1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,800 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg We 5 00:00:27,880 --> 00:00:30,080 Speaker 1: can catch up. A good friend of this program's Tony 6 00:00:30,120 --> 00:00:33,479 Speaker 1: da of counter coach genuitcy Tony, you've been quiet for 7 00:00:33,520 --> 00:00:37,879 Speaker 1: a solid week. Where have you been. I don't know. 8 00:00:37,920 --> 00:00:41,080 Speaker 1: I don't feel so quiet. Uh So I'm in this 9 00:00:41,320 --> 00:00:45,080 Speaker 1: funky position because we've been expecting a relief rally and 10 00:00:45,120 --> 00:00:47,400 Speaker 1: we got it right. We got a relief rally that 11 00:00:47,520 --> 00:00:50,880 Speaker 1: is historic. We've retraced about fifty of what we've lost 12 00:00:51,440 --> 00:00:56,280 Speaker 1: during the crash in March and that that really is extraordinary. 13 00:00:56,480 --> 00:00:59,240 Speaker 1: So what you know, I'm trying to figure out if 14 00:00:59,240 --> 00:01:03,360 Speaker 1: a tactical rally, meaning based on an over soul condition 15 00:01:03,440 --> 00:01:07,560 Speaker 1: of hope, uh, if that's going to become a fundamental rally, 16 00:01:07,720 --> 00:01:11,399 Speaker 1: and I'm not clear on that at this point. I 17 00:01:11,520 --> 00:01:15,840 Speaker 1: looked Tony at the equity markets and what I perceive 18 00:01:15,959 --> 00:01:21,800 Speaker 1: as a narrowness of this rally. How narrow is narrow? Well? 19 00:01:21,800 --> 00:01:25,200 Speaker 1: The last two days have seen the downside by him 20 00:01:25,240 --> 00:01:29,280 Speaker 1: significantly outweighing the upside by him. So you had you 21 00:01:29,400 --> 00:01:34,160 Speaker 1: had two really bad quote unquote market days, but megacap 22 00:01:34,280 --> 00:01:37,959 Speaker 1: Tech was leading. So the thing that's the most interesting 23 00:01:38,000 --> 00:01:41,520 Speaker 1: about that megacap Tech at this point is it's actually 24 00:01:42,040 --> 00:01:46,840 Speaker 1: considered defensive. So for those that have gone on offense, right. 25 00:01:46,880 --> 00:01:48,720 Speaker 1: We we downgraded the market, as you guys know in 26 00:01:48,800 --> 00:01:52,960 Speaker 1: January and expected once you got that panic low, which 27 00:01:53,000 --> 00:01:56,160 Speaker 1: was identifiable, we expect the relief rally, and we got it. 28 00:01:56,160 --> 00:01:59,160 Speaker 1: It's been a lot more than I thought it would be, 29 00:01:59,560 --> 00:02:02,680 Speaker 1: but the wrong groups are leading it. If you're if 30 00:02:02,720 --> 00:02:06,600 Speaker 1: you're expecting a good fundamentally driven bull market, they usually 31 00:02:06,600 --> 00:02:11,639 Speaker 1: are kicked off with small cap stocks leading, with offensive 32 00:02:11,720 --> 00:02:18,240 Speaker 1: sectors like financials, industrials, consumer discretionary, with those areas leading, 33 00:02:18,760 --> 00:02:23,639 Speaker 1: but they're lagging. So there's basically to make it very 34 00:02:23,680 --> 00:02:27,720 Speaker 1: clear for the listeners, because this sounds really complicated coming 35 00:02:27,720 --> 00:02:30,480 Speaker 1: off of a major bear market low. You want to 36 00:02:30,560 --> 00:02:34,080 Speaker 1: see the more aggressive areas do better, but that's not 37 00:02:34,240 --> 00:02:37,000 Speaker 1: been the case in the rally, and that was evidence time, 38 00:02:37,000 --> 00:02:39,160 Speaker 1: as you suggested, by the narrowness of the last couple 39 00:02:39,200 --> 00:02:42,120 Speaker 1: of days, Tony. As you talk, it strikes me that 40 00:02:42,160 --> 00:02:44,799 Speaker 1: perhaps we can look at this in another way that 41 00:02:44,880 --> 00:02:47,680 Speaker 1: when we say the stock market is rallying despite the 42 00:02:47,760 --> 00:02:51,320 Speaker 1: horrific data that we keep getting out of the real economy, 43 00:02:51,360 --> 00:02:54,040 Speaker 1: perhaps this is a couple of key tech names that 44 00:02:54,080 --> 00:02:57,560 Speaker 1: are rallying well. The rest of the stocks completely lagged behind, 45 00:02:57,600 --> 00:03:01,120 Speaker 1: the small caps down year to date, and it doesn't 46 00:03:01,160 --> 00:03:05,359 Speaker 1: necessarily indicate anything positive, even hope for the economy and 47 00:03:05,440 --> 00:03:08,280 Speaker 1: the month's ahead. Is that a better way to understand 48 00:03:08,280 --> 00:03:11,480 Speaker 1: the rally that we're seeing in equities right now? Yes, 49 00:03:11,600 --> 00:03:14,440 Speaker 1: it's really born out of an extreme oversoul condition when 50 00:03:14,440 --> 00:03:17,120 Speaker 1: everybody got too bearish all at once, and that's what 51 00:03:17,160 --> 00:03:20,600 Speaker 1: we identified as quote unquote the panic low. You know, 52 00:03:20,680 --> 00:03:23,640 Speaker 1: you have you kick off a human nature. There's times 53 00:03:23,639 --> 00:03:26,440 Speaker 1: when human nature is the driver of the market activity, 54 00:03:26,440 --> 00:03:29,240 Speaker 1: and then there's times for fundamentals. For the last ten years, 55 00:03:29,240 --> 00:03:33,760 Speaker 1: it's been a fundamentally driven positive credit backdrop, good earnings 56 00:03:33,880 --> 00:03:38,360 Speaker 1: driven rally. Right now, it's basically everybody got too shortened 57 00:03:38,360 --> 00:03:41,120 Speaker 1: to too out of the market too quickly. Okay, but 58 00:03:41,160 --> 00:03:44,000 Speaker 1: where are we right now on this Friday? Is everybody's 59 00:03:44,000 --> 00:03:46,040 Speaker 1: gonna go home? This weekend like John Farrow and trying 60 00:03:46,040 --> 00:03:47,360 Speaker 1: to figure out what to do with their two oh 61 00:03:47,400 --> 00:03:53,800 Speaker 1: one k. That's true, what's excuse lost my head? I 62 00:03:53,880 --> 00:03:55,960 Speaker 1: went out yesterday for the first time in ten days. 63 00:03:57,280 --> 00:04:01,040 Speaker 1: I was fully protected. Has yep. I know I had 64 00:04:01,040 --> 00:04:02,760 Speaker 1: it has met yep. I had the two things on 65 00:04:02,800 --> 00:04:07,760 Speaker 1: the side, and vet Ye tech came over to tech 66 00:04:07,800 --> 00:04:11,640 Speaker 1: came over to tweak my No tech him over the 67 00:04:13,560 --> 00:04:16,800 Speaker 1: instant vet build than me, Tony, I want to talk 68 00:04:16,839 --> 00:04:20,000 Speaker 1: about what I do this weekend with my four oh 69 00:04:20,040 --> 00:04:25,200 Speaker 1: one k allocation. How enthused are you to reallocate right now, 70 00:04:25,240 --> 00:04:30,360 Speaker 1: to rebalance right now? I'm not really enthused. I would 71 00:04:30,360 --> 00:04:35,000 Speaker 1: have been down despite the economic backdrop, because that was 72 00:04:35,080 --> 00:04:37,680 Speaker 1: down too far too fast. Now I think we've gone 73 00:04:37,839 --> 00:04:40,920 Speaker 1: up too far too fast. So again, Tom, you do 74 00:04:41,000 --> 00:04:43,159 Speaker 1: not want to bet against the guy's printing their money. 75 00:04:43,160 --> 00:04:46,799 Speaker 1: The FED told you they're going to continue to support everything, 76 00:04:46,880 --> 00:04:49,799 Speaker 1: but stocks don't bet against. I would not bet against 77 00:04:49,839 --> 00:04:52,880 Speaker 1: the market, but at this point I also wouldn't chase 78 00:04:53,040 --> 00:04:56,520 Speaker 1: the kind of Relly, not just that it's over a 79 00:04:56,600 --> 00:04:59,320 Speaker 1: very short period of time, but also the kind were 80 00:04:59,560 --> 00:05:03,400 Speaker 1: Lisa engine. Small cap stocks are underperforming and the more 81 00:05:03,520 --> 00:05:07,400 Speaker 1: economically sensitive sectors are also underperforming. Well, let's talk about 82 00:05:07,400 --> 00:05:09,680 Speaker 1: what's working then, what's working really both in the United 83 00:05:09,720 --> 00:05:11,880 Speaker 1: States and Europe, And you saw it pretty pronounced in 84 00:05:11,960 --> 00:05:15,480 Speaker 1: yesterday's price action I T and healthcare, what's lacking? What's 85 00:05:15,560 --> 00:05:18,160 Speaker 1: uply financials and energy? You're just saying, stick with the 86 00:05:18,160 --> 00:05:22,159 Speaker 1: stuff that's working. That's at this point, you would that 87 00:05:22,200 --> 00:05:25,720 Speaker 1: would that's the leadership. Um, Honestly, I'd be pretty sector 88 00:05:25,760 --> 00:05:28,240 Speaker 1: neutral right now. I think that there are there are 89 00:05:28,279 --> 00:05:30,320 Speaker 1: times where you can have a high conviction call and 90 00:05:30,360 --> 00:05:32,479 Speaker 1: there's times when you don't. And this is as you 91 00:05:32,520 --> 00:05:34,440 Speaker 1: guys know, we've been doing this for a number of years. 92 00:05:34,440 --> 00:05:36,520 Speaker 1: I'm pretty happy to make a high conviction call when 93 00:05:36,560 --> 00:05:40,480 Speaker 1: I have one. At this point, this is a tactical rally. UM, 94 00:05:40,640 --> 00:05:44,359 Speaker 1: I don't think I would chase the strength and I think, uh, 95 00:05:44,440 --> 00:05:47,360 Speaker 1: it's just a good time it to just be neutral 96 00:05:47,680 --> 00:05:50,760 Speaker 1: and wait for more economic data. Sonny, always appreciate your 97 00:05:50,800 --> 00:05:52,600 Speaker 1: honesty and thanks for it. Signed this morning, I hope 98 00:05:52,600 --> 00:05:54,760 Speaker 1: you and you also doing pretty well, Tony to that 99 00:05:55,000 --> 00:06:08,880 Speaker 1: of kind of cogenency for our audience worldwide on Bloomberg 100 00:06:08,920 --> 00:06:12,120 Speaker 1: TV and on Bloomberg Radio. I'm very pleased to say that. 101 00:06:12,120 --> 00:06:15,599 Speaker 1: We're joined now by the president of the Cleveland Bank 102 00:06:15,760 --> 00:06:19,360 Speaker 1: of the Federal Reserve, alongside Bloomberg's Michael McKee, who would 103 00:06:19,400 --> 00:06:21,760 Speaker 1: join us for this interview. The Cleveland Fed president joined 104 00:06:21,839 --> 00:06:24,720 Speaker 1: us now. The rdamester fantastic to catch up with you. 105 00:06:24,960 --> 00:06:26,600 Speaker 1: I just want to reflect on the data that we've 106 00:06:26,640 --> 00:06:29,920 Speaker 1: had for this economy because it has been brutal, twenty 107 00:06:30,040 --> 00:06:33,839 Speaker 1: two million jobless claims in a single month, wiping out 108 00:06:33,880 --> 00:06:36,520 Speaker 1: a decade of jobs growth. I want you to help 109 00:06:36,600 --> 00:06:39,600 Speaker 1: us understand how you see the future path for policy 110 00:06:39,880 --> 00:06:43,480 Speaker 1: together with this recovery as these economies slowly normalize at 111 00:06:43,520 --> 00:06:46,960 Speaker 1: the back end of this year. Yeah, so you're right, 112 00:06:47,040 --> 00:06:51,880 Speaker 1: the data is very ugly. UM not unexpected given what 113 00:06:51,920 --> 00:06:54,120 Speaker 1: we've decided as a country to do in the best 114 00:06:54,160 --> 00:06:56,839 Speaker 1: interest of public health, which is of course social distancing 115 00:06:56,880 --> 00:07:00,520 Speaker 1: and shutting down um in the medical expert tell us 116 00:07:00,560 --> 00:07:03,000 Speaker 1: that's the best way to control the virus. So what 117 00:07:03,040 --> 00:07:06,920 Speaker 1: you've seen is all the numbers coming in basically reflect 118 00:07:06,960 --> 00:07:10,400 Speaker 1: that shutdown and activity, the fact that many firms are 119 00:07:10,400 --> 00:07:13,840 Speaker 1: furlowing workers. You see that in initial claims numbers, you 120 00:07:13,880 --> 00:07:17,640 Speaker 1: see workers being laid off. This is very very painful 121 00:07:17,880 --> 00:07:21,160 Speaker 1: for everyone. UM. Not only do you have to deal 122 00:07:21,200 --> 00:07:23,560 Speaker 1: with illness and sickness, but then you also have to 123 00:07:23,600 --> 00:07:27,400 Speaker 1: worry about, um, your financial well being. So you know, 124 00:07:27,560 --> 00:07:30,240 Speaker 1: small businesses throughout our district, in the fourth district the 125 00:07:30,240 --> 00:07:33,120 Speaker 1: Midwest are telling us, you know, this is an incredibly 126 00:07:33,240 --> 00:07:38,000 Speaker 1: unprecedented event for them. So I'm not that surprised about 127 00:07:38,000 --> 00:07:43,440 Speaker 1: the actual numbers per se, because we we've engineered this shutdown. 128 00:07:43,520 --> 00:07:48,000 Speaker 1: The question is going forward, can we put in policies? 129 00:07:48,040 --> 00:07:50,000 Speaker 1: And I think the said in the federal government have 130 00:07:50,120 --> 00:07:53,400 Speaker 1: been trying to do this to get people from the 131 00:07:53,480 --> 00:07:58,040 Speaker 1: economy that looked good in February through this pandemic shutdown 132 00:07:58,120 --> 00:08:01,760 Speaker 1: period so that when economy begins to open up again, 133 00:08:02,040 --> 00:08:05,280 Speaker 1: they have the wherewithal um to sort of have the 134 00:08:05,360 --> 00:08:08,360 Speaker 1: recovery come on board. And so a lot of the 135 00:08:08,440 --> 00:08:10,360 Speaker 1: things that the SET is doing is to try and 136 00:08:10,360 --> 00:08:12,680 Speaker 1: to make sure that there's a good foundation in terms 137 00:08:12,760 --> 00:08:16,720 Speaker 1: of functioning markets, which of course is vital for an 138 00:08:16,760 --> 00:08:20,840 Speaker 1: economy to get you know, credit UM and lending to 139 00:08:21,480 --> 00:08:25,280 Speaker 1: the households and businesses that need it UM to reduce 140 00:08:25,440 --> 00:08:29,120 Speaker 1: collateral damage UM and mitigate some of the impacts from 141 00:08:29,160 --> 00:08:31,840 Speaker 1: the shutdown, so that when we get to the point 142 00:08:31,880 --> 00:08:35,280 Speaker 1: where the economy reopens, the recovery is in the best 143 00:08:35,320 --> 00:08:41,520 Speaker 1: possible place it can be given this unprecedented shutdown and activity. Laretta, 144 00:08:41,600 --> 00:08:45,160 Speaker 1: This is Michael. Um. When you talk about when we're 145 00:08:45,160 --> 00:08:47,680 Speaker 1: going to open up, what are CEOs in your district 146 00:08:47,720 --> 00:08:50,120 Speaker 1: and you're the heart of manufacturing country in the US. 147 00:08:50,160 --> 00:08:52,520 Speaker 1: What are they telling you about the damage they see 148 00:08:52,559 --> 00:08:56,080 Speaker 1: now and when they think they can reopen, and what 149 00:08:56,240 --> 00:08:59,160 Speaker 1: the economy will look like when we do. Will they 150 00:08:59,200 --> 00:09:02,880 Speaker 1: have customers? Well, they ramp up rapidly. What do you 151 00:09:02,880 --> 00:09:06,320 Speaker 1: see from Cleveland? Right, So we're all working on this 152 00:09:06,480 --> 00:09:10,040 Speaker 1: right now. Um. As you know, Governor Dawine of Ohio 153 00:09:10,880 --> 00:09:14,320 Speaker 1: is doing daily press conferences and he yesterday said that 154 00:09:14,360 --> 00:09:18,920 Speaker 1: he's aiming for May first for some type of reopening. 155 00:09:18,920 --> 00:09:21,640 Speaker 1: But of course that reopening is going to be done 156 00:09:21,840 --> 00:09:26,640 Speaker 1: very carefully in stage because no one wants to go backward. Um. 157 00:09:26,720 --> 00:09:29,800 Speaker 1: And so really it's really thinking through now what those 158 00:09:29,800 --> 00:09:33,040 Speaker 1: criteria would be, you know, And we have some examples 159 00:09:33,080 --> 00:09:35,840 Speaker 1: of firms that did stay open as essential companies of 160 00:09:35,880 --> 00:09:38,480 Speaker 1: how they've been able to do it, for example, grocery stores. 161 00:09:38,559 --> 00:09:41,800 Speaker 1: So taking some of the lessons about how do you 162 00:09:41,840 --> 00:09:45,720 Speaker 1: do social distancing within a store, how do you do 163 00:09:45,800 --> 00:09:48,920 Speaker 1: social distancing within a manufacturing plan, and trying to apply 164 00:09:49,120 --> 00:09:52,000 Speaker 1: those So, you know, my view and talking to the 165 00:09:52,040 --> 00:09:55,320 Speaker 1: firms is everyone realizes that everyone wants to kind of 166 00:09:55,360 --> 00:09:58,520 Speaker 1: get back to work, but everyone realizes that how you 167 00:09:58,600 --> 00:10:02,320 Speaker 1: do that u UM really is has to be done 168 00:10:02,400 --> 00:10:05,120 Speaker 1: very carefully. And so we're you know, we expect to 169 00:10:05,160 --> 00:10:10,400 Speaker 1: see social distancing practices continue. UM certainly you know, uh, 170 00:10:10,600 --> 00:10:13,880 Speaker 1: personal protective equipment like maths and gloves will be part 171 00:10:13,920 --> 00:10:16,959 Speaker 1: of that. So it's got to be done very thoughtfully. 172 00:10:17,160 --> 00:10:20,960 Speaker 1: Some things will be able to reopen that make it 173 00:10:21,240 --> 00:10:25,400 Speaker 1: you know that can do social distancing more easily than others. UM. 174 00:10:25,440 --> 00:10:29,520 Speaker 1: You wouldn't expect to see big conventions or or even uh, 175 00:10:29,600 --> 00:10:32,400 Speaker 1: you know, conferences where you have people, um, a lot 176 00:10:32,400 --> 00:10:35,200 Speaker 1: of people around. You have to be very careful about 177 00:10:35,200 --> 00:10:37,040 Speaker 1: how you do it. But everyone kind of has a 178 00:10:37,080 --> 00:10:39,640 Speaker 1: goal of wanting to kind of get back to opening 179 00:10:39,679 --> 00:10:42,480 Speaker 1: up activity. You know, partly because when you think about it, 180 00:10:42,559 --> 00:10:46,640 Speaker 1: this is very painful for so you know, small businesses. UM, 181 00:10:46,679 --> 00:10:48,520 Speaker 1: you know some of them have had to shut down, 182 00:10:49,320 --> 00:10:52,440 Speaker 1: very painful for people that you know have you know, 183 00:10:52,480 --> 00:10:55,000 Speaker 1: have lost their jobs in certain sectors are bearing the 184 00:10:55,040 --> 00:10:58,320 Speaker 1: brunt of this and so um. This is why I 185 00:10:58,360 --> 00:11:00,960 Speaker 1: think you've seen unprecedented act and at both the federal 186 00:11:01,000 --> 00:11:03,880 Speaker 1: Reserve and at the federal government level of trying to 187 00:11:03,960 --> 00:11:09,559 Speaker 1: mitigate the negatives um on the economy from the appropriate 188 00:11:09,600 --> 00:11:13,040 Speaker 1: policy of social distancing and shutting down the activity in 189 00:11:13,160 --> 00:11:16,280 Speaker 1: order to get the virus under control. Well, do you 190 00:11:16,280 --> 00:11:19,200 Speaker 1: think maybe markets are getting a little bit ahead of 191 00:11:19,720 --> 00:11:23,840 Speaker 1: themselves in pricing in a very rapid recovery at this point, 192 00:11:24,280 --> 00:11:26,560 Speaker 1: when do you think we start growing again and and 193 00:11:26,720 --> 00:11:31,480 Speaker 1: how quickly? Yeah? So, I mean, as you've seen, I 194 00:11:31,520 --> 00:11:33,360 Speaker 1: think that there are going to be different parts of 195 00:11:33,360 --> 00:11:36,280 Speaker 1: the country that are going to feel that they're capable 196 00:11:36,360 --> 00:11:40,600 Speaker 1: of bringing back some businesses when the virus has kind 197 00:11:40,600 --> 00:11:42,960 Speaker 1: of gotten to a point where the curve starts to 198 00:11:43,040 --> 00:11:45,600 Speaker 1: flatten and then move down. So you're going to see 199 00:11:45,600 --> 00:11:48,640 Speaker 1: that not all of businesses and not all parts of 200 00:11:48,679 --> 00:11:52,319 Speaker 1: the coming opening at the same time. So as that happens, 201 00:11:53,040 --> 00:11:56,080 Speaker 1: you would expect to see at least in terms of numbers, 202 00:11:56,120 --> 00:12:00,400 Speaker 1: in terms of percentages, looking like they're they're moving back up. 203 00:12:00,600 --> 00:12:03,960 Speaker 1: Right when you go from zero base to activity. You're 204 00:12:04,000 --> 00:12:06,560 Speaker 1: going to see some increase in terms of the percentage 205 00:12:06,679 --> 00:12:09,400 Speaker 1: rise in some of those numbers, but that nowhere need 206 00:12:10,240 --> 00:12:13,760 Speaker 1: nowhere implies that, right we've made up what we lost 207 00:12:13,800 --> 00:12:16,480 Speaker 1: by the shutdown, and so you know, you might see 208 00:12:16,520 --> 00:12:19,319 Speaker 1: some of the numbers of like percentage grows an output 209 00:12:19,400 --> 00:12:22,200 Speaker 1: looking like they're coming back, you know, maybe in the 210 00:12:22,280 --> 00:12:25,920 Speaker 1: third quarters if things start to open up in certain areas, 211 00:12:25,960 --> 00:12:28,880 Speaker 1: But again, that doesn't mean that you're truly back to 212 00:12:29,679 --> 00:12:31,800 Speaker 1: you know, activity, being back to normal. It's just gonna 213 00:12:31,800 --> 00:12:34,840 Speaker 1: take time. Right if you're a manufacturing plant, um, and 214 00:12:34,920 --> 00:12:38,520 Speaker 1: you don't have you know, supplies, um, it's gonna take 215 00:12:38,559 --> 00:12:41,079 Speaker 1: time for you to kind of bring back your workers, 216 00:12:41,640 --> 00:12:44,320 Speaker 1: you know, get the supply of inputs that you need 217 00:12:44,360 --> 00:12:46,600 Speaker 1: to start picking out activity. And then of course it 218 00:12:46,600 --> 00:12:48,440 Speaker 1: depends on what demand you're going to say, so I 219 00:12:48,480 --> 00:12:51,559 Speaker 1: think it will take some time where the economy to 220 00:12:51,679 --> 00:12:53,640 Speaker 1: kind of pick back up. And right now we're in 221 00:12:53,679 --> 00:12:56,360 Speaker 1: this still in the phase of making sure we get 222 00:12:56,400 --> 00:13:01,160 Speaker 1: to that point without you know, as as best we can. 223 00:13:01,280 --> 00:13:05,160 Speaker 1: We're trying to limit the damage, um, the economic damage, 224 00:13:05,160 --> 00:13:07,640 Speaker 1: and get people so that they can sort of resume 225 00:13:07,800 --> 00:13:12,720 Speaker 1: things in the best way possible, Lorendo, we're up against 226 00:13:12,720 --> 00:13:14,080 Speaker 1: the clocks. I want to jump in and get as 227 00:13:14,080 --> 00:13:16,600 Speaker 1: many questions in as possible if we can. I don't 228 00:13:16,600 --> 00:13:18,480 Speaker 1: want to be toned deaf to what's happening in the markets. 229 00:13:18,720 --> 00:13:21,440 Speaker 1: Right now. We have a seventeen handle on w t 230 00:13:21,520 --> 00:13:24,160 Speaker 1: I crude, we have some real risk and high yield 231 00:13:24,240 --> 00:13:27,200 Speaker 1: space of defaults. Yet people have been encouraged to pile 232 00:13:27,240 --> 00:13:29,000 Speaker 1: on that risk in the last week because the Federal 233 00:13:29,000 --> 00:13:32,520 Speaker 1: Reserve has suggested it will go into high yield. Can 234 00:13:32,600 --> 00:13:35,800 Speaker 1: you see why that's encouraging risky behavior at a time 235 00:13:35,840 --> 00:13:39,959 Speaker 1: when maybe we shouldn't be doing that. So we're in 236 00:13:40,040 --> 00:13:45,000 Speaker 1: a you know, a real unprecedented, incredibly deep, deep shock 237 00:13:45,080 --> 00:13:47,920 Speaker 1: to the economy, and I think if the Who's us, 238 00:13:47,960 --> 00:13:51,640 Speaker 1: that the send to really use our tools as best 239 00:13:51,679 --> 00:13:55,679 Speaker 1: we can to get us through this pandemic shutdown period, 240 00:13:56,280 --> 00:13:59,839 Speaker 1: mitigating the negative impact on the economy so that the 241 00:14:00,040 --> 00:14:02,920 Speaker 1: recovery can be as deaf as it can be when 242 00:14:02,920 --> 00:14:05,920 Speaker 1: we get to that point. Yes, we are moving into 243 00:14:06,040 --> 00:14:09,920 Speaker 1: unprecedented territories, but remember we're trying to then lend a 244 00:14:10,040 --> 00:14:14,040 Speaker 1: firms um that, through no fault of their own, were 245 00:14:14,080 --> 00:14:17,240 Speaker 1: impacted by the virus, and so there are you know, 246 00:14:17,320 --> 00:14:20,320 Speaker 1: we are going into, for example, UM corporate debt progments 247 00:14:20,320 --> 00:14:22,800 Speaker 1: which we haven't done before UM, and we are going 248 00:14:22,800 --> 00:14:26,840 Speaker 1: to include some fallen angels right that, you know, kind 249 00:14:26,840 --> 00:14:31,760 Speaker 1: of investment grade rating before the virus sits. So you're 250 00:14:31,840 --> 00:14:34,840 Speaker 1: right that we are doing things that we hadn't done before. 251 00:14:35,280 --> 00:14:37,560 Speaker 1: But at this point, I don't think we can be 252 00:14:37,760 --> 00:14:41,480 Speaker 1: that concerned about UM those kind of moral hazards. I 253 00:14:41,520 --> 00:14:43,800 Speaker 1: really think we have to really look at this is 254 00:14:43,840 --> 00:14:48,240 Speaker 1: a hugely impactful and negatively impactful shock, and we have 255 00:14:48,320 --> 00:14:50,800 Speaker 1: to do all we can to make sure that we're 256 00:14:50,840 --> 00:14:55,280 Speaker 1: not doing permanent damage to the underlying fundamentals of the 257 00:14:55,280 --> 00:14:58,200 Speaker 1: economy so that when the time comes and activity can 258 00:14:58,200 --> 00:15:01,040 Speaker 1: pick up, we can get a d sent recovery out 259 00:15:01,040 --> 00:15:04,320 Speaker 1: of this. A lot of what you just said will 260 00:15:04,360 --> 00:15:07,320 Speaker 1: make sense to a lot of people where people struggle, though, Loretta, 261 00:15:07,360 --> 00:15:09,960 Speaker 1: and maybe you can help us. Buying double B credits 262 00:15:10,000 --> 00:15:12,760 Speaker 1: that were triple B before this might make sense to 263 00:15:12,800 --> 00:15:16,480 Speaker 1: tons of people. The huge employers buying high yield ETFs 264 00:15:17,240 --> 00:15:19,960 Speaker 1: that have triple C credit in them, exposed to a 265 00:15:20,080 --> 00:15:23,000 Speaker 1: very shaky energy sector that weren't on firm footing before 266 00:15:23,040 --> 00:15:29,400 Speaker 1: this doesn't make sense, why the decision by jun ytfs. Yeah, 267 00:15:29,640 --> 00:15:31,960 Speaker 1: so part of what we're doing and all the things 268 00:15:32,000 --> 00:15:35,160 Speaker 1: that we're doing are twofold. One is right. We're trying 269 00:15:35,200 --> 00:15:40,000 Speaker 1: to make sure that the markets say functioning. So some 270 00:15:40,040 --> 00:15:42,560 Speaker 1: of the efforts of the set is done right are 271 00:15:42,600 --> 00:15:45,480 Speaker 1: really geared at market functioning and some of them are 272 00:15:45,520 --> 00:15:48,840 Speaker 1: geared to make sure that right we mitigate the negative 273 00:15:48,840 --> 00:15:51,960 Speaker 1: effects on households and businesses by making sure that we 274 00:15:52,040 --> 00:15:55,080 Speaker 1: have credit flowing to those businesses. So I look at 275 00:15:55,120 --> 00:15:57,120 Speaker 1: the E t F. Part of that is a market 276 00:15:57,200 --> 00:16:00,280 Speaker 1: functioning issue, um and so, and we're continuing need to 277 00:16:00,320 --> 00:16:03,320 Speaker 1: look for gaps to make sure that our markets are functioning. 278 00:16:03,360 --> 00:16:04,920 Speaker 1: And I would say that some of the efforts that 279 00:16:04,920 --> 00:16:09,080 Speaker 1: we've taken already have improved functioning in the market. So 280 00:16:09,240 --> 00:16:11,880 Speaker 1: there's two things going on. One of us is making 281 00:16:11,920 --> 00:16:15,400 Speaker 1: sure that and this is the FED responsibility, right, is 282 00:16:15,440 --> 00:16:17,480 Speaker 1: to make sure that we have markets that are well 283 00:16:17,560 --> 00:16:21,560 Speaker 1: functioning so that credit can flow right and do what 284 00:16:21,680 --> 00:16:25,040 Speaker 1: it can to help shore up the economy to prepare 285 00:16:25,080 --> 00:16:28,240 Speaker 1: it for the recovery. So, you know, we can get 286 00:16:28,280 --> 00:16:30,360 Speaker 1: and we can disagree on kind of what the right 287 00:16:30,400 --> 00:16:32,040 Speaker 1: way to do that is, but part of what we're 288 00:16:32,080 --> 00:16:33,840 Speaker 1: doing is to try to make sure that we have 289 00:16:34,040 --> 00:16:39,040 Speaker 1: functioning financial markets precisely because those are an essential ingredient 290 00:16:39,920 --> 00:16:42,640 Speaker 1: for the economy. For that any other policies that we 291 00:16:42,680 --> 00:16:46,360 Speaker 1: do can flow through, so there's a transmission to the 292 00:16:46,440 --> 00:16:51,160 Speaker 1: households and businesses that need those fundings. We got about 293 00:16:51,240 --> 00:16:54,240 Speaker 1: two minutes left Lare and I know that at this 294 00:16:54,320 --> 00:16:57,240 Speaker 1: point the FED is all in doing everything it can 295 00:16:57,280 --> 00:16:59,600 Speaker 1: to try to support the economy. When we get to 296 00:16:59,680 --> 00:17:04,400 Speaker 1: that quarter maybe reopening and it's time to stimulate the economy, 297 00:17:04,440 --> 00:17:06,760 Speaker 1: is there more you think you need to do or 298 00:17:06,960 --> 00:17:10,840 Speaker 1: can do, and what would that be? So I think 299 00:17:10,880 --> 00:17:13,159 Speaker 1: we're going to have to see how um, what it 300 00:17:13,200 --> 00:17:15,320 Speaker 1: looks like when we get there. I don't think we're 301 00:17:15,400 --> 00:17:17,960 Speaker 1: up against any kind of constraint on what we can do, 302 00:17:18,080 --> 00:17:21,439 Speaker 1: as you've seem that we we I think we acted 303 00:17:21,720 --> 00:17:28,800 Speaker 1: um appropriately rapidly, um in an unprecedented rapidly way really 304 00:17:28,840 --> 00:17:32,800 Speaker 1: because of the recognition of how deep this this shock 305 00:17:33,160 --> 00:17:36,960 Speaker 1: was um and engineered because of the investment we're making 306 00:17:36,960 --> 00:17:40,080 Speaker 1: in public health. Right. So when we get to that point, 307 00:17:40,160 --> 00:17:42,600 Speaker 1: we're going to look at our tools do what we 308 00:17:42,720 --> 00:17:45,879 Speaker 1: can again. To support some of the programs that the 309 00:17:45,880 --> 00:17:48,760 Speaker 1: federal government is doing UM in terms of like the 310 00:17:48,800 --> 00:17:52,040 Speaker 1: p PP, the Paycheck Protection Program, etcetera. And then be 311 00:17:52,160 --> 00:17:56,240 Speaker 1: prepared to use our tools as appropriate to make sure 312 00:17:56,240 --> 00:17:59,280 Speaker 1: one market function and two that we're supporting the economy 313 00:17:59,359 --> 00:18:02,480 Speaker 1: as we all nes do UM, so that we can 314 00:18:02,520 --> 00:18:07,280 Speaker 1: get back to a normal sustainable growth with UM, full 315 00:18:07,359 --> 00:18:10,960 Speaker 1: employment and price stability. And so that's what our goal 316 00:18:11,080 --> 00:18:13,960 Speaker 1: is going to be. That's what our goals always are UM, 317 00:18:14,000 --> 00:18:16,640 Speaker 1: and we have tools to do that. We have forward guidings, 318 00:18:16,720 --> 00:18:19,440 Speaker 1: we have our interest rate tools that we're doing right 319 00:18:19,480 --> 00:18:22,200 Speaker 1: now at zero UM, and we're going to move those 320 00:18:22,240 --> 00:18:25,720 Speaker 1: things around as appropriate UM to make sure that the 321 00:18:25,760 --> 00:18:32,959 Speaker 1: economy can recover and get back to a sustainable growth path. Laura, 322 00:18:33,080 --> 00:18:34,240 Speaker 1: we have to leave it that and I have to 323 00:18:34,280 --> 00:18:36,159 Speaker 1: say thank you to you for your time a conversation. 324 00:18:36,240 --> 00:18:38,760 Speaker 1: We will continue la right amester that the President of 325 00:18:38,800 --> 00:18:41,439 Speaker 1: the Federal Reserve Bank of Cleveland a special thanks to 326 00:18:41,440 --> 00:18:43,400 Speaker 1: our already in some blind Bug TV and a blind 327 00:18:43,400 --> 00:18:56,119 Speaker 1: Bug Radio. This is with our question, our definitive discussion 328 00:18:56,200 --> 00:19:00,520 Speaker 1: this week and the microbiology and the virology of this endemic. 329 00:19:00,600 --> 00:19:03,639 Speaker 1: Andrew Pallis is out of Rutger's in Pen He is 330 00:19:03,640 --> 00:19:07,120 Speaker 1: at the Johns Hopkins University Bloomberg School of Public Health. 331 00:19:07,160 --> 00:19:10,440 Speaker 1: I should point out that Mr Bloomberg has provided philanthropy 332 00:19:10,520 --> 00:19:13,080 Speaker 1: to his Johns Hopkins University, and of course as the 333 00:19:13,119 --> 00:19:16,800 Speaker 1: founder of Bloomberg Gulp and this television and radio station. 334 00:19:17,320 --> 00:19:23,760 Speaker 1: This is an extraordinary expert on microbiology and vera virology. 335 00:19:23,840 --> 00:19:29,920 Speaker 1: Let's listen to Professor Pelkos. This virus is truly interesting 336 00:19:29,920 --> 00:19:33,840 Speaker 1: in the sense that it causes this broad spectrum of diseases. 337 00:19:34,000 --> 00:19:37,119 Speaker 1: So it's very true that the vast majority of people 338 00:19:37,160 --> 00:19:40,040 Speaker 1: will suffer what we call sort of mild to moderate diseases, 339 00:19:40,560 --> 00:19:43,440 Speaker 1: maybe even know symptoms at all. But when you look 340 00:19:43,520 --> 00:19:48,480 Speaker 1: at UM, the vulnerable portions of the population, the elderly, 341 00:19:49,080 --> 00:19:52,160 Speaker 1: when you look at people with secondary medical conditions such 342 00:19:52,160 --> 00:19:55,119 Speaker 1: as diabetes, heart disease, of a lung disease, and to 343 00:19:55,160 --> 00:19:58,520 Speaker 1: be honest, even when you look at relatively healthy individuals UM, 344 00:19:58,880 --> 00:20:01,040 Speaker 1: there are a significant a number of part of the 345 00:20:01,040 --> 00:20:04,760 Speaker 1: population that has very severe disease requiring, if not a 346 00:20:04,840 --> 00:20:09,720 Speaker 1: hospital visit, um um admission into the hospital. So it 347 00:20:09,840 --> 00:20:12,879 Speaker 1: runs in a huge spectrum in terms of how it 348 00:20:12,960 --> 00:20:16,439 Speaker 1: presents after infection. I don't want to talk enzymes on 349 00:20:16,480 --> 00:20:18,879 Speaker 1: a Friday, and I certainly don't want to talk RNA 350 00:20:18,960 --> 00:20:23,560 Speaker 1: transcript taste and the other necessities of doing a test. 351 00:20:24,240 --> 00:20:28,359 Speaker 1: But I would suggest, respectfully, doctor that America from a 352 00:20:28,440 --> 00:20:36,480 Speaker 1: top down doesn't understand the sophisticated chemistry and biochemistry of tests. 353 00:20:37,000 --> 00:20:40,200 Speaker 1: How hard is it to do a test and millions 354 00:20:40,240 --> 00:20:44,480 Speaker 1: of tests for this virus. So we know in a 355 00:20:44,600 --> 00:20:48,640 Speaker 1: lot about the virus, and you certainly can do good testing. 356 00:20:48,960 --> 00:20:51,520 Speaker 1: It requires not only a good test, but it also 357 00:20:51,600 --> 00:20:56,679 Speaker 1: requires a good laboratory that's validated, that knows how to detesting, 358 00:20:56,960 --> 00:20:59,240 Speaker 1: that knows how to do the controls, and knows how 359 00:20:59,320 --> 00:21:03,160 Speaker 1: to show that they can reproducibly perform the tests well. 360 00:21:03,840 --> 00:21:06,320 Speaker 1: So that's where it's really important to be focused in 361 00:21:06,400 --> 00:21:10,120 Speaker 1: on public health agencies and medical institutions that know how 362 00:21:10,119 --> 00:21:13,200 Speaker 1: to do these tests. Professor Pekosh talk to us about 363 00:21:13,200 --> 00:21:17,159 Speaker 1: reinfection and immunity. Are people that have had the virus 364 00:21:17,359 --> 00:21:21,560 Speaker 1: really getting infected twice? Yeah? So right now, um, it's 365 00:21:21,600 --> 00:21:25,800 Speaker 1: still a little bit unclear, but this is this gets 366 00:21:25,800 --> 00:21:29,320 Speaker 1: back to the testing issue. Oftentimes, what I've seeing is 367 00:21:29,359 --> 00:21:32,879 Speaker 1: people who are testing positive by the you know the 368 00:21:32,880 --> 00:21:35,320 Speaker 1: test that tells you if you're infected, which is a 369 00:21:35,359 --> 00:21:38,919 Speaker 1: PCR test that the text the virus. That doesn't necessarily 370 00:21:38,960 --> 00:21:41,360 Speaker 1: mean you've been reinfected. It may simply mean that there's 371 00:21:41,400 --> 00:21:44,160 Speaker 1: small amounts of the virus that are still in your 372 00:21:44,160 --> 00:21:47,679 Speaker 1: system UM from the infection that you've already controlled a 373 00:21:47,720 --> 00:21:50,360 Speaker 1: few days ago or a week or so ago. So 374 00:21:51,080 --> 00:21:53,680 Speaker 1: right now, there really is no good evidence to suggest 375 00:21:53,720 --> 00:21:57,760 Speaker 1: that you're getting reinfected after your first exposure. May simply 376 00:21:57,760 --> 00:22:00,600 Speaker 1: be that the virus is hanging around and you see 377 00:22:00,760 --> 00:22:03,879 Speaker 1: vestiges of the virus there after you you've controlled the 378 00:22:03,920 --> 00:22:07,119 Speaker 1: initial infection. But it's something that's very important to understand 379 00:22:07,440 --> 00:22:11,560 Speaker 1: as we think about rolling back in and coming UH 380 00:22:12,080 --> 00:22:15,000 Speaker 1: leaving some of our public health interventions. Do we have 381 00:22:15,080 --> 00:22:18,000 Speaker 1: a credible test to test immunity. There's gonna be a 382 00:22:18,040 --> 00:22:21,560 Speaker 1: two part UH phase to that. Many of the tests 383 00:22:21,560 --> 00:22:23,720 Speaker 1: that are out there will tell you if you've had 384 00:22:24,200 --> 00:22:28,240 Speaker 1: an infection and if you have antibodies UM. Now that's 385 00:22:28,240 --> 00:22:31,040 Speaker 1: important because that'll tell us how many people were infected 386 00:22:31,080 --> 00:22:34,040 Speaker 1: the first time this barus moves through the population. But 387 00:22:34,160 --> 00:22:36,600 Speaker 1: most of those tests don't really tell you if you're 388 00:22:36,640 --> 00:22:40,040 Speaker 1: protected from reinfection. That's going to take a second set 389 00:22:40,080 --> 00:22:43,879 Speaker 1: of tests that are done more in laboratory settings that 390 00:22:43,960 --> 00:22:46,000 Speaker 1: take a little bit of time to develop, but that 391 00:22:46,040 --> 00:22:49,480 Speaker 1: will differentiate people who just have some antibodies to it 392 00:22:49,680 --> 00:22:52,080 Speaker 1: versus the people that have antibodies that we think will 393 00:22:52,119 --> 00:22:55,520 Speaker 1: protect you from reinfection. We'd like to think that those 394 00:22:55,560 --> 00:22:58,600 Speaker 1: are going to be very closely related, but we have 395 00:22:58,680 --> 00:23:01,920 Speaker 1: to do those experiments to be percent sure that the 396 00:23:02,000 --> 00:23:05,000 Speaker 1: rapid tests that people are establishing are really telling you 397 00:23:05,040 --> 00:23:08,480 Speaker 1: that you're protected from infection or reinfection. Help me with 398 00:23:08,800 --> 00:23:13,640 Speaker 1: reject the true or accept the false of this testing. 399 00:23:14,080 --> 00:23:18,000 Speaker 1: How it risks is America to type one and type 400 00:23:18,040 --> 00:23:22,760 Speaker 1: two malfunction in our testing. So again it gets back 401 00:23:22,800 --> 00:23:25,800 Speaker 1: to the laboratories that are doing the testing and making 402 00:23:25,840 --> 00:23:31,480 Speaker 1: sure that the tests are being performed in m rigorous, 403 00:23:31,840 --> 00:23:37,119 Speaker 1: controlled environments. UM. You can have two types of errors, right. 404 00:23:37,240 --> 00:23:39,800 Speaker 1: You can have a false positive, meaning that you test 405 00:23:39,880 --> 00:23:43,680 Speaker 1: positive when you really aren't infected UM And the other 406 00:23:43,720 --> 00:23:46,000 Speaker 1: type of error is that you test negative when you 407 00:23:46,040 --> 00:23:49,639 Speaker 1: really are infected. And it's that latter group that's really 408 00:23:49,680 --> 00:23:53,800 Speaker 1: the most important to be aware of because that really 409 00:23:53,840 --> 00:23:56,560 Speaker 1: means that you're telling people who are infected that they 410 00:23:56,560 --> 00:23:59,800 Speaker 1: can go back out in the population and behave you know, 411 00:24:00,600 --> 00:24:04,640 Speaker 1: and not take extra precautions. And again, laboratories that know 412 00:24:04,720 --> 00:24:08,800 Speaker 1: how to perform these tests do something called validation, right, 413 00:24:08,840 --> 00:24:11,800 Speaker 1: so they go through and they test with known samples 414 00:24:12,640 --> 00:24:16,760 Speaker 1: both types of error and report back what exactly they 415 00:24:16,800 --> 00:24:20,080 Speaker 1: expect those errors to be. Um other laboratories that are 416 00:24:20,160 --> 00:24:22,560 Speaker 1: just sort of fly by night may not be reporting 417 00:24:22,560 --> 00:24:25,359 Speaker 1: that rigorously. And that's where some of the danger comes in. 418 00:24:26,560 --> 00:24:29,920 Speaker 1: With Francine Laquid and myself, he's with JOHNS. Hopkins University 419 00:24:29,920 --> 00:24:44,639 Speaker 1: of Bloomberg School of Public Health. Jared Bernstein's listening to scoring. 420 00:24:44,760 --> 00:24:49,960 Speaker 1: Why am I on faring say, scratching his head. Jared 421 00:24:50,000 --> 00:24:53,480 Speaker 1: Bernstein knows that Vice President Biden of course will probably 422 00:24:53,520 --> 00:24:56,200 Speaker 1: take Fargo. We'll see how that goes in the election. 423 00:24:56,359 --> 00:24:59,720 Speaker 1: Mr Bernstein was economic advisor to the Vice President in 424 00:24:59,800 --> 00:25:03,480 Speaker 1: his definitive in Washington on policy years ago at the 425 00:25:03,480 --> 00:25:06,199 Speaker 1: Economic Policy Institute and now the Center on Budget and 426 00:25:06,200 --> 00:25:11,679 Speaker 1: Policy Priorities. Dr Bernstein is someone everybody reads right, left 427 00:25:11,760 --> 00:25:14,560 Speaker 1: and in the middle as well. Jared John Farrell brought 428 00:25:14,600 --> 00:25:17,440 Speaker 1: it up today, and John, as a British guy, doesn't 429 00:25:17,560 --> 00:25:23,720 Speaker 1: understand the American ethos, the distrust of our federal system. 430 00:25:23,840 --> 00:25:27,080 Speaker 1: Will that maintain in the coming weeks, or can we 431 00:25:27,160 --> 00:25:32,480 Speaker 1: get a federal statement of assistance to Americans like we 432 00:25:32,560 --> 00:25:38,000 Speaker 1: knew in times long past. I think there are those 433 00:25:38,040 --> 00:25:41,680 Speaker 1: who are very skeptical, as you suggested, of the government 434 00:25:42,040 --> 00:25:45,440 Speaker 1: in normal times, But in times like this, people really 435 00:25:45,480 --> 00:25:48,399 Speaker 1: do turn to the federal sector for the kinds of 436 00:25:48,480 --> 00:25:52,200 Speaker 1: help we need meeting existential challenges precisely like this one. 437 00:25:52,200 --> 00:25:54,840 Speaker 1: It's the same as in war time. One thing we've 438 00:25:54,840 --> 00:26:01,040 Speaker 1: certainly seen is a level of bipartisanship in Congress. You know, 439 00:26:01,160 --> 00:26:04,520 Speaker 1: the Cares Act past nine six to zero in the Senate. 440 00:26:04,680 --> 00:26:07,120 Speaker 1: When was the last time something like that happened? So, 441 00:26:07,160 --> 00:26:09,800 Speaker 1: at least for now, I think many Americans walking around 442 00:26:09,800 --> 00:26:13,440 Speaker 1: thinking we shouted government, and probably and probably thinking we 443 00:26:13,760 --> 00:26:17,760 Speaker 1: need a more competent governance down the road. Jared, your 444 00:26:17,800 --> 00:26:21,679 Speaker 1: work was path breaking a decade ago at the Economic 445 00:26:21,760 --> 00:26:25,960 Speaker 1: Policy Institute of saying we need to get money into 446 00:26:26,000 --> 00:26:31,119 Speaker 1: people's hands at certain emergent times. Why is Washington so 447 00:26:31,520 --> 00:26:38,440 Speaker 1: reticent about income replacement? Yeah? Well, I think the main 448 00:26:39,040 --> 00:26:43,760 Speaker 1: reason for that is just a real skepticism about giving 449 00:26:43,840 --> 00:26:47,240 Speaker 1: money to directly to people because of the fear that 450 00:26:47,359 --> 00:26:50,639 Speaker 1: it will cause them to alter their labor supply. I 451 00:26:50,640 --> 00:26:54,880 Speaker 1: think many American policymakers in our commist really overestimate that 452 00:26:55,040 --> 00:26:58,000 Speaker 1: quote labor supply elasticity that says if you give people 453 00:26:58,000 --> 00:27:01,159 Speaker 1: a dollar, they're gonna work less. Well, in fact, most 454 00:27:01,200 --> 00:27:03,600 Speaker 1: people in America, their paychecks are such that they just 455 00:27:03,680 --> 00:27:05,800 Speaker 1: have to keep working if they're going to get by. 456 00:27:05,840 --> 00:27:08,040 Speaker 1: And by the way, right now, we don't want people 457 00:27:08,080 --> 00:27:09,639 Speaker 1: to go to work. So that's one of the reasons 458 00:27:09,720 --> 00:27:13,240 Speaker 1: why folks really need to put that sort of older 459 00:27:13,280 --> 00:27:16,640 Speaker 1: thinking but behind behind right now. The usually statements Jared 460 00:27:16,720 --> 00:27:18,439 Speaker 1: made by people who have never grown up around a 461 00:27:18,480 --> 00:27:21,560 Speaker 1: working class environment and have no clue because most people, 462 00:27:21,600 --> 00:27:24,120 Speaker 1: in fact, everybody I grew up with, wanted the job. 463 00:27:24,280 --> 00:27:25,919 Speaker 1: They didn't want to hand out from the government. And 464 00:27:25,920 --> 00:27:28,399 Speaker 1: as you say, people are being told they have to 465 00:27:28,440 --> 00:27:31,399 Speaker 1: stay at home, businesses are being told they have to 466 00:27:31,480 --> 00:27:35,400 Speaker 1: shut makes me wonder why we're sitting here asking questions 467 00:27:35,400 --> 00:27:40,520 Speaker 1: about why Congress won't top up the paycheck protection program 468 00:27:40,560 --> 00:27:42,920 Speaker 1: for the small business administration. Jared, why are we even 469 00:27:43,000 --> 00:27:46,760 Speaker 1: having the conversation and asking the question, Well, first of all, 470 00:27:46,840 --> 00:27:48,840 Speaker 1: let me just say you're exactly right in the first 471 00:27:49,240 --> 00:27:52,720 Speaker 1: part of your comments right there. I started in some ways. 472 00:27:52,760 --> 00:27:54,679 Speaker 1: I think I'm probably a rare economist, and that I 473 00:27:54,720 --> 00:27:56,560 Speaker 1: started out as a social worker, and one of the 474 00:27:56,560 --> 00:27:59,480 Speaker 1: first things I learned is that people simply can't begin 475 00:27:59,600 --> 00:28:02,360 Speaker 1: to get by on the money they get, at least 476 00:28:02,400 --> 00:28:05,240 Speaker 1: from the American social assistance system. May be different in 477 00:28:05,280 --> 00:28:09,480 Speaker 1: some other countries. Look, I think the scene in Congress 478 00:28:09,560 --> 00:28:12,440 Speaker 1: right now is that both parties want to plus up 479 00:28:12,800 --> 00:28:16,320 Speaker 1: the Paycheck Protection Act because frankly, that money got out 480 00:28:16,320 --> 00:28:19,160 Speaker 1: the door really quickly and it's starting to meet some needs. 481 00:28:19,840 --> 00:28:23,240 Speaker 1: But the Democrats want to add some other pieces that 482 00:28:23,280 --> 00:28:27,440 Speaker 1: are quite necessary to the next phase of the stimulus plan, 483 00:28:27,440 --> 00:28:30,280 Speaker 1: and the Republicans are resisting. So that's what they're squabbling 484 00:28:30,280 --> 00:28:33,280 Speaker 1: about right now. So, Jared, as we have that backdrop, 485 00:28:33,440 --> 00:28:36,840 Speaker 1: we have the unemployment figures that keep coming out with 486 00:28:36,960 --> 00:28:41,080 Speaker 1: jaw dropping numbers. Yesterday the sort of five point two 487 00:28:41,080 --> 00:28:44,320 Speaker 1: million coming in a little low expectations, still mind blowing. 488 00:28:44,400 --> 00:28:46,320 Speaker 1: And you're the perfect person to speak to about how 489 00:28:46,400 --> 00:28:49,480 Speaker 1: quickly these jobs can come back. After your writing getting 490 00:28:49,480 --> 00:28:52,080 Speaker 1: back to full employment in the state of Working America 491 00:28:52,480 --> 00:28:56,880 Speaker 1: a decade of jobs lost in four weeks, how quickly 492 00:28:57,000 --> 00:29:00,920 Speaker 1: can we get them back? You know, it's really an 493 00:29:00,920 --> 00:29:04,640 Speaker 1: epidemiological question more than an economic one. Probably more quickly 494 00:29:04,640 --> 00:29:08,239 Speaker 1: than you'd think, because at least from the information we have, 495 00:29:08,800 --> 00:29:12,640 Speaker 1: many of these folks are on a temporary layoff or furloughed. 496 00:29:12,880 --> 00:29:16,560 Speaker 1: So we're there there's the potential to bounce back, but 497 00:29:16,680 --> 00:29:19,080 Speaker 1: that can only happen. I believe if we get the 498 00:29:19,120 --> 00:29:21,760 Speaker 1: green light, or at least the yellow light. That's more realistic, 499 00:29:22,120 --> 00:29:25,000 Speaker 1: if we get the yellow light from health officials and 500 00:29:25,040 --> 00:29:27,760 Speaker 1: then from governors to do so. I do think that 501 00:29:27,800 --> 00:29:30,760 Speaker 1: any reopening will be a very gradual one. But that's 502 00:29:30,760 --> 00:29:33,400 Speaker 1: why the measures we were just talking about, these measures 503 00:29:33,400 --> 00:29:37,120 Speaker 1: to help keep families and businesses kind of intact between 504 00:29:37,160 --> 00:29:39,959 Speaker 1: now and then, so that there's an economy on the 505 00:29:39,960 --> 00:29:43,280 Speaker 1: other side of this that's capable of bouncing back. Jared, 506 00:29:43,440 --> 00:29:45,640 Speaker 1: this is the key question. It's interesting to hear you 507 00:29:45,680 --> 00:29:47,960 Speaker 1: say this because I've been reading a number of reports 508 00:29:48,280 --> 00:29:51,080 Speaker 1: with people expecting the unemployment rate to remain at about 509 00:29:51,160 --> 00:29:53,800 Speaker 1: ten percent for a prolonged period of time in the 510 00:29:53,880 --> 00:29:56,720 Speaker 1: United States. Are you saying that those estimates are are 511 00:29:56,960 --> 00:30:00,920 Speaker 1: perhaps a little bit too pessimistic. No, I mean, I 512 00:30:00,960 --> 00:30:05,080 Speaker 1: think the unemployment rate is probably above ten percent now, 513 00:30:05,200 --> 00:30:07,200 Speaker 1: and I think we'll be lucky if we if we 514 00:30:07,280 --> 00:30:10,000 Speaker 1: peek out at I know that's a scary number, but 515 00:30:10,040 --> 00:30:11,720 Speaker 1: I think that's the fact that the case. What I'm 516 00:30:11,760 --> 00:30:14,880 Speaker 1: saying is that if you look at some focus our 517 00:30:14,920 --> 00:30:17,520 Speaker 1: friend jan hat C s Obert Goldman, they actually have 518 00:30:17,720 --> 00:30:20,080 Speaker 1: kind of a V shape bounce back built in. But 519 00:30:20,200 --> 00:30:22,280 Speaker 1: that's based on an assumption that we're doing a lot 520 00:30:22,360 --> 00:30:25,640 Speaker 1: more testing and tracing than we're anywhere close to now. 521 00:30:26,000 --> 00:30:28,480 Speaker 1: So I think the answer to your question is just 522 00:30:28,600 --> 00:30:32,960 Speaker 1: conditional on getting the yellow light from the medical community. 523 00:30:32,960 --> 00:30:35,760 Speaker 1: And if you read those folks, they're still quite skeptical 524 00:30:35,840 --> 00:30:38,320 Speaker 1: because we're so far behind the curb on testing. I 525 00:30:38,400 --> 00:30:40,720 Speaker 1: just think that if we do the right thing in 526 00:30:40,840 --> 00:30:43,480 Speaker 1: terms of social and stimulative policy, or maybe call it 527 00:30:43,560 --> 00:30:47,560 Speaker 1: relief policy, to keep households in businesses at least somewhat intact, 528 00:30:47,800 --> 00:30:49,760 Speaker 1: then at least we know when we get the yellow light, 529 00:30:49,960 --> 00:30:52,240 Speaker 1: there'll be in a current it's capable of bouncing back 530 00:30:52,280 --> 00:30:54,760 Speaker 1: on the other side. Jared, quickly, I've got to ask 531 00:30:54,840 --> 00:30:58,160 Speaker 1: the question. The world has changed, America has changed, what's 532 00:30:58,200 --> 00:31:02,480 Speaker 1: the word steam prediction for what's a Burns Burnstein prescription 533 00:31:03,000 --> 00:31:06,080 Speaker 1: for Vice President Biden? What's he need to do right now? 534 00:31:07,600 --> 00:31:09,880 Speaker 1: You know, I thought President Obama said it well in 535 00:31:09,960 --> 00:31:12,360 Speaker 1: his uh in his endorsement the other day, which is 536 00:31:12,360 --> 00:31:16,560 Speaker 1: really worth watching because he actually gets into that precise question. Um, 537 00:31:16,720 --> 00:31:18,960 Speaker 1: he said he wouldn't run on the same platform he 538 00:31:19,000 --> 00:31:21,400 Speaker 1: did in oh eight. And we know that Biden has 539 00:31:21,440 --> 00:31:24,760 Speaker 1: been very influenced by his work with President Obama. So 540 00:31:24,800 --> 00:31:26,800 Speaker 1: this is the time it gets back to your first question. 541 00:31:26,840 --> 00:31:30,200 Speaker 1: This is the time where the country needs and wants 542 00:31:30,200 --> 00:31:33,920 Speaker 1: an amply funded federal sector that is highly competent to 543 00:31:34,000 --> 00:31:38,120 Speaker 1: meet the challenges we face repeatedly these days. Hundred day floods, 544 00:31:38,120 --> 00:31:42,200 Speaker 1: the hundred year floods come every two years. Your sector. 545 00:31:43,440 --> 00:31:47,400 Speaker 1: You know what I'm saying. I mean, we face real challenges, Jared, which, 546 00:31:47,480 --> 00:31:49,680 Speaker 1: thank you so much, Jared Burnstein with us of course 547 00:31:49,720 --> 00:31:54,320 Speaker 1: as the Center on Budget and Policy for Priorities. Thanks 548 00:31:54,320 --> 00:31:58,560 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 549 00:31:58,800 --> 00:32:04,120 Speaker 1: to interviews on Apple podcast, SoundCloud, or whichever podcast platform 550 00:32:04,240 --> 00:32:08,560 Speaker 1: you prefer. I'm on Twitter at Tom Keene. Before the podcast, 551 00:32:08,600 --> 00:32:12,080 Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio.