1 00:00:00,440 --> 00:00:02,960 Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm 2 00:00:03,040 --> 00:00:05,520 Speaker 1: Jason Kelly. We're here every day bringing you the latest 3 00:00:05,519 --> 00:00:09,800 Speaker 1: news from the world's of business and finance, plus technology, politics, economics, 4 00:00:09,840 --> 00:00:13,480 Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors, 5 00:00:13,480 --> 00:00:16,759 Speaker 1: not to mention our journalists and analysts more than a 6 00:00:16,800 --> 00:00:19,520 Speaker 1: hundred and twenty countries. You can download Bloomberg Business Week 7 00:00:19,560 --> 00:00:22,439 Speaker 1: on iTunes, SoundCloud, or Bloomberg dot Com. You can also 8 00:00:22,480 --> 00:00:24,919 Speaker 1: listen to our radio show weekdays at two pm Eastern 9 00:00:25,000 --> 00:00:28,280 Speaker 1: only on Bloomberg Radio. We want to move to our 10 00:00:28,320 --> 00:00:32,600 Speaker 1: own expert here. Brian Granuelotti is the chief executive officer 11 00:00:32,640 --> 00:00:35,440 Speaker 1: of Atlantic Health System, joining us on the phone from Morristown, 12 00:00:35,760 --> 00:00:39,360 Speaker 1: New Jersey. Obviously a state like here in New York 13 00:00:39,400 --> 00:00:42,360 Speaker 1: that has been hit very hard. New Jersey's death rate 14 00:00:42,479 --> 00:00:46,000 Speaker 1: actually eclipsing the daily death rate, eclipsing New York's, I 15 00:00:46,000 --> 00:00:49,520 Speaker 1: believe for the first time today. So clearly a lot 16 00:00:49,600 --> 00:00:51,559 Speaker 1: going on, and a lot going on as we think 17 00:00:51,600 --> 00:00:56,360 Speaker 1: about what happens next, even in terms of reopening the economy. Brian, 18 00:00:56,520 --> 00:00:59,200 Speaker 1: really good to have you with Carol and myself. Thank 19 00:00:59,240 --> 00:01:02,639 Speaker 1: you so give us a sense of what you are 20 00:01:02,720 --> 00:01:05,959 Speaker 1: seeing on the front lines there, what is it like, 21 00:01:06,520 --> 00:01:10,200 Speaker 1: and what's maybe new and different today or this week 22 00:01:10,720 --> 00:01:14,160 Speaker 1: versus in the preceding weeks. Sure, you know you you 23 00:01:14,200 --> 00:01:17,800 Speaker 1: had mentioned the differences between New York and New Jersey, 24 00:01:17,840 --> 00:01:22,080 Speaker 1: and I gotta tell you that, Um, you gotta follow 25 00:01:22,120 --> 00:01:26,520 Speaker 1: the transit lines, because what happened in New York followed 26 00:01:26,560 --> 00:01:29,400 Speaker 1: the transit down into New Jersey. And we have been 27 00:01:29,440 --> 00:01:33,000 Speaker 1: really overwhelmed, as you described here, uh, in New Jersey, 28 00:01:33,040 --> 00:01:36,600 Speaker 1: particularly in northern New Jersey. So today at our command 29 00:01:36,680 --> 00:01:39,520 Speaker 1: center call, we had five hundred and forty four patients 30 00:01:39,560 --> 00:01:43,920 Speaker 1: with COVID in our hospitals and um, about thirty five 31 00:01:44,040 --> 00:01:48,120 Speaker 1: percent of those patients are still on ventilators. So we 32 00:01:48,160 --> 00:01:51,520 Speaker 1: have a very sick patient population. But that's down from 33 00:01:51,600 --> 00:01:54,920 Speaker 1: our peak, which was on April ninth, where we actually 34 00:01:54,960 --> 00:01:58,400 Speaker 1: had eight hundred and thirty four patients. So we're down 35 00:01:58,440 --> 00:02:03,040 Speaker 1: about thirty but it's still an enormous number of patients. 36 00:02:04,240 --> 00:02:07,080 Speaker 1: You know. As we've gone through this process, Brian, I mean, 37 00:02:07,360 --> 00:02:12,840 Speaker 1: what have we learned about being prepared next time, you know, 38 00:02:13,200 --> 00:02:15,400 Speaker 1: and what we need to do in terms of really 39 00:02:15,600 --> 00:02:19,760 Speaker 1: shoring up our health system. And access for everyone. You know, 40 00:02:19,800 --> 00:02:24,160 Speaker 1: there's a there's a famous statement it's about the economy. Um, well, 41 00:02:24,200 --> 00:02:27,880 Speaker 1: it's about the testing. I mean, our major lesson here 42 00:02:28,000 --> 00:02:32,120 Speaker 1: is testing was a problem at the beginning. Testing continues 43 00:02:32,160 --> 00:02:34,919 Speaker 1: to be a problem today. And if we don't get 44 00:02:34,960 --> 00:02:38,720 Speaker 1: this testing right as we go into recovery, we're going 45 00:02:38,760 --> 00:02:42,040 Speaker 1: to have a rebound effect and we're going to be 46 00:02:42,400 --> 00:02:44,639 Speaker 1: back in the soup again, and we have to be very, 47 00:02:44,760 --> 00:02:47,880 Speaker 1: very careful about that. The second thing that we've learned 48 00:02:48,000 --> 00:02:52,000 Speaker 1: is that just in time delivery doesn't work in a pandemic, 49 00:02:52,360 --> 00:02:56,520 Speaker 1: and our supply chain is really broken right now. Um, 50 00:02:57,240 --> 00:03:00,640 Speaker 1: we went through periods of enormous panic making sure that 51 00:03:00,680 --> 00:03:03,720 Speaker 1: we had the right kind of protective equipment for our 52 00:03:03,880 --> 00:03:08,520 Speaker 1: team members to keep them healthy and safe. Ventilators were 53 00:03:08,600 --> 00:03:10,919 Speaker 1: a big issue over a period of time. I can 54 00:03:10,960 --> 00:03:15,040 Speaker 1: tell you just uh a weekend we spent scanning the 55 00:03:15,240 --> 00:03:18,359 Speaker 1: nation for ventilators and and being able to have many 56 00:03:18,400 --> 00:03:20,840 Speaker 1: of our colleagues in different parts of the country support those. 57 00:03:21,360 --> 00:03:24,760 Speaker 1: And it's the same thing with medications, particularly those medications 58 00:03:24,760 --> 00:03:28,040 Speaker 1: that support people on ventilators. So what we've learned is 59 00:03:28,080 --> 00:03:32,160 Speaker 1: we've really got to fix this supply chain, we've got 60 00:03:32,160 --> 00:03:35,200 Speaker 1: to have more control over it because you know, COVID 61 00:03:35,360 --> 00:03:38,680 Speaker 1: is not going to go away until we have a vaccine, 62 00:03:39,280 --> 00:03:41,640 Speaker 1: and that could be a year and a half or 63 00:03:42,000 --> 00:03:45,840 Speaker 1: two years away. So we have just threaded the needle 64 00:03:46,160 --> 00:03:50,360 Speaker 1: here in UH, New Jersey. The governor has been a 65 00:03:50,400 --> 00:03:55,160 Speaker 1: fantastic ally and advocate for us, particularly with the federal 66 00:03:55,200 --> 00:03:58,720 Speaker 1: government and the stockpiles. But we've learned a lot and 67 00:03:58,760 --> 00:04:01,480 Speaker 1: we've got to make sure that at UH we continue 68 00:04:01,480 --> 00:04:03,960 Speaker 1: to use the tools that we have, the predominant one 69 00:04:04,000 --> 00:04:06,800 Speaker 1: being social distancing. Right now, so Brian, I want to 70 00:04:06,800 --> 00:04:08,880 Speaker 1: talk a little bit more about testing it if we could, 71 00:04:08,960 --> 00:04:11,160 Speaker 1: because I feel like we want to go at level 72 00:04:11,200 --> 00:04:15,360 Speaker 1: down and understand both testing for the disease and also 73 00:04:15,480 --> 00:04:18,599 Speaker 1: the zoological, the the antibody testing. What do we know 74 00:04:18,800 --> 00:04:22,000 Speaker 1: now and what is important for our listeners to know 75 00:04:22,200 --> 00:04:25,280 Speaker 1: in terms of what they should be doing, what they 76 00:04:25,320 --> 00:04:28,880 Speaker 1: should expect, especially you know, in and around your hospital 77 00:04:29,000 --> 00:04:32,800 Speaker 1: system over the coming weeks. So the frustration that we've 78 00:04:32,839 --> 00:04:35,760 Speaker 1: had with the diagnostic tests, in other words, do you 79 00:04:35,800 --> 00:04:38,840 Speaker 1: have COVID or not? Is we needed to get that 80 00:04:39,000 --> 00:04:40,960 Speaker 1: right at the point of care so there wouldn't be 81 00:04:41,080 --> 00:04:47,560 Speaker 1: delays in providing a definitive diagnosis because many patients come 82 00:04:47,640 --> 00:04:52,440 Speaker 1: into the health care system UH and they don't need 83 00:04:52,480 --> 00:04:57,920 Speaker 1: to be hospitalized about so so when they go back, 84 00:04:57,960 --> 00:04:59,839 Speaker 1: they need to know if they have a diagnogosis or not, 85 00:05:00,040 --> 00:05:03,760 Speaker 1: they know whether to self quarantine. That diagnosis wasn't coming 86 00:05:03,800 --> 00:05:06,400 Speaker 1: back for three or four days, and that was a 87 00:05:06,520 --> 00:05:10,200 Speaker 1: big problem of the patients that go into the hospital. 88 00:05:10,560 --> 00:05:13,919 Speaker 1: We have to treat everybody is COVID positive until we 89 00:05:14,000 --> 00:05:19,640 Speaker 1: have a definitive diagnosis. And in that instance, about of 90 00:05:19,640 --> 00:05:21,680 Speaker 1: the patients that would go into the hospital and be 91 00:05:21,800 --> 00:05:25,200 Speaker 1: tested UM would be under UH. We wouldn't have a 92 00:05:25,240 --> 00:05:28,440 Speaker 1: test result on them. So we were burning through all 93 00:05:28,480 --> 00:05:32,680 Speaker 1: that scarce protective equipment because we had to treat everybody 94 00:05:32,720 --> 00:05:35,679 Speaker 1: the same. So again we have to have a point 95 00:05:35,760 --> 00:05:39,640 Speaker 1: of care test on that. And then going forward as 96 00:05:39,680 --> 00:05:43,719 Speaker 1: we open up healthcare and start doing some of the 97 00:05:43,760 --> 00:05:46,520 Speaker 1: care that's been tent up, and you've seen articles written 98 00:05:46,520 --> 00:05:49,880 Speaker 1: recently about that UM where people are just staying home 99 00:05:49,920 --> 00:05:52,200 Speaker 1: instead of engaging in the health system, which they need 100 00:05:52,240 --> 00:05:55,200 Speaker 1: to do. We're gonna need to provide that test at 101 00:05:55,240 --> 00:05:59,719 Speaker 1: that preoperative time or pre procedure time in order to 102 00:05:59,760 --> 00:06:02,720 Speaker 1: make sure that we know those patients do not have COVID, 103 00:06:03,200 --> 00:06:06,040 Speaker 1: so that diagnostic tests are going to have to be 104 00:06:06,200 --> 00:06:09,159 Speaker 1: at the spot you're doing the care and they need 105 00:06:09,200 --> 00:06:12,360 Speaker 1: to be able to be determined right away. And when 106 00:06:12,400 --> 00:06:14,200 Speaker 1: you say point of care, I just want to make 107 00:06:14,200 --> 00:06:15,720 Speaker 1: sure that I understand when you say point of care 108 00:06:15,760 --> 00:06:19,120 Speaker 1: that that could also include a pharmacy or someplace like that, 109 00:06:19,240 --> 00:06:22,600 Speaker 1: right or am I misunderstanding, Well, if you're coming in 110 00:06:22,640 --> 00:06:25,279 Speaker 1: for a diagnostic test, or if you're coming in for 111 00:06:25,400 --> 00:06:28,120 Speaker 1: a surgery, it would be in a facility a lot 112 00:06:28,120 --> 00:06:32,760 Speaker 1: of that where you do your preoperative testing. Um. The 113 00:06:32,839 --> 00:06:36,000 Speaker 1: second piece that you talked about antibody testing. That's going 114 00:06:36,040 --> 00:06:40,320 Speaker 1: to be important as it provides some clarification on whether 115 00:06:40,400 --> 00:06:44,000 Speaker 1: or not you have had the disease previously. Now, over 116 00:06:44,040 --> 00:06:47,520 Speaker 1: the last week you've seen U two things happen in 117 00:06:47,520 --> 00:06:51,280 Speaker 1: that space which are concerning. One is that we are 118 00:06:51,320 --> 00:06:56,599 Speaker 1: getting an incredible variation of results on the different tests 119 00:06:56,600 --> 00:06:58,600 Speaker 1: that are being done, the types of tests that are 120 00:06:58,640 --> 00:07:03,200 Speaker 1: being done, and it's really caused some pause and some concern. 121 00:07:03,960 --> 00:07:06,400 Speaker 1: But but clearly we've got to run that down because 122 00:07:06,400 --> 00:07:09,000 Speaker 1: what we don't want to do is give somebody an 123 00:07:09,040 --> 00:07:12,080 Speaker 1: impression that they have built up the immunities. And then 124 00:07:12,080 --> 00:07:14,920 Speaker 1: the second piece that's been of concern was the was 125 00:07:14,960 --> 00:07:17,720 Speaker 1: the feedback we got from the World Health Organization over 126 00:07:17,760 --> 00:07:22,720 Speaker 1: the weekend that perhaps having those antibodies does not necessarily 127 00:07:22,760 --> 00:07:27,080 Speaker 1: protect you again from getting this virus. I think more 128 00:07:27,120 --> 00:07:30,000 Speaker 1: work needs to be done in that space, because the 129 00:07:30,160 --> 00:07:33,880 Speaker 1: consequence of thinking your bulletproof on this and you're not 130 00:07:33,880 --> 00:07:39,480 Speaker 1: going to get it again, uh, is a problem. So Okay, 131 00:07:39,640 --> 00:07:41,760 Speaker 1: I don't want to get all dystopian on everybody, but 132 00:07:41,920 --> 00:07:45,400 Speaker 1: Brian described to me, then what our world is like 133 00:07:45,560 --> 00:07:48,840 Speaker 1: going forward, is it we all just have to get 134 00:07:48,920 --> 00:07:53,160 Speaker 1: used to a lot more testing, wearing masks and potentially 135 00:07:53,160 --> 00:07:56,360 Speaker 1: I mean, you got you oversee a massive hospital system, 136 00:07:56,440 --> 00:07:59,920 Speaker 1: seven hospitals in New Jersey, I think roughly sev men 137 00:08:00,160 --> 00:08:03,840 Speaker 1: ers um almost five thousand physicians, eleven counties. You know, 138 00:08:03,920 --> 00:08:07,520 Speaker 1: five million people you know have access to your system. 139 00:08:07,640 --> 00:08:10,720 Speaker 1: Is it a case that you know, how we go 140 00:08:10,800 --> 00:08:13,520 Speaker 1: about getting procedures, It's going to be very different and 141 00:08:13,560 --> 00:08:14,800 Speaker 1: we have to just get used to it. That's going 142 00:08:14,840 --> 00:08:17,240 Speaker 1: to become the new norm. And we also will have 143 00:08:17,280 --> 00:08:21,560 Speaker 1: health facilities that are separated into virus where people have 144 00:08:21,640 --> 00:08:25,400 Speaker 1: the virus and those places that do not. Yeah, the first, 145 00:08:25,440 --> 00:08:27,760 Speaker 1: the first thing I want to say is that our 146 00:08:27,840 --> 00:08:32,560 Speaker 1: hospitals are safe. UM. I would I would argue our 147 00:08:32,600 --> 00:08:35,800 Speaker 1: hospitals are very safe compared to some of the other 148 00:08:36,120 --> 00:08:39,800 Speaker 1: things we engage in um UH in our communities as 149 00:08:39,840 --> 00:08:43,400 Speaker 1: we UM seek our activities of daily living UM so 150 00:08:43,480 --> 00:08:46,480 Speaker 1: we're we're safe to begin with. But as we think 151 00:08:46,520 --> 00:08:50,280 Speaker 1: about needing to continue to care for this virus UM 152 00:08:50,480 --> 00:08:53,360 Speaker 1: we will as our volumes go down in our hospitals, 153 00:08:54,160 --> 00:08:58,520 Speaker 1: these patients will be contained in very specific areas where 154 00:08:58,559 --> 00:09:02,240 Speaker 1: they won't be interact with other patients. The team members 155 00:09:02,280 --> 00:09:04,840 Speaker 1: that will care for them will care for those patients 156 00:09:04,880 --> 00:09:09,360 Speaker 1: and not care for other patients during their shifts. And 157 00:09:09,600 --> 00:09:13,400 Speaker 1: we need to make sure that UM we have safe 158 00:09:13,400 --> 00:09:18,439 Speaker 1: pathways through our organizations so that we don't have people 159 00:09:18,559 --> 00:09:23,000 Speaker 1: intersecting UH inadvertently, and all those steps are being put 160 00:09:23,040 --> 00:09:27,680 Speaker 1: in place literally as we speak. We also UM have 161 00:09:28,240 --> 00:09:31,000 Speaker 1: when we do turn a unit over and have it 162 00:09:31,120 --> 00:09:34,440 Speaker 1: become an on COVID unit, we do a terminal cleaning 163 00:09:34,440 --> 00:09:37,680 Speaker 1: in there and make sure that everything is safe, so 164 00:09:37,679 --> 00:09:41,240 Speaker 1: so patients shouldn't be safe or shouldn't be scared, and 165 00:09:41,240 --> 00:09:44,000 Speaker 1: there are safe. The thing that we need to think 166 00:09:44,000 --> 00:09:46,280 Speaker 1: about though, to your question, is this will be a 167 00:09:46,320 --> 00:09:49,640 Speaker 1: period of wearing masks. This will be a period of 168 00:09:49,720 --> 00:09:52,800 Speaker 1: maintaining social distance. This will be a period where you 169 00:09:52,840 --> 00:09:57,400 Speaker 1: can't bring your entire family in on your office visit. Um. Uh. 170 00:09:57,440 --> 00:10:00,160 Speaker 1: Those are the kinds of things that we're doing. We're 171 00:10:00,160 --> 00:10:04,040 Speaker 1: going to continue to really use telehealth in a big way, um. 172 00:10:04,080 --> 00:10:07,120 Speaker 1: But we're also in the process of opening our offices. 173 00:10:07,720 --> 00:10:10,000 Speaker 1: You mentioned we have a lot of physician practices, and 174 00:10:10,080 --> 00:10:14,000 Speaker 1: we're doing that also. And so I guess just to 175 00:10:14,000 --> 00:10:16,680 Speaker 1: to drill down at a further level, how long does 176 00:10:16,920 --> 00:10:20,280 Speaker 1: the sort of era of social distance and masking and 177 00:10:20,720 --> 00:10:23,719 Speaker 1: all of that last. In your estimation, Brian, is it 178 00:10:23,840 --> 00:10:26,120 Speaker 1: till we have a vaccine or is what do we 179 00:10:26,160 --> 00:10:29,600 Speaker 1: need to see in order for you know, life to 180 00:10:29,800 --> 00:10:35,840 Speaker 1: even optically look something like close to normal, you know, 181 00:10:36,040 --> 00:10:39,360 Speaker 1: in a perfect world, that's the answer. It's a vaccine. 182 00:10:39,920 --> 00:10:42,120 Speaker 1: But the but the reality is that that's going to 183 00:10:42,200 --> 00:10:44,600 Speaker 1: take a while. So we've got to continue to pursue 184 00:10:44,600 --> 00:10:47,079 Speaker 1: a couple of things. One is we've got to pursue 185 00:10:47,120 --> 00:10:51,440 Speaker 1: effective treatments for this disease, because that will go a 186 00:10:51,440 --> 00:10:54,760 Speaker 1: long way in itself to taking the scare out of 187 00:10:54,760 --> 00:10:58,640 Speaker 1: this UM. The second thing that we've got to work 188 00:10:58,720 --> 00:11:02,199 Speaker 1: on is just contin enuing to educate the public about 189 00:11:02,200 --> 00:11:04,839 Speaker 1: the importance of washing your hands and using a lot 190 00:11:04,880 --> 00:11:07,600 Speaker 1: of common sense, you know, the kinds of things that 191 00:11:07,760 --> 00:11:10,800 Speaker 1: you you learned when you were a kid, UM, and 192 00:11:11,280 --> 00:11:14,240 Speaker 1: make sure that we're adhering to those things. But we 193 00:11:14,320 --> 00:11:17,199 Speaker 1: also are going to be in a position where our 194 00:11:17,240 --> 00:11:18,960 Speaker 1: lives are going to be a lot different. You know, 195 00:11:19,040 --> 00:11:25,599 Speaker 1: I think about restaurants, you know, um, paper disposable menus, um. 196 00:11:25,679 --> 00:11:28,680 Speaker 1: Instead of something that seats a hundred, it'll seat fifty 197 00:11:28,840 --> 00:11:34,319 Speaker 1: and those all have huge uh impacts on those various industries. 198 00:11:35,000 --> 00:11:37,679 Speaker 1: But we will be in a different place. But the 199 00:11:37,800 --> 00:11:40,440 Speaker 1: key thing, again, just to go back to it, is 200 00:11:40,559 --> 00:11:43,679 Speaker 1: we've got to we've got to be able to have 201 00:11:43,840 --> 00:11:46,920 Speaker 1: the testing available so that when we do get an outbreak, 202 00:11:47,480 --> 00:11:49,880 Speaker 1: we are on that in doing the tracing we need 203 00:11:49,960 --> 00:11:53,320 Speaker 1: to do. And that is kind of the blocking and 204 00:11:53,400 --> 00:11:57,360 Speaker 1: tackling of public health system. Ryan just just got about 205 00:11:57,360 --> 00:12:00,480 Speaker 1: thirty seconds here are you bracing your team and preparing 206 00:12:00,480 --> 00:12:03,360 Speaker 1: your team though potentially for another second wave here and 207 00:12:03,480 --> 00:12:07,080 Speaker 1: just gotta be quick. Yes, we are we are absolutely 208 00:12:07,120 --> 00:12:10,280 Speaker 1: preparing for that wave and we will pray that it 209 00:12:10,320 --> 00:12:13,080 Speaker 1: doesn't happen, but we will be there as we always 210 00:12:13,160 --> 00:12:16,480 Speaker 1: are to serve our communities safely, and that's really what 211 00:12:16,520 --> 00:12:19,640 Speaker 1: we're all about. All Thank you so much. We really 212 00:12:19,640 --> 00:12:23,000 Speaker 1: appreciate it. Thank you so much, Brian granielatia really thoughtful conversation, 213 00:12:23,400 --> 00:12:26,560 Speaker 1: realistic conversation about where we are on the medical front 214 00:12:26,840 --> 00:12:29,199 Speaker 1: as it comes to the health system. Carol, he is 215 00:12:29,240 --> 00:12:32,080 Speaker 1: the CEO of Atlantic Health System, joining us on the 216 00:12:32,080 --> 00:12:34,200 Speaker 1: phone from Morristown, and you're a great state of New 217 00:12:34,280 --> 00:12:36,160 Speaker 1: Jersey and my great state of New Jersey and just 218 00:12:36,240 --> 00:12:38,000 Speaker 1: understanding a little bit more of what life is like 219 00:12:38,080 --> 00:12:40,600 Speaker 1: on the other side. And I think, you know, the 220 00:12:40,600 --> 00:12:43,360 Speaker 1: more information we know, the more secure we will feel 221 00:12:43,720 --> 00:12:46,880 Speaker 1: about kind of re entering um. And so it's really 222 00:12:46,880 --> 00:12:48,680 Speaker 1: great to get some time with him. All right, coming up, 223 00:12:48,720 --> 00:12:52,360 Speaker 1: we're going to check in on an interesting story that's 224 00:12:52,480 --> 00:12:54,960 Speaker 1: in Bloomberg Business Week magazine this week, and it all 225 00:12:54,960 --> 00:12:57,840 Speaker 1: has to do with that active passive management kind of 226 00:12:57,880 --> 00:13:00,600 Speaker 1: at it again. I gotta say, I'm just not sure 227 00:13:00,600 --> 00:13:02,560 Speaker 1: how this is going to go today. It's just it's 228 00:13:02,600 --> 00:13:05,640 Speaker 1: just one of those days. It's one of those limits Tuesday, 229 00:13:06,400 --> 00:13:08,800 Speaker 1: and we're going with it as much as we can. 230 00:13:08,920 --> 00:13:12,680 Speaker 1: Joel Weber is joining us, as he does most days 231 00:13:12,840 --> 00:13:14,880 Speaker 1: at this time. He, of course is the editor Bloomberg 232 00:13:14,920 --> 00:13:17,640 Speaker 1: Business Week, as is Justine, the lead markets and quant 233 00:13:17,800 --> 00:13:21,160 Speaker 1: reporter quantz reporter for Bloomberg, joining us on the phone 234 00:13:21,440 --> 00:13:24,840 Speaker 1: from London and Joel, I feel like this is almost 235 00:13:24,840 --> 00:13:27,319 Speaker 1: like a little throwback to your time as editor of 236 00:13:27,360 --> 00:13:30,720 Speaker 1: Bloomberg Markets. Like I started, I'm digging this, I'm digging 237 00:13:30,760 --> 00:13:33,800 Speaker 1: in it. Tell us, tell us about this story. So 238 00:13:34,240 --> 00:13:37,760 Speaker 1: there was a kind of a Bloomberg News Call regular 239 00:13:37,840 --> 00:13:42,200 Speaker 1: call about a week ago, and Justina kind of piped 240 00:13:42,240 --> 00:13:44,520 Speaker 1: in with this idea that she was kind of noodling, 241 00:13:44,920 --> 00:13:47,200 Speaker 1: and as she was describing it, I was just like, Wow, 242 00:13:47,320 --> 00:13:50,760 Speaker 1: just sounds so perfect for Bloomberg Markets. I want it 243 00:13:50,760 --> 00:13:53,880 Speaker 1: for Bloomberg Business and I want it for Bloomberg Business Week. Um, 244 00:13:53,880 --> 00:13:57,200 Speaker 1: and it's really about small versus big companies, which is 245 00:13:57,240 --> 00:13:59,640 Speaker 1: one that I think, you know, we're we're gonna obviously 246 00:13:59,720 --> 00:14:02,160 Speaker 1: spend a couple of minutes talking about here. It's also 247 00:14:02,200 --> 00:14:04,800 Speaker 1: going to be I think I've seen that will resonate 248 00:14:05,400 --> 00:14:10,520 Speaker 1: um for the coming year for investors particular um, if 249 00:14:10,559 --> 00:14:14,200 Speaker 1: not years. And it really what really caught my ear though, 250 00:14:14,480 --> 00:14:17,160 Speaker 1: was the word quantz um. So just you know, you 251 00:14:17,160 --> 00:14:19,680 Speaker 1: want to figure out how to make sense of this 252 00:14:19,720 --> 00:14:25,800 Speaker 1: for for us? Yeah? Sure, because essentially what quantitative investors 253 00:14:25,840 --> 00:14:29,320 Speaker 1: do is that, you know, they don't rely on human judgment. 254 00:14:29,440 --> 00:14:32,360 Speaker 1: They use their computer models to try to find a 255 00:14:32,440 --> 00:14:36,200 Speaker 1: couple of trading fingales that they then apply across thousands 256 00:14:36,200 --> 00:14:40,600 Speaker 1: of securities. And so I initially got this idea talking 257 00:14:40,680 --> 00:14:42,840 Speaker 1: to a quant fund and what they were telling me 258 00:14:43,400 --> 00:14:46,400 Speaker 1: is that the dominance of all these megacap stocked you know, 259 00:14:46,480 --> 00:14:50,000 Speaker 1: like Netflix or Facebook was really not good for their 260 00:14:50,120 --> 00:14:55,360 Speaker 1: kind of strategies because they're essentially underweight megacaps given doubt, 261 00:14:55,400 --> 00:14:58,400 Speaker 1: they're so diversified. And I thought that was a really 262 00:14:58,440 --> 00:15:01,360 Speaker 1: interesting kind of intersection and of this nerdy realm of 263 00:15:01,520 --> 00:15:04,480 Speaker 1: quantz and also a phone phenomenon that I'm sure all 264 00:15:04,560 --> 00:15:07,480 Speaker 1: of us are noticing in the market. So what does 265 00:15:07,520 --> 00:15:10,480 Speaker 1: it tell us about kind of what what they're seeing? 266 00:15:10,720 --> 00:15:13,160 Speaker 1: And because it's it's interesting, you know, justine it because 267 00:15:13,200 --> 00:15:16,160 Speaker 1: we talked so much about active versus passive, right, uh, 268 00:15:16,160 --> 00:15:18,440 Speaker 1: and we know the passive play has been you know, 269 00:15:18,640 --> 00:15:20,960 Speaker 1: done so well for so long coming off of the 270 00:15:21,000 --> 00:15:24,400 Speaker 1: financial crisis and until recently, Um, kind of what did 271 00:15:24,480 --> 00:15:26,800 Speaker 1: you take away from kind of doing this story and 272 00:15:26,840 --> 00:15:31,840 Speaker 1: about that argument in that debate that's been going on, right, 273 00:15:32,000 --> 00:15:35,480 Speaker 1: I mean, essentially one trend that has been making it 274 00:15:35,600 --> 00:15:39,080 Speaker 1: even harder for the active stock pickers is that, you know, 275 00:15:39,160 --> 00:15:42,520 Speaker 1: since the crisis, we have seen big companies get even bigger. 276 00:15:43,240 --> 00:15:45,440 Speaker 1: Now a lot of people think this is you know, 277 00:15:45,480 --> 00:15:48,040 Speaker 1: a structural trend in this sense that a lot of 278 00:15:48,080 --> 00:15:51,760 Speaker 1: the tech companies are taking an advantage of essentially a 279 00:15:51,760 --> 00:15:55,560 Speaker 1: winner took all economy. Because as an active stock picker, 280 00:15:55,640 --> 00:15:57,960 Speaker 1: you want to be different from the benchmark. So you 281 00:15:58,000 --> 00:16:00,880 Speaker 1: want to feel like you have your own original ideas. 282 00:16:00,880 --> 00:16:04,200 Speaker 1: So a lot of the times were naturally underweight large caps, 283 00:16:04,760 --> 00:16:07,080 Speaker 1: but you know, when the they gets bigger, that's not 284 00:16:07,240 --> 00:16:10,040 Speaker 1: an advantage for active stock pickers. And we've kind of 285 00:16:10,120 --> 00:16:14,280 Speaker 1: seen that, you know, repuls be the asset management industry 286 00:16:14,320 --> 00:16:17,080 Speaker 1: with a lot of acquisitions and even more people at 287 00:16:17,120 --> 00:16:22,280 Speaker 1: turning to eats each year. So so just what what 288 00:16:22,360 --> 00:16:25,040 Speaker 1: about right of late? Just you know, the past few 289 00:16:25,040 --> 00:16:28,080 Speaker 1: months have been so crazy and you know, in theory, 290 00:16:28,160 --> 00:16:31,360 Speaker 1: I guess maybe you know, quantitative approach could take out 291 00:16:31,400 --> 00:16:34,960 Speaker 1: that the emotional effect um. What's been happening with quants 292 00:16:34,960 --> 00:16:40,120 Speaker 1: of late, right, I mean, obviously I'm generalizing a little, 293 00:16:40,280 --> 00:16:43,800 Speaker 1: but this year hasn't been great for quantz either. And 294 00:16:43,840 --> 00:16:46,720 Speaker 1: part of the reason is that, you know, they tend 295 00:16:46,760 --> 00:16:49,960 Speaker 1: to have more experiensures to small caps which have been underperforming. 296 00:16:50,440 --> 00:16:53,680 Speaker 1: They also have more exposure to value stocks typically, which 297 00:16:53,720 --> 00:16:57,800 Speaker 1: as you know, have also suffered even more than growth stocks. 298 00:16:57,880 --> 00:17:00,480 Speaker 1: And so it hasn't been a great year for on theater. 299 00:17:00,680 --> 00:17:04,480 Speaker 1: But they're always saying, you know, in every market, when 300 00:17:04,840 --> 00:17:08,200 Speaker 1: valuations are so stretched between the winners and losers, there 301 00:17:08,240 --> 00:17:10,919 Speaker 1: could be a snap back. And it's interesting because I 302 00:17:10,920 --> 00:17:13,400 Speaker 1: think the past couple of days we've seen a little 303 00:17:13,400 --> 00:17:15,639 Speaker 1: bit of that, like small cups coming back a little. 304 00:17:15,920 --> 00:17:20,800 Speaker 1: It's definitely far too early to say then, Yeah, I 305 00:17:20,800 --> 00:17:23,080 Speaker 1: mean it's interesting too. I mean, I guess guys to 306 00:17:23,080 --> 00:17:26,280 Speaker 1: to think about who the winners and losers are, at 307 00:17:26,359 --> 00:17:28,159 Speaker 1: least so far in this and I feel like we're 308 00:17:28,160 --> 00:17:29,520 Speaker 1: going to get a little bit of a picture of 309 00:17:29,560 --> 00:17:33,440 Speaker 1: this this week, Carol, when all the companies are are 310 00:17:33,480 --> 00:17:36,000 Speaker 1: starting to perform, and Joel it it does take me 311 00:17:36,040 --> 00:17:39,119 Speaker 1: back to some extent and this uh, this company has 312 00:17:39,119 --> 00:17:41,199 Speaker 1: mentioned in the lead of Justine's story. It takes it 313 00:17:41,240 --> 00:17:43,600 Speaker 1: back to Zoom, which was the subject of a great 314 00:17:43,920 --> 00:17:46,320 Speaker 1: cover story in the magazine a couple of weeks ago. 315 00:17:46,359 --> 00:17:48,920 Speaker 1: I mean sort of discerning the winners and losers here 316 00:17:49,000 --> 00:17:53,280 Speaker 1: even from beyond the quant perspective, but just from a 317 00:17:53,359 --> 00:17:57,400 Speaker 1: stock in a business perspective, is it feels even trickier 318 00:17:57,520 --> 00:18:01,240 Speaker 1: right now. Yeah, and especially as you know, if if 319 00:18:01,240 --> 00:18:04,480 Speaker 1: we think about the market share the um it's sort 320 00:18:04,480 --> 00:18:07,040 Speaker 1: of the situation like this pandemic kind of creates for 321 00:18:07,119 --> 00:18:09,520 Speaker 1: like an Amazon where you can just see like how 322 00:18:09,560 --> 00:18:12,320 Speaker 1: a big company could really really thrive here while so 323 00:18:12,359 --> 00:18:15,560 Speaker 1: many small ones get hurt. But now that said, like 324 00:18:15,760 --> 00:18:18,760 Speaker 1: you know, I recorded a podcast earlier with Eric ful Tunis, 325 00:18:18,800 --> 00:18:21,239 Speaker 1: and one of those things that um, he was kind 326 00:18:21,240 --> 00:18:23,119 Speaker 1: of thinking about on the E t F side is 327 00:18:23,160 --> 00:18:26,480 Speaker 1: just like you know, small companies have been so beaten down, 328 00:18:26,640 --> 00:18:28,679 Speaker 1: and he just kind of has a theory that like, 329 00:18:28,760 --> 00:18:30,800 Speaker 1: you can only beat these things down so far, like 330 00:18:30,880 --> 00:18:34,640 Speaker 1: over the long term, we might actually see some of these, um, 331 00:18:34,680 --> 00:18:37,760 Speaker 1: the smaller companies and even the small small company value 332 00:18:37,800 --> 00:18:41,000 Speaker 1: ones really outperformed over the next three to five years, 333 00:18:41,000 --> 00:18:43,639 Speaker 1: so from a long term play, there might be something 334 00:18:43,680 --> 00:18:46,399 Speaker 1: to that just you know, like any any reporting on 335 00:18:46,440 --> 00:18:51,400 Speaker 1: that and um from from you right exactly. I mean 336 00:18:51,480 --> 00:18:54,040 Speaker 1: for my story, I spoke to the head of Quantitative 337 00:18:54,080 --> 00:18:57,800 Speaker 1: Strategies and Northern Trust Assets. His name is Michael hunts Deed. 338 00:18:58,280 --> 00:19:00,879 Speaker 1: What he told me is that besides factor which is 339 00:19:00,920 --> 00:19:04,120 Speaker 1: you know, betting on small caps, it's not dead. It's 340 00:19:04,160 --> 00:19:07,040 Speaker 1: just that it's an incredibly long cycle. I think it's 341 00:19:07,080 --> 00:19:10,520 Speaker 1: around eight years, and his research meaning that you could 342 00:19:10,600 --> 00:19:14,119 Speaker 1: be underperforming for eight years, but if you stick it 343 00:19:14,160 --> 00:19:17,000 Speaker 1: out over the long term, it actually still works out. 344 00:19:17,359 --> 00:19:20,360 Speaker 1: So of course, the problem for most people, especially if 345 00:19:20,400 --> 00:19:22,520 Speaker 1: you're a fun manager and then needs to get paid, 346 00:19:22,600 --> 00:19:25,280 Speaker 1: is that most people don't have that kind of patience. 347 00:19:25,720 --> 00:19:28,600 Speaker 1: But if you do, um, you know, the academic research 348 00:19:28,640 --> 00:19:32,840 Speaker 1: indicates that exposure to small caps should still out perform 349 00:19:32,960 --> 00:19:34,920 Speaker 1: over the long one. I gotta say, this is the 350 00:19:35,000 --> 00:19:37,080 Speaker 1: kind of story that just you know, Jill, it just 351 00:19:37,240 --> 00:19:39,119 Speaker 1: makes the market even more interesting as we try to 352 00:19:39,119 --> 00:19:41,760 Speaker 1: figure out kind of what happens next. Yeah, I mean, 353 00:19:41,800 --> 00:19:43,480 Speaker 1: it's like to me, it's like that great buy and 354 00:19:43,520 --> 00:19:45,960 Speaker 1: hold lesson Like if you if you can seriously like 355 00:19:46,080 --> 00:19:50,120 Speaker 1: buy and holding. It might be might be worth thinking about. Yeah, absolutely, 356 00:19:50,160 --> 00:19:52,320 Speaker 1: all right. It's a great story on the Bloomberg one 357 00:19:52,320 --> 00:19:54,119 Speaker 1: of the most read, and not surprisingly, it's in the 358 00:19:54,160 --> 00:19:57,200 Speaker 1: upcoming edition of Bloomberg Business Week, so find it online 359 00:19:57,640 --> 00:19:59,960 Speaker 1: or pick up the magazine when it's out later this week. 360 00:20:00,080 --> 00:20:04,160 Speaker 1: Justina Lee joining us from London. Joel Webber, the editor 361 00:20:04,160 --> 00:20:11,080 Speaker 1: of Bloomberg Business Week, joining us from Brooklyn. I'm brooom 362 00:20:11,440 --> 00:20:18,119 Speaker 1: journal now, but you let me drive. Oh no, no, no no, no, honey, please, 363 00:20:18,240 --> 00:20:27,439 Speaker 1: I'll do the riding drivel. I want to drive, Just drive, baby. 364 00:20:28,200 --> 00:20:38,160 Speaker 1: The question dry This is the drive to the globe. 365 00:20:38,920 --> 00:20:42,520 Speaker 1: Give me thanks. We'll drying us down on Bloomberg Radio. 366 00:20:43,000 --> 00:20:44,840 Speaker 1: It is time for the drive to the clothes. Just 367 00:20:45,119 --> 00:20:49,400 Speaker 1: got about fifteen minutes left in today's trading day. Calm 368 00:20:49,440 --> 00:20:51,639 Speaker 1: us along with Jason Kelly. Back with us is Alan Zaffron. 369 00:20:52,040 --> 00:20:53,919 Speaker 1: He is founding partner in co CEO at I e 370 00:20:54,000 --> 00:20:59,040 Speaker 1: Q Capital, joining us on the phone from Foster City, California. Allen, 371 00:20:59,160 --> 00:21:01,199 Speaker 1: good to have you here with us. How's it all 372 00:21:01,240 --> 00:21:04,640 Speaker 1: going well, I'll tell you what, it's beautiful weather out here. 373 00:21:04,680 --> 00:21:07,600 Speaker 1: Home sheltering is a badly got eightygree weather in sunshine, 374 00:21:07,640 --> 00:21:10,359 Speaker 1: so it isn't all bad in California. Are people still 375 00:21:10,359 --> 00:21:13,840 Speaker 1: sheltering though, with that kind of weather? They are? And 376 00:21:13,880 --> 00:21:16,840 Speaker 1: if you're listening to Mayor London Breed in San Francisco 377 00:21:16,880 --> 00:21:19,440 Speaker 1: and you're in the six counties around surrounding San Francisco, 378 00:21:19,480 --> 00:21:22,560 Speaker 1: you're sheltering at least through the end of May. So 379 00:21:22,720 --> 00:21:27,000 Speaker 1: California has a, um, you know, a tighter lockdown possibly 380 00:21:27,000 --> 00:21:29,159 Speaker 1: than other parts of the country. And we'll see the 381 00:21:29,200 --> 00:21:31,360 Speaker 1: long run whether that was prudent or not, both from 382 00:21:31,359 --> 00:21:34,000 Speaker 1: a health as well as an economic perspective. But the 383 00:21:34,119 --> 00:21:36,119 Speaker 1: rules are the rules, and that's the way we're in 384 00:21:36,119 --> 00:21:39,399 Speaker 1: California and Northern California currently. And so what do you 385 00:21:39,440 --> 00:21:42,679 Speaker 1: make of it? I mean, as a longtime businessman, you know, 386 00:21:42,800 --> 00:21:45,760 Speaker 1: someone who's watching both the markets, but obviously has watched 387 00:21:45,760 --> 00:21:49,240 Speaker 1: the rise of Silicon Valley and and just the economic 388 00:21:49,320 --> 00:21:53,320 Speaker 1: boom that you've seen there in Northern California. Obviously it's 389 00:21:53,320 --> 00:21:57,240 Speaker 1: a balance Alan, But but I do I wonder what 390 00:21:57,240 --> 00:22:01,159 Speaker 1: do you make of it? I may convit it's it's 391 00:22:01,200 --> 00:22:05,760 Speaker 1: fraught with challenges. Uh, clearly, it's a negative economically, clearly 392 00:22:05,840 --> 00:22:09,480 Speaker 1: it's a positive from a healthcare perspective. UM, the reality 393 00:22:09,600 --> 00:22:12,320 Speaker 1: is we probably were not built to handle a massive 394 00:22:12,359 --> 00:22:16,600 Speaker 1: amount of emergency UH cases heading into hospitals. We would 395 00:22:16,640 --> 00:22:19,679 Speaker 1: have been overwhelmed. UM. It's easier look in retrospect and 396 00:22:19,720 --> 00:22:22,480 Speaker 1: think we should have acted sooner. We didn't. In the 397 00:22:22,480 --> 00:22:25,000 Speaker 1: absence of doing that, we had to take some action steps. 398 00:22:25,320 --> 00:22:27,800 Speaker 1: The question will obviously be was the cure worse than 399 00:22:27,840 --> 00:22:31,359 Speaker 1: the disease? Not entirely sure. It's very clear that there's 400 00:22:31,400 --> 00:22:35,879 Speaker 1: been significant economic damage that's gonna last years, not weeks, 401 00:22:35,880 --> 00:22:39,439 Speaker 1: not months, years, and so that's the sad part of 402 00:22:39,440 --> 00:22:43,600 Speaker 1: this is you're gonna see a tremendous amount of economic damage. 403 00:22:43,600 --> 00:22:46,760 Speaker 1: And the worst part of this, Jason and Carrol, the 404 00:22:47,000 --> 00:22:49,719 Speaker 1: inequity between the wealthy and those that don't have has 405 00:22:49,760 --> 00:22:52,399 Speaker 1: only been exacerbated by this crisis. Let's get back to 406 00:22:52,400 --> 00:22:55,040 Speaker 1: Alan Zaffron founding partner a co CEO over at I 407 00:22:55,080 --> 00:22:58,280 Speaker 1: e Q Capital, on the phone from Foster City, California. Ellen, 408 00:22:58,320 --> 00:23:00,600 Speaker 1: what do you what do you think so far of UM? 409 00:23:00,680 --> 00:23:03,359 Speaker 1: We can debate a lot about how long it took 410 00:23:03,400 --> 00:23:07,360 Speaker 1: and you know whether the you know, the shutdown will 411 00:23:07,520 --> 00:23:09,960 Speaker 1: hurt us more in the long term. Um, there's lots 412 00:23:10,000 --> 00:23:13,160 Speaker 1: to be said, lots of criticism about what we did wrong, 413 00:23:13,200 --> 00:23:17,679 Speaker 1: and there are things certainly that folks have h done right. UM, 414 00:23:17,720 --> 00:23:20,240 Speaker 1: But I do wonder about the AID that's coming because 415 00:23:20,280 --> 00:23:22,480 Speaker 1: that's really important, and that's the kind of forward looking 416 00:23:22,480 --> 00:23:24,960 Speaker 1: story about how we get through this and how do 417 00:23:25,040 --> 00:23:27,600 Speaker 1: we look on the other side of the virus. So far, 418 00:23:27,680 --> 00:23:31,639 Speaker 1: so good. Um, so far, so good. But if you 419 00:23:31,760 --> 00:23:34,920 Speaker 1: think of it this way, AID can only do so much. 420 00:23:34,920 --> 00:23:36,880 Speaker 1: It's almost like there's four things that have to get 421 00:23:36,920 --> 00:23:39,159 Speaker 1: done because you really have a medical crisis. So you 422 00:23:39,160 --> 00:23:41,760 Speaker 1: can you can lower rate to zero like the said did, 423 00:23:41,760 --> 00:23:44,560 Speaker 1: and that helps. That doesn't solve a virus problem. You 424 00:23:44,560 --> 00:23:47,280 Speaker 1: can have the subtle government throw money the individuals who 425 00:23:47,320 --> 00:23:50,080 Speaker 1: are unemployed, and that doesn't stop a virus problem. So 426 00:23:50,160 --> 00:23:53,359 Speaker 1: ultimately it's helpful fills the whole from some of the 427 00:23:53,440 --> 00:23:57,240 Speaker 1: unemployment gaps and lack of economic activity when of small 428 00:23:57,240 --> 00:24:01,080 Speaker 1: businesses are shut down in America. But the until we 429 00:24:01,200 --> 00:24:04,879 Speaker 1: get a solution for the problem, you're still going to 430 00:24:04,960 --> 00:24:07,919 Speaker 1: end up in a world of volatility and uncertain and 431 00:24:08,000 --> 00:24:12,800 Speaker 1: until someone has a clear cut vaccine with being widely distributable, 432 00:24:13,200 --> 00:24:15,399 Speaker 1: it's a fools errand to think that the volatility has 433 00:24:15,440 --> 00:24:17,440 Speaker 1: suddenly gone away. Don't be fooled by the last week. 434 00:24:17,480 --> 00:24:19,280 Speaker 1: We're not out of the water yet. It's still gonna 435 00:24:19,280 --> 00:24:23,919 Speaker 1: be tough, right and and that's clearly true, Alan, for 436 00:24:23,960 --> 00:24:26,840 Speaker 1: anyone who's looking this with a clear eye. And yet 437 00:24:27,560 --> 00:24:30,440 Speaker 1: I take a look at the actually want to bring 438 00:24:30,480 --> 00:24:33,919 Speaker 1: you one headline related to your state, California reporting one thousand, 439 00:24:34,520 --> 00:24:37,919 Speaker 1: seventy six new COVID cases fifty four deaths uh in 440 00:24:37,960 --> 00:24:41,760 Speaker 1: the last twenty four hours. I believe that's a tick 441 00:24:41,960 --> 00:24:45,760 Speaker 1: up maybe from yesterday. So we'll bring you more details 442 00:24:45,800 --> 00:24:48,879 Speaker 1: on that. That of course coming uh from California Governor 443 00:24:48,880 --> 00:24:52,200 Speaker 1: Gavin Newsom. He's giving his daily update over the last hour. 444 00:24:52,359 --> 00:24:56,200 Speaker 1: So what I was gonna say, Alan, is in terms 445 00:24:56,240 --> 00:24:58,520 Speaker 1: of valuations, and we've been talking about this over the 446 00:24:58,600 --> 00:25:00,480 Speaker 1: last couple days, especially because it's a to a a big 447 00:25:00,960 --> 00:25:05,040 Speaker 1: tech week. Uh, You've got the NASDAC that I'm looking at. 448 00:25:05,040 --> 00:25:07,480 Speaker 1: My Bloomberg termament right now is down less than four 449 00:25:07,520 --> 00:25:11,399 Speaker 1: percent for the entire year, So things aren't necessarily cheap 450 00:25:11,520 --> 00:25:14,920 Speaker 1: right now. Yeah, you've hit the nail on the head. 451 00:25:14,960 --> 00:25:16,840 Speaker 1: I haven't. I can't tell how many questions the last 452 00:25:16,880 --> 00:25:18,680 Speaker 1: week I've had about I can't believe how come this 453 00:25:18,800 --> 00:25:22,960 Speaker 1: market's going up? Um. The indexes are hiding the weakness. 454 00:25:23,280 --> 00:25:26,439 Speaker 1: The NASDAC is reasonably flat for the year. UM, the 455 00:25:26,560 --> 00:25:29,600 Speaker 1: SMP is down a ten percent for there but small 456 00:25:29,600 --> 00:25:34,800 Speaker 1: caps are down. It's because defense is what used to 457 00:25:34,800 --> 00:25:37,000 Speaker 1: be high BATA to no longer bid a large cap 458 00:25:37,040 --> 00:25:41,520 Speaker 1: growth businesses that aren't as reliant on basic economic activity. 459 00:25:41,600 --> 00:25:44,440 Speaker 1: You don't need people visiting you with the low contact sports, 460 00:25:44,440 --> 00:25:46,840 Speaker 1: so to speak. Those are the businesses that have been 461 00:25:46,840 --> 00:25:49,480 Speaker 1: working in this economy and probably will continue to in 462 00:25:49,480 --> 00:25:53,720 Speaker 1: the low growth environment. So the sp and the NASDAC 463 00:25:53,920 --> 00:25:59,120 Speaker 1: are in a way hiding the broader main street economic weakness, 464 00:25:59,200 --> 00:26:01,679 Speaker 1: and that is where the any is rotating. And until 465 00:26:01,840 --> 00:26:05,320 Speaker 1: there's greater symbolance of a reflationary economy, which could be 466 00:26:05,720 --> 00:26:09,800 Speaker 1: several years away. Large camp us centric large camp growth 467 00:26:09,880 --> 00:26:12,359 Speaker 1: seems to be the place where there's more steady growth, 468 00:26:12,760 --> 00:26:15,359 Speaker 1: and all things equal, ironically, it's a safer place to 469 00:26:15,359 --> 00:26:17,439 Speaker 1: put your equity camp, right, and the companies that we 470 00:26:17,440 --> 00:26:19,159 Speaker 1: can probably bank on and get through all of this. 471 00:26:19,359 --> 00:26:21,840 Speaker 1: Ultimately on the other side of it, are you putting 472 00:26:22,040 --> 00:26:25,760 Speaker 1: would you suggest Alan, that's still it's a time to 473 00:26:25,880 --> 00:26:28,679 Speaker 1: kind of pick up um some names, certainly in the 474 00:26:28,680 --> 00:26:31,399 Speaker 1: equity universe. Um, there are some opportunities out there. Or 475 00:26:31,440 --> 00:26:35,200 Speaker 1: do you feel like those easy gains, the bounces off 476 00:26:35,200 --> 00:26:38,840 Speaker 1: the low that's already been been done. Yeah, I think 477 00:26:38,840 --> 00:26:41,360 Speaker 1: the trains left the station on the easy games. Um. 478 00:26:41,400 --> 00:26:43,480 Speaker 1: It always makes sense if you're a long term investor, 479 00:26:43,600 --> 00:26:48,119 Speaker 1: be dollar cost averaging. However, it's it's a world of 480 00:26:48,480 --> 00:26:52,440 Speaker 1: low growth. You want to stick with franchises, strong balance sheets, 481 00:26:52,440 --> 00:26:55,159 Speaker 1: and the ability to grow earnings regardless of a very 482 00:26:55,160 --> 00:26:59,119 Speaker 1: slow economic environment. So don't get caught in a value trap. 483 00:26:59,520 --> 00:27:01,560 Speaker 1: Just because there's a high dividend doesn't mean it's going 484 00:27:01,640 --> 00:27:03,960 Speaker 1: to stay at high dividend, nor does it mean that 485 00:27:04,040 --> 00:27:06,359 Speaker 1: businesses will be able to generate the cash flows to 486 00:27:06,400 --> 00:27:10,640 Speaker 1: pay that dividend. Focus on quality, quality, quality right now. 487 00:27:11,000 --> 00:27:13,680 Speaker 1: Make sure you know the franchises and sectors you're buying into. 488 00:27:13,720 --> 00:27:16,680 Speaker 1: There's a reason healthcare and tech for the best performing 489 00:27:16,720 --> 00:27:20,040 Speaker 1: sectors here, because that's where the secular growth is now 490 00:27:20,119 --> 00:27:21,840 Speaker 1: and going forward. I feel like that's I was just 491 00:27:21,840 --> 00:27:23,199 Speaker 1: gonna say, I feel like that's going to be our 492 00:27:23,200 --> 00:27:27,600 Speaker 1: new world order. Healthcare and tech. Yeah, yeah, secular growth. Um. 493 00:27:27,680 --> 00:27:29,640 Speaker 1: So Alan talked to us about real estate. I feel 494 00:27:29,640 --> 00:27:30,960 Speaker 1: like this is going to be one of the big 495 00:27:31,040 --> 00:27:34,080 Speaker 1: questions that we are talking about for some time to come, 496 00:27:34,320 --> 00:27:37,919 Speaker 1: not just from an investment perspective, but from the perspective 497 00:27:37,960 --> 00:27:41,120 Speaker 1: of how do we consume real estate, how do we 498 00:27:41,280 --> 00:27:45,240 Speaker 1: use it both residentially and commercially. We had Kent Swigg 499 00:27:45,240 --> 00:27:49,760 Speaker 1: on our program last week. He obviously has invested heavily, 500 00:27:49,960 --> 00:27:52,760 Speaker 1: especially on the coast in San Francisco near you, and 501 00:27:52,800 --> 00:27:55,720 Speaker 1: in New York City here near us. We also have 502 00:27:55,800 --> 00:27:58,480 Speaker 1: these big questions around our big company is going to 503 00:27:58,560 --> 00:28:01,919 Speaker 1: take less realist state more real estate, What does social 504 00:28:01,920 --> 00:28:05,119 Speaker 1: distancing look like? What is the new workplace look like? 505 00:28:05,160 --> 00:28:09,720 Speaker 1: And I do wonder, especially given your history of advising 506 00:28:09,880 --> 00:28:13,480 Speaker 1: a number of wealthy families over the years, real estate 507 00:28:13,480 --> 00:28:17,560 Speaker 1: has always been a pretty comfortable place for folks, right, Yeah, 508 00:28:17,600 --> 00:28:20,280 Speaker 1: it really has because it's got, you know, very tacticfficient 509 00:28:20,320 --> 00:28:23,880 Speaker 1: mechanism to deliver income. And I think it's very clear, Um, 510 00:28:23,920 --> 00:28:26,520 Speaker 1: there have been some secular changes, and the secular changes 511 00:28:26,680 --> 00:28:28,720 Speaker 1: are first and foremost. There is going to be a 512 00:28:28,760 --> 00:28:31,680 Speaker 1: shift in work behavior going forward. It's clear not everybody's 513 00:28:31,680 --> 00:28:34,040 Speaker 1: going to jump back to the office as frequently. On 514 00:28:34,119 --> 00:28:35,440 Speaker 1: the one that, I kind of like that because will 515 00:28:35,480 --> 00:28:37,359 Speaker 1: be less traffic driving to and from the office. On 516 00:28:37,359 --> 00:28:40,800 Speaker 1: the other hand, so I'm an owner of an office building, um, 517 00:28:40,840 --> 00:28:43,080 Speaker 1: I think my buyers now my renters are going to 518 00:28:43,160 --> 00:28:45,880 Speaker 1: have more buying powers, does need less demand for office 519 00:28:45,920 --> 00:28:49,440 Speaker 1: So there's definitely going to be some valuation discount, probably 520 00:28:49,480 --> 00:28:52,920 Speaker 1: other than an exceptionally high quality office in that major 521 00:28:52,960 --> 00:28:58,600 Speaker 1: metropolitan cities. Secondarily, I would argue that industrial properties, core 522 00:28:58,600 --> 00:29:01,560 Speaker 1: industrial probably has actually gone in value the notion of 523 00:29:01,600 --> 00:29:04,480 Speaker 1: delivering with more goods and services to more consumers going forward. 524 00:29:04,520 --> 00:29:07,920 Speaker 1: If you're a warehouse provided for a target Walmart, you know, Amazon, 525 00:29:08,400 --> 00:29:10,360 Speaker 1: it's gonna be a good thing. So there's winners and losers. 526 00:29:10,360 --> 00:29:13,360 Speaker 1: I think the place that's really complicated not retail. It's 527 00:29:13,360 --> 00:29:15,640 Speaker 1: pretty clear that that's an over retailed environment. Will have 528 00:29:15,680 --> 00:29:18,320 Speaker 1: to refigure it out. But its apartments, which has traditionally 529 00:29:18,320 --> 00:29:20,480 Speaker 1: been a very safe environment. You know, if we're in 530 00:29:20,520 --> 00:29:22,520 Speaker 1: a world where renters are given a free pass to 531 00:29:22,560 --> 00:29:25,880 Speaker 1: pay rent, possibly for very good reason, I don't know 532 00:29:25,880 --> 00:29:27,800 Speaker 1: if that makes the landlord feel very good, and I 533 00:29:27,840 --> 00:29:29,920 Speaker 1: don't know who's culpable in the back end, and so 534 00:29:30,080 --> 00:29:31,920 Speaker 1: there is going to be, at least in the short run, 535 00:29:32,560 --> 00:29:36,360 Speaker 1: some discount evaluations on basic conventional apartment buildings because what 536 00:29:36,520 --> 00:29:38,920 Speaker 1: was once perceived to be an exceptionally low risk income 537 00:29:38,960 --> 00:29:41,000 Speaker 1: stry and you know, is arguably a little more risk. 538 00:29:41,040 --> 00:29:43,600 Speaker 1: It depends on what kind of apartment property and what location. 539 00:29:44,480 --> 00:29:46,640 Speaker 1: All Right, we're gonna leave it. They're great to catch 540 00:29:46,680 --> 00:29:48,160 Speaker 1: up with you. Thanks for be impatient with us as 541 00:29:48,200 --> 00:29:51,000 Speaker 1: we jumped around. We really appreciate Alan's affron founding partner 542 00:29:51,080 --> 00:29:53,640 Speaker 1: co c of I e Q Capital on the phone 543 00:29:53,880 --> 00:29:57,760 Speaker 1: from northern California. Thanks for listening to Bloomberg Business Week. 544 00:29:57,880 --> 00:30:00,640 Speaker 1: You can subscribe to the podcast on iTunes, SoundCloud, or 545 00:30:00,640 --> 00:30:03,080 Speaker 1: Bloomberg dot com. You can also listen to our radio 546 00:30:03,120 --> 00:30:06,200 Speaker 1: show every weekday at two pm Eastern only on Bloomberg 547 00:30:06,280 --> 00:30:11,080 Speaker 1: Radio h