Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Well, our tough stories on
Speaker 1: the virus, you've been hearing them throughout the day here
Speaker 1: at Bloomberg. Those anti malaria drugs that President trub has
Speaker 1: touted to fight COVID nint well, they're linked to an
Speaker 1: increase of death and heart ailments. Meantime, you've got Oxford
Speaker 1: and Astra Zeneca they're starting to recruit subjects for advanced
Speaker 1: human studies of one of the fastest moving experimental vaccines.
Speaker 1: And then Dr fauci Uh He said he was quote
Speaker 1: cautiously optimistic about Murderner's vaccine boosting that stock once again.
Speaker 1: So let's get an update, let's see what you really
Speaker 1: need to walk away with before we get into the
Speaker 1: holiday weekend. Dr Ian LUs Bader is Clinical Associate Professor
Speaker 1: Medicine at n Y you Land Going Medical Center, joining
Speaker 1: us once again on the phone from New york Ian.
Speaker 1: Good to have you back again. How was your week?
Speaker 1: Thank you Carol and Jason. Hope you guys are doing well. Um,
Speaker 1: I think it's been overall a good week. You know,
Speaker 1: we're all transitioning, trying to transition back to whatever a
Speaker 1: more normal environment is. Certainly we're seeing a fewer cases
Speaker 1: in the hospital with UH with a cute UH COVID
Speaker 1: nineteen UH. Still a number of patients who are in
Speaker 1: the hospital, and certainly we're still touched by death. Yesterday
Speaker 1: a colleague of mine who's a cardiologist died uh. Not
Speaker 1: very old at seventy and a very vital, great teacher.
Speaker 1: So I think we're all touched one way or another
Speaker 1: by friends or family or people that we know. So
Speaker 1: it's still, you know, a very serious disease. Fortunately, the
Speaker 1: numbers here or going down there's some data perhaps in
Speaker 1: South America that the number of cases are going up,
Speaker 1: which is a concern, and we're trying to transition back
Speaker 1: to normal patient flow. What's interesting is a lot of
Speaker 1: the floors that were previously medical or surgical most of
Speaker 1: the hospital converted to COVID patients. Those patients, many of
Speaker 1: them fortunately have been discharged UH and now sort of
Speaker 1: awaiting the return of regular patients. And what's interesting to
Speaker 1: see is that volume is not a hundred percent. So
Speaker 1: it seems that many patients with you know, abdominal pain,
Speaker 1: chest pain, elective surgery needs are slow to return to
Speaker 1: the regular healthcare system, which which may reflect either you know,
Speaker 1: fears about getting care, maybe fears about getting COVID. But
Speaker 1: certainly I think the medical system is eddie to return
Speaker 1: to UH, you know, dealing with patients who might have
Speaker 1: postponed some of their care and our anxious to have
Speaker 1: those patients back. So Ian talked to us about New
Speaker 1: York City at this point. You know, we heard from
Speaker 1: Governor Cuomo that by next week, essentially every region of
Speaker 1: this state of New York State will be in the
Speaker 1: phases that early phases and and and further along in
Speaker 1: reopening safe for New York City. We know about the density,
Speaker 1: we know about the fact that this was the epicenter
Speaker 1: really in the entire United States. Help us understand what
Speaker 1: needs to happen, because my understanding is is that part
Speaker 1: of it is available beds and and basically hospital capacity.
Speaker 1: That is one threshold that the city has yet to meet.
Speaker 1: Help us understand that, well. I think it's very hard
Speaker 1: to turn on hospital availability like a light switch. When
Speaker 1: you start filling up your hospital with you know, elective
Speaker 1: surgery and uh other surgical procedures or cardiac cases and
Speaker 1: so forth. If there's a sudden surgeon patients, you it's
Speaker 1: very hard to quickly get those patients out. So it's
Speaker 1: always better to anticipate what your needs may be, whether
Speaker 1: it's ventilators or I c U space. But it does
Speaker 1: seem at this time whether or not social distancing and
Speaker 1: and mitigation measures have helped, or whether it's the better weather,
Speaker 1: we don't really know. But the number of new cases
Speaker 1: does seem to be uh reducing. So that's certainly very
Speaker 1: uh you know, encouraging, and I think we have to
Speaker 1: address our regular patients and other patients, you know, to
Speaker 1: deal to deal with those issues. And I think this
Speaker 1: is really unknown, it's a new virus, and how people
Speaker 1: will get back, how safe it will be uh in
Speaker 1: businesses and offices. I certainly I think people will begin
Speaker 1: to come back in a slower fashion. People who can
Speaker 1: work from home probably will still be encouraged to work
Speaker 1: them home. But I think there's a lot of benefit
Speaker 1: to people getting back to normal psychologically. Um, there may
Speaker 1: be some people who still want to work from home,
Speaker 1: may be more efficient. There's some people who say they're
Speaker 1: working longer hours, you know, from eight am to six pm,
Speaker 1: and and actually even being more productive. Yeah. I think
Speaker 1: just now I've had some of those conversations that you know,
Speaker 1: I don't think. I think I went into this wasn't
Speaker 1: quite sure how it was going to work. And I
Speaker 1: feel probably more productive on a lot of different levels. UM.
Speaker 1: So it's kind of interesting this experience. UM. What did
Speaker 1: you make of the president taking hydrochloroquin so that that
Speaker 1: has been asked to me by a number of patients
Speaker 1: and UH and colleagues and and and friends. And I think, um,
Speaker 1: because we do not have any medication really that we
Speaker 1: know of to reduce the uh say, incidents of of
Speaker 1: COVID nineteen or the symptoms. We're very lucky that of
Speaker 1: patients approximately more or less seem to do fairly well
Speaker 1: and a smaller percent again for unclear reasons. We know
Speaker 1: some risk factors. Again we talked about age and weight
Speaker 1: and diabetes and hypertension due to deteriorate UH. We don't
Speaker 1: really have great medications to to bend that curve. We
Speaker 1: certainly know hydroxy chloroquine um is very useful for rheumatoid arthritis, lupus, malaria, prophylaxis.
Speaker 1: We also know from many studies it's not very helpful
Speaker 1: at all once you're hospitalized and use sort of late
Speaker 1: in the disease or when patients are very sick. There
Speaker 1: are a number of studies going on now to see
Speaker 1: in a controlled way, and we don't really have good
Speaker 1: randomized control studies, so so those are starting now. But
Speaker 1: there's a lot of anecdotal evidence, small case studies and
Speaker 1: individual reports where it does seem to reduce the viral replication,
Speaker 1: does seem to reduce the severity um of the disease,
Speaker 1: or maybe actually prevents some people from getting the disease,
Speaker 1: so they're used early on. It right to be very helpful,
Speaker 1: and I think in the White House where I have
Speaker 1: the best guest, thirty or forty people there habit and
Speaker 1: hang on a second, because we've just got to take
Speaker 1: a break and we'll come back. We're catching up with
Speaker 1: our pal. Dr Ian les Bader, clinical Associate Professor of
Speaker 1: Medicine at n y U s Lango Medical Center, joinings
Speaker 1: on the phone from New York City, and when we
Speaker 1: left off, we were talking about some of the treatments
Speaker 1: that are out there. So Ian, I want to ask you,
Speaker 1: since testing and tracing are going to be key to reopening,
Speaker 1: where are we on testing? What are we learning so far? Um,
Speaker 1: both in sort of broad strokes but also sort of
Speaker 1: specifically what have you seen here in New York h
Speaker 1: great questions. So in terms of testing, every one UH,
Speaker 1: whether they've had mild or no symptoms or severe symptoms,
Speaker 1: wants antibody testing and those are generally pretty reliable. We're
Speaker 1: using some of the national labs um for a blood
Speaker 1: draw and I g G levels, and it's interesting to
Speaker 1: me that there are some people who were very sick
Speaker 1: and they have antibody positive. That's great, not all unexpected.
Speaker 1: You've got some people who are very mild or no
Speaker 1: known exposure and they're positive. But we're also seeing and
Speaker 1: I would say the majority of patients who are curious
Speaker 1: negative blood tests for antibodies, and you know, presumably that
Speaker 1: means those people definitely should be vaccinated when that is
Speaker 1: available and hopefully soon. In terms of acute patients who
Speaker 1: are ill, uh, we are now able to get those
Speaker 1: nasal swabs. Some people go to local urgent care where
Speaker 1: they may get nasal swabs or the saliva test. UH.
Speaker 1: Many go to urgent care to and get antibody tests.
Speaker 1: Remember that takes about ford to six weeks after symptoms
Speaker 1: for the antibody tests to be positive. But it seems
Speaker 1: there's a lot of curiosity and when we get all
Speaker 1: that data, that will give us a denominator of how
Speaker 1: many people had exposure and really what the death rate
Speaker 1: is when those final numbers come through. But at the
Speaker 1: end of the day, because we have no specific treatment,
Speaker 1: even if someone is COVID swab positive, UM, we really
Speaker 1: don't treat them. And that's sort of hearkens back to
Speaker 1: what we were talking about before with President Trump taking
Speaker 1: hydroxy chloroquine that may either prevent more severe disease or
Speaker 1: may prevent getting the disease or shortened symptoms. Other things,
Speaker 1: for example, vitamin D, some zinc, vitamin C, all of
Speaker 1: those may play a role. I urged patients to talk
Speaker 1: to their doctor about it. If you're vitamin D deficient,
Speaker 1: probably good to take a supplement. The hydroxy chloroquine does
Speaker 1: have risks. People really should get an e KG baseline.
Speaker 1: We've used it for years successfully in amator arthritis and lupus,
Speaker 1: and patients do very well on that. Uh. If I
Speaker 1: was the president and surrounded by thirty or forty people,
Speaker 1: including my valet with I wish I had a l A,
Speaker 1: but and I had a l A who was sick um,
Speaker 1: I would definitely say, hey, maybe I should take hydroxy clorklin.
Speaker 1: There is some data. I'm not sure that's appropriate for
Speaker 1: everyone to do. And I think that's sort of the
Speaker 1: issue that your role model and you sort of everyone
Speaker 1: then says, hey, if he's taking it, should I write
Speaker 1: that we're really waiting for for data on that. So will.
Speaker 1: I love that you said, if if you know maybe
Speaker 1: what the president is thinking, that you know where I
Speaker 1: am and who I'm surrounded with, maybe it makes sense
Speaker 1: for me to take it and so I'm going to
Speaker 1: ask my doctor, if you were his doctor, knowing his age,
Speaker 1: and you know some of his medical health conditions and um,
Speaker 1: who he is, would you suggest he do it? That's
Speaker 1: that's really a great question. There is no question he's
Speaker 1: in a high risk group. Um, even though he is
Speaker 1: appears overall healthy. We don't know. I don't know his
Speaker 1: e KG results, but if you're overweight, that is a
Speaker 1: significant risk factor, and a certainly age and male sex
Speaker 1: as a risk factor. So he definitely is high risk.
Speaker 1: He's surrounded by a very close UH workers who who
Speaker 1: have tested positive. I don't think it was really a
Speaker 1: crazy idea to take it. The next question is, okay, well,
Speaker 1: how long do you take it? What's the dose you take?
Speaker 1: We don't really have that information. Studies are going on,
Speaker 1: but you're really guessing when you're when you're dosing it
Speaker 1: as to what the right doses and how long to
Speaker 1: keep someone on it. But in principle it is not
Speaker 1: a crazy idea. All right, Well, we hope you have
Speaker 1: a triffic weekend. Dr lesbader Ian Les Beder, Clinical Associate
Speaker 1: Professor of Medicine, ny US Langown Medical Center, And I
Speaker 1: will say just to give him a shout out. He
Speaker 1: has been such a consistent voice for us in all
Speaker 1: of this. I really look forward to our conversations. I
Speaker 1: feel like I come out the other side smarter and
Speaker 1: and really able to talk to people because we're all
Speaker 1: talking about this all the time, Carol, and being able
Speaker 1: to convey some information not just to our listeners, but
Speaker 1: even in my personal life. Very grateful to the the infide. Yeah,
Speaker 1: and I have to say he's often given us a
Speaker 1: heads up on things that all of a sudden, like
Speaker 1: in a week or in a few days, are in
Speaker 1: everybody's headlines and in everybody's uh conversations. But I really
Speaker 1: do feel like he's been ahead of the curve, so
Speaker 1: really appreciate it. Um Dr Ian lust Later LUs Baider,
Speaker 1: Clinical Associate Professor Medicine at Lanto Medical Center. On the
Speaker 1: phone from New York City. You're listening to Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: This story Jason is among the most red on the
Speaker 1: Bloomberg Today. You and I were both He's rubbing his
Speaker 1: hands together because we're excited to talk to Ashley Vance.
Speaker 1: It is in the magazine's double issue. It's online. It's
Speaker 1: a story that came out of a phone call from
Speaker 1: Elon Musk to Bloomberg Business Week reporter and New York
Speaker 1: Times bestselling author Ashley Vats, who, of course, as you know,
Speaker 1: wrote a biography of Musk entitled Elon Musk, Slow, SpaceX
Speaker 1: and the Quest for a Fantastic Future, actually also the
Speaker 1: host of Hello World. He joins us on the phone
Speaker 1: from Palo Alto, California. So must just called you up. Yeah,
Speaker 1: we we uh, you know, we never since my book
Speaker 1: came out, we've had a bit of unusual relationship, sometimes talking,
Speaker 1: sometimes not, and it had been a while since we
Speaker 1: had any kind of really meaningful conversation. But you know,
Speaker 1: there's this amazing moment that's coming up next week with
Speaker 1: SpaceX China launch after us to the Space station. And
Speaker 1: I got a call from Elan on Sunday and Ashley,
Speaker 1: you do such a beautiful job setting it up, and
Speaker 1: I don't want to take I'm not gonna I was
Speaker 1: gonna read some of your best lines. I'm not gonna
Speaker 1: read it out loud because people just have to go
Speaker 1: read it and have the whole experience that we got
Speaker 1: to have. Of of like sitting and reading and just
Speaker 1: sort of being enveloped in this world. But the main
Speaker 1: point that you make at the top is that this
Speaker 1: should be a very straightforward, like declare victory, patriotic moment,
Speaker 1: you know, and you talk about like an immigrant launching
Speaker 1: people into space. This is what this whole country has
Speaker 1: has been about. And yet it is so much more complicated,
Speaker 1: in part because Elon Musk himself is complicated. Help us
Speaker 1: understand why and what you really took from this conversation. See,
Speaker 1: and I just wanted to know, did you like, wait, Ellen,
Speaker 1: can I just get back to you. I'm hope busy
Speaker 1: right now now. I'm just kidding answer answer Jason's question.
Speaker 1: It is funny because you know, I was already working
Speaker 1: on an essay tied to this launch, because it is
Speaker 1: it is this historic moment. You know, we've been we've
Speaker 1: been relying on Russian rockets for for about ten years
Speaker 1: to get humans into space, and obviously it's such a
Speaker 1: good ton with the virus that I wanted to write
Speaker 1: something about. Look, you know, humans can do a lot
Speaker 1: when they really put their mind to it. We all
Speaker 1: work together Space Action, NASA, the government and the private
Speaker 1: sector doing something good and and you want had already
Speaker 1: started to complicate my piece because you know, for the
Speaker 1: last um two or three weeks, he's been especially flamboyant
Speaker 1: on Twitter. Um, he's pretty happily in the COVID ninety
Speaker 1: and Truther camp. Uh. You know, he's been fighting to
Speaker 1: open his factories when people have been saying maybe that's
Speaker 1: not the safest thing to do, and so so yeah,
Speaker 1: just it's not really complex. I mean, here's this, um
Speaker 1: super it should be just a super positive thing for
Speaker 1: humanity at a time when when humanity as a whole
Speaker 1: is uh is phasing questions and I think you know,
Speaker 1: the US obviously is as well. Well all right, I
Speaker 1: know Jason said he wasn't going to read a line,
Speaker 1: but I am, and I agree everybody has to read this.
Speaker 1: But you're right, so the moment of achievement is complicated,
Speaker 1: sort of like the right stuff meets the electrical maid
Speaker 1: acid test or the idea that anything is possible is
Speaker 1: as unnerving as it is encouraging. Mind mail Jason Kelly, Um,
Speaker 1: it's such a great line, but but it is significant.
Speaker 1: My dad was very involved in the space race, UM
Speaker 1: back in the you know, fifties, sixties seventies. Um, so
Speaker 1: tell us about this moment and really, you know Elon Musk,
Speaker 1: you know, really does stand at this moment of doing
Speaker 1: something incredible for our country. Yet at the same time,
Speaker 1: right he kind of complicates everything he does. Yeah, I mean,
Speaker 1: it's sort of it speaks to everything about Ellen. I think,
Speaker 1: you know, SpaceX, of all his businesses, is probably the
Speaker 1: most improbable, and yet it is ended up being the
Speaker 1: most consistent, reliable, and high achieving of all his companies.
Speaker 1: So much though that NASA, which is this very traditional
Speaker 1: um risk averse organization, is willing to put human lives
Speaker 1: on top of the the SpaceX rocket. You know, if you're
Speaker 1: if you're not a space nerd, it's it's kind of
Speaker 1: hard maybe to put what an unlikely achievement this is
Speaker 1: and and how hard it was to do it. Um,
Speaker 1: I think then you just have the wrapper of law
Speaker 1: all around is you know, there was a day when
Speaker 1: he was firing off a ton of his tweets when
Speaker 1: he was gonna sell off his possessions that we have
Speaker 1: to open the factors and like, at that very same moment,
Speaker 1: Master was having a press conference with Gwinn Shotwell, the
Speaker 1: president of SpaceX talking about the launch, and and so
Speaker 1: you just have you have these such extreme things where um,
Speaker 1: this is not your traditional NASA rocket lodgers just out
Speaker 1: there giving a vision of public safety and you and
Speaker 1: we beings every and so we'd be remiss if we
Speaker 1: didn't ask you about some other sort of musky and things,
Speaker 1: you know, not the least of which is Tesla because
Speaker 1: you know, despite everything, I mean you go back and
Speaker 1: and read sort of the headlines or a timeline over
Speaker 1: the past couple of years. You know, this is a
Speaker 1: company that's had lovers and haters, and it feels like
Speaker 1: most people are sort of binary on this, both from
Speaker 1: an investor perspective and even from a personal perspective. And
Speaker 1: you have a great line where you talk about, you know,
Speaker 1: defying when you especially when you look across his portfolio,
Speaker 1: you know, like lottery like odds to be successful. Um
Speaker 1: here remind us of the Tesla piece of this, because
Speaker 1: in terms of influencing everyday life, he has had a
Speaker 1: massive influence there. Yeah, I mean on the you know,
Speaker 1: say is incredible. Tesla is a remarkable story as well.
Speaker 1: You know, without Tesla, I do not think most people
Speaker 1: would be talking about electric cars, and so whether you
Speaker 1: love Tesla or here, I think they're going to go
Speaker 1: banker up to turn a profit. I mean, the reality
Speaker 1: is that Elon shifted um the car market to to
Speaker 1: actually pay attention to electric cars and get consumers interested
Speaker 1: in them. In this particular story, Tesla is strange as
Speaker 1: a result of Musk tweets, because a lot of people
Speaker 1: buy Tesla's to kind of virtue signal that they care
Speaker 1: about the environment and may hope, you know, human kind
Speaker 1: ends up in a better place. Um. But because of
Speaker 1: Musk tweets where he's been he's been threatening the pool
Speaker 1: Tesla out of California and go to tech, and he's
Speaker 1: been tweeting a lot of kind of right stuff. He's
Speaker 1: suddenly now now a post child for for conservatives, a
Speaker 1: clident Denis as well. So it's a very strange situation.
Speaker 1: What's also and I love the way towards the end
Speaker 1: of your story you talk about Musk's larger ambitions, which
Speaker 1: I think some people are like, Okay, this is the
Speaker 1: crazy side of Elon Musk, you know, building a human
Speaker 1: colony on Mars. But here we are with the pandemic
Speaker 1: and not quite sure about how this is all going
Speaker 1: to play out, or really what our future is when
Speaker 1: it comes to you know, devastating viruses and the idea
Speaker 1: of an alternative planet to maybe go to. Not such
Speaker 1: a crazy idea anymore. Yeah, that's kind of the irony
Speaker 1: of it. What do you allowed to use this? People like,
Speaker 1: why do you want to spend your money on space? Actually? Like, wow,
Speaker 1: humans might get wiped out one day and we should
Speaker 1: have this backup plan. And people like whatever, man, you
Speaker 1: know you're crazy. Why don't you go do something else?
Speaker 1: And then you know, a plague hits the world and
Speaker 1: then he's dedying it. But but this is kind of
Speaker 1: the reason SpaceX was started at the beginning, and so
Speaker 1: there's a lot of symbolism in to the human is
Speaker 1: actually exiting the pandemic on a SpaceX rocket. Yeah. Well
Speaker 1: it's amazing and uh fortunate for us. You are in
Speaker 1: a position to take that call, Ashley fans and write
Speaker 1: about it for Bloomberg Business, Like you got your voicemail
Speaker 1: and you're like, wait, I bet they were going to connect.
Speaker 1: It sounds like he was. It sounds like he wanted
Speaker 1: to unburden himself. Ashley. You're the best. Thank you so
Speaker 1: much for spending some time with this feature writer for
Speaker 1: Bloomberg Business Week. His book on Elon Musk. It's a
Speaker 1: great quarantine read so timely now given everything that's going on.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. Well as Jason Kelly and I've
Speaker 1: been talking. It's been the world tour for FED Chief
Speaker 1: J Powell. I believe what do we call it, the
Speaker 1: lending not spending tour, ending not spending tour JP and
Speaker 1: the Feds. We have heard from j Pale a lot
Speaker 1: over the past week, and he certainly has reaching been
Speaker 1: reaching out getting his message of us. Uh, what does
Speaker 1: it all mean in terms of FED policy. Let's get
Speaker 1: into that with Jeffrey Cleveland. He's Chief Economistic Paidon and Regal.
Speaker 1: He's joins us on the phone from Los Angeles. Jeffrey,
Speaker 1: great to have you back with us on Bloomberg Radio.
Speaker 1: First of all, tell us a little bit about your
Speaker 1: world out in l A. We know the world is
Speaker 1: slowly across the country reopening. Um, how have you been impacted?
Speaker 1: What's going on? Well, the work from home protocol is
Speaker 1: going pretty well. You know, I'm able to adjust quickly
Speaker 1: to that. I think that the real downside here in
Speaker 1: l A. The weather has been beautiful the last couple
Speaker 1: of weeks, and only within the last week or so
Speaker 1: did they open up the detrails here. I went. I
Speaker 1: went hiking in the Santa Monica Mountains, which was great,
Speaker 1: and then down to the beach. You can carol. You
Speaker 1: can swim in the ocean, they said, and run at
Speaker 1: the beach, but you're not supposed to sit on the
Speaker 1: beach and gather in in crowd. So it's a little
Speaker 1: bit limited. Alright, so some some rules still, right, Yeah,
Speaker 1: but you know, we we're looking at high frequency data.
Speaker 1: So if you're looking at l A public transit, you
Speaker 1: know you got a huge client and activity obviously during
Speaker 1: March and April and into early part of May. But
Speaker 1: it looks like it's bottomed out. Looks like those high
Speaker 1: frequency data measures have bottomed out. So if you want
Speaker 1: to find a silver lining, the the April period was
Speaker 1: probably the worst and we are starting to recover because
Speaker 1: things are reopening slowly, and so that sort of data,
Speaker 1: those are the same sorts of things that the FED
Speaker 1: is looking at. That J. Powell and his team are
Speaker 1: looking at what do you think are the most important
Speaker 1: data that they should be taking into consideration as they
Speaker 1: figure out what the rest of the m O could
Speaker 1: be in their arsenal and as they make recommendations around
Speaker 1: monetary policy, but also clearly influenced the way we're all
Speaker 1: thinking about the economic landscape going forward. Jeffrey, I think
Speaker 1: if you had to pick one, I would look at
Speaker 1: Thursday morning, I would look at the continuing claims with
Speaker 1: the continued claims data, because that, for me, is in
Speaker 1: real time the best thing to look at. It's at
Speaker 1: million as of yesterday's data. Uh, and it's you know,
Speaker 1: continuing to rise. You want to see that plateau, and
Speaker 1: then you want to see that decline because that would
Speaker 1: be a sign that the p p P program for examples,
Speaker 1: working people are being brought back on payroll, people are
Speaker 1: finding employment that we're reopening, and people are going back
Speaker 1: to work. So that's what I would watch. If that
Speaker 1: doesn't if that stays elevated or doesn't come down as quickly,
Speaker 1: I think then people might change their tune about the
Speaker 1: shape of the recovery here. It really all comes down
Speaker 1: to that are the people laid off, are they permanently
Speaker 1: laid off. Are they temporary laid off? Well, what do
Speaker 1: you think? You know, Jeffrey, you've seen a fair amount
Speaker 1: of cycles. I mean, what do you think. Do you
Speaker 1: think it's gonna stay elevated? Um, we have lots of
Speaker 1: stories on the Bloomberg that's say some of those temporary
Speaker 1: setbacks in the labor market will become permanent. Yeah. I
Speaker 1: think people, the hopeful people, the optimists are saying you
Speaker 1: are temporary and then mostiple people will come back. I
Speaker 1: think it's much lower than that, Carol. I think maybe
Speaker 1: something closer to six or temporary and permanent, because you
Speaker 1: are I think you are seeing a reallocation here of
Speaker 1: restructuring of the U. S economy and the global economy
Speaker 1: before the crisis and after the crisis, and so that
Speaker 1: will be different staffing levels, that will be different types
Speaker 1: of people needed, so you won't just have like you
Speaker 1: can't flip the lights on and then therefore what goes
Speaker 1: right back to work as before the world has changed. Jeffrey,
Speaker 1: what do you make of all these discussions around some
Speaker 1: major demographic shifts and geographic shifts that we're hearing about.
Speaker 1: I mean, we're talking to you from the New York area,
Speaker 1: you're in Los Angeles, you know, you look up the
Speaker 1: coast from you to San Francisco. You know, these are
Speaker 1: all extraordinarily expensive housing markets. Now we're are facing a
Speaker 1: situation where, you know, Mark Zuckerberg is saying Facebook employees
Speaker 1: maybe remote in the next ten years. Is that something
Speaker 1: that plays into how you think about the economy and
Speaker 1: the short and midterm. Yeah, I think you know, you
Speaker 1: can the phrase I like, gradually then suddenly I think
Speaker 1: there was a gradual sort of murmuring out there about
Speaker 1: remote work and distributed work, and but I think there
Speaker 1: was reluctance. You know, people were conservative, or there's there's
Speaker 1: inertia and management of firms and they, you know, didn't
Speaker 1: want to go that route. And then a crisis happens
Speaker 1: and then suddenly you have to experiment. And I could
Speaker 1: speak for our firm, it's gone really quite well. And
Speaker 1: so I think we've discovered through that process, hey, we
Speaker 1: can be very effective in communicating with clients, uh, you know,
Speaker 1: remotely distributed. So I think that trend now is exhilarating.
Speaker 1: What does that mean? I think my bias for certain
Speaker 1: geographic areas that have really benefited from the concentration of
Speaker 1: of capital and wealth. San Francisco would be a good
Speaker 1: example of that. Maybe maybe that's been the peak, and
Speaker 1: now as as people get more distributed, they'll they'll filter
Speaker 1: out over the rest of the world. I think this
Speaker 1: is a good thing though, for growth longer, because this
Speaker 1: opens up the avenue for talent from all over the
Speaker 1: world to be brought into the economy and not just
Speaker 1: people who can make it and struggle in areas where
Speaker 1: which are very expensive, like Los Angeles and San Francisco.
Speaker 1: So it's actually a long run of very good thing,
Speaker 1: right if you think about you know how so many struggles,
Speaker 1: so many cities around the country have struggled, right because,
Speaker 1: as you know, people don't want to live there because
Speaker 1: there's nothing happening. But if you can live anywhere and
Speaker 1: still work for Google or Facebook or our company or
Speaker 1: your company, I mean, think about, um, what that opens
Speaker 1: up it It It would be pretty dramatic in terms of
Speaker 1: changes for our economy. Listen, we just have about a
Speaker 1: minute left. You mentioned about you can do some hiking,
Speaker 1: You can do some swimming. I did not know this
Speaker 1: about you, but you are a big time open water swimmer.
Speaker 1: You have swam across the English Channel, the Catalina Channel. Um,
Speaker 1: and you've also uh swam around Manhattan. I had no idea. Yeah,
Speaker 1: twenty eight and a half miles around Manhattan, up the
Speaker 1: East River, across the Harlem River if you can call
Speaker 1: it a river, I don't know, you tell me, and
Speaker 1: then down the beautiful Hudson, which was just great to
Speaker 1: finish down the Hudson, and it was I thought the
Speaker 1: cleanest of the three. So yeah, that took eight hours
Speaker 1: and about fourteen minutes, so that those three together considered
Speaker 1: the triple Crown of open water swimming. And I did
Speaker 1: that and at the time, I think Carol person to
Speaker 1: do it. There's there's been a two others that have
Speaker 1: joined that list now though, Wow, amazing, that's incredible. I
Speaker 1: live about two blocks from the Hudson, a little further
Speaker 1: up in Westchester, and I have to say it is
Speaker 1: quite a beautiful river. So I'm glad you've got to
Speaker 1: experience it in a way very very few people have.
Speaker 1: Jeffrey Cleveland, thank you so much. Great to spend some
Speaker 1: time with you here on a Friday. Chief economists of
Speaker 1: course at Payton and Regal joining us on the phone
Speaker 1: from Los Angeles. I think his point about what this
Speaker 1: up ends in terms of the workforce is huge, and
Speaker 1: it might be a great way to really get more
Speaker 1: evenly distribute. We talked about the inequalities. What if you
Speaker 1: could just help rebuild cities around the country, around the
Speaker 1: world right by making it possible for people to kind
Speaker 1: of live anywhere well. And also you think about the
Speaker 1: implications of those cities Los Angeles, San Francisco, New York
Speaker 1: in many ways become unattainable. Um, you have a huge
Speaker 1: homeless problem in many cases because housing is unaffordable. If
Speaker 1: housing comes down a little bit, and you're hearing some
Speaker 1: anecdotal evidence of this already, it's a game changer for sure.
Speaker 1: Your listing to Bloomberg Business Week with Carol Messer and
Speaker 1: Jason Kelly on Bloomberg Radio Listen, we want to get
Speaker 1: right to our next guest, because this call across the
Speaker 1: Bloomberg terminal and it comes from Bernie McTurnan. He works
Speaker 1: over at Rosenblatt. He's an analyst, and he says, the
Speaker 1: fitness and wellness company Peloton maybe looking to make another
Speaker 1: version of its high end bank. So Bernie joins us
Speaker 1: on the phone in Fairfield, Connecticut. Bank bike bike. Did
Speaker 1: I say bike based bank? Oh? Sorry, well maybe maybe
Speaker 1: they're gonna make bank on their new bike. Maybe they're
Speaker 1: gonna make bank on their new bike. It is definitely Friday, Bernie.
Speaker 1: Thanks for your patients here. UM tell us about your
Speaker 1: note here, and you specifically cite some comments from John Foley,
Speaker 1: Peloton CEO that they have talked about launching a value bike.
Speaker 1: What did you hear? Yep, thanks for having me on.
Speaker 1: So there was an article that was published in Time
Speaker 1: magazine and talking about having a cheaper bike, and we
Speaker 1: already assume a cheaper track bill uh comes in fiscal
Speaker 1: twenty two, which personally I think is a bigger opportunity
Speaker 1: than the value bike. But the conversation of the value
Speaker 1: bike is consistent with their recent discussion on affordability. And
Speaker 1: I think the reason why they're increasingly talking about affordability
Speaker 1: is because they've learned from the coronavirus is that their
Speaker 1: customer acquisition costs are just a lot lower than they
Speaker 1: originally anticipated, and they have a strategy where they their
Speaker 1: in net customer acquisition costs. So the gross profit that
Speaker 1: they make from selling the biker the treadmill um goes
Speaker 1: into sales and marketing expects and all of a sudden
Speaker 1: they think they don't need to spend as much on
Speaker 1: sale as and marketing, so that allows them to invest
Speaker 1: back in the business. Uh. And that means focused on affordability.
Speaker 1: And the reason why we like the stock so much
Speaker 1: is because of their subscription product. Once people becomes connected
Speaker 1: Fitness subscribers, they don't turn off customer lifetime values. So
Speaker 1: focus on affordability increases with ham drives more subscribers, right,
Speaker 1: And that's really what this all comes down to. An
Speaker 1: this is and I know this is a tired metaphor, Bernie,
Speaker 1: but I'm going to use it anyway. I mean, this
Speaker 1: is razors and razor blade sort of eight point oh
Speaker 1: right in the sense of once you get that bike
Speaker 1: and and full disclosure, I have one, Carroll has one
Speaker 1: um and you really do get Hey, it's hard to
Speaker 1: get rid of to some extent. You're not just gonna
Speaker 1: be like, yeah, I'm gonna send it back. I'm not
Speaker 1: really using it anymore, and you're going to keep paying
Speaker 1: for it. And it is you know, it's pretty reliable
Speaker 1: from a from a revenue stream perspective, I would imagine Yeah,
Speaker 1: and the two analogies that and I completely get your
Speaker 1: Razors and Razorblar analogy. The ones that we like to
Speaker 1: use are comparing to Netflix and comparing it to Roku.
Speaker 1: So with Netflix, uh, this is a business that really scales.
Speaker 1: And frankly we also cover Netflix even neutral rating on
Speaker 1: the stock. But with with Netflix, it's um, you know,
Speaker 1: there's a lot of competition for their content. With HBO
Speaker 1: Max launching next week, you know, there's it's it's a
Speaker 1: bidding process for all the scripts. For peloton um not
Speaker 1: that same way, and it doesn't matter for them if
Speaker 1: you have a thousand people watching, um, you know a
Speaker 1: cycling ride or or a million or two million doesn't matter. Um.
Speaker 1: And so it's the same thing. So we think that
Speaker 1: there's the economies of scale Kinne to Netflix. And then
Speaker 1: also with Roku is interesting because you know, you're selling
Speaker 1: a device and this is very similar to the Razors
Speaker 1: and Razor Boys, but you're selling a device and that
Speaker 1: you're making, you know, but the real reasons because of
Speaker 1: that the ancillary revenues on top of it. So for
Speaker 1: Roku with advertising, but for Pelotonic subscription right, well, Bernie,
Speaker 1: how much of you know do you foresee too. And
Speaker 1: I think they're learning this with because of COVID nineteen.
Speaker 1: You know, not only is it having their specific pieces
Speaker 1: of equipment, but just tapping into a streaming world. Yeah. Well,
Speaker 1: I think one of the shifts that we that was
Speaker 1: was happening before the coronavirus was the shift towards home fitness.
Speaker 1: There were things like tonal and mirror like you was
Speaker 1: coming out with an app to um. So, I think
Speaker 1: there's there was a shift towards home fitness coming anyways,
Speaker 1: and then this and then all of a sudden, trenches
Speaker 1: got accelerated. Um. You know, I don't know who's going
Speaker 1: to be you know, clamoring to go back to a
Speaker 1: you know, a soul cycle or a flywheel and be sweating,
Speaker 1: you know, on the bike, you know, six inches away
Speaker 1: from someone else. So I think Holton already had an
Speaker 1: advantage of business model just because there's not fifty people
Speaker 1: per class. There could be you know, fifty thou people
Speaker 1: in the class. Um So. I think, you know, tapping
Speaker 1: into those economics, um really is what makes the business
Speaker 1: models so attractive and why we think they'll be able
Speaker 1: to win long term. Really quickly, fifteen seconds, you've got
Speaker 1: a fifty six dollars share price target. You feel pretty
Speaker 1: conservative about that? Are you feel pretty good with that
Speaker 1: for the next year? Just quickly. I think there's still
Speaker 1: lots of leverage for them to pull to the upside.
Speaker 1: Wrest and the people higher from here? Wow? Interesting? All right? Well,
Speaker 1: great stuff, really interesting. Note and it's a stock certainly
Speaker 1: we've watched very closely since the I p O. Love
Speaker 1: to keep in touch with Bernie McTernan. He is an
Speaker 1: analyst for Rosenblat Securities. Join us on the phone from
Speaker 1: Connecticut Road Journal. Now, but you let me drive? Oh no,
Speaker 1: no, no no, no home, honey, please, I'll do the riding drivel.
Speaker 1: I want to drive. Just drive, baby, it's the questions trying.
Speaker 1: This is the drive to the globe. Give me thanks.
Speaker 1: We'll drying us Dawn on Bloomberg Radio, It is time
Speaker 1: for the drive to the close, getting ready to wrap
Speaker 1: up the trading day and the trading week before the
Speaker 1: long holiday week, and Larry Pittkowski is back with us,
Speaker 1: co founder, UH and portfolio manager at good Haven Capital
Speaker 1: Management based in Milburgh, New Jersey. And that's exactly where
Speaker 1: we find him on the phone on this Friday Larry.
Speaker 1: Nice to have you hear. How how are you doing?
Speaker 1: I am doing fine, Carol, and doing okay? How are
Speaker 1: you doing? We're doing okay. You know, it's amazing we
Speaker 1: can uh, and it's pretty remarkable of the folks that
Speaker 1: we talked to. And a lot of people are working
Speaker 1: and doing their thing. That's certainly we know unfortunately not
Speaker 1: the case for everyone. Um, but move it along. And
Speaker 1: it's been an interesting week where we saw some enthusiasm
Speaker 1: come back into the equity markets. We continue to hear
Speaker 1: a lot from the Federal Reserve overall, and certainly the
Speaker 1: Fed Chief J. Powell. Uh, what are you noticing that's
Speaker 1: kind of interesting in the trade and maybe what you're
Speaker 1: hearing from some of your clients, Well, it's been a
Speaker 1: very unusual period, uh, Carol. You know, we are modus
Speaker 1: operandi overall the years at good Haven, in in my
Speaker 1: prior life, was to you know, be very aggressive investing
Speaker 1: when there is severe downturns and market volatility and panic
Speaker 1: selling and the things that we saw in March. And
Speaker 1: I was aggressive in March. We probably put about you know,
Speaker 1: our to work during those you know, really dark days
Speaker 1: of market volatility. Uh. And now you've had prices uh
Speaker 1: lift substantially in some areas, and you've had credit markets
Speaker 1: much improved. And I think you've shifted now from will
Speaker 1: the economy and will be you know, credit markets and
Speaker 1: banking markets, Will everything function normally? And now you're asking
Speaker 1: a question of what are certain companies going to earn
Speaker 1: over the next six to twenty four months, which is
Speaker 1: a lot harder. So I think you've you've taken the
Speaker 1: fear of a lack of uh functioning of a lot
Speaker 1: of important parts of the system. You you put that
Speaker 1: over to this side thanks to the you know, very
Speaker 1: strong efforts of the Federal Reserve and you know, Congress
Speaker 1: in the White House. And now you've got to sift
Speaker 1: through as an investor in try and see if you
Speaker 1: are comfortable looking a little bit forward. And some industries
Speaker 1: are relatively straightforward, but lots of others, you know, it's, uh,
Speaker 1: it's a bit of a wild card. Yeah, So Mary,
Speaker 1: walk us through some of that. I mean, obviously you
Speaker 1: were makeing some initial bets, as you say, during a
Speaker 1: very dark period of time when most people were certainly
Speaker 1: running the other way. You know, you were running into
Speaker 1: this market which is noble and probably paid off quite
Speaker 1: well for you, as as you alluded to and its
Speaker 1: care alluded to. In terms of where the markets are today,
Speaker 1: how has your thinking evolved in terms of who may
Speaker 1: come out of this, either in terms of individual names
Speaker 1: or in terms of sectors now that we are starting
Speaker 1: to at least get some sense of the shape of
Speaker 1: the recovery. Well, I think as as I was looking
Speaker 1: at purchases to make during that period, and and you know,
Speaker 1: I'm not as I'm not as young as I look.
Speaker 1: We're sounds, so I've seen my share of downturns, but
Speaker 1: I think what was most unusual about this one, and
Speaker 1: it is nothing that's been seen before by anybody, is
Speaker 1: you know, to have a cessation of such a large
Speaker 1: part of the economy makes forward thinking very difficult for
Speaker 1: lots of industries where some of the potential bargains so are.
Speaker 1: And so you know, there were lots of industries where,
Speaker 1: you know, where the relatively straightforward, but that's not where
Speaker 1: the potential opportunities may have lied. For instance, in the
Speaker 1: financial sector during March, I think there was a uh,
Speaker 1: you know, a bit of a view that a lot
Speaker 1: of the alternative asset managers who had some leverage within
Speaker 1: their investment portfolios would be in for a very difficult
Speaker 1: period and might have some real problems. Uh. We had
Speaker 1: had our eye on kk R for quite some time
Speaker 1: at good Haven. We like to buy good businesses run
Speaker 1: by talented management teams, where the management teams have skin
Speaker 1: in the game. And you know, KKR has built quite
Speaker 1: a machine. Assets under management or two seven billion dollars.
Speaker 1: They've grown in about seventeen percent years since so five
Speaker 1: employees in the management own about of the company. They've
Speaker 1: grown books value at a very nice clip, I think
Speaker 1: about ten percent a year since O nine and as
Speaker 1: the share is really cascaded all the way down to
Speaker 1: the mid teams, h we use it as an opportunity
Speaker 1: to make some purchases which I think, you know, they've
Speaker 1: already worked out fine, but I think they'll work at
Speaker 1: very well over time. And I think it's still interesting well,
Speaker 1: and it's interesting about KKR. And keep me honest here, Larry.
Speaker 1: One of the differentials I believe between them and their
Speaker 1: competitors like Blackstone and Carlisle is that they are more
Speaker 1: aggressive or sort of structurally able to use their balance
Speaker 1: sheet right in a different way than some of those
Speaker 1: other names are Yeah, I think that's a great point.
Speaker 1: I mean they have become more focused on growing book value. Uh,
Speaker 1: and they've been very articulate about that. And you know,
Speaker 1: it's interesting. We own some Brookfield Asset Management, which we
Speaker 1: own because we own some oak Tree and it got
Speaker 1: what by Brookfield and Brookfield came at their current business
Speaker 1: structure being a grow book value for the owners and
Speaker 1: then build an asset management business. And KKR has come
Speaker 1: at it from having asset management business and then focus
Speaker 1: on growing book value. And you know, they've got I
Speaker 1: think to see the one of the executives set on
Speaker 1: the recent call, they've got something like of the assets
Speaker 1: are locked up for eight years or longer, and so
Speaker 1: they're focused on it. As you said, in a different sense.
Speaker 1: But you've got a great underlying business. You've got people
Speaker 1: that seem to be very talented investors, they've got skin
Speaker 1: in the game, and they are focused on growing books
Speaker 1: value and they have been very active. I think they
Speaker 1: put you know, eight billion dollars to work, probably more
Speaker 1: by now during let's call it, you know, March and April,
Speaker 1: including a substantial amount in the credit market. So we
Speaker 1: think that will serve owners well over time. Is there
Speaker 1: anything you would not buy in particular in this market environment.
Speaker 1: That's a hard question, Carl. I mean there's always, there's
Speaker 1: always things. I think you just have to look at
Speaker 1: something and see if you can come up with some
Speaker 1: reasonable range of estimates about what you think the future
Speaker 1: looks like, and then has that stock price or bond
Speaker 1: price compare with what you think the UH company is worth.
Speaker 1: And there's always things where you just you know it
Speaker 1: belongs in the too hard pole. You just can't figure
Speaker 1: it out, or you think the price is no bar again,
Speaker 1: or you think it's it's too dangerously leveraged, or there's
Speaker 1: there's there. There should be very few things, even during
Speaker 1: a downturn. You've always got to be very picky. There
Speaker 1: should be very few things you're willing to do. You
Speaker 1: should pretend you've got UH. You know a limited number
Speaker 1: of decisions you can make in your investment lifetime, and
Speaker 1: it will serve you better. You'll make fewer and hopefully
Speaker 1: there will be a better quality. All right, We're gonna
Speaker 1: leave it there. I hope you have a nice long
Speaker 1: holiday weekend. Larry Pittkowski, co founder portfolio manager of good
Speaker 1: Haven Capital Management, Johnny's on the phone from Millburn, New Jersey.
Speaker 1: Thanks so much for listening to Bloomberg Business Week. Download
Speaker 1: the podcast on itune, South Cloud, blooberg dot com, or
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