Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you
Speaker 1: along with my co host Lisa Brahma Wicks. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money. Whether at the grocery store or
Speaker 1: the trading floor, find a Bloomberg Penl podcast on Apple
Speaker 1: Podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. When there are crises, there's a
Speaker 1: question of leadership. How should a leader go around getting
Speaker 1: people to come together and get past the difficulties they're
Speaker 1: they're currently dealing with. To answer that question, we have
Speaker 1: David McCourt, founder and Chief executive officer of Granahan McCourt Capital,
Speaker 1: also the chair of National Broadband Ireland, an entrepreneur for
Speaker 1: years in the technology, media and telecommunications space who has
Speaker 1: been a top many companies, many production outfits. Reading Rainbow
Speaker 1: you want an Emmy for It? I loved that show
Speaker 1: when I was a little kid. You're also the author
Speaker 1: of Total Rethink Why Entrepreneurs should Act like Revolutionaries. When
Speaker 1: you're leading through a crisis, how do you even begin
Speaker 1: to think about first steps? When messaging your to your staff,
Speaker 1: to the people who you are leading. Thanks Thanks Lisa. Well,
Speaker 1: I think the first thing you want to do, Lisa
Speaker 1: is make your issue and the people you're leading issue
Speaker 1: the same. That's the very first thing you want to do.
Speaker 1: And you want to have empathy, and you want to
Speaker 1: spend as much time listening as you do talking, and
Speaker 1: you want to be consistent. And I think those are
Speaker 1: the things you're seeing. Some people in the business will
Speaker 1: do very very well and some excuse me, and some
Speaker 1: not to do well at all. And I think on
Speaker 1: the on the government side, we're seeing a real inconsistency
Speaker 1: around those types of leadership qualities, which is contributing to
Speaker 1: the chaos and the problems we're having right now, which
Speaker 1: are obviously not only affecting us as a society it
Speaker 1: has it's just not good business as well. So it's interesting, David.
Speaker 1: You know technology, we think about social media, the ways
Speaker 1: leaders can communicate as so different today. It used to be,
Speaker 1: you know, you would hear from the White House via
Speaker 1: some formal press release with the White House stationary. Now
Speaker 1: it's it's it's a tweet. How has technology changed maybe
Speaker 1: how leaders get their message across to their followers. Well,
Speaker 1: it's it's changed everything, right, Uh, Paul, I mean it's
Speaker 1: it's it's changed overnight. We've all changed the way we
Speaker 1: do business. But I think I think the big change
Speaker 1: is yet to come and there's a couple of things
Speaker 1: that have to happen. Number One, we have to make
Speaker 1: sure we get connectivity to everyone because right now it's
Speaker 1: a big urban world divide. Is roughly three million people
Speaker 1: a week that are moving from ral to urban because
Speaker 1: rural life in America and other parts of the world
Speaker 1: where I do business the UK and Ireland has just
Speaker 1: been decimated. And we need to make connectivity human, right
Speaker 1: like Keanan water not so they get Netflix, so they
Speaker 1: have educational opportunities, health care opportunities, jobs, products and services
Speaker 1: to make their lives better. So that's the big change
Speaker 1: right now. It's zoom calls, and it's it's you know,
Speaker 1: being able to use social media to communicate. And when
Speaker 1: you think of social media, Paul, I think you want
Speaker 1: to really be thinking of that. That is Internet two
Speaker 1: point oh. Right. Internet one point oh was was was
Speaker 1: just moving once and zero is more efficiently. Internet two
Speaker 1: point oh was was people communicating with machines uh at pace.
Speaker 1: But Internet three point oh when machines are communicating with
Speaker 1: machines at scale. That's going to be a total game
Speaker 1: change of all businesses, all your listeners that are gonna
Speaker 1: have to rethink the businesses when that happens. And of course,
Speaker 1: to make it fair, we have to make sure we
Speaker 1: have connectivity to everyone. And I would argue that a
Speaker 1: lot of people are already making this shift mentally right now,
Speaker 1: based on what we've experienced with the pandemic, with more
Speaker 1: people working from home, trying to homeschool or not home schooling.
Speaker 1: But I'm just wondering, you know, especially as we get
Speaker 1: the jobs report tomorrow. As a leader, how do you
Speaker 1: offer reassurance to people that they're not going to become obsolete,
Speaker 1: they're not going to be earning much much less. How
Speaker 1: do you give that kind of confidence and rally support
Speaker 1: at a time of such massive technological transformation. Well maybe
Speaker 1: maybe that that might be the wrong question, because I
Speaker 1: don't think we can if we don't make real changes,
Speaker 1: because there's some systemic problems that we're not dealing with.
Speaker 1: Our education, that training is relatively flat for last fifty years.
Speaker 1: If you saw a classroom fifty years ago, in years
Speaker 1: start pitch of a classroom today, they look alike. The
Speaker 1: types of jobs we need in America are at a
Speaker 1: slope upward slope that's deeper than it's ever been. The
Speaker 1: traditional jobs are at a downward slope that sleep steeper
Speaker 1: than we've ever seen. So we can't give people a
Speaker 1: fake sense of confidence. We need to get people ready
Speaker 1: for the jobs of the future, and and we're not
Speaker 1: really doing that. So so you said that people have
Speaker 1: already made that the jump. People have made the jump
Speaker 1: that have a job. So if you have a job,
Speaker 1: like like the three of us do, then you can
Speaker 1: make the change. You can adjust your life, you can
Speaker 1: do zoom calls, you can do an interview on Bloomberg
Speaker 1: Radio from in Los Angeles right now when you're in
Speaker 1: New York. But if you don't have a job after
Speaker 1: this is over, you're gonna be going into a market
Speaker 1: with the jobs aren't ever coming back, and the need
Speaker 1: for training for new jobs has never been so steep.
Speaker 1: So I think we have to address the systemic issues
Speaker 1: rapidly um as opposed to pretending that everything is going
Speaker 1: to be okay. Because we have unemployment at the levels
Speaker 1: we have this pandemic that you know is as fearful
Speaker 1: as the one of nineteen eighteen. We have riots that
Speaker 1: are that are far more expansive than the nine. So
Speaker 1: we've got a lot of things going on that we
Speaker 1: have to deal with, and the best way to deal
Speaker 1: with it, I think is not to give people confidence
Speaker 1: that it's gonna be okay, give people confidence that we're
Speaker 1: really going to address the systemic issues that we have.
Speaker 1: I think that's that's what the game changes, and I
Speaker 1: think that's what everybody wants to hear. And by the way,
Speaker 1: I know, this is the business show, so it's good
Speaker 1: to business. The the it's good for business that we
Speaker 1: give people their dignity and we give people a sense
Speaker 1: that we're going to address these systemic employment issues. That's
Speaker 1: my view anyway. David McCourt, thank you so much for
Speaker 1: joining us. We really appreciate your thoughts and Commentsary David McCourt.
Speaker 1: He is the founder and CEO of Granahan McCourt Capital,
Speaker 1: also chairman of the National Broadbad Ireland and Lisa Also.
Speaker 1: He's also the author of Total Rethink Why Entrepreneurs Should
Speaker 1: Act Like Revolutionaries. There's certainly need, Lisa, I think we
Speaker 1: can all agree as we look around what's going on
Speaker 1: over the last several months and really over the last
Speaker 1: we can have as a really to some of the
Speaker 1: civil unrest for leadership both at the national level, UH
Speaker 1: and at the local level as well. Yeah, this is
Speaker 1: a scary time. It's a scary time for everyone, and
Speaker 1: it has brought about a lot of changes rapidly, people
Speaker 1: saying that it is accelerated, brought forward by years, some
Speaker 1: of the trends that we had seen, in addition to
Speaker 1: shattering a lot of people's notions of safety, of healthcare
Speaker 1: and and beyond. And and there's a question of how
Speaker 1: we get beyond this, Who will bring us there? How
Speaker 1: do we get the confidence and the support in order
Speaker 1: to build whatever comes next? And Paul, that's going to
Speaker 1: be something that we continue to ask throughout the months ahead. Boy.
Speaker 1: Airline stocks are just ripping today, America Airlines up almost United,
Speaker 1: up about four Delta, up about eleven percent. And that's
Speaker 1: on news that American Airlines says it's gonna boosting in
Speaker 1: July by about seventy as demand goes back stronger than expected.
Speaker 1: Mary Steinenstein, us airlines reporter for Bloomberg News, joins us. Mary,
Speaker 1: give us a sense of how what really American is
Speaker 1: saying here about the demand side of their business, well,
Speaker 1: they're saying that they've seen demand come back a little
Speaker 1: bit quicker than they had expected, particularly in domestic markets
Speaker 1: and particularly in states that have already lifted some of
Speaker 1: the quarantine rules, like Florida and like Texas. They're seeing
Speaker 1: a lot of people who want to travel to UM
Speaker 1: to destinations like beaches, amusement parks that may be reopening
Speaker 1: things like that, and they're also seeing a little bit
Speaker 1: of improvement in domestic business demand. All right, so this
Speaker 1: is actually coming off a very difficult period. How much
Speaker 1: ahead of expectations is the surge and demand the American
Speaker 1: Airlines is describing here. They didn't really put out a
Speaker 1: lot of numbers in terms of what they had expected
Speaker 1: versus what they're seeing, UM, but you know, they what
Speaker 1: they're doing is they're going to increase the number of
Speaker 1: flights on their busiest days next months to four thousand,
Speaker 1: and that's up from twenty three hundred in June. So
Speaker 1: they've been planning clearly, you know, for around that twenty
Speaker 1: three d June level, and now that all of a
Speaker 1: sudden they're bumping up to four thousand UM And part
Speaker 1: of the reason for that is they're saying that their
Speaker 1: load factor, the percentage of seats filled for plane climbed
Speaker 1: to fifty five percent last week, down from in April,
Speaker 1: or up from fIF in April. And what's important to
Speaker 1: note was before COVID, load factors on US airlines were
Speaker 1: like in the high eighty percent, So they've fallen a lot.
Speaker 1: They're still way below where they were a year ago,
Speaker 1: but they definitely are on the uptick. Are they gonna
Speaker 1: be selling middle seats? Is anybody can buy a middle
Speaker 1: seat anymore? You know? Um long term? All the airlines
Speaker 1: have said they can't block middle seats long term. Right now,
Speaker 1: the only airlines that are guaranteeing the block middle seats
Speaker 1: are Delta and Jet Blue. The others are saying, you know,
Speaker 1: we'll space you out as best we can UM or
Speaker 1: will allow you to move when that's possible so that
Speaker 1: you're not sitting next to other people. But yet clearly
Speaker 1: that's going to have to go away because they can't
Speaker 1: make money by blocking off a third of the seats
Speaker 1: on their planes. Well, Mary, I'm curious about the liability
Speaker 1: of airline carriers if someone does get sick on one
Speaker 1: of their flights. Could they be held liable if they
Speaker 1: don't provide masks and if they don't require a certain
Speaker 1: level of air filtration and sanitation. Right, A lot of
Speaker 1: the airlines, effect all the airlines have enacted very sophisticated,
Speaker 1: very up to date UM cleaning processes for their aircraft.
Speaker 1: And they'll tell you that the filters on their planes
Speaker 1: are our hospital quality filters, and that the air is
Speaker 1: recirculated very often. It's not like once a flight that
Speaker 1: the air recirculates or that just recirculates air within the cabin.
Speaker 1: Um they're doing, you know, electrostatic cleaning. UM, they're taking
Speaker 1: all kinds of steps. Most of them are will give
Speaker 1: you a mask in a little packet of disinfectant when
Speaker 1: you get on the plane. UM. A number of them
Speaker 1: are requiring masks to board the aircraft. And so I think,
Speaker 1: you know, as long as they are complying with CDC
Speaker 1: recommendations and doing everything that they can, I'm not sure
Speaker 1: how viable UM a lawsuit would be about them, although
Speaker 1: I'm not a legal expert. Mary, what's the you mentioned
Speaker 1: load factors in the high eighties. It seems like every
Speaker 1: flight I've been on in the last couple years has
Speaker 1: been a load factor. What's the load factor they need
Speaker 1: to to kind of break even start making money. UM.
Speaker 1: That's a big question that everybody asked, is what what
Speaker 1: do you need to be break even? UM? You know,
Speaker 1: the airlines today are all still burning through millions of
Speaker 1: dollars a day. UM. The the government aid they got
Speaker 1: helped them with some payroll costs. But you know, although
Speaker 1: you have this bright outlook or brightened outlook on more flights,
Speaker 1: you know, all these airlines are still UM, plan need
Speaker 1: to cut jobs. You know, United and American and both
Speaker 1: said we're going to cut our management and support staff.
Speaker 1: They have tens of thousands of employees who have already
Speaker 1: taken leaves or early retirement UM. And they are mostly
Speaker 1: offering a second round now of leave for employees to take.
Speaker 1: So although it, you know, it looks a little bit brighter,
Speaker 1: the industry is still hurting a lot and it's going
Speaker 1: to be a long lasting impact that the carriers are saying,
Speaker 1: you know, we know when demand improves and we come
Speaker 1: out of this, we're just gonna be a lot smaller
Speaker 1: than we were before it happened. I want to talk
Speaker 1: about the roots that the airlines are willing to fly.
Speaker 1: How much is this really just focused on domestic flights
Speaker 1: and how limited our flights to areas that have been
Speaker 1: harder hit by COVID? And then of course there's a
Speaker 1: question of international travel. How are the airline carriers dealing
Speaker 1: with that? Right? The airlines have not added a lot
Speaker 1: of international travel. Um. You know, right after um, the
Speaker 1: COVID pandemic really started spreading, Um, they basically stopped all
Speaker 1: the international flying, I mean playing. Airlines like American was
Speaker 1: making a handful of flights internationally each week, so it
Speaker 1: was a very very small amount. They are adding back, um,
Speaker 1: some international routes now, um, but they're also delaying some
Speaker 1: international routes. For example, American has added back a few
Speaker 1: for June, but they've delayed by another month until July
Speaker 1: or beyond, a whole lot more of the international routes
Speaker 1: that they had had planned to start. Part of the
Speaker 1: reason for that is there's confusion about well, you know
Speaker 1: what country is listed the restrictions. What countries are gonna
Speaker 1: cause me to quarantine for fourteen days when I get there?
Speaker 1: You know what? Tourist attractions in Europe are open. So
Speaker 1: there's a lot of confusion, and so people are more
Speaker 1: hesitant to book internationally, UM, domestically. UM. You know. The
Speaker 1: only place that is got a quarantine requirement when you
Speaker 1: fly there in places Hawaii, and that's really dampening down
Speaker 1: travel to Hawaii. Southwest for example, has not restarted uh,
Speaker 1: their primary Hawaii service yet because of that. Mary Schlagenstein,
Speaker 1: thank you so much. She covers all things airlines for
Speaker 1: us at Bloomberg News. Well's another difficult jobless claims number today.
Speaker 1: We're looking about forty million people since the beginning of
Speaker 1: the pandemic have fouled jobs claims. Real question is how
Speaker 1: are the gig economy employees being counted here and how
Speaker 1: are they faring during this economy? For that, we're welcome, Uh,
Speaker 1: We're pleased to have John Chuangu, CEO and co founder
Speaker 1: of Aquinutu discusses the gig economy. So, John, thanks so
Speaker 1: much for joining us here. Give us a sense of
Speaker 1: how gig economy employees are faring here in this economic environment. Yeah,
Speaker 1: gig economy employees are not uh, not doing well. They
Speaker 1: are a very large part of the record numbers of
Speaker 1: unemployed people uh that we're having. Um, and more importantly,
Speaker 1: because they are not really part of the social safety net.
Speaker 1: Um they do not get, they have a lot more
Speaker 1: difficulty getting an employment and by large they do not
Speaker 1: have sick pay and they do not have health insurance
Speaker 1: from their employer, so they are they are definitely hurting
Speaker 1: more um than the average employee. Well, so I'm wondering
Speaker 1: going forward whether we're going to see a sea change
Speaker 1: in some of the lack of protections that gig workers
Speaker 1: have based on the fact that the government has had
Speaker 1: to step in in big in a big way to
Speaker 1: back up these workers and may push employee employers to
Speaker 1: do more. I certainly hope. So right now, there's a
Speaker 1: great deal of inequality in corporate America, even in some
Speaker 1: of the biggest, most richest American companies. You have really
Speaker 1: two classes of employees, one regular w two employees who
Speaker 1: get who might get great benefits and retirement plan ends
Speaker 1: and lots of perks. But then you have the contingent
Speaker 1: contractors who are who are combined you know, gig gig
Speaker 1: economy employees as well as temporary contractors, and they do
Speaker 1: not get benefits, and that that really needs to change,
Speaker 1: and it's it's changing by companies on their own taking
Speaker 1: some initiatives. They've been some companies taking steps a few
Speaker 1: a few ones recently, UM, but it might take government
Speaker 1: involvement to really change it. You have initiatives like a
Speaker 1: B five in California, UM where some UM where the
Speaker 1: where the California government has basically passed laws making it
Speaker 1: a lot more difficult to hire people as ten ninety
Speaker 1: nine or contractors, which will kind of force UM at
Speaker 1: least basic employment protections on a lot of UM businesses.
Speaker 1: And and and I think we shall support that because
Speaker 1: it's only fair for the workers. So John, I guess
Speaker 1: you know we saw over the last several year as
Speaker 1: I think about Uber and Lift and other gig economy companies,
Speaker 1: you know, a real sense that, gee, this is a
Speaker 1: real cool way to think about work. It's flexible. I
Speaker 1: can work when I want, where I want, kind of
Speaker 1: set my own hours, be my own boss. There's a big,
Speaker 1: big move towards the gig economy. And I always joke
Speaker 1: that anytime you walk into a Starbucks anywherewhere around the country,
Speaker 1: it seems like the entire Starbucks is people with you know,
Speaker 1: computers open doing a certain gig economy jobs. That's going
Speaker 1: to change at all. On the other side of this pandemic. Look,
Speaker 1: there's a really big opportunity here to make the gig
Speaker 1: economy great. That's sort of flexibility that you're talking about,
Speaker 1: and the easy access the jobs is wonderful and we
Speaker 1: should really be proud of of economy that has created
Speaker 1: this and the entrepreneurship that has UH has built UH
Speaker 1: such flexibility and work. Now there is a downside though,
Speaker 1: because um as they built these systems, they did very quickly,
Speaker 1: and they wanted to have the as much HOSS advantage
Speaker 1: as possible, so they decided to pay people as contractors,
Speaker 1: which means you don't pay employment taxes, and you don't
Speaker 1: do minimum wage, and you don't overtime laws. As an
Speaker 1: effect you and and you cut out all the social services. Well,
Speaker 1: this has a really big impact, and it's been magnified
Speaker 1: by the pandemic. So my hope is what these companies
Speaker 1: will do, maybe with some prodding from the government, is
Speaker 1: keep the gig economy and keep all the great benefits,
Speaker 1: but add the social protections such as minimum wage, unemployment insurance,
Speaker 1: you know, overtime laws that all companies have really provided
Speaker 1: their workers for the last hundred years if something. If
Speaker 1: if companies like McDonald's and Starbucks and Walmart to pride
Speaker 1: these protections UM for their employees, I'm sure gig economy
Speaker 1: companies can do the same. John, I'm sure you've heard
Speaker 1: this argument. UH. And just to give some perspective, you
Speaker 1: co founded this company in while you are an under
Speaker 1: graduated at Harvard. UH. It's fascinating to see how much
Speaker 1: the world has transformed in that time with the focus
Speaker 1: on the gig economy. What do you say to people
Speaker 1: who counter your argument about protections and say that this
Speaker 1: market would but not be nearly as dynamic if companies
Speaker 1: had to pay the kind of overhead required of companies
Speaker 1: that do have full time, non gig workers. No, I
Speaker 1: I I disagree with that UM UH Fully Basically, America
Speaker 1: wants companies that could provide value to consumers and pay
Speaker 1: their workers a fair wage. UH. They do not want
Speaker 1: UM to UM participate in businesses that mistreat their workers UM.
Speaker 1: And that's why many American companies that are the most
Speaker 1: successful have managed to do both. UM. What gig economy
Speaker 1: companies are saying is that, hey, we can't UM provide
Speaker 1: great value to customers unless we underpay our workers. And
Speaker 1: if that is the case, which is not the case,
Speaker 1: but if that was the case, Uh, then there should
Speaker 1: be no gig economy because you cannot essentially provide great
Speaker 1: services while miss treating your workers. Americans don't want that.
Speaker 1: John Joying, thank you so much for being with those,
Speaker 1: co founder, chairman and chief executive officer of aquand here
Speaker 1: in New York talking about that gig economy, which has
Speaker 1: very much been in focus. And Paul, when we parse
Speaker 1: the jobs data tomorrow, one big question mark is a
Speaker 1: number of people receiving the pandemic unemployment insurance, a separate
Speaker 1: bucket that covers the gig workers. Well. After the significant
Speaker 1: sell off we saw in March, in most financial markets,
Speaker 1: it's been extraordinary rebound for a lot of the riskiest
Speaker 1: assets out that. Do you think about the equity markets
Speaker 1: up nearly off the lows. Uh. It's also applied to
Speaker 1: certain extents to the emerging markets. And let's get the
Speaker 1: latest for all things emerging markets. We turned to Damien Sassaur.
Speaker 1: He's the chief Emerging Markets credit streat just for Bloomberg Intelligence.
Speaker 1: So Damian, give us a sense of kind of how
Speaker 1: your markets, the riskier assets classes out there emerging markets
Speaker 1: have performed over the last week or so. Yeah, you know,
Speaker 1: I mean they're definitely snapping back. But you know, look,
Speaker 1: I mean, Paul, we've worked together for four year now,
Speaker 1: four years now, you know. So in my prior lifetime,
Speaker 1: you know, you're aware I ran a large asset manager
Speaker 1: with a focus on em but more importantly to focus
Speaker 1: on the frontier markets. Right. So when it comes to
Speaker 1: pitching numerous projects, you know the folks down at Connecticut
Speaker 1: and seven nineteen Street, I'm talking about the World Bank
Speaker 1: and the i m F now for funding for development
Speaker 1: of power deals or agriculture. I mean, I can tell
Speaker 1: you without fail, multilaterals, including all their x in banks
Speaker 1: and the financial institutions that support them, they must manage
Speaker 1: their own balance sheet risk and this means managing exposure
Speaker 1: across countries and sectors. Paul. So you know, when we
Speaker 1: talk about debt relief from the G seven, and we
Speaker 1: talk about all the IMF lending facilities that are going
Speaker 1: on for the me the debate isn't about relief, It's
Speaker 1: about how the relief is delivered. And I've got two
Speaker 1: words for you here, transparency and control and I fear
Speaker 1: when the dust those we're going to have little of
Speaker 1: either to lean on when times gets off. All right, well,
Speaker 1: let's talk about the current situation and who needs the
Speaker 1: debt relief the most. As an investor, if you channel
Speaker 1: where you were back from two thousand sixteen, where would
Speaker 1: you be looking for, you know, the best place to
Speaker 1: basically put your equity in and and say you deserve
Speaker 1: some sort of relief And I want to be part
Speaker 1: of your upside. I mean, is there is there a
Speaker 1: country that you say is deserving? Is that of that?
Speaker 1: I mean plenty of them. The problem is the problem
Speaker 1: is how to institutions price that risk? Okay, so let
Speaker 1: me give you an example here. The I m F
Speaker 1: is preparing a new credit line with Ecuador. But Lennon Moreno,
Speaker 1: the president is not going to seek re election, and
Speaker 1: if he doesn't, there's a reasonable chance that the new
Speaker 1: government won't be as pro reform. So how does the IMF?
Speaker 1: How does the World Bank price that risk that the
Speaker 1: next administration might very well reject any you know, loans
Speaker 1: they agree to today? Right, so this is a country
Speaker 1: that's going to have as much as eight billion in
Speaker 1: an eight billion dollar budget gap. I mean they once
Speaker 1: went a hundred and eighty years without repaying a bund.
Speaker 1: They're obviously not a good creditor, you know, So you know,
Speaker 1: I mean that's that's the risk when you deal with
Speaker 1: you know, frontier and emerging markets and all that's going
Speaker 1: on here in the world. And for me again, it
Speaker 1: comes down to, you know what we're seeing from the
Speaker 1: G seven This is more forbearance than debt reduction, right,
Speaker 1: it's not real debt relief. I mean, does the G
Speaker 1: seven expect to realistically get paid back on these loans?
Speaker 1: Does the I m F? And more importantly, you know
Speaker 1: how does the World Bank and political risk instore is
Speaker 1: out their guard against all of these risks. I mean,
Speaker 1: it's very difficult to price your Lisa. So what is
Speaker 1: the market for some of these frontier countries, Damien? I mean,
Speaker 1: is it is? It is the I m F, the backstop,
Speaker 1: is that the last lender of last resort or can
Speaker 1: some of these folks go to say China and go
Speaker 1: to their check book. Well, you know what it comes
Speaker 1: down to the two words I mentioned previously, transparency and control.
Speaker 1: So on the China front, it's all about transparency. You know,
Speaker 1: we need to know what the debt stock looks like
Speaker 1: for a potential borrow before lending to them, that's just
Speaker 1: has to upen and you know right now we don't
Speaker 1: have much of that right. And then it comes down
Speaker 1: to control. Even if the moons and the moneys do
Speaker 1: reach who you know, you know that country sures you
Speaker 1: know who's going to control it? You know who's going
Speaker 1: to disperse it? Is it going to go to the
Speaker 1: places that the I m F and the World Bank
Speaker 1: and and and the slenders wanted to go? You know,
Speaker 1: are we going to trust that the municipalities, the governments
Speaker 1: that are in power are going to do that for
Speaker 1: them as an extension of them. You know, the verdict
Speaker 1: is still owed. And you know, these are the real
Speaker 1: challenges that go hand in hand with trying to provide
Speaker 1: relief to all of these markets that so desperately needed. Paul,
Speaker 1: this all sounds pretty bad, and it seems like you
Speaker 1: wouldn't want to invest in developing markets. And yet if
Speaker 1: you take a look at developing market currencies, they've been
Speaker 1: on a tear recently. I mean they've been gating quite
Speaker 1: a bit. And this has to do with the dollar,
Speaker 1: which is weekend pretty steadily. How much can you just
Speaker 1: go into a basket VM currencies here based on a
Speaker 1: week or dollar call going forward and nothing else. I mean,
Speaker 1: I wouldn't do that. I mean, I'd be taking with
Speaker 1: the market different I'm sure. I mean, I you know me,
Speaker 1: I'm a risk averse guy. Look, there's no question about it,
Speaker 1: you know, and you invested in the market marrow and
Speaker 1: may and go away, and I was wrong. I'm the
Speaker 1: first one to say that mean and say, you know,
Speaker 1: but I'm I'm a prudent man having worked in these
Speaker 1: markets and knowing what the real risks are. And you know,
Speaker 1: what you're seeing an emerging market, specifically on the equity side,
Speaker 1: is very much what we're seeing here in US equity
Speaker 1: US equities, where it's it's it's all at the top,
Speaker 1: you know, it's it's it's the Ali Baba's, it's the
Speaker 1: ten cents, it's the Taiwan semiconductors that are getting fatter.
Speaker 1: It's not the smaller commodity producers we might find in
Speaker 1: many of these countries that make them tick. And so
Speaker 1: it's not everyone participating. And I think you know that
Speaker 1: we're seeing that here in the US obviously as well.
Speaker 1: So I see Brent crude here pushing close to forty
Speaker 1: dollars a big rebound. What does that mean is that
Speaker 1: significant enough movers that oil still low not to be
Speaker 1: much of a help for some of these exporting emerging
Speaker 1: market companies. Well, Paul, I mean you have to look
Speaker 1: at the average price over a period of time. So
Speaker 1: when things got really bad for a period there, you
Speaker 1: know a lot of people weren't as overly concerned. I
Speaker 1: mean I wasn't as overly concerned. People still need to
Speaker 1: power their you know, know, their cars and their plants
Speaker 1: and everything us that goes hand in hand. So so
Speaker 1: you know what I think, you know, we're taking a
Speaker 1: step back and now realizing, you know, what are Saudi
Speaker 1: Arabia and Russia? What did the OPEC plus going to
Speaker 1: do here? You know, are they going to be successful
Speaker 1: in pushing these production cuts forward? We know Nigeria and
Speaker 1: Iraq have you know, they're on the out because they've
Speaker 1: been producing far too much based on what they've agreed to.
Speaker 1: And so you know, I do think that you know,
Speaker 1: Saudi and Russia have regained a little bit of a
Speaker 1: toe hold here in the market. I think that should
Speaker 1: but provide some stability and support and hopefully that's the
Speaker 1: next leg we see where the commodity producers begin to
Speaker 1: participate in the recovery. How much does the emerging markets
Speaker 1: dead investment industry rely on the FED and the ECB
Speaker 1: continuing to just absolutely blow away the market with as
Speaker 1: much cash as they possibly can and absorb any excess
Speaker 1: government debt. In other words, how much does it rely
Speaker 1: on a suppression of yields in the developed markets. I mean,
Speaker 1: that's the great question, right And I think the market
Speaker 1: pricing of the financial assets that investable are very much
Speaker 1: a function of what we're seeing here with the FED.
Speaker 1: But the real economies are just not feeling it yet,
Speaker 1: because there's still a hunger for dollars. There's a dollars
Speaker 1: you know, onshore in many of these economies that you know,
Speaker 1: they you know, they they've they've gotten hit so very
Speaker 1: badly by the pandemic. I mean, food prices, energy prices,
Speaker 1: I mean, and now you know, you know, the governments
Speaker 1: are coming after local corporates and households, taxing them more
Speaker 1: because they can't meet their budget depth. You know, so
Speaker 1: it's really becoming very painful. You know, it's not about
Speaker 1: helicopter money in these markets. It's about directing the capital
Speaker 1: to those that need it most in an effica you know,
Speaker 1: just in the right way. And you know that's where
Speaker 1: things are getting a bit muddled, and that's where the
Speaker 1: challenges line. And so yeah, I'm sorry to be the
Speaker 1: dead horse here, but you know that's my focus and
Speaker 1: it's and it's you know, I'm laser focused on it.
Speaker 1: To to coach on Sarah, I gotta say, I've I've
Speaker 1: I've got to be fascinating. Unfortunately, I would love to
Speaker 1: speak with you all afternoon, and actually particularly about the
Speaker 1: movement that we're seeing in the bond market today, because
Speaker 1: I think it's fascinating. It is very unusual. It does
Speaker 1: not go here with a broader narrative. You see the
Speaker 1: long bond sell off even though you don't see inflation
Speaker 1: expectations picking up twenty seconds. Any thoughts on that are
Speaker 1: you interesting? Premium? I mean, we need some of it, right,
Speaker 1: I mean, obviously I don't know if this is more
Speaker 1: inflation expectations or growth expectations yet because it's early going.
Speaker 1: But this is the steepener that and steepening move that
Speaker 1: a lot of you know, a lot of Wall Street
Speaker 1: House has been calling for and I expected to continue
Speaker 1: at least for a little bit longer. But we're hitting
Speaker 1: some technical levels if you ask my man our Jersey
Speaker 1: so but people look out. We're hitting technical levels, folks,
Speaker 1: same as as our chief Emerging Markets credit Strategies for
Speaker 1: Bloomberg Intelligence. Thank you so much. I find this so interesting, Paul.
Speaker 1: I mean, I'm just looking at this, and I'm thinking,
Speaker 1: you know, is it inflation? But you're not saying at
Speaker 1: the break evens, you're not seeing it stocks, you're not
Speaker 1: seeing it in high credit risk priced in by the derivatives. Interesting.
Speaker 1: I wonder who's selling. Thanks for listening to the Bloomberg
Speaker 1: P and L podcast. You can subscribe and listen to
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Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa
Speaker 1: abram Woids. I'm on Twitter at Lisa bramwoit's one before
Speaker 1: the podcast. You can always catch us worldwide on Bloomberg
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