Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
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Speaker 1: Week on iTunes, SoundCloud, al Bloomberg dot com. You can
Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Not to be too much
Speaker 1: of a homer to parochial, but we're very focused on
Speaker 1: New York City and what's happening here because we remember
Speaker 1: all too well what happened earlier in this pandemic. Let's
Speaker 1: check in with Dr David Levy. He is chief executive
Speaker 1: offer of E h E Health. He joins us on
Speaker 1: the phone from New York City. Dr Levy, really nice
Speaker 1: to have you with us. Thank you very much for
Speaker 1: inviting me. So let's talk about New York. Let's get
Speaker 1: right down to it. Because you're seeing the same numbers,
Speaker 1: and probably more numbers than we are. You're also looking
Speaker 1: at them with a much more sophisticated eyes, certainly than
Speaker 1: I am. What do we need to know? What should
Speaker 1: we be worried about? What should we not be worried
Speaker 1: about as we see this new data. Well, it's important
Speaker 1: to understand that um uh, it's not unexpected that we
Speaker 1: should get spikes and we should get focal outbreaks, particularly
Speaker 1: since the only tools we have at hand or what
Speaker 1: I call public health one oh one, namely masks, washing
Speaker 1: your hands, social distance testing, UH, contact tracing, and quarantine.
Speaker 1: And frankly, if people relax from those disciplines, then we're
Speaker 1: going to likely see focal outbreaks. And I think as
Speaker 1: you see UH and UH has been highlighted by both
Speaker 1: the government and mayor, some of these outbreaks are happening
Speaker 1: in particular neighborhoods, and likely at the bottom of it
Speaker 1: is people who have relaxed on those disciplines. Well, and
Speaker 1: it's interesting. I wanted you to talk a little bit
Speaker 1: about what you guys are seeing at your company, specifically
Speaker 1: in terms of virus trends. UH and other healthcare trends
Speaker 1: pandemic related or other. Right, So, uh, you know, what
Speaker 1: we've been focused on not only is getting our folks
Speaker 1: back to work and helping other companies get their folks
Speaker 1: back to work, uh, and keeping people informed on kind
Speaker 1: of what we call the public health one on one
Speaker 1: and frankly cautiously optimistic through the emerging new technologies that
Speaker 1: we believe by Q one of next year will really
Speaker 1: make a dentedness and that's basically rapid testing anti virals
Speaker 1: and vaccines. We think we're going to see the waning
Speaker 1: of this and the economy coming back certainly by the
Speaker 1: end of the first quarter of next year. Now I'm
Speaker 1: saying that cautiously optimistically. You know, we call epidemiology the
Speaker 1: exact science of probabilities. But in the end we feel
Speaker 1: pretty comfortable about that. But we're we're now focused on
Speaker 1: is what's going to happen after the epidemic. And what's
Speaker 1: pretty shocking is some emerging evidence, particularly from some of
Speaker 1: the large health payers. And I'm referring specifically to a
Speaker 1: webcast we did in conjunction with the United Health Group
Speaker 1: last week where we're are seeing upboard of fifty and
Speaker 1: sixty of reduction of preventive health and maintenance visits for
Speaker 1: people who have put off all of that healthcare because
Speaker 1: they're staying home or because it's their state has gone
Speaker 1: into lockdown. And there is going to be a very
Speaker 1: significant accumulation of undetected cancers, undetected uh cardiovascular disease that
Speaker 1: is going to start re emerging in two and I
Speaker 1: think people are going to have to be we should
Speaker 1: start thinking about now how to be prepared for that.
Speaker 1: And that's simply because people just aren't going for checkouts
Speaker 1: and so things that would be detected in the normal
Speaker 1: course of business just aren't. That's exactly right. So let
Speaker 1: me tell you some statistics for New York City wellness
Speaker 1: visits down, diabetes screening down, breast cancer screening down, colon
Speaker 1: cancer screening down. So we have a whole cohort of
Speaker 1: maybe close to a year of people getting all this
Speaker 1: stuff done who aren't getting it done. Well, you know,
Speaker 1: just because we don't do the testing doesn't mean they're
Speaker 1: not going to have the disease. And ultimately we're going
Speaker 1: to start seeing all of this backlog start to come
Speaker 1: up and at a later stage, and really it's ugly
Speaker 1: head frankly in the year two and beyond. So where's
Speaker 1: the health care system helping individuals? Because I think what
Speaker 1: happened was health care systems just shut down and basically
Speaker 1: would only take COVID. You know, patients are dealing with COVID,
Speaker 1: and I understand it because these systems were strained. But
Speaker 1: where is the health care community. You know, on a
Speaker 1: large scale, this is a war. This is a health war,
Speaker 1: you know, coming together and saying, Okay, this facility is
Speaker 1: going to be for you know, routine checkups and routine
Speaker 1: conditions and making sure that we're doing you know, colon
Speaker 1: screening and and breast cancer screening and all of that.
Speaker 1: Where is that happening, especially if we go into a
Speaker 1: second wave or as we were talking with some of
Speaker 1: our our market folks, possible third wave. So, Carol, that's
Speaker 1: a great point. Look buying necessity. When you have like
Speaker 1: we had a New York and overwhelming number of cases,
Speaker 1: you have to focus on the people who are very
Speaker 1: ill and who are dying, There's no question about that.
Speaker 1: But as you move through the stages where the hospitals
Speaker 1: now have capacity and the health care system has capacity,
Speaker 1: you know, people are reopening all over the country. Primary care,
Speaker 1: preventive care, health systems are reopening and trying to encourage
Speaker 1: their patients to come back. You see ads all over
Speaker 1: the place. The problem actually isn't the health systems and
Speaker 1: the and and and the and and the providers. The
Speaker 1: problem is people are afraid. Uh, they don't understand that
Speaker 1: they're not going to get COVID in hospital or the
Speaker 1: doctor's office that has taken care of and made the
Speaker 1: environment as safe as possible. They're going to get COVID
Speaker 1: likely if they show up in bars, in crowds and
Speaker 1: they're not wearing masks and they're not social distancing. It's
Speaker 1: not a it's not a well controlled hospital, it's not
Speaker 1: a well controlled doctor's office where they're going to get it,
Speaker 1: and so and and Frankly, people are afraid. They're afraid
Speaker 1: to use the public transfer system. They're really afraid to
Speaker 1: step out and start re engaging in these behaviors and
Speaker 1: and candidly at E H E Health, that's what we're
Speaker 1: up to. We're up to reaching out to these people,
Speaker 1: helping them step out and get back into brown and healthcare.
Speaker 1: We talked about preventive healthcare, and you know, Jason brought
Speaker 1: up the point Dr David dr Levy that you know,
Speaker 1: are we seeing kind of a rethink when it comes
Speaker 1: to corporate health plans and just healthcare in general, that
Speaker 1: it is becoming more about preventive. We know it needs
Speaker 1: to be, but are we seeing any kind of concrete
Speaker 1: steps that are taking us there. Yeah, well that's a
Speaker 1: great question. So just as a backdrop, we published a
Speaker 1: paper with our colleagues at the Mailment School of Public
Speaker 1: Health at Columbia and IBM Watson Health in March showing
Speaker 1: that despite Obamacare covering preventive visits, only about people go
Speaker 1: and when they go they don't even get the right stuff. Now,
Speaker 1: the interesting thing about the COVID pandemic is that it
Speaker 1: preference re league, hurts and kills people who have diseases
Speaker 1: of lifestyle overweight, high blood pressure, diabetes, cardiovascular disease. And
Speaker 1: in fact, the mortality is about ten times uh the
Speaker 1: expected mortality when you have one of those lifestyle diseases
Speaker 1: and you get admitted to the hospital for COVID. And
Speaker 1: so what employers are now becoming are now coming to
Speaker 1: understand that having invested properly in prevention, you can actually
Speaker 1: immediately reduce the co morbidity effect of the mortality of
Speaker 1: of COVID nineteen. And in fact, when we looked at
Speaker 1: our patients, we saw that when they came in for
Speaker 1: routine and you will preventive visits, they had half the
Speaker 1: prevalence of those risk factors. So I think this epidemic
Speaker 1: has been really interesting and getting employers focused once again
Speaker 1: on getting everybody in for prevention and getting health maintenance
Speaker 1: finally to where it needs to be, namely for everybody.
Speaker 1: So then Dr Levy, how do we do that? I mean,
Speaker 1: is going to come down to smart, candidly cost conscious,
Speaker 1: but also health conscious and employee conscious employers forcing the
Speaker 1: system to change because the system seems doesn't seem to
Speaker 1: have the right economic incentives in place. I dare say,
Speaker 1: right now to achieve what you're talking about, right, I
Speaker 1: mean now healthcare purchasing. Purchasing is all about the immediate,
Speaker 1: immediate return of investment and the reduction of healthcare claims.
Speaker 1: That's a very short sighted approach. Those employers who are
Speaker 1: interested in the retention of talent and optimal productivity, those
Speaker 1: are the employers and frankly, who are our customers who say, wait,
Speaker 1: a minute. We need to look at the entire balance
Speaker 1: sheet of good health, not just on healthcare claims, but
Speaker 1: on productivity, on retention, engagement, reduction, and short term disability,
Speaker 1: long term disability, and all of those things. And that's
Speaker 1: where the rewards are very, very big. But you're absolutely right,
Speaker 1: it is very difficult to convince folks who are buying
Speaker 1: healthcare in the moment to have a longer view because
Speaker 1: it's really, you know, a year to year kind of
Speaker 1: a view on you know, what's my healthcare going to cost,
Speaker 1: as opposed to the long view on really what's optimal healthcare?
Speaker 1: Looked like an optimal productivity alright, So one thing you
Speaker 1: could change right now or get you know, corporate programs
Speaker 1: or corporations to change in terms of how they think
Speaker 1: about health care for their employees. That would be more
Speaker 1: about preventive rather than oh my god, crisis, we've got
Speaker 1: to do something. Um what would you do? Well? Now
Speaker 1: is no better a time because you know, I use
Speaker 1: this expression COVID compresses time. So today, somebody for diabetes,
Speaker 1: you don't you know, you may have had let's let's
Speaker 1: say last year with diabetes, you may have had ten
Speaker 1: or twenty years to worry about if they were going
Speaker 1: to die of the complications of diabetes. Well, with COVID around,
Speaker 1: they could die tomorrow. And so now is now is
Speaker 1: the absolute perfect time to get involved in prevention because
Speaker 1: it's not even an investment for the next ten or
Speaker 1: twenty years. It's an investment for today because with this
Speaker 1: pandemic and with all of these people pretend exposed to
Speaker 1: something that could kill them tomorrow with one of these
Speaker 1: lifestyle illnesses, invest right now, no better time, that's my
Speaker 1: point of view. All right, well, here's hoping. I mean,
Speaker 1: I think I think you've sold us Dr David Levy,
Speaker 1: and I certainly believe in the preventive medicine. And listen,
Speaker 1: I think more and more companies are thinking about this,
Speaker 1: and we talk about COVID really being the great accelerant
Speaker 1: uh and I really liked your phraseology there that COVID
Speaker 1: compresses time. We certainly have felt that in many ways,
Speaker 1: and it feels like it is reimagining, forcing us to
Speaker 1: reimagine Carol a lot of different industries. Dr David Levy
Speaker 1: is the CEO of E H E Health. He joined
Speaker 1: us on the phone from New York City. Great context.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio, two of our faves on the
Speaker 1: line now, and this is a story. It's timely, it's
Speaker 1: well reported, so many things that we always ascribed to
Speaker 1: both Business Week and to this reporter, Shawn don and
Speaker 1: senior trade and globalization reporter for Bloomberg. He joins us
Speaker 1: from Maryland, and his story is a fantastic preview, a
Speaker 1: different sort of preview of what we're going to see
Speaker 1: tonight because it takes us right to the site of
Speaker 1: the debate. Sean is with us along with Joel Weber,
Speaker 1: the editor of Bloomberg Business Week. So Joel, this is
Speaker 1: a piece that you can find online and on the
Speaker 1: Bloomberg terminal. Tee it up for us. So Sean has
Speaker 1: spent um a fair amount of time going to places
Speaker 1: um that I think are are really important, um in
Speaker 1: part for the election, but also in part of the
Speaker 1: bigger story that is sort of upon America right now.
Speaker 1: And Cleveland has actually figured into that reporting a lot.
Speaker 1: This is sort of part two of a Cleveland series
Speaker 1: that he's been working on, and it's specifically about the
Speaker 1: Cleveland Clinic, which is sort of a renowned medical center. Um.
Speaker 1: But what's actually been interesting, and this kind of gets
Speaker 1: right to the heart of of Sean's story, is as
Speaker 1: the clinic has thrived, basically the black neighbors and the
Speaker 1: black neighborhood that surrounds the Cleveland Clinic has actually seen
Speaker 1: its health deteriora. Seohn picking up from there, what what
Speaker 1: did you discover during your reporting? Yeah, so, I mean
Speaker 1: the Cleveland Clinic is this world leading health institution. If
Speaker 1: you are going to get a higher bypass operation, this
Speaker 1: is probably where you want to go. It's the place
Speaker 1: where they really perfected it in the nineteen sixties and
Speaker 1: they've built it a whole fortune, a real thriving business
Speaker 1: on the back of this. The Cleveland Clinic last year
Speaker 1: had ten point five billion dollars in revenues. It's going
Speaker 1: to open a new hospital in London later this year.
Speaker 1: It's also in the Middle East. It's opening a new
Speaker 1: hospital in China in in the next couple of years.
Speaker 1: It's become this world renowned institution, and it's also become
Speaker 1: a great example of what people talk about when they
Speaker 1: talk about the EDS and MEDS economic development model for cities.
Speaker 1: You know, after manufacturing left a lot of cities like
Speaker 1: like like Cleveland. People were looking at alternatives and and
Speaker 1: they look to education, and they look to the health
Speaker 1: care sector. And we've seen institutions like the Cleveland Clinic
Speaker 1: thrive in recent decades. The problem is that you go
Speaker 1: to Cleveland, you step out beyond the main campus. There's
Speaker 1: a hundred and sixty five acres in the middle of Cleveland, uh,
Speaker 1: and you walk not even a couple of blocks. You
Speaker 1: walk a block, and what you discover is you are
Speaker 1: in neighborhoods that have some of the highest poverty rates
Speaker 1: in the nation, and where a kid who's born today
Speaker 1: is gonna it has a life expectancy that's twenty years
Speaker 1: less than a kid who is who's born a fifteen
Speaker 1: minute drive away. And that really, right now, in the
Speaker 1: middle of an economic crisis, illustrates this kind of American
Speaker 1: paradox that we have in terms of inequality. You can
Speaker 1: have world beating institutions like the Cleveland Clinic, and right
Speaker 1: next door you can have black neighborhoods that are just
Speaker 1: really just being left behind. There's no other way to
Speaker 1: describe it, all right, So describe to us, though, what
Speaker 1: the CEO of the Cleveland Clinic told you, I mean,
Speaker 1: I gotta read the quote. Cleveland is that our name,
Speaker 1: he says, But we cannot thrive as an organization unless
Speaker 1: the communities in which we reside thrive with us. So
Speaker 1: there they see at front and center. How are they
Speaker 1: dealing with it? What are they doing doing to change
Speaker 1: this conversation? Right? So that CEO Tom Halovich is a
Speaker 1: Croatian born heart surgeon who took over as the CEO
Speaker 1: of the clinic in and he says he has made
Speaker 1: raising up the neighborhoods around the Cleveland Clinic one of
Speaker 1: the one of his priorities. And he's recognizing tacitly by
Speaker 1: doing that that they haven't done enough in the past
Speaker 1: to do that. And so they're starting, and we should
Speaker 1: say they're starting slowly to to invest in different things,
Speaker 1: whether it's adding to their work in community health centers.
Speaker 1: And there's a big project that's about to get launched
Speaker 1: right next door to the Cleveland Clinic. It's a project
Speaker 1: called Innovation Square. It's being run by Community Development Corporation there.
Speaker 1: It's gonna cost about three hundred million dollars over the
Speaker 1: next five years to really redeveloped a neighborhood and bring
Speaker 1: back grocery stores because we're talking about food deserts right
Speaker 1: right around the clinic there. Bring back new, hot, new
Speaker 1: housing there. And the Cleveland Clinic says it's going to
Speaker 1: get involved in that project. We don't know how much,
Speaker 1: but we need to put that all in perspective at
Speaker 1: the same time. So we're getting this kind of good
Speaker 1: will from the Cleveland Clinic, but there's this three million
Speaker 1: dollar project next door, and you put that in the
Speaker 1: context of of the business that is the Cleveland Clinic.
Speaker 1: Over the next five years, if they keep going the
Speaker 1: way they've been going, they're gonna make something like fifty
Speaker 1: billion dollars in revenues. That entire three million dollar project
Speaker 1: is zero point six percent of revenues. They're also sitting
Speaker 1: on one point five billion dollars cash in hand at
Speaker 1: the end of June, which means that they could effectively
Speaker 1: just write a check for this entire project, and and
Speaker 1: and they're not. So it's a complicated story. It's it's
Speaker 1: it's it's tough because the institution is recognized as the problem.
Speaker 1: It clearly is trying to do something, but there's big
Speaker 1: questions about whether they're doing enough. So Sean synthesize this
Speaker 1: with some of the other work you've been doing, because
Speaker 1: there is a political undercurrent to all of this. You
Speaker 1: are describing one of the key economic questions of this
Speaker 1: entire presidential race in this election here in many ways,
Speaker 1: all these things that have been laid bare by not
Speaker 1: just the coronavirus crisis, but this overdue reckoning with race
Speaker 1: and inequality in America. How does this fit in with
Speaker 1: some of the other things you've seen as you've been
Speaker 1: doing reporting about some similar places that illustrate inequity in
Speaker 1: this country. Yeah, well, look, I mean, we we know
Speaker 1: that President Trump was writing at what he considered a
Speaker 1: healthy economy into uh into this election year, and that
Speaker 1: the pandemic upended all that. But what the pandemic really
Speaker 1: did was it shown a spotlight on these real structural
Speaker 1: inequalities in the American economy right now. And the real
Speaker 1: risk that we have right now coming out of this
Speaker 1: economic crisis is that these things are only going to
Speaker 1: get worse, that they're not going to get better. I've
Speaker 1: got some more reporting coming that will that will that
Speaker 1: will look at the housing market in Cleveland, which is
Speaker 1: really interesting. Uh, But the reality is we are and
Speaker 1: we sometimes forget it because a lot of us are
Speaker 1: sitting at home and we're spending time with the kids
Speaker 1: and we're learning how to bake bread. But there's a
Speaker 1: lot of people out there who are really being damaged
Speaker 1: in this economy, and and and and who are hurting
Speaker 1: in this economy. And in some cases those are people
Speaker 1: who were hurting beforehand, but we kind of tended to
Speaker 1: have forgotten about. Yeah. Well, it is a phenomenal piece
Speaker 1: of reporting. As always, Sean Donn and your body of work,
Speaker 1: I feel like has been at the core of all
Speaker 1: of these issues that we're wrestling with and we have
Speaker 1: to keep wrestling with. So thank you for bringing this
Speaker 1: story to Sean Donna, senior Trade and globalization reporter for Bloomberg.
Speaker 1: He joined us on the phone from Maryland. Check out
Speaker 1: his story. It's online and on the Bloomberg terminal. Say
Speaker 1: our things as well. To Joel Webber, the editor of
Speaker 1: Bloomberg Business Week, I'm gonna think about the Cleveland clinic
Speaker 1: different way when I'm watching the debate tonight. You're listening
Speaker 1: to Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. All right, for this edition of Business
Speaker 1: Week Economics, let's check in with Ali Wolfe, chief economist
Speaker 1: at Myer's Research, joining us on the phone from Irvine, California. Ali,
Speaker 1: really good to have you back with us. Hi, Jason
Speaker 1: and Carroll keep having me all right, so can we
Speaker 1: make sense of the economy and like, you know, like
Speaker 1: six seven men, it's here with you because no pressure.
Speaker 1: But it's kind of a mess. We're trying to find
Speaker 1: the right data. We're dealing with the potential second wave
Speaker 1: and a presidential election that's throwing all sorts of headlines
Speaker 1: at us. What do the data tell us? So I
Speaker 1: love that you said we're trying to find the right
Speaker 1: data because if you you right saw this morning consumer
Speaker 1: confidence trends came out and August last month, when we
Speaker 1: were talking to clients, we said, hey, you know, just
Speaker 1: watch out because consumer confidence is at the lowest level
Speaker 1: since the pandemic started, lower than March and April. We
Speaker 1: were like, what are consumers telling us? And then today,
Speaker 1: of course September came out the highest level since the
Speaker 1: pandemic hit. So I think right now consumers are going
Speaker 1: through the same whiplash. As industry analysts, it depends on
Speaker 1: the day, the data, the trend, and you get a
Speaker 1: completely different story of where the economy is. So how important, though,
Speaker 1: is all of that consumer's sentiment ultimately on additional stimulus
Speaker 1: we get from the pandemic, especially if we continue to
Speaker 1: see the economy having to remain in some kind of
Speaker 1: lockdown state, if we start to see more waves um
Speaker 1: talk to us a little bit about that and how
Speaker 1: much of this also is dependent on the job's environment
Speaker 1: and whether or not we see people going back to
Speaker 1: work or continuing to go back to work. Yeah, And
Speaker 1: I think that's been one of the surprising things is
Speaker 1: as we do look at the data, the economy is
Speaker 1: holding up. I know that there's a lot of talk
Speaker 1: that it's losing momentum, but it is holding up all
Speaker 1: things considered. We're still in the middle of a pandemic,
Speaker 1: and as Dave Paul said at his press conference, we're
Speaker 1: learning to live with the virus. And as I talked
Speaker 1: to some of my co workers across the country, they say, life,
Speaker 1: depending on where you live and depending on how you're
Speaker 1: thinking about the virus, looks pretty normal. But the concern
Speaker 1: at this point is that the easy gains have been made,
Speaker 1: as you mentioned with the jobs. Yeah, we're still adding jobs,
Speaker 1: but we're eleven point five million people shy of February
Speaker 1: the labor force, and that doesn't account for the three
Speaker 1: point seven million people that have just ultimately left the
Speaker 1: labor force since February. And that's one of the biggest
Speaker 1: things because a lot of people are stepping out for
Speaker 1: childcare reasons. So let's talk about something that we have
Speaker 1: talked a lot about on this program, and I'm dying
Speaker 1: to get your take on it, Alley, which is the
Speaker 1: K shaped recovery. It when you said, uh, something a
Speaker 1: minute ago about sort of depends on who you are,
Speaker 1: where you live, what your job is. That calls to
Speaker 1: mind this idea of the K shaped recovery. Give me
Speaker 1: your reaction to that notion and that description of this
Speaker 1: recovery that we're in, whatever it may look like. The
Speaker 1: K shape is the reason we do not have another
Speaker 1: stimulus deal because if you look at the stock market
Speaker 1: and you look at the unstoppable housing market, there are
Speaker 1: parts of the economy that why do you need to
Speaker 1: give them additional money? And I think a lot of economists,
Speaker 1: myself included said, oh gosh, watch for the end of July,
Speaker 1: we're going to really see the economy tanks and it's
Speaker 1: held up all things considered. So that's been one of
Speaker 1: the biggest issues. But as we're seeing today, Pelosi and
Speaker 1: Treasury Secretary Revolution are looking at maybe getting closer to
Speaker 1: a stimulus steal. But they have to be careful because
Speaker 1: I agree with the Republicans we don't need another two
Speaker 1: to three trillion, because we already have trillions of dollars
Speaker 1: slashing around in the economy. But I agree with the
Speaker 1: Democrats that it needs to be targeted because if you're
Speaker 1: in a K shape recovery, don't keep giving money to
Speaker 1: top half of the K and expecting a different result.
Speaker 1: You need to make sure that that bottom half of
Speaker 1: the K is getting the right money when they really
Speaker 1: need it. Well, how important and let's talk about this,
Speaker 1: that bottom part of the K. How important is it
Speaker 1: ultimately to the US economy? We, you know, at nauseam
Speaker 1: talk about the importance of small business owners and small
Speaker 1: businesses to our economy. You know, are we providing enough
Speaker 1: aid for that part of our economy? No, we're not
Speaker 1: providing enough aid right now, And and I think another
Speaker 1: one of the issues is if you look at the
Speaker 1: savings rate, if you were in the bottom half of
Speaker 1: the K and you were getting that extra six federal
Speaker 1: federal stimulus. We know the stats about six people were
Speaker 1: earning more money by being on that unemployment insurance. They've
Speaker 1: been able to save some of their money. So when
Speaker 1: you look at the personal savings rate, that looks okay,
Speaker 1: but that's going to start coming down. And that's coming
Speaker 1: down partly because the top half of the K is
Speaker 1: going out and spending money, but partly because the bottom
Speaker 1: half of the K is never starting to run out.
Speaker 1: They're starting to tap into their savings accounts and that's
Speaker 1: not unlimited. That's not going to go on indefinitely. So
Speaker 1: we have to look at, uh, what's the top up
Speaker 1: to the unemployment insurance. I know there's that joke about
Speaker 1: the lazy economy giving the six hundred, So okay, fine,
Speaker 1: do the three hundred, but make sure you're also giving
Speaker 1: money to the state and local governments, to small businesses,
Speaker 1: two people on the rent and mortgages so they don't
Speaker 1: end up homeless. So there's still is just needs to
Speaker 1: be a really really targeted effort. What happens if we
Speaker 1: don't get that, What does it look like and how
Speaker 1: soon do we see it? Alle? Well, the economy is
Speaker 1: going to backpedal, but it's not going to happen that quickly. Again,
Speaker 1: that's kind of been the lesson learned to all of
Speaker 1: us is when you throw three trillion dollars into an
Speaker 1: economy that only slowed for two months, that actually can
Speaker 1: keep you going for a while. So I don't think
Speaker 1: we're going to see that backpedal. We'll see the savings
Speaker 1: start to go down. We'll see the amount of people
Speaker 1: unable to pay the rent or pay the mortgage start
Speaker 1: to increase. But that's gonna be a slow burn, maybe
Speaker 1: the next six months. Yeah, I mean, I just feel
Speaker 1: like it's just a tricky, tricky moment. Listen to the
Speaker 1: debate tonight, just got thirty seconds. What do you want
Speaker 1: to know on the economic front from Biden and from
Speaker 1: Trump just quickly? Are they able to bring back by
Speaker 1: partisan politics? Are they able to put things aside and
Speaker 1: actually make sure that we don't backpedal in the economy? No? No,
Speaker 1: I mean really, really, Alli, what do you want to know?
Speaker 1: Help springs a eternal Alie, We really appreciate it as always.
Speaker 1: Ali Wolf is chief economists for Myer's Research. She joined
Speaker 1: us on the phone from Irvine, California. It's a really
Speaker 1: nice analysis there of the K shaped recovery and sort
Speaker 1: of how we need to be thinking about it. And
Speaker 1: she's exactly right. The K shape recoveries why we haven't
Speaker 1: gotten more stimulus. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. In this week's
Speaker 1: edition of Bloomberg Business Week, small business Survival Guy TikTok.
Speaker 1: Many small business owners men who took part in the
Speaker 1: paycheck Protection program. They got loans as part of the program.
Speaker 1: They're watching the clock because they're now waiting on the
Speaker 1: forgiveness of those loans. Let's talk about that with Bloomberg
Speaker 1: News editor de Meetri cass and Needy. She's joining us
Speaker 1: on the phone on this Tuesday. Man, that program was
Speaker 1: a lifeline for many, but I think some of them
Speaker 1: are now nervous. Oh yeah, some of them are very
Speaker 1: nervous right now. There were millions that applied for it.
Speaker 1: You know, about five billion dollars listed versed in aid
Speaker 1: and from the be giving. One of the things that
Speaker 1: was really emphasized with this program was that many of
Speaker 1: these loans would be forgiven provided that you met certain
Speaker 1: criteria and that you know, we we still believe that
Speaker 1: that will be the case. But of course, as we've
Speaker 1: experienced with this program from the very beginning, there have
Speaker 1: been many delays. There are questions now about whether new
Speaker 1: programs are going to be approved by Congress in the
Speaker 1: coming weeks. So many lenders are encouraging small businesses to
Speaker 1: hold off on submitting the forgiveness applications. But you know,
Speaker 1: when you're confronting loans of any amount, you know, it
Speaker 1: could be a hundred fifty thousand dollars you're a very
Speaker 1: small business, it could be double that amount, you know,
Speaker 1: and you're thinking that it's not an amount you can
Speaker 1: pay back. It's really causing a lot of anxiety right now.
Speaker 1: And so what is it? It's a great piece by
Speaker 1: Nick liber that is available via the terminal in business
Speaker 1: week dot com and through the small business Survival guide Demitra.
Speaker 1: What what can they do? What? Especially because we're all
Speaker 1: sort of waiting for more stimulus, what's the playbook here? Sure? Well, um,
Speaker 1: you know, we have a number of several pieces of advice.
Speaker 1: Nick interviewed Chris um Leavy. He is the senior vice
Speaker 1: president at one of the c s excuse me, c
Speaker 1: d f I s. You know, we've talked about these
Speaker 1: a lot community development financial institutions. UH, and this is
Speaker 1: a person who has a lot of experience with these loans.
Speaker 1: So the advice from Chris and from others that Nick
Speaker 1: has talked to is, you know, first, you really do
Speaker 1: have to just kind of take a step back, to
Speaker 1: take a Z breath and be patient, but use the
Speaker 1: time right now because Pursuits, which is the name of
Speaker 1: the company Chris leave you work for, and other institutions
Speaker 1: and lenders are not yet processing these applications. The reason
Speaker 1: they're not is because they are anticipating that Congress is
Speaker 1: either going to approve another PPP like program or they're
Speaker 1: going to pass some other legislation. There's broad bipartisan support
Speaker 1: for a handful of programs that are going to better
Speaker 1: define the terms of the forgiveness, which is going to
Speaker 1: make the application process easier. So that is a point
Speaker 1: to emphasize that if your patients and if we hold
Speaker 1: off on actually submitting right now, it'll save us having
Speaker 1: to resubmit having to refile documents. So use the time
Speaker 1: to gather up all the information you're gonna need. You know,
Speaker 1: the information about your payroll, about your rent, about what
Speaker 1: the other expenses were that you spent the p p
Speaker 1: P on. Read up on what the various changes have
Speaker 1: been over the last few months with PT either from
Speaker 1: the website of your own lender or from many other
Speaker 1: resources that exist out there on the internet. And then
Speaker 1: be prepared to have a process that's going to go
Speaker 1: a little more smoothly once they say yes, okay, now
Speaker 1: we're ready to process these applications. So um, it's it's
Speaker 1: tricky because it's testing. It is testing people's you know, patients,
Speaker 1: And again you're anxious and you think, well, what you're
Speaker 1: telling me is I just have to wait. You know
Speaker 1: that's that really doesn't sound patience. But there are so
Speaker 1: many intricacies here, and there are so many rules and
Speaker 1: regulations that changed over the last few months. So it's
Speaker 1: really good for a small business to become as knowledgeable
Speaker 1: as they can and to really then also consider going forward,
Speaker 1: let's say there are going to be new programs, to
Speaker 1: really consider what maybe going to make the most sense
Speaker 1: for them in terms of what their needs are going
Speaker 1: to be because this is a process that of course
Speaker 1: we'll inform that and we'll help them well. And what
Speaker 1: you know, if there's a lesson here right as you
Speaker 1: guys right in this story, uh and as Nick reports,
Speaker 1: I mean, this whole program has evolved as this this
Speaker 1: situation has gone on, and that's something to keep in
Speaker 1: mind exactly. I mean, you know, I think that um
Speaker 1: not in haste, but you know, somewhat hurriedly. The program
Speaker 1: was put together because of the great need. An agency
Speaker 1: that typically deals with a fraction of the number of
Speaker 1: things that the SBA has been dealing with has been
Speaker 1: inundated with all kinds of applications and other matters that
Speaker 1: they need to deal with. So you know, it does
Speaker 1: take time. Also, you know, once you submit that application,
Speaker 1: there is there is still a waiting period. There's a
Speaker 1: ten month period that they can uh you know, the
Speaker 1: the SBA can take to make a determination then. You know,
Speaker 1: so you do have to accept that there's a lot
Speaker 1: of time built into this because of volume and number
Speaker 1: of applications and against factors that might change. There are
Speaker 1: you know, categories that haven't been very well defined. Some
Speaker 1: lenders have said that now they're reading that the p
Speaker 1: p P forgiveness if you also received the other type
Speaker 1: of loan that we've written a lot about, the e
Speaker 1: I d L loans, the Economic income disaster loans, um
Speaker 1: that that amount then must be deducted from what you
Speaker 1: received from p p P, and you'll get forgiveness on
Speaker 1: that amount right on the on the PPP minus the ideals.
Speaker 1: That seems to be news to many people who are
Speaker 1: now handling these situations. So there's further clarity emerging on
Speaker 1: the way that this is being approached. And I don't
Speaker 1: think you know, I mean, we have to believe that
Speaker 1: this is really born again of just so much that
Speaker 1: everybody is dealing with, and it attempts to really just
Speaker 1: be as clear as they can be. And it all
Speaker 1: happen so quickly, I mean to think about it so fast,
Speaker 1: so fast, and we knew that things were not maybe
Speaker 1: going to go super smoothly. Dimitri Casinitis, thank you so much.
Speaker 1: Check out more of those stories stories just like this
Speaker 1: at the Small Business Survival Guide at Bloomberg dot com.
Speaker 1: A journal. Now that you let me drive, Oh no, no, no, non, please,
Speaker 1: I'll do the writing. Excuse me, I want to drive,
Speaker 1: just drive by the questions trying. This is the drive
Speaker 1: to the globe. Thanks Bloomberg Radio. It is time for
Speaker 1: the drive for the clothes. Let's check in with our buddy.
Speaker 1: Aaron Kennon, co founder CEO of Clear Harbor Asset Management,
Speaker 1: managing approximately eight hundred million dollars. He journs on the
Speaker 1: phone from Stamford, Connecticut. Aaron, how are you what's going
Speaker 1: on over in Stanford? Well, I think things are fine here.
Speaker 1: Thanks for asking, Jason. I hope, hope all as well
Speaker 1: in the city. Right. I know, the last time we
Speaker 1: talked to you, we were kind of we went down
Speaker 1: a rabbit hole. We did because we were blown away
Speaker 1: because in New York it's like yeah. And then Bright
Speaker 1: came on to talk about the market and I ended
Speaker 1: up talking about real estate and Connecticut. Guys. Thanks and
Speaker 1: Jessie your media team, like, um, Aaron, Um, that was
Speaker 1: that was really good. But um, we're sorry that we
Speaker 1: did that to you. But um, you know those guys.
Speaker 1: Date of Connecticut, State of Connecticut was quite happy with it. Yeah, exactly.
Speaker 1: State of Connecticut with governor called you up and said
Speaker 1: thank you very much. But listen, I have to tell you.
Speaker 1: Jason and I after that conversation talk so many times
Speaker 1: about that conversation because you guys were very definitive. You
Speaker 1: were in New York and you made a change. You
Speaker 1: are now in Connecticut, you're outside the city, and you're
Speaker 1: being very open right with your employees about how they
Speaker 1: want to work. Absolutely, you know, flexibility is the key,
Speaker 1: uh in in any marketplace, and we wanted to get
Speaker 1: ahead of this. We also wanted to bring back our team,
Speaker 1: and so we have our team back here. Not everyone
Speaker 1: is here every day, but um, you know, I believe
Speaker 1: in the collegiality of of sort of working in a
Speaker 1: live setting, and and people wanted to get back to
Speaker 1: work and they didn't want to use public transportation. So
Speaker 1: you know, we acted quickly and I think it ultimately
Speaker 1: was to the benefit of our clients. Um. And I'm
Speaker 1: really excited about you know, where we are now, and
Speaker 1: it's great to see my colleagues every day. So as
Speaker 1: you are talking to those colleagues, I would imagine, like
Speaker 1: everyone else, you're talking about the state of the world.
Speaker 1: And I would imagine that today around the water cooler
Speaker 1: if there is one, although probably in COVID times that's
Speaker 1: not a good idea. But we're all looking ahead to
Speaker 1: the presidential debate tonight, and even if nobody's mind really
Speaker 1: gets changed, we are reminded that we are in the
Speaker 1: thick of this very contentious election. We're less than forty
Speaker 1: days to go. How do you figure that into the
Speaker 1: investment thesis year? Well, it's it's fascinating. I think this
Speaker 1: will be the most watched UM debate on television and
Speaker 1: forever since nineteen sixty, since we started watching these debates. UM.
Speaker 1: And I think there's a lot at stake, UM at
Speaker 1: some level at a political level, but also at an
Speaker 1: economic level, UM, at a regulatory level. UM. I think
Speaker 1: strategically at a political level, my sense is that Vice
Speaker 1: President Biden has more to to lose UM because he's
Speaker 1: ahead in the polls, UM in some of the key
Speaker 1: battleground states. UM. He seems to be, you know, leaning
Speaker 1: ahead in the polls, and so if he trips up UM,
Speaker 1: I think it could potentially alter uh, the the outcome
Speaker 1: and and you know, sort of reconfigure are thinking around
Speaker 1: UM what UH two thousand and twenty one looks like
Speaker 1: from a policy perspective. But I would also keep in
Speaker 1: mind the Senate race, I think is really perhaps just
Speaker 1: as important if one believes that a balance of power
Speaker 1: in Congress is helpful to the overall economy. And um,
Speaker 1: that's a close race. I mean there are races in Michigan, Montana, Maine,
Speaker 1: South Carolina that are all extraordinarily close, and um, I
Speaker 1: would argue that those are just as critical. What's really
Speaker 1: important down ballot are a critically You're exactly right. What
Speaker 1: I do wonder too, though, Aaron, is that you know,
Speaker 1: Jason and I've talked a lot about there's two stories
Speaker 1: going on. If your investor in the market, like there
Speaker 1: are things, or you're an investor in general, or you're
Speaker 1: at the higher end of the income scale and wealth
Speaker 1: scale in ARCA, you are seeing a different economy in
Speaker 1: world right now versus those at the bottom. And I
Speaker 1: think that is at the core of this election, Like
Speaker 1: who who ultimately gets hurt? Is it major publicly health
Speaker 1: corporations or is it small business on walls, you know,
Speaker 1: on main street? Like I feel like there's that divide,
Speaker 1: and so I don't know what's a priority to you.
Speaker 1: I mean, you're an investor, you know, well, you know
Speaker 1: that's that's a good point, Carol, I I have been
Speaker 1: hearing a lot about this K shaped recovery, and while
Speaker 1: I think there's a lot of merit to it, as
Speaker 1: I look at the market, there's almost a K shaped
Speaker 1: like occurrence within the public equity market. So you look
Speaker 1: at you know, sectors of of the equity markets, like
Speaker 1: technology that are up year to date, um as artificial
Speaker 1: intelligence grows, as the race to the cloud proliferates, um
Speaker 1: as five G rollout continues, there's a lot of great
Speaker 1: tail winds for those companies and their employees of course,
Speaker 1: uh and shareholders. Contrast that with energy, where you've had
Speaker 1: a huge demand shock, um financials where long growth is
Speaker 1: extraordinarily tepid, and those sectors are down and respectively. I'm
Speaker 1: just looking at the screen right now as I talk
Speaker 1: UM and so I think it speaks to sort of,
Speaker 1: you know how in the real economy, which is your question,
Speaker 1: is really very much being reflected UM in the public
Speaker 1: equity marketplace. And so pandemic aside, or maybe there's no
Speaker 1: such thing as pandemic side, maybe election aside, Uh, what
Speaker 1: do you look at over the next sixty days if
Speaker 1: you can sort of set the election aside, Well, we
Speaker 1: We've come a long long way since the March low
Speaker 1: in the equity market, since the FED has entered the
Speaker 1: scene and expanded their balance sheet, and since all of
Speaker 1: the various fiscal proposals have been enacted in in the
Speaker 1: in the trillion of dollars, and we did see that
Speaker 1: massive decline in GDP thirty three about Q two, I
Speaker 1: would expect a significant rise in GDP and Q three
Speaker 1: maybe thirty two thirty three, maybe even more on the upside.
Speaker 1: And so the question in the midst of having grown
Speaker 1: debt to GDP at the public sector level so significantly
Speaker 1: just this year UM and and the balance sheet having
Speaker 1: expanded at the FED by on an annualized basis, is
Speaker 1: sort of this question around are are we did we
Speaker 1: just experience a deep dark recession and are we in
Speaker 1: this new sort of expansionary economic phase which we could
Speaker 1: historic history would suggest last or five to ten years,
Speaker 1: or are are we entering a period of keepic growth
Speaker 1: because we've just put up in place massive debtloads on
Speaker 1: onto the public sector, uh and to some extent the
Speaker 1: corporate sector. And you know time, time will tell. Mean
Speaker 1: there are reasons why one would argue that the glass
Speaker 1: is half full or half empty there, But as an
Speaker 1: adviser to clients, I would just say, we really focus
Speaker 1: on the things that are in our control, and that
Speaker 1: is ultimately, you know, what's the right ASCID allocation for
Speaker 1: the client. Do they have the right risk tolerance reflected
Speaker 1: in that acid allocation? What are their long term goals?
Speaker 1: How do we structure their portfolios in their financial life
Speaker 1: to achieve them. Regardless of whether we're entering that new
Speaker 1: bear market or new BULLMARKETA lots to keep an eye on.
Speaker 1: We really appreciate it. Aaron Kennon, sy, we stuck to
Speaker 1: the markets this time more or less is going to
Speaker 1: be happy this They're going to be happy at this time,
Speaker 1: all right, Aaron Kennon, Really good to catch up. The
Speaker 1: Cup founder CEO of Clear Harbor Asset Management. Thanks so
Speaker 1: much for listening to Bloomberg Business Week. Download the podcast
Speaker 1: on itune, South Cloud, Blomberg dot com, or wherever you
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