Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: us now the Laureate of Columbia University, Joe, I want
Speaker 1: to cut right. We're gonna talk about what's going on
Speaker 1: right now, but Joe, I want to go back a
Speaker 1: small forty years to Grossman's Stiglets, and in it, there
Speaker 1: is an equation, folks, which is the simplest equation in
Speaker 1: all of economics. You equal state of plus epsilon. Epsilon
Speaker 1: is the unobservable. It's what we can't see. Joe Stiglets
Speaker 1: became acclaimed for this. Joe Stiglets, have you ever seen
Speaker 1: an epsilon like right now? Have you ever seen the
Speaker 1: unobservable that we see in this pandemic. We've never seen
Speaker 1: a shock as big as we have. But the interesting
Speaker 1: thing is after the shock has hit, uh, we can
Speaker 1: trace out some of the consequences. And what I find
Speaker 1: a little disappointing is that we haven't been doing next
Speaker 1: second round. The shock we could not have anticipated. Uh,
Speaker 1: we could have done a better response to it. So, Professor,
Speaker 1: this shock is what's unique about this shock versus what
Speaker 1: maybe some things we've experienced in the past. It is
Speaker 1: truly truly global. Does the response have to be global
Speaker 1: because right now it seems country by country or even
Speaker 1: within the United States state by state. Well, it has
Speaker 1: to be you might say, both global and local. Uh,
Speaker 1: if the local hospitals that are going to take care
Speaker 1: of people. But the fundamental fact is that we won't
Speaker 1: be able to control the pandemic until we control it everywhere.
Speaker 1: If it's raging in some part of the world and
Speaker 1: we don't yet have a vaccine and we don't have
Speaker 1: a rest viral, it'll come back to bite us. And
Speaker 1: that is what was so disappointing about Trump's decision to
Speaker 1: hold up money on w h O. It's like being
Speaker 1: upset about the fire department and uh, defunding the fire
Speaker 1: department in the middle of the fire. Joe. What I
Speaker 1: find so distressing here is we've got rogueoff and Reinhard
Speaker 1: publishing a brilliant essay the other day. And you know, folks,
Speaker 1: I've never said this in my life. Rogoff and Stiglets
Speaker 1: are on the same page, and and Joe, this is
Speaker 1: really critical the urgency of the matter. And we've seen
Speaker 1: a central bank and frankly central banks plural matter, and
Speaker 1: the legislature, particularly in the United States, seems locked in
Speaker 1: almost a pardon the pun a lockey and the individual
Speaker 1: approach where society cannot collectively battle a viral pandemic. How
Speaker 1: do we get ourselves out of that? How do we
Speaker 1: extract ourselves from this forced individualism? Well, I think the
Speaker 1: hope is that we look around and see what's going
Speaker 1: on in other countries and take the lesson. You know,
Speaker 1: the I m F came out with report yesterday and
Speaker 1: one of the striking things to me, and that was
Speaker 1: that the United States it was way ahead of every
Speaker 1: other country in the number of the fraction of unemployment,
Speaker 1: the unemployment rate UH and ahead of every country in
Speaker 1: a very negative way. When they said, you know, let's
Speaker 1: make a number us number one, they didn't mean make
Speaker 1: us number one in having the highest level of unemployment
Speaker 1: among all the events countries in response to the coronavirus.
Speaker 1: The other countries have figured it out and have figured
Speaker 1: out a way to make sure that there is less sufferings,
Speaker 1: fewer people are thrown out of their jobs. And what's
Speaker 1: so devastating the United States is we are the one
Speaker 1: country where people depend on employment for health insurance in
Speaker 1: the middle of a health crisis. So the devastating effects
Speaker 1: in the United States being unemployed, our orders of magnitude
Speaker 1: worse than another country. And then, Paul, I've been out
Speaker 1: of tooralize here. I'm talking to my own book, but
Speaker 1: it's companies like Bloomberg, and I'll mention Bank of America,
Speaker 1: Mr Mourne, and today re emphasizing this is not the
Speaker 1: time to can peoples. You got to find a way
Speaker 1: to do this. Paul, pick it. So, professor, give us
Speaker 1: what we know about the US fiscal stimulus response. What
Speaker 1: do you think the US government should do next? I mean,
Speaker 1: the FED seems to have really flexed its muscles, exercised
Speaker 1: many tools in the toolbox. What do you think the
Speaker 1: federal response should be going forward? Well, I think there's
Speaker 1: actually a number of things that we need to do. Uh,
Speaker 1: some of them are relatively easy. There were some big
Speaker 1: gaps in our earlier measures for inch things. While we
Speaker 1: recognize how important it was for people to have paid sickly.
Speaker 1: We don't want people with COVID nineteen going into the
Speaker 1: workplace and spreading the disease. And so they passed a law.
Speaker 1: But what did they do then, under the pressure of
Speaker 1: the big companies, exempt at eight of American workers. So
Speaker 1: we recognized the principle, and then we totally undermine it.
Speaker 1: So that needs to be changed. Uh. We recognized the
Speaker 1: principle that we shouldn't have people UH, we should keep
Speaker 1: the connection between people in their jobs. But then when
Speaker 1: we designed the program, we designed it in a way
Speaker 1: that it's not working very well. Other countries have done
Speaker 1: UH much better, And there's a bill in Congress to
Speaker 1: follow the model that the other countries UH used where
Speaker 1: the employer directly gets a check to pay his workers
Speaker 1: from the I R S or Social Security. We have
Speaker 1: all those Uh, we have all the the the information
Speaker 1: we need. I mean, after all, the I R S
Speaker 1: is communicating with every corporation and so they know how
Speaker 1: to communicate. So that's money that could go almost overnight.
Speaker 1: And why we didn't do it that way, I have
Speaker 1: no idea. UH. And then we have some other big gaps.
Speaker 1: One of the big issues is UH we left out
Speaker 1: the big NGOs. The universities are research institutions, and so
Speaker 1: some of the kinds of institutions that are will be
Speaker 1: absolutely necessary for our revival as a strong economy. I
Speaker 1: have not been supported. They'll they'll be along with another trunch.
Speaker 1: If you're just joining us, what's Joseph sticklet's with us
Speaker 1: of Columbia University. Joe, I want to talk about your
Speaker 1: Democratic Party. I know you voted Republican four or five
Speaker 1: elections ago, but Joe, I want to talk about the
Speaker 1: need for Democrats, and particularly the visible East Coast Democrats
Speaker 1: that hang on every Joe Stigley, it's in word, how
Speaker 1: do they get back to the middle ground. How does
Speaker 1: the vice president running against President Trump? How does your
Speaker 1: party ex convention getting to November? How do they find
Speaker 1: their way back to Hubert Humphrey, Scoop Jackson in the
Speaker 1: middle Democratic party ground? So my view is they need
Speaker 1: to focus on the basic principles, which are principles that
Speaker 1: you know of American support. Uh, most Americans you know
Speaker 1: in poeft Po show, they think that seven dollars is
Speaker 1: not adequate as a minimum wage. They think it's not
Speaker 1: a livable wage. We need raise a minimum wage. Almost
Speaker 1: everybody says that the fact of the United States is
Speaker 1: the only advanced country that doesn't recognize the right to
Speaker 1: access to healthcare is a basic human right. We need
Speaker 1: to recognize that, and there are different ways of doing it.
Speaker 1: We need a good democratic debate about how to do it.
Speaker 1: But recognize that principle. Uh, the idea that people should
Speaker 1: be able to shoot other people, Uh, that you should have.
Speaker 1: You know, we're not talking about rifles. We're talking about
Speaker 1: machine guns. Uh that uh the Fourth Amendment not wasn't
Speaker 1: talking about everybody having the right to have machine guns.
Speaker 1: So some forms of gun control. I mean you to
Speaker 1: stay on the pandemic now, and you know, we all
Speaker 1: understand on gun control it's about the Senate majority and
Speaker 1: the power in the rural nature of the Senate, etcetera.
Speaker 1: I mean, we all get that. On the pandemic and
Speaker 1: on the politics forward. Do you see any nudging towards
Speaker 1: the more collective American psychology or do we get done
Speaker 1: with the pandemic and we just move on as we've
Speaker 1: been moving on since you know, forty years ago. Yeah,
Speaker 1: I'm glad you raised that because that is the essential
Speaker 1: issue when we have a crisis. We realize that we
Speaker 1: need collective action, that our individualism can't work, and we
Speaker 1: turned to government. And here in New York, Governor Como
Speaker 1: has really done a fantastic job under very difficult circumstances. Uh.
Speaker 1: So Uh and we see in states like California the
Speaker 1: role of good leadership and the role of the state
Speaker 1: in being able to protect people and to get the
Speaker 1: pandemic under control. So I think you know this is
Speaker 1: one of the themes of my book. Uh, People Power
Speaker 1: and Profits Progressive Capitalism. Uh, it's that we went too
Speaker 1: far in the extreme at markets where everything we need
Speaker 1: to get a better balance of balance between recognizing markets
Speaker 1: are important, but so is collective actalcy Joe, just because
Speaker 1: of the clock, we gotta leave it there. Joe Stiglets,
Speaker 1: thank you so much for joining us to Lauria from
Speaker 1: Columbia University. Always controversial, we got a ton of response
Speaker 1: when Professor Stiglets is on. We are committed here to
Speaker 1: speaking of medicine, and we do that across the wide
Speaker 1: sphere of this pandemic. We've talked to radiologists, We've talked
Speaker 1: to epidemiologists. Again, we speak to someone expert in emergency medicine.
Speaker 1: She's Laurence Soer Johns Hopkins University, their assistant professor, really
Speaker 1: just outside the pandemic expert in this area. We caught
Speaker 1: up with her today here. He is Professor Soer. I
Speaker 1: think it's a little too early to say whether it's
Speaker 1: fully accresting or not. We are seeing a slow down
Speaker 1: in the number of increasing cases. We haven't I don't
Speaker 1: think peaked that curve yet, but we are starting to
Speaker 1: see slow downs in the volume um and all the
Speaker 1: more reason to protect those measures that are in place,
Speaker 1: like distancing, to ensure that that those volumes don't spike
Speaker 1: right back up as soon as a sort of quote
Speaker 1: unquote go back to normal, Lauren. That is certainly what
Speaker 1: I see in the fancy exponential or logarithmic charts as well,
Speaker 1: exactly as you just described it. And so much of
Speaker 1: that is done on a moving average, where professionals like
Speaker 1: you and unprofessionals like me, or even the present United
Speaker 1: States have to use a number of days or weeks
Speaker 1: or months and blended together to really see the abb
Speaker 1: How long is that moving average? What's the appropriate length
Speaker 1: of time for you to gauge? Well, I think UM,
Speaker 1: it's changing every day, and I think we're just starting
Speaker 1: to learn more information about this virus and how it
Speaker 1: behaves in people. UM. The the key is not to
Speaker 1: make an assumption way too early, right so, UM, two
Speaker 1: weeks is really the minimum to even start to understand
Speaker 1: the data for you want to look at it two
Speaker 1: weeks out. So I think we're several months before we
Speaker 1: really can go back to UM go towards planning to
Speaker 1: reopen and and go back to normal, Lauren, how quickly
Speaker 1: what we get a vaccination against the pandemic. There's a
Speaker 1: lot of really good candidates coming up right now. I
Speaker 1: think we're we're seeing estimates from the scientists somewhere between
Speaker 1: three and twelve months, which is unbelievable for vaccine science.
Speaker 1: It's really fast, and so it's exciting to see all
Speaker 1: this progress being made. I think realistically a vaccine that's
Speaker 1: ready to go out to the general public is about
Speaker 1: a year away. UM, but we could start seeing candidates
Speaker 1: that could be used to protect our frontline health workers
Speaker 1: and for responders earlier. Probably what's the biggest challenge right now?
Speaker 1: So there are a number of questions Lauren about, for example,
Speaker 1: US symptomatic cases right, why are they symptomatic? And until
Speaker 1: you find out more about them, it's very difficult to
Speaker 1: get a handle because they keep on transmitting if the
Speaker 1: lockdown is eased somewhat. But also immunity, how close are
Speaker 1: we to understanding whether people that have had it can
Speaker 1: go back safely to work. Yeah, there's a lot of
Speaker 1: work being done in that immunity question right now, and
Speaker 1: I think we have to because we're so early in
Speaker 1: the outbreak. We have to wait to see how people's
Speaker 1: immune responses stay over time and also how when people
Speaker 1: are are ready to go back to work without having symptoms.
Speaker 1: The biggest challenge right now I see is testing. We're
Speaker 1: still trying to ramp up testing in a meaningful way,
Speaker 1: and that is what every single other public health measure
Speaker 1: hands up on all of those things that we want
Speaker 1: to use to get back to work, to alleviate social distancing,
Speaker 1: to be able to travel, to reduce the masks, the
Speaker 1: hind one testing more very clear. Thank you so much
Speaker 1: for bringing that up. What is the constraint I'm getting
Speaker 1: more testing done? I think it's it's a little bit
Speaker 1: of a supply issue and a lot of bit of
Speaker 1: a coordination issue. So making sure that the tests are
Speaker 1: in the right place, that people have the ability to
Speaker 1: scale up and test all the people they need to um,
Speaker 1: that you continue to get the materials, and that you
Speaker 1: have the people to run the tests. Lauren Son with
Speaker 1: us with the Johns Hopkins University and Emergency Medicine as
Speaker 1: we've been talking to people and nursing there, and also
Speaker 1: from the Bloomberg School of Public Health. We should of
Speaker 1: course mentioned that Mr Bloomberg has provided a mens fum
Speaker 1: anthropy to Johns Hopkins for that School of Public Health
Speaker 1: as the founder and owner of Bloomberg Television. In Bloomberg Radio,
Speaker 1: we now have some turf under U S JP, Morgan,
Speaker 1: Bank of America, Golden Sec City Group of course others
Speaker 1: coming out in the superregionals in your community banks as well.
Speaker 1: Synthesizing this is Kenneth Leon. Here's a CFR, a head
Speaker 1: of research and also acutely focused on the financials. All it.
Speaker 1: I believe it's four shops right now, ken Leon, what
Speaker 1: is the summary? The summary is shift to balance sheet
Speaker 1: credit risk. Uh, there's only a few weeks of look
Speaker 1: into the the recession, so more work will be done
Speaker 1: for the second quarter. In terms of reserves for loan losses. UM.
Speaker 1: The question, though, always is how deep will this recession
Speaker 1: be and how long. I guess the public markets expect
Speaker 1: a recovery in the second half of this year, but
Speaker 1: banks are being prudent, which essentially means that they're building
Speaker 1: up reserves for non performing loans. That's the good news, Kent,
Speaker 1: that they already that this balance sheet is strongest city
Speaker 1: in our sweat too. Here's what I'm trying to get
Speaker 1: my hands around them, and maybe you can help us.
Speaker 1: When these guys say they're prepared and when they come
Speaker 1: through with a que huge credit provisions like the ones
Speaker 1: we've seen over the last couple of days, what are
Speaker 1: they prepared for another shutdown that last a month, two months,
Speaker 1: three months? Can you understand the duration that they're working
Speaker 1: with their timeline that enables them to decide how much
Speaker 1: money they need to put aside. What often happens is
Speaker 1: banks are ultra conservative, which means they tend to reserve
Speaker 1: more than what will actually happen. It is likely that
Speaker 1: if it's a recovery later in the economy, there could
Speaker 1: be a reverse of these reserves. But at this point, UM,
Speaker 1: it's essentially the credit committees for these banks are being very,
Speaker 1: very conservative. Can I'm struck by this sort of dissidents.
Speaker 1: We're seeing the increase in credit loan loss provisions, which
Speaker 1: is deteriorating some of the earnings potential. But City Group
Speaker 1: just reported it's best fixed income trading revenue in eight years.
Speaker 1: And you're seeing this consistently across the big banks, that
Speaker 1: they are performing better when it comes to treating revenues,
Speaker 1: and I'm wondering are people being too dismissive of this
Speaker 1: is sort of the profit winning aspect of a dislocation
Speaker 1: like this, and the fact that the big banks have
Speaker 1: been in a position to take advantage of it. So
Speaker 1: the banks are serving clients. And then the capital markets
Speaker 1: trading has been strong, particularly as you know pick UM,
Speaker 1: and it's mostly investment great as opposed to high yield
Speaker 1: or other derivatives UM. We're also seeing strength and equity
Speaker 1: trading with volatility UM. This shines much brighter for a
Speaker 1: Golden Sax or Morgan Stanley as a percentage of their
Speaker 1: total net revenues than the large banks, which still have
Speaker 1: a sizable traditional loan business and just sort of dissecting
Speaker 1: the other sort of lending functions of the banks. We're
Speaker 1: seeing that the increase in c an I lending and
Speaker 1: say Bank of America is really attributed to the draw
Speaker 1: down on credit lines that we've been hearing a lot
Speaker 1: about will the ultimately be a pain point for the
Speaker 1: banks or a point of profit going forward into what
Speaker 1: will eventually be a recovery. So, first of all, in
Speaker 1: terms of lines of credits and unrestricted lines, UM, companies
Speaker 1: are taking advantage of that. When we look at that
Speaker 1: and also look at their loan exposure, UM, we think
Speaker 1: there's risk in terms of commercial real estate and construction. Uh.
Speaker 1: The total lines of credit for the big for the
Speaker 1: four largest bank was just about four hundred sixty billion,
Speaker 1: four times greater than back in two thousand thirteen. Um.
Speaker 1: You know, so a lot of this will have in
Speaker 1: terms of how deep this can be for credit losses
Speaker 1: will be in industries like real estate, oil and gas.
Speaker 1: Goldman has taken a reserve ninety seven million, and UM,
Speaker 1: you know, we really think it's really a question of
Speaker 1: getting people act to work versus having unoccupied officers as
Speaker 1: well as other real estate property types that could be
Speaker 1: at risk. City saying that numbers just incredible for our
Speaker 1: listeners and might not have heard this eight percent of
Speaker 1: employers around the world employees around the world working remotely
Speaker 1: at city group of phenomenal stat the path forward can
Speaker 1: I don't think we should be naive about this. I
Speaker 1: truly believe that these banks want to help their customers.
Speaker 1: Of course they do, absolutely, of course they do. But
Speaker 1: I don't think we should be naive about the pr
Speaker 1: effort going on right now. None of these banks want
Speaker 1: to be seen laying off anybody in but they will
Speaker 1: want to cut costs again. And Ken, I'm just wondering,
Speaker 1: are we putting off this year's cost cuts for a
Speaker 1: huge effort next year. Well, it's a great question. And
Speaker 1: when you look at state coach holders, it's about serving
Speaker 1: the public their employees. I don't think investors really are
Speaker 1: looking at earnings for the next quarter as well. So
Speaker 1: when you get analytical about this with our efficiency ratio UM,
Speaker 1: they're not going to be where the banks wanted to
Speaker 1: target is the mid fifty percent range. You know, that's
Speaker 1: another conversation in a better environment, but at this point
Speaker 1: it's really serving customers and also UM due diligence in
Speaker 1: terms of non performing loans and Kenna John's observation working
Speaker 1: from home. Great, what do the banks do that aren't
Speaker 1: digitally ready? I mean, is this crisis is pandemic just
Speaker 1: brought to the forefront. They're dead? Is that true? It's
Speaker 1: over four thousand banks in the US, community banks, smaller banks,
Speaker 1: and some that Stilton might have passbooks. So if being
Speaker 1: digital Ken Ken Ken, John Fair and Lisa Bramwits don't
Speaker 1: know what a passbook is, that's so far back. And
Speaker 1: think you know, we're talking community bank, what are they?
Speaker 1: What are they gonna do? Can? Seriously, what are the
Speaker 1: non digital gonna do? Their deposits are not going anywhere,
Speaker 1: and it's really a question of um whether they were
Speaker 1: too aggressive in terms of loans. The regional banks have
Speaker 1: more concentrated industry exposure, some in oil and gas, but
Speaker 1: I think community banks will just slog along and unlike
Speaker 1: the rest of the world. Uh, the US banking industry
Speaker 1: number of banks is still too large, but the concentration
Speaker 1: of assets with banks greater than two and our fifty
Speaker 1: billion is over of the total industry. Can just real
Speaker 1: quick here, I'm wondering, what's your recommendation on stocks? Do
Speaker 1: you think that they're buy or do you think that
Speaker 1: this is sort of indicating some serious caution and risk
Speaker 1: going forward. We didn't get this right, and we have
Speaker 1: five recommendations on Bank of America, also on JP Morgan
Speaker 1: and also City Group and Trading Um at low multiples
Speaker 1: of net tangible book value. Forget about earnings. We would
Speaker 1: look for the banks probably to the market performers at
Speaker 1: best in your term. But if there is enough turn
Speaker 1: in the economy, these are great cyclical stocks later this year.
Speaker 1: Can't get to catch up with the solways Kelly on
Speaker 1: that cfl right, director of Equity Research, on a busy
Speaker 1: morning for bank kearnings Right now, folks, this is the
Speaker 1: conversation of the day if you are part of global
Speaker 1: Wall Street, and also, as John mentioned yesterday, if your
Speaker 1: retirement plan has been blown up, which is a few
Speaker 1: people as well. William Priest wrote a definitive book on
Speaker 1: free cash flow a number of years ago. Was my
Speaker 1: book of the summer one summer. It's called Free cash
Speaker 1: Flow and Shareholder Yield, and it is a must read.
Speaker 1: There's no other way, uh to move it. The rumor
Speaker 1: is the movie will be out next year. Memorial Day
Speaker 1: Week on John Farrell playing counterpart in it as well.
Speaker 1: Bill Priest joins us now with Epic Investments. Bill Priests,
Speaker 1: one of the great foundations of your life. Work on
Speaker 1: free cash flow is share buy backs. They've disappeared. What
Speaker 1: does that do to the priest mathematics? Well, thanks again, Tom. Actually,
Speaker 1: let's go back one step and just start with the
Speaker 1: fundamental statement. The value of any business is a function
Speaker 1: of as ability to generate cash flow. And we define
Speaker 1: cash flow uh where we as we subtract from the
Speaker 1: operating cash flow of a business. And he planned capital
Speaker 1: expenditures in all cash taxes, which gives you free cash flow.
Speaker 1: And there are only five things you can do with
Speaker 1: a dollar free cash flow. You can pay a dividend,
Speaker 1: buy back stock, pay down debt, reinvest the money internally,
Speaker 1: or make an acquisition. If you can earn a return
Speaker 1: above your cost to capital, you should reinvest or acquire.
Speaker 1: It's the fastest way to growth shareholder value. That said,
Speaker 1: most companies cannot use all of their free cash flow internally,
Speaker 1: and as a result, they decide to return some of
Speaker 1: it back to the owners of the business. Now you
Speaker 1: can pay down debt, that's not going to happen. You
Speaker 1: have a cash dividend and buy backs and buy backs
Speaker 1: sword after the O eight crisis, and I think you'll
Speaker 1: see that diminished. It doesn't mean that corporations are going
Speaker 1: to stop returning capital to the owners of the business,
Speaker 1: but the buy back method will will come down substantially. Uh.
Speaker 1: It's uh, it's one of these things where people are
Speaker 1: going to have an attitude towards buy backs that are
Speaker 1: not going to be positive when they visit when they
Speaker 1: see suffering going on. That said, the corporation's job is
Speaker 1: the max amid the value to business to the owners.
Speaker 1: So I think what you're going to see is a
Speaker 1: substantial diminishment of buy backs, but not necessarily cash dividends.
Speaker 1: Cash dividends will be down this year for sure, because
Speaker 1: they're going to be down, But depending on the company,
Speaker 1: you'll see some like yesterday you had P and G
Speaker 1: raised the dividends. Day before, I think you had Johnson
Speaker 1: Johnson raised or cash dividends. Cash dividends are okay. The
Speaker 1: banks are a little different. The banks have this problem
Speaker 1: that in O eight they were viewed as the cause
Speaker 1: of the crisis. Depending on what country you lived in. Uh,
Speaker 1: they were treated well or badly. In this country, they
Speaker 1: were treated rather well, and I think the populace generally
Speaker 1: feels they were treated too well. So this time around,
Speaker 1: I do think they have to take a more socially
Speaker 1: appropriate attitude. And I don't think you'll see any buy
Speaker 1: backs by any US banks this year. And Bill they
Speaker 1: seem to have confirmed this, UH saying that basically they're
Speaker 1: not going to engage in that they're talking about the
Speaker 1: banks since sort of the loan loss provisions that we
Speaker 1: keep focusing on here twenty four billion dollars set aside.
Speaker 1: When you look at City Group, Well's, far Ago, Bank
Speaker 1: of America, and JP Morgan so far for potential loan losses,
Speaker 1: and I'm just wondering, is there some sort of consensus
Speaker 1: that's emerging among the big banks in terms of the
Speaker 1: parameters of how deep this downturn is going to be
Speaker 1: that's instructive for other earnings going forward. Well good, that's
Speaker 1: a very good question. And I think when you look
Speaker 1: at what's going on, it's unclear what the what the
Speaker 1: ultimate unemployment number will be, but it's going to be substantial.
Speaker 1: We have roughly a hundred and we had I should
Speaker 1: say a hundred and fifty five million jobs in the
Speaker 1: United States unemployment rate would be thirty million people. We're
Speaker 1: gonna be at twenty pretty easily, and we will see
Speaker 1: the biggest unemployment number since since the end of World
Speaker 1: War two, really since the depression. And I don't think
Speaker 1: it's going to prove socially accept a bowl for any
Speaker 1: financial intermediary to quote do well or have their senior
Speaker 1: leadership do well when you have that level of unemployment.
Speaker 1: So I think you'll see very very cautious statements with
Speaker 1: regarding dividends and as we said earlier, just no buybacks
Speaker 1: at all. I think other companies, you've seen some people
Speaker 1: waive salaries in some parts of the world. I noticed
Speaker 1: they haven't weighd bonuses, but they have waived salaris that
Speaker 1: they won't take a salary during this uh, this this tobacco.
Speaker 1: I think you'll hear more and more of that in
Speaker 1: the United States as well. It will depend on the
Speaker 1: build out. I mean, we have to reopen the economy.
Speaker 1: If we don't reopen economy, and it's going to be
Speaker 1: an absolute catastrophe. How well reopen it it will be. Uh.
Speaker 1: I think it will start probably soiler than many people think,
Speaker 1: but there will be experimentation, and it will be a
Speaker 1: while before you get the economy fully opened up. Bill,
Speaker 1: thanks so much, greatly, greatly appreciate it. Just a quick
Speaker 1: update there too short. Thanks for listening to the bloom
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keene before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio.