WEBVTT - First U.S. Virus Death Came Weeks Before Previously Thought 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.880 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.759 not to mention our journalists and analysts more than a 0:00:16.800 --> 0:00:19.520 hundred and twenty countries. You can download Bloomberg Business Week 0:00:19.560 --> 0:00:22.439 on iTunes, SoundCloud, or Bloomberg dot com. You can also 0:00:22.480 --> 0:00:24.919 listen to our radio show weekdays at two pm Eastern 0:00:25.000 --> 0:00:27.880 only on Bloomberg Radio. I gotta say though, one of 0:00:27.920 --> 0:00:29.960 the stories, uh, and one of the main stories on 0:00:30.000 --> 0:00:33.000 the virus today, that's a little maybe disturbing, um, and 0:00:33.040 --> 0:00:34.720 maybe we just need to kind of understand it is 0:00:34.720 --> 0:00:37.560 about how the first US virus case came weeks before 0:00:37.600 --> 0:00:42.320 previously thought. Uh. Here with our daily coronavirus update. Drew Armstrong. 0:00:42.479 --> 0:00:44.720 He is team leader for US Healthcare Bloomberg News. As 0:00:44.720 --> 0:00:47.680 we've said repeatedly, you have got to check out all 0:00:47.720 --> 0:00:50.200 of the coverage that has been led by Drew about 0:00:50.240 --> 0:00:52.720 the virus really keeping us informed. Drew joining us once 0:00:52.760 --> 0:00:54.800 again on the phone in New York, Drew. Good to 0:00:54.840 --> 0:00:58.480 have you back with us. This story about the first 0:00:58.480 --> 0:01:00.600 case coming weeks before previously out. My daughter and I 0:01:00.600 --> 0:01:03.520 were actually having conversation about this, like, you know, people said, oh, 0:01:03.560 --> 0:01:05.000 I think I had the virus. Well, why didn't we 0:01:05.040 --> 0:01:08.039 see more cases in earlier on help us understand this? 0:01:08.080 --> 0:01:11.360 And what's the significance of this? Well, I think you 0:01:11.400 --> 0:01:15.680 know what. What you're actually seeing here is the final 0:01:15.720 --> 0:01:18.360 effect of what we've known for a long time was 0:01:18.400 --> 0:01:22.600 a really really lackluster testing situation in the United States. 0:01:23.040 --> 0:01:26.440 People complain about the testing UM not being sufficient now, 0:01:26.480 --> 0:01:28.960 but if you look back to February, when we know 0:01:29.160 --> 0:01:33.040 that we were seeing the very first trickle of identified cases, 0:01:33.360 --> 0:01:35.559 the only testing that was happening was actually being done 0:01:35.680 --> 0:01:39.360 by the CDC, State and local public health labs did 0:01:39.360 --> 0:01:41.520 not have their own tests. When they finally got those 0:01:41.560 --> 0:01:44.600 tests sent by the CDC, they didn't work. It took 0:01:44.680 --> 0:01:49.320 essentially a month for real, significant, more widespread testing to happen. 0:01:49.440 --> 0:01:52.280 And so now all of a sudden, we're looking back 0:01:52.360 --> 0:01:54.920 and we're finding more and more people who did have 0:01:55.440 --> 0:02:00.240 these infections UM and additionally finding some of these first 0:02:00.240 --> 0:02:02.600 early deaths. You know, we were also at that time 0:02:02.640 --> 0:02:06.240 in the middle of a reasonably active flue season, which 0:02:06.280 --> 0:02:10.200 may have masked some of the UM cases that may 0:02:10.200 --> 0:02:13.600 have been circulating early. So it's it's a hint at 0:02:13.600 --> 0:02:16.639 how much we don't know UM and and that amount 0:02:16.680 --> 0:02:20.000 is definitely quite significant, I think, and Drew, you know, 0:02:20.560 --> 0:02:22.440 we were talking about it in my house this morning too, 0:02:22.440 --> 0:02:24.560 because it feels like one of these things that really 0:02:24.639 --> 0:02:29.640 could dramatically change the narrative and the reality going forward. 0:02:30.280 --> 0:02:35.640 Is they're a positive read on this that basically says 0:02:36.200 --> 0:02:40.160 this was circulating a lot, This was in the population. 0:02:40.639 --> 0:02:43.079 We had a lot of people who had either mild 0:02:43.240 --> 0:02:45.880 or medium systems and as you say, may have thought 0:02:45.919 --> 0:02:48.799 they had the flu, but really they had this that 0:02:48.880 --> 0:02:57.080 will maybe portend a broader immunity or a broader ability 0:02:57.120 --> 0:02:58.919 to sort of deal with this in the short and 0:02:59.000 --> 0:03:02.560 mid term. I wish that was the case. But if 0:03:02.560 --> 0:03:05.160 you look at some of the research that's been been 0:03:05.200 --> 0:03:08.480 done out of that area, and you know, all prefaces 0:03:08.680 --> 0:03:10.440 by saying some of this, some of these studies I'm 0:03:10.440 --> 0:03:12.799 about to discuss are pretty controversial. There's been some criticism 0:03:12.880 --> 0:03:15.720 other methods, but you know, there have been findings that 0:03:16.200 --> 0:03:18.960 as many as you know, four percent of people in 0:03:19.080 --> 0:03:22.120 Santa Clara County, um in in l A H may 0:03:22.160 --> 0:03:25.120 have been UM effect by this, And there's some variances 0:03:25.160 --> 0:03:28.000 in those estimates, but they're around that, around that mark, 0:03:28.360 --> 0:03:30.560 and you know that tells you that, yes, this virus 0:03:30.639 --> 0:03:34.480 was here, it was probably circulating to some degree. If 0:03:34.520 --> 0:03:37.560 we believe that those studies are accurate. It doesn't really 0:03:37.600 --> 0:03:42.360 provide any reassurances on you know, things like herd immunity, 0:03:42.440 --> 0:03:47.120 which you need, you know, fifty six of the population 0:03:47.120 --> 0:03:51.280 to have been infected and has a level of immunity. 0:03:51.520 --> 0:03:53.800 In order to reach that. There is a tremendous amount 0:03:53.800 --> 0:03:56.440 we still don't know about that. UM. You have to 0:03:56.480 --> 0:03:58.920 have quite a bit of penetration of the virus or 0:03:59.000 --> 0:04:02.800 have a vaccine that essentially replicates that UM that process. 0:04:03.000 --> 0:04:05.600 And I don't think that there's any thinking, at least 0:04:05.680 --> 0:04:08.800 in in the places where we know about that level 0:04:08.840 --> 0:04:11.960 of penetrance UM, that we're well on our way to 0:04:12.600 --> 0:04:16.520 any kind of immunity, of widespread immunity. Here my optimism. 0:04:17.240 --> 0:04:19.240 Well see, and one of the conversations we were having 0:04:19.360 --> 0:04:22.160 is that, Okay, I mean I thought I maybe had 0:04:22.200 --> 0:04:24.359 it because some of the symptoms but maybe not as severe. 0:04:24.440 --> 0:04:28.080 And this was back in I don't know, was that February, right, 0:04:28.440 --> 0:04:30.520 So I've had families say that they thought it about 0:04:30.520 --> 0:04:33.120 they had it around the holidays. If if, if it's 0:04:33.160 --> 0:04:35.560 the case that maybe people did have sub form of it, 0:04:35.640 --> 0:04:40.120 but not the extreme or severe case. You know, should 0:04:40.120 --> 0:04:42.400 we have expected, Drew that the numbers would have ramped 0:04:42.480 --> 0:04:45.400 up much more quickly, or does it say something about 0:04:45.680 --> 0:04:49.000 that we do have a greater immunity than we all realized, 0:04:49.040 --> 0:04:51.240 maybe to this virus. I'm not quite sure what to 0:04:51.320 --> 0:04:54.560 make of it. Well. I think what's really important to 0:04:54.600 --> 0:04:58.960 remember is that people are so um to appear to 0:04:59.040 --> 0:05:00.920 the cover just find from the virus. You know, our 0:05:00.920 --> 0:05:04.000 immune system is very good overall reacting this. There are 0:05:04.040 --> 0:05:07.400 a large number of people who are asymptomatic to it. 0:05:07.640 --> 0:05:10.520 So it doesn't have you know, anything necessarily to do 0:05:11.279 --> 0:05:14.279 as far as we know, with you know, one strain 0:05:14.560 --> 0:05:17.200 or another being milder or weaker. It's just that some 0:05:17.279 --> 0:05:19.720 people get sicker than other folks. And who gets sick 0:05:19.839 --> 0:05:23.359 and why is one of the big unanswered questions out there. 0:05:23.400 --> 0:05:25.920 I think we have some explanation of that in terms 0:05:25.960 --> 0:05:28.600 of pre existing conditions and age and all that sort 0:05:28.640 --> 0:05:31.200 of thing. Um, but you know, we still don't really 0:05:31.240 --> 0:05:34.039 have as comprehensive an answer to that as as we 0:05:34.080 --> 0:05:37.400 would like. Um. You know, so we know that that 0:05:38.040 --> 0:05:39.440 has been happening. I think you also look at the 0:05:39.440 --> 0:05:44.039 differences between you know, a place like southern California and 0:05:44.160 --> 0:05:46.919 like New York City and you guys live here. You 0:05:46.960 --> 0:05:48.360 know what it was like before we were all staying 0:05:48.400 --> 0:05:50.520 at home. You know, everyone's packed in on subways. There's 0:05:50.560 --> 0:05:53.600 just a huge amount of population density, shared surfaces, all 0:05:53.640 --> 0:05:55.400 those things. Last time and I was in l A. 0:05:55.720 --> 0:05:58.000 I spent the entire time driving around in my rental car, 0:05:58.800 --> 0:06:01.360 not a tremendous amount of you you just don't if 0:06:01.360 --> 0:06:04.200 you think about this, virus is something that transmits by 0:06:04.200 --> 0:06:06.800 people being really close to each other and touching the 0:06:06.880 --> 0:06:11.040 same stuff. The way your city is built and organized 0:06:11.120 --> 0:06:14.960 and how people interact really really matters, uh to that. 0:06:15.040 --> 0:06:17.559 And I think that that's very very important as people 0:06:17.960 --> 0:06:21.159 try to interpret why are outbreaks in some places worse 0:06:21.240 --> 0:06:23.440 than others. You know, if you think about how people 0:06:23.520 --> 0:06:28.159 live in a you know, widely dispersed suburb in a 0:06:28.880 --> 0:06:30.840 you know, in the southern part of the country, where 0:06:31.000 --> 0:06:35.040 I have, you know, relatives, You're you're already practicing social 0:06:35.040 --> 0:06:37.400 distancing just in the course of you normal life compared 0:06:37.839 --> 0:06:41.000 we do every day in New York City. Yeah. Absolutely, 0:06:41.040 --> 0:06:43.400 it's a great point and we certainly are going to 0:06:43.440 --> 0:06:45.880 be licking in that whe The responses are so tough 0:06:45.920 --> 0:06:48.920 to write in terms of every city, every state, or 0:06:49.200 --> 0:06:51.240 you know, can be very different in terms of what 0:06:51.279 --> 0:06:53.880 they're dealing with and how do you respond um to Armstrong. 0:06:53.960 --> 0:06:56.240 Thank you so much, and I do highly recommend our 0:06:56.240 --> 0:06:58.320 listeners check out all of his coverage and his team's 0:06:58.360 --> 0:07:00.960 coverage at Bloomberg dot com. His team leader for US 0:07:00.960 --> 0:07:03.120 health caret Bloomberg News on the phone in the year 0:07:03.360 --> 0:07:06.920 This is Bloomberg Business Week with Carol Masser and Jason 0:07:07.040 --> 0:07:11.880 Kelly on Bloomberg Radio. All lies on Delta this morning, obviously, 0:07:12.160 --> 0:07:15.119 and some pretty staggering numbers. Is one of those things, Carol, 0:07:15.160 --> 0:07:16.960 that you think, Wow, this is gonna be pretty bad, 0:07:17.120 --> 0:07:20.400 and then it is and you just think, this is 0:07:20.440 --> 0:07:24.160 a tough, tough business, especially for a company that by 0:07:24.320 --> 0:07:26.920 all accounts, had been doing very well over the past 0:07:26.960 --> 0:07:29.360 few years. We had spent some time held with that 0:07:29.520 --> 0:07:32.400 bastion the CEO there just last year, and he was 0:07:32.440 --> 0:07:35.120 telling obviously a very different story. George Ferguson joins a 0:07:35.200 --> 0:07:38.640 senior aerospace, defense and Airlines analyst for Bloomberg Intelligence on 0:07:38.720 --> 0:07:42.640 the phone from Princeton. All right, so, George, amid all 0:07:42.680 --> 0:07:45.320 of the numbers, what's the most important thing we need 0:07:45.360 --> 0:07:51.280 to take away from the numbers from Delta and the commentary? Oh, well, 0:07:51.280 --> 0:07:53.320 good afternoon. I think the most important number we have 0:07:53.320 --> 0:07:58.000 to take away is that they're going to push hard 0:07:58.000 --> 0:08:01.600 to get expenses down and only burn fifty million dollars 0:08:01.600 --> 0:08:04.760 a day by the beginning of May, and we think 0:08:04.800 --> 0:08:08.520 they'll consume four and a half to five and a 0:08:08.560 --> 0:08:12.840 half billion dollars during the second quarter. And so right now, 0:08:13.480 --> 0:08:18.440 really this business is all about trying to survive through 0:08:18.600 --> 0:08:22.520 the coronavirus effects here to some other side that we 0:08:22.760 --> 0:08:24.440 we don't know when you know, we've got to get 0:08:24.440 --> 0:08:26.240 people comfortable with flying again. We don't know if we 0:08:26.320 --> 0:08:29.080 need we need a vaccine, we need to we don't 0:08:29.080 --> 0:08:30.920 know if we need to put dividers between seats. But 0:08:30.960 --> 0:08:33.440 we've got to survive in order to get to the 0:08:33.440 --> 0:08:35.640 point where we can put people on airplanes and much 0:08:35.760 --> 0:08:38.680 larger size so they can make money. They say demand 0:08:38.800 --> 0:08:41.160 is bouncing along the bottom. They want to finish the 0:08:41.200 --> 0:08:43.800 end of two queue with ten billion dollars, which would 0:08:43.880 --> 0:08:45.679 let them burn that kind of cash for two more 0:08:45.760 --> 0:08:47.200 quarters and make it to the end of the year. 0:08:47.520 --> 0:08:51.000 So they've applied delta specifically for four point six billion 0:08:51.040 --> 0:08:53.560 dollar loan from the US government rescue package. But they 0:08:53.640 --> 0:08:55.800 might not accept it. I guess what's being offered because 0:08:55.800 --> 0:08:57.960 the Treasury would get some equity or at least some 0:08:58.000 --> 0:09:02.320 warrants in exchange for a loan. Should we just do that? Yeah, 0:09:02.360 --> 0:09:05.520 I think they're all using that as an option here, right. 0:09:05.559 --> 0:09:09.520 And so one of the one of the restrictions to that, 0:09:09.840 --> 0:09:13.160 to the loan, not the grant package, but the loan package, 0:09:13.760 --> 0:09:16.400 is the loan can go out five years, but for 0:09:16.840 --> 0:09:19.920 the term of the loan plus an additional year, the 0:09:20.000 --> 0:09:23.840 company cannot buy back shares, pay a dividend, and it 0:09:23.920 --> 0:09:28.880 lives with um with caps on pay. And so I 0:09:29.600 --> 0:09:32.000 think what they're all doing is they you know, they're 0:09:33.120 --> 0:09:34.840 I think it's a great thing. I guess they're looking 0:09:34.880 --> 0:09:38.080 past coronavirus and they're thinking, what if we get into 0:09:38.080 --> 0:09:41.120 a world here where things resumed somewhat close to normal. 0:09:41.160 --> 0:09:43.720 We right size the business, we're making money. We can't 0:09:43.720 --> 0:09:47.920 buy back shares, we can't pay a dividend. That might, 0:09:48.320 --> 0:09:50.400 you know, unduly restrict us. We might not be able 0:09:50.480 --> 0:09:53.720 to attract investors like another airline that could get through there. 0:09:54.440 --> 0:09:56.720 Uh and now and Delta said, look, they've got uh. 0:09:56.800 --> 0:09:58.560 I forget what timetable they gave, but I think they've 0:09:58.559 --> 0:10:00.960 got to the end of the quarter or something like 0:10:01.000 --> 0:10:04.480 that in order to actually take the loan. Um. Look, 0:10:04.520 --> 0:10:07.120 I think if things look like we think they're going 0:10:07.160 --> 0:10:09.319 to look like at the end of two Q meaning 0:10:09.880 --> 0:10:12.080 not much better, I think they will just go ahead 0:10:12.120 --> 0:10:16.360 and take those loans. And hearing what they said, George, 0:10:16.400 --> 0:10:20.280 you know from a consumer perspective, obviously an investor perspective, 0:10:20.320 --> 0:10:22.480 but just from the perspective of people like get on 0:10:22.559 --> 0:10:25.640 planes for business trips and family trips and things like that. 0:10:26.280 --> 0:10:30.360 What do you hear across the industry about how soon 0:10:31.280 --> 0:10:36.000 this industry looks at least somewhat healthy. Again, obviously that 0:10:36.240 --> 0:10:39.640 it's unknowable largely, but what are you extrapolating from what 0:10:39.679 --> 0:10:41.360 you hear from these guys? And don't you love how 0:10:41.360 --> 0:10:43.080 he's not using the word normal, because I don't think 0:10:43.080 --> 0:10:48.199 anybody expects there's normal. Yeah, I agreed. Um, So you know, 0:10:48.240 --> 0:10:50.480 I think we're all all the analyst community. I think 0:10:50.480 --> 0:10:53.760 everybody that surrounds the airlines and I'm sure inside the 0:10:53.800 --> 0:10:55.640 airlines are just not talking to us about it as 0:10:55.720 --> 0:10:58.280 much as are sort of you know, war gaming that 0:10:58.280 --> 0:11:00.560 out in our heads, like how do we get people 0:11:00.640 --> 0:11:04.480 comfortable getting back on an airplane? And even at Baster 0:11:04.559 --> 0:11:06.719 you mentioned today about a vaccine, which you know is 0:11:07.120 --> 0:11:10.080 potentially a long way off right at sometime into in 0:11:10.120 --> 0:11:12.439 the next year, and I think everybody's think about taking 0:11:12.440 --> 0:11:16.600 out seats or you know, blocking out seats or um 0:11:16.840 --> 0:11:19.760 using masks or things like that. But look, I think 0:11:20.640 --> 0:11:25.440 it's just hard to imagine demand coming back strongly before 0:11:25.480 --> 0:11:27.840 you can really get people comfortable getting in an airplane. 0:11:27.880 --> 0:11:30.360 And I think it's a vaccine because I mean, the 0:11:30.440 --> 0:11:32.640 last time I checked, the middle seat wasn't six ft 0:11:32.640 --> 0:11:34.560 wide when I you know, last time I was on 0:11:34.559 --> 0:11:37.959 an airplane. It's been a while now, but I think 0:11:37.960 --> 0:11:40.320 it's that's that's the million dollar. And you know, even 0:11:40.320 --> 0:11:42.800 if you take the middle seats out, um, you know, 0:11:43.080 --> 0:11:45.360 like a typical narrow body airplane. You've got sort of 0:11:45.400 --> 0:11:48.880 six rows three and three on each side. You know, 0:11:49.040 --> 0:11:51.960 the airlines just line at sixty six full. They typically 0:11:51.960 --> 0:11:54.880 can't make money at that level. So do you do 0:11:54.920 --> 0:11:56.760 you envision just twenty seconds that we may be a 0:11:56.800 --> 0:11:59.320 wearing like some kind of helmet or something, you know, 0:11:59.400 --> 0:12:03.280 to get on a plane. I mean, I think people 0:12:03.320 --> 0:12:06.120 are wargaming everything, and that's something that's ticking about. Maybe 0:12:06.120 --> 0:12:08.440 not an elmet, maybe the face mask that's already on 0:12:08.480 --> 0:12:13.760 the airplane. Yeah. Interesting, that interesting, Wow, amazing. All right, well, 0:12:13.800 --> 0:12:16.160 we appreciate your context as always, especially in such a 0:12:16.160 --> 0:12:19.960 busy day. George Ferguson, senior aerospace, defense and airlines analysts 0:12:19.960 --> 0:12:23.360 for Bloomberg Intelligence, joining us on the phone from New Jersey, 0:12:23.800 --> 0:12:26.680 and as he said, just huge, huge, you know, billion 0:12:26.720 --> 0:12:29.600 billion dollar questions that these guys are going to have 0:12:29.720 --> 0:12:32.080 to answer. We're all going to have to answer, right, 0:12:32.080 --> 0:12:34.480 and those international flights, which are the more expensive flights 0:12:34.520 --> 0:12:36.720 where they make money or not happening. Spain's parliament, by 0:12:36.720 --> 0:12:38.800 the way, voting to extend the lockdown through May night. 0:12:38.880 --> 0:12:41.760 That was a headline that just crossed the Bloomberg This 0:12:42.120 --> 0:12:45.640 is Bloomberg Business Week with Carol Masser and Jason Kelly 0:12:46.000 --> 0:12:48.559 on Bloomberg Radio. We've talked a lot about the moves 0:12:48.559 --> 0:12:50.760 in the oil market and the reasons why we've seen 0:12:50.800 --> 0:12:54.280 such dramatic drops. But Bloomberg Business Week Economics editor Peter Corey, 0:12:54.280 --> 0:12:56.360 he writes this week in the magazine that the historic 0:12:56.400 --> 0:12:58.599 crash and oil prices that we saw on Monday to 0:12:58.720 --> 0:13:01.960 below zero, believe it or not, can be explained with 0:13:02.040 --> 0:13:05.640 one wonky word. Charlie Pellett said it. We've got Peter 0:13:05.720 --> 0:13:08.200 joining us on the phone from New Jersey, So Peter, 0:13:08.280 --> 0:13:09.760 good to have you here with us. I feel like 0:13:10.040 --> 0:13:12.040 your story is one of those stories everybody. We've talked 0:13:12.040 --> 0:13:14.000 a lot about the energy markets, but you really explain 0:13:14.080 --> 0:13:18.120 it well why we are in today's current situation. It's 0:13:18.160 --> 0:13:21.640 not like this is something that just happened, uh, seemingly overnight. 0:13:21.679 --> 0:13:23.160 It was kind of long and coming. Tell us a 0:13:23.160 --> 0:13:25.560 little bit about what you wrote about. Well, first, thank 0:13:25.600 --> 0:13:32.400 that Charlie Pellett for that great segue. What a setup. Yes, 0:13:33.320 --> 0:13:36.040 in tosticity is one of those terms that you've learned 0:13:36.320 --> 0:13:41.119 intro econ, which is the idea that for certain products, 0:13:41.720 --> 0:13:46.000 their prices, the demand and supply do not adjust very 0:13:46.080 --> 0:13:48.400 much in response to a change in the price. And 0:13:48.880 --> 0:13:52.199 oil is a perfect example that in the short term, 0:13:52.240 --> 0:13:55.680 so like, look on the demand side, COVID nineteen pandemic, 0:13:56.160 --> 0:13:59.319 the price of gasoline is plunged, But how many people 0:13:59.320 --> 0:14:01.920 are filling up their tanks these days? Practically nobody because 0:14:01.920 --> 0:14:05.280 we're not driving and so we're not The demand for 0:14:05.440 --> 0:14:11.120 gasoline has not responded to the falling prices. Uh. Meanwhile, 0:14:11.160 --> 0:14:14.240 on the supply side, you're not seeing supply falling in 0:14:14.360 --> 0:14:20.720 response to the decline in price. Uh somewhat, yes, Uh. 0:14:20.920 --> 0:14:26.360 You see, you know, across the shale fields, producers cutting back, 0:14:26.480 --> 0:14:32.280 but Saudi Arabian Russia are still producing far more than 0:14:32.320 --> 0:14:35.160 the market will bear. That cuts and production have not 0:14:35.440 --> 0:14:39.480 matched the decline in demand. Now, usually what happens in 0:14:39.480 --> 0:14:42.320 a case like that is that that you just mora 0:14:42.320 --> 0:14:44.840 olil goes into inventory. That's kind of the buffer. What 0:14:44.920 --> 0:14:49.160 was happening now is we've run out of room to store, 0:14:49.320 --> 0:14:52.520 and that's why we're getting these extreme moves. Well, and 0:14:52.600 --> 0:14:54.840 that storage, as you point out in your story, I'm 0:14:54.880 --> 0:14:56.960 glad you brought that up, because that seems to be 0:14:57.560 --> 0:14:59.640 or it is, and it's not that it seems to be. 0:15:00.240 --> 0:15:02.480 I mean, that's really what's happening here, that this has 0:15:02.520 --> 0:15:05.640 gone on for so long there's literally no place to 0:15:05.640 --> 0:15:08.800 to put it. It's one of these things where I'm 0:15:08.800 --> 0:15:11.880 sure that people look at the complexities of the financial 0:15:11.920 --> 0:15:15.320 system and global trading and things like that and they say, well, 0:15:15.360 --> 0:15:18.280 surely it can't be that simple, and it kind of 0:15:18.320 --> 0:15:23.720 actually is, except that geopolitics obviously have entered into this 0:15:23.760 --> 0:15:27.480 as well. You mentioned Russian Saudi Arabia, So what are 0:15:27.520 --> 0:15:31.480 we to do about this? And can I just can 0:15:31.520 --> 0:15:32.960 I just jump in for a second, because part of 0:15:32.960 --> 0:15:35.720 this too is it's usually futures contracts, right Peter, that 0:15:35.720 --> 0:15:38.600 are traded, and you don't you never expect to actually 0:15:38.600 --> 0:15:41.080 take the physical delivery of oil. That's not usually how 0:15:41.320 --> 0:15:44.440 the markets work, the futures markets, but that's what's right. 0:15:44.760 --> 0:15:48.560 So it depends. There are different rules for different contracts. 0:15:48.600 --> 0:15:51.000 For the Brent crude, which is you know, North Sea 0:15:51.800 --> 0:15:57.680 that's settled in cash. The vast majority of contracts for 0:15:57.760 --> 0:16:02.200 West Texas Intermediate on the Nymex are also settled in cash. 0:16:02.880 --> 0:16:08.280 But if you own a contract to receive oil and 0:16:08.360 --> 0:16:11.080 you have not managed to sell it before the deadline, 0:16:11.760 --> 0:16:14.800 then you have to take it. And of course the 0:16:14.880 --> 0:16:16.840 joke is like where you gonna put in your garage? 0:16:18.120 --> 0:16:21.760 So what ends up happening is that the seller will 0:16:23.000 --> 0:16:26.000 arrive at a punitive deal with you. You'd have to 0:16:26.000 --> 0:16:29.160 pay through the nose to wriggle out of the contract 0:16:29.280 --> 0:16:32.800 because you're basically violating its terms. And that's why we 0:16:32.840 --> 0:16:36.400 saw oil on Monday go to negative thirty six something 0:16:36.440 --> 0:16:39.600 dollars of barrel. This was people who were totally desperate 0:16:39.920 --> 0:16:42.080 to get out of their contract so they wouldn't be 0:16:42.400 --> 0:16:47.960 put into that squeeze. And so, so what happens next year? 0:16:48.040 --> 0:16:50.680 I mean you, as you often point out to us, 0:16:50.720 --> 0:16:54.200 you're not an economist, but you do. You are an 0:16:54.240 --> 0:16:57.800 expert business Week, You are an expert on on the 0:16:57.840 --> 0:17:01.800 world of economics. I mean, I guess synthesized this into 0:17:01.840 --> 0:17:04.359 the rest of what we're seeing because also, by the way, 0:17:04.400 --> 0:17:06.679 we're in the midst of a global pandemic. Yeah, so, 0:17:06.800 --> 0:17:10.440 like the June contract. I talked to the guy named 0:17:10.480 --> 0:17:13.640 Steve Short I quote him in my story from Pennsylvania, 0:17:13.680 --> 0:17:16.160 has been in the market for years. He was looking 0:17:16.160 --> 0:17:19.760 at how how much higher the price of June oil 0:17:19.960 --> 0:17:23.920 was than May oil saying that can't last. June has 0:17:23.960 --> 0:17:26.840 got to come down, and he's right, it has come down. 0:17:27.320 --> 0:17:29.600 And as I would not be surprised if as we 0:17:29.640 --> 0:17:32.840 get closer to the expiration of the June contract, we're 0:17:32.840 --> 0:17:35.600 gonna see much of the same kind of craziness, because 0:17:35.640 --> 0:17:39.440 it's very unlikely that between now and then, which would 0:17:39.480 --> 0:17:44.560 be the beginning of May, we're gonna yeah, the desert 0:17:44.600 --> 0:17:47.000 of late in May. We're good that we will see 0:17:47.480 --> 0:17:50.960 the change in the supply demand conditions. We're not going 0:17:51.000 --> 0:17:53.440 to see people buying a lot more gasoline because COVID 0:17:53.480 --> 0:17:56.480 is not going away, and it's just gonna be really, 0:17:56.520 --> 0:18:00.520 really difficult for producers to cut their production enough to 0:18:00.600 --> 0:18:04.479 stop putting it into storage. So is this the beginning 0:18:04.480 --> 0:18:08.640 of the end of the oil market. No, obviously got 0:18:08.680 --> 0:18:11.359 the end of the oil market. We're gonna have oil um, 0:18:11.440 --> 0:18:14.760 but it's the beginning beginning the It's not only the 0:18:14.760 --> 0:18:16.439 beginning of the end, it's the end for a lot 0:18:16.520 --> 0:18:19.720 of speculators here getting wiped out here. They made some 0:18:19.840 --> 0:18:22.479 really bad decisions, and a lot of them are, by 0:18:22.480 --> 0:18:24.720 the way, people who decided to go into exchange trading 0:18:24.760 --> 0:18:27.440 funds because they figured ah, yeah, oil prices gotta go 0:18:27.480 --> 0:18:30.680 off from here. They're getting killed as the one contract 0:18:30.760 --> 0:18:33.159 rolls over into another. So maybe I should ask is 0:18:33.160 --> 0:18:36.119 it the end of the oil age? In the oil age? 0:18:36.160 --> 0:18:38.840 Now that's the more profound question. Well, you know in 0:18:38.880 --> 0:18:43.040 a way that we've accelerated the transition out of the 0:18:43.080 --> 0:18:48.080 oil age, um, which was coming anyway right uh. Um, 0:18:49.119 --> 0:18:52.280 And once this happens, we're certainly gonna have still demand 0:18:52.359 --> 0:18:56.720 for oil. But this is waking people up to the 0:18:56.760 --> 0:19:00.080 fact that, um, you don't want to be investing a 0:19:00.119 --> 0:19:02.760 lot in new oil production that when this kind of 0:19:02.800 --> 0:19:05.480 thing can come along and slam you. Well. And it's 0:19:05.520 --> 0:19:08.280 interesting too, you know that E T F element of it. 0:19:08.320 --> 0:19:09.600 We talked about that at the top of the show 0:19:09.600 --> 0:19:13.040 with their own Critty Gupta who follows these markets so closely. 0:19:13.280 --> 0:19:15.840 I mean, I also I love the kicker quote in 0:19:15.880 --> 0:19:17.879 your story. I just want to read it. Uh. Some 0:19:18.000 --> 0:19:20.919 might consider an event that happens point to five of 0:19:20.920 --> 0:19:23.320 the time to be too improbable to worry about. However, 0:19:23.400 --> 0:19:26.160 I ask yourself this, I cannot get this image out 0:19:26.160 --> 0:19:28.320 of my head. How well will you sleep tonight if 0:19:28.320 --> 0:19:30.199 you know that once every year to someone is going 0:19:30.240 --> 0:19:33.920 to wake you up by dropping a tarantula on your face. Wow, 0:19:34.119 --> 0:19:40.639 that is that is scary as heck. Yeah, that's a 0:19:40.680 --> 0:19:43.480 lot of people these days feel like that tarantula just 0:19:43.640 --> 0:19:46.360 landed on their face. It sounds like it's happening more 0:19:46.400 --> 0:19:48.919 often though, Man, yeah, more than a year or two. 0:19:49.000 --> 0:19:51.800 But I do think but it does speak to to 0:19:52.320 --> 0:19:54.720 a broader thing that I think we're all thinking about, 0:19:54.840 --> 0:19:58.680 which is, are we entering a new era of much 0:19:58.760 --> 0:20:03.680 more I don't know regular uncertainty, if that's such a thing, Peter, 0:20:03.760 --> 0:20:05.439 and I know it's something that that you spend a 0:20:05.440 --> 0:20:08.080 lot of time thinking about from an economics perspective, because 0:20:08.400 --> 0:20:12.119 there there's academics and then there's reality. Yeah, I have 0:20:12.240 --> 0:20:15.800 to say that very few people saw that we would 0:20:15.840 --> 0:20:19.679 have oil negative something dollars a barrel. So there's an 0:20:19.680 --> 0:20:25.239 example of a black Swan event. Um. I tend to 0:20:25.280 --> 0:20:28.520 shy away from the idea that there's more uncertainty now 0:20:28.560 --> 0:20:31.320 than there ever has been, because I think it's a 0:20:31.359 --> 0:20:34.399 it's a lot of because we don't know what's going 0:20:34.440 --> 0:20:37.399 to happen next. You know, you look back in history 0:20:37.440 --> 0:20:39.200 and say, well, it was obviously we're gonna have a 0:20:39.280 --> 0:20:42.280 nine eleven or or whatever else it wasn't at the time. 0:20:42.320 --> 0:20:44.679 It came with a shock to us. All right, we 0:20:44.720 --> 0:20:48.080 gotta go. Sorry, Peter, we love you, thank you so much. 0:20:52.359 --> 0:20:55.919 A journal now, but you let me drive? Oh no, no, 0:20:55.920 --> 0:21:02.440 no, no no please, I'll do drivel exprest. I want to 0:21:02.520 --> 0:21:18.600 drive all just drive baby, good question, trying the drive 0:21:18.680 --> 0:21:21.840 to the globe Commune to thanks, We'll drying us to 0:21:21.960 --> 0:21:25.600 Dawn Bloomberg Radio. All right, it's time for a special 0:21:25.760 --> 0:21:28.360 edition of Drive to the Close at double Shot, because 0:21:28.640 --> 0:21:32.000 this guy deserves it. Henry Cornell, Founder, senior partner of 0:21:32.000 --> 0:21:37.639 Cornell Capital, longtime investor, a globally minded guy, and full disclosure, 0:21:38.080 --> 0:21:40.720 a friend of mine, so happy to have him on 0:21:40.760 --> 0:21:43.840 the line from Long Island. Henry, how are you. I 0:21:43.880 --> 0:21:46.640