1
00:00:00,160 --> 00:00:03,360
Speaker 1: This is Bloomberg Wall Street Week. What's the state of

2
00:00:03,400 --> 00:00:06,360
Speaker 1: corporate governance? The deficit is a real issue. The US

3
00:00:06,400 --> 00:00:09,800
Speaker 1: economy continues to send mixed signals to the financial stories

4
00:00:09,800 --> 00:00:12,680
Speaker 1: that cheap our world fed action to con concerns over

5
00:00:12,760 --> 00:00:16,239
Speaker 1: dollar liquidity and encouraging China data. The five hundred wealthiest

6
00:00:16,239 --> 00:00:18,360
Speaker 1: people in the world. Through the eyes of the most

7
00:00:18,480 --> 00:00:22,520
Speaker 1: influential voices Larry Summers, the former Treasury Secretary, star Ward CEO,

8
00:00:22,640 --> 00:00:26,360
Speaker 1: Kevin Johnson sec Chairman j Clayton. Bloomberg wool Street Week

9
00:00:26,480 --> 00:00:30,440
Speaker 1: with David Weston from Bloomberg Radio. Markets get their hopes

10
00:00:30,480 --> 00:00:33,680
Speaker 1: up investors look past fears of a cold war with

11
00:00:33,760 --> 00:00:37,400
Speaker 1: China and a possible second wave of COVID. This is

12
00:00:37,400 --> 00:00:40,800
Speaker 1: Bloomberg Wall Street Week. I'm David Weston. It was a

13
00:00:40,800 --> 00:00:44,320
Speaker 1: week of hope, but is it hope triumphing over experience.

14
00:00:44,720 --> 00:00:47,720
Speaker 1: Equities continue to climb higher, but lurking in the background

15
00:00:47,800 --> 00:00:51,280
Speaker 1: are those growing tensions between Beijing and Washington, and as

16
00:00:51,320 --> 00:00:53,560
Speaker 1: well a fear that there might be a second wave

17
00:00:53,640 --> 00:00:56,240
Speaker 1: of a pandemic that as of this week, has claimed

18
00:00:56,240 --> 00:01:00,720
Speaker 1: a hundred thousand American lives. The economic numbers are stunning

19
00:01:01,040 --> 00:01:04,120
Speaker 1: to be sure. This week, jobless claims fell for the

20
00:01:04,120 --> 00:01:06,280
Speaker 1: first time in two and a half months, but during

21
00:01:06,319 --> 00:01:10,520
Speaker 1: that period of time, over forty million Americans have become unemployed.

22
00:01:11,000 --> 00:01:14,600
Speaker 1: Fiscal and monetary authorities continue to look for more solutions.

23
00:01:14,640 --> 00:01:17,760
Speaker 1: That's after they've already thrown trillions of dollars into the

24
00:01:17,800 --> 00:01:21,800
Speaker 1: stew of government support. So which story isn't we should

25
00:01:21,800 --> 00:01:25,160
Speaker 1: believe the hopeful one of the equity markets back almost

26
00:01:25,200 --> 00:01:27,800
Speaker 1: to the level they were pre COVID, or the one

27
00:01:27,800 --> 00:01:29,840
Speaker 1: that tells us that we are not yet out of

28
00:01:29,880 --> 00:01:33,240
Speaker 1: the woods. Rick Reader of Black Rock, really knows rates

29
00:01:33,280 --> 00:01:35,600
Speaker 1: like no one else in this new world, and he

30
00:01:35,680 --> 00:01:38,800
Speaker 1: sees the effect of FED action on yields right across

31
00:01:38,880 --> 00:01:41,160
Speaker 1: the yield curve. But the FED has done has been

32
00:01:41,160 --> 00:01:43,920
Speaker 1: pretty powerful. But you know, there is something that I

33
00:01:43,959 --> 00:01:46,240
Speaker 1: think people underestimate when you when you think about what

34
00:01:46,280 --> 00:01:48,040
Speaker 1: the FED does with central banks can do. When they

35
00:01:48,120 --> 00:01:50,680
Speaker 1: before they wheel out the bazooka and say this is

36
00:01:50,720 --> 00:01:53,520
Speaker 1: what we will do if we need to, the markets

37
00:01:53,560 --> 00:01:55,680
Speaker 1: tend to take them at their word. Particularly is FED

38
00:01:55,720 --> 00:01:57,160
Speaker 1: that has a lot of credibility to day. So the

39
00:01:57,160 --> 00:01:59,280
Speaker 1: FED actually hasn't done a lot in the credit markets

40
00:01:59,480 --> 00:02:02,320
Speaker 1: at all. But what's happening is there's a sense that

41
00:02:02,440 --> 00:02:05,560
Speaker 1: the FED will be there for emergency reasons or to

42
00:02:05,680 --> 00:02:09,800
Speaker 1: provide for markets to actually function effectively. So what's happening

43
00:02:09,840 --> 00:02:12,600
Speaker 1: now is you're seeing a manifestation of what the FED

44
00:02:12,680 --> 00:02:15,840
Speaker 1: has done. Let's take interest rates to zero. They're gonna

45
00:02:15,880 --> 00:02:18,240
Speaker 1: keep them at zero for an extended period of time.

46
00:02:18,280 --> 00:02:21,799
Speaker 1: And what it's as long as the economy is reasonably

47
00:02:21,960 --> 00:02:25,720
Speaker 1: stable than this demand for income and we've talked about

48
00:02:25,760 --> 00:02:27,440
Speaker 1: a bunch of times, the demand for income in the

49
00:02:27,480 --> 00:02:30,880
Speaker 1: world because of the aging, demographic, etcetera, is so profound.

50
00:02:31,000 --> 00:02:34,320
Speaker 1: And as long as people feel like, gosh, I need

51
00:02:34,360 --> 00:02:36,680
Speaker 1: to that the economy is gonna be stable, I can

52
00:02:36,720 --> 00:02:38,560
Speaker 1: start to go and get that income. And then when

53
00:02:38,600 --> 00:02:40,400
Speaker 1: you think about the size of the high yield market,

54
00:02:40,960 --> 00:02:42,679
Speaker 1: it's only a trillion dollar market. Do you think about

55
00:02:42,680 --> 00:02:45,200
Speaker 1: the market cap of Amazon, it's more it's been uh

56
00:02:45,240 --> 00:02:48,160
Speaker 1: And you think about it's a bigger Amazon is bigger

57
00:02:48,160 --> 00:02:50,160
Speaker 1: than the entire high you horning there's not enough income

58
00:02:50,200 --> 00:02:52,440
Speaker 1: in the world, And so what you're seeing is this

59
00:02:52,440 --> 00:02:56,000
Speaker 1: is Gosh, I gotta get income. Economies doing fatter. I'm

60
00:02:56,000 --> 00:02:58,519
Speaker 1: anticipating will continue to do better, and so the surge

61
00:02:58,520 --> 00:03:01,080
Speaker 1: of money that's commenced been restive to say the least.

62
00:03:02,960 --> 00:03:05,600
Speaker 1: So as a result, yields are really suppressed, I would say,

63
00:03:05,639 --> 00:03:08,360
Speaker 1: and it's reasonably cheap still to borrow money despite everything

64
00:03:08,360 --> 00:03:10,720
Speaker 1: that's happened. Does that sort of give government to blank

65
00:03:10,800 --> 00:03:14,119
Speaker 1: check for stimulus? We had to former central bankers Carston's

66
00:03:14,360 --> 00:03:17,040
Speaker 1: and Vabor come out and say this is really dangerous

67
00:03:17,040 --> 00:03:19,360
Speaker 1: because we're basically gonna have the central banks funding the

68
00:03:19,360 --> 00:03:24,839
Speaker 1: government debt. So you know that it has a long

69
00:03:24,960 --> 00:03:27,200
Speaker 1: complicated discussion, and I would say a couple of things

70
00:03:27,240 --> 00:03:30,399
Speaker 1: that are really important. One is there is something that's

71
00:03:30,440 --> 00:03:32,840
Speaker 1: really profound about the ability for the governments to actually

72
00:03:32,880 --> 00:03:34,840
Speaker 1: borrow today. I'm not saying there's an unlimited amount of

73
00:03:34,840 --> 00:03:37,360
Speaker 1: the governments can borrow. They have to be conscious of.

74
00:03:37,960 --> 00:03:39,520
Speaker 1: You can put too much doubt on the system. You

75
00:03:39,520 --> 00:03:43,520
Speaker 1: create a crowding out effect for the corporate sector, household financials, etcetera.

76
00:03:43,760 --> 00:03:45,880
Speaker 1: But today, because of the demograph, we can talk about

77
00:03:45,880 --> 00:03:47,800
Speaker 1: the system is actually set up to be a lender.

78
00:03:47,840 --> 00:03:51,160
Speaker 1: Insurance companies, pension funds actually need the assets and actually

79
00:03:51,200 --> 00:03:53,880
Speaker 1: need to lend. And what's happened when you drop rates

80
00:03:53,920 --> 00:03:57,200
Speaker 1: to so low, um, it's causing people to say, gosh,

81
00:03:57,280 --> 00:03:59,440
Speaker 1: where do I go to actually be a lender? And

82
00:03:59,480 --> 00:04:02,760
Speaker 1: so into day's environment, you can actually, you can actually

83
00:04:02,800 --> 00:04:05,680
Speaker 1: create some more debt on the system as long as

84
00:04:05,800 --> 00:04:08,280
Speaker 1: you're creating nominal GDP, which I would argue in the

85
00:04:08,400 --> 00:04:12,000
Speaker 1: US we will have some some improvements, significant improvement and

86
00:04:12,080 --> 00:04:14,920
Speaker 1: nominal GDP to pay down the debt over time. But

87
00:04:15,440 --> 00:04:17,640
Speaker 1: I think it's fair to say we shouldn't go too far,

88
00:04:18,080 --> 00:04:19,719
Speaker 1: but to put a bit more down on the system,

89
00:04:19,800 --> 00:04:22,960
Speaker 1: given the circumstances, is actually not as scary as it's

90
00:04:22,960 --> 00:04:24,400
Speaker 1: been historically. Think about it. When we were back in

91
00:04:24,440 --> 00:04:27,279
Speaker 1: oh six, oh seven, the households were indebted because the

92
00:04:27,320 --> 00:04:30,080
Speaker 1: housing market, the financials were indebted. We're in a better

93
00:04:30,279 --> 00:04:32,880
Speaker 1: position today, happening side. You've always got to be pragmatic

94
00:04:32,920 --> 00:04:35,760
Speaker 1: about you can't just keep doing it. And but we

95
00:04:35,760 --> 00:04:37,640
Speaker 1: can afford to do a little more debt, certainly to

96
00:04:37,680 --> 00:04:39,160
Speaker 1: get to the other side of what is a shock

97
00:04:39,240 --> 00:04:43,440
Speaker 1: to the economic system. So with that, that's the fixed

98
00:04:43,440 --> 00:04:45,920
Speaker 1: income side of your book. Let's go to the equity side,

99
00:04:45,920 --> 00:04:47,920
Speaker 1: because a lot of people saying, boy, the equities look

100
00:04:47,960 --> 00:04:50,360
Speaker 1: like they're pretty high considering what we're really seeing in

101
00:04:50,400 --> 00:04:54,800
Speaker 1: the economy, the equities telling us something meaningful about the recovery.

102
00:04:55,880 --> 00:04:57,279
Speaker 1: But the first as we can't leave the fixed thing

103
00:04:57,360 --> 00:04:59,360
Speaker 1: in side, because as part of why the equities are doing,

104
00:04:59,480 --> 00:05:02,040
Speaker 1: uh doing a they're doing. When you move interest rates

105
00:05:02,120 --> 00:05:05,880
Speaker 1: to to to zero, then you're basically telling people you

106
00:05:06,120 --> 00:05:08,600
Speaker 1: need to find something else to do. And and when

107
00:05:08,640 --> 00:05:10,480
Speaker 1: you can't create income in other ways, you need to

108
00:05:10,520 --> 00:05:13,360
Speaker 1: find something else to do, and you create this transmission

109
00:05:13,360 --> 00:05:15,640
Speaker 1: effect that gets into the discount rate on equities, that

110
00:05:15,720 --> 00:05:20,120
Speaker 1: gets into the alternative assets that equities are. And listen,

111
00:05:20,120 --> 00:05:23,400
Speaker 1: I think the equity market is too high on a

112
00:05:23,440 --> 00:05:25,960
Speaker 1: short term basis given what the economy is telling you.

113
00:05:26,440 --> 00:05:28,480
Speaker 1: But part of what I think people have been maybe

114
00:05:28,600 --> 00:05:31,320
Speaker 1: maybe a bit short sighted about is you don't buy

115
00:05:31,360 --> 00:05:33,360
Speaker 1: equities for the next quarter, and people talk a lot

116
00:05:33,400 --> 00:05:37,080
Speaker 1: about next quarter and p ratio offer this year. If

117
00:05:37,080 --> 00:05:39,320
Speaker 1: you go over the intermediate term and think about guess

118
00:05:39,400 --> 00:05:41,360
Speaker 1: you've got we don't have interest low interest rates for

119
00:05:41,400 --> 00:05:44,040
Speaker 1: a long time, and you think about where earnings are

120
00:05:44,040 --> 00:05:46,160
Speaker 1: going to be over a long period of time. These

121
00:05:46,160 --> 00:05:49,040
Speaker 1: equities are a long duration the longest duration asset there

122
00:05:49,160 --> 00:05:53,159
Speaker 1: is equity valuations when you take equity risk premium and

123
00:05:53,200 --> 00:05:56,000
Speaker 1: think about where we are versus on a low interest rate,

124
00:05:56,200 --> 00:05:58,400
Speaker 1: on a low level where companies can borrow and actually

125
00:05:58,400 --> 00:06:00,920
Speaker 1: buy back their stock if they want to. Equities are

126
00:06:00,920 --> 00:06:02,719
Speaker 1: not high. I mean, I think they can go higher

127
00:06:02,760 --> 00:06:04,320
Speaker 1: in the near terms. I think they should pull back

128
00:06:04,400 --> 00:06:07,360
Speaker 1: a little bit probably, But you know, if you're building

129
00:06:07,400 --> 00:06:10,240
Speaker 1: balance in your portfolio and you're a long term investor

130
00:06:10,120 --> 00:06:13,040
Speaker 1: and medium term investor, to hold equities in the portfolio,

131
00:06:13,400 --> 00:06:15,640
Speaker 1: you know, versus owning you're not gonna make any money

132
00:06:15,640 --> 00:06:18,080
Speaker 1: owning the ten year Treasury note at sixty eight basis

133
00:06:18,080 --> 00:06:21,240
Speaker 1: points sixty nine basis points. So I do think that

134
00:06:21,240 --> 00:06:23,400
Speaker 1: that equities makes sense as long as you're an investor

135
00:06:23,480 --> 00:06:25,280
Speaker 1: and can be thoughtful about. Gosh, I'm not gonna look

136
00:06:25,279 --> 00:06:27,000
Speaker 1: at you know, could I go down in the next

137
00:06:27,000 --> 00:06:28,600
Speaker 1: week or so. You could go down a bit, But

138
00:06:28,960 --> 00:06:31,200
Speaker 1: I think people are under estimating equities for the for

139
00:06:31,240 --> 00:06:34,680
Speaker 1: the intermediate to long haul are actually still okay value here.

140
00:06:35,040 --> 00:06:38,120
Speaker 1: That was Rick Reader of black Rock coming up. We

141
00:06:38,240 --> 00:06:39,920
Speaker 1: talked with the governor of one of the states hit

142
00:06:39,960 --> 00:06:43,359
Speaker 1: hardest by the coronavirus as it moves cautiously to open

143
00:06:43,400 --> 00:06:47,200
Speaker 1: back up, Governor Phil Murphy of New Jersey. That's next

144
00:06:47,240 --> 00:06:56,520
Speaker 1: on Wall Street Week on Bloomberg. This is Bloomberg Will

145
00:06:56,640 --> 00:07:01,080
Speaker 1: Street Week with David Weston from Bloomberg. Ready, New Jersey

146
00:07:01,120 --> 00:07:04,040
Speaker 1: has been one of the state's hardest hit by the coronavirus,

147
00:07:04,320 --> 00:07:06,720
Speaker 1: and Governor Phil Murphy has been on the front lines

148
00:07:07,000 --> 00:07:10,800
Speaker 1: organizing efforts to bend the curve, comforting those afflicted, and,

149
00:07:10,880 --> 00:07:14,240
Speaker 1: as he says, playing moneyball by sticking to the science.

150
00:07:14,600 --> 00:07:19,160
Speaker 1: I hope what we can offer, folks um is that

151
00:07:19,840 --> 00:07:23,360
Speaker 1: you know some basic sort of themes, which is number one,

152
00:07:23,480 --> 00:07:27,920
Speaker 1: public health creates economic health. Inasmuch as we're all chopping

153
00:07:27,960 --> 00:07:31,520
Speaker 1: at the bit to get everything opened again. If we

154
00:07:31,760 --> 00:07:34,800
Speaker 1: if we transpose those steps or we jumped the gun,

155
00:07:35,400 --> 00:07:37,400
Speaker 1: I think we throw gasoline on the fire. And I

156
00:07:37,400 --> 00:07:40,920
Speaker 1: think we've been very deliberate. And the second handed glove

157
00:07:40,960 --> 00:07:43,920
Speaker 1: with that is we say all the time that data

158
00:07:44,200 --> 00:07:47,960
Speaker 1: determines dates. So inasmuch as we don't ever want this

159
00:07:48,080 --> 00:07:51,400
Speaker 1: to be abstracted. In fact, we eulogize a handful of

160
00:07:51,440 --> 00:07:54,160
Speaker 1: people every day. I call families every day to make

161
00:07:54,160 --> 00:07:58,600
Speaker 1: sure it always stays personal. Having said that this is moneyball,

162
00:07:58,960 --> 00:08:01,559
Speaker 1: this is what's the day to telling us and what's

163
00:08:01,560 --> 00:08:04,080
Speaker 1: it allowed that data allow us to do? And I

164
00:08:04,680 --> 00:08:07,920
Speaker 1: hope that that we get that right. So far, so good,

165
00:08:08,240 --> 00:08:10,440
Speaker 1: and just about every one of those briefings that I've seen,

166
00:08:10,480 --> 00:08:12,200
Speaker 1: at least. You also give credit to people in New

167
00:08:12,280 --> 00:08:15,480
Speaker 1: Jersey for complying with the restrictions that are not easy

168
00:08:15,480 --> 00:08:17,600
Speaker 1: to comply with. You mentioned chomping in the bit. People

169
00:08:17,640 --> 00:08:19,920
Speaker 1: are chomping to put in New Jersey and elsewhere as well.

170
00:08:20,200 --> 00:08:22,240
Speaker 1: As you start to back off, and it's not just

171
00:08:22,320 --> 00:08:25,320
Speaker 1: an on off switch, it's by measures. How do you

172
00:08:25,440 --> 00:08:28,440
Speaker 1: ensure compliance? It's going to get harder and harder. Yeah,

173
00:08:28,520 --> 00:08:32,320
Speaker 1: it probably is. But I have to say both individuals, David,

174
00:08:32,480 --> 00:08:34,920
Speaker 1: in terms of staying at home and staying away from

175
00:08:34,920 --> 00:08:38,720
Speaker 1: each other and wearing face coverings, as well as businesses

176
00:08:38,960 --> 00:08:43,520
Speaker 1: both big and small, the compliance has been overwhelming relative

177
00:08:43,640 --> 00:08:48,640
Speaker 1: to any expectation. Now, clearly as the weather has gotten warmer,

178
00:08:49,320 --> 00:08:53,120
Speaker 1: as the clock has continued to tick, as folks see

179
00:08:53,160 --> 00:08:56,320
Speaker 1: other states that have been less hard hit than New

180
00:08:56,400 --> 00:08:58,959
Speaker 1: Jersey and New York, as they you know, that's all

181
00:08:59,080 --> 00:09:02,440
Speaker 1: human nature, and I I get that. Are there more

182
00:09:02,480 --> 00:09:05,959
Speaker 1: folks today than there were a month ago? Uh, saying

183
00:09:06,040 --> 00:09:08,199
Speaker 1: you know, I'm gonna open on June something. Yeah, there

184
00:09:08,200 --> 00:09:11,160
Speaker 1: are some more, but I will say this, and by

185
00:09:11,200 --> 00:09:12,679
Speaker 1: the way, I think the other point I would make

186
00:09:12,760 --> 00:09:15,360
Speaker 1: is that we have we've done, We've started to open up.

187
00:09:15,400 --> 00:09:17,640
Speaker 1: We've not this is not uh, you know, we we

188
00:09:17,760 --> 00:09:20,920
Speaker 1: recognize that we need to take steps. For the most part,

189
00:09:20,960 --> 00:09:23,400
Speaker 1: folks have done the right thing. What about the politics

190
00:09:23,440 --> 00:09:25,120
Speaker 1: of it within New Jersey? We've seen, at least in

191
00:09:25,160 --> 00:09:27,760
Speaker 1: some other places some of the states, a fair amount

192
00:09:27,800 --> 00:09:29,800
Speaker 1: of politics involved where some people are really not just

193
00:09:29,840 --> 00:09:33,120
Speaker 1: clamoring to get back, but really demonstrating pretty active in it.

194
00:09:33,240 --> 00:09:35,360
Speaker 1: What's been the politics New Jersey? Do you have the

195
00:09:35,440 --> 00:09:38,120
Speaker 1: legislature with you? Do you have the politicians back in

196
00:09:38,200 --> 00:09:40,720
Speaker 1: you here? Yeah, for the most part, we do. There's

197
00:09:40,720 --> 00:09:43,960
Speaker 1: been some demonstrations, There's no question about it. Nothing at

198
00:09:44,000 --> 00:09:46,200
Speaker 1: the scale that we've seen in a place like Michigan,

199
00:09:46,280 --> 00:09:49,880
Speaker 1: for instance, But they have been pretty regular demonstrations. And

200
00:09:50,040 --> 00:09:53,040
Speaker 1: I don't begrudge that we never have. I would prefer

201
00:09:53,120 --> 00:09:57,280
Speaker 1: folks to them virtually that they don't congregate, But that

202
00:09:57,600 --> 00:10:00,760
Speaker 1: bothers me more than the demonstrations. Uh, you know, there's

203
00:10:00,800 --> 00:10:04,000
Speaker 1: always exceptions with any legislature. But we we've had a

204
00:10:04,080 --> 00:10:08,280
Speaker 1: very good across the aisle, give and take, generally strong support,

205
00:10:08,840 --> 00:10:10,600
Speaker 1: and we've needed them. You know, we need laws to

206
00:10:10,640 --> 00:10:12,720
Speaker 1: get past. We need to for instance, we need an

207
00:10:12,760 --> 00:10:17,280
Speaker 1: ability to borrow money to fill up the enormous budget

208
00:10:17,280 --> 00:10:20,079
Speaker 1: hole that we have as an example. But so far,

209
00:10:20,240 --> 00:10:22,959
Speaker 1: so good. Again, there are some folks who, naturally, in

210
00:10:23,000 --> 00:10:26,400
Speaker 1: any democratic reality, are gonna go off and say and

211
00:10:26,400 --> 00:10:28,280
Speaker 1: do their own things. But for the most part, we're

212
00:10:28,360 --> 00:10:31,080
Speaker 1: we've been in a good place. One of the tricky

213
00:10:31,120 --> 00:10:35,480
Speaker 1: things everyone is confronting is reopening at the schools, and unfortunately,

214
00:10:35,520 --> 00:10:37,480
Speaker 1: with the summer most people are not going to school anyway.

215
00:10:37,520 --> 00:10:39,520
Speaker 1: But you've got the fall coming up. It's a lot

216
00:10:39,600 --> 00:10:42,160
Speaker 1: of uncertainty about how that's gonna work. As you approach

217
00:10:42,240 --> 00:10:44,800
Speaker 1: that question, what are the criteria're gonna use, What are

218
00:10:44,840 --> 00:10:47,840
Speaker 1: the things you're considering about how and when to open

219
00:10:47,840 --> 00:10:51,320
Speaker 1: your schools? You know, we've promised folks by sort of

220
00:10:51,400 --> 00:10:54,960
Speaker 1: mid June, we're gonna give them guidance, uh at least

221
00:10:55,040 --> 00:10:58,480
Speaker 1: on pre K through twelve, And we're clearly talking to

222
00:10:58,559 --> 00:11:03,800
Speaker 1: the universities and higher in community constantly as well. Um,

223
00:11:03,960 --> 00:11:07,280
Speaker 1: and it's it's my bias, David strongly is that we

224
00:11:07,320 --> 00:11:10,959
Speaker 1: get back to school. Uh. We've done the virtual stuff

225
00:11:11,000 --> 00:11:13,760
Speaker 1: as well as any American state, but there's for a

226
00:11:13,800 --> 00:11:17,120
Speaker 1: whole host of reasons, including mental health, the richness of

227
00:11:17,120 --> 00:11:19,880
Speaker 1: the experience. I'd like, I want to see us back

228
00:11:20,280 --> 00:11:22,280
Speaker 1: in school, but it's got to be a new normal

229
00:11:22,559 --> 00:11:25,200
Speaker 1: if you ask me a different question. But relatedly, what's

230
00:11:25,240 --> 00:11:28,560
Speaker 1: my biggest what what's the hardest nut to crack? I

231
00:11:28,600 --> 00:11:35,320
Speaker 1: think it's gonna it's going to be the young, healthy, asymmetric, asymptomatic,

232
00:11:35,679 --> 00:11:41,600
Speaker 1: unwitting student who could pass this virus to an older educator, administrator,

233
00:11:41,760 --> 00:11:45,040
Speaker 1: someone with underlying health challenges. That's got to be the

234
00:11:45,080 --> 00:11:47,240
Speaker 1: one piece of this that we've got to get right.

235
00:11:47,400 --> 00:11:52,040
Speaker 1: I think we can with social distancing, face coverings, maybe

236
00:11:52,160 --> 00:11:56,240
Speaker 1: virtual instruction, even within the in the bricks and mortar reality,

237
00:11:56,320 --> 00:11:57,880
Speaker 1: but we've got to make sure we get that right.

238
00:11:58,480 --> 00:11:59,920
Speaker 1: One of the things you said is a particular chan

239
00:12:00,000 --> 00:12:02,480
Speaker 1: elenge of New Jersey is long term care facilities. It

240
00:12:02,520 --> 00:12:04,200
Speaker 1: is not unique j New Jersey, but you've had a

241
00:12:04,200 --> 00:12:06,520
Speaker 1: big issue with that. What are you doing about that?

242
00:12:06,640 --> 00:12:09,880
Speaker 1: How can you really going forward sort of protect some

243
00:12:09,960 --> 00:12:11,319
Speaker 1: of our elderly, some of the people with some of

244
00:12:11,360 --> 00:12:15,240
Speaker 1: the underlying conditions. Yeah, we've been clabbored in long term care.

245
00:12:15,320 --> 00:12:18,559
Speaker 1: We're not alone for sure. But uh. Of the eleven thousand,

246
00:12:18,559 --> 00:12:22,000
Speaker 1: four one deaths, almost five thousand of them are from

247
00:12:22,040 --> 00:12:25,480
Speaker 1: long term care facilities. Uh. And by the way, early on,

248
00:12:25,520 --> 00:12:28,560
Speaker 1: when I just mentioned about schools early on, that was

249
00:12:28,640 --> 00:12:31,760
Speaker 1: sort of the the spark that created the fire, the

250
00:12:32,320 --> 00:12:37,480
Speaker 1: symptomatic unwitting heroic by I might add, healthcare employee or

251
00:12:37,600 --> 00:12:41,200
Speaker 1: love one visiting and unwittingly passing it on. So we've

252
00:12:41,240 --> 00:12:44,960
Speaker 1: thrown the kitchen sink at this, including at the uneven

253
00:12:45,040 --> 00:12:49,920
Speaker 1: operator performance. The Attorney General has got an investigation outstanding.

254
00:12:50,280 --> 00:12:52,800
Speaker 1: The National Guard, I'm very happy to say the President

255
00:12:52,920 --> 00:12:56,200
Speaker 1: is just re up the funding to extend the National Guard.

256
00:12:56,200 --> 00:12:58,599
Speaker 1: They're in a lot of our long term care facilities.

257
00:12:58,880 --> 00:13:02,800
Speaker 1: The Federal Veterans Administration has come in and helped us out,

258
00:13:02,840 --> 00:13:05,439
Speaker 1: not just in our veterans homes which have been hit,

259
00:13:05,520 --> 00:13:09,600
Speaker 1: but also in other homes. We hired a nationally renowned firm.

260
00:13:09,920 --> 00:13:13,400
Speaker 1: We're now we're now in the process of universal testing

261
00:13:13,480 --> 00:13:18,760
Speaker 1: and re testing, cohorting, separating patients positive from non positive.

262
00:13:19,480 --> 00:13:22,120
Speaker 1: We've learned a lot of lessons. The in that industry

263
00:13:22,120 --> 00:13:25,239
Speaker 1: has learned a lot. We all have the hard way unfortunately.

264
00:13:25,400 --> 00:13:29,240
Speaker 1: But it's also an economic issue. Without adat, we are

265
00:13:29,320 --> 00:13:33,160
Speaker 1: getting increasing numbers of unemployed and the inclusion New Jersey,

266
00:13:33,200 --> 00:13:35,000
Speaker 1: I think is that one in nine. Now you're up to.

267
00:13:35,960 --> 00:13:37,760
Speaker 1: At what point do you still expect this is going

268
00:13:37,800 --> 00:13:40,719
Speaker 1: to bottom out? Do you see a bottom to this unemployment?

269
00:13:40,720 --> 00:13:43,680
Speaker 1: And it's starting to turn back around? Please God sooner

270
00:13:43,679 --> 00:13:48,240
Speaker 1: than later. Uh. I think it's correlated with a couple

271
00:13:48,240 --> 00:13:53,920
Speaker 1: of things. David number one, the responsible continued responsible reopening

272
00:13:54,040 --> 00:13:56,280
Speaker 1: that we get that right that we don't have. You know,

273
00:13:56,280 --> 00:13:58,040
Speaker 1: we're going down on one way street. I don't want

274
00:13:58,040 --> 00:14:01,560
Speaker 1: to turn the car around and go back the other way. Uh.

275
00:14:01,600 --> 00:14:04,520
Speaker 1: And secondly, I'll give you a big game changer, and

276
00:14:04,600 --> 00:14:09,760
Speaker 1: that is direct federal cash assistance to states and municipalities. Uh.

277
00:14:09,800 --> 00:14:12,480
Speaker 1: It's talked about. There are a couple of bills, including

278
00:14:12,840 --> 00:14:16,560
Speaker 1: Bob Menendez, one of our great senators co sponsor with

279
00:14:16,559 --> 00:14:20,760
Speaker 1: a Republican colleague, Bill Cassidy in Louisiana. UH is a

280
00:14:20,760 --> 00:14:24,640
Speaker 1: good example, Speaker Pelosi with the Heroes Act. UH. We

281
00:14:24,720 --> 00:14:27,360
Speaker 1: need that, Uh, not just a blue state, not just

282
00:14:27,400 --> 00:14:31,320
Speaker 1: New Jersey, all American states need that. And and frankly,

283
00:14:31,400 --> 00:14:36,320
Speaker 1: that's the biggest potential accelerant that's available to us right

284
00:14:36,320 --> 00:14:39,600
Speaker 1: now to reboot our economy and get as close to

285
00:14:39,680 --> 00:14:45,520
Speaker 1: that that long uh long sought after V shaped recovery.

286
00:14:45,560 --> 00:14:48,120
Speaker 1: That's to me the biggest game changer available. That was

287
00:14:48,160 --> 00:14:51,640
Speaker 1: Governor Phil Murphy of New Jersey. Coming up. Europe finally

288
00:14:51,680 --> 00:14:54,680
Speaker 1: gets its act together for a fiscal stimulus package. That's

289
00:14:54,720 --> 00:15:03,440
Speaker 1: next on Wall Street Week on Bloomberg. This is Bloomberg

290
00:15:03,480 --> 00:15:07,400
Speaker 1: Wall Street Week with David Weston from Bloomberg Radio. We

291
00:15:07,520 --> 00:15:10,520
Speaker 1: wrap up the week with our very special contributor Larry Summers.

292
00:15:10,560 --> 00:15:12,680
Speaker 1: As always so Larry, welcome, Good to have you here.

293
00:15:13,200 --> 00:15:15,280
Speaker 1: Af Throughout the entire week, markets were sort of a

294
00:15:15,280 --> 00:15:17,200
Speaker 1: little nervous about China, and then at the very end

295
00:15:17,200 --> 00:15:19,240
Speaker 1: of the week, President Trump had a big news conference

296
00:15:19,440 --> 00:15:20,960
Speaker 1: at the White House and he said, boy, there are

297
00:15:21,040 --> 00:15:23,440
Speaker 1: bad things coming from China. He did withdraw from the

298
00:15:23,560 --> 00:15:25,520
Speaker 1: w h oh, so there's gonna be sanctions, but the

299
00:15:25,560 --> 00:15:28,240
Speaker 1: markets could have shriped it off. Is this real or

300
00:15:28,320 --> 00:15:32,320
Speaker 1: is it saber rattling some of both uh our withdrawal

301
00:15:32,360 --> 00:15:37,120
Speaker 1: from the W HO is probably not as consequential as

302
00:15:37,120 --> 00:15:39,600
Speaker 1: when the United States decided not to join the League

303
00:15:39,640 --> 00:15:44,080
Speaker 1: of Nations after the First World War, but it may

304
00:15:44,160 --> 00:15:51,080
Speaker 1: be the most important withdrawal from internationalism that the United

305
00:15:51,120 --> 00:15:55,080
Speaker 1: States has engaged in since the Second World War. It's

306
00:15:55,120 --> 00:15:59,920
Speaker 1: a completely irresponsible act that will set back the effort

307
00:16:00,160 --> 00:16:04,600
Speaker 1: to combat disease in the world and will ultimately hurt

308
00:16:05,480 --> 00:16:10,160
Speaker 1: our security. God knows the w h O is deeply flawed,

309
00:16:10,480 --> 00:16:14,240
Speaker 1: but the United States should be fixing it, not abandoning it,

310
00:16:14,480 --> 00:16:19,080
Speaker 1: and future generations will regret this decision and the lack

311
00:16:19,120 --> 00:16:22,400
Speaker 1: of trust uh that comes from it. It's not something

312
00:16:22,440 --> 00:16:25,640
Speaker 1: that affects the profits of companies over the next several years,

313
00:16:25,680 --> 00:16:28,480
Speaker 1: so it doesn't affect the stock market. But that's the

314
00:16:28,560 --> 00:16:34,400
Speaker 1: really consequential thing. The sparring on Hong Kong doesn't involve

315
00:16:34,560 --> 00:16:38,280
Speaker 1: something that is going to concretely hurt corporate profits. That's

316
00:16:38,280 --> 00:16:43,320
Speaker 1: why the market didn't react, and the market has been

317
00:16:43,360 --> 00:16:47,440
Speaker 1: pricing in the fact that the United States and China

318
00:16:47,920 --> 00:16:51,800
Speaker 1: are at deep blogger heads in a way they haven't

319
00:16:51,880 --> 00:16:56,760
Speaker 1: been since Nixon opened to China fifty years ago, and

320
00:16:56,840 --> 00:17:01,520
Speaker 1: that's what's continuing to play out. But think that the

321
00:17:01,560 --> 00:17:06,800
Speaker 1: fact that there's no market response shouldn't make people complacent,

322
00:17:07,359 --> 00:17:11,200
Speaker 1: not about the United States abandoning the world's health organization,

323
00:17:11,720 --> 00:17:16,639
Speaker 1: and not about the state of the US China relationship,

324
00:17:16,760 --> 00:17:21,639
Speaker 1: which I believe if history goes wrong, goes off track

325
00:17:22,359 --> 00:17:26,119
Speaker 1: in this decade, the far and away the most likely

326
00:17:26,240 --> 00:17:29,720
Speaker 1: way in which that will happen is fissures between the

327
00:17:29,800 --> 00:17:32,960
Speaker 1: United States and China. So, Larry, if the goal is

328
00:17:33,000 --> 00:17:35,760
Speaker 1: to modify China's behavior in some way, shape or form,

329
00:17:36,480 --> 00:17:38,040
Speaker 1: is there a way to do that? As a practic man,

330
00:17:38,040 --> 00:17:39,920
Speaker 1: it looks like President she has decided what he wants

331
00:17:39,920 --> 00:17:41,680
Speaker 1: to do, whether it's in Hong Kong and other places.

332
00:17:41,760 --> 00:17:43,879
Speaker 1: It doesn't look like anything we're doing is changing his

333
00:17:44,000 --> 00:17:48,159
Speaker 1: mind any Look. I think one of a lessons of

334
00:17:49,000 --> 00:17:53,280
Speaker 1: human life, and it's also a lesson of global life,

335
00:17:53,840 --> 00:17:58,280
Speaker 1: is that it's harder to change people and it's harder

336
00:17:58,320 --> 00:18:02,880
Speaker 1: to change nations then we often hope it would be,

337
00:18:03,560 --> 00:18:10,399
Speaker 1: and that threats and scolding are not all that effective

338
00:18:11,000 --> 00:18:16,480
Speaker 1: as UH tactics, And so I'm not surprised that this

339
00:18:16,560 --> 00:18:20,639
Speaker 1: isn't working very well with respect to China, And of

340
00:18:20,680 --> 00:18:25,280
Speaker 1: course it creates all the wrong incentives over the medium

341
00:18:25,320 --> 00:18:30,639
Speaker 1: and UH long term. It strengthens the people who say

342
00:18:30,680 --> 00:18:34,080
Speaker 1: in China that any kind of inter relationship with the

343
00:18:34,160 --> 00:18:38,280
Speaker 1: United States is a mistake against those who want to

344
00:18:38,359 --> 00:18:43,000
Speaker 1: be more intertwined UH with UH the United States. It

345
00:18:43,080 --> 00:18:47,280
Speaker 1: teaches China that they need to avoid any kind of

346
00:18:47,359 --> 00:18:51,960
Speaker 1: vulnerability to US, which means they will put more emphasis

347
00:18:52,080 --> 00:18:58,680
Speaker 1: on splintering UH their technologies and their economic approach from

348
00:18:58,720 --> 00:19:04,280
Speaker 1: anything that's global and is involved U with US. But

349
00:19:04,600 --> 00:19:09,200
Speaker 1: in fairness, UH, these are really hard problems, and it's

350
00:19:09,720 --> 00:19:15,040
Speaker 1: much easier to object to particular means that are being

351
00:19:15,160 --> 00:19:20,760
Speaker 1: pursued UH than it is UH to propose ways that

352
00:19:20,840 --> 00:19:24,880
Speaker 1: will be effective. I think over time, we're gonna have

353
00:19:25,080 --> 00:19:28,960
Speaker 1: to reduce our aspirations for how much we're going to

354
00:19:29,040 --> 00:19:34,560
Speaker 1: change China and concentrate on the set of issues that

355
00:19:34,760 --> 00:19:41,520
Speaker 1: most directly UH impact on our security. And we're gonna

356
00:19:41,560 --> 00:19:46,400
Speaker 1: have to think about aspects of our own behavior UH

357
00:19:46,440 --> 00:19:51,119
Speaker 1: that at times are provocative and recognized that in a

358
00:19:51,240 --> 00:19:55,040
Speaker 1: bargain UH you have to demand, you get to demand things,

359
00:19:55,080 --> 00:20:00,320
Speaker 1: but you also have to respond to uh the other

360
00:20:00,440 --> 00:20:04,720
Speaker 1: side's concerns, and that our concept can't be that we

361
00:20:04,840 --> 00:20:08,679
Speaker 1: run the world and China gets to decide how exactly

362
00:20:08,720 --> 00:20:12,840
Speaker 1: it wants to fit into the world we run. That's

363
00:20:12,840 --> 00:20:18,080
Speaker 1: probably not gonna work given China's current strength and UH

364
00:20:18,560 --> 00:20:26,919
Speaker 1: broad economic power. The one other thing, one other that's

365
00:20:27,040 --> 00:20:30,120
Speaker 1: one other thing if I could, Uh, David, I think

366
00:20:30,280 --> 00:20:34,960
Speaker 1: probably the single most serious farm policy error that the

367
00:20:35,000 --> 00:20:40,720
Speaker 1: Trump administration has made is the more you think that

368
00:20:41,000 --> 00:20:45,720
Speaker 1: China is, in various ways a serious threat, the more

369
00:20:45,800 --> 00:20:51,520
Speaker 1: important it is that we have strong global alliances with

370
00:20:51,600 --> 00:20:55,720
Speaker 1: all the other countries in the world. And so what

371
00:20:56,000 --> 00:21:02,879
Speaker 1: is odd is a strategy of UH elevating the Chinese

372
00:21:02,960 --> 00:21:10,639
Speaker 1: China threat and at the same time not aggressively trying

373
00:21:10,720 --> 00:21:15,000
Speaker 1: to get close to all the other countries and instead,

374
00:21:15,080 --> 00:21:21,919
Speaker 1: in many ways abrogating commitments UH to them and lashing

375
00:21:21,960 --> 00:21:26,560
Speaker 1: out at them UH in various ways. In a world

376
00:21:26,600 --> 00:21:31,320
Speaker 1: where we want to put trade sanctions on China, what

377
00:21:31,480 --> 00:21:36,439
Speaker 1: could be dumber than threatening trade sanctions on Canada and

378
00:21:36,560 --> 00:21:39,639
Speaker 1: Europe and all the other countries who we need to

379
00:21:39,720 --> 00:21:43,240
Speaker 1: cooperate with us if we're to have a realistic chance

380
00:21:43,280 --> 00:21:46,520
Speaker 1: of influencing China's behavior. Larry, I want to come back

381
00:21:46,520 --> 00:21:48,200
Speaker 1: to the unit statis just for a couple of minutes

382
00:21:48,200 --> 00:21:50,840
Speaker 1: here because you've expressed concern about how quickly we're coming back,

383
00:21:50,880 --> 00:21:52,840
Speaker 1: at least in some parts of the country, whether we're ready,

384
00:21:53,000 --> 00:21:55,359
Speaker 1: whether we have the testing, the contact tracing, things like that.

385
00:21:55,600 --> 00:21:57,600
Speaker 1: We are starting to open back up, even here in

386
00:21:57,640 --> 00:21:59,960
Speaker 1: New York. Now we're hearing New York City maybe open

387
00:22:00,040 --> 00:22:02,840
Speaker 1: with the next couple of weeks. How will it be

388
00:22:03,000 --> 00:22:05,800
Speaker 1: different these cities now, these big cities are a lot

389
00:22:05,840 --> 00:22:07,600
Speaker 1: of talk now, But what are these cities like New

390
00:22:07,680 --> 00:22:10,080
Speaker 1: York City, like Boston, the places, whether they'll ever be

391
00:22:10,160 --> 00:22:14,560
Speaker 1: the same again. Look, I think to two separate questions there,

392
00:22:14,840 --> 00:22:20,640
Speaker 1: uh David. Several weeks ago um a set of criteria

393
00:22:20,760 --> 00:22:24,280
Speaker 1: were laid out. There seemed to be a consensus around

394
00:22:24,280 --> 00:22:28,240
Speaker 1: those criteria. In fact, the Trump administration laid them out

395
00:22:28,359 --> 00:22:31,720
Speaker 1: for how much progress we had to make with respect

396
00:22:31,800 --> 00:22:34,840
Speaker 1: to health, how much death counts had to come down,

397
00:22:35,160 --> 00:22:39,879
Speaker 1: how much testing had to be in place. None of

398
00:22:39,920 --> 00:22:43,840
Speaker 1: those criteria have been matched, and we're still moving ahead.

399
00:22:44,920 --> 00:22:47,800
Speaker 1: And I think those were probably reasonable criteria when we

400
00:22:47,880 --> 00:22:51,679
Speaker 1: laid them out, and I think it's therefore quite risky

401
00:22:52,200 --> 00:22:55,600
Speaker 1: to be moving ahead. I can understand why the decision

402
00:22:55,680 --> 00:23:00,480
Speaker 1: is being made, but I'm very concerned that I think

403
00:23:00,520 --> 00:23:06,800
Speaker 1: we are taking substantial risks of a second wave of

404
00:23:07,040 --> 00:23:12,960
Speaker 1: a re emergence UH. Everything the world knows about pandemic

405
00:23:13,080 --> 00:23:20,119
Speaker 1: disease suggests that it doesn't grow. It's not an inverted V.

406
00:23:20,520 --> 00:23:24,960
Speaker 1: It doesn't grow and then revert back to zero. It's

407
00:23:25,000 --> 00:23:29,480
Speaker 1: more like upside down. W It goes up and then

408
00:23:29,520 --> 00:23:33,399
Speaker 1: it comes down, and then it goes up again. And

409
00:23:33,560 --> 00:23:41,800
Speaker 1: I think we're taking a substantial risk of that, and people, UH, markets,

410
00:23:42,240 --> 00:23:46,600
Speaker 1: UH need to be aware that that's very much a

411
00:23:46,720 --> 00:23:49,800
Speaker 1: risk we're taking. We could be doing much more to

412
00:23:49,920 --> 00:23:53,400
Speaker 1: minimize that risk. We could have a much more organized

413
00:23:53,560 --> 00:23:57,919
Speaker 1: national effort to make to massively increase the level of

414
00:23:57,960 --> 00:24:02,680
Speaker 1: testing UH in the United States, for example, but we don't.

415
00:24:02,720 --> 00:24:06,480
Speaker 1: We could be engaged in a major effort when there

416
00:24:06,359 --> 00:24:08,879
Speaker 1: are tens of millions of people who are unemployed, to

417
00:24:09,040 --> 00:24:13,400
Speaker 1: hire people to do contact tracing so as to reduce

418
00:24:13,800 --> 00:24:19,440
Speaker 1: UH the spread. We could recognize, as is increasingly being

419
00:24:19,520 --> 00:24:23,880
Speaker 1: recognized by the scientists, the problem of super spreaders and

420
00:24:24,320 --> 00:24:29,119
Speaker 1: be trying to pursue targeted strategies directed at making sure

421
00:24:29,240 --> 00:24:33,560
Speaker 1: that any superspreaders are separated from the rest of the population.

422
00:24:33,640 --> 00:24:37,200
Speaker 1: As rapidly as possible. But we're not doing any of that,

423
00:24:37,800 --> 00:24:42,520
Speaker 1: and so I think we are taking substantial, uh needless

424
00:24:42,680 --> 00:24:48,800
Speaker 1: risks of more trouble down the road. We may look out,

425
00:24:49,160 --> 00:24:54,719
Speaker 1: it may be okay, nobody can predict uh pandemics, but

426
00:24:55,440 --> 00:24:58,360
Speaker 1: uh sometimes people don't buy insurance and they don't get

427
00:24:58,400 --> 00:25:01,919
Speaker 1: sick and it work shout. Okay not to have what insurance,

428
00:25:02,240 --> 00:25:05,080
Speaker 1: But that doesn't make it the right thing to do.

429
00:25:05,240 --> 00:25:10,960
Speaker 1: So I'm alarmed our strategy. I think it's extremely odd

430
00:25:11,000 --> 00:25:14,119
Speaker 1: that as a country we are debating, and this is

431
00:25:14,320 --> 00:25:20,480
Speaker 1: a bipartisan issue, we're debating a three trillion dollar bill,

432
00:25:21,240 --> 00:25:25,840
Speaker 1: and not two percent of it is devoted to uh

433
00:25:25,960 --> 00:25:31,320
Speaker 1: finding vaccines and therapies and increasing testing. And so I

434
00:25:31,359 --> 00:25:37,399
Speaker 1: would suggest as a minimum threshold of responsibility that of

435
00:25:37,440 --> 00:25:43,280
Speaker 1: any legislation we devote to addressing these economic problems be

436
00:25:44,080 --> 00:25:46,560
Speaker 1: devoted to the health aspect. Okay, there you have it,

437
00:25:46,600 --> 00:25:48,520
Speaker 1: Thank you so much. Larry some re Seon, a special

438
00:25:48,520 --> 00:25:51,560
Speaker 1: contributor of Courstion is former Secretary Treasury. That's it for

439
00:25:51,640 --> 00:25:54,760
Speaker 1: this edition of Walstert Week. I'm David Weston. See you

440
00:25:54,840 --> 00:25:56,840
Speaker 1: next week. This is Bloomberg