Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot Com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Let's also set the Business
Speaker 1: Week agenda. Gotta talk a little bit about the market.
Speaker 1: Trade Here. Sarah Ponza is with Us Crosshouse at reporter
Speaker 1: at Bloomberg New She's on the phone in New York City.
Speaker 1: Dave Wilson our stocks that are at Bloomberg News on
Speaker 1: the phone from New Jersey. So, Sarah, let's start with you.
Speaker 1: What kind of interesting moves are you seeing in the
Speaker 1: trade today. So honestly, it's really shocking in a way
Speaker 1: that you have oil prices the wt I crude oil
Speaker 1: as we speak, below twenty dollars a barrel coming into
Speaker 1: the trading day. There were a lot of warnings, a
Speaker 1: lot of research notes emails going around say this could
Speaker 1: be another rough day in the markets, considering the extremely
Speaker 1: large games at rally that we saw last week and
Speaker 1: now oil plunging yet again. Yet you look at the
Speaker 1: market and we see equities higher for a fourth day
Speaker 1: in five. So it really is pretty striking the fact
Speaker 1: that we're seeing this resilience once again, and you have
Speaker 1: the likes of JP Morgan Cross Assets strategists saying that
Speaker 1: maybe the lows truly are in, and even Mike Wilson,
Speaker 1: who's been embarished, he was on Blueberg Television this morning
Speaker 1: and he said he doesn't even think that we will
Speaker 1: go back and retest those lows. Now. Of course, you
Speaker 1: have many people on the other end of the spectrum too,
Speaker 1: saying that this is just a bear market bounce. But
Speaker 1: the resiliency today does make you at least question, all right,
Speaker 1: Dad Wilson, come on in here. Set the scene for us.
Speaker 1: From your perspective, you're looking at sectors, you're looking at
Speaker 1: individual names. What do you see in this trade that
Speaker 1: feels different from what we've seen over the last couple
Speaker 1: of weeks. Frankly, not a whole lot. I mean, you
Speaker 1: talk about energy stocks being down, we've gotten used to
Speaker 1: the idea since last year that energy has been a
Speaker 1: week sister. When you look at the main industry groups
Speaker 1: in the S and P and when you see what's
Speaker 1: up today technology stocks, and we've certainly seen them at
Speaker 1: the forefront of the market's performance, even in this current
Speaker 1: bear market. I'll have more about that next hour with
Speaker 1: my chart of the day. And on top of that,
Speaker 1: the defensive areas healthcare utilities, the makers of consumer staples, food, beverage,
Speaker 1: tobacco doing relatively well. Real estate is a bit of
Speaker 1: an exception today because it's, you know, little changed and
Speaker 1: you're finding issues. I mean, let's face it, we're coming
Speaker 1: up on April one. We already know that Cheesecake Factory
Speaker 1: isn't gonna be paying rent on any of their restaurants,
Speaker 1: and you've got to presume they're gonna be a whole
Speaker 1: lot of other companies following their example. My husband and
Speaker 1: I've been talking about that. That's remarkable because anytime we've
Speaker 1: ever gone to a cheesecake factory, it is packed, The
Speaker 1: lines are out the door. So if a chain like
Speaker 1: that is having troubles. You know, it just is indicative
Speaker 1: of just so many of those independently owned restaurants. You
Speaker 1: just you know, it's very clear how troubling this time
Speaker 1: is going to be for them. I just I think
Speaker 1: it's interesting, and David speaks to a larger real estate story,
Speaker 1: commercial and even residential. If folks aren't able to pay
Speaker 1: their mortgage, or if businesses aren't able to pay their rent,
Speaker 1: that's has a ripple effect through um our economy. What
Speaker 1: absolutely does. And we've already seen that play out with
Speaker 1: what they call the mortgage reets real Estate Investment Trust
Speaker 1: and either lend money for properties or buy morriage backed securities.
Speaker 1: And they have really taken a hit this month, much
Speaker 1: more so than the broader market. And I just want
Speaker 1: to point out, you know what, Cheesecake Factory, the shares
Speaker 1: are actually hired today, and you had a firm, Googen
Speaker 1: Haun come in and raise their twelve bunts price estimate
Speaker 1: by fifteent to thirty dollars to share. They figured that
Speaker 1: Cheesecake Factory is gonna be okay in the long run
Speaker 1: once they get past the issues in front of them
Speaker 1: now that are keeping them um at least in their
Speaker 1: own plans from paying the rent, and so Sarah Ponzac
Speaker 1: still with us, help us understand whether that is consistent
Speaker 1: across the trade and investor's mindset. At this point, are
Speaker 1: people just saying, all right, well, let's see what's going
Speaker 1: to be good in the long term and just look
Speaker 1: past the next sixty days. Well, do you know what's
Speaker 1: really standing out to me today? And I think it's
Speaker 1: a little different, is the fact that we're back to
Speaker 1: that norm where you have tech outperforming once again, you
Speaker 1: have healthcare outperforming once again, particularly the likes of Abbott Labs,
Speaker 1: also Johnson and Johnson. But you're back to that scenario
Speaker 1: where the likes of Boeing, your airline, your transport companies
Speaker 1: are the ones falling. And that it is a bit
Speaker 1: telling because if you were to love there to basket
Speaker 1: that Goldman Sacks tracks of the most short of stocks,
Speaker 1: and today it's actually down but very very slightly. So
Speaker 1: you're not seeing this giant rally in the stocks that
Speaker 1: were beating up most. So you're not seeing this huge
Speaker 1: short squeeze in the market, which we did see in
Speaker 1: some of those major rallies last week. So we're back
Speaker 1: to this more sustainable buying, sustainable buying of the names
Speaker 1: that people have loved over the past ten years, over
Speaker 1: the past bull market, and I think that's a bit
Speaker 1: telling about the structure of the rally today. All Right,
Speaker 1: Sarah pon Zack, We're gonna leave it there, Thank you
Speaker 1: so much. Pon Zack is cross asset reporter for Bloomberg
Speaker 1: joining us from New York City. Dave Wilson. We are
Speaker 1: going to talk to him next hour, as he alluded
Speaker 1: to for his chart of the day. This is Bloomberg
Speaker 1: Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. Well,
Speaker 1: we got a lot of news over the weekend and
Speaker 1: certainly continuing this morning. Jason Spain reporting fewer deaths today.
Speaker 1: Uh yet President Trump abandoning his ambition to return America
Speaker 1: to kind of normal life by Easter. H cases now
Speaker 1: of the virus topping seven hundred thirty seven thousand, thirty
Speaker 1: five thousand have lost their lives. A hundred and fifty
Speaker 1: six thousand um have recovered. This according to JOHNS. Hopkins,
Speaker 1: let's talk about this. Dr Rhonda Meadows is President at
Speaker 1: Health Management at Providence St. Joseph's Health, the first US
Speaker 1: case of the virus was confirmed in Washington State at
Speaker 1: Providence Regional Medical Center in Everest, and this is all
Speaker 1: part of a big major health system. Dr Meadows, nice
Speaker 1: to have you here with Jason and myself. Um tell
Speaker 1: us where we are in terms of either finding a
Speaker 1: vaccine or a better test so that we can somehow
Speaker 1: get our head our hands around uh, the virus, maybe
Speaker 1: sooner rather than later. Good afternoon, and thank you for
Speaker 1: inviting me. As far as a vaccine is concerned, that
Speaker 1: is somewhat out on the horizon. We're looking at about
Speaker 1: a year from now. But we're most concerned with now
Speaker 1: is actually getting the personal protective equipment on the map
Speaker 1: to our frontline caregivers, our doctors, nurses, e MS and
Speaker 1: first responders. We're also to the work of actually updating
Speaker 1: our projections on potentially the worst case scenario and making
Speaker 1: sure that we have sufficient supplies including ventilators and so.
Speaker 1: Dr Meadows, what have you seen change either in the
Speaker 1: sort of the the progression of the outbreak or the preparedness,
Speaker 1: especially in the last week or two as you've learned
Speaker 1: a lot there on the ground, and you've also watched
Speaker 1: cities like New York UH and San Francisco and others
Speaker 1: grapple with this. So what we have seen over the
Speaker 1: last week or show is trickling in of the personal
Speaker 1: protective equipment and some mask We get a couple of
Speaker 1: days at a time when we do get some supplies
Speaker 1: from some domestic suppliers, are international suppliers are still delayed
Speaker 1: and getting the big bulk of the equipment and supplies
Speaker 1: that we need. Um. We are seeing, UM with the
Speaker 1: good effort of the American people, UM, the efforts to
Speaker 1: do the stay in place and the social distancing, and
Speaker 1: the more we do it, the further along we will
Speaker 1: be in terms of slowing flowing the rate of the
Speaker 1: spread of the virus itself. UM. That means that in
Speaker 1: some places like cel and the West Coast where we
Speaker 1: have been addressing this for a little over two months
Speaker 1: now since that first case January one, but we actually
Speaker 1: are seeing UM that we can actually manage UM the
Speaker 1: patient populations that are coming in. However, if we delay
Speaker 1: or becomes a liquent in doing those social distances to
Speaker 1: stay at home, we could see another surge that can
Speaker 1: overwhelm our health your systems. Still on the East Coast, Yeah,
Speaker 1: I'm sorry, please continue. No, I was going to say,
Speaker 1: on the East coast, are rather are overwhelmed, right, they
Speaker 1: have a large number of people in population densed areas UM,
Speaker 1: they more than than anyone else, needs additional help in
Speaker 1: getting the supplies for their front line. It's interesting what
Speaker 1: you said about, you know, accessing your domestic and international suppliers.
Speaker 1: How is UM the federal government helping and maybe you know,
Speaker 1: figuring out out the domestic and international suppliers, pulling in
Speaker 1: those resources and making sure it gets to the hospitals
Speaker 1: and the medical care professionals or the medical professionals who needed.
Speaker 1: Is the government playing a bigger and better role, if
Speaker 1: you will? And all that, I think the Settle government
Speaker 1: is beginning to play a role UM. Probably and not
Speaker 1: as aggressively if some of us would like. But we
Speaker 1: do see some of the effort. UM. We actually went
Speaker 1: out on our own to actually procure the maths, the
Speaker 1: personal projective equipment, the ventilators, anything and everything we've needed.
Speaker 1: We've actually gone on our own. We've worked with our
Speaker 1: state partners who have been great UM to work with
Speaker 1: us UM. But part of the original problem, Carol and Jason,
Speaker 1: is that we are starting off with the blindly. We
Speaker 1: don't have the surveillance data, we don't know what the
Speaker 1: original denominator baseline was. So we're having to assume the
Speaker 1: worst case UH scenario, and so our projections may seem
Speaker 1: large and alarming to folks, but it's because if we
Speaker 1: don't prepare and act toward addressing the worst case, we
Speaker 1: will be surely in trouble if we don't do that. UM.
Speaker 1: So we're seeing some UM, some questions in some request.
Speaker 1: We have not received any ventilators from the subtle government. UM.
Speaker 1: They would go UM when they are dispersed to state
Speaker 1: government and then be UM dispersed. We have not seen
Speaker 1: any come to Providence yet. We have not seen any
Speaker 1: ventilators come locally, I mean domestically or internationally. We are
Speaker 1: in queue with everyone else UM, and everybody is trying.
Speaker 1: It kind of makes the use of the Defense Production
Speaker 1: Act even more important UM to basically encourage UM non
Speaker 1: traditional providers of equipment can help us get the supplies right. UM.
Speaker 1: So last question for you, Dr Meadows before we let
Speaker 1: you get back to work. How important was it yesterday
Speaker 1: the President coming out and basically saying, look, Easter is
Speaker 1: not going to make sense we're going to go to
Speaker 1: at least April. Did that give you some some sense
Speaker 1: of optimism that maybe this is being taken more seriously.
Speaker 1: It actually does, and I will tell you that we
Speaker 1: cannot flack off, we cannot step away. The social distancing
Speaker 1: and the stay at home must be maintained at least
Speaker 1: until April. We'll have to see in other states what
Speaker 1: they need as well. We're basically facing waves of viral
Speaker 1: spread and health care is what was The viral spread
Speaker 1: is local. We have to address it where it is.
Speaker 1: All right, we really appreciate it. Thank you so much.
Speaker 1: We know it is extraordinarily busy, very grateful for you
Speaker 1: for taking the time. We've learned so much in talking
Speaker 1: to you and your colleagues there in the state of Washington,
Speaker 1: especially as we as you point out, we deal with
Speaker 1: a very overwhelmed system here on the East Coast. Dctor
Speaker 1: Rounde Meadows is the president of health management at Providence St.
Speaker 1: Joseph Health to joined us on the phone from Everett, Washington.
Speaker 1: As Carol said, that's where it all began in the
Speaker 1: United States, or that's at least where we first saw
Speaker 1: the US the first domestic patient. Yeah, I feel like
Speaker 1: that what we've our discussions with her and her team
Speaker 1: have really been helpful and kind of understanding the spread
Speaker 1: of the virus and the impact of it. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Jason Kelly on
Speaker 1: Bloomberg Radio. Glas Carol mentioned it's the most read story
Speaker 1: on the Bloomberg and not surprisingly, this is at the
Speaker 1: heart of the financial side of this crisis. Michelle Davis
Speaker 1: wrote the story. She's a finance reporter for Bloomberg, one
Speaker 1: of our top shots. She joins us on the phone
Speaker 1: from Vermont. So, Michelle, you, I'm sure, like all of us,
Speaker 1: saw these headlines about corporations drawing down these revolvers. You
Speaker 1: went to the banking side and what do you find. Well, So, yeah,
Speaker 1: as you mentioned, I have been watching as lots of
Speaker 1: companies around the country have just since March nine to
Speaker 1: draw on more than a hundred and seventy seven billion
Speaker 1: from revolvers, and h that means that banks have been,
Speaker 1: you know, at the same time, banks have been talking
Speaker 1: to companies and they've been saying, look, you know, if
Speaker 1: you don't really need the money right now and you
Speaker 1: are just topping this revolver out, of an abundance of caution,
Speaker 1: we'd advise you to please not do that. Um. And
Speaker 1: the idea is, you know, it's not anything having to
Speaker 1: do with liquidity concerns. The banks say there is there
Speaker 1: and they will honor any requests they get for revolver
Speaker 1: draw downs, but it's really one person described it as
Speaker 1: you know, trying to take a hot shower. If everyone
Speaker 1: tries to take a hot shower at the same time,
Speaker 1: some people are gonna be left with cold water. And
Speaker 1: so in order to be able to get money to
Speaker 1: the companies or the people that need it the most
Speaker 1: and the quickest, banks are asking, you know, the healthiest
Speaker 1: companies to kind of stand down so that they can
Speaker 1: prioritize getting access to these other companies. Well, what's great
Speaker 1: about it too? I love this line in your story
Speaker 1: and you're reporting, Michelle is for Wall Street. It's not
Speaker 1: an issue of liquidity so much as profitability. Explain that
Speaker 1: so every time, well, first of all, revolvers are technically
Speaker 1: just very low more argin uh instruments. Banks will extend
Speaker 1: them the companies of kind of a relationship thing, you know,
Speaker 1: like this is here for you just in case, But
Speaker 1: they don't accept everyone to draw them down. There a
Speaker 1: lot of them aren't even profitable, and they're seen as
Speaker 1: kind of an entryway into other more expensive capital markets
Speaker 1: fields or or you know, m and a advice um.
Speaker 1: And so every time someone does draw down on one
Speaker 1: of these, the banks have to put aside more capital
Speaker 1: because of you know, financial crisis rules, and so that
Speaker 1: does end up straining or hitting their profitability if if
Speaker 1: everyone is doing it at the same time. Well, and
Speaker 1: it's interesting too in your story of a really important
Speaker 1: nuance is that you found evidence that some companies are saying,
Speaker 1: all right, banker, I'm going to give you a break
Speaker 1: on this one. I'm actually gonna pay a little bit more.
Speaker 1: I believe McDonald's did this to go get a short
Speaker 1: term loan, So I don't do this at the risk of,
Speaker 1: you know, maybe making you Mr banker and they're all misters.
Speaker 1: It feels like upset down the line and maybe not
Speaker 1: giving me the attention that that I want and feel
Speaker 1: like I deserve. That's correct. You know, when I first
Speaker 1: started hearing about bankers were doing this that my first
Speaker 1: question was, why would any company agree to this, Like,
Speaker 1: why would they say, yeah, you know what, I'm just
Speaker 1: not going to draw down on this. And the idea
Speaker 1: is no one really knows what's going to happen over
Speaker 1: the next couple of weeks or months or years even
Speaker 1: and so this companies, you know, see banks as very
Speaker 1: stable resource for them, and the last thing they want
Speaker 1: to do is is you know, bother or put their banker,
Speaker 1: you know, on bad terms. And so some of them,
Speaker 1: like McDonald's have said, okay, um, we'll work with you
Speaker 1: on these short, shorter term revolvers UM. McDonald's actually went
Speaker 1: up for a sixty four day revolving credit facility, drew
Speaker 1: down the entire thing, even though it hadn't yet tapped
Speaker 1: an existing six billion dollar revolver that it had well.
Speaker 1: And what's interesting though, is this is also illustrating by
Speaker 1: companies maybe tapping different sources, showing that the system is
Speaker 1: working right, that companies can access money if they need
Speaker 1: it exactly. Yeah, And this shows like McDonald's for example,
Speaker 1: by doing that, they kind of signaled to stay actually
Speaker 1: have additional funding sources UM. I think for companies that
Speaker 1: are not as directly impacted by you know, the economic
Speaker 1: fall out that's come from the majority of a country
Speaker 1: being on lockdown, if you can show if you can
Speaker 1: go to the bond market or go and get another
Speaker 1: bank line right now, and show that you actually don't
Speaker 1: need the money, but you actually, you know, want to
Speaker 1: have it, just in case that that communicates to investors
Speaker 1: that you're in a in a strong position. Well, I
Speaker 1: feel like I was gonna say, I feel like banks
Speaker 1: are also signaling like, all right, you draw it down,
Speaker 1: but listen, I'm going to make it up somewhere else road.
Speaker 1: And I think that's a really important point. And I'm
Speaker 1: glad that you both made it earlier in the conversation.
Speaker 1: This idea of what we're really talking about is bank
Speaker 1: profitability here. And so as people read this story, there
Speaker 1: are probably a lot of people outside of well sheet
Speaker 1: saying like, oh, I'm sorry, you're not gonna make as
Speaker 1: much money JP Morgan. Anyway, it's a very technical term.
Speaker 1: But in any case, Michelle Davis, thank you so much.
Speaker 1: Great reporting. Most read story on the Bloomberg for a reason,
Speaker 1: A really smart look at how this is playing out, Carol.
Speaker 1: I think it's a really smart story exactly. And and
Speaker 1: you know it's just um the understanding too of how
Speaker 1: it all works. Right. Uh So I think it's really
Speaker 1: important that that she wrote about it, and that it's
Speaker 1: certainly something we discussed. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Jason Kelly on Bloomberg Radio. This was
Speaker 1: the story. Let's be honest. We had to do this
Speaker 1: when Carol Masser so into uh this because we're obsessed
Speaker 1: with the world of fitness and it's all that much
Speaker 1: more important right now. Uh, let's get into it with
Speaker 1: Mary Pollan. She is the writer of the story in
Speaker 1: Bloomberg Business Week this week. It's on the terminal and
Speaker 1: on Bloomberg dot Com today, along with the editor of
Speaker 1: the story and editor at the magazine, Sylvia Killingsworth, both
Speaker 1: of us, both of them joining us on the phone. Mary,
Speaker 1: I want to start with you, first of all, Great
Speaker 1: Peace help us what understand what's going on in the
Speaker 1: world of boutique fitness. Sure, thanks for having me. So.
Speaker 1: This is one of the many industries that I think
Speaker 1: was completely transformed overnight. This was considered to be a
Speaker 1: really booming part of the economy. You know, whether we're
Speaker 1: talking about the big players, your crunches, your equinoxes, etcetera,
Speaker 1: but also a lot of small businesses. There's a whole
Speaker 1: cottage industry of these boutique you know classes, whether it's
Speaker 1: bar or pilates or advanced to views. And then with coronavirus,
Speaker 1: a lot of them had to close their doors overnight. Uh,
Speaker 1: they operate with very little runway usually so they don't
Speaker 1: know how to pay rent for the next couple of months.
Speaker 1: And you know, there's three d fifty thousand fitness trainers
Speaker 1: and instructors, most of whom work as contractors. So unfortunately
Speaker 1: this has also met a lot of people are out
Speaker 1: of a job and it's unclear, you know, kind of
Speaker 1: what with the future holds for them. I have to say,
Speaker 1: I do feel like there's these tensions within the fitness
Speaker 1: industry because every we go to these fitness classes. I
Speaker 1: love it because I do have a sense of community
Speaker 1: with all my friends and sitting in the class and
Speaker 1: doing something. But I have to say this weekend I
Speaker 1: did a yoga class by a beloved teacher through Zoom
Speaker 1: and it was twenty of us, twenty five of us.
Speaker 1: It was pretty amazing. We could see each other um
Speaker 1: and there was a sense of community. Sylvia, I do
Speaker 1: feel like this is going to be an interesting time
Speaker 1: and maybe there are some longer lasting results on the
Speaker 1: fitness industry as a result of the virus. That's absolutely
Speaker 1: the post I think you're seeing. Um. You know you
Speaker 1: mentioned like yoga classes of verg we also know about
Speaker 1: peloton um is one of or the mirror for example,
Speaker 1: are those services whereas you can do a lot of
Speaker 1: in home workouts. And I think you're going to see
Speaker 1: probably a lot of people shipping over to those businesses
Speaker 1: and maybe you know when things reopen, who's going to
Speaker 1: stick with that? He's going to go back to the studio.
Speaker 1: This is a really kind of like a pole uh
Speaker 1: tug of war between those two things. I think right
Speaker 1: now they're trying to plant ye to each other. Um.
Speaker 1: The focus here was definitely those smaller business owners who
Speaker 1: um how you know, it's like usually an individual sounder
Speaker 1: who goes off on their own rather than being part
Speaker 1: of the big gym. They take on a lot of risks,
Speaker 1: they take on a lot of debt, and you know
Speaker 1: now they're sort of reduced to essentially a staff of one.
Speaker 1: So we're looking at very much what is you know,
Speaker 1: sort of put the put the business on ice option?
Speaker 1: How do you how does one person keep a small
Speaker 1: studio afloat and for that time, and it's it's going
Speaker 1: to be really tough. Yeah, it's funny, Mary, I mean
Speaker 1: my inbox is just full of these you know offers,
Speaker 1: you know, as including from folks who are in your
Speaker 1: story like boxing, flow box plus flow uh and many
Speaker 1: others sort of shopping their wares. How does it change
Speaker 1: the business model though, especially for these small guys. Sure, well,
Speaker 1: you've got a lot of people racing to make these videos.
Speaker 1: And you know, keep in mind obviously, like at home
Speaker 1: fitness is far from new. I mean it's almost like
Speaker 1: this return to it's a return Yeah, It's like it's
Speaker 1: like a throwback and back then you have to watch
Speaker 1: the same video over and over and over again. Now
Speaker 1: we have all this variety. And so there's been you know,
Speaker 1: players like Beach Body, Um, we've been doing this for
Speaker 1: a long time, and a lot of you know, the
Speaker 1: bigger players had a whole video library that many other
Speaker 1: members either didn't know about or didn't use as often.
Speaker 1: So or it was a subset of people who were
Speaker 1: really devoted to these companies. So I do think that
Speaker 1: we're going to see a big boom there, and I
Speaker 1: think that was driving a lot of UM. You know
Speaker 1: what you're alluding to his loyalty to studios. I think
Speaker 1: people who really love that, you know, local slt teacher,
Speaker 1: bar teacher. It's a great way to support people and
Speaker 1: remain connected to a specific relationship you might have UM,
Speaker 1: but a lot of us being you know, built overnight.
Speaker 1: So you know, we talked to Sadie kurts Band, who
Speaker 1: runs um Purify Fitness, which has a pretty big footprint
Speaker 1: here New York, but it's all over the place. She's
Speaker 1: now one woman company and she is doing her dance
Speaker 1: classes at noon and six on her parents porch in
Speaker 1: Miami and quarantine, so you know, it's you know, she
Speaker 1: went from having a ton of really amazing studio space
Speaker 1: in New York, so like this is and and all
Speaker 1: thousands of people are tuning in because they are so
Speaker 1: devot into you know, her brand of dance classes. So
Speaker 1: I think we're going to see a lot of that
Speaker 1: UM and that the scrappiness of quality sometimes can become
Speaker 1: part of what's been gearing about it too. Mary, what
Speaker 1: are we hearing about in terms of the stimulus package
Speaker 1: and the help that especially since so many of these
Speaker 1: are individuals or their contractors, you know what kind of
Speaker 1: assistance might be coming for them. Sure, so you know
Speaker 1: the gift economy I put kind of put clotes around
Speaker 1: that that is in the stimulus package. Whether there's going
Speaker 1: to be anything specific for fitness or sports seems to
Speaker 1: remain remains to be seen. You know, in a lot
Speaker 1: of industry trade groups are already lobbying for relief. Um.
Speaker 1: The big one that I heard from people is rent release, right.
Speaker 1: I mean, if if a lot of these studios can
Speaker 1: whether or get some kind of forgiveness, you know, whether
Speaker 1: this last month or two or three, I think that
Speaker 1: will make a huge, huge difference because that's a huge
Speaker 1: cost because location is such a big deal in this industry. Um,
Speaker 1: And I think that's something that is being pushed really,
Speaker 1: really hard. So we'll see. And you know, the iron
Speaker 1: each from a policy standpoint is this is at a
Speaker 1: time when people need to be healthy, right, Like this
Speaker 1: could be a focus for a lot of folks. So
Speaker 1: it's interesting because an industry that's really struggling yet there's demands, right,
Speaker 1: it's a little counterintuitive to how we kind of think
Speaker 1: about business. Yeah, totally, it's that that's such a good
Speaker 1: point and Sylvia come back on in. I mean, I
Speaker 1: do think about this, and we've been sort of talking
Speaker 1: around this notion that we're going to have a bunch
Speaker 1: of businesses that are fundamentally changed by this crisis. How
Speaker 1: does this sort of figure in with other industries that
Speaker 1: you guys are looking at at the magazine. I'm really
Speaker 1: interested in what's going to happen in the restaurant and
Speaker 1: food industry. I think, um, you're going to see a
Speaker 1: very similar sort of um, you know, crush on the space.
Speaker 1: You know, again their physical spaces that people join together
Speaker 1: to do an activity, and um, you know you're going
Speaker 1: to see the same sort of crunch on rent and spacing. Um,
Speaker 1: you know, we're gonna lose a lot of restaurants, but
Speaker 1: I think it's going to be interesting to see what
Speaker 1: we come out with on the other end of that. Yeah,
Speaker 1: now it's really really interesting. Thank you both so much.
Speaker 1: I was obsessed with this story as soon as it
Speaker 1: came out, and Carol and I I think both saw
Speaker 1: some familiar names in here, things that we've done, folks
Speaker 1: we've talked to, like the CEO over at Beach Body
Speaker 1: is a really really nice read. Mary Pollan wrote it.
Speaker 1: She is a writer for Bloomberg Business Week. She joined
Speaker 1: us on the phone, as did Sylvia Killingsworth, an editor
Speaker 1: over at the magazine. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Jason Kelly on Bloomberg Radio. It's also
Speaker 1: really important, and we talked about this on our planning
Speaker 1: call that we do have to remember, I mean, it's
Speaker 1: hard not to forget. This is a global story. It's
Speaker 1: a virus that's impacting both developed and developing markets. So
Speaker 1: we want to talk a little bit about that, specifically
Speaker 1: the emerging markets, especially Africa in the Middle East. Andy
Speaker 1: Brown is Bloomberg New Economy editorial director. He joins us
Speaker 1: on the phone from New Hampshire, and you know, I
Speaker 1: have to say, Andy, I have been watching like Africa
Speaker 1: and India, like some of these um emerging markets because
Speaker 1: of their populations and also because of their conditions that
Speaker 1: so many people live in and how the virus might
Speaker 1: impact them. This is this could be just incredibly, incredibly
Speaker 1: damaging for these societies. It is. It is really scary.
Speaker 1: I mean, obviously, the story here is that the coronavirus,
Speaker 1: the pandemic, it begins in China, it heads west, it
Speaker 1: ravages parts of Europe, it's rampaging through the United States.
Speaker 1: So far, so far, the emerging world, the poorer countries
Speaker 1: of the world have largely escaped the worst effects, and
Speaker 1: that is about to change their next in line. Abbi Ahmed,
Speaker 1: the Prime Minister of Ethiopia, was writing the other day.
Speaker 1: He said, Africa is on the edge of an abyss um,
Speaker 1: you know. And the problem. The problem here is that
Speaker 1: these these poorer countries, they neither have the instituteitutional capacity
Speaker 1: of China. I mean, China was able to mobilize these
Speaker 1: massive state resources to fight a people's war and can
Speaker 1: largely contain the coronavirus. Neither does it have the advanced
Speaker 1: medical infrastructure that you have in country richer countries of
Speaker 1: the West, or in the social wealth and nets which
Speaker 1: cushioned pain. And so it's going to be far, far
Speaker 1: worse for these countries, as you say, in the Middle East,
Speaker 1: Sub Saharan Africa, Latin America and elsewhere. And so Andy,
Speaker 1: I want to go back to where you started, help
Speaker 1: us understand how emerging markets are different when it comes
Speaker 1: to this specific virus or candidly any sort of pandemic
Speaker 1: or infectious disease. Sure. So you know, they are by definition,
Speaker 1: many of them fragile economies and and fragile in a
Speaker 1: number of ways. Um, they're fragile because they have already
Speaker 1: these unappalling underlying health conditions. So if you look at
Speaker 1: South Africa where the rand has collapsed, something like seven
Speaker 1: or eight million people in South Africa are living with HIV.
Speaker 1: You take a country like Egypt, hundred million people, ten percent,
Speaker 1: around ten percent of the population of Egypt living with
Speaker 1: hepatitis C. You know, so you have you have these
Speaker 1: these these underlying conditions exacerbated by poverty, and now you're
Speaker 1: they're about to be hit by you know, COVID nineteen.
Speaker 1: That's that's on the that's on the medical side. On
Speaker 1: the financial side, many of these economies have been piling
Speaker 1: up US dollar debt and they've been struggling to repay
Speaker 1: that debt even before, even before this this UH crisis erupted.
Speaker 1: So now they're looking at debt repayment when their economies
Speaker 1: are in deep distress. Commodity prices of full and tourism
Speaker 1: revenues have collapsed. Um, the dollar is surging, and they're
Speaker 1: going to have a much much more difficult time now
Speaker 1: repaying uh these deaths. Now you you you take Ethiopia,
Speaker 1: you look at it. You know Ethiopian Airlines, I mean
Speaker 1: one of the iconic airlines of globalization, along with Emirates
Speaker 1: and Cathay Pacific. It is a major foreign exchange for Ethiopia.
Speaker 1: Of course, Ethiopian Airlines is in deep trouble like all
Speaker 1: of the world's airlines. This means Ethiopia doesn't have the
Speaker 1: hard currency that it needs to import drugs, to import
Speaker 1: emergency medical gear gowns and and face masks and so on.
Speaker 1: I mean, it's it's it's economically brutal and medically devastating
Speaker 1: for these economies. Well, and the thing is andy, I
Speaker 1: mean ultimately, once we get on the other side of this,
Speaker 1: I mean we really need the global economy developed and
Speaker 1: developing to recover in order for the world world to
Speaker 1: overall recover exactly. I mean the metaphor people keep using
Speaker 1: is a forest fire, right, so you know, you you
Speaker 1: can you can contain a forest fire, but you know
Speaker 1: if you have if you have stray sparks coming in,
Speaker 1: you're going to very quickly reignite it. And what we're
Speaker 1: going to have this situation is emerging economies acting as
Speaker 1: a sort of a you know, a source for showers
Speaker 1: of sparks which are going to descend upon the countries
Speaker 1: that have already you know, recovering. The truth is that
Speaker 1: you cannot have global health security. You cannot really declare
Speaker 1: victory against COVID nineteen until the most vulnerable countries in
Speaker 1: the world have themselves defeated it. But you do. But
Speaker 1: you do worry, right, and you do worry that. I mean,
Speaker 1: right now the developed world is struggling to deal with this,
Speaker 1: and so their ability to even lend a hand to
Speaker 1: the developing world it's just not there right now, or
Speaker 1: not to the extent we've seen in in past crises. Yeah, exactly.
Speaker 1: I mean you look at the way that you know,
Speaker 1: even within the United States, States are now bidding against
Speaker 1: each other for medical equipment. Well, that's going to be
Speaker 1: happening in the case of countries you know, and and
Speaker 1: and guests. Who's going to be a loser in that
Speaker 1: bidding war? Yeah? Absolutely. Well, I mean the other thing Andy,
Speaker 1: before we let you go just a minute or so
Speaker 1: left that I wanted to ask you, is you know,
Speaker 1: we are seeing, you know, sort of pictures reading stories
Speaker 1: from Wuhan, you know, where so much attention is focused.
Speaker 1: Earlier this year, we talked about it with you at
Speaker 1: the time. You were well ahead of it as a
Speaker 1: journalist and certainly helping keep us honest on what was
Speaker 1: happening over there. As you look at that situation, what
Speaker 1: are we learning? What can we take from what has
Speaker 1: happened with China that gives us some sense of what
Speaker 1: may happen next here in the West. Well, you know, there,
Speaker 1: there there, there is light at the end of it.
Speaker 1: I mean, that's that's that's the story from China. But
Speaker 1: the real lesson from China in addition of course to
Speaker 1: lockdown owns, it's mass testing, um, you know, contact tracing,
Speaker 1: use of technology, all of government effort, individuals and since
Speaker 1: we've talked about this before, individuals in society taking responsibilities
Speaker 1: for their own actions. Um. You know, we don't believe
Speaker 1: the numbers coming out of China. It's way worse than
Speaker 1: the numbers have suggested. I think that's very very clear.
Speaker 1: But when I talk to my friends in China who
Speaker 1: are running factories and businesses, they're they're telling me that
Speaker 1: pretty much China is back on the economy is back online,
Speaker 1: They're big problem now is the rest of the world
Speaker 1: that their export markets are now being slammed, the United
Speaker 1: States and Europe. All right, Andy Brown, always good to
Speaker 1: catch up with you, really good contexts and a very
Speaker 1: important story the Kolonel now. But oh no, no, no, no,
Speaker 1: please do the right mate. I want to drive, just drive.
Speaker 1: Good questions trying. This is the drive to the globe.
Speaker 1: Give me thanks. We'll drying us down. On Bloomberg Radio,
Speaker 1: it is time for the Drive to the close. David
Speaker 1: Deeds is back with us president and chief investment officer
Speaker 1: at Point View Wealth Management. They've got roughly seven and
Speaker 1: a half billion dollars in assets under management, joining us
Speaker 1: on the phone from some of New Jersey. David, UM,
Speaker 1: I hope this finds you well, your family well, Um,
Speaker 1: good to have you here with us, Carol, we're all
Speaker 1: doing well. Good to hear your voice. Yeah, same here. Um.
Speaker 1: You know, I think we're all trying to make sense
Speaker 1: of just the day to day news, the hourly news update. Um.
Speaker 1: We do have markets pretty much holding on to their
Speaker 1: best levels here today. What how would you describe kind
Speaker 1: of the mood of the market right now. So it's
Speaker 1: really a conflict here between investors bracing for economic news,
Speaker 1: which is going to get uglier and uglier as the
Speaker 1: layoffs pile up, unemployment rates go higher, indexes of activity
Speaker 1: are going to go down. Plus of course the very
Speaker 1: sad news of more infections, more death. Investors are bracing
Speaker 1: for that. However, a raid against the other side. Are
Speaker 1: several things of hope here. One, of course, if we've
Speaker 1: heard some great news today from for example, Johnson Johnson
Speaker 1: talking about a vaccine that is being worked on and developed,
Speaker 1: We had some great news coming. It will be ready,
Speaker 1: but but I will but I will say that's they
Speaker 1: also said it wouldn't be it's like a first quarter,
Speaker 1: second quarter maybe at its earliest one. That's a long
Speaker 1: that's a long way away. You know, it is long
Speaker 1: way away. And of course UM but there of course
Speaker 1: not the only company biotech and pharmactical company working on
Speaker 1: these things. I actually have a lot of hope that
Speaker 1: something else is going to be developed, and you know
Speaker 1: it may get tested offshore and be rushed to UM
Speaker 1: permission from the f d A if it's available. But
Speaker 1: of course we also need testing devices so we know
Speaker 1: where we're in safe spaces. And Abbott Labs is now
Speaker 1: shipping a device that can tell in five minutes whether
Speaker 1: you're infected, thirteen minutes to prove that you're not. So
Speaker 1: there's some help on the on the healthcare front, and so, David,
Speaker 1: it feels like the advice that we're hearing on the
Speaker 1: investment side is similar to what we're hearing from the
Speaker 1: health side in terms of our own if if we
Speaker 1: are fortunate enough to be healthy, which is stay put,
Speaker 1: stay in place, and don't and resist a temptation to
Speaker 1: sort of get out. Is that a fair, if slightly
Speaker 1: glib characterization. Certainly every investor needs to check their risk
Speaker 1: tolerance and continue to confirm what their investment horizons. But
Speaker 1: us put this into context, We've never seen We've never
Speaker 1: not come back from a health scare over the last
Speaker 1: hundred years, We've never not come back from a bear
Speaker 1: market from a panic, and so forth. The question, of course, therefore,
Speaker 1: is how long is this going to last? Um, we
Speaker 1: heard some news over the weekend that the stay at
Speaker 1: home rules could be in place for perhaps as long
Speaker 1: as June, but certainly that is much shorter than most
Speaker 1: investors horizons are. Of course, the other thing not to
Speaker 1: minimize is to resolve the other resolved by policy makers.
Speaker 1: We're just seeing record setting amounts of fiscal stimulus. Is
Speaker 1: student going to be ported to the economy? Does that
Speaker 1: worry you though? On the other side as well? I mean,
Speaker 1: is there a debt burden that the US government is
Speaker 1: going to have problems with, especially if we get into
Speaker 1: an economy that slows down where the tax receipts aren't there.
Speaker 1: You know, I think most people would love to um
Speaker 1: worry about what's on the other side. They want to
Speaker 1: get there. But you are absolutely right, Carol, I don't
Speaker 1: think it's going to be a question as to whether, uh,
Speaker 1: the government can honor the debt. I think ultimately, what
Speaker 1: we've seen in other times where we've grostly expanded the
Speaker 1: amount of debt is inflationary scare. And so I think
Speaker 1: given how low bond prices are today, how high bond
Speaker 1: prices are today, how low yields are, and the fact
Speaker 1: that we could see an inflation scared down the road,
Speaker 1: I think, ultimately, um, perhaps a year or two down
Speaker 1: the road, inflation could be the problem, even though it's
Speaker 1: very hard to believe that now. And so, David, how
Speaker 1: do you invest? How do you look at stocks, how
Speaker 1: do you screened them right now? What are you looking
Speaker 1: for as you work through with your team. Well, we
Speaker 1: start with going back out to our clients and saying
Speaker 1: this is the time to rebounce, look at your legacy
Speaker 1: asset allocations and bring the stocks up to where they
Speaker 1: were before the downturn started. Then, in terms of what
Speaker 1: stock to buy, what sectors, I think job one is
Speaker 1: is diversification. There is the Tennessee. However, to always go
Speaker 1: with what's been working, maybe you know consumer staples, utilities,
Speaker 1: some of the uh bulletproof balance sheets, to some of
Speaker 1: the tech names, and there's certainly a solid place in
Speaker 1: your portfolio for that, but you may also want to
Speaker 1: take advantage of this downturn and look at some of
Speaker 1: the more cyclical names, which, um, if ultimately this stimulus
Speaker 1: does work and we get pass this healthcare should have
Speaker 1: some of the biggest rebound. Is there anywhere you don't
Speaker 1: want to be right now, David? In terms of sectors,
Speaker 1: I mean we just talked about Macy's. I mean they're
Speaker 1: laying off, you know, almost all of their workers, and
Speaker 1: I know that that's been a troubled retailer for some time.
Speaker 1: But is there any industry, any sector, any names specifically
Speaker 1: that you just don't want to touch right now. Well,
Speaker 1: certainly those trends that were in place, like the the
Speaker 1: um transition from in store purchases to online uh, seemed
Speaker 1: to be getting accelerated during this downturn. So those are
Speaker 1: things that you really have to look at. Who are
Speaker 1: the cyber survivors and who are aren't. But I would
Speaker 1: have to say the biggest things I would avoid is
Speaker 1: some of these smaller biotech names and so forth, which
Speaker 1: have gone up tremendously on hopes of some sort of
Speaker 1: proud that's really unproven. And of course some of the
Speaker 1: manufacturers are consumer staples. I think you're a little late
Speaker 1: now to be getting into cleaning supplies and things along
Speaker 1: those lines. Other than that, I think everything can work
Speaker 1: all right. We're gonna leave it there. David Deeds, great
Speaker 1: to catch up with you. Glad to hear that you
Speaker 1: and the family are well there in Summit, New Jersey.
Speaker 1: David Deeds as the president and chief investment strategists at
Speaker 1: Point View Wealth Management, joining us on the phone from
Speaker 1: New Jersey. Thanks for listening to Bloomberg Business Week. You
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Speaker 1: dot com. You can also listen to our radio show
Speaker 1: every weekday at two pm Eastern, only on Bloomberg Radio