WEBVTT - Surveillance: Jobs Recovery With Scalia 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom keene Jaily. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.400 Bloomberg dot Com, and of course on the Bloomberg. Well, 0:00:27.480 --> 0:00:29.200 let us get right to it. We've got lots in 0:00:29.280 --> 0:00:31.760 store here on our simulcast, and we welcome all of 0:00:31.800 --> 0:00:35.159 you right now. The Secretary of Labor of the United States, 0:00:35.400 --> 0:00:38.199 Eugene Scalia. Of course, we're thrilled to have you on, 0:00:38.400 --> 0:00:42.920 Mr Secretary, after this Supreme Court decision, how will the 0:00:43.000 --> 0:00:49.640 Department of Labor adapt and adjust immediately to this historic decision? Well, Tom, 0:00:49.680 --> 0:00:51.760 good to be with you, and yes, it is an 0:00:51.760 --> 0:00:56.440 important decision the Court issued yesterday. We at the Labor 0:00:56.480 --> 0:01:00.520 Department don't have primary responsibility for a minister during that 0:01:00.600 --> 0:01:03.880 particular law. The Equal Employment Opportunity Commission, the e o 0:01:04.040 --> 0:01:07.600 C is the agency charge with administering Title seven. But 0:01:07.600 --> 0:01:11.800 we're certainly reading through the Court's decision and the Court 0:01:11.840 --> 0:01:15.400 has ruled and will adhere to that. I mean, it's 0:01:15.520 --> 0:01:18.679 very important here to understand, Mr Secretary, that you will 0:01:18.800 --> 0:01:22.480 set the tone and we would suggest that Gene Scalley 0:01:22.560 --> 0:01:26.959 has been doing that for years. Mr Secretary, there's ideas 0:01:27.040 --> 0:01:32.000 here of religious exemption to the normal labor of this 0:01:32.160 --> 0:01:36.560 country that businesses can say, no, we digress from this ruling, 0:01:36.560 --> 0:01:38.680 We're not going to do it. Do you think that 0:01:38.760 --> 0:01:42.560 will be evident immediately? And how should E O C 0:01:42.880 --> 0:01:45.880 or labor respond? Well, Tom, I think that was one 0:01:45.920 --> 0:01:50.880 of the issues that Justice Gorsage, in his opinion for 0:01:50.880 --> 0:01:55.360 the majority side, stepped a little bit. He acknowledged that 0:01:56.200 --> 0:02:02.360 people of faith and religious institutions particularly uh might be 0:02:02.800 --> 0:02:06.560 affected more than other institutions by this decision. Uh, uh 0:02:06.640 --> 0:02:09.120 and and uh, and he said that's an issue that 0:02:09.160 --> 0:02:11.560 will address some other day. So I think that was 0:02:11.560 --> 0:02:15.799 one of the issues that decision potentially raises that Uh, Well, 0:02:15.840 --> 0:02:19.959 we'll get addressed by the courts down the road. The 0:02:19.960 --> 0:02:22.480 major the dissenters would have liked the court to address 0:02:22.520 --> 0:02:25.760 that more fully, but the majority didn't. And so we'll 0:02:26.040 --> 0:02:28.200 we'll take a closer look and see what implications that 0:02:28.240 --> 0:02:31.440 has for our programs. Mr Secretary, thank you for addressing 0:02:31.800 --> 0:02:37.320 these issues. The issue right now, Sir, is double digit unemployment. 0:02:37.680 --> 0:02:41.240 Give us an update on what your micro data sees 0:02:41.600 --> 0:02:46.000 of a depression level joblessness in America. Well, Tom, I 0:02:46.919 --> 0:02:50.480 have to say, I think the comparisons to the Depression 0:02:50.480 --> 0:02:54.919 only get you so far. We have had very high unemployment. 0:02:54.919 --> 0:02:58.959 We've had too many Americans put out of work, uh, 0:02:59.000 --> 0:03:00.600 and we know the hardship that's meant for them and 0:03:00.639 --> 0:03:02.640 their families. At the same time, we got here by 0:03:02.639 --> 0:03:06.160 a very different route than we got into the Great Depression, 0:03:06.160 --> 0:03:08.240 and I think the jobs report we put out what 0:03:08.320 --> 0:03:10.840 ten eleven days ago suggest that we're going to come 0:03:10.840 --> 0:03:13.440 out of it by a different route. That we put 0:03:13.639 --> 0:03:16.120 two point five million Americans back to work in the 0:03:16.200 --> 0:03:18.720 month of May, and I think that's a trend that's 0:03:18.720 --> 0:03:21.640 contuning right now. As you know, that data was a 0:03:21.720 --> 0:03:25.880 month old. Uh. There's been a lot of reopening since then, 0:03:26.200 --> 0:03:28.360 so I think people are getting back to work. It is, 0:03:28.400 --> 0:03:30.960 of course important that that happened safely, and that's something 0:03:31.000 --> 0:03:33.160 we keep an eye on. But I think we're making 0:03:33.200 --> 0:03:36.840 real headway on the employment picture right now. Let's talk 0:03:36.880 --> 0:03:39.160 about that, miss the Secretary, do you see any evidence 0:03:39.320 --> 0:03:42.320 right now whatsoever that the enhanced unemployment benefits that were 0:03:42.320 --> 0:03:46.280 past is holding back re hir Rank, we hear uh, John. 0:03:46.280 --> 0:03:49.760 We hear concerns about that, raised UH anecdotally by a 0:03:49.840 --> 0:03:53.640 number of employers. That point that they make is that 0:03:54.000 --> 0:03:57.520 with the enhanced unemployment benefit provided by the federal government, 0:03:57.560 --> 0:03:59.680 which is UH six hundred dollars a week, you put 0:03:59.720 --> 0:04:02.400 that on top of the state benefit, and people can 0:04:02.440 --> 0:04:05.920 be making between fifty and fifty five thousand dollars on 0:04:05.960 --> 0:04:11.360 an annualized basis on unemployment, which is obviously significantly more 0:04:11.360 --> 0:04:13.880 than one typically sees. And the concern is they'll not 0:04:13.920 --> 0:04:16.120 return to work. What we'll keep an eye on that. 0:04:16.120 --> 0:04:19.279 That benefit, as you know, expires at the end of July. UH. 0:04:19.400 --> 0:04:22.960 Congress set that sunset in anticipation that we wouldn't be 0:04:23.000 --> 0:04:25.719 shutting down our economy at that point. We'd have reopened 0:04:25.760 --> 0:04:27.880 it and we'd want people to be going back to work. 0:04:27.960 --> 0:04:29.960 And Mr Secretary, I remember when we spoke to you 0:04:30.040 --> 0:04:33.280 last you said that you do expect those enhanced unemployment 0:04:33.279 --> 0:04:35.960 benefits to expire in July, and we have heard the 0:04:36.000 --> 0:04:39.960 same from other administration officials. What could make you change 0:04:40.080 --> 0:04:43.280 your view? In other words, what data could come in 0:04:43.400 --> 0:04:46.240 weaker than expected that would make you think, you know what, 0:04:46.680 --> 0:04:49.559 even if people are making more than they had previously made. 0:04:49.800 --> 0:04:52.240 It doesn't mean that they necessarily aren't going back to 0:04:52.240 --> 0:04:54.159 work because they don't want to, and at least they 0:04:54.160 --> 0:04:56.280 can continue to pay their rent. Well, I think those 0:04:56.320 --> 0:05:01.440 are a couple of different questions. Will look a variety 0:05:01.440 --> 0:05:04.320 of data coming in, as you know, obviously, on July two, 0:05:04.400 --> 0:05:07.080 we'll put Art put out our report for June. I 0:05:07.160 --> 0:05:10.320 think that report will show many more jobs added to 0:05:10.320 --> 0:05:14.360 the economy. But let's look at that report, watch other trends, UH, 0:05:14.400 --> 0:05:17.919 and see what additionals additional measures may be needed. I 0:05:18.000 --> 0:05:21.120 don't think that, uh, it's going to be continuing that 0:05:21.160 --> 0:05:25.599 six benefit, which again was a very important, valuable benefit 0:05:25.640 --> 0:05:28.800 for American workers while we were closing our economy, but 0:05:29.240 --> 0:05:32.920 it was a blunt instrument UH that was adopted UH 0:05:33.000 --> 0:05:36.240 in March as things were closing so quickly in light 0:05:36.279 --> 0:05:38.599 of some real limitations that the states had in their 0:05:39.000 --> 0:05:42.360 unemployment insurance systems. I think we've learned a lot since then, 0:05:42.800 --> 0:05:45.120 and I don't see that as the policy going forward. 0:05:45.800 --> 0:05:48.240 Let's talk about the policy going forward. Repulsed this morning 0:05:48.279 --> 0:05:50.800 of a one trillion dollar infrastructure program. It's the sectary. 0:05:50.839 --> 0:05:54.000 Are you working with the Department of Transportation on that plan. 0:05:54.480 --> 0:05:58.320 Their discussions obviously, as you would want throughout the administration 0:05:58.400 --> 0:06:03.680 about what the right steps are for the economy. And 0:06:03.960 --> 0:06:09.400 we certainly appreciate the UH implications that infrastructure bill could 0:06:09.440 --> 0:06:12.720 have throughout the economy, including for employment, and and those 0:06:12.760 --> 0:06:16.039 are among the things that are being talked about. Infrastructure 0:06:16.080 --> 0:06:18.280 one of them. And once Triti in dollar plan, well, 0:06:18.320 --> 0:06:22.320 there's been different numbers put on it. Um John, I'll 0:06:22.320 --> 0:06:24.400 just leave it at saying that certainly something that's being 0:06:24.440 --> 0:06:27.840 talked about, and there's been some interest and expressed in it. 0:06:28.360 --> 0:06:30.479 But we're watching the economy. You know. One of the 0:06:30.520 --> 0:06:33.280 things that I've said on this show before is one 0:06:33.279 --> 0:06:36.360 of the real marks of the virus is how swiftly 0:06:36.400 --> 0:06:38.680 things have changed. And so I think it's important to 0:06:38.680 --> 0:06:41.760 take the time now to watch the economy, developed watch 0:06:41.800 --> 0:06:44.440 the reopening, see how it progresses, and not rush in 0:06:45.000 --> 0:06:47.000 UH to a play from the playbook that we used 0:06:47.000 --> 0:06:49.039 back in March, for example. But we'd love to carry 0:06:49.040 --> 0:06:51.000 on the conversation, say so, hopefully we can get you 0:06:51.000 --> 0:06:54.120 back on soon. Because this labor market healed quickly in 0:06:54.120 --> 0:06:56.120 the first month. I'm not sure how many economists think 0:06:56.120 --> 0:06:57.760 it will continue very quickly, and we'd love to get 0:06:57.800 --> 0:06:59.919 your input on a continued basis of the day to 0:07:00.080 --> 0:07:02.800 tinues to come through Eugene Scalia that the U S. 0:07:02.800 --> 0:07:07.839 Secretary of Labor on this labor market and the club economy. 0:07:10.160 --> 0:07:12.280 For those of us of a certain vintage, there's a 0:07:12.320 --> 0:07:15.760 way that you read research on the street. At JP Morgan. 0:07:15.920 --> 0:07:18.520 The way was always Friday evening. You would get the 0:07:18.560 --> 0:07:21.760 report from Robert Melman, and it would ruin your Friday 0:07:21.760 --> 0:07:24.440 evening because you would start reading it and you'd have 0:07:24.480 --> 0:07:27.880 to go for fifteen or even twenty pages. The tradition 0:07:27.960 --> 0:07:32.040 continues with Michael Faroli putting together a jewel of a 0:07:32.120 --> 0:07:35.640 report for Global Wall Street every Friday evening. He joins 0:07:35.720 --> 0:07:39.360 us now the chief US economists for JP Morgan. Michael, 0:07:39.440 --> 0:07:43.320 what you're looking at on the consumer are little micro 0:07:43.520 --> 0:07:48.240 details like charge card dynamics. What do you see right 0:07:48.280 --> 0:07:52.640 now from the American consumer? Well, what we see in 0:07:52.720 --> 0:07:56.239 May was a pretty nice rebound from the depths of April. 0:07:56.760 --> 0:07:58.760 We see that in a variety of metrics, as you 0:07:58.880 --> 0:08:02.680 mentioned at Daily uh Dad, on charge cards, a number 0:08:02.720 --> 0:08:05.880 of other indicators which seemed just as I said, a 0:08:05.960 --> 0:08:08.760 very strong rebound in May we'll find out an hour's 0:08:08.760 --> 0:08:11.200 time exactly how strong. And it looks like that was 0:08:11.240 --> 0:08:15.640 continuing into into June. We already have a strong indication 0:08:15.680 --> 0:08:19.160 of this rebound in May auto sales report, which increased 0:08:19.240 --> 0:08:22.960 for two uh So, you know, I think, in line 0:08:22.960 --> 0:08:26.360 with the comments earlier, the early part of this recovery 0:08:26.360 --> 0:08:28.920 are going to be in a way easy because you're 0:08:28.920 --> 0:08:31.280 coming off of such little levels, and I think the 0:08:31.320 --> 0:08:35.240 easy part should be made June, perhaps July. I think 0:08:35.240 --> 0:08:39.280 after that the story gets a little more interesting. But 0:08:39.400 --> 0:08:41.520 it does look like they should be pretty strong for 0:08:41.600 --> 0:08:43.959 real consumer sending. So let's get to like some of Mike. 0:08:44.080 --> 0:08:46.880 Let's just jump out to Walker's late August going into September. 0:08:46.960 --> 0:08:50.120 If we haven't passed another bill down in Washington to 0:08:50.160 --> 0:08:52.840 how this economy to support people who are unemployed in 0:08:52.840 --> 0:08:58.400 a bigger way, to incentifize corporates to rehid workers. What happens, Well, 0:08:58.440 --> 0:09:02.560 it's not necessarily the death metal of recovery, but I 0:09:02.600 --> 0:09:06.760 think further stimulus would be nice insurance against a relapse 0:09:06.840 --> 0:09:09.240 into more economic weakness. We know for a fact that 0:09:09.440 --> 0:09:12.559 given the current policy environment, you're gonna have a pretty 0:09:12.600 --> 0:09:16.440 big decline in real disposable income in the third quarter. 0:09:16.480 --> 0:09:18.920 And the reason is you pack so much of that 0:09:19.000 --> 0:09:22.000 stimulus into the second quarter, whether it's the stimulus, checks, 0:09:22.360 --> 0:09:27.840 expanded unemployment benefits, the paycheck protection program. And so we 0:09:27.960 --> 0:09:31.120 really have to be confident that the economy has its 0:09:31.160 --> 0:09:34.120 own recovery dynamics in place for there to be no 0:09:34.240 --> 0:09:36.600 need for further fiscal stimulus. I don't think it's an 0:09:36.640 --> 0:09:39.800 absolute necessity or a certainty that we need it, but 0:09:39.840 --> 0:09:43.240 it certainly would be nice insurance against against the relap 0:09:43.280 --> 0:09:46.400 into relapse into further weakness as we get into the 0:09:46.440 --> 0:09:49.120 late summer. So my cow past established a signpost to 0:09:49.160 --> 0:09:52.800 determine whether we need the extra package or not. The government, 0:09:52.800 --> 0:09:54.840 the administration down in Washington, are going to take the 0:09:54.840 --> 0:09:56.600 next month to look over the day, to pour over 0:09:56.640 --> 0:09:59.040 the data and draw conclusion as to what we do 0:09:59.120 --> 0:10:03.360 and donate. Is that too early? Uh So? I think 0:10:03.360 --> 0:10:05.760 part of the problem here is, you know, the classic 0:10:05.840 --> 0:10:10.720 fool in the shower, uh challenge with setting either fiscal 0:10:10.800 --> 0:10:14.280 or monetary policy when it actually lack. And so if 0:10:14.320 --> 0:10:17.959 we have to wait until we actually see the data 0:10:18.000 --> 0:10:21.079 in the late summer early fall, it may be too late. 0:10:21.120 --> 0:10:24.720 Given the implementation lacks and so forth. So, uh, you know, 0:10:24.760 --> 0:10:28.000 Congress and the Fed have a tough job here, which 0:10:28.040 --> 0:10:31.720 is to make a judgment on what the economy is 0:10:31.720 --> 0:10:34.959 going to look like. And we fourth quarter and act now, 0:10:35.000 --> 0:10:37.880 and I think if we wait until late July, that 0:10:38.000 --> 0:10:41.160 may may not pass that test of being a little 0:10:41.160 --> 0:10:44.080 forward looking in how we set policy. And this goes 0:10:44.120 --> 0:10:46.559 to where actually exactly where I wanted to go, this 0:10:46.600 --> 0:10:49.840 idea that yes, the economy is recovering, but there still 0:10:49.880 --> 0:10:53.679 are more than twenty million Americans collecting unemployment benefits. There's 0:10:53.679 --> 0:10:57.280 still are companies going bankrupt at an accelerating pace, depending 0:10:57.360 --> 0:11:00.240 on which part of the economy you're looking at. And 0:11:00.280 --> 0:11:03.240 it raises a question of whether the rebound that we're 0:11:03.280 --> 0:11:07.000 seeing is largely confined to markets or whether the economy 0:11:07.120 --> 0:11:09.959 is keeping pace. And I'm wondering, from your perspective, Mike, 0:11:10.000 --> 0:11:12.720 given the fact that you try to square the markets 0:11:12.800 --> 0:11:16.400 with the economy, how much of the federal reserve stimulus, 0:11:16.480 --> 0:11:18.640 of the of the rebound that we're seeing in stock 0:11:18.679 --> 0:11:21.120 and bond prices, how much of that is getting into 0:11:21.160 --> 0:11:24.160 the real economy. So the first thing I would say 0:11:24.200 --> 0:11:26.920 is it does look like the real economy, UH turned 0:11:26.960 --> 0:11:29.200 the corner in May. I think we should see some 0:11:29.240 --> 0:11:32.120 confirmation of that later this morning. We already saw that 0:11:32.200 --> 0:11:36.120 in the jobs datas, and the economy is picking up. UH. Now, 0:11:36.160 --> 0:11:40.120 it is true that when it comes to markets, publicly 0:11:40.160 --> 0:11:43.920 traded companies probably employ only about a third of the workforce. 0:11:43.960 --> 0:11:47.040 So that leaves about two thirds of the workforce that 0:11:47.200 --> 0:11:51.520 is employed by companies that aren't listed on the stock exchanges, 0:11:51.520 --> 0:11:54.360 so that don't have listed bonds at the FETE is buying. 0:11:55.080 --> 0:11:58.520 That doesn't mean, of course, that the that actions don't 0:11:58.520 --> 0:12:00.560 have trickled on effects to the rest of the economy. 0:12:00.880 --> 0:12:03.760 And of course some of those actions will support UH 0:12:03.880 --> 0:12:07.760 non corporate behavior for example, for example, lower mortgage rates. Certainly, 0:12:07.800 --> 0:12:10.880 the housing sector is one area the economy that looks 0:12:10.880 --> 0:12:14.120 like it's holding in reasonably well here, and I think 0:12:14.240 --> 0:12:17.120 a little mortgage rates have to have some some role 0:12:17.160 --> 0:12:20.520 in that. So it's true that you know, Look, I 0:12:20.520 --> 0:12:23.600 think what you're gonna hear from Powell later this morning 0:12:23.720 --> 0:12:28.880 is that the Fed's actions are designed entirely to help Americans, 0:12:28.920 --> 0:12:32.800 American households. And you know that said, there are only 0:12:32.840 --> 0:12:36.240 limited tools that the FED has to to support the comedy, Michael. 0:12:36.360 --> 0:12:38.840 I know that Bruce Casman has a bottle and there's 0:12:38.840 --> 0:12:41.120 a genie in it on his desk, but I'm sorry 0:12:41.120 --> 0:12:44.000 the genies out of the bottle. Let's pretend we're at 0:12:44.040 --> 0:12:47.840 the Booth School seminar in Manhattan. Must attend, folks for 0:12:47.920 --> 0:12:50.760 anyone in economics, and we have to look at the 0:12:50.840 --> 0:12:56.960 central bank history of buying stuff. They can't stop, can they? 0:12:57.040 --> 0:13:00.959 Once they start? It's really really hard to say no 0:13:01.480 --> 0:13:04.800 to buying the next marginal bond or in some banks history, 0:13:05.080 --> 0:13:08.560 to buy the next marginal share of Apple computer. Do 0:13:08.600 --> 0:13:13.280 you have any confidence that this FED can behave well? 0:13:13.760 --> 0:13:15.960 So to think? Two points I would make at least 0:13:16.000 --> 0:13:18.040 one is that the FED has stopped in the past. 0:13:18.840 --> 0:13:21.400 After QUE three, we had to took a taper tantrum 0:13:21.400 --> 0:13:23.839 for them to stop, but they were able to h 0:13:24.320 --> 0:13:28.000 pull that off. Uh. Secondly, and maybe something that the 0:13:28.000 --> 0:13:31.400 markets aren't fully appreciating here is that the two corporate 0:13:31.400 --> 0:13:35.079 credit facilities which have received so much attention over the 0:13:35.120 --> 0:13:38.040 past twenty four hours, those are set to expire on 0:13:38.120 --> 0:13:42.040 September three. And so the FED, I think deliberately here 0:13:42.160 --> 0:13:47.360 when they implemented these programs in March set expiration dates 0:13:47.400 --> 0:13:50.240 because they didn't want them to be lingering on now. 0:13:50.280 --> 0:13:52.440 Of course they can extend to those expiration dates, but 0:13:52.440 --> 0:13:54.760 it will take a judgment of the committee that economy 0:13:54.840 --> 0:13:57.079 is under performing. So I do think the Fed made 0:13:57.120 --> 0:14:02.720 a reasonable program design choice here whereby UH these should 0:14:02.720 --> 0:14:06.960 be self expiring provided the economy is in a decent 0:14:06.960 --> 0:14:09.199 position by the end of the third quarter. Mike, what 0:14:09.240 --> 0:14:11.000 would you ask J Powell today if you were on 0:14:11.040 --> 0:14:13.400 the Senate Banking Committee? I think one thing I would 0:14:13.400 --> 0:14:15.959 ask him is why so there's been some indication that 0:14:16.320 --> 0:14:18.640 that is the next big step is going to come 0:14:18.679 --> 0:14:20.920 in September? I would I would ask him why wait 0:14:20.960 --> 0:14:23.800 until September? Why not act last week? Or why not 0:14:23.920 --> 0:14:27.680 act in late July. Yes, we don't know the shape 0:14:27.680 --> 0:14:30.480 of the recovery in two or three years from now, 0:14:31.000 --> 0:14:33.600 but it's almost certain to be um in a rather 0:14:33.680 --> 0:14:36.119 depressed state. So I would I would ask him why 0:14:36.360 --> 0:14:40.640 why wait this program get ahead? From me? I'm sure 0:14:40.720 --> 0:14:42.760 you'd have more than one question my Ferrati that of 0:14:42.920 --> 0:14:50.400 Jack Mulligan, the chief US economist. If you're ever so lucky. 0:14:50.520 --> 0:14:54.480 In science, you can read Leninger's bio chemistry and say, well, 0:14:54.520 --> 0:14:57.040 I sort of wandered by it. Then there are others 0:14:57.080 --> 0:15:00.920 that master it. Peter Hoe tested that l and then 0:15:00.920 --> 0:15:05.560 in biochemistry at Rockefeller University and then onto wild Cornell. 0:15:05.760 --> 0:15:10.880 He is, without question with Mr Fauci, our leader on vaccines. 0:15:10.960 --> 0:15:15.640 Peter Hotez joins us this morning from Baylor at University. Peter, 0:15:15.840 --> 0:15:19.640 I take great issue with the media silliness over the 0:15:19.720 --> 0:15:24.640 second wave. It's a three variable differential equation. Are we 0:15:24.760 --> 0:15:27.640 looking at a second wave or is it just the 0:15:27.760 --> 0:15:33.120 normative expansion of a virus in pandemic? Well, I can 0:15:33.240 --> 0:15:36.080 uh really articulate. First of all, thanks for having me, 0:15:36.120 --> 0:15:39.120 and I think you're the only major news anchor that 0:15:39.160 --> 0:15:43.920 knows what managers biochemistry is though. That's really cool. Uh. 0:15:43.960 --> 0:15:48.280 With regards to uh, what's happening here in Texas, what 0:15:48.360 --> 0:15:51.400 happened was we did a good job. Initially. We we 0:15:51.440 --> 0:15:54.120 saw what was happening in New York. We went on 0:15:55.040 --> 0:15:59.720 lockdown and in the middle of March and we did everything. 0:16:00.160 --> 0:16:03.080 We never got that surge like you saw in New York. 0:16:03.920 --> 0:16:06.280 But then we couldn't keep it together. We couldn't hold 0:16:06.280 --> 0:16:08.760 it together. The modelers told us we had to keep 0:16:08.800 --> 0:16:11.600 this in place throughout the month of May. We opened 0:16:11.600 --> 0:16:14.800 it up towards the end of April, and now we're 0:16:14.840 --> 0:16:16.960 seeing a massive resurgence. So I don't know if so 0:16:17.040 --> 0:16:21.040 much as the second wave meaning reintroduction, is just that 0:16:21.120 --> 0:16:24.240 we never we never brought it down to zero to 0:16:24.360 --> 0:16:27.360 containment mode like we could have. And now the numbers 0:16:27.360 --> 0:16:31.359 are flaming precipitously in Houston and Dallas and in Arizona. 0:16:31.400 --> 0:16:36.680 Now also, you were scrambling to acquire to invent to 0:16:36.720 --> 0:16:40.240 give us a vaccine. Give us an update. Yeah, so 0:16:40.280 --> 0:16:45.400 we have. We're we've developed a low cost recombinant protein 0:16:45.480 --> 0:16:49.480 vaccine made any East. The same technology used to make 0:16:49.520 --> 0:16:52.640 the recombinant hepatitis the vaccine used all over the world, 0:16:52.680 --> 0:16:55.760 and it's made locally in India and Brazil and Indonesia 0:16:55.800 --> 0:16:59.240 and Bangladesh, and we decided we're going to use that 0:16:59.360 --> 0:17:03.920 technology to make a low cost, affordable, highly accessible COVID 0:17:04.040 --> 0:17:07.520 nineteen vaccine. And it's going great guns. It looks really promising, 0:17:07.560 --> 0:17:10.720 and we've been engaging the Food and Drug Administration to 0:17:10.760 --> 0:17:13.400 move that along and we think this could be one 0:17:13.400 --> 0:17:16.919 of the first global health vaccines used. All of the 0:17:17.359 --> 0:17:21.199 US used everywhere and made locally. So the problem is 0:17:21.200 --> 0:17:23.920 we're not a farmer company, so we don't get all 0:17:23.960 --> 0:17:27.040 the stuff that you hear about what the operation works 0:17:27.119 --> 0:17:30.720 feed companies. In terms of big time government assistance, we're 0:17:30.720 --> 0:17:33.600 getting some from the n i H. But you know 0:17:33.600 --> 0:17:36.560 we're raising money privately too, and hopefully we're gonna enough 0:17:36.640 --> 0:17:38.879 the big partnership with India. We hope in the in 0:17:38.880 --> 0:17:41.640 the coming days of the week dr Hotels. We saw 0:17:41.800 --> 0:17:45.239 from Moderna's CEO that they're expecting that a vaccine, if 0:17:45.280 --> 0:17:49.160 all things go well, could be ready by Thanksgiving. I'm wondering, 0:17:49.240 --> 0:17:52.400 for your perspective on the front lines, how close are we. 0:17:52.480 --> 0:17:55.119 I mean, what's the time frame not only forgetting a 0:17:55.200 --> 0:17:58.320 vaccine that is effective and has proven safe, but also 0:17:58.400 --> 0:18:02.000 can be widely distributed as your talking about. Yeah, certainly 0:18:02.040 --> 0:18:04.919 not by Thanksgiving. What's going to happen is you're going 0:18:05.000 --> 0:18:07.679 to UH and you we're going to see a number 0:18:07.720 --> 0:18:11.560 of the warp speed vaccines enter into UH Phase three 0:18:11.640 --> 0:18:16.240 clinical trials beginning in July UH and then it's probably 0:18:16.280 --> 0:18:18.320 gonna take about a year to collect all of the 0:18:18.440 --> 0:18:21.480 data that we need UH to show that the vaccines 0:18:21.520 --> 0:18:24.760 actually work and that the vaccines are actually safe. And 0:18:24.840 --> 0:18:27.080 that's the part you can't rush. I mean, oftentimes this 0:18:27.160 --> 0:18:29.440 is sort of in the biotechs do this, and even 0:18:29.640 --> 0:18:32.399 the White House does this. They they frame this as 0:18:32.440 --> 0:18:35.320 a manufacturing issue. That like, they talk about it in 0:18:35.359 --> 0:18:38.320 the same context that we'll talk about making ventilators or 0:18:38.400 --> 0:18:42.119 diagnostics kits. And it's not the same. Yes, there are 0:18:42.160 --> 0:18:45.280 manufacturing issues, but the big hurdle is you need to 0:18:45.359 --> 0:18:47.320 give it the time to show that it works and 0:18:47.359 --> 0:18:50.960 it's safe. Uh. And that means doing a thirty person 0:18:51.160 --> 0:18:53.800 study and I don't I don't see a path by 0:18:53.800 --> 0:18:57.439 which you can collect enough safety and data showing that 0:18:57.480 --> 0:18:59.800 it works before the end of the year. So I 0:19:00.200 --> 0:19:02.400 more likely in the in the middle of next year 0:19:02.400 --> 0:19:04.520 at the earliest. And even then that would be a 0:19:04.560 --> 0:19:07.080 world dance speed record. But I don't know where these 0:19:07.680 --> 0:19:09.080 you know, some of the c e O s and 0:19:09.160 --> 0:19:11.359 some of the some of the people coming out of 0:19:11.359 --> 0:19:12.919 the White House day we're going to have it by 0:19:12.960 --> 0:19:15.280 the fall. I just don't see how that can happen. 0:19:15.720 --> 0:19:18.400 Doctor appreciate time this morning. As always, I'm looking forward 0:19:18.400 --> 0:19:19.920 to getting you back on the program that was Dr 0:19:19.920 --> 0:19:26.760 Peter hot As that of the Baylor College of Medicine, 0:19:27.600 --> 0:19:30.439 Chairman on the Hill for two days. Used to be 0:19:30.480 --> 0:19:32.760 called a Humphrey Hawkins. You can't remember what they call 0:19:32.800 --> 0:19:35.480 it right now. Always interesting to get the Q and 0:19:35.520 --> 0:19:39.000 I always different from the Senate versus the rabble in 0:19:39.080 --> 0:19:41.399 the House. It'll be interesting to see you. Wonder if 0:19:41.400 --> 0:19:45.639 they'll address negative interest rates somehow. I don't think it 0:19:45.680 --> 0:19:48.160 will come up. We can do that with our guests. 0:19:48.240 --> 0:19:51.560 Kenneth Rogoff joins us, of course, at Harvard University. He 0:19:51.720 --> 0:19:55.280 has been a wonderful supporter of Bloomberg on the Economy 0:19:55.280 --> 0:19:58.359 and Bloomberg Surveillance over the years, and we're thrilled that 0:19:58.440 --> 0:20:00.840 he could join us right now. Can I have to 0:20:00.880 --> 0:20:04.960 ask you about your courageous book, The Curse of Cash, Folks. 0:20:05.000 --> 0:20:06.960 It was my book of the Year a few years ago. 0:20:07.520 --> 0:20:12.280 Ever important now can give us an update on the 0:20:12.400 --> 0:20:17.480 efficacy of negative interest rates in the United Kingdom and 0:20:17.520 --> 0:20:22.000 in the United States of America, given how their financial 0:20:22.119 --> 0:20:26.480 systems are so different from Europe, would negative interest rates 0:20:26.560 --> 0:20:32.280 help well? Right now? There's so much going on. I 0:20:32.720 --> 0:20:34.600 don't think it would be a good idea to do 0:20:34.720 --> 0:20:39.640 something so experimental this minute, But if in two years 0:20:39.720 --> 0:20:45.160 after the government is you know, gone through many more 0:20:45.240 --> 0:20:50.520 stimulus spending measures, after the fellow reserve has you know, 0:20:50.680 --> 0:20:54.520 basically tried to guarantee ever been a credit provider of 0:20:54.680 --> 0:20:57.600 last resort in the economy for a long time, if 0:20:57.600 --> 0:21:01.200 things still aren't growing, if the interest rates are very low, 0:21:01.720 --> 0:21:05.560 I absolutely think that this should be on the table. 0:21:05.680 --> 0:21:08.159 It's just silly to take it off the table. And 0:21:08.480 --> 0:21:10.119 yes it would work it but it has to be 0:21:10.160 --> 0:21:13.000 done the right way. I don't think even Europe has 0:21:13.000 --> 0:21:14.879 done it the right way. You have to deal with 0:21:14.960 --> 0:21:18.920 cash hoarding, uh so that you can make interest rates 0:21:19.080 --> 0:21:22.840 very negative. But let it be noted that the studies 0:21:22.920 --> 0:21:26.239 coming out of the European Central Bank have by and 0:21:26.359 --> 0:21:30.560 large been finding that negative interest rates have worked fairly well, 0:21:31.000 --> 0:21:35.560 haven't caused the problems people said. There has been passed 0:21:35.600 --> 0:21:39.240 through in the banking sector from you know, certainly the 0:21:39.280 --> 0:21:43.080 healthy banks, and they find the effects on investment are 0:21:43.200 --> 0:21:46.440 very similar to normal monetary policy. And I think that's 0:21:46.480 --> 0:21:48.679 what we could expect in the United States and the 0:21:48.720 --> 0:21:55.160 United Kingdom. Are we nationalizing our bond market? I mean 0:21:55.240 --> 0:21:57.760 that's the question that Chairman Paul is going to get 0:21:58.000 --> 0:22:01.520 from the Senate today, all all of these different programs, 0:22:01.520 --> 0:22:05.120 including announcement yesterday that they will in some way and 0:22:05.200 --> 0:22:08.480 let's say it's efficacious, they will buy corporate bonds troubled 0:22:08.480 --> 0:22:11.760 and less troubled. Keen, is it anything but a mass 0:22:12.040 --> 0:22:17.800 nationalization of our debt? Well, it depends on what happens next. 0:22:18.400 --> 0:22:22.640 So if it turns out that things get better pretty quickly, 0:22:23.359 --> 0:22:27.080 this clearly will you look like a pretty low cost 0:22:27.200 --> 0:22:30.480 move that had a big benefit. But you know, it's funny. 0:22:30.760 --> 0:22:35.440 Usually in crises before this, uh, they would say, well, 0:22:36.320 --> 0:22:39.400 here's a company that we think is solvent, but there's 0:22:39.440 --> 0:22:42.760 a liquidity problem. So we're going to provide liquidity and 0:22:42.800 --> 0:22:45.320 make sure that they can still get financing and not 0:22:45.520 --> 0:22:48.960 needlessly go bankrupt. That's, you know, usually the main idea. 0:22:49.440 --> 0:22:52.560 The thing is, if the virus goes on, there are 0:22:52.560 --> 0:22:57.399 a lot of companies that will need to change radically. 0:22:58.000 --> 0:23:01.280