1 00:00:02,680 --> 00:00:05,360 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you, 2 00:00:05,400 --> 00:00:07,720 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,760 --> 00:00:10,280 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,320 --> 00:00:12,560 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,600 --> 00:00:15,520 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,560 --> 00:00:18,000 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:18,000 --> 00:00:21,880 Speaker 1: that Bloomberg dot com. When you think about the broader SMP, 8 00:00:22,120 --> 00:00:24,280 Speaker 1: you know, from the peak to trough when this coronavirus 9 00:00:24,400 --> 00:00:26,640 Speaker 1: really hit the markets, we had about a thirty four 10 00:00:26,720 --> 00:00:29,880 Speaker 1: percent decline in the SMP. The markets kind of carved 11 00:00:29,920 --> 00:00:32,720 Speaker 1: back or clawed back about half that and for a 12 00:00:32,760 --> 00:00:36,000 Speaker 1: lot of investors that seems a little bit unusual given 13 00:00:36,159 --> 00:00:38,840 Speaker 1: or incongruous with the data we're seeing, the economic data, 14 00:00:38,920 --> 00:00:42,280 Speaker 1: the jobless data, UH and the data that we're certain 15 00:00:42,320 --> 00:00:45,400 Speaker 1: to see over the coming days, weeks, and months. To 16 00:00:45,479 --> 00:00:47,520 Speaker 1: get a sense of kind of how that's really playing 17 00:00:47,520 --> 00:00:50,400 Speaker 1: out in what the relationship is there between the equity 18 00:00:50,440 --> 00:00:54,240 Speaker 1: markets and the economic environment. We welcome Paul Krugman, Distinguished 19 00:00:54,280 --> 00:00:56,720 Speaker 1: Professor of Economics at the City University of New York. 20 00:00:56,960 --> 00:01:00,720 Speaker 1: He's also a New York Times columnist and Nobel Laurea Paul, 21 00:01:00,760 --> 00:01:03,800 Speaker 1: thanks so much for joining us again. A lot of 22 00:01:03,840 --> 00:01:06,440 Speaker 1: our listeners, a lot of investors are not sure whether 23 00:01:07,000 --> 00:01:09,000 Speaker 1: or how to square it with what's going on in 24 00:01:09,040 --> 00:01:11,720 Speaker 1: the economy, the pain that they're seeing the economy, yet 25 00:01:11,760 --> 00:01:16,000 Speaker 1: the stock market seems to be pretty solid. Yeah. Well, 26 00:01:16,080 --> 00:01:20,120 Speaker 1: the first thing to say is that stock market. As 27 00:01:20,160 --> 00:01:22,080 Speaker 1: I like to say, there are three rules about the 28 00:01:22,120 --> 00:01:24,720 Speaker 1: stock market and the economy, which is that the stock 29 00:01:24,760 --> 00:01:26,800 Speaker 1: market is not the economy. The stock market is not 30 00:01:26,840 --> 00:01:31,120 Speaker 1: the economy, and the stock market economy. Um. And actually, 31 00:01:31,560 --> 00:01:33,760 Speaker 1: beyond the fact that there's a whole lot of psychology 32 00:01:33,760 --> 00:01:36,639 Speaker 1: in the market, and uh, all those kinds of things 33 00:01:36,680 --> 00:01:41,120 Speaker 1: can move stocks, Um, there's the simple fact that, um, 34 00:01:41,200 --> 00:01:45,480 Speaker 1: there there's another market that is much more closely linked 35 00:01:45,480 --> 00:01:48,560 Speaker 1: to economic prospects, which is the bond market. The bond 36 00:01:48,560 --> 00:01:51,040 Speaker 1: market has been telling us something very clearly. If you 37 00:01:51,080 --> 00:01:54,040 Speaker 1: look at at long term interest rates, you see that 38 00:01:54,040 --> 00:02:00,480 Speaker 1: that um, the ten year is falling from almost actually 39 00:02:00,480 --> 00:02:03,600 Speaker 1: a little over three um at at the beginning of 40 00:02:03,600 --> 00:02:08,480 Speaker 1: twenty nineteen and uh well over two percent that you know, 41 00:02:08,639 --> 00:02:11,919 Speaker 1: not not very long ago to to you know, frash 42 00:02:11,960 --> 00:02:16,320 Speaker 1: number percent now thirty year rates down by half since uh, 43 00:02:16,440 --> 00:02:20,919 Speaker 1: since last fall. UM, So the bond market is signaling 44 00:02:21,120 --> 00:02:25,359 Speaker 1: economic weakness. UM. That has a bearing on stocks because 45 00:02:25,800 --> 00:02:28,919 Speaker 1: you know, bonds are the alternative to stocks. A stock 46 00:02:29,000 --> 00:02:31,519 Speaker 1: is a claim on future profits, not just profits in 47 00:02:31,560 --> 00:02:34,720 Speaker 1: the next year, profits some ways into the future. And 48 00:02:34,760 --> 00:02:37,280 Speaker 1: if you're going to discount those future profits at a 49 00:02:37,360 --> 00:02:40,480 Speaker 1: much lower rate because interest rates are down, uh, that's 50 00:02:40,680 --> 00:02:43,600 Speaker 1: an upward push for stocks. So once you take two account, 51 00:02:43,600 --> 00:02:46,040 Speaker 1: the full and interest rates, it's not so peculiar that 52 00:02:46,080 --> 00:02:50,960 Speaker 1: stocks are held up pretty well despite these calamitous economic numbers. Paul, 53 00:02:51,360 --> 00:02:54,280 Speaker 1: is what I'm hearing from you support of the Fed 54 00:02:54,360 --> 00:02:57,960 Speaker 1: bottle the idea that the lower the interest rates, the 55 00:02:58,000 --> 00:03:00,760 Speaker 1: more people will just be pushed into stocks because the 56 00:03:00,840 --> 00:03:06,080 Speaker 1: relative earnings that you get ultimately proved that they become 57 00:03:06,160 --> 00:03:11,239 Speaker 1: attractive regardless of what the economy it seems to be showing. Yeah, 58 00:03:11,240 --> 00:03:14,080 Speaker 1: I mean that's not I mean that's sort of obvious, 59 00:03:14,160 --> 00:03:17,160 Speaker 1: right if you think about there are stocks are competing 60 00:03:17,160 --> 00:03:20,880 Speaker 1: with with other assets, uh, and for money they you 61 00:03:20,960 --> 00:03:23,600 Speaker 1: can't tell what a stock is worth until you tell 62 00:03:23,600 --> 00:03:27,239 Speaker 1: me what what are the alternatives? Um? And the alternatives 63 00:03:27,639 --> 00:03:31,160 Speaker 1: are are actually looking pretty grimply. Uh, the markets just 64 00:03:31,240 --> 00:03:34,080 Speaker 1: saying there's there's just not much yield. Well, although you 65 00:03:34,120 --> 00:03:36,200 Speaker 1: say it's kind of obvious, and yet we see that 66 00:03:36,240 --> 00:03:39,080 Speaker 1: the earnings yield is falling dramatically on stocks as they 67 00:03:39,080 --> 00:03:41,960 Speaker 1: cut their dividends and they cut their payouts, uh just 68 00:03:42,040 --> 00:03:44,880 Speaker 1: in general and share buybacks because they are running out 69 00:03:44,920 --> 00:03:47,840 Speaker 1: of money. So at what point is getting your money 70 00:03:47,880 --> 00:03:52,120 Speaker 1: back a preferable outcome than risking it with a company 71 00:03:52,160 --> 00:03:56,760 Speaker 1: that faces a very bleak outcome. Well, there's a Remember 72 00:03:56,880 --> 00:03:59,720 Speaker 1: the earning deal on bonds is also very long. Now 73 00:04:00,080 --> 00:04:02,680 Speaker 1: again it's really long term bonds. It's half what it 74 00:04:02,800 --> 00:04:07,280 Speaker 1: was before the coronavirus hit, and so um you would expend. 75 00:04:07,560 --> 00:04:11,400 Speaker 1: Remember also that for the value of the stock depends 76 00:04:11,400 --> 00:04:16,120 Speaker 1: a lot on expected future uh yields, not just this year, 77 00:04:16,160 --> 00:04:19,280 Speaker 1: but three, four or five, maybe even ten years out. 78 00:04:19,440 --> 00:04:23,599 Speaker 1: So they it's really is not that peculiar. Um what 79 00:04:23,760 --> 00:04:26,479 Speaker 1: the old The question is, at what point do people say, 80 00:04:27,000 --> 00:04:29,200 Speaker 1: all of these yields are so low that I'm going 81 00:04:29,279 --> 00:04:34,440 Speaker 1: to I'm scared and I'm just gonna go into cash. Um. 82 00:04:34,560 --> 00:04:37,120 Speaker 1: And that's that actually was happening for a couple of 83 00:04:37,200 --> 00:04:40,800 Speaker 1: weeks in March. We had a point there where everything froze, 84 00:04:40,640 --> 00:04:44,800 Speaker 1: where bond prices and stock prices both fell, where UM 85 00:04:45,040 --> 00:04:48,599 Speaker 1: where corporate bonds were selling at the deel on corporate 86 00:04:48,640 --> 00:04:52,640 Speaker 1: bonds shot up because people were afraid of default and 87 00:04:52,680 --> 00:04:56,000 Speaker 1: the and the stocks created UM that came to a 88 00:04:56,160 --> 00:05:00,520 Speaker 1: pretty abrupt end UH in late March, and stops be bounded, 89 00:05:00,600 --> 00:05:02,640 Speaker 1: making up you know, something like half the losses that 90 00:05:02,640 --> 00:05:05,600 Speaker 1: they've experienced. But that's the story. The As long as 91 00:05:05,640 --> 00:05:10,680 Speaker 1: people are not afraid of a real financial crisis, and 92 00:05:10,720 --> 00:05:13,840 Speaker 1: at the moment that that fear has receded, UM, then 93 00:05:13,880 --> 00:05:15,760 Speaker 1: it makes sense for stocks to hold up pretty well 94 00:05:15,800 --> 00:05:20,920 Speaker 1: despite a truly ghastly real economy. Talking about the real economy, Paul, 95 00:05:20,960 --> 00:05:23,960 Speaker 1: we've seen obviously the second quote of expectations are for 96 00:05:24,000 --> 00:05:27,480 Speaker 1: just crushing, crushing contraction in g d P. But then 97 00:05:27,520 --> 00:05:31,240 Speaker 1: I guess the real discussion becomes to what extent and 98 00:05:31,279 --> 00:05:34,599 Speaker 1: over what time period will the US economy recover. We've 99 00:05:34,600 --> 00:05:38,000 Speaker 1: had to fed very aggressive, we've had fiscal stimulus from 100 00:05:38,000 --> 00:05:40,839 Speaker 1: Congress and more likely to come. How do you think 101 00:05:41,040 --> 00:05:44,480 Speaker 1: the recovery plays out? I won't ask you to give 102 00:05:44,520 --> 00:05:47,240 Speaker 1: me a letter of V or W rn L or anything. 103 00:05:47,320 --> 00:05:49,719 Speaker 1: But how do you think this is going to play out? Actually, 104 00:05:49,760 --> 00:05:51,400 Speaker 1: I will give you it's not a it's not a letter. 105 00:05:51,440 --> 00:05:55,279 Speaker 1: It's a swoosh right, very step, very steep decline and 106 00:05:55,320 --> 00:05:57,920 Speaker 1: then a climb the only which is clearly going to 107 00:05:58,000 --> 00:06:02,680 Speaker 1: be much slower than the crash. Um and Uh, it's 108 00:06:03,480 --> 00:06:07,000 Speaker 1: the question of how fast that rise uh is going 109 00:06:07,040 --> 00:06:10,320 Speaker 1: to be is actually one of the hardest things. We 110 00:06:10,320 --> 00:06:13,720 Speaker 1: we really don't have experience with this that the we Uh, 111 00:06:14,000 --> 00:06:16,760 Speaker 1: you can tell stories that go in all directions. I 112 00:06:17,680 --> 00:06:21,360 Speaker 1: have no confidence at all in in any prediction, including 113 00:06:21,360 --> 00:06:23,840 Speaker 1: my own, on this. Uh. You know, on the one hand, 114 00:06:23,960 --> 00:06:27,279 Speaker 1: there could be pent up demand, um, people raring to go. 115 00:06:28,400 --> 00:06:31,520 Speaker 1: On the other hand, Uh, there's probably a lot of 116 00:06:31,520 --> 00:06:36,360 Speaker 1: financial damaging taking taking place down businesses. Business can't come 117 00:06:36,360 --> 00:06:39,800 Speaker 1: back if the business has gone under. Uh, consumers maybe 118 00:06:39,920 --> 00:06:44,880 Speaker 1: wanting to rebuild their balance sheets after after the beating 119 00:06:44,920 --> 00:06:48,800 Speaker 1: they've taken in at the peak of the crisis. UM. 120 00:06:49,000 --> 00:06:53,279 Speaker 1: And we'll also the the epidemiology is how the uncertain 121 00:06:53,360 --> 00:06:54,960 Speaker 1: You said, well, we're going to be ready to go 122 00:06:55,000 --> 00:06:58,080 Speaker 1: back to business, are we? I mean everything I see 123 00:06:58,120 --> 00:07:00,599 Speaker 1: so is that Um, if you take out new York, 124 00:07:00,640 --> 00:07:03,480 Speaker 1: which had a very steep peak in cases and is 125 00:07:03,560 --> 00:07:06,000 Speaker 1: now falling. The rest of the country things are still 126 00:07:06,000 --> 00:07:10,400 Speaker 1: getting worse, and so your guess is really as good 127 00:07:10,400 --> 00:07:13,440 Speaker 1: as mine. It's used to certain they can't count on 128 00:07:13,440 --> 00:07:16,800 Speaker 1: a rampid recovery. Flying blind is the way a lot 129 00:07:16,800 --> 00:07:18,560 Speaker 1: of analysts have put it, and that's definitely how I 130 00:07:18,560 --> 00:07:21,960 Speaker 1: feel right now. Paul Krugman, Distinguished Professor of Economics at 131 00:07:21,960 --> 00:07:24,320 Speaker 1: the City A University of New York, and New York 132 00:07:24,320 --> 00:07:29,960 Speaker 1: Times columnist Nobel laureate and uh, really really helpful insights 133 00:07:30,000 --> 00:07:33,040 Speaker 1: into this issue. Joining us on the phone from New Jersey. 134 00:07:33,080 --> 00:07:38,520 Speaker 1: We are expecting a truly horrific jobs data figure on 135 00:07:38,560 --> 00:07:42,000 Speaker 1: Friday when we get the April jobs numbers. Were expecting 136 00:07:42,000 --> 00:07:44,560 Speaker 1: more than twenty million jobs to have been lost, and 137 00:07:44,600 --> 00:07:46,760 Speaker 1: we saw a numbers similar to that this morning from 138 00:07:46,760 --> 00:07:53,600 Speaker 1: the ADP report. It is time for Bloomberg Opinion. We 139 00:07:53,680 --> 00:07:56,600 Speaker 1: are joined today by Bloomberg Opinion coms Tera la Chapelle. 140 00:07:56,640 --> 00:08:00,720 Speaker 1: She covers all things on the entertainment, telecommunications and deals 141 00:08:00,760 --> 00:08:03,600 Speaker 1: front for Bloomberg Opinion. So Tara, thanks so much for 142 00:08:03,800 --> 00:08:06,920 Speaker 1: joining us here. We had, you know, highly anticipated numbers 143 00:08:06,920 --> 00:08:09,480 Speaker 1: out of Disney last night, and boy, it seems like 144 00:08:09,520 --> 00:08:13,000 Speaker 1: they're key businesses really bore the brunt of you know, 145 00:08:13,040 --> 00:08:16,560 Speaker 1: what's happening to the US economy resulting from this pandemic. 146 00:08:16,600 --> 00:08:18,680 Speaker 1: What kind of stood out for you as you looked 147 00:08:18,680 --> 00:08:21,520 Speaker 1: at the results last night, Well, if you look at 148 00:08:21,560 --> 00:08:25,440 Speaker 1: the park, the Theme parks division, they're operating income and 149 00:08:25,560 --> 00:08:29,240 Speaker 1: just that business was down fifty eight percent. And if 150 00:08:29,240 --> 00:08:32,600 Speaker 1: you recall, that's for the quarter ended March thirty one, 151 00:08:32,760 --> 00:08:35,160 Speaker 1: So that was only the beginning of this crisis, which 152 00:08:35,160 --> 00:08:37,839 Speaker 1: means this quarter is going to be a lot worse um, 153 00:08:37,880 --> 00:08:41,880 Speaker 1: and that drove down Disney's overall net income by ninety 154 00:08:41,960 --> 00:08:44,680 Speaker 1: one percent. So it wasn't really surprising to see that, 155 00:08:44,720 --> 00:08:47,520 Speaker 1: given that we know so much of Disney's different businesses 156 00:08:47,559 --> 00:08:51,320 Speaker 1: have been affected and closed because of these lockdowns, but 157 00:08:51,559 --> 00:08:54,160 Speaker 1: it was still really just momentous to look at those 158 00:08:54,200 --> 00:08:56,440 Speaker 1: numbers and be like, Wow, we haven't seen something like 159 00:08:56,440 --> 00:08:59,319 Speaker 1: this from Disney for a really long time. Can you 160 00:08:59,400 --> 00:09:01,439 Speaker 1: just talk a little little bit about the breakdown in 161 00:09:01,520 --> 00:09:04,439 Speaker 1: terms of where Disney gets revenues, in terms of how 162 00:09:04,520 --> 00:09:08,320 Speaker 1: much Disney Plus could actually pull with respect to revenues 163 00:09:08,360 --> 00:09:12,240 Speaker 1: it brings in. So Disney Plus has been a bright spot, 164 00:09:12,280 --> 00:09:14,280 Speaker 1: but when you look at the numbers, I mean they're 165 00:09:14,280 --> 00:09:17,600 Speaker 1: not that impressive yet because you know, it's still losing money. 166 00:09:17,720 --> 00:09:20,680 Speaker 1: It's it's nowhere near the level of these other businesses. 167 00:09:20,679 --> 00:09:23,080 Speaker 1: Their Disney is still very dependent on their media network, 168 00:09:23,520 --> 00:09:26,240 Speaker 1: the advertising money they get from that, their theme parks. 169 00:09:26,240 --> 00:09:29,400 Speaker 1: Of course, they're films that get released to movie theaters, 170 00:09:29,440 --> 00:09:32,679 Speaker 1: so they're still very much tied to that. However, you 171 00:09:32,720 --> 00:09:36,040 Speaker 1: can see that bob Iger as he was preparing for retirement, 172 00:09:36,080 --> 00:09:38,679 Speaker 1: was trying to set up Disney for a future where 173 00:09:38,760 --> 00:09:41,160 Speaker 1: streaming is going to play a much bigger role. And 174 00:09:41,200 --> 00:09:43,520 Speaker 1: they have been hoping to get to sixteed and ninety 175 00:09:43,520 --> 00:09:48,560 Speaker 1: million subscribers globally for Disney Plus by the year. They're 176 00:09:48,600 --> 00:09:51,839 Speaker 1: already almost at sixty million now, so you can see that, 177 00:09:51,880 --> 00:09:54,200 Speaker 1: you know, this is doing better than they expected. It 178 00:09:54,280 --> 00:09:56,400 Speaker 1: can't carry the weight of Disney, but I think it 179 00:09:56,440 --> 00:09:58,520 Speaker 1: definitely is a bright spot in something investors are at 180 00:09:58,600 --> 00:10:01,320 Speaker 1: least like while they have this and it is the future, 181 00:10:01,400 --> 00:10:05,599 Speaker 1: so maybe that's an opportunity there. Hey, tera did was 182 00:10:05,640 --> 00:10:08,240 Speaker 1: there any clarification on the call last night of what 183 00:10:08,480 --> 00:10:11,320 Speaker 1: Bob Eyre's role is. I mean, you know, it's been 184 00:10:11,360 --> 00:10:13,920 Speaker 1: an on again, off again for years about whether he was, 185 00:10:14,440 --> 00:10:17,199 Speaker 1: you know, when when he was gonna retire. He surprised 186 00:10:17,200 --> 00:10:19,680 Speaker 1: everybody by retiring a couple of months ago, kind of 187 00:10:19,760 --> 00:10:22,200 Speaker 1: right in front of this pandemic, which I think surprised 188 00:10:22,200 --> 00:10:25,480 Speaker 1: a lot of people, and Bob Speck was elevated the 189 00:10:25,480 --> 00:10:29,240 Speaker 1: CEO role, and then there's some announcement that Bob was 190 00:10:29,320 --> 00:10:31,760 Speaker 1: kind of coming back and taking more hands on roles. 191 00:10:31,760 --> 00:10:35,280 Speaker 1: So is there any clarification last night? See didn't address 192 00:10:35,320 --> 00:10:36,800 Speaker 1: it head on, but I think there was kind of 193 00:10:36,800 --> 00:10:40,520 Speaker 1: an unspoken message. When the earnings call began, Bob Iger 194 00:10:40,600 --> 00:10:43,600 Speaker 1: kicked it off with some introductory remarks on just how 195 00:10:43,640 --> 00:10:45,920 Speaker 1: he sees the business and how he's still really optimistic 196 00:10:45,960 --> 00:10:48,920 Speaker 1: about the future and so on. But then from there 197 00:10:49,080 --> 00:10:51,880 Speaker 1: the new CEO, Bob Check He handled all the questions 198 00:10:51,920 --> 00:10:54,319 Speaker 1: along with their chief financial officer, and we didn't really 199 00:10:54,360 --> 00:10:56,720 Speaker 1: hear from Igor the rest of the evening. So I 200 00:10:56,760 --> 00:10:59,080 Speaker 1: think that was a Disney's way of saying Check is 201 00:10:59,120 --> 00:11:03,360 Speaker 1: the CEO. But I do think that Eiger, as executive chairman, 202 00:11:03,679 --> 00:11:06,520 Speaker 1: is perhaps being a little bit more hands on than 203 00:11:06,559 --> 00:11:09,200 Speaker 1: a chairman normally would and I think maybe his focus 204 00:11:09,559 --> 00:11:11,920 Speaker 1: while Chapeck is, you know, all his attention has to 205 00:11:11,960 --> 00:11:13,680 Speaker 1: go to the theme parks right now and getting those 206 00:11:13,720 --> 00:11:16,560 Speaker 1: back open. I think maybe Eiger is focusing on the 207 00:11:16,640 --> 00:11:20,319 Speaker 1: content side and making sure Disney Plus doesn't get thrown 208 00:11:20,320 --> 00:11:23,160 Speaker 1: off course by all of this. One thing I was 209 00:11:23,200 --> 00:11:25,560 Speaker 1: wondering about Terra the dividend. They said they were not 210 00:11:25,600 --> 00:11:27,640 Speaker 1: going to pay it for the second half of the year. 211 00:11:28,000 --> 00:11:29,959 Speaker 1: Do we have a sense of how long they will 212 00:11:30,000 --> 00:11:34,960 Speaker 1: suspend the dividend as the theme parks are struggling to reopen. 213 00:11:35,840 --> 00:11:38,440 Speaker 1: It sounded like they were going to reassess it in 214 00:11:38,480 --> 00:11:41,240 Speaker 1: about six months, So I think this was it wasn't 215 00:11:41,240 --> 00:11:43,520 Speaker 1: something they necessarily needed to do, but it just seems 216 00:11:43,520 --> 00:11:46,160 Speaker 1: like a smart move. They're trying to conserve their money 217 00:11:46,240 --> 00:11:48,240 Speaker 1: right now. You know, they have lots of workers that 218 00:11:48,240 --> 00:11:50,600 Speaker 1: are fur allowed at the moment, but as so their 219 00:11:50,640 --> 00:11:52,880 Speaker 1: costs are lower than they would be. But as they 220 00:11:52,880 --> 00:11:54,800 Speaker 1: get these parks back up and running, they're trying to 221 00:11:54,840 --> 00:11:57,240 Speaker 1: figure out how many people they need to staff and 222 00:11:57,280 --> 00:11:59,920 Speaker 1: what the effects of that are going to be relative 223 00:12:00,040 --> 00:12:03,800 Speaker 1: to the lower volume of visitors that they're going to 224 00:12:03,840 --> 00:12:06,280 Speaker 1: be allowing in. So I think they're just going to 225 00:12:06,360 --> 00:12:09,840 Speaker 1: have to reassess that down the road. There's also a 226 00:12:09,920 --> 00:12:13,920 Speaker 1: question of executive compensation. There's been some political ire over 227 00:12:13,960 --> 00:12:17,480 Speaker 1: the fact that there still aren't packages incentive packages for 228 00:12:17,640 --> 00:12:20,560 Speaker 1: some of the top executives, even though there is this 229 00:12:20,720 --> 00:12:24,240 Speaker 1: absolute demolition of their balance sheet. Any word on that. 230 00:12:25,679 --> 00:12:27,960 Speaker 1: You know, this has been an ongoing issue for Disney 231 00:12:28,000 --> 00:12:33,240 Speaker 1: even before this crisis. Tiger's pay has been increasingly controversial, 232 00:12:33,440 --> 00:12:37,640 Speaker 1: and you know, now with them furloughing so many workers, 233 00:12:38,240 --> 00:12:40,920 Speaker 1: and I think this could be, you know, something that 234 00:12:41,080 --> 00:12:42,839 Speaker 1: makes its way back into the news again. They really 235 00:12:42,840 --> 00:12:45,200 Speaker 1: haven't talked much about it other than doing the same 236 00:12:45,240 --> 00:12:47,520 Speaker 1: things that other companies are doing with cutting you know, 237 00:12:47,559 --> 00:12:50,800 Speaker 1: executive pay and things like that. But you know, as 238 00:12:50,920 --> 00:12:53,840 Speaker 1: time wears on those employees that they had been paying 239 00:12:54,080 --> 00:12:57,200 Speaker 1: even though they weren't working at the park, that's going 240 00:12:57,240 --> 00:12:59,559 Speaker 1: to you know, they're going to stop doing that, and 241 00:12:59,600 --> 00:13:01,800 Speaker 1: that's to be something that becomes a little bit more 242 00:13:01,840 --> 00:13:05,520 Speaker 1: controversial when these executives are obviously still making lots of money. 243 00:13:06,040 --> 00:13:08,520 Speaker 1: Tera La Chapelle, Bloomberg Opinion Columnists, thank you so much 244 00:13:08,559 --> 00:13:10,800 Speaker 1: for being with us. Definitely, Paul, that's been a political 245 00:13:10,840 --> 00:13:15,679 Speaker 1: hot button issue, especially as the company cuts half of 246 00:13:15,720 --> 00:13:18,880 Speaker 1: its employees tied to the theme parks. I'm just wondering 247 00:13:18,880 --> 00:13:21,400 Speaker 1: what would you make of the earnings. Yeah, it's interesting, 248 00:13:21,760 --> 00:13:24,160 Speaker 1: kind of as expected, but just decimated. And they're gonna 249 00:13:24,160 --> 00:13:26,480 Speaker 1: be even worse this coming fiscal quarter because I kind 250 00:13:26,480 --> 00:13:28,960 Speaker 1: of a full quarter of the park shutdown and no 251 00:13:29,120 --> 00:13:32,240 Speaker 1: film and entertainment, and so it's gonna be tough. But 252 00:13:32,280 --> 00:13:34,440 Speaker 1: I think the I think what most investors are saying is, 253 00:13:34,640 --> 00:13:37,080 Speaker 1: you know, this is a world class brand, and when 254 00:13:37,080 --> 00:13:39,440 Speaker 1: we do get to the other side of this, uh, 255 00:13:39,440 --> 00:13:42,000 Speaker 1: this is a brand that once again start generating returns 256 00:13:42,000 --> 00:13:44,520 Speaker 1: for shareholders. I think that's kind of what we're seeing 257 00:13:44,559 --> 00:13:46,600 Speaker 1: in the stock today. It's up about three percent today, 258 00:13:46,640 --> 00:13:49,719 Speaker 1: but still down about year to date. Yeah, there's also 259 00:13:49,800 --> 00:13:53,840 Speaker 1: this idea that the entire environment is giving some wind 260 00:13:54,080 --> 00:13:56,520 Speaker 1: to its Disney Plus offering and making it a real 261 00:13:56,559 --> 00:13:59,079 Speaker 1: competitor for Netflix. So if they can hang on to 262 00:13:59,160 --> 00:14:02,040 Speaker 1: the subscribers, is that could be a potential boon to them. 263 00:14:02,120 --> 00:14:07,600 Speaker 1: On the other side of this, As we were just 264 00:14:07,640 --> 00:14:10,520 Speaker 1: talking about with Terry La Chappelle, Disney Plus and Netflix 265 00:14:10,520 --> 00:14:12,320 Speaker 1: have been some of the few bright spots in an 266 00:14:12,400 --> 00:14:15,880 Speaker 1: otherwise bleak time for companies and employees alike. Meanwhile, theater 267 00:14:15,960 --> 00:14:18,720 Speaker 1: companies like a MC are struggling to survive all this 268 00:14:18,880 --> 00:14:21,560 Speaker 1: leading to the question how much will the media landscape 269 00:14:21,640 --> 00:14:24,720 Speaker 1: change in the wake of this pandemic? Joining us now 270 00:14:24,840 --> 00:14:27,080 Speaker 1: someone with a front row seat to all of the 271 00:14:27,160 --> 00:14:30,680 Speaker 1: changes over media, which is Terry Quaja. He was former 272 00:14:30,720 --> 00:14:33,400 Speaker 1: global head of Media Mergers and Acquisitions at City Group 273 00:14:33,440 --> 00:14:36,480 Speaker 1: and Credit suitees First Boston, more than twenty years of experience. 274 00:14:36,520 --> 00:14:40,560 Speaker 1: Currently founder and Chief executive Officer of Luma Partners Investment 275 00:14:40,600 --> 00:14:44,920 Speaker 1: Banking in New York. Terry, as you surveil the landscape 276 00:14:45,000 --> 00:14:48,680 Speaker 1: right now that seems to be under a dramatic change, 277 00:14:48,720 --> 00:14:52,920 Speaker 1: what will it look like on the other side? Good morning, 278 00:14:52,960 --> 00:14:55,160 Speaker 1: Lakes are a great debe with you. You know we 279 00:14:55,280 --> 00:14:57,920 Speaker 1: have this What's going on right now is this bizarre 280 00:14:58,120 --> 00:15:06,160 Speaker 1: dichotomy between we normally connect time stent media with advertising opportunity, 281 00:15:06,440 --> 00:15:09,680 Speaker 1: and we've got this saving that has taken place because 282 00:15:09,840 --> 00:15:13,760 Speaker 1: here we are in COVID in lockdown, and consumers across 283 00:15:13,800 --> 00:15:18,560 Speaker 1: the board are consuming more media almost across every conceivable 284 00:15:18,920 --> 00:15:23,720 Speaker 1: uh category, more TV, more digital um uh and and 285 00:15:23,760 --> 00:15:27,760 Speaker 1: what's interesting is yet at the same time, advertising is down. 286 00:15:28,160 --> 00:15:30,840 Speaker 1: And and when I say these changes are taking place, 287 00:15:31,280 --> 00:15:35,160 Speaker 1: we're watching way more TV, way more digital, uh, you know, 288 00:15:35,200 --> 00:15:37,440 Speaker 1: spending more time on our funds, and yet advertising is 289 00:15:37,480 --> 00:15:41,800 Speaker 1: down thirty just in the course of the last two months. 290 00:15:41,880 --> 00:15:46,920 Speaker 1: So this dichotomy between time spent and and revenue from 291 00:15:46,960 --> 00:15:52,200 Speaker 1: advertising is pretty material. I think post COVID we have 292 00:15:52,320 --> 00:15:56,360 Speaker 1: to look to see what of these patterns are are 293 00:15:56,720 --> 00:15:59,880 Speaker 1: you know, we'll stick are more permanent than others because 294 00:16:00,160 --> 00:16:02,520 Speaker 1: we should presume that when things get back to normal, 295 00:16:02,880 --> 00:16:07,600 Speaker 1: the sort of advertising opportunity should rematch with time spent, 296 00:16:07,880 --> 00:16:10,600 Speaker 1: so we should get rid of that tasm. Then the 297 00:16:10,680 --> 00:16:14,640 Speaker 1: question is what will consumption look like? And I think, uh, 298 00:16:14,760 --> 00:16:18,480 Speaker 1: in large part, you can assume that the impacts of 299 00:16:18,560 --> 00:16:24,640 Speaker 1: COVID have been not to necessarily change our patterns permanently, 300 00:16:24,840 --> 00:16:28,480 Speaker 1: but rather accelerate the trends that we were previously seeing. So, 301 00:16:28,760 --> 00:16:33,840 Speaker 1: for example, the shift from linear television to cutting the 302 00:16:33,960 --> 00:16:39,080 Speaker 1: chord and watching via streaming, that will likely accelerate post COVID. 303 00:16:39,440 --> 00:16:45,280 Speaker 1: Um the enhanced listening of podcast the consumption of podcast 304 00:16:45,360 --> 00:16:49,640 Speaker 1: media will likely enhanced post COVID. And then there's a 305 00:16:49,680 --> 00:16:54,800 Speaker 1: two question marks uh, like around terrestrial radio. What you 306 00:16:54,960 --> 00:16:59,200 Speaker 1: tell me what the work from home patterns change post COVID, 307 00:16:59,200 --> 00:17:02,120 Speaker 1: and I'll tell you, but the implications of drive time 308 00:17:02,160 --> 00:17:05,680 Speaker 1: and therefore listening of terrestrial radio. So some of them 309 00:17:05,720 --> 00:17:08,160 Speaker 1: we know for sure are accelerance and trends that were 310 00:17:08,200 --> 00:17:12,880 Speaker 1: already happening pre COVID. Others are more jump ball, Terry, 311 00:17:12,920 --> 00:17:15,160 Speaker 1: I know you're really on the front lines and dealing 312 00:17:15,200 --> 00:17:18,639 Speaker 1: with a lot of the digital advertising ecosystem here the 313 00:17:18,720 --> 00:17:21,720 Speaker 1: buyers and sellers of digital advertising. Do you think one 314 00:17:21,720 --> 00:17:26,320 Speaker 1: of the trends will be maybe an acceleration of advertising 315 00:17:26,359 --> 00:17:31,080 Speaker 1: dollars from traditional media, whether it's broadcasting, cable, television, print 316 00:17:31,119 --> 00:17:33,800 Speaker 1: and so on, to the digital, to the facebooks, to 317 00:17:33,840 --> 00:17:37,720 Speaker 1: the Googles of the world. Is that just gonna be accelerated, Yeah, 318 00:17:37,520 --> 00:17:42,199 Speaker 1: no question right if we you know, at times of crisis, 319 00:17:42,920 --> 00:17:46,520 Speaker 1: that tends to create intellection points right on existing trends. 320 00:17:46,560 --> 00:17:49,840 Speaker 1: If we look back at the financial crisis ten years ago, 321 00:17:50,359 --> 00:17:55,040 Speaker 1: what happened was media spending. Every single category went down 322 00:17:55,359 --> 00:18:00,960 Speaker 1: except for one search Search ad spend went up during 323 00:18:01,080 --> 00:18:04,240 Speaker 1: the last recession, which is and and and that is 324 00:18:04,280 --> 00:18:09,359 Speaker 1: a function of the fact that advertisers retreat towards performance 325 00:18:09,800 --> 00:18:13,440 Speaker 1: when when times get tough, right, so UH brands spend 326 00:18:13,560 --> 00:18:18,200 Speaker 1: spend on you know, garnering impressions without necessarily it leading 327 00:18:18,240 --> 00:18:20,720 Speaker 1: to the direct sale of a product. Tends to be 328 00:18:20,800 --> 00:18:24,440 Speaker 1: thought of as more discretionary in nature, So when economic 329 00:18:24,520 --> 00:18:27,560 Speaker 1: times turned down, you sort of siphon off that some 330 00:18:27,680 --> 00:18:31,040 Speaker 1: of that spend, whereas what you do keep spending on 331 00:18:31,160 --> 00:18:33,399 Speaker 1: are the things that keep driving your business. So the 332 00:18:33,680 --> 00:18:37,240 Speaker 1: tighter the connection between the spend on media in advertising 333 00:18:37,760 --> 00:18:41,200 Speaker 1: and the results of driving actual new customers, those are 334 00:18:41,240 --> 00:18:44,760 Speaker 1: the channels to which you will migrate to in downtimes, 335 00:18:44,800 --> 00:18:48,800 Speaker 1: and those tend to be searchers. I mentioned performance ads 336 00:18:48,840 --> 00:18:55,040 Speaker 1: on Facebook and other similar channels. Terry. There's also a 337 00:18:55,119 --> 00:18:58,760 Speaker 1: question of who will remain after this crisis is over all. 338 00:18:58,800 --> 00:19:01,639 Speaker 1: We've seen from AMC to leaters for example, are struggling 339 00:19:02,080 --> 00:19:04,520 Speaker 1: UH to stay afloat as no one can go to 340 00:19:04,520 --> 00:19:07,600 Speaker 1: the movies and actually see them in a theater. There 341 00:19:07,760 --> 00:19:10,639 Speaker 1: is also a question about mergers and acquisitions. Do you 342 00:19:10,680 --> 00:19:14,879 Speaker 1: expect a rash of deals and consolidation in the near future. 343 00:19:16,600 --> 00:19:19,719 Speaker 1: So I think what this crisis does, obviously for growth 344 00:19:19,760 --> 00:19:22,640 Speaker 1: companies is it puts a cash constraint on You've seen 345 00:19:22,920 --> 00:19:26,679 Speaker 1: almost most companies, you know, cut their guidance, downsize their 346 00:19:26,760 --> 00:19:31,080 Speaker 1: their workforce in preparation to withstand and whether this storm, 347 00:19:31,119 --> 00:19:34,119 Speaker 1: because we just don't know the total extent of the 348 00:19:34,160 --> 00:19:37,520 Speaker 1: impact or how long it will take, but absolutely this 349 00:19:37,600 --> 00:19:42,600 Speaker 1: will create sellers, right, companies that need to find a home. 350 00:19:43,040 --> 00:19:47,240 Speaker 1: And again the continuation or perhaps acceleration of a trend 351 00:19:47,280 --> 00:19:49,640 Speaker 1: that we had witnessed and you we all had talked 352 00:19:49,640 --> 00:19:54,560 Speaker 1: about on a prior program where it's inevitable that this 353 00:19:54,640 --> 00:19:57,159 Speaker 1: will then cause some companies to want to sort of 354 00:19:57,600 --> 00:20:00,480 Speaker 1: panic is probably too strong a word, but certainly seek 355 00:20:00,880 --> 00:20:04,040 Speaker 1: an exit. And then on the back end of this, 356 00:20:04,200 --> 00:20:06,919 Speaker 1: when things come back, I think we will get in 357 00:20:06,960 --> 00:20:09,840 Speaker 1: whatever it is, three months, six months, nine months of 358 00:20:09,920 --> 00:20:12,879 Speaker 1: a deal hiatus, and I actually do believe we'll see 359 00:20:13,440 --> 00:20:16,800 Speaker 1: a tremendous amount of strategic activity take place. So I'm 360 00:20:16,800 --> 00:20:19,919 Speaker 1: actually contemplating the end of this year and into two 361 00:20:20,000 --> 00:20:22,560 Speaker 1: thousand twenty one as being a very active time for 362 00:20:22,680 --> 00:20:26,000 Speaker 1: deals in media. So Barry, we Terry, we just had 363 00:20:26,800 --> 00:20:29,080 Speaker 1: Disney report last night, and you know, the silver lining, 364 00:20:29,119 --> 00:20:31,040 Speaker 1: I guess if there was one, was the Disney plus 365 00:20:31,040 --> 00:20:34,520 Speaker 1: and all the streaming businesses uh doing pretty well. You know, 366 00:20:34,840 --> 00:20:37,480 Speaker 1: people I guess are sampling a lot. Now we're all quarantined, 367 00:20:37,480 --> 00:20:40,120 Speaker 1: we're sampling all the streaming products out there. How many 368 00:20:40,160 --> 00:20:43,600 Speaker 1: streaming services do you think will ultimately uh shake out 369 00:20:43,600 --> 00:20:47,840 Speaker 1: in this market? Yeah, it's a good question, Paul. I 370 00:20:47,840 --> 00:20:50,879 Speaker 1: think if you look at the survey data, you know, 371 00:20:51,119 --> 00:20:54,280 Speaker 1: people suggest that you know, sort of earns itself out 372 00:20:54,560 --> 00:20:58,800 Speaker 1: in and around uh three to five you know subscription services, 373 00:20:58,800 --> 00:21:00,840 Speaker 1: And of course it's a function of you know, what 374 00:21:00,840 --> 00:21:04,760 Speaker 1: what the nature of those services and how comprehensive. I 375 00:21:04,800 --> 00:21:08,359 Speaker 1: think of it more in terms of the total economic bundle. 376 00:21:08,480 --> 00:21:11,520 Speaker 1: So the are pro the average revenue per user, what 377 00:21:11,520 --> 00:21:16,119 Speaker 1: what the average American pays for their cable bundle is 378 00:21:16,160 --> 00:21:20,680 Speaker 1: approximately a hundred dollars a month. Uh. That translated into 379 00:21:20,760 --> 00:21:24,320 Speaker 1: a streaming world is about half of that, about fifty 380 00:21:24,320 --> 00:21:26,159 Speaker 1: dollars a month. So if you think of you know, 381 00:21:26,320 --> 00:21:30,840 Speaker 1: Netflix plus, maybe you know an HBO Mac subscription, maybe 382 00:21:30,840 --> 00:21:32,960 Speaker 1: you've got you know, sling, is some one of these 383 00:21:33,040 --> 00:21:36,320 Speaker 1: comprehensive v m v p ds to give you a 384 00:21:36,359 --> 00:21:39,280 Speaker 1: bundle of channels you'll all add up to in that 385 00:21:39,400 --> 00:21:43,880 Speaker 1: sort of range. So it's it's materially. Hey, Terry, thanks 386 00:21:43,880 --> 00:21:46,159 Speaker 1: so much for joining us. We really appreciate your thoughts 387 00:21:46,160 --> 00:21:48,440 Speaker 1: in your perspective. You're right on the front lines here 388 00:21:48,880 --> 00:21:51,879 Speaker 1: of the media space, the digital media space, a transformation 389 00:21:51,960 --> 00:21:55,439 Speaker 1: of linear media to digital media. Terry Kawasha, founder and 390 00:21:55,520 --> 00:21:59,480 Speaker 1: CEO of Luma Partners Investment Banking. They target that whole 391 00:21:59,520 --> 00:22:03,200 Speaker 1: digital media space and at least we've seen this transformational 392 00:22:03,520 --> 00:22:06,800 Speaker 1: shift of ad dollars from traditional media to digital and 393 00:22:06,920 --> 00:22:08,840 Speaker 1: and Terry and as firm er right there dealing with 394 00:22:08,880 --> 00:22:11,160 Speaker 1: all those companies on the front lines. We appreciate that 395 00:22:11,200 --> 00:22:18,639 Speaker 1: this is Bloomberg. The story Paul, that really really cried 396 00:22:18,680 --> 00:22:21,520 Speaker 1: out to me this morning, written by Sean Donnon and 397 00:22:21,600 --> 00:22:24,639 Speaker 1: Joe Doe, talking about the layoffs that we're seeing in 398 00:22:24,800 --> 00:22:28,919 Speaker 1: unprecedented numbers across America. There is a question are we 399 00:22:29,040 --> 00:22:33,120 Speaker 1: moving from a temporary wave of layoffs to something much 400 00:22:33,160 --> 00:22:36,480 Speaker 1: more permanent and uh and and nefarious when it comes 401 00:22:36,560 --> 00:22:39,640 Speaker 1: to a longer term recovery. Shaan donn and senior trade 402 00:22:39,680 --> 00:22:43,439 Speaker 1: reporter for Bloomberg, joining us. Now, Sean, how much have 403 00:22:43,600 --> 00:22:45,960 Speaker 1: you seen by way of evidence that a lot of 404 00:22:46,000 --> 00:22:48,639 Speaker 1: the layoffs that we're seeing right now are going to 405 00:22:48,680 --> 00:22:51,159 Speaker 1: be permanent. Yeah. Well, I mean the story of the 406 00:22:51,240 --> 00:22:53,600 Speaker 1: jobs market in the US right now is the story 407 00:22:53,640 --> 00:22:55,960 Speaker 1: of a lot of cases of the data that we 408 00:22:56,040 --> 00:22:58,800 Speaker 1: don't have, right I mean, it's it's we know that 409 00:22:58,840 --> 00:23:01,199 Speaker 1: these jobs numbers we're going to get on Friday are 410 00:23:01,200 --> 00:23:04,000 Speaker 1: going to show us that they're huge layoffs in in 411 00:23:04,000 --> 00:23:06,280 Speaker 1: in April, but they're not going to really answer one 412 00:23:06,320 --> 00:23:08,360 Speaker 1: of the key questions, which is what we set out 413 00:23:08,400 --> 00:23:11,880 Speaker 1: to answer here or address here, and that is how 414 00:23:11,880 --> 00:23:15,920 Speaker 1: many of these layoffs are temporary and how many are permanent? 415 00:23:16,080 --> 00:23:19,880 Speaker 1: And what we're seeing in the notices that companies are 416 00:23:19,920 --> 00:23:23,480 Speaker 1: filing with state authorities around the country. You can dig 417 00:23:23,520 --> 00:23:27,360 Speaker 1: into these what are called Warren notices and places like Ohio, Wisconsin, 418 00:23:27,440 --> 00:23:31,000 Speaker 1: Washington State, California, all over the place, and you read 419 00:23:31,040 --> 00:23:33,879 Speaker 1: those letters and more and more companies are starting to 420 00:23:33,960 --> 00:23:39,439 Speaker 1: use the word at least uh, at least indefinite and 421 00:23:39,640 --> 00:23:44,200 Speaker 1: often permanent. And that is scary for anyone who's hoping 422 00:23:44,240 --> 00:23:47,639 Speaker 1: for a V shaped recovery in the U S economy. So, Sean, 423 00:23:47,680 --> 00:23:50,199 Speaker 1: I think I'm guessing you know, when you're reporting a 424 00:23:50,200 --> 00:23:52,160 Speaker 1: lot of what you found is that the companies really 425 00:23:52,200 --> 00:23:55,439 Speaker 1: just don't know, you know, how this virus is going 426 00:23:55,520 --> 00:23:57,680 Speaker 1: to play out? Is there going to be a second wave? 427 00:23:58,160 --> 00:24:00,200 Speaker 1: I mean, are most companies that you looked at were 428 00:24:00,200 --> 00:24:03,800 Speaker 1: they Are they still clinging to the hope that there 429 00:24:03,840 --> 00:24:07,400 Speaker 1: this will be a relatively you know, yes, it will 430 00:24:07,400 --> 00:24:09,280 Speaker 1: be a brutal contraction in g d P in the 431 00:24:09,320 --> 00:24:13,400 Speaker 1: second quarter, but that in fact will be relatively brief. Look, 432 00:24:13,600 --> 00:24:16,400 Speaker 1: I think everyone's clinging to that hope. Uh And we've 433 00:24:16,400 --> 00:24:19,399 Speaker 1: seen Kevin Hassett go out there this morning and the 434 00:24:19,440 --> 00:24:22,639 Speaker 1: President do this a number of times, talking about the 435 00:24:22,680 --> 00:24:25,959 Speaker 1: possibility of a real rebound in the third quarter of 436 00:24:26,000 --> 00:24:27,879 Speaker 1: this year. But what you're starting to see in these 437 00:24:27,960 --> 00:24:31,080 Speaker 1: layoff notices this company saying I can hope, but I'm 438 00:24:31,119 --> 00:24:34,119 Speaker 1: looking at my order book, I'm looking at demand and 439 00:24:34,200 --> 00:24:37,080 Speaker 1: what I'm expecting ahead, and that looks like a much 440 00:24:37,119 --> 00:24:40,199 Speaker 1: slower recovery than what I'm hoping for. And therefore I'm 441 00:24:40,200 --> 00:24:42,159 Speaker 1: going to start cutting costs and I'm going to start 442 00:24:42,520 --> 00:24:45,360 Speaker 1: laying off people. And one of the companies we mentioned 443 00:24:45,359 --> 00:24:47,520 Speaker 1: in here is is you know, these are these are 444 00:24:47,560 --> 00:24:51,920 Speaker 1: not short term decisions. These are these are in some 445 00:24:51,960 --> 00:24:55,439 Speaker 1: cases companies that have long histories. One of the companies 446 00:24:55,480 --> 00:24:57,560 Speaker 1: we look at in this story is the Michigan Maple 447 00:24:57,640 --> 00:25:01,200 Speaker 1: Block Company, which goes back to eight teen eight one 448 00:25:01,280 --> 00:25:05,440 Speaker 1: in the Michigan town of Potoski, four hours north of Detroit, 449 00:25:05,920 --> 00:25:09,439 Speaker 1: and it is laying off and shutting down, and that 450 00:25:09,480 --> 00:25:13,320 Speaker 1: means fifty six workers are are done and will be 451 00:25:13,359 --> 00:25:15,280 Speaker 1: done by by by the end of the by the 452 00:25:15,280 --> 00:25:18,639 Speaker 1: early July, and that is, you know, the beginning of 453 00:25:18,640 --> 00:25:20,800 Speaker 1: the third quarter that that we're talking about that we're 454 00:25:20,800 --> 00:25:24,199 Speaker 1: hoping for that recovery. So you see those layoffs and 455 00:25:24,200 --> 00:25:26,359 Speaker 1: again those and those layoffs in the case of Michigan 456 00:25:26,400 --> 00:25:29,960 Speaker 1: Maple aren't showing up yet in the in the broader 457 00:25:29,960 --> 00:25:34,840 Speaker 1: economic data because they haven't happened yet. But that company 458 00:25:34,920 --> 00:25:37,240 Speaker 1: is shutting down and it's just saying it can't do anymore. 459 00:25:37,240 --> 00:25:39,320 Speaker 1: You look at the auto supply chain company. I talked 460 00:25:39,320 --> 00:25:44,080 Speaker 1: to al Udine, which makes lightweight aluminum chassis components. They 461 00:25:44,080 --> 00:25:47,440 Speaker 1: sell to all the major carmakers, and they're looking at 462 00:25:47,560 --> 00:25:51,120 Speaker 1: forecast for the auto market right now. Going into this crisis, 463 00:25:51,160 --> 00:25:54,400 Speaker 1: we were expecting the US to sell some sixteen million 464 00:25:54,400 --> 00:25:57,439 Speaker 1: cars this year. Now people talking about more like eleven 465 00:25:57,520 --> 00:26:02,240 Speaker 1: or twelve million. That's just a huge robin demand through 466 00:26:02,359 --> 00:26:05,000 Speaker 1: the rest of the year for this company's products, and 467 00:26:05,040 --> 00:26:07,760 Speaker 1: what are they doing. They're responding by laying off two 468 00:26:08,200 --> 00:26:11,560 Speaker 1: fifty people in Michigan and in Georgia the foundry that 469 00:26:11,600 --> 00:26:15,080 Speaker 1: they have there, and that those are permanent layoffs, those 470 00:26:15,960 --> 00:26:19,000 Speaker 1: back to work. I'm struck by the regions and the 471 00:26:19,040 --> 00:26:23,240 Speaker 1: industries that you keep mentioning Michigan, the rust belt in general, 472 00:26:23,280 --> 00:26:25,920 Speaker 1: and these are industrial companies, and I'm wondering how much 473 00:26:25,960 --> 00:26:28,680 Speaker 1: this is an accelerating a trend that we had seen 474 00:26:28,880 --> 00:26:32,640 Speaker 1: for years, frankly, which is a shift away from industrials 475 00:26:32,680 --> 00:26:36,120 Speaker 1: that maybe will be solidified with a much smaller industrial 476 00:26:36,119 --> 00:26:39,600 Speaker 1: footprint in the United States going forward. Yeah. Look, I 477 00:26:39,800 --> 00:26:41,520 Speaker 1: it's hard to tell where we're going to come out 478 00:26:41,520 --> 00:26:44,320 Speaker 1: of this, right, I mean with this is a once 479 00:26:44,320 --> 00:26:46,520 Speaker 1: in a not just a once in a generation, it's 480 00:26:46,560 --> 00:26:50,200 Speaker 1: once in the century event. And in many ways economically, uh, 481 00:26:50,320 --> 00:26:53,480 Speaker 1: some companies will be able to come through this and 482 00:26:53,480 --> 00:26:56,760 Speaker 1: and be more robust and maybe even gain market share. 483 00:26:56,800 --> 00:26:59,280 Speaker 1: But you look at the steel industry, You look at 484 00:27:00,000 --> 00:27:04,199 Speaker 1: Aluminum ALCA shutting down a big smelter out in in 485 00:27:04,320 --> 00:27:09,400 Speaker 1: Washington State, layoff people. You look at the auto industry. Uh, 486 00:27:09,400 --> 00:27:12,119 Speaker 1: and what's going to happen there. You look at coal miners. 487 00:27:12,600 --> 00:27:14,800 Speaker 1: One of the companies that we talked about in this 488 00:27:15,400 --> 00:27:18,960 Speaker 1: is runs a coal mine in Billsville, Ohio, and ten 489 00:27:19,000 --> 00:27:22,359 Speaker 1: people are going to be laid off there. It's hard 490 00:27:22,480 --> 00:27:25,960 Speaker 1: to to you know, we think oftentimes about the impact 491 00:27:26,080 --> 00:27:30,840 Speaker 1: on on travel or hotels and restaurants and and so 492 00:27:30,920 --> 00:27:32,840 Speaker 1: onto this crisis and the things that we're not going 493 00:27:32,880 --> 00:27:36,040 Speaker 1: to do anymore, but this is really hitting industrial America 494 00:27:36,119 --> 00:27:39,720 Speaker 1: and it's a major crisis for industrial Sean Donna, thanks 495 00:27:39,760 --> 00:27:42,679 Speaker 1: so much for joining us. Really a compelling story. You 496 00:27:42,720 --> 00:27:45,119 Speaker 1: and Joe Doe put out just a really interesting story 497 00:27:45,160 --> 00:27:48,040 Speaker 1: about the real impact that we're seeing in terms of 498 00:27:48,080 --> 00:27:50,800 Speaker 1: behind the employment numbers that we talked about every week. 499 00:27:50,840 --> 00:27:53,280 Speaker 1: Sean Donna and senior trade reporter for Bloomberg and Lisa. 500 00:27:53,520 --> 00:27:55,520 Speaker 1: Sean's story just kind of brings back to, you know, 501 00:27:55,720 --> 00:27:57,600 Speaker 1: to the flour once again, if we ever do forget 502 00:27:57,600 --> 00:28:01,320 Speaker 1: about it, that when we talk about these employment figures, 503 00:28:01,320 --> 00:28:04,080 Speaker 1: that job was claims every week that there are you know, 504 00:28:04,240 --> 00:28:08,200 Speaker 1: real companies, real people, real communities, you know, really being 505 00:28:08,240 --> 00:28:11,080 Speaker 1: impacted by what's happening as a result of this coronavirus. 506 00:28:11,080 --> 00:28:13,880 Speaker 1: In terms of the economic activity, yeah, I would say 507 00:28:13,880 --> 00:28:17,120 Speaker 1: that the political implications too are vast, considering that these 508 00:28:17,200 --> 00:28:20,000 Speaker 1: are some of these swing states and some of the 509 00:28:20,040 --> 00:28:23,000 Speaker 1: ones that were hardest hit after the last crisis and 510 00:28:23,040 --> 00:28:25,600 Speaker 1: look like they're at the epicenter of this one once again. 511 00:28:25,800 --> 00:28:28,080 Speaker 1: The exactly right as we come up to a presidential 512 00:28:28,119 --> 00:28:31,800 Speaker 1: election period, certainly some issues for the candidates to think 513 00:28:31,800 --> 00:28:34,119 Speaker 1: about is this will be front and center obviously for 514 00:28:34,160 --> 00:28:38,320 Speaker 1: this upcoming election, the pandemic and how elected officials have reacted. 515 00:28:38,760 --> 00:28:42,200 Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg P 516 00:28:42,280 --> 00:28:44,840 Speaker 1: and L podcast. You can subscribe and listen to interviews 517 00:28:44,880 --> 00:28:48,720 Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, 518 00:28:48,720 --> 00:28:51,480 Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woids. 519 00:28:51,480 --> 00:28:54,520 Speaker 1: I'm on Twitter at Lisa A. Bramwods One. Before the podcast, 520 00:28:54,560 --> 00:28:57,160 Speaker 1: you can always catch us worldwide on Bloomberg Radio.