1 00:00:00,080 --> 00:00:13,800 Speaker 1: Ye. Welcome to the Bloomberg Surveillance podcast. I'm Tom keene Jailey. 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 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,360 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Benjamin 5 00:00:27,400 --> 00:00:30,240 Speaker 1: Laidler with US Tara Hudson right now. Many of you 6 00:00:30,280 --> 00:00:32,479 Speaker 1: know that he was with US fourteen months ago and 7 00:00:32,520 --> 00:00:36,040 Speaker 1: did better than good I'm calling equity market. He was 8 00:00:36,080 --> 00:00:37,640 Speaker 1: with us a few weeks ago and where throwed he 9 00:00:37,640 --> 00:00:41,200 Speaker 1: could rejoin us today. Ben, you have a brilliant chart. 10 00:00:41,320 --> 00:00:44,080 Speaker 1: I want you to dovetail this into where we are 11 00:00:44,120 --> 00:00:47,560 Speaker 1: now after a thousand points down yesterday of the great 12 00:00:47,760 --> 00:00:53,680 Speaker 1: rotation of US domestic and international flows. What does that 13 00:00:53,760 --> 00:01:00,120 Speaker 1: chart tell you about your confidence in US equities? It 14 00:01:00,160 --> 00:01:02,120 Speaker 1: tells me that maybe people aren't as build up on 15 00:01:02,240 --> 00:01:05,560 Speaker 1: US equities as um. You know, I think the consensual 16 00:01:05,640 --> 00:01:08,240 Speaker 1: narrative is. I mean, you've had something like four hundred 17 00:01:08,319 --> 00:01:12,319 Speaker 1: billion dollars of mutual fund outflows out of US equities 18 00:01:12,319 --> 00:01:14,040 Speaker 1: over the last couple of years, and at the same 19 00:01:14,080 --> 00:01:17,319 Speaker 1: time you had done an awful lot of money going 20 00:01:17,319 --> 00:01:19,959 Speaker 1: into international equity so I think this sort of narrative 21 00:01:19,959 --> 00:01:21,760 Speaker 1: when we came into the year, that you know, the 22 00:01:21,840 --> 00:01:24,440 Speaker 1: US just couldn't keep out performing and that you should 23 00:01:24,440 --> 00:01:28,679 Speaker 1: really look at international equities UM has actually sort of 24 00:01:28,680 --> 00:01:30,760 Speaker 1: been turned on its head, right. I mean, the coronavirus 25 00:01:30,800 --> 00:01:32,319 Speaker 1: was a sort of catalyst for this. But I think 26 00:01:32,319 --> 00:01:33,959 Speaker 1: we've all woken up to the fact that all the 27 00:01:33,959 --> 00:01:36,240 Speaker 1: consensus has woken up in the fact that the sort 28 00:01:36,240 --> 00:01:39,560 Speaker 1: of international growth recovery is maybe not as secure as 29 00:01:39,600 --> 00:01:43,080 Speaker 1: it once looked UM and UM, you know, the valuations. 30 00:01:43,120 --> 00:01:45,520 Speaker 1: I don't think we're you know, a bit of a mirage. 31 00:01:45,600 --> 00:01:48,440 Speaker 1: It's just you know, you have different sector composition internationally, 32 00:01:48,480 --> 00:01:50,200 Speaker 1: and I think the US is is actually a lot 33 00:01:50,200 --> 00:01:52,200 Speaker 1: more secure than people think it is. I think the 34 00:01:52,240 --> 00:01:56,040 Speaker 1: macro were in pretty good shape. Valuations I think more 35 00:01:56,080 --> 00:01:58,720 Speaker 1: supportive than people think they are. And we've just had 36 00:01:58,760 --> 00:02:00,920 Speaker 1: the end end of the earnings recess and and and 37 00:02:01,400 --> 00:02:02,640 Speaker 1: you know, to back to the chart, I think the 38 00:02:02,680 --> 00:02:05,920 Speaker 1: center on US equities actually hasn't been that good. To 39 00:02:05,920 --> 00:02:08,560 Speaker 1: put all that together, and you know, I think the 40 00:02:08,560 --> 00:02:11,000 Speaker 1: case of the US remains here. This Church John is 41 00:02:11,040 --> 00:02:13,840 Speaker 1: one of the great unknowns of the present Zeit ghost 42 00:02:13,960 --> 00:02:18,320 Speaker 1: people don't understand the flows domestic international. So Ben, let's 43 00:02:18,320 --> 00:02:20,640 Speaker 1: extend this one step further or a couple of steps further. 44 00:02:20,680 --> 00:02:23,799 Speaker 1: Do you think there's a technical flow, dynamic flow component 45 00:02:23,919 --> 00:02:26,639 Speaker 1: the resilience of U equity equities over the last couple 46 00:02:26,680 --> 00:02:32,440 Speaker 1: of weeks and that wasn't just some complacency around fundamentals. Yeah, 47 00:02:32,440 --> 00:02:33,760 Speaker 1: I think there's been a little bit of that, right. 48 00:02:33,760 --> 00:02:36,560 Speaker 1: I definitely think you had you know, you've had inflows 49 00:02:36,560 --> 00:02:38,640 Speaker 1: into US equities for the first for the last couple 50 00:02:38,680 --> 00:02:41,040 Speaker 1: of weeks, which is the first time we've seen them 51 00:02:41,040 --> 00:02:44,000 Speaker 1: in you know, literally months, so you know it could 52 00:02:44,040 --> 00:02:45,600 Speaker 1: be part of our sort of safe haven trade, but 53 00:02:45,600 --> 00:02:48,480 Speaker 1: you're definitely seeing money coming back into US equities for 54 00:02:48,480 --> 00:02:50,840 Speaker 1: the first time in a while. And I think the 55 00:02:50,919 --> 00:02:53,280 Speaker 1: other one is earnings. Right, let's talk about fundamentals. We 56 00:02:53,360 --> 00:02:55,760 Speaker 1: had three quarters of negative earnings growth and now and 57 00:02:56,000 --> 00:02:58,280 Speaker 1: in the fourth quarter, which is basically wrapping up. You know, 58 00:02:58,320 --> 00:03:01,040 Speaker 1: as we speak, you've got you've got to earnings and 59 00:03:01,520 --> 00:03:03,800 Speaker 1: you know, i'd argue before they're more positive than they look. 60 00:03:04,200 --> 00:03:06,079 Speaker 1: Once you sort of strip out energy and we all 61 00:03:06,120 --> 00:03:07,520 Speaker 1: know all the bad things that are happening there and 62 00:03:07,520 --> 00:03:09,519 Speaker 1: once you start out international, which has been quite a 63 00:03:09,560 --> 00:03:12,720 Speaker 1: big drag on us. So domestic US, I would actually 64 00:03:12,840 --> 00:03:14,400 Speaker 1: say it was in pretty good shape and I think 65 00:03:14,400 --> 00:03:16,400 Speaker 1: it gets better from here. Well, Ben, let's talk about 66 00:03:16,440 --> 00:03:19,919 Speaker 1: that because Germany recession likely Italy could be one, to 67 00:03:20,160 --> 00:03:22,239 Speaker 1: Japan is heading their south career is going to be 68 00:03:22,240 --> 00:03:24,960 Speaker 1: a terrible que one, terrible que one as well for 69 00:03:25,040 --> 00:03:28,000 Speaker 1: China too. Can you really remain constructive with that kind 70 00:03:28,000 --> 00:03:32,200 Speaker 1: of macro backdrop, bend Um, I think you can if 71 00:03:32,240 --> 00:03:35,600 Speaker 1: it's you know, if if the coronavirus remains reasonably contained, right, 72 00:03:35,640 --> 00:03:37,840 Speaker 1: and it remains as a one or two quarter event, 73 00:03:37,920 --> 00:03:39,680 Speaker 1: and we allows us to sort of look through it, 74 00:03:40,040 --> 00:03:42,240 Speaker 1: if you like, to sort of the recovery and we 75 00:03:42,320 --> 00:03:43,920 Speaker 1: and we sort of continue on. So I think that's 76 00:03:43,960 --> 00:03:46,440 Speaker 1: absolutely what's at stake here, right, I mean, what drove 77 00:03:46,920 --> 00:03:48,360 Speaker 1: you know, the sell off at the end of last 78 00:03:48,400 --> 00:03:50,760 Speaker 1: week and into this week was partly of the coronavirus 79 00:03:50,800 --> 00:03:52,920 Speaker 1: sort of going global and the spear of the unknown 80 00:03:52,960 --> 00:03:56,240 Speaker 1: and then it could you know, dislocate economies for you know, 81 00:03:56,280 --> 00:03:59,360 Speaker 1: more than a quarter. But you know, I also think 82 00:03:59,360 --> 00:04:02,840 Speaker 1: there's some politics here, right. I mean, Saunders resounding victory 83 00:04:02,840 --> 00:04:06,040 Speaker 1: in the Nevada Caucus. I think it's certainly unnerving some people. 84 00:04:06,080 --> 00:04:07,280 Speaker 1: And we have flash p M E s out of 85 00:04:07,280 --> 00:04:08,760 Speaker 1: the US. At the end of last week, we showed 86 00:04:08,760 --> 00:04:10,920 Speaker 1: a little bit of weakness and services, which I think 87 00:04:11,000 --> 00:04:14,000 Speaker 1: important because you know, that's been the the anchor of 88 00:04:14,040 --> 00:04:17,000 Speaker 1: this sort of US economic strength for the last sort 89 00:04:17,000 --> 00:04:19,000 Speaker 1: a couple of years. So and also, you know, the 90 00:04:19,000 --> 00:04:22,320 Speaker 1: backdrop is really important here. You know, I'm pretty polish 91 00:04:22,360 --> 00:04:24,600 Speaker 1: on US equities, but we are a nineteen times earnings 92 00:04:24,839 --> 00:04:27,039 Speaker 1: and we have just come off you know, months and 93 00:04:27,160 --> 00:04:30,120 Speaker 1: months and below our rejecuity volatility. So I think, you know, 94 00:04:30,279 --> 00:04:32,560 Speaker 1: to have markets pulling back a little bit and to 95 00:04:32,680 --> 00:04:35,000 Speaker 1: have a bit of volatility, you know, I think we've 96 00:04:35,320 --> 00:04:37,159 Speaker 1: just got to expect it from time to time. Then 97 00:04:37,240 --> 00:04:40,120 Speaker 1: I'm really glad that Tom started with flows and talked 98 00:04:40,120 --> 00:04:42,920 Speaker 1: about how flows are flooding into the United States since 99 00:04:42,960 --> 00:04:46,440 Speaker 1: it is sort of the strongest economy of them all. 100 00:04:46,520 --> 00:04:49,520 Speaker 1: I'm struggling to understand where they're coming out of. And 101 00:04:49,560 --> 00:04:52,520 Speaker 1: I'm looking at emerging markets lower if you look at 102 00:04:52,560 --> 00:04:54,720 Speaker 1: the m S c I Index by five percent year 103 00:04:54,760 --> 00:04:56,280 Speaker 1: to date, a pain trades and so a lot of 104 00:04:56,279 --> 00:04:59,159 Speaker 1: people thought that this area would outperform. Do you think 105 00:04:59,560 --> 00:05:02,440 Speaker 1: that can Census trade at the beginning of has been 106 00:05:02,440 --> 00:05:04,800 Speaker 1: turned on its head and it's poised to continue to 107 00:05:04,839 --> 00:05:08,160 Speaker 1: underperform through the rest of the year. Yeah. I think 108 00:05:08,160 --> 00:05:09,880 Speaker 1: we're in the middle of it, of it being turned 109 00:05:09,880 --> 00:05:11,200 Speaker 1: on its head. I mean, I said, I think it's 110 00:05:11,200 --> 00:05:13,200 Speaker 1: really reasonably early days. We've seen a couple of weeks 111 00:05:13,200 --> 00:05:15,640 Speaker 1: of US inflows, but I think there's you know, as 112 00:05:15,640 --> 00:05:18,200 Speaker 1: I say, on a cumulator basis, over the last two years, 113 00:05:18,200 --> 00:05:21,200 Speaker 1: you've had something three billion dollars go into international equities, 114 00:05:21,480 --> 00:05:23,160 Speaker 1: So you know, I think there's a I think that's 115 00:05:23,240 --> 00:05:25,320 Speaker 1: quite a long way to come. And I think, you know, 116 00:05:25,360 --> 00:05:28,760 Speaker 1: the mistake that the markets are making is um you know, 117 00:05:29,360 --> 00:05:31,520 Speaker 1: the international was really going to recover here. I mean, 118 00:05:31,560 --> 00:05:33,000 Speaker 1: I think that was a little bit of a sort 119 00:05:33,000 --> 00:05:35,520 Speaker 1: of head fake, right, I mean, you know, Europe is 120 00:05:35,520 --> 00:05:38,440 Speaker 1: going to have significantly lower growth than the US this year, 121 00:05:38,560 --> 00:05:42,800 Speaker 1: China's stabilizing at best. I think the resiliency of that 122 00:05:42,839 --> 00:05:46,160 Speaker 1: international growth was always in question, and then there was 123 00:05:46,240 --> 00:05:49,600 Speaker 1: sort of mirage evaluations are cheap. I don't think they 124 00:05:49,640 --> 00:05:51,360 Speaker 1: really are. I just think it's you know, places like 125 00:05:51,400 --> 00:05:53,479 Speaker 1: Europe are full of cheaper sectors in the US is 126 00:05:53,520 --> 00:05:57,200 Speaker 1: full of sort of intrinsically more profitable, um, you know, 127 00:05:57,240 --> 00:06:00,440 Speaker 1: more expensive sectors. Ben Laylor think of similar to tell Hudson, 128 00:06:00,480 --> 00:06:03,880 Speaker 1: greatly appreciated to see you in February, uh this year 129 00:06:06,960 --> 00:06:12,320 Speaker 1: bringing shepherds for Newcastle. You've gotta be a motional pantheon. 130 00:06:12,400 --> 00:06:15,520 Speaker 1: Macroeconomics chief economist, being fantastic to have you with us. 131 00:06:15,640 --> 00:06:18,799 Speaker 1: Mr Clarada, the Vice chair speaking at three pm Eastern, 132 00:06:18,920 --> 00:06:23,120 Speaker 1: what are you looking for from him? Later? I'm expecting 133 00:06:23,200 --> 00:06:26,200 Speaker 1: to say that the FED is watching very carefully the 134 00:06:26,440 --> 00:06:29,599 Speaker 1: developments on the coronavirus that seems to be the mantra 135 00:06:29,720 --> 00:06:32,280 Speaker 1: of the moment, and gather watching very carefully. I don't 136 00:06:32,279 --> 00:06:34,800 Speaker 1: think they're going to do anything yet, but I tell you, 137 00:06:34,839 --> 00:06:36,640 Speaker 1: if we have a few more days like yesterday, I 138 00:06:36,680 --> 00:06:39,760 Speaker 1: think they probably would as all. Right, now, we seem 139 00:06:39,800 --> 00:06:41,640 Speaker 1: to have a sort of a dead cat bounce emerging 140 00:06:41,760 --> 00:06:44,800 Speaker 1: in futures this morning in the US, so we'll see 141 00:06:44,800 --> 00:06:47,760 Speaker 1: what develops. But I think that the FED is not 142 00:06:47,880 --> 00:06:49,200 Speaker 1: at the point yet where they're going to pull the 143 00:06:49,240 --> 00:06:54,120 Speaker 1: trigger to take sort of a precautionary action. But yeah, 144 00:06:54,200 --> 00:06:55,760 Speaker 1: it could happen. I mean I think the thing we 145 00:06:55,800 --> 00:06:58,080 Speaker 1: all got to admit you is, is how much we 146 00:06:58,120 --> 00:07:00,159 Speaker 1: don't know. I mean, you know, we just don't know 147 00:07:01,000 --> 00:07:02,920 Speaker 1: how far this thing is going to spread, how quickly 148 00:07:02,920 --> 00:07:04,440 Speaker 1: it's going to spread, where it's going to spread, to 149 00:07:04,920 --> 00:07:07,120 Speaker 1: the extent of the destruction it's going to cause. It's 150 00:07:07,200 --> 00:07:09,240 Speaker 1: just a long list of don't know. So I think 151 00:07:09,240 --> 00:07:11,200 Speaker 1: for the FED to be saying they're watching very carefully 152 00:07:11,280 --> 00:07:13,160 Speaker 1: is probably about the most sensible thing at the moment. 153 00:07:13,200 --> 00:07:15,360 Speaker 1: And then we will see the outcome over the next 154 00:07:15,400 --> 00:07:17,160 Speaker 1: few days, you know, And I agree with you. I've 155 00:07:17,160 --> 00:07:18,920 Speaker 1: said multiple times over the last couple of weeks that 156 00:07:18,960 --> 00:07:21,080 Speaker 1: we just need a massive dose of humility about what 157 00:07:21,240 --> 00:07:23,240 Speaker 1: we don't know at the moment. We can get to 158 00:07:23,320 --> 00:07:26,080 Speaker 1: hands around some of the risks though twin shocks to 159 00:07:26,360 --> 00:07:29,800 Speaker 1: demand and supply for the global economy. I asked this 160 00:07:29,880 --> 00:07:31,640 Speaker 1: question a little bit earlier in I'd be interested in 161 00:07:31,640 --> 00:07:33,680 Speaker 1: your response to what is the biggest shock that you're 162 00:07:33,720 --> 00:07:38,559 Speaker 1: worried about at the moment in demand side or supply side, well, 163 00:07:39,880 --> 00:07:41,840 Speaker 1: the two that are inextricably linked. I mean, so if 164 00:07:41,920 --> 00:07:44,440 Speaker 1: if I were in manufacturing, I'd be most concerned about 165 00:07:44,520 --> 00:07:48,840 Speaker 1: the disruptions to supply, inability to get ahold of parts, materials, 166 00:07:48,960 --> 00:07:51,920 Speaker 1: equipment and all of those things. Um. If I were 167 00:07:52,000 --> 00:07:54,960 Speaker 1: in a consumer facing business, I'd be worrying about people 168 00:07:55,000 --> 00:07:57,680 Speaker 1: just staying home and not shopping at my store, or 169 00:07:57,840 --> 00:08:00,160 Speaker 1: not coming to my restaurant on my bar, or or 170 00:08:00,200 --> 00:08:02,840 Speaker 1: not taking vacations in my hotel. So it depends where 171 00:08:02,880 --> 00:08:06,960 Speaker 1: you sit, but the the effect ultimately could be quite severe. 172 00:08:07,360 --> 00:08:09,800 Speaker 1: You know, we've we've seen this in Italy right now 173 00:08:09,800 --> 00:08:12,760 Speaker 1: with fifty people in lockdown. Um. You know, I imagine 174 00:08:12,800 --> 00:08:15,560 Speaker 1: that the tourist business in Tenerifa, the can Area Islands 175 00:08:15,560 --> 00:08:18,520 Speaker 1: is now feeling extremely nervous after their one case. Actually 176 00:08:18,520 --> 00:08:20,560 Speaker 1: it was a doctor of this thing from Italy, which 177 00:08:20,600 --> 00:08:23,440 Speaker 1: presumably is why he brought it with him. Um. So 178 00:08:23,600 --> 00:08:25,520 Speaker 1: it does depend which bit of the economy you sit 179 00:08:25,560 --> 00:08:27,360 Speaker 1: and as to whether you're more concerned about demand and 180 00:08:27,400 --> 00:08:30,560 Speaker 1: supply from a sort of a macro perspective, I think 181 00:08:30,560 --> 00:08:33,040 Speaker 1: the Fed's focus will be on the potential for demand 182 00:08:33,040 --> 00:08:36,760 Speaker 1: shock because I think the extent of inflation upside inflation 183 00:08:36,880 --> 00:08:40,720 Speaker 1: risk coming from this is probably quite small. Um. Remember 184 00:08:40,720 --> 00:08:43,800 Speaker 1: that in the West anyway, most of our inflation index 185 00:08:43,840 --> 00:08:46,240 Speaker 1: components are services they're not good. So if the price 186 00:08:46,240 --> 00:08:48,640 Speaker 1: of manufactured stuff from China goes up, even if it 187 00:08:48,640 --> 00:08:50,760 Speaker 1: goes up quite a lot, it's probably not going to 188 00:08:50,840 --> 00:08:53,080 Speaker 1: make a huge difference to the inflation picture. I think 189 00:08:53,080 --> 00:08:55,640 Speaker 1: the FED would look through that, and if it turned 190 00:08:55,640 --> 00:08:57,680 Speaker 1: out that demand would collapsing, I think they would step 191 00:08:57,720 --> 00:08:59,400 Speaker 1: in and ease and pretty much no matter what was 192 00:08:59,400 --> 00:09:01,720 Speaker 1: happening to the sation side from China. And there's a 193 00:09:01,720 --> 00:09:04,920 Speaker 1: bit of gallows humor about the FED cutting rates in 194 00:09:05,000 --> 00:09:07,960 Speaker 1: response to the coronavirus, the concept that that could somehow 195 00:09:08,000 --> 00:09:11,319 Speaker 1: help the situation when it is so clearly a solution 196 00:09:11,800 --> 00:09:16,000 Speaker 1: that isn't addressing a medical need. I'm just wondering for stocks, 197 00:09:16,120 --> 00:09:18,560 Speaker 1: I mean, how much will it actually do to cut 198 00:09:18,679 --> 00:09:21,640 Speaker 1: rates if if FED is waiting for actual evidence that 199 00:09:21,679 --> 00:09:24,800 Speaker 1: there is an economic slowdown by the time they do that, 200 00:09:25,040 --> 00:09:27,760 Speaker 1: wouldn't there be enough of a pull downward for equities 201 00:09:27,960 --> 00:09:33,439 Speaker 1: that a fifty basis point rate cut won't make a difference. Yes, 202 00:09:33,520 --> 00:09:35,800 Speaker 1: I mean this is the dilemma that they face. Um, 203 00:09:35,840 --> 00:09:37,959 Speaker 1: you know, do do you respond to a market move? 204 00:09:38,000 --> 00:09:39,760 Speaker 1: Do you wait for the economic data to move? Do 205 00:09:40,080 --> 00:09:42,200 Speaker 1: you assume that a market move will drive a moving 206 00:09:42,200 --> 00:09:43,719 Speaker 1: the economic data. I mean, there's quite a lot of 207 00:09:43,760 --> 00:09:47,720 Speaker 1: evidence that it would. Um and and then ultimately, if 208 00:09:47,760 --> 00:09:49,520 Speaker 1: you do pull the trigger, what what good does it do? 209 00:09:49,760 --> 00:09:51,840 Speaker 1: I mean, it sends a signal, of course, the signal 210 00:09:51,840 --> 00:09:53,240 Speaker 1: that it sends us that the FED has got the 211 00:09:53,280 --> 00:09:55,800 Speaker 1: markets back, which is a view that has been extremely 212 00:09:55,800 --> 00:09:58,720 Speaker 1: powerfully held in markets for a very long time now. 213 00:09:59,080 --> 00:10:00,760 Speaker 1: Um And so it's kind of you need to think 214 00:10:00,760 --> 00:10:02,560 Speaker 1: of the of the alternative. You know, if they don't 215 00:10:02,559 --> 00:10:05,800 Speaker 1: step in and move, then that could then generate panic 216 00:10:05,800 --> 00:10:08,360 Speaker 1: in markets because it will be saying to invest us 217 00:10:08,360 --> 00:10:10,000 Speaker 1: for the first time in a very long time, that hey, 218 00:10:10,040 --> 00:10:13,280 Speaker 1: the FED doesn't have your back, in which case, sell everything. 219 00:10:13,559 --> 00:10:15,160 Speaker 1: And that's not a position I think they want to 220 00:10:15,160 --> 00:10:17,560 Speaker 1: get into. So having having trained markets to believe that 221 00:10:17,559 --> 00:10:19,640 Speaker 1: the FED will always be there for them, now probably 222 00:10:19,679 --> 00:10:21,640 Speaker 1: is not the time not to be there for them. 223 00:10:21,840 --> 00:10:23,240 Speaker 1: So I kind of think that if the if the 224 00:10:23,280 --> 00:10:26,360 Speaker 1: markets take a further serious tumble, will pretty much have 225 00:10:26,440 --> 00:10:28,240 Speaker 1: to move. But you're writing and it doesn't address the 226 00:10:28,280 --> 00:10:30,920 Speaker 1: underlying question of cutting REGIS doesn't fix the coronavirus, that's 227 00:10:30,960 --> 00:10:33,600 Speaker 1: for sure, and you and Free of Beamers have been 228 00:10:33,679 --> 00:10:35,920 Speaker 1: lights out on LinkedIn. You've just really put out some 229 00:10:36,120 --> 00:10:39,840 Speaker 1: very important Asian research as well. Give us your update 230 00:10:39,920 --> 00:10:42,360 Speaker 1: what your expert on China says. What is Free of 231 00:10:42,360 --> 00:10:47,240 Speaker 1: Beams say about the immediate dynamics of China. Yeah, it's 232 00:10:47,280 --> 00:10:49,840 Speaker 1: an awful mess, and that the more we look at it, 233 00:10:49,880 --> 00:10:51,880 Speaker 1: the more bearish we're getting about the first quarter, and 234 00:10:51,920 --> 00:10:54,600 Speaker 1: the more nervous we're getting about the prospect for a 235 00:10:54,640 --> 00:10:57,600 Speaker 1: really quick rebound in the second quarter. You know, after all, 236 00:10:57,640 --> 00:10:59,240 Speaker 1: the start of the second quarter now is only four 237 00:10:59,280 --> 00:11:02,560 Speaker 1: weeks away. So this is now becoming a clear and 238 00:11:02,559 --> 00:11:04,920 Speaker 1: present danger to China's economy for the whole of the 239 00:11:04,920 --> 00:11:07,520 Speaker 1: first half of the year. Uh. And I think it's 240 00:11:07,520 --> 00:11:09,320 Speaker 1: becoming more and more difficult to have a view in 241 00:11:09,320 --> 00:11:11,640 Speaker 1: a V shaped rebound. There's a lot of activity there 242 00:11:11,679 --> 00:11:13,800 Speaker 1: that that will be recaptured, but an awful lot of 243 00:11:13,800 --> 00:11:17,040 Speaker 1: it that won't, especially in the services sector. And they 244 00:11:17,080 --> 00:11:19,760 Speaker 1: must be worrying about permanent loss of business from from 245 00:11:19,880 --> 00:11:22,480 Speaker 1: firms outside China who will try and now do business 246 00:11:22,480 --> 00:11:26,720 Speaker 1: with with with alternative supplies in other countries. I'm pretty 247 00:11:26,720 --> 00:11:29,000 Speaker 1: sure that China isn't going to print GDP numbers anything 248 00:11:29,040 --> 00:11:30,720 Speaker 1: like as bad as we think they will actually be. 249 00:11:31,280 --> 00:11:33,680 Speaker 1: But of course, you know, disbelief in China statistics isn't 250 00:11:33,679 --> 00:11:38,160 Speaker 1: anything new. But but I'm pretty convinced that the economy 251 00:11:38,240 --> 00:11:40,120 Speaker 1: is going to contract out right in the first quarter. 252 00:11:40,360 --> 00:11:42,760 Speaker 1: And you know, at the moment, it's very much an 253 00:11:42,760 --> 00:11:44,600 Speaker 1: open questions to how big the rebound is in the 254 00:11:44,640 --> 00:11:48,240 Speaker 1: second quarter, or heaven forbid, whether that rebound gets pushed 255 00:11:48,240 --> 00:11:50,720 Speaker 1: out into the third, which yeah, you know is possible 256 00:11:50,720 --> 00:11:52,280 Speaker 1: at this point. And I was looking at some of 257 00:11:52,320 --> 00:11:54,760 Speaker 1: the estimates for pm is just last week ahead of 258 00:11:54,800 --> 00:11:58,280 Speaker 1: this China p m I extravagant of this coming weekend 259 00:11:58,679 --> 00:12:01,640 Speaker 1: forty five point one. The manufacturing is the estimate. It's 260 00:12:01,679 --> 00:12:04,400 Speaker 1: a moving target as we survey participants that can move 261 00:12:04,440 --> 00:12:07,959 Speaker 1: around ahead of the print. Not manufacturing fifty one point five. 262 00:12:08,559 --> 00:12:11,719 Speaker 1: That's the median estimate going into the February print for 263 00:12:11,840 --> 00:12:14,880 Speaker 1: non manufacturing p m I. In How on earth do 264 00:12:14,960 --> 00:12:16,960 Speaker 1: you generate any kind of estimate whatsoever as to what 265 00:12:17,000 --> 00:12:20,200 Speaker 1: has happened in the Chinese economy this month? You don't, 266 00:12:20,240 --> 00:12:23,240 Speaker 1: I mean, these numbers are guesswork that nothing nothing more 267 00:12:22,559 --> 00:12:25,600 Speaker 1: and nothing less. At this point, you know that the 268 00:12:25,640 --> 00:12:28,480 Speaker 1: previous print of the manufacturing was fifty dead um, and 269 00:12:28,559 --> 00:12:30,600 Speaker 1: it tends not to move by huge amounts. So for 270 00:12:30,640 --> 00:12:33,040 Speaker 1: it to drop to forty five or the consensus and 271 00:12:33,080 --> 00:12:34,839 Speaker 1: your survey forty five point one, don't to get the 272 00:12:34,840 --> 00:12:37,800 Speaker 1: point one. The drop by by five points is an 273 00:12:37,960 --> 00:12:40,600 Speaker 1: enormous move, and to drop by three and a half points, 274 00:12:40,640 --> 00:12:42,920 Speaker 1: which is a consensus of the non manufacturing p m 275 00:12:42,960 --> 00:12:46,080 Speaker 1: I also is an enormous move and that will be 276 00:12:46,120 --> 00:12:48,960 Speaker 1: reflected pretty quickly in p m i's in Europe and 277 00:12:49,040 --> 00:12:50,880 Speaker 1: the U S as well if it happens. But you know, 278 00:12:51,000 --> 00:12:53,600 Speaker 1: we just don't know. We really don't know. We do 279 00:12:53,679 --> 00:12:55,360 Speaker 1: just have at this point hold our hands up and 280 00:12:55,360 --> 00:12:58,040 Speaker 1: say that when these numbers print, um, you know, we 281 00:12:58,080 --> 00:13:00,920 Speaker 1: could be surprised in either direction. As I just want 282 00:13:00,960 --> 00:13:05,320 Speaker 1: to say, folks, go to LinkedIn Pantheon macro Economics. It 283 00:13:05,440 --> 00:13:08,160 Speaker 1: is lights out one of the best things on LinkedIn 284 00:13:08,240 --> 00:13:13,880 Speaker 1: out there, and Johnny even recapitulates recapitulates my viral log 285 00:13:14,000 --> 00:13:17,120 Speaker 1: chart from the Johns Hopkins University. It shout out to 286 00:13:17,120 --> 00:13:19,800 Speaker 1: class fist Tessin as well does the European coverage for them. 287 00:13:20,280 --> 00:13:26,160 Speaker 1: Fantastic class out on. I mean, it's hugely informative stuff. 288 00:13:26,840 --> 00:13:29,920 Speaker 1: Viral log chart virus. It's about the virus, it's not 289 00:13:30,400 --> 00:13:33,440 Speaker 1: It's about the cases of China and the deaths, and 290 00:13:33,440 --> 00:13:36,600 Speaker 1: the slope is flattening out of cases. That's good news, 291 00:13:36,640 --> 00:13:39,080 Speaker 1: although you have to wonder about the actual accuracy of 292 00:13:39,080 --> 00:13:41,600 Speaker 1: the data as well as this tread to other regions 293 00:13:41,800 --> 00:13:48,720 Speaker 1: and great to can't shout with you macroeconomics. You know 294 00:13:48,800 --> 00:13:51,080 Speaker 1: somebody said earlier it was a dead cat bounce. We 295 00:13:51,120 --> 00:13:54,600 Speaker 1: don't say that. We don't editorialize, but Lisa, what we can. 296 00:13:54,880 --> 00:13:57,439 Speaker 1: The word I would use is stasis. Here the tape, 297 00:13:57,480 --> 00:13:59,960 Speaker 1: somebody they said, somebody upstairs in the food court, send 298 00:14:00,080 --> 00:14:02,640 Speaker 1: me you know what's it looked like. It feels just 299 00:14:02,720 --> 00:14:06,080 Speaker 1: like stacis here waiting for the next news. The annables 300 00:14:06,120 --> 00:14:08,360 Speaker 1: kind of paralyzing people. But the one thing that is 301 00:14:08,440 --> 00:14:11,960 Speaker 1: knowable is what will earnings do? And it is not 302 00:14:12,040 --> 00:14:14,240 Speaker 1: going to be positive for them, and we're starting to 303 00:14:14,240 --> 00:14:16,920 Speaker 1: get earnings revisions that are lower. And the avocado toast 304 00:14:16,960 --> 00:14:19,200 Speaker 1: this morning was just exquisite food. Cop you have who 305 00:14:19,240 --> 00:14:22,000 Speaker 1: never had avocado toast? Have you ever had avocado toast? Ever? 306 00:14:22,400 --> 00:14:24,320 Speaker 1: When I'm on the Upper West Side, I'm forced to 307 00:14:24,360 --> 00:14:26,880 Speaker 1: have avocada I know that's not true. I've seen you 308 00:14:26,960 --> 00:14:30,280 Speaker 1: there and I know that you're not eating avocado toast 309 00:14:30,880 --> 00:14:34,480 Speaker 1: our steam. Guest, who's all stasis right now? Zo Martin Adams, 310 00:14:34,520 --> 00:14:37,960 Speaker 1: GUS equity strategist for us here at Bloomberg Intelligence. Brilliant 311 00:14:38,000 --> 00:14:40,400 Speaker 1: research coming out, and I really want to, you know, 312 00:14:40,440 --> 00:14:43,160 Speaker 1: focus on the earnings. You put one report out stocks 313 00:14:43,160 --> 00:14:46,320 Speaker 1: and face near term struggle as earnings momentum runs out. 314 00:14:46,680 --> 00:14:49,560 Speaker 1: What were you referring to, Yes, so a lot of 315 00:14:49,600 --> 00:14:52,360 Speaker 1: it is just fourth quarter earning season. I do think 316 00:14:52,480 --> 00:14:55,720 Speaker 1: elevated stocks to a degree where they could sort of 317 00:14:55,760 --> 00:14:58,360 Speaker 1: ignore the dam a revision momentum to Q one and 318 00:14:58,440 --> 00:15:01,280 Speaker 1: Q two related to coronavirus because Q four came out 319 00:15:01,400 --> 00:15:04,760 Speaker 1: so much better than expected. Uh. You know, in the end, 320 00:15:04,800 --> 00:15:07,240 Speaker 1: we ended up earning about two percent growth on on 321 00:15:07,280 --> 00:15:11,560 Speaker 1: the index um EPs. That's much better than the expectation 322 00:15:11,600 --> 00:15:15,480 Speaker 1: for nearly a two percent decline. So that helped us 323 00:15:15,560 --> 00:15:19,320 Speaker 1: ignore coronavirus. Well, now that earnings is waning, the momentum 324 00:15:19,320 --> 00:15:21,920 Speaker 1: and forward estimates is becoming one and more and more important. 325 00:15:21,920 --> 00:15:24,680 Speaker 1: In what we're finding is not only our first quarter 326 00:15:24,800 --> 00:15:27,360 Speaker 1: estimates falling, but second quarter estimates are falling, and third 327 00:15:27,440 --> 00:15:30,800 Speaker 1: quarter estimates are even starting to fall now, so analysts 328 00:15:30,840 --> 00:15:34,880 Speaker 1: are sort of having to embed expectations for much slower growth, 329 00:15:35,240 --> 00:15:39,600 Speaker 1: disruptions to supply chains, a lot of uncertainty into their forecast, 330 00:15:39,640 --> 00:15:41,200 Speaker 1: and I think that's going to weigh on markets for 331 00:15:41,200 --> 00:15:44,280 Speaker 1: the new term. And we had MasterCard, United Air both 332 00:15:44,320 --> 00:15:46,520 Speaker 1: emerging as the latest companies to warn that sales and 333 00:15:46,520 --> 00:15:48,240 Speaker 1: profit are put at risk as a result of the 334 00:15:48,280 --> 00:15:52,440 Speaker 1: disruptions due to the coronavirus. Just amounting number of companies 335 00:15:52,520 --> 00:15:55,680 Speaker 1: saying this, do you think that this is going to 336 00:15:55,760 --> 00:15:58,600 Speaker 1: be V shaped you shaped? Or do you think that 337 00:15:58,640 --> 00:16:00,440 Speaker 1: this is going to be a more perm didn't hit 338 00:16:00,480 --> 00:16:03,480 Speaker 1: for companies at a time of already slowing momentum. It 339 00:16:03,520 --> 00:16:07,080 Speaker 1: really depends upon how long coronavirus lasts. Right at the 340 00:16:07,120 --> 00:16:10,600 Speaker 1: first quarter is typically very seasonally weak for most industries, 341 00:16:10,640 --> 00:16:14,760 Speaker 1: and anyway, especially technology and technology is really central to 342 00:16:14,800 --> 00:16:18,200 Speaker 1: the story because t MT as a whole is of 343 00:16:18,200 --> 00:16:20,000 Speaker 1: the market cap of the index now, so it's really 344 00:16:20,000 --> 00:16:23,600 Speaker 1: important that the tech supply chain is able to operate 345 00:16:23,640 --> 00:16:26,160 Speaker 1: and get back online by by the end of the 346 00:16:26,200 --> 00:16:29,200 Speaker 1: first quarter, because you start to see order flow ramp 347 00:16:29,200 --> 00:16:31,640 Speaker 1: in the second quarter and into the third quarter, especially 348 00:16:31,640 --> 00:16:35,040 Speaker 1: third quarters the most important season for tech, So I 349 00:16:35,040 --> 00:16:37,000 Speaker 1: think you want to watch for how long at last. 350 00:16:37,120 --> 00:16:40,760 Speaker 1: It can absolutely be a V if the factories come 351 00:16:40,760 --> 00:16:43,760 Speaker 1: back online and demand starts recovering, If all of the 352 00:16:43,840 --> 00:16:47,160 Speaker 1: quarantines end within the next week or so, you can 353 00:16:47,240 --> 00:16:49,800 Speaker 1: definitely have a V shaped recovery into the second half. 354 00:16:50,240 --> 00:16:52,840 Speaker 1: But if it persists over the period of the next 355 00:16:52,840 --> 00:16:57,200 Speaker 1: several weeks and even leaks, especially into the second quarter, 356 00:16:57,480 --> 00:17:00,840 Speaker 1: that I think could be consequential and create of a 357 00:17:00,920 --> 00:17:03,640 Speaker 1: down draft that stays really flat and then an upward 358 00:17:03,680 --> 00:17:06,439 Speaker 1: trajectory which is much more like a U type of shape. 359 00:17:06,560 --> 00:17:10,679 Speaker 1: It's all speculation. But then if I own something now, 360 00:17:10,760 --> 00:17:12,560 Speaker 1: if I've been a grown up and I bought the 361 00:17:13,200 --> 00:17:18,240 Speaker 1: geno Martin Adams et f whatever it is, I'm rationalizing 362 00:17:18,359 --> 00:17:22,560 Speaker 1: out not quarters, but I'm rationalizing out one year or 363 00:17:22,640 --> 00:17:25,399 Speaker 1: two year or three year with a new low interest 364 00:17:25,480 --> 00:17:29,480 Speaker 1: rate environment. How far out do you and Bloomberg Intelligence 365 00:17:29,720 --> 00:17:33,720 Speaker 1: rationalized mean to me? Three years is the new one year? Yeah? 366 00:17:33,800 --> 00:17:35,720 Speaker 1: I think it's a really good point, especially with the 367 00:17:35,760 --> 00:17:38,479 Speaker 1: FEDS sort of constantly keeping rates as low as possible 368 00:17:38,520 --> 00:17:43,600 Speaker 1: real rates and very very negative territory constantly. You know, 369 00:17:43,640 --> 00:17:45,840 Speaker 1: I think there's so much uncertainty at the end of 370 00:17:45,840 --> 00:17:48,480 Speaker 1: this year with respect to the election. Of course, sort 371 00:17:48,480 --> 00:17:52,080 Speaker 1: of where that takes us into it's almost impossible to 372 00:17:52,080 --> 00:17:53,720 Speaker 1: take a three year view. And this is part of 373 00:17:53,760 --> 00:17:57,800 Speaker 1: the consequence of markets, unfortunately, is we've got coronavirus, and 374 00:17:57,840 --> 00:18:00,040 Speaker 1: then once we moved past coronavirus, we think again and 375 00:18:00,119 --> 00:18:03,520 Speaker 1: about election. Then once we move past election, depending upon 376 00:18:03,520 --> 00:18:06,920 Speaker 1: who's elected, we think about potentially a new energy deal, 377 00:18:07,320 --> 00:18:10,520 Speaker 1: a huge fiscal spending package, or trade wars again. So 378 00:18:10,600 --> 00:18:14,080 Speaker 1: I think that the market is ongoing and adjusting to 379 00:18:14,119 --> 00:18:18,960 Speaker 1: this ongoing period of a tremendous policy input in general, 380 00:18:19,440 --> 00:18:22,120 Speaker 1: and that's creating a much shorter time horizon. There are 381 00:18:22,119 --> 00:18:24,320 Speaker 1: fewer and fewer adults in the room, is my short, 382 00:18:24,440 --> 00:18:27,520 Speaker 1: My short answer to the long question. Nobody thinks three 383 00:18:27,600 --> 00:18:31,680 Speaker 1: years out. They think okay, six months out, twelve months out, 384 00:18:31,720 --> 00:18:34,520 Speaker 1: but thinking three years out has become nearly impossible because 385 00:18:34,520 --> 00:18:37,200 Speaker 1: of all of this policy volatility on the fiscal side 386 00:18:37,280 --> 00:18:39,320 Speaker 1: more than on the monetary side. So, Gina, you laid 387 00:18:39,320 --> 00:18:42,400 Speaker 1: out all the uncertainties, and certainly that is the prevailing 388 00:18:42,440 --> 00:18:47,600 Speaker 1: sentiment across markets today. What's your highest conviction certainty that's 389 00:18:47,640 --> 00:18:50,840 Speaker 1: sort of anchoring your belief in US equities right now. Yeah, 390 00:18:51,960 --> 00:18:54,960 Speaker 1: A lot of it is just the flight to quality certainty. 391 00:18:55,040 --> 00:18:58,080 Speaker 1: When I talk about that policy uncertainty as the underlying 392 00:18:58,080 --> 00:19:01,480 Speaker 1: condition that investors have to face. This I think it's 393 00:19:01,600 --> 00:19:04,960 Speaker 1: one of the single biggest underappreciated drivers of the US 394 00:19:05,040 --> 00:19:07,119 Speaker 1: equity premium over the course of the last decade has 395 00:19:07,160 --> 00:19:10,520 Speaker 1: been in times of uncertainty, investors flocked to the most 396 00:19:10,600 --> 00:19:13,119 Speaker 1: certain and the US is the most certain in the 397 00:19:13,160 --> 00:19:17,080 Speaker 1: globe of equities, right It's the most consistent, the companies 398 00:19:17,080 --> 00:19:20,800 Speaker 1: are most consistent. Um. They also are the biggest market 399 00:19:20,800 --> 00:19:25,080 Speaker 1: share gainers. They produced the strongest learnings growth via margin expansion, 400 00:19:25,480 --> 00:19:28,200 Speaker 1: and that consistency is very, very valued. It's one of 401 00:19:28,240 --> 00:19:31,000 Speaker 1: the reasons I think the dollar continues to rally as well. 402 00:19:31,040 --> 00:19:34,160 Speaker 1: It's a safe haven, right and in a safe haven's 403 00:19:34,160 --> 00:19:37,040 Speaker 1: performed best in times of uncertainty, So the US A 404 00:19:37,080 --> 00:19:38,679 Speaker 1: lot of the reason the U s performs as well 405 00:19:38,680 --> 00:19:41,159 Speaker 1: as it does is because it is the certainty in 406 00:19:41,200 --> 00:19:43,680 Speaker 1: an uncertain world. Gina Martin Adams, thank you so much 407 00:19:43,680 --> 00:19:46,200 Speaker 1: and all your team as well, particularly your running was 408 00:19:46,240 --> 00:19:50,240 Speaker 1: great today. At home depot. First, we've been trying to 409 00:19:50,280 --> 00:19:53,960 Speaker 1: speak to medical experts worldwide, particularly off London, in New 410 00:19:54,040 --> 00:19:56,399 Speaker 1: York and at Baylor University, and as you know, that 411 00:19:56,480 --> 00:19:59,560 Speaker 1: must mean Peter Hotez joins us. He has been more 412 00:19:59,600 --> 00:20:02,320 Speaker 1: than going to join us with the Baylor College of Medicine, 413 00:20:02,600 --> 00:20:07,080 Speaker 1: the National School of Tropical Medicine as well. Dr Rotists, 414 00:20:07,080 --> 00:20:10,080 Speaker 1: thank you so much for your commitment to the show. Uh. 415 00:20:10,119 --> 00:20:13,960 Speaker 1: The International Journal of Infectious Diseases, this is Rosanno and 416 00:20:14,000 --> 00:20:18,000 Speaker 1: all out of Italy and the thunderous article they wrote 417 00:20:18,000 --> 00:20:22,680 Speaker 1: in November of two thousand nineteen is flew and flew 418 00:20:22,840 --> 00:20:28,399 Speaker 1: death in elderly is a normal occurrence? How out of 419 00:20:28,600 --> 00:20:32,720 Speaker 1: normal are we right now with this virus? If it 420 00:20:32,880 --> 00:20:36,119 Speaker 1: seems all the research shows flu is with us at 421 00:20:36,160 --> 00:20:41,040 Speaker 1: each and every moment, and particularly for those over sixty. So, 422 00:20:41,400 --> 00:20:43,159 Speaker 1: first of all, thanks for having me back, and I 423 00:20:43,200 --> 00:20:45,720 Speaker 1: think you've hit it right. I'm in fact I'm here 424 00:20:45,800 --> 00:20:48,120 Speaker 1: this morning at the Cleveland Clinic and I was speaking 425 00:20:48,200 --> 00:20:52,080 Speaker 1: exactly about that. I mean, if this coronavirus sits the 426 00:20:52,160 --> 00:20:55,440 Speaker 1: United States, We've had a terrible flu season this year. 427 00:20:55,880 --> 00:20:59,160 Speaker 1: Some projections are going to go to May and Unfortunately 428 00:20:59,160 --> 00:21:01,720 Speaker 1: Americans are not getting their flu vaccine. And then we 429 00:21:01,800 --> 00:21:05,880 Speaker 1: have the added problem that historically when when we had 430 00:21:05,960 --> 00:21:09,720 Speaker 1: measles epidemics, they occur late winter early spring. Guess which 431 00:21:09,720 --> 00:21:13,040 Speaker 1: tiny arative we're moving into late winter early spring. And 432 00:21:13,280 --> 00:21:17,000 Speaker 1: the consequence of both is due to the anti vaccine movement, 433 00:21:17,880 --> 00:21:21,840 Speaker 1: which is greatly lowered our flu vaccination rate of measles 434 00:21:21,920 --> 00:21:25,840 Speaker 1: vaccination rates. So I'm very concerned in this country, as 435 00:21:25,840 --> 00:21:29,359 Speaker 1: in Italy, that we could be fighting criple epidemic and 436 00:21:29,400 --> 00:21:33,119 Speaker 1: that's a no win proposition. And discussed your professional view 437 00:21:34,000 --> 00:21:37,119 Speaker 1: of the media and the normal public. I mean use 438 00:21:37,160 --> 00:21:40,840 Speaker 1: this word carefully, folks. Hysteria that we've seen over say, 439 00:21:40,840 --> 00:21:44,880 Speaker 1: the last three days about it's a crisis, we can 440 00:21:44,920 --> 00:21:49,360 Speaker 1: do nothing, we cannot travel, we cannot move, etcetera, etcetera. 441 00:21:49,520 --> 00:21:54,000 Speaker 1: Is there efficacy to this outrage and limitation of our 442 00:21:54,080 --> 00:21:57,760 Speaker 1: moving around or should we try to make it life 443 00:21:57,840 --> 00:22:02,360 Speaker 1: as normal even as we fight this rific virus. Yeah. 444 00:22:02,440 --> 00:22:05,520 Speaker 1: I think in any time you see a brand new pathogen, 445 00:22:06,119 --> 00:22:09,760 Speaker 1: new virus, people get very worried, very quickly. It's always 446 00:22:09,800 --> 00:22:12,720 Speaker 1: the fear of the unknown. And and again the example 447 00:22:12,800 --> 00:22:16,280 Speaker 1: of that is there's nothing. Uh, that's much more deadly 448 00:22:16,320 --> 00:22:19,560 Speaker 1: than flour measles. And yet Americans are choosing not to 449 00:22:19,640 --> 00:22:23,000 Speaker 1: vaccinate their their families. And so that's one of the 450 00:22:23,040 --> 00:22:25,400 Speaker 1: first thing I say, let's at least take those two 451 00:22:25,440 --> 00:22:30,399 Speaker 1: diseases off the table. Look, I mean that it is 452 00:22:30,440 --> 00:22:34,240 Speaker 1: a concern, right, I mean, northern Italy is being severely 453 00:22:34,280 --> 00:22:39,040 Speaker 1: affected by this as his other pockets right now, you know, 454 00:22:39,160 --> 00:22:42,680 Speaker 1: the World Health Organization is not calling this a pandemic. 455 00:22:42,800 --> 00:22:46,200 Speaker 1: We may eventually get there, but for now, it's still 456 00:22:46,280 --> 00:22:49,960 Speaker 1: confined to focal areas. UH. So we just have to 457 00:22:49,960 --> 00:22:53,520 Speaker 1: be smart about it and and take the key steps 458 00:22:54,320 --> 00:22:57,000 Speaker 1: uh to anticipate what happens if it does come to 459 00:22:57,080 --> 00:22:59,560 Speaker 1: a place like the United States when and the most 460 00:22:59,720 --> 00:23:02,080 Speaker 1: one of the most important things that I'm worried about 461 00:23:02,119 --> 00:23:06,560 Speaker 1: is protecting our healthcare workers. We saw in Wuhan over 462 00:23:06,640 --> 00:23:10,600 Speaker 1: a thousand healthcare workers got infected with this virus. The 463 00:23:10,720 --> 00:23:14,199 Speaker 1: six steps, so those are the ones that we're going 464 00:23:14,280 --> 00:23:17,080 Speaker 1: to have to protect those on the front lines. Making 465 00:23:17,119 --> 00:23:21,399 Speaker 1: certain that we have adequate diagnostic testing. Right now, the 466 00:23:21,400 --> 00:23:24,639 Speaker 1: test that we have is not nearly good enough to 467 00:23:24,920 --> 00:23:28,680 Speaker 1: routinely pick up this virus. So the the key now 468 00:23:29,280 --> 00:23:33,119 Speaker 1: is to be very smart and very strategic about what 469 00:23:33,400 --> 00:23:37,040 Speaker 1: to do when this virus occurs and where it might 470 00:23:37,080 --> 00:23:40,439 Speaker 1: occur next. So, Dr Hotez, just from your perspective from 471 00:23:40,480 --> 00:23:44,160 Speaker 1: the medical community, what do we know about the coronavirus 472 00:23:44,200 --> 00:23:47,760 Speaker 1: and what don't we know about it? Uh? What we 473 00:23:47,880 --> 00:23:51,880 Speaker 1: What we know is that for many individuals, it does 474 00:23:51,920 --> 00:23:56,280 Speaker 1: not produce the severe infection, especially younger individuals. So we 475 00:23:56,359 --> 00:23:59,040 Speaker 1: know at least eighty percent and probably more than that 476 00:23:59,240 --> 00:24:04,560 Speaker 1: or low grade upper respiratory symptoms are resembling the common colds. 477 00:24:05,440 --> 00:24:08,119 Speaker 1: But we do know that individuals who are older of 478 00:24:08,200 --> 00:24:13,280 Speaker 1: underlying diabetes or hypertension are a greater risk for hospitalization 479 00:24:13,320 --> 00:24:14,840 Speaker 1: and death. I mean, the one of the things we 480 00:24:14,840 --> 00:24:17,439 Speaker 1: don't know is what's the story on that link between 481 00:24:17,480 --> 00:24:20,640 Speaker 1: diabetes and hypertension. We don't know. And that's not only 482 00:24:20,680 --> 00:24:23,880 Speaker 1: true of this virus, of other virul infections as well, 483 00:24:23,960 --> 00:24:27,720 Speaker 1: So that's a big unknown. We still don't really understand 484 00:24:27,720 --> 00:24:31,960 Speaker 1: how this virus is transmitted. We know close respiratory contact 485 00:24:32,040 --> 00:24:35,000 Speaker 1: is certainly a major route if you call for sneeze 486 00:24:35,040 --> 00:24:38,560 Speaker 1: on somebody or if those droplets get on surfaces, you 487 00:24:38,680 --> 00:24:41,320 Speaker 1: come into contact with them. But we don't know, for instance, 488 00:24:41,320 --> 00:24:45,040 Speaker 1: for sure whether this virus can travel for for meters 489 00:24:45,480 --> 00:24:48,520 Speaker 1: in the air like measles does not. Too many viruses 490 00:24:48,560 --> 00:24:53,560 Speaker 1: it turns out does that. Also, we're seeing uh strange presentations, 491 00:24:53,640 --> 00:24:57,840 Speaker 1: being that the Chinese have recorded several patients now who 492 00:24:57,880 --> 00:25:00,520 Speaker 1: were actually admitted for abdominal symptoms and thought to have 493 00:25:00,520 --> 00:25:03,320 Speaker 1: a surgical problem and only later did it turn out 494 00:25:03,320 --> 00:25:07,120 Speaker 1: they had the coronavirus and that caused in the hospital 495 00:25:07,160 --> 00:25:10,720 Speaker 1: to get infected. So, you know, the bad news that 496 00:25:10,800 --> 00:25:13,119 Speaker 1: we're still a lot of people learning curve about this virus. 497 00:25:13,160 --> 00:25:15,399 Speaker 1: The good news is it's only been a few weeks. 498 00:25:15,400 --> 00:25:18,080 Speaker 1: I mean, I have to say, you know, compared to 499 00:25:18,160 --> 00:25:21,240 Speaker 1: what happened with previous epidemics like Stars, where it took 500 00:25:21,320 --> 00:25:24,119 Speaker 1: us months and months to isolate the virus know what 501 00:25:24,240 --> 00:25:27,480 Speaker 1: this virus was, we've compressed that to a period of 502 00:25:27,520 --> 00:25:30,760 Speaker 1: days and weeks. So so we're learning a lot and 503 00:25:31,160 --> 00:25:33,960 Speaker 1: in some ways the Chinese did us a favor by 504 00:25:34,040 --> 00:25:36,920 Speaker 1: giving us that few week head starts so we can 505 00:25:36,960 --> 00:25:40,639 Speaker 1: get ready for it here in this country. Dotes, thank 506 00:25:40,680 --> 00:25:43,480 Speaker 1: you so much from the Cleveland Clinic today, Cleveland, Ohio. 507 00:25:43,560 --> 00:25:49,680 Speaker 1: Peter Hotels, of course, of Baylor at University. We can 508 00:25:49,720 --> 00:25:52,919 Speaker 1: have Quint corner with Kevin Cirilli. He's in South Carolina, 509 00:25:53,040 --> 00:25:59,520 Speaker 1: parsing poll numbers. Kevin, what parts of South Carolina support 510 00:26:00,400 --> 00:26:03,800 Speaker 1: Senator Sanders? Well, look, I think that he's going to 511 00:26:03,880 --> 00:26:06,600 Speaker 1: try to put together the Hispanic coalition and replicate what 512 00:26:06,640 --> 00:26:09,200 Speaker 1: he did in Nevada. But then also the more Vioral voters. 513 00:26:09,280 --> 00:26:12,879 Speaker 1: I think the question is going to be how strong 514 00:26:12,960 --> 00:26:16,800 Speaker 1: and significant as African American turnout in the cities for 515 00:26:16,800 --> 00:26:19,760 Speaker 1: former Vice President Joe Biden. I mean, the expectation is 516 00:26:19,760 --> 00:26:21,800 Speaker 1: not that Bernie Sanders is gonna win this thing on 517 00:26:21,880 --> 00:26:24,480 Speaker 1: in South Carolina. The expectation is that Joe Biden is 518 00:26:24,480 --> 00:26:28,000 Speaker 1: gonna win big. I mean, And so you look at 519 00:26:28,040 --> 00:26:31,040 Speaker 1: that and then you head into Super Tuesday. If Biden 520 00:26:31,119 --> 00:26:35,600 Speaker 1: doesn't at least meet his own clearing mark, then it's 521 00:26:35,600 --> 00:26:38,160 Speaker 1: gonna be very difficult for him to make the case 522 00:26:38,200 --> 00:26:41,879 Speaker 1: that he should stay in this past Super Tuesday. So, Kevin, 523 00:26:41,880 --> 00:26:44,000 Speaker 1: what who is I guess for the folks that are 524 00:26:44,040 --> 00:26:47,000 Speaker 1: gonna be on stage tonight, who was who was this 525 00:26:47,040 --> 00:26:51,439 Speaker 1: debate most critical for Make or Break? I'd say Joe Biden. 526 00:26:51,680 --> 00:26:53,760 Speaker 1: I'd say Joe Biden, just because I think if if 527 00:26:53,760 --> 00:26:57,399 Speaker 1: he doesn't perform strongly in South Carolina, you know, and 528 00:26:57,440 --> 00:27:01,040 Speaker 1: then has a harmful Super two day, there's gonna be 529 00:27:01,040 --> 00:27:03,280 Speaker 1: a lot of questions, but really all of them, uh, 530 00:27:03,400 --> 00:27:06,199 Speaker 1: in the sense everyone but Bernie Sanders, because if you 531 00:27:06,240 --> 00:27:10,520 Speaker 1: look at polls, at whether it's Texas, whether it's California, 532 00:27:10,840 --> 00:27:14,400 Speaker 1: I mean, he's leading. So if all of the candidates 533 00:27:14,480 --> 00:27:18,200 Speaker 1: attack Bernie Sanders, then you know, whether it shifts the 534 00:27:18,240 --> 00:27:20,119 Speaker 1: dynamic of the race. Will have to wait and see. 535 00:27:20,880 --> 00:27:23,520 Speaker 1: But up until this point, it's just it hasn't stopped. 536 00:27:23,520 --> 00:27:26,040 Speaker 1: So if you're any of the other candidates and you're 537 00:27:26,040 --> 00:27:28,760 Speaker 1: hoping that there's gonna be a contested convention or some 538 00:27:28,800 --> 00:27:31,960 Speaker 1: type of delegate fight, then you need to keep Bernie 539 00:27:32,000 --> 00:27:36,560 Speaker 1: Sanders as far away from getting delegates as possible. You 540 00:27:36,640 --> 00:27:39,440 Speaker 1: need to keep him from clearing I one could make 541 00:27:39,480 --> 00:27:43,240 Speaker 1: the case four hundred, you know, because you need there 542 00:27:43,280 --> 00:27:46,399 Speaker 1: to be um, it needs to be close. If if 543 00:27:46,440 --> 00:27:49,439 Speaker 1: he ends up getting like fift hundred delegates, how do 544 00:27:49,480 --> 00:27:51,159 Speaker 1: you stop that? And I'm just not sure that that 545 00:27:51,440 --> 00:27:53,760 Speaker 1: they would be able to do that. Kevin, good luck 546 00:27:53,840 --> 00:27:55,800 Speaker 1: to that. We'll look forward to the coverage on Bloomberg 547 00:27:55,880 --> 00:27:59,640 Speaker 1: Radio in Boston, in Washington, in New York are complete 548 00:27:59,640 --> 00:28:03,200 Speaker 1: cover of the debates. Kevin's really clearly leading our coverage 549 00:28:03,240 --> 00:28:07,000 Speaker 1: in South Carolina, Chief Washington, of course spot Thanks for 550 00:28:07,080 --> 00:28:11,480 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 551 00:28:11,640 --> 00:28:17,399 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 552 00:28:17,920 --> 00:28:21,280 Speaker 1: I'm on Twitter at Tom Keene before the podcast. You 553 00:28:21,280 --> 00:28:24,720 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio