 --> 0:11:43.440 it to the world. UM. The state of Utah, the 0:11:43.440 --> 0:11:46.080 Governor's office, reached out to us and identified us as 0:11:46.080 --> 0:11:49.000 a solution. UM, and you know, to be able to 0:11:49.040 --> 0:11:54.359 pivot our business and dedicate the number of resources engineers, designers, 0:11:54.360 --> 0:11:57.480 product managers UM to really build a high quality product 0:11:57.559 --> 0:12:00.199 both in the mobile application and also in these back 0:12:00.280 --> 0:12:02.920 end systems, and those things just cause resources to be 0:12:02.960 --> 0:12:05.000 able to do it um and so our goal is 0:12:05.080 --> 0:12:08.199 to serve as many you know, states and enterprises as 0:12:08.200 --> 0:12:10.400 we possibly can um and to do that and to 0:12:10.520 --> 0:12:12.720 scale up, it's just going to take money for us 0:12:12.720 --> 0:12:15.600 to be able to do it. Twenty co founder Jared 0:12:15.679 --> 0:12:17.640 all Good, thank you so much for being with us, 0:12:17.679 --> 0:12:22.000 talking about his Healthy Together contact tracing app, which has 0:12:22.040 --> 0:12:28.160 been deployed by the State of Utah. This is Bloomberg 0:12:28.240 --> 0:12:32.319 Markets with Lisa Ramowitz and Paul Sweeney on Bloomberg Radio. 0:12:33.559 --> 0:12:35.920 Certainly a lot of news coming out of China and 0:12:36.040 --> 0:12:39.200 Hong Kong in the last twenty four hours. We've seen 0:12:39.240 --> 0:12:42.040 some news here that it's uh, you know, really trying 0:12:42.040 --> 0:12:45.920 to really trying to reassert some or reassert more power 0:12:46.080 --> 0:12:48.080 and control over Hong Kong. To get a sense of 0:12:48.120 --> 0:12:50.280 what's really going on, what it means for Hong Kong, 0:12:50.320 --> 0:12:53.160 and it's economy and it's people. We welcome Yvonne Man. 0:12:53.200 --> 0:12:57.480 She's the anchor for Daybreak Asia and Bloomberg Markets China Open. 0:12:57.920 --> 0:13:00.000 She's in Hong Kong, and Tom or like chief economist 0:13:00.000 --> 0:13:02.040 for Bloombrick Economics, on the phone from Washington, d C. 0:13:02.200 --> 0:13:06.040 Tom spent a lot of time living in Beijing as well. So, Yvon, 0:13:06.120 --> 0:13:07.840 thanks so much for joining us. I want to start 0:13:07.880 --> 0:13:10.440 with you just give our listeners a sense of what 0:13:10.760 --> 0:13:14.679 actually happened between China and Hong Kong over the last 0:13:14.720 --> 0:13:18.480 twenty four hours. Well, it certainly has been quite an 0:13:18.480 --> 0:13:22.160 interesting twenty four hours fall And basically what has happened 0:13:22.200 --> 0:13:25.560 is that the NPC, the National People's Congress in Beijing, 0:13:25.640 --> 0:13:29.480 decided to enact this National Security Law which basically curbs 0:13:29.760 --> 0:13:34.240 DIO sessions addition for interference and terrorism in Hong Kong. 0:13:34.280 --> 0:13:37.520 It's also known as Article twenty three here in the city, 0:13:37.640 --> 0:13:42.560 and which was legislation that has basically been installed in 0:13:42.600 --> 0:13:45.800 the Legislative Council for for many years now, since two 0:13:45.800 --> 0:13:48.360 thousand and three. Back then when it was introduced, is 0:13:48.480 --> 0:13:51.760 fueled some widespread demonstrations. The government was then forced to 0:13:51.800 --> 0:13:55.480 scrap it. So we now see a very stronger and 0:13:55.559 --> 0:13:58.800 much more bold in Beijing than seventeen years ago. So 0:13:58.840 --> 0:14:01.960 they're taking matters into our own hands. They're frustrated by 0:14:02.000 --> 0:14:04.280 the months of unrest that it's hearth the economy. They're 0:14:04.280 --> 0:14:08.359 frustrated by lawmakers who have failed to get through this legislation. 0:14:08.480 --> 0:14:11.800 So the new strategy now from Beijing is to basically 0:14:11.880 --> 0:14:16.120 by pass Legislative Council here, skip the whole legislative process 0:14:16.160 --> 0:14:19.520 and do this. And they're from the MPC, so that's 0:14:19.560 --> 0:14:22.520 why this jokes so much outrage from those in the 0:14:22.560 --> 0:14:25.680 pro democracy side. Yvonne, you've done a great job of 0:14:25.720 --> 0:14:27.880 outlining this, and we thank you so much for staying 0:14:28.120 --> 0:14:30.400 so late to speak with us and lay it out 0:14:30.520 --> 0:14:33.080 for us here. Tom, I'd love your perspective from an 0:14:33.080 --> 0:14:37.600 economic viewpoint. Why Beijing is doing this now against a 0:14:37.640 --> 0:14:40.520 backdrop of a pandemic and a huge hit to its 0:14:40.520 --> 0:14:44.160 economic growth. Why is it not more concerned about the 0:14:44.280 --> 0:14:47.240 loss of Hong Kong as an international center and hub 0:14:47.320 --> 0:14:51.720 for finance and beyond UM So, I think what's what's 0:14:51.760 --> 0:14:55.320 really clear, Lisa, is that the politics is trumping the 0:14:56.040 --> 0:15:01.160 is trumping the economics UM and the national curiocy considerations 0:15:01.240 --> 0:15:06.000 the Beijing are more important than any risk to Hong 0:15:06.080 --> 0:15:08.680 kong status as a as a financial hub and a 0:15:08.800 --> 0:15:14.080 pathway for capital and expertise in trade between the mainland 0:15:14.080 --> 0:15:16.280 and the rest of the world. I think the other 0:15:16.320 --> 0:15:18.680 point to keep in mind about that the timing of 0:15:18.760 --> 0:15:22.440 this is, I mean, this is a move um, which 0:15:22.560 --> 0:15:28.400 in normal times would be expected to be controversial internationally. Right, 0:15:29.000 --> 0:15:32.160 a move which would be controversially in the United States, 0:15:32.600 --> 0:15:36.040 with the United Kingdom with its historic relationship with Hong Kong, 0:15:36.560 --> 0:15:40.560 Um with potentially some European countries as well. But at 0:15:40.560 --> 0:15:45.440 this particular moment in time, the world is in crisis, Um. 0:15:45.680 --> 0:15:52.040 Domestic leaders President Trump, Boris Johnson, Angelo Merkel, Um, they 0:15:52.040 --> 0:15:54.960 have other things on their mind. Right, They're dealing with 0:15:55.120 --> 0:16:00.200 a pandemic. They're dealing with economies in deep, in deep crisis. Um. 0:16:00.520 --> 0:16:03.160 So I don't have a crystal ball into the thinking 0:16:03.160 --> 0:16:07.480 of China's leadership, But potentially this is also a moment 0:16:07.600 --> 0:16:11.240 where they can make this controversial, mute move with perhaps 0:16:11.800 --> 0:16:16.360 less global repercussions than they would see in normal times. Yvonne, 0:16:16.360 --> 0:16:19.840 what is the expected response from those in China? Prior 0:16:20.120 --> 0:16:23.760 in Hong Kong, prior to the pandemic, the protesters were 0:16:23.880 --> 0:16:28.880 consistent week after week after week in their protests. Um, 0:16:28.920 --> 0:16:33.160 what is the expectation here for this move. Well, there's 0:16:33.160 --> 0:16:36.120 already some calls for people to hit the streets this 0:16:36.160 --> 0:16:39.760 weekend and the following uh A week after as well, 0:16:39.840 --> 0:16:43.400 and we've seen the activists already hitting the streets tonight 0:16:43.560 --> 0:16:46.240 handing out leaflets to the people in the streets educating 0:16:46.280 --> 0:16:50.760 about them about this national security law. So we have 0:16:50.960 --> 0:16:54.680 seen the anger resurface thing again and potentially we are 0:16:54.840 --> 0:16:57.240 could be saying the stage for a repeat of what 0:16:57.360 --> 0:17:00.960 we saw late last year. So the prospects aren't good 0:17:01.000 --> 0:17:03.720 at this moment. And it just seems like at this 0:17:03.960 --> 0:17:07.920 point from from the opposition side, they believe that by 0:17:08.000 --> 0:17:13.400 bypassing legislative process, that this is the end of one country, 0:17:13.440 --> 0:17:16.639 two systems, this is the end of Hong Kong's autonomy. 0:17:16.720 --> 0:17:19.840 So it's hard to see that this national security law 0:17:20.160 --> 0:17:24.200 could actually end the the unrest out there, even carry 0:17:24.200 --> 0:17:27.399 a LANDA chief executive herself said tonight that she doesn't 0:17:27.440 --> 0:17:31.600 expect protests to end amid this security law, and if anything, 0:17:31.640 --> 0:17:34.160 it's it's only feels more anger on the streets, especially 0:17:34.160 --> 0:17:38.600 now that this this outbreak and the coronavirus has eased 0:17:38.600 --> 0:17:40.680 a bit here in the city. It's it's calm down 0:17:40.680 --> 0:17:43.200 in terms of the numbers of local infections has been 0:17:43.320 --> 0:17:45.520 down for the last couple of weeks. Now that's given 0:17:45.520 --> 0:17:47.840 a little more comfortable people to come out again to 0:17:48.520 --> 0:17:50.800 you thought. I'm just wondering from your perspective, I saw 0:17:50.840 --> 0:17:53.440 that real estate stocks got hit the hardest in Hong Kong. 0:17:53.480 --> 0:17:57.639 I'm wondering how much you're seeing anecdotally or from data 0:17:57.720 --> 0:18:01.359 perspectives foreign money and will the money going out of 0:18:01.359 --> 0:18:05.840 the property sector in Hong Kong. Yeah, certainly was a 0:18:05.920 --> 0:18:08.880 concern late last year when when you were hearing people 0:18:08.920 --> 0:18:10.720 saying that they were pulling money out of Hong Kong 0:18:11.080 --> 0:18:13.840 and moving it to Singapore, for example. There's a lot 0:18:13.840 --> 0:18:16.960 of questions of whether Hong Kong status as an international 0:18:17.240 --> 0:18:20.720 finance hub is now under a question. Uh, and so 0:18:20.880 --> 0:18:23.480 markets really took this by surprise, the fact that the 0:18:23.600 --> 0:18:27.560 MPC we heard this type of legislation. Um, you know, 0:18:27.640 --> 0:18:30.000 at this point, we haven't seen a whole lot of 0:18:30.280 --> 0:18:33.120 those concerns or at least that type of movement just yet. 0:18:33.119 --> 0:18:37.440 But what's different now versus say, back in two thousand 0:18:37.440 --> 0:18:40.560 and eight, and what led to Hong Kong I should 0:18:40.600 --> 0:18:42.520 say stars not two thousand and eight, was that what 0:18:42.680 --> 0:18:45.880 led to a revival in the economy was the fact 0:18:45.880 --> 0:18:48.480 that they opened up the borders from mainland tourists to 0:18:48.520 --> 0:18:51.600 come that essentially gave it a v shaped recovery here 0:18:51.600 --> 0:18:53.840 in Hong Kong. Now that we're in a recession, a 0:18:53.840 --> 0:18:56.520 lot of economists say it's unlikely we're going to see 0:18:56.840 --> 0:18:59.800 that quick of a bounce back in the economy because 0:19:00.280 --> 0:19:03.760 we have been the mainline tours arrivals dwindle. In fact, 0:19:03.800 --> 0:19:06.439 I think they're they're in a single digit at most, 0:19:07.000 --> 0:19:10.639 so and given the anti China sentiment there is in 0:19:10.720 --> 0:19:14.320 the streets there, you can't exactly rely on Chinese tourists 0:19:14.359 --> 0:19:17.760 to revive the economy anymore. And they were key buyers 0:19:17.760 --> 0:19:20.680 in the property market as well, so potentially we could 0:19:20.760 --> 0:19:24.600 see thumb rupture there in in the property market. We 0:19:24.640 --> 0:19:26.600 haven't seen a whole lot of it just yet. It's 0:19:26.600 --> 0:19:29.480 actually been still quite table at this point. But you know, 0:19:29.800 --> 0:19:32.639 Tim will tell Tom just real quick here thirty seconds 0:19:32.680 --> 0:19:34.280 before we let you go, what are you looking for 0:19:34.480 --> 0:19:39.360 over the weekend? As Beijing has its annual power So 0:19:39.680 --> 0:19:42.800 we've already seen China step back from its growth target, 0:19:43.040 --> 0:19:47.000 that GDP target, which set the tone set expectations for 0:19:47.119 --> 0:19:51.439 the year UM. They've significantly ramps up fiscal stimulus, so 0:19:51.560 --> 0:19:55.720 that will provide some support to sentiment and demand UM 0:19:55.800 --> 0:19:59.280 in terms of Hong Kong is As Von said, I 0:19:59.320 --> 0:20:01.920 think the key thing to look for now is what's 0:20:01.960 --> 0:20:05.040 the reaction on the Hong Kong Street. Does this bring 0:20:05.400 --> 0:20:08.480 a very large number of people back out to protest? 0:20:08.880 --> 0:20:11.560 And if that happens, what then are the consequences for 0:20:11.680 --> 0:20:15.399 Hong Kong markets, real estate and the economy going forwards. 0:20:16.280 --> 0:20:19.200 Tom or Like chief economist for Bloomberg Economics, and Von Man, 0:20:19.240 --> 0:20:23.000 anchor of Daybreak Asia and Bloomberg Markets, which had to 0:20:23.040 --> 0:20:26.560 open for Bloomberg joining us, staying late to give us 0:20:26.720 --> 0:20:32.280 that report from Hong Kong. Definitely a historic seizure rupture 0:20:32.359 --> 0:20:35.639 here between Hong Kong and Beijing. Long time in the works, 0:20:36.000 --> 0:20:39.120 yet really raising questions about why now amid a backdrop 0:20:39.160 --> 0:20:44.719 of rising see no US tension. You're listening to Bloomberg 0:20:44.760 --> 0:20:48.879 Markets with Lisa Abrama Ed's and Paul Sweeney on Bloomberg Radio. 0:20:49.520 --> 0:20:52.440 We've talked a lot about how passive investing is all 0:20:52.440 --> 0:20:55.240 the rage and everyone wants to go into an index fund, 0:20:55.280 --> 0:20:58.639 and yet we often failed to discuss the very active 0:20:58.800 --> 0:21:02.520 process of composed using the underlying index, and that's very 0:21:02.600 --> 0:21:05.359 much in the forefront of people's minds right now. Is 0:21:05.400 --> 0:21:09.480 the SMP, which is the most tracked index bypassive funds, 0:21:09.800 --> 0:21:13.280 goes under potentially a pretty big overhaul. Joining us now 0:21:13.320 --> 0:21:15.680 to discuss this is Nick KOLs, co founder of Data 0:21:15.720 --> 0:21:19.000 Trek Research. Always great to get your thoughts, Nick, I 0:21:19.040 --> 0:21:21.960 want to start with why the SMP may have to 0:21:22.000 --> 0:21:28.760 rejigger which companies includes. Yes, the biggest reason, and you 0:21:28.760 --> 0:21:31.400 know we see this day to day, is that there 0:21:31.440 --> 0:21:33.960 are a lot of companies at the bottom end of 0:21:34.000 --> 0:21:36.960 this index in terms of market cap, that have fallen 0:21:37.000 --> 0:21:40.280 away below the typical levels where the SMP committee begins 0:21:40.320 --> 0:21:44.520 to think about replacing them. So, for example, Harley Davidson 0:21:44.880 --> 0:21:48.680 three billion dollar market cap, GAP stores at three point 0:21:48.720 --> 0:21:51.720 five billion dollar market cap, that's well below these five 0:21:51.800 --> 0:21:54.240 to eight billion dollars the committee tends to think about 0:21:54.280 --> 0:21:57.000 in terms of taking companies out of the index and 0:21:57.040 --> 0:21:59.239 replacing them with new ones. And it's a function of 0:21:59.840 --> 0:22:02.720 all the issues of the COVID crisis that we've seen 0:22:02.760 --> 0:22:07.320 in terms of how different companies are doing versus others. So, Nick, 0:22:07.680 --> 0:22:09.960 is the SMP that the committee there that looks at 0:22:10.000 --> 0:22:12.280 some of these companies. Are they trying to give some 0:22:12.320 --> 0:22:14.120