1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,200 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We 5 00:00:27,280 --> 00:00:30,200 Speaker 1: start with the markets with Joe quinnin this morning Meryl 6 00:00:30,320 --> 00:00:33,240 Speaker 1: and Bank America Private Bank, head of c i O 7 00:00:33,520 --> 00:00:36,240 Speaker 1: Market Strategy. Soo fantastic to catch up with you, sir. 8 00:00:36,320 --> 00:00:38,839 Speaker 1: Let's just start there because the question that comes up 9 00:00:38,880 --> 00:00:41,920 Speaker 1: again and again that we filled a lot, the distinction, 10 00:00:42,000 --> 00:00:44,159 Speaker 1: the difference, the spread between what is happening on Main 11 00:00:44,200 --> 00:00:46,639 Speaker 1: Street and what is happening on Wall Street right now, Joe, 12 00:00:46,680 --> 00:00:49,520 Speaker 1: how do you answer that question? Well, it's a good question. 13 00:00:49,640 --> 00:00:51,520 Speaker 1: Is top of mind with our investors as well. They're 14 00:00:51,560 --> 00:00:54,160 Speaker 1: kind of scratching your head what's going on? But I 15 00:00:54,200 --> 00:00:57,600 Speaker 1: mean you have to kind of part of the divide 16 00:00:57,680 --> 00:01:01,080 Speaker 1: rest with the Fed Central banks on the world flooding 17 00:01:01,440 --> 00:01:03,800 Speaker 1: the system with liquidity that's being put to use in 18 00:01:03,880 --> 00:01:08,040 Speaker 1: the higher yielding asset class called equities. There is also 19 00:01:08,120 --> 00:01:12,280 Speaker 1: the speed in quotes from Congress getting that package out 20 00:01:12,280 --> 00:01:15,200 Speaker 1: of the fiscal package aggressiveness on the part of the 21 00:01:15,280 --> 00:01:18,280 Speaker 1: e c B. So I think maybe it's misplaced, but 22 00:01:18,280 --> 00:01:20,679 Speaker 1: I don't think it's misfounded in the sense that the 23 00:01:20,840 --> 00:01:24,800 Speaker 1: policy response all of this time versus oh eight or nine, 24 00:01:25,240 --> 00:01:29,400 Speaker 1: much more directed focus Zuokas, and I think I do 25 00:01:29,520 --> 00:01:33,080 Speaker 1: think that gives a floor beneath equities as we grind higher. 26 00:01:33,080 --> 00:01:35,320 Speaker 1: Now is it over, No, no, no doubt about it. 27 00:01:35,520 --> 00:01:38,080 Speaker 1: We need to have signs that all the stimulus is 28 00:01:38,080 --> 00:01:42,880 Speaker 1: actually going to help mainstream. That's the next big test test, Joe. 29 00:01:42,920 --> 00:01:45,120 Speaker 1: I know we've got a lot of unknown unknowns, but 30 00:01:45,240 --> 00:01:48,160 Speaker 1: what's your unknown unknown on the equity markets in terms 31 00:01:48,160 --> 00:01:52,960 Speaker 1: of choosing or selecting or allocating where to put the 32 00:01:53,040 --> 00:01:56,880 Speaker 1: marginal equity dollar? Now, is it large cap, bigger is better? 33 00:01:57,040 --> 00:02:01,520 Speaker 1: Small cap? International? How do you reset towards May fifteen? 34 00:02:02,920 --> 00:02:06,640 Speaker 1: I mean, Tom, we're trying not to be too much 35 00:02:06,640 --> 00:02:10,080 Speaker 1: of that crowded trade in and around healthcare and technology, 36 00:02:10,280 --> 00:02:13,400 Speaker 1: but we're sticking with those two sectors. We're putting a 37 00:02:13,440 --> 00:02:15,120 Speaker 1: little bit, you know, warming up a little bit here 38 00:02:15,160 --> 00:02:18,800 Speaker 1: to financials because one of our thesis is bigger is better, 39 00:02:19,160 --> 00:02:21,640 Speaker 1: the banks are well capitalized, are gonna work through this 40 00:02:21,760 --> 00:02:24,400 Speaker 1: problem and we do like the small cap companies, there 41 00:02:24,440 --> 00:02:29,359 Speaker 1: could be some opportunities in and around biotechnology, biosecurity. So 42 00:02:29,480 --> 00:02:33,320 Speaker 1: it's very selective, it's very difficult. We don't like to 43 00:02:33,360 --> 00:02:35,840 Speaker 1: be stock pickers. Were not, but you've got to have 44 00:02:35,919 --> 00:02:38,280 Speaker 1: to kind of step back, be careful though, where the 45 00:02:38,360 --> 00:02:41,440 Speaker 1: valuations are today in certain sectors where they're not, and 46 00:02:41,480 --> 00:02:46,720 Speaker 1: how you play that out. So biosecurity, biotech, healthcare, and 47 00:02:46,760 --> 00:02:51,800 Speaker 1: financials look for us some opportunities. What about international? I mean, John, 48 00:02:52,320 --> 00:02:54,840 Speaker 1: help me, you're John. Remind me we had one quarter 49 00:02:54,919 --> 00:02:58,400 Speaker 1: or quarter and a half of decent international performance? Is 50 00:02:58,400 --> 00:03:00,680 Speaker 1: that right, John? One quarter of being kind? I think 51 00:03:00,680 --> 00:03:02,079 Speaker 1: we've had a couple of days in the context of 52 00:03:02,080 --> 00:03:07,480 Speaker 1: a massive decade long rally in the Joy It's John's correct, 53 00:03:07,520 --> 00:03:11,799 Speaker 1: as usual, with seven days, we're international performed. Joe, When 54 00:03:11,800 --> 00:03:14,200 Speaker 1: do I get on board international? I mean, come on, 55 00:03:14,280 --> 00:03:17,359 Speaker 1: it's in the it's it's it's tanked, it's take time, 56 00:03:17,360 --> 00:03:19,000 Speaker 1: and I would just I would do it on a 57 00:03:19,120 --> 00:03:23,720 Speaker 1: sector by sector basis. So technology Northeast Asia, so that's 58 00:03:23,760 --> 00:03:26,720 Speaker 1: South Korea, that's gonna be Taiwan, that's gonna be Japan, 59 00:03:27,000 --> 00:03:29,720 Speaker 1: and the e commerce giants of China. We know who 60 00:03:29,760 --> 00:03:33,120 Speaker 1: they are because we're gonna bifur kate the technological divide 61 00:03:33,160 --> 00:03:36,000 Speaker 1: here globally. They're gonna have their own system and we're 62 00:03:36,000 --> 00:03:39,120 Speaker 1: gonna have our own as well, and they'll be Korea 63 00:03:39,160 --> 00:03:41,400 Speaker 1: and Taiwan stuck in the middle, so to speak. So 64 00:03:41,640 --> 00:03:43,240 Speaker 1: there's not much to talk about when it comes to 65 00:03:43,280 --> 00:03:47,200 Speaker 1: Europe technology. But like sciences in Europe, are these a 66 00:03:47,360 --> 00:03:51,200 Speaker 1: very good companies, great scientists, human capital histories. If you 67 00:03:51,200 --> 00:03:53,320 Speaker 1: look at history of the drug company started in Europe, 68 00:03:53,400 --> 00:03:55,440 Speaker 1: right it's gonna come back to Europe as we solve 69 00:03:55,560 --> 00:04:00,320 Speaker 1: these problems. So the sector specific as opposed to country system, 70 00:04:00,480 --> 00:04:03,720 Speaker 1: Joe taking a stepped back, there's a question about the 71 00:04:03,800 --> 00:04:06,080 Speaker 1: risk on field that we have right now and what 72 00:04:06,160 --> 00:04:08,640 Speaker 1: it's pricing in. I think that Mike Wilson over at 73 00:04:08,640 --> 00:04:11,000 Speaker 1: Morgan Stanley put it well, saying that there is a 74 00:04:11,040 --> 00:04:14,160 Speaker 1: bearishness still in markets, but it shifted. He said, it's 75 00:04:14,160 --> 00:04:16,880 Speaker 1: a different kind of barishness, one that accepts the extraordinary 76 00:04:16,920 --> 00:04:20,080 Speaker 1: policy responses having done its job to stop the decline, 77 00:04:20,480 --> 00:04:24,280 Speaker 1: but skeptical that it can lead to a sustainable recovery. 78 00:04:24,440 --> 00:04:27,200 Speaker 1: Do you agree with the first premise that the policy 79 00:04:27,279 --> 00:04:30,359 Speaker 1: response so far has done its job to stop the 80 00:04:30,400 --> 00:04:33,400 Speaker 1: decline for the foreseeable future, even as we see an 81 00:04:33,480 --> 00:04:37,680 Speaker 1: unemployment rate that will likely climb up to or beyond 82 00:04:38,000 --> 00:04:41,120 Speaker 1: according to some estimates. Yeah, I mean the short answer 83 00:04:41,240 --> 00:04:44,960 Speaker 1: is yes, because J. Powell Company moved so quickly to 84 00:04:45,279 --> 00:04:48,840 Speaker 1: provide the liquidity to all parts of the capital markets 85 00:04:48,880 --> 00:04:52,280 Speaker 1: that staved off any huge blowout in credit spreads or 86 00:04:52,320 --> 00:04:55,640 Speaker 1: any type of solvency issues thus far overlaid that with 87 00:04:55,640 --> 00:04:58,520 Speaker 1: a fiscal response as well. So I do think that 88 00:04:58,600 --> 00:05:02,760 Speaker 1: policy response, as big in its spast, gives us some 89 00:05:02,760 --> 00:05:05,719 Speaker 1: some comfort. They're going forward, however, that we have to 90 00:05:05,760 --> 00:05:08,880 Speaker 1: see Main Street kind of settled down, I think, and 91 00:05:08,920 --> 00:05:11,200 Speaker 1: it's gonna come. When I mentioned this earlier in the 92 00:05:11,200 --> 00:05:13,520 Speaker 1: sense that the healthcare industry, if you look at the 93 00:05:13,560 --> 00:05:17,680 Speaker 1: GDP numbers, took up beating. But around the country hospitals 94 00:05:17,680 --> 00:05:21,120 Speaker 1: are now reopening. If you want one sector to reopen, right, 95 00:05:21,240 --> 00:05:24,760 Speaker 1: it's not necessarily airlines or restaurants, it's the healthcare system, 96 00:05:24,839 --> 00:05:27,359 Speaker 1: the hospitals, and they're doing just that. And so I 97 00:05:27,360 --> 00:05:29,919 Speaker 1: think that's gonna alleviate some of the unemployment plane in 98 00:05:30,000 --> 00:05:32,880 Speaker 1: healthcare services, and that's going to be a surprise on 99 00:05:32,920 --> 00:05:36,080 Speaker 1: the upside. But I do think we've got to bottom in. 100 00:05:36,440 --> 00:05:40,159 Speaker 1: But we have to be realistic about the mexicansolidation phase 101 00:05:40,240 --> 00:05:43,480 Speaker 1: before we get another significant leg up. I just wanted 102 00:05:43,520 --> 00:05:45,279 Speaker 1: to run things out with a delicate question just on 103 00:05:45,320 --> 00:05:48,200 Speaker 1: the psychology of things right now. Was something that had 104 00:05:48,279 --> 00:05:51,279 Speaker 1: for manager Dan McMurtry alluded to over the weekend. Do 105 00:05:51,279 --> 00:05:54,160 Speaker 1: you think there's a social stigma attached with being long 106 00:05:54,240 --> 00:05:58,400 Speaker 1: this market at the moment? So what was there? Stigma? 107 00:05:58,400 --> 00:06:01,440 Speaker 1: Being a text? It's just a social stigma attached to 108 00:06:01,480 --> 00:06:04,680 Speaker 1: being long this market at the moment. I don't think so, 109 00:06:04,839 --> 00:06:08,039 Speaker 1: not not necessarily a social stigma. I mean being along 110 00:06:08,120 --> 00:06:10,200 Speaker 1: the market. And if you're in the right let me 111 00:06:10,279 --> 00:06:11,960 Speaker 1: let me, let me rEFInd a question joke coming on 112 00:06:12,000 --> 00:06:14,919 Speaker 1: a question like this, how difficult on a program like this, 113 00:06:15,040 --> 00:06:17,640 Speaker 1: How difficult is it to say that you're long the 114 00:06:17,720 --> 00:06:22,120 Speaker 1: market when we have this dreadful data in the labor 115 00:06:22,160 --> 00:06:26,120 Speaker 1: market in the United States and worldwide? Okay, I would 116 00:06:26,200 --> 00:06:30,280 Speaker 1: I would say, look at history, We're worked through this pandemic. 117 00:06:31,480 --> 00:06:35,080 Speaker 1: Look to the other side. When it comes to the leaders, 118 00:06:35,120 --> 00:06:38,240 Speaker 1: who's gonna be technology, health care, bio security. So it 119 00:06:38,400 --> 00:06:41,720 Speaker 1: is difficult because we're right in the midst of the trough, 120 00:06:41,800 --> 00:06:44,240 Speaker 1: right where where this is it. This is the point 121 00:06:44,240 --> 00:06:47,000 Speaker 1: of maximum pain with the numbers coming in. But the 122 00:06:47,080 --> 00:06:51,279 Speaker 1: markets and looking forward think of we're gonna be a ballparks, 123 00:06:51,560 --> 00:06:54,440 Speaker 1: We're gonna be in restaurants. So that's I think we're 124 00:06:54,480 --> 00:06:56,560 Speaker 1: the equity markets. And you can say they're projecting too 125 00:06:56,640 --> 00:06:59,480 Speaker 1: far ahead, too fast. I wouldn't disagree. But when you 126 00:06:59,520 --> 00:07:02,920 Speaker 1: look out eighteen twenty four months from now, we're having 127 00:07:02,920 --> 00:07:07,880 Speaker 1: a totally different conversation about probably debt, inflation and other issues. 128 00:07:07,920 --> 00:07:10,880 Speaker 1: But I do think there's growth on the other side, 129 00:07:10,960 --> 00:07:14,400 Speaker 1: and there's opportunities now to put money to work. So Quinlin, 130 00:07:14,440 --> 00:07:17,480 Speaker 1: thank you so much. Always brilliant Bank of America, greatly appreciated. 131 00:07:20,760 --> 00:07:22,160 Speaker 1: Let's do this, folks, I want to do this for 132 00:07:22,200 --> 00:07:24,120 Speaker 1: Global Wall Street. We can talk about the VIX. We 133 00:07:24,160 --> 00:07:27,480 Speaker 1: can talk about volatility. My amateur take is, you know, 134 00:07:27,560 --> 00:07:30,880 Speaker 1: bigger number means more fear, lower number means less fear, 135 00:07:31,240 --> 00:07:33,920 Speaker 1: but it gets a lot more sophisticated. Dean Current joins 136 00:07:34,000 --> 00:07:37,160 Speaker 1: us now Macros Advisors and Dean I want to go right. 137 00:07:37,240 --> 00:07:40,440 Speaker 1: So there's a curve, which is the VIX and then 138 00:07:40,480 --> 00:07:43,880 Speaker 1: there's the guestimate of where the vixes out any number 139 00:07:43,960 --> 00:07:48,800 Speaker 1: of months, and that curve now is very steep, which 140 00:07:48,880 --> 00:07:52,640 Speaker 1: I don't understand that. What does it mean, Dean when 141 00:07:52,680 --> 00:07:59,040 Speaker 1: you see a steep futures market for volatility? Right? Thanks? Um. So, 142 00:07:59,360 --> 00:08:03,000 Speaker 1: it actually is quite interesting right now to look at, um, 143 00:08:03,080 --> 00:08:05,760 Speaker 1: the combination of the level of the VIX, which is 144 00:08:06,160 --> 00:08:08,920 Speaker 1: of course way down from its incredible peak, but also 145 00:08:09,000 --> 00:08:12,680 Speaker 1: still relative to history quite high. Um. So to see 146 00:08:12,720 --> 00:08:15,280 Speaker 1: a high VIX, but also to see, as you noted, 147 00:08:15,360 --> 00:08:18,800 Speaker 1: an upward sloping curve is actually pretty rare. UM. So 148 00:08:18,920 --> 00:08:21,720 Speaker 1: let me just give you a quick bit of perspective 149 00:08:21,760 --> 00:08:23,640 Speaker 1: on that. So the end of two thousand eight, team, 150 00:08:23,640 --> 00:08:26,840 Speaker 1: remember we had that big risk off. Powell was tightening 151 00:08:26,840 --> 00:08:30,520 Speaker 1: in the face of the market. Um, the VIX reached 152 00:08:30,560 --> 00:08:36,319 Speaker 1: about thirty one on December, but six month volatility was 153 00:08:36,440 --> 00:08:39,600 Speaker 1: much lower. So that's an inverted vall curve. The VIX 154 00:08:39,640 --> 00:08:41,640 Speaker 1: is higher than the future volatility, and now you have 155 00:08:41,720 --> 00:08:44,360 Speaker 1: the opposite. So if I look, for example, at one 156 00:08:44,400 --> 00:08:48,120 Speaker 1: month implied volatility on the SMP, that's where the VIX 157 00:08:48,200 --> 00:08:52,000 Speaker 1: comes from. That's about But if I look at six months, 158 00:08:52,360 --> 00:08:56,440 Speaker 1: it's about so you have that upward slope. How do 159 00:08:56,520 --> 00:08:58,760 Speaker 1: I read that? I think it's a function of just 160 00:08:58,880 --> 00:09:02,880 Speaker 1: the amount of artificiality that is in asset prices right now. 161 00:09:02,920 --> 00:09:04,840 Speaker 1: I'm not saying it's good or bad. It's just that 162 00:09:05,360 --> 00:09:08,440 Speaker 1: folks are really struggling to make sense of what to 163 00:09:08,520 --> 00:09:12,079 Speaker 1: do here. Um, there's been a massive economic sudden stop, 164 00:09:12,600 --> 00:09:15,679 Speaker 1: a gigantic policy of response from the government and the Fed, 165 00:09:16,360 --> 00:09:19,800 Speaker 1: and it's just really difficult to know where asset prices 166 00:09:19,840 --> 00:09:22,320 Speaker 1: are going to land. And so in some ways we've 167 00:09:22,360 --> 00:09:26,080 Speaker 1: punted that uncertainty out a couple of months, and that's 168 00:09:26,080 --> 00:09:29,360 Speaker 1: why I see longer dated volatility out, you know, call 169 00:09:29,400 --> 00:09:32,920 Speaker 1: it six months, clearing it at higher levels of the fixes. Dean, 170 00:09:33,160 --> 00:09:35,760 Speaker 1: what you said is really important for this moment, the 171 00:09:35,880 --> 00:09:40,000 Speaker 1: artificiality of current pricing, And do you have a sense 172 00:09:40,400 --> 00:09:43,000 Speaker 1: of kind of where that artificiality is coming from. Is 173 00:09:43,040 --> 00:09:46,320 Speaker 1: it coming from basically what is becoming guild curve controlled 174 00:09:46,360 --> 00:09:49,360 Speaker 1: by the Federal Reserve. Is it coming from Washington, d C. 175 00:09:49,679 --> 00:09:52,000 Speaker 1: Or is it coming from the hopium that we're going 176 00:09:52,080 --> 00:09:54,880 Speaker 1: to see something more akin to a V shaped recovery 177 00:09:54,880 --> 00:09:58,840 Speaker 1: at least in markets as we go forward. I think 178 00:09:58,840 --> 00:10:01,160 Speaker 1: it's really least of the first two rather than the hope. 179 00:10:01,240 --> 00:10:07,160 Speaker 1: I think that the degree of of support provided by 180 00:10:07,240 --> 00:10:10,040 Speaker 1: UH Congress, in the White House and a bipartisan fashion 181 00:10:10,120 --> 00:10:15,400 Speaker 1: so far has been unbelievably strong. UH So one metric 182 00:10:15,440 --> 00:10:18,360 Speaker 1: that said, on a Q two basis, personal income is 183 00:10:18,400 --> 00:10:20,600 Speaker 1: actually gonna be up. Um. So it just shows you 184 00:10:20,640 --> 00:10:22,440 Speaker 1: how much of the whole that, at least for now, 185 00:10:22,840 --> 00:10:25,040 Speaker 1: the government is silling in. And then on the second front, 186 00:10:25,080 --> 00:10:27,800 Speaker 1: of course, the Fed. Wow, what a tremendous amount of 187 00:10:27,880 --> 00:10:32,440 Speaker 1: you know, both explicit buying, a tremendous amount of forward guidance, 188 00:10:32,559 --> 00:10:36,080 Speaker 1: you know, waiting into the private UH markets, and it's 189 00:10:36,120 --> 00:10:40,520 Speaker 1: put a floor in a large way under under asset prices. 190 00:10:40,559 --> 00:10:43,000 Speaker 1: And it's just listen, the old adage of don't fight 191 00:10:43,040 --> 00:10:45,600 Speaker 1: the Fed. I don't think it couldn't be you know, 192 00:10:45,640 --> 00:10:49,920 Speaker 1: more relevant than right now. It's really difficult to UH 193 00:10:50,040 --> 00:10:52,600 Speaker 1: to get in front of this UH And to some extent, 194 00:10:52,640 --> 00:10:55,000 Speaker 1: I think this is the markets in a waiting game. 195 00:10:55,080 --> 00:10:59,440 Speaker 1: You know, we're trying to gauge the policy response not 196 00:10:59,520 --> 00:11:01,800 Speaker 1: just now, at the future wherewithal and you're starting to 197 00:11:01,840 --> 00:11:05,920 Speaker 1: see some breakdown of that in terms of the depth 198 00:11:05,920 --> 00:11:08,680 Speaker 1: of its gold in Washington. You know, McConnell's starting to 199 00:11:09,520 --> 00:11:12,600 Speaker 1: um discuss that there are limitations to what we can 200 00:11:12,640 --> 00:11:16,360 Speaker 1: do UM. So it's it's that that part is challenging. 201 00:11:16,400 --> 00:11:18,600 Speaker 1: And then I think the other part that the we're 202 00:11:18,640 --> 00:11:21,840 Speaker 1: just trying to gauge is that the reopening, the efficacy 203 00:11:21,880 --> 00:11:24,520 Speaker 1: of reopening, at least so far from my perspective, the 204 00:11:24,600 --> 00:11:28,600 Speaker 1: scorecard there doesn't look promising. If you look at other countries, 205 00:11:28,640 --> 00:11:30,800 Speaker 1: it's it's still obviously very early, but there's been a 206 00:11:30,840 --> 00:11:34,440 Speaker 1: couple of setbacks in South Korea and China, in Germany 207 00:11:34,480 --> 00:11:38,080 Speaker 1: and Spain UM, And so I think that's where ultimately 208 00:11:38,120 --> 00:11:40,000 Speaker 1: the market is going to have to find some metrics 209 00:11:40,040 --> 00:11:42,800 Speaker 1: to watch UM. But I think the low vix right 210 00:11:42,800 --> 00:11:45,280 Speaker 1: now points to that it it isn't a little bit 211 00:11:45,320 --> 00:11:47,480 Speaker 1: of no man's land in terms of figuring out the mark. 212 00:11:47,559 --> 00:11:50,400 Speaker 1: You know what risk really is adating with that in mind, 213 00:11:50,400 --> 00:11:52,600 Speaker 1: and you've touched on something quite important. The risk of 214 00:11:52,600 --> 00:11:55,040 Speaker 1: reopening in a second wave is something likely to sit 215 00:11:55,080 --> 00:11:57,360 Speaker 1: on sentiment for quite a while. Do you think that 216 00:11:57,400 --> 00:12:00,400 Speaker 1: makes it difficult to rotate to the most sickly laritys 217 00:12:00,400 --> 00:12:02,360 Speaker 1: of the market that have lacked in the rally off 218 00:12:02,360 --> 00:12:05,600 Speaker 1: the bottom over the last two months, I think, so 219 00:12:05,760 --> 00:12:09,120 Speaker 1: I was just looking at the just growth versus value. 220 00:12:09,120 --> 00:12:13,679 Speaker 1: The divergence this year is on the order of performance 221 00:12:13,679 --> 00:12:17,080 Speaker 1: growth versus value, and so you know, if if value 222 00:12:17,200 --> 00:12:21,080 Speaker 1: is is UH embodied insty locality, I do think it's 223 00:12:21,240 --> 00:12:24,720 Speaker 1: very tricky to to really get you know, behind the 224 00:12:24,760 --> 00:12:28,640 Speaker 1: notion that one people will be able to come back 225 00:12:28,720 --> 00:12:31,520 Speaker 1: because the infection rates are clearly coming down, and then too, 226 00:12:31,559 --> 00:12:34,800 Speaker 1: I think the psychology never is too long, but I 227 00:12:34,800 --> 00:12:37,079 Speaker 1: think the psychology is pretty important. You know, folks, even 228 00:12:37,080 --> 00:12:39,400 Speaker 1: if they were given the opportunity to come back, some are, 229 00:12:39,880 --> 00:12:42,319 Speaker 1: but many are not. And I you know, just given 230 00:12:42,360 --> 00:12:45,200 Speaker 1: the leverage inherent and a lot of cyclical businesses, the 231 00:12:45,240 --> 00:12:49,040 Speaker 1: balance sheet UH considerations and the degree to which they 232 00:12:49,080 --> 00:12:52,000 Speaker 1: really need you know, whether it's a fully stocked hotel 233 00:12:52,520 --> 00:12:55,160 Speaker 1: a plane with no seats empty, it's going to be 234 00:12:55,280 --> 00:12:58,559 Speaker 1: very difficult U And I think, you know, the psychology 235 00:12:58,600 --> 00:13:00,840 Speaker 1: makes that more challenging. Tom. I think this is the 236 00:13:00,920 --> 00:13:02,959 Speaker 1: decision at the moment to make it really really simple. 237 00:13:03,040 --> 00:13:05,480 Speaker 1: Do you stick with what's worked over the last six 238 00:13:05,520 --> 00:13:08,400 Speaker 1: weeks or do you rotate to what hasn't and what's 239 00:13:08,400 --> 00:13:10,679 Speaker 1: worked is Big Tech, the Big five all positive year 240 00:13:10,720 --> 00:13:14,839 Speaker 1: today the SMP five hundred lower on the year. It's 241 00:13:14,840 --> 00:13:16,840 Speaker 1: just unreal how much out performance we've had from the 242 00:13:16,840 --> 00:13:19,400 Speaker 1: Big five. You know, what's so interesting here is is 243 00:13:19,440 --> 00:13:22,120 Speaker 1: you but to sit up against this liquidity solvency you 244 00:13:22,160 --> 00:13:25,000 Speaker 1: ssue John that we've seen over the weekend, and certainly 245 00:13:25,080 --> 00:13:28,400 Speaker 1: you know with the Columbia Airlines Avianca their bankruptcy, and 246 00:13:28,840 --> 00:13:31,160 Speaker 1: you know, you look at Liftansa with a full bailout 247 00:13:31,200 --> 00:13:34,840 Speaker 1: in Germany with potential ownership by the government. It's not 248 00:13:34,880 --> 00:13:37,719 Speaker 1: only two worlds, it's almost three worlds out there. Yeah, Dean, 249 00:13:37,800 --> 00:13:40,360 Speaker 1: I think Tom's brought up something important. Things are still breaking, 250 00:13:40,640 --> 00:13:43,040 Speaker 1: and you've shared something that that I share with you 251 00:13:43,160 --> 00:13:46,559 Speaker 1: that when things move fast, they break. Have we seen 252 00:13:46,760 --> 00:13:50,040 Speaker 1: all the broken parts of this huge move very very 253 00:13:50,120 --> 00:13:53,079 Speaker 1: quickly in the last few months. Yeah, I think that 254 00:13:53,120 --> 00:13:56,600 Speaker 1: would be way too optimistic to suggest that even as 255 00:13:57,000 --> 00:14:00,200 Speaker 1: three VIX is probably not coming back, that the after 256 00:14:00,280 --> 00:14:03,600 Speaker 1: shocks are likely not fully appreciated yet. You know, just 257 00:14:03,640 --> 00:14:06,880 Speaker 1: think about post the financial crisis in two thousand ten, 258 00:14:07,360 --> 00:14:10,040 Speaker 1: we had the flash crash. Two eleven and twelve is 259 00:14:10,080 --> 00:14:14,160 Speaker 1: when the Eurozone sovereign crisis began in full earnest, and 260 00:14:14,240 --> 00:14:17,000 Speaker 1: those were in some ways after shocks of the Great 261 00:14:17,000 --> 00:14:20,880 Speaker 1: Financial Crisis. UM. I just don't think so UM when 262 00:14:20,920 --> 00:14:24,040 Speaker 1: you're seeing I know, you guys just covered the you know, 263 00:14:24,400 --> 00:14:27,560 Speaker 1: uh FED funds futures trading north of a hundred implied 264 00:14:27,680 --> 00:14:32,120 Speaker 1: rates in the US below um, you know, below zero. UM. 265 00:14:32,160 --> 00:14:36,160 Speaker 1: We obviously saw the crude meltdown. It's just in a 266 00:14:36,240 --> 00:14:39,480 Speaker 1: world where things are moving so fast and the policy 267 00:14:39,560 --> 00:14:44,120 Speaker 1: response is just so enormous UM, and the deflationary forces 268 00:14:44,360 --> 00:14:48,320 Speaker 1: upon which the policy responses built are so enormous, it's 269 00:14:48,360 --> 00:14:52,440 Speaker 1: just really difficult to think that we've got some you know, 270 00:14:52,520 --> 00:14:55,320 Speaker 1: resolution that's not going to see some you know, some 271 00:14:55,360 --> 00:14:58,080 Speaker 1: crazy things happen. UM. And I think this is where 272 00:14:58,120 --> 00:14:59,800 Speaker 1: one of the things, you know, we spent a lot 273 00:14:59,800 --> 00:15:02,000 Speaker 1: of I'm in hedging at Macro Risk Advisors, but also 274 00:15:02,080 --> 00:15:06,359 Speaker 1: on portfolio construction. And I just think that gold deserves 275 00:15:06,800 --> 00:15:10,920 Speaker 1: an increasing allocation in the portfolio. It's an asset that 276 00:15:11,360 --> 00:15:15,240 Speaker 1: has negative correlation attributes to the risk complex. UM. And 277 00:15:15,360 --> 00:15:18,040 Speaker 1: it I'd like to say it's just long paranoia. And 278 00:15:18,120 --> 00:15:22,359 Speaker 1: I think we are entering into a period of increasing 279 00:15:22,480 --> 00:15:27,320 Speaker 1: Unfortunately paranoia in the monetary system, as we're gonna come 280 00:15:27,360 --> 00:15:30,240 Speaker 1: to the market with three trillion dollars of issuance in 281 00:15:30,400 --> 00:15:33,800 Speaker 1: one quarter. It's just we're kind of in no man's land. 282 00:15:33,880 --> 00:15:36,240 Speaker 1: And so I'm just continuing to recommend to folks to 283 00:15:36,480 --> 00:15:39,280 Speaker 1: really take a hard look at gold. Dain't really really 284 00:15:39,280 --> 00:15:45,040 Speaker 1: thoughtful stuff didn't kind of the macro risk advisors. We 285 00:15:45,160 --> 00:15:47,320 Speaker 1: turned to the great stimulus debate in Washington now, and 286 00:15:47,360 --> 00:15:49,840 Speaker 1: I've said repeatedly over the last few months, I've been 287 00:15:49,880 --> 00:15:53,360 Speaker 1: really impressed with how while the administration has worked with 288 00:15:53,400 --> 00:15:57,280 Speaker 1: the Democrats to get significant bills over the line, the 289 00:15:57,360 --> 00:16:00,360 Speaker 1: question for many people in this market, Tom is long 290 00:16:00,720 --> 00:16:03,600 Speaker 1: does that unity lost? Yeah? It goes once twice and 291 00:16:03,640 --> 00:16:05,360 Speaker 1: then there's a third time. I John, you and I 292 00:16:05,400 --> 00:16:08,320 Speaker 1: were talking about early May is being the time of 293 00:16:08,320 --> 00:16:10,880 Speaker 1: the next discussion, and we're nowhere near that. We're past 294 00:16:10,920 --> 00:16:14,880 Speaker 1: early May, folks, and now staggering into a later May 295 00:16:14,960 --> 00:16:18,520 Speaker 1: looking for the next fiscal stimulus. It's good to get 296 00:16:18,520 --> 00:16:21,080 Speaker 1: away from the three zip codes that we look at 297 00:16:21,120 --> 00:16:24,720 Speaker 1: here in New York and possibly wander out to Indiana. 298 00:16:24,800 --> 00:16:28,160 Speaker 1: Trey Hollingsworth is with the ninth District this is the 299 00:16:28,240 --> 00:16:31,920 Speaker 1: path from Indianapolis on down to Louisville and of course 300 00:16:32,040 --> 00:16:36,480 Speaker 1: encompassing the University of Indiana as well. Congressmen, wonderful to 301 00:16:36,520 --> 00:16:41,760 Speaker 1: speak to you today. How far removed are the Republicans 302 00:16:41,760 --> 00:16:45,680 Speaker 1: of the House and the Republicans of the middle ground 303 00:16:46,240 --> 00:16:51,640 Speaker 1: from the arch Senate conservatives that are there. It's a 304 00:16:51,640 --> 00:16:55,120 Speaker 1: great question. Looks there are many Republicans in the House 305 00:16:55,160 --> 00:16:58,080 Speaker 1: that are concerned about the devas that that are concerned 306 00:16:58,200 --> 00:17:02,560 Speaker 1: about total US debt. However, there is a strong push 307 00:17:02,600 --> 00:17:05,600 Speaker 1: and it continues strong push from Republicans to find a 308 00:17:05,680 --> 00:17:08,560 Speaker 1: pathway to build economic growth back. I mean, we saw 309 00:17:08,680 --> 00:17:12,359 Speaker 1: a terrible job report on Friday. People want to ensure 310 00:17:12,400 --> 00:17:15,919 Speaker 1: that those losses are temporary and not permanent, because the 311 00:17:16,000 --> 00:17:18,200 Speaker 1: last thing we want to see right now is this 312 00:17:18,400 --> 00:17:22,320 Speaker 1: exogenous coronavirus shock to the economy become a long term 313 00:17:22,680 --> 00:17:26,480 Speaker 1: demand crippling shock to the economy. This is so important, Congress, 314 00:17:26,520 --> 00:17:28,800 Speaker 1: and I really want to emphasize this. There's a belief 315 00:17:28,960 --> 00:17:33,320 Speaker 1: out there that the pent unemployment heading to Kevin Hasses 316 00:17:34,840 --> 00:17:38,119 Speaker 1: is located in the city is it's where the viruses 317 00:17:38,200 --> 00:17:41,520 Speaker 1: where the President makes clear these are blue regions that 318 00:17:41,600 --> 00:17:44,960 Speaker 1: he doesn't care about etcetera. How have you seen the 319 00:17:45,119 --> 00:17:50,439 Speaker 1: job economy in the ninth Congressional District Now? It is 320 00:17:50,480 --> 00:17:52,320 Speaker 1: not just in the cities, It is not just in 321 00:17:52,359 --> 00:17:54,879 Speaker 1: blue state. I live in a very red state, and 322 00:17:54,920 --> 00:17:57,879 Speaker 1: the job losses are real. I hear from families every 323 00:17:57,920 --> 00:18:00,760 Speaker 1: single day that say, I thought and I had a 324 00:18:00,880 --> 00:18:03,560 Speaker 1: long term job. I was seeing my wages grow up 325 00:18:03,640 --> 00:18:05,960 Speaker 1: until just a month ago, and now I don't have 326 00:18:06,000 --> 00:18:08,640 Speaker 1: a job and don't have prospects for getting a job 327 00:18:08,720 --> 00:18:12,199 Speaker 1: anytime soon. And I think this is really challenging getting 328 00:18:12,280 --> 00:18:17,280 Speaker 1: back businesses open safely while mitigating risk, getting back individuals 329 00:18:17,320 --> 00:18:20,199 Speaker 1: to being able to purchase things for their families for 330 00:18:20,359 --> 00:18:23,320 Speaker 1: their futures. It's hugely important that confidence has to start 331 00:18:23,359 --> 00:18:26,159 Speaker 1: in Washington, d C. That leadership has to start in 332 00:18:26,200 --> 00:18:31,440 Speaker 1: Washington DCING represent Representative Hungsworth. You've been a small business owner. 333 00:18:32,040 --> 00:18:36,879 Speaker 1: We've seen reports that the small business bankruptcies could rise 334 00:18:36,960 --> 00:18:40,640 Speaker 1: to forty percent of all of the companies in six 335 00:18:40,720 --> 00:18:44,320 Speaker 1: months if the shutdowns continue. How concerned are you that 336 00:18:44,400 --> 00:18:47,600 Speaker 1: the program put into place so far has been ineffective. 337 00:18:47,920 --> 00:18:51,160 Speaker 1: It's staving off these insolvencies as well as the subsequent 338 00:18:51,240 --> 00:18:56,119 Speaker 1: layoffs that obviously are just escalating. Well, I think you 339 00:18:56,200 --> 00:18:57,760 Speaker 1: hit the nail on the head, which is, how do 340 00:18:57,800 --> 00:19:01,040 Speaker 1: we determine how effective this is? And the reality is 341 00:19:01,080 --> 00:19:03,480 Speaker 1: the program was just designed to be a short term 342 00:19:03,520 --> 00:19:06,960 Speaker 1: bridge to opening up the economy again, a short term 343 00:19:07,000 --> 00:19:09,720 Speaker 1: bridge to enable firms to get back to hiring, get 344 00:19:09,720 --> 00:19:12,399 Speaker 1: back to doing business as normal. If we are not 345 00:19:12,480 --> 00:19:14,439 Speaker 1: able to get the economy open safely, if we're not 346 00:19:14,480 --> 00:19:17,080 Speaker 1: able to hold down the level of infections and transmissions 347 00:19:17,119 --> 00:19:19,320 Speaker 1: once we open with the the economy, there isn't enough money 348 00:19:19,359 --> 00:19:22,520 Speaker 1: in Washington to save businesses in the long term. This 349 00:19:22,680 --> 00:19:26,159 Speaker 1: has to bring a bridge to empowering the economy to 350 00:19:26,200 --> 00:19:29,359 Speaker 1: get back to healing itself. That's the only way in 351 00:19:29,400 --> 00:19:31,919 Speaker 1: the long term we can keep these businesses afloat, going 352 00:19:32,240 --> 00:19:35,199 Speaker 1: and expanding. Congressman, how do we understand this from the 353 00:19:35,280 --> 00:19:38,439 Speaker 1: debt perspective? What is the concern right now about the 354 00:19:38,480 --> 00:19:42,520 Speaker 1: debt just specifically, what's the big concern? Well, Look, I 355 00:19:42,520 --> 00:19:46,240 Speaker 1: think the big concern is the large amount of deficits 356 00:19:46,280 --> 00:19:50,119 Speaker 1: that we're spending this year alone, and what that means 357 00:19:50,200 --> 00:19:53,280 Speaker 1: from a long term perspective on where rates go back 358 00:19:53,320 --> 00:19:55,639 Speaker 1: to once they normalized. Look, it's hard to look at 359 00:19:55,640 --> 00:19:57,400 Speaker 1: the ten uere today and say, gosh, there's a debt 360 00:19:57,440 --> 00:20:00,440 Speaker 1: problem in the United States, right, But once interest rates 361 00:20:00,440 --> 00:20:01,919 Speaker 1: to begin to normally, as we get back to a 362 00:20:01,960 --> 00:20:05,919 Speaker 1: more normal looking economy, the question is will we be 363 00:20:06,040 --> 00:20:08,600 Speaker 1: able to hold interest rates at an appropriate level or 364 00:20:08,600 --> 00:20:11,440 Speaker 1: will interest costs continue to rise in the US, pushing 365 00:20:11,440 --> 00:20:13,760 Speaker 1: out and crowding at all the other important spending that 366 00:20:13,800 --> 00:20:16,920 Speaker 1: we think is there right, research and development on future 367 00:20:17,040 --> 00:20:19,320 Speaker 1: cures for diseases, A lot of that goes through NIH 368 00:20:19,560 --> 00:20:21,560 Speaker 1: defense spending. All these things will be crowded out by 369 00:20:21,640 --> 00:20:24,760 Speaker 1: larger and larger interest payments on our debt. Should interest 370 00:20:24,800 --> 00:20:27,480 Speaker 1: rates return to their normal levels, you think there could 371 00:20:27,520 --> 00:20:30,800 Speaker 1: be a problem with debt sustainability in America. Is that 372 00:20:30,880 --> 00:20:34,879 Speaker 1: something you actually worry about? Well, I do worry about that, 373 00:20:34,920 --> 00:20:36,600 Speaker 1: and I think the important thing is to worry about 374 00:20:36,640 --> 00:20:40,200 Speaker 1: it before it becomes a problem. I think the important 375 00:20:40,240 --> 00:20:41,639 Speaker 1: question we have to ask ourselves is what are the 376 00:20:41,720 --> 00:20:44,320 Speaker 1: changes we need to make today? What are the changes 377 00:20:44,359 --> 00:20:46,359 Speaker 1: we need to make over the next year to ensure 378 00:20:46,520 --> 00:20:48,040 Speaker 1: that we can put ourselves on the path that this 379 00:20:48,080 --> 00:20:50,160 Speaker 1: SPS just need to building. This isn't a problem today, 380 00:20:50,200 --> 00:20:51,720 Speaker 1: as you will are toy. This isn't gonna be a 381 00:20:51,720 --> 00:20:55,560 Speaker 1: problem tomorrow or next year. But ultimately one goes bankrupt 382 00:20:55,600 --> 00:20:57,800 Speaker 1: slowly at first, then suddenly the key is to catch 383 00:20:57,800 --> 00:21:00,719 Speaker 1: it in the slow phase, not in the sudden phase. Representative, 384 00:21:00,760 --> 00:21:03,960 Speaker 1: I want to make sure to understand what you're saying. 385 00:21:04,200 --> 00:21:07,000 Speaker 1: Are you saying that we should not add some sort 386 00:21:07,000 --> 00:21:10,479 Speaker 1: of effort to pump money into the economy at this 387 00:21:10,600 --> 00:21:15,160 Speaker 1: point for fear of that future escalation of debt costs? 388 00:21:15,320 --> 00:21:19,159 Speaker 1: Is that your argument here? So? I think my argument is, 389 00:21:19,240 --> 00:21:22,800 Speaker 1: we have spent two point nine trillion dollars of Americans 390 00:21:22,800 --> 00:21:26,399 Speaker 1: harder at taxpayer dollars. Before we start spending more, we 391 00:21:26,440 --> 00:21:30,000 Speaker 1: should ensure that the programs are effective, As you will 392 00:21:30,080 --> 00:21:33,680 Speaker 1: asked earlier, we should ensure that we're solving the right problems. 393 00:21:33,680 --> 00:21:35,920 Speaker 1: We're ensuring that these are the right programs to be 394 00:21:35,960 --> 00:21:37,760 Speaker 1: able to get the economy back on its feet so 395 00:21:37,800 --> 00:21:40,520 Speaker 1: we can normalize again. But I think in the long 396 00:21:40,840 --> 00:21:43,879 Speaker 1: term question for Americans, and we were already at a 397 00:21:43,880 --> 00:21:47,760 Speaker 1: definite of a trillion dollars before coronavirus happened, how can 398 00:21:47,840 --> 00:21:50,880 Speaker 1: we put ourselves on the path of sustainability even outside 399 00:21:50,880 --> 00:21:54,440 Speaker 1: of this large acute dip so that we can see 400 00:21:54,480 --> 00:21:57,120 Speaker 1: a brighter, brighter future for Americans and not hand down 401 00:21:57,160 --> 00:22:00,040 Speaker 1: a mountain debt to our grandchildren. Congressman, we got a 402 00:22:00,040 --> 00:22:02,920 Speaker 1: problem Indiana. We thank you for listening in Indiana Day, 403 00:22:06,960 --> 00:22:09,720 Speaker 1: Michelle Meyer with us the Bank of America. Michelle, I 404 00:22:10,480 --> 00:22:12,760 Speaker 1: want to rip up the script and do something completely 405 00:22:12,800 --> 00:22:16,600 Speaker 1: different than I normally would. I was thunderstruck. And how 406 00:22:16,640 --> 00:22:22,800 Speaker 1: economists this weekend adjusted the job's report forward aggressively. Usually 407 00:22:22,840 --> 00:22:25,640 Speaker 1: they can gut estimate it or tweak it. What did 408 00:22:25,680 --> 00:22:29,800 Speaker 1: Bank of America do to extrapolate out to May into 409 00:22:29,880 --> 00:22:32,480 Speaker 1: June and even into July. Did you get out well? 410 00:22:32,520 --> 00:22:39,080 Speaker 1: Over is a solid forecast UM, so certainly UM, we 411 00:22:39,080 --> 00:22:42,159 Speaker 1: think the unemployment rate will take up further next month. 412 00:22:42,640 --> 00:22:46,439 Speaker 1: But we think in terms of the rate of job destruction, 413 00:22:46,560 --> 00:22:49,959 Speaker 1: in terms of non time perils, last month was the worst. 414 00:22:50,240 --> 00:22:52,480 Speaker 1: April was by far the worst. So, you know, a 415 00:22:52,560 --> 00:22:55,120 Speaker 1: rough estimate. If you look at how claims are trending 416 00:22:55,200 --> 00:22:57,800 Speaker 1: thus far, which is a really good leading indicator of 417 00:22:57,840 --> 00:23:01,159 Speaker 1: what we're going to see for total job um jobs 418 00:23:01,240 --> 00:23:03,600 Speaker 1: lost in a month, we can see somewhere in the 419 00:23:03,680 --> 00:23:07,240 Speaker 1: order of about you know, six or seven million decline 420 00:23:07,800 --> 00:23:11,360 Speaker 1: in May UM. So if we see that and we assume, 421 00:23:11,600 --> 00:23:14,520 Speaker 1: you know, some kind of trend like labor force participation 422 00:23:14,600 --> 00:23:16,640 Speaker 1: rate numbers leased off of what we had from last month, 423 00:23:16,880 --> 00:23:20,040 Speaker 1: the employmentary probably will take up a bit, probably flirting 424 00:23:20,040 --> 00:23:24,080 Speaker 1: with but I actually don't think we'll get above Michelle. 425 00:23:24,119 --> 00:23:26,359 Speaker 1: Do we have a good understanding now of the depth 426 00:23:26,400 --> 00:23:29,879 Speaker 1: of the downturn to establish forecasts about the shape of 427 00:23:29,880 --> 00:23:32,399 Speaker 1: the recovery, because over the last month we've seen so 428 00:23:32,440 --> 00:23:36,000 Speaker 1: many people willing to look through the current data, and 429 00:23:36,080 --> 00:23:38,400 Speaker 1: what I've grappled with is how can you establish any 430 00:23:38,480 --> 00:23:41,040 Speaker 1: kind of forecast about the future without a deep understanding 431 00:23:41,480 --> 00:23:43,240 Speaker 1: of where we are at the moment the depth of 432 00:23:43,240 --> 00:23:47,400 Speaker 1: the downturn. Yeah. Absolutely So. The way that I've been 433 00:23:47,400 --> 00:23:50,560 Speaker 1: thinking about this is that it's very hopeful to to 434 00:23:51,080 --> 00:23:53,960 Speaker 1: break this into three phases is traject into three phases. 435 00:23:53,960 --> 00:23:57,560 Speaker 1: The first one is the shutdown. It was extremely painful, 436 00:23:58,200 --> 00:24:00,639 Speaker 1: but it is largely over that end in the beginning 437 00:24:00,640 --> 00:24:04,280 Speaker 1: of April UM. The second phase is the transition phase, 438 00:24:04,320 --> 00:24:06,600 Speaker 1: which is when you start to see some reopening, but 439 00:24:06,840 --> 00:24:10,240 Speaker 1: to the shock that started in the consumer multiplies more 440 00:24:10,280 --> 00:24:12,520 Speaker 1: broadly through the economy. In terms of the decline and 441 00:24:12,560 --> 00:24:16,879 Speaker 1: investment decline and housing UM. You just see the ramifications 442 00:24:16,880 --> 00:24:21,440 Speaker 1: of this aggressive amount of job destruction and consumer spending decline. UM. 443 00:24:21,480 --> 00:24:23,240 Speaker 1: That's the phase that we're in right now, this kind 444 00:24:23,240 --> 00:24:25,280 Speaker 1: of transition period. And then the third phase is the 445 00:24:25,320 --> 00:24:29,000 Speaker 1: recovery UM, and that's really the most uncertain and that's 446 00:24:29,000 --> 00:24:31,560 Speaker 1: where you can have, you know, quite a number of 447 00:24:31,600 --> 00:24:36,000 Speaker 1: different scenarios, largely dependent on the detectory of the buyers. Michelle, 448 00:24:36,000 --> 00:24:39,920 Speaker 1: I'm struck by the disparity and who got hit hardest 449 00:24:40,359 --> 00:24:43,159 Speaker 1: so far. It is the most vulnerable workers. It is 450 00:24:43,160 --> 00:24:45,720 Speaker 1: the people with the least education, in the lowest wages, 451 00:24:46,119 --> 00:24:49,000 Speaker 1: wiping out a lot of the job gains. Uh, you know, 452 00:24:49,040 --> 00:24:53,120 Speaker 1: both in a substantive as well as a quantitative determination 453 00:24:53,240 --> 00:24:56,560 Speaker 1: since the beginning of the last crisis. I'm wondering how 454 00:24:56,680 --> 00:24:59,720 Speaker 1: much that's going to color the recovery. In other words, 455 00:24:59,760 --> 00:25:02,919 Speaker 1: what are the longer term consequences of the fact that 456 00:25:03,080 --> 00:25:09,359 Speaker 1: the most vulnerable populations are getting slammed harder than anybody else. Sure, so, 457 00:25:09,400 --> 00:25:12,160 Speaker 1: I mean, if you look at the breakdown of job 458 00:25:12,200 --> 00:25:15,920 Speaker 1: lost between last two months, was in leisure and hospitality 459 00:25:15,960 --> 00:25:17,879 Speaker 1: and least it to your point, those are workers that 460 00:25:17,920 --> 00:25:21,000 Speaker 1: tend to earn less, the more considered lower skilled, lower 461 00:25:21,000 --> 00:25:24,040 Speaker 1: wage workers. Um. So, with the ramifications, if you assume 462 00:25:24,080 --> 00:25:25,800 Speaker 1: that leisure and hospitality is going to take a whole 463 00:25:25,840 --> 00:25:28,159 Speaker 1: lot of time to come back, and it may not 464 00:25:28,480 --> 00:25:30,600 Speaker 1: ever return to the pre COVID levels given some of 465 00:25:30,600 --> 00:25:34,120 Speaker 1: these structural changes that were likely to see an economy 466 00:25:34,119 --> 00:25:37,879 Speaker 1: as people learn from this pandemic experience, UM, we're going 467 00:25:37,920 --> 00:25:41,160 Speaker 1: to have to do a lot of job retool train, 468 00:25:41,320 --> 00:25:44,200 Speaker 1: you know, retooling, job training, figuring out how to redeploy 469 00:25:44,280 --> 00:25:46,600 Speaker 1: this labor and it could end up being that you 470 00:25:46,640 --> 00:25:48,440 Speaker 1: have a lot of workers or a portion of a 471 00:25:48,480 --> 00:25:52,840 Speaker 1: labor force that are somewhat displaced until they can figure 472 00:25:52,880 --> 00:25:55,240 Speaker 1: out how to get back in with a new skill set. 473 00:25:55,240 --> 00:25:57,200 Speaker 1: It was somewhat akin to what we had seen during 474 00:25:57,240 --> 00:26:00,520 Speaker 1: the housing creasis when you had a large portion of 475 00:26:00,640 --> 00:26:03,080 Speaker 1: construction workers that were displaced for a period of time 476 00:26:03,119 --> 00:26:07,720 Speaker 1: given the nature of that shock. Um so, yes, well, 477 00:26:07,760 --> 00:26:10,479 Speaker 1: so people are focusing on this and saying the higher 478 00:26:10,560 --> 00:26:15,399 Speaker 1: paid jobs are remaining intact. I'm just wondering how worried 479 00:26:15,440 --> 00:26:18,800 Speaker 1: are you about a second wave of job cuts that 480 00:26:19,080 --> 00:26:23,040 Speaker 1: some people are talking about in the higher earning brackets 481 00:26:23,040 --> 00:26:26,880 Speaker 1: as this goes on. Yeah, I mean, you know, it's interesting. Yes, 482 00:26:26,920 --> 00:26:29,399 Speaker 1: the pain was driven in the lower end of the 483 00:26:29,600 --> 00:26:32,720 Speaker 1: of the income spectrum, but it's broad based. When we 484 00:26:32,760 --> 00:26:36,920 Speaker 1: have this degree of job cuts, it is across every industry. 485 00:26:37,560 --> 00:26:40,040 Speaker 1: The industry is and the last jobs report saw some 486 00:26:40,280 --> 00:26:42,960 Speaker 1: time jobs. Ten per cent of the job last and 487 00:26:43,040 --> 00:26:45,480 Speaker 1: last two months was in professional and business category, which 488 00:26:45,480 --> 00:26:48,520 Speaker 1: is a pretty broad category, including many high school jobs. 489 00:26:49,000 --> 00:26:52,639 Speaker 1: Um So, so I would argue that already is somewhat 490 00:26:52,880 --> 00:26:55,200 Speaker 1: broad based, just given a nature of of the number 491 00:26:55,240 --> 00:26:58,440 Speaker 1: of jobs that were lost. But to your point, yes, 492 00:26:58,640 --> 00:27:02,240 Speaker 1: you know, the initial shot was in the COVID sensitive sectors, lease, 493 00:27:02,280 --> 00:27:06,959 Speaker 1: your hospitality, retail. As you know, you see this recession 494 00:27:07,440 --> 00:27:09,960 Speaker 1: multiply and kind of work its way through the economy 495 00:27:10,000 --> 00:27:12,800 Speaker 1: and and having to be a function of the income laws, 496 00:27:12,800 --> 00:27:15,679 Speaker 1: people not spending as much, companies realizing the challenges that 497 00:27:15,760 --> 00:27:20,159 Speaker 1: lie had. You could see um you know, continued job jobs, 498 00:27:20,320 --> 00:27:24,919 Speaker 1: jobs cut, and that would be more the typical recessionary response. Right. 499 00:27:24,960 --> 00:27:27,840 Speaker 1: The first order was the lockdown, the extreme loss. That 500 00:27:27,920 --> 00:27:31,359 Speaker 1: second order is more that typical multiplier. What's the first 501 00:27:31,400 --> 00:27:35,360 Speaker 1: and second order of the price of a home I mean, Michelle, 502 00:27:35,440 --> 00:27:38,119 Speaker 1: this is your claim to fame. Tell us what you 503 00:27:38,280 --> 00:27:42,480 Speaker 1: expect in the housing market nationwide and for that matter, 504 00:27:42,520 --> 00:27:44,600 Speaker 1: in the three zip codes we live in in New York. 505 00:27:44,720 --> 00:27:50,800 Speaker 1: I mean, do you just assume housing prices decline? So housing, 506 00:27:50,840 --> 00:27:53,840 Speaker 1: to me is very interesting in this cycle because, um, 507 00:27:53,880 --> 00:27:56,320 Speaker 1: it is highly unlike what we had seen in the 508 00:27:56,400 --> 00:28:00,119 Speaker 1: last cycle. So housing this time around is the victim, 509 00:28:00,119 --> 00:28:03,840 Speaker 1: it is not the culpriate. UM. Housing will weaken in 510 00:28:03,920 --> 00:28:07,320 Speaker 1: my view, as a result of the extreme declient and 511 00:28:07,400 --> 00:28:10,760 Speaker 1: economic activity and the income loss and the job loss UM. 512 00:28:10,840 --> 00:28:14,760 Speaker 1: But because the housing market enter this cycle without very 513 00:28:14,880 --> 00:28:18,600 Speaker 1: much excess, mostly that you know, excess in terms of 514 00:28:19,160 --> 00:28:24,480 Speaker 1: housing stock and excess in terms of leverage UM, it's 515 00:28:24,520 --> 00:28:28,320 Speaker 1: not nearly as vulnerable to a correction. UM. And on 516 00:28:28,359 --> 00:28:31,520 Speaker 1: top of that, you've seen a government response already pretty 517 00:28:31,520 --> 00:28:34,800 Speaker 1: aggressive in terms of trying to um underpinn the housing 518 00:28:34,840 --> 00:28:38,200 Speaker 1: market with forbearance plans UM, so that the Fannie Freddy 519 00:28:38,440 --> 00:28:42,920 Speaker 1: mortgage holders can take forbearance uptil months. That makes um 520 00:28:43,000 --> 00:28:46,800 Speaker 1: the rate of foreclosures much much lower. UM. So all 521 00:28:46,840 --> 00:28:50,080 Speaker 1: that being said, I think that housing will soften certainly, 522 00:28:50,120 --> 00:28:53,760 Speaker 1: home sales falling sharply already housing starts are going to 523 00:28:53,760 --> 00:28:56,840 Speaker 1: fall very sharply. You can see those numbers down fifty 524 00:28:56,520 --> 00:29:01,200 Speaker 1: six from the peak given a sixth UM. But once 525 00:29:01,240 --> 00:29:03,920 Speaker 1: you start to see some recovery come back, those numbers 526 00:29:03,960 --> 00:29:06,200 Speaker 1: will come back quickly as well. Um. So it's very 527 00:29:06,280 --> 00:29:10,800 Speaker 1: much going to follow the broader cycle for home prices nationally. 528 00:29:10,800 --> 00:29:13,600 Speaker 1: We're looking for, you know, somewhere on two or three 529 00:29:14,040 --> 00:29:16,320 Speaker 1: to client on a year of your basis with very 530 00:29:16,400 --> 00:29:19,560 Speaker 1: deep biplications in the market. So if you're in big 531 00:29:19,680 --> 00:29:24,840 Speaker 1: urban centers, clearly the outlook looks more problematic. Um. If 532 00:29:24,880 --> 00:29:28,520 Speaker 1: you're more in the suburbs, let me let me translate 533 00:29:28,560 --> 00:29:31,800 Speaker 1: that for you. What Michelle saying is at three bedroom 534 00:29:32,240 --> 00:29:35,960 Speaker 1: four best thing you're looking at over right with the 535 00:29:36,080 --> 00:29:43,760 Speaker 1: view terrace a gym. I'm sure we don't have that. 536 00:29:43,800 --> 00:29:45,600 Speaker 1: You know, every time Michelle comes on, she preps for 537 00:29:45,640 --> 00:29:47,400 Speaker 1: housing because she knows you're going to ask her back 538 00:29:48,320 --> 00:29:54,600 Speaker 1: every single best. I know you do, I know you 539 00:29:54,680 --> 00:29:56,840 Speaker 1: do before we run things out. Can this be the 540 00:29:56,920 --> 00:30:02,240 Speaker 1: quarter that we stop annuallyzing g D p um No, 541 00:30:02,520 --> 00:30:05,560 Speaker 1: because then you won't get these these extreme numbers if 542 00:30:05,560 --> 00:30:08,480 Speaker 1: you I mean, how useful is that to annualize GDP 543 00:30:08,600 --> 00:30:11,239 Speaker 1: in a moment like this, Look, I think you just 544 00:30:11,280 --> 00:30:13,720 Speaker 1: have to. I think you continue to annualize it because 545 00:30:13,760 --> 00:30:16,920 Speaker 1: that's the way we always look historically at GDP, and 546 00:30:16,920 --> 00:30:18,480 Speaker 1: the reason it starts you would do that is because 547 00:30:18,480 --> 00:30:20,440 Speaker 1: otherwise you end up getting these very small numbers if 548 00:30:20,480 --> 00:30:24,720 Speaker 1: you don't annualize it. So annualizing of the trend obviously 549 00:30:24,760 --> 00:30:29,200 Speaker 1: today annualizing you get these aggressively large numbers. Um So, 550 00:30:29,320 --> 00:30:31,440 Speaker 1: to me, it's important to put these numbers into perspective. 551 00:30:31,480 --> 00:30:33,640 Speaker 1: Let's say we get a thirty percent annualize the clients 552 00:30:33,760 --> 00:30:35,960 Speaker 1: talk about it in terms of the quote unquote annualize, 553 00:30:35,960 --> 00:30:38,480 Speaker 1: talk about it just the quote unquote change on annuals. 554 00:30:38,480 --> 00:30:40,200 Speaker 1: Talk about in terms of the year and your change. 555 00:30:40,800 --> 00:30:42,680 Speaker 1: Just look at a variety of indicators. In my view, 556 00:30:43,160 --> 00:30:44,520 Speaker 1: what are you looking at late in the week. One 557 00:30:44,520 --> 00:30:48,160 Speaker 1: more question, Michelle not on housing retail sales claims, Which 558 00:30:48,200 --> 00:30:52,080 Speaker 1: matters the most, Which is the most valuable? Um So, 559 00:30:52,160 --> 00:30:55,160 Speaker 1: I would say, you know, claims continue to be really 560 00:30:55,240 --> 00:30:57,160 Speaker 1: high up on the list in terms of being able 561 00:30:57,200 --> 00:31:01,800 Speaker 1: to track UM the trajectory for for the labor market 562 00:31:02,240 --> 00:31:05,480 Speaker 1: UM and we have been seeing a pretty steady deceleration 563 00:31:05,520 --> 00:31:07,080 Speaker 1: in the rate of claims, which is quite nice that 564 00:31:07,120 --> 00:31:12,120 Speaker 1: we're looking for two point eight million, obviously aggressively high UM, 565 00:31:12,160 --> 00:31:15,120 Speaker 1: but you know it is coming down and it's readily 566 00:31:15,160 --> 00:31:17,040 Speaker 1: coming down front the peak, which shows you that healing 567 00:31:17,080 --> 00:31:21,040 Speaker 1: in the economy, although you know amount of stealing only UM. 568 00:31:21,120 --> 00:31:23,760 Speaker 1: The retail sales numbers obviously very important as well. That 569 00:31:23,760 --> 00:31:25,320 Speaker 1: would be for the month of April. We already saw 570 00:31:25,360 --> 00:31:28,960 Speaker 1: a pretty sharp, sharp decline in March. Now is the 571 00:31:28,960 --> 00:31:31,160 Speaker 1: March numbers were driven just from the left two weeks 572 00:31:31,160 --> 00:31:34,479 Speaker 1: of March falling dramatically, so the hands off into April 573 00:31:34,640 --> 00:31:37,760 Speaker 1: is really really poor and that's going to bring retail 574 00:31:37,760 --> 00:31:40,160 Speaker 1: sales down as well. So expected pretty ugly number there. 575 00:31:40,920 --> 00:31:42,840 Speaker 1: Michelle always writes to catch up with you, thanks for 576 00:31:42,920 --> 00:31:50,120 Speaker 1: jointing us on housing market and the broader economy. Right now, 577 00:31:50,200 --> 00:31:53,840 Speaker 1: we want to really nail down what everyone's talking about, 578 00:31:53,920 --> 00:31:57,680 Speaker 1: and that is, of course reflation. The idea of aggressively 579 00:31:57,840 --> 00:32:02,040 Speaker 1: imputing a new inflation is sore of arbitrary. It's really 580 00:32:02,040 --> 00:32:05,400 Speaker 1: not in the economic textbooks. Then there's inflation, which we 581 00:32:05,480 --> 00:32:09,200 Speaker 1: all know we've all lived, and then there's lesser inflation 582 00:32:10,120 --> 00:32:13,440 Speaker 1: that's called disinflation d I s and then there's this 583 00:32:13,520 --> 00:32:17,720 Speaker 1: gloomy thing from Europe and another time pass early Eisenhower 584 00:32:18,360 --> 00:32:24,080 Speaker 1: outright price declined deflation. No one owns this territory like 585 00:32:24,160 --> 00:32:27,320 Speaker 1: Gary Shilling. We're thrilled to Dr Shilling could join us 586 00:32:27,760 --> 00:32:32,600 Speaker 1: right now writing his wonderful newsletter. Gary, you said there's 587 00:32:32,640 --> 00:32:36,960 Speaker 1: good and bad deflation in the pandemic. Is there good 588 00:32:37,040 --> 00:32:42,280 Speaker 1: or bad disinflation and good and bad deflation? Well, good 589 00:32:42,560 --> 00:32:45,840 Speaker 1: good inflation is like you've had in times of tremendous 590 00:32:45,840 --> 00:32:50,360 Speaker 1: productivity growth that happened in the latter part of the 591 00:32:50,440 --> 00:32:53,800 Speaker 1: nineteenth century and again actually in the nineteen twenties when 592 00:32:54,040 --> 00:32:59,840 Speaker 1: basically supply outruns demand and so prices decline. Bad deflations 593 00:32:59,840 --> 00:33:03,280 Speaker 1: were out where demand is destroyed, demand goes down more 594 00:33:03,320 --> 00:33:06,440 Speaker 1: than supply. And I think now we're more in the ladder, 595 00:33:06,440 --> 00:33:10,840 Speaker 1: We're more in the bad deflation because we're the supply, 596 00:33:11,440 --> 00:33:14,840 Speaker 1: particularly in a global basis, has not used that much, 597 00:33:15,200 --> 00:33:17,880 Speaker 1: but demand certainly has dried up, at least for now. 598 00:33:18,240 --> 00:33:22,600 Speaker 1: With all the monetary central bank and fiscal action and 599 00:33:22,680 --> 00:33:26,680 Speaker 1: even more action to come that we've seen. Does that 600 00:33:26,960 --> 00:33:31,480 Speaker 1: exacerbate these price change moves? Does it make for a 601 00:33:31,640 --> 00:33:37,720 Speaker 1: greater disinflation. Um, well, I I don't know if it 602 00:33:37,840 --> 00:33:40,200 Speaker 1: if it if it does that, Tom, but it's it 603 00:33:40,320 --> 00:33:44,760 Speaker 1: certainly is disruptive. And you know, I think you have 604 00:33:44,920 --> 00:33:48,520 Speaker 1: to you have to consider that all this, all this 605 00:33:48,640 --> 00:33:52,960 Speaker 1: monetary and fiscal stimuli is really not doing that much. 606 00:33:53,000 --> 00:33:55,719 Speaker 1: I mean, you look back and what happened after the 607 00:33:55,760 --> 00:33:59,360 Speaker 1: oceanal On nine recession. That said, uh, when into massive 608 00:33:59,680 --> 00:34:03,400 Speaker 1: quant a cative quantitative ease, and what happened. We had 609 00:34:03,440 --> 00:34:06,720 Speaker 1: the slowest economic recovery in the post war period. Yeah, 610 00:34:06,760 --> 00:34:09,720 Speaker 1: the money went into stocked, but it didn't go into 611 00:34:09,800 --> 00:34:12,640 Speaker 1: spending and investing. And I think you have the same 612 00:34:12,680 --> 00:34:16,439 Speaker 1: thing now. We also had massive fiscal stimulus back then. 613 00:34:17,160 --> 00:34:21,240 Speaker 1: So you know these uh, you're fighting against tremendous forces. 614 00:34:21,320 --> 00:34:24,040 Speaker 1: I think we're I think we're dealing with the we're 615 00:34:24,080 --> 00:34:27,240 Speaker 1: the greatest shock to the world's economy since World War Two, 616 00:34:27,640 --> 00:34:30,359 Speaker 1: and in terms of disruption and the length of time 617 00:34:30,400 --> 00:34:32,960 Speaker 1: it's going to take to get re oriented. Garry, That's 618 00:34:32,960 --> 00:34:36,680 Speaker 1: exactly where I wanted to go, especially given your credentials 619 00:34:36,800 --> 00:34:39,560 Speaker 1: as one of the top ranked economists out there by 620 00:34:39,560 --> 00:34:42,800 Speaker 1: a number of places. You wrote in a recent column 621 00:34:42,840 --> 00:34:45,800 Speaker 1: for Bloomberg opinion that you think that people are getting 622 00:34:45,800 --> 00:34:47,919 Speaker 1: a little ahead of themselves and that were headed toward 623 00:34:48,320 --> 00:34:51,680 Speaker 1: something more akin to the market crash in the early 624 00:34:51,719 --> 00:34:56,359 Speaker 1: nineteen thirties Great depression. Where are so many economists I'm 625 00:34:56,360 --> 00:34:59,759 Speaker 1: thinking of some houses Morgan Stanley, Goldman Sacks that are 626 00:34:59,760 --> 00:35:02,319 Speaker 1: looking for a U shape recovery or even a V 627 00:35:02,440 --> 00:35:05,600 Speaker 1: shaped recovery, saying that we're going to see a big 628 00:35:05,760 --> 00:35:09,320 Speaker 1: rebound in the latter half of Where are they wrong 629 00:35:09,440 --> 00:35:14,360 Speaker 1: in your view? Well, I think they're They're They're likely 630 00:35:14,440 --> 00:35:18,800 Speaker 1: air is that they are assuming that business and consumer 631 00:35:18,880 --> 00:35:22,319 Speaker 1: spending revive a lot faster than I think. Uh, if 632 00:35:22,400 --> 00:35:25,840 Speaker 1: you've had the disruption to supply change, you've had a 633 00:35:25,920 --> 00:35:29,719 Speaker 1: whole change in the way people behave. Yeah, Okay, people 634 00:35:29,760 --> 00:35:31,759 Speaker 1: aren't going to stay at home forever, but I think 635 00:35:31,760 --> 00:35:34,799 Speaker 1: they're going to be a lot less likely to come out. 636 00:35:35,200 --> 00:35:37,840 Speaker 1: We don't have anything like a vaccine that's going to 637 00:35:37,920 --> 00:35:40,920 Speaker 1: ensure people that they're not going to get uh COVID 638 00:35:41,040 --> 00:35:43,680 Speaker 1: nineteen when they do go out. And and of course, 639 00:35:43,719 --> 00:35:46,080 Speaker 1: when you look at the disruption of supply change and 640 00:35:46,120 --> 00:35:49,120 Speaker 1: the realization that we were relying on China for a 641 00:35:49,160 --> 00:35:52,239 Speaker 1: lot of basic pharmaceuticals and so on. To work all 642 00:35:52,280 --> 00:35:56,560 Speaker 1: this out and expect a V is unlikely. And also, uh, 643 00:35:57,440 --> 00:35:59,960 Speaker 1: at least the history is that any time you've had 644 00:36:00,040 --> 00:36:05,680 Speaker 1: over decline in the stock market, Uh, it's it's never 645 00:36:05,840 --> 00:36:09,880 Speaker 1: ended in less than six months. Uh, that's history. Doesn't 646 00:36:09,920 --> 00:36:12,319 Speaker 1: mean it can't be a V this time, but I 647 00:36:12,360 --> 00:36:14,640 Speaker 1: think it's highly unlikely. Well, what do you say to 648 00:36:14,680 --> 00:36:18,520 Speaker 1: the arguments that this time the fiscal and monetary response 649 00:36:18,560 --> 00:36:21,920 Speaker 1: has been unprecedented, both in its scope and its speed. 650 00:36:22,600 --> 00:36:27,200 Speaker 1: Does that change the equation? Well, it might, but it 651 00:36:27,360 --> 00:36:30,160 Speaker 1: I just mentioned we had the same thing in response 652 00:36:30,239 --> 00:36:34,840 Speaker 1: to the Great Recession, the only seven oh nine decline, 653 00:36:34,880 --> 00:36:38,800 Speaker 1: your massive that the FED and other central banks not 654 00:36:38,960 --> 00:36:43,279 Speaker 1: to race down to zero, then massive quantitative easing. Then 655 00:36:43,320 --> 00:36:46,239 Speaker 1: we had fiscal stimuli that was the extent of six 656 00:36:46,320 --> 00:36:49,399 Speaker 1: percent of g d P. Yes, things are bigger this time, 657 00:36:49,440 --> 00:36:51,480 Speaker 1: but this is a bigger shock. Bear in mind back then, 658 00:36:52,040 --> 00:36:55,400 Speaker 1: but that was a shock to housing. But people's lives 659 00:36:55,400 --> 00:36:57,880 Speaker 1: were not disrupted. Now, of course, if you were somebody 660 00:36:57,880 --> 00:37:00,520 Speaker 1: who was way on the limb with a shut mortgage, 661 00:37:00,520 --> 00:37:02,560 Speaker 1: who are in trouble, But most people have had a 662 00:37:02,600 --> 00:37:05,799 Speaker 1: little in fact, but this, this affects everybody. So to 663 00:37:05,840 --> 00:37:08,879 Speaker 1: say that you've had much more monitoring postal Sami, Yeah, 664 00:37:08,880 --> 00:37:11,800 Speaker 1: but you've had a much greater problem. And in my judgment, 665 00:37:11,960 --> 00:37:15,040 Speaker 1: it still does not simply that things are going to 666 00:37:15,080 --> 00:37:18,080 Speaker 1: turn around on a dime. Gary showing, Thank you so much, 667 00:37:18,120 --> 00:37:20,960 Speaker 1: Gary showing with Gary showing. And of course it is wonderful, 668 00:37:21,520 --> 00:37:25,359 Speaker 1: uh lengthy, I should say newsletter almost a monograph when 669 00:37:25,360 --> 00:37:31,200 Speaker 1: he puts it out right here we speak at the 670 00:37:31,280 --> 00:37:34,759 Speaker 1: Johns Hopkins University there Bloomberg School of Public Health, and 671 00:37:34,800 --> 00:37:38,160 Speaker 1: of course that is Michael Bloomberg, the founder of Bloomberg LP, 672 00:37:38,320 --> 00:37:42,200 Speaker 1: this radio and television operation, as well his philanthropy to 673 00:37:42,360 --> 00:37:46,160 Speaker 1: his alma mater and engineering school at Johns Hopkins. But 674 00:37:46,200 --> 00:37:48,799 Speaker 1: it goes much further than that. And one of their 675 00:37:48,880 --> 00:37:53,879 Speaker 1: assets is Joshua Sharfstein. He is Weisstein, and we caught 676 00:37:53,960 --> 00:37:57,279 Speaker 1: up with him on the strange thing called this lockdown. 677 00:37:58,400 --> 00:38:01,439 Speaker 1: The ability to open week health safe depends on more 678 00:38:01,480 --> 00:38:05,000 Speaker 1: than mass and gloves masks. So really, um, you know, 679 00:38:05,680 --> 00:38:09,080 Speaker 1: stop cap measure how well they work isn't really as 680 00:38:09,120 --> 00:38:12,480 Speaker 1: well known as you might think. So the most important 681 00:38:12,480 --> 00:38:15,080 Speaker 1: thing is the ability to stay away from each other 682 00:38:15,200 --> 00:38:20,520 Speaker 1: physically have areas between people, particularly like a cash registers 683 00:38:20,560 --> 00:38:24,360 Speaker 1: that would prevent goplets from spreading better than a mask 684 00:38:24,560 --> 00:38:27,799 Speaker 1: or so. I think it's possible in some areas to 685 00:38:27,880 --> 00:38:32,799 Speaker 1: do that. Um as cages coming are coming down as 686 00:38:32,800 --> 00:38:35,799 Speaker 1: we have more public health measures and plays as the 687 00:38:35,880 --> 00:38:38,480 Speaker 1: hospitals is doing better. But it has to be done 688 00:38:38,560 --> 00:38:41,120 Speaker 1: very carefully, and it's not if you just wear a 689 00:38:41,239 --> 00:38:43,919 Speaker 1: mask and gloves. Too good to go, Josh, how does 690 00:38:43,960 --> 00:38:47,279 Speaker 1: contact tracing work? Is it the most effective tool we 691 00:38:47,320 --> 00:38:50,040 Speaker 1: have right now? It is a really critical tool. And 692 00:38:50,120 --> 00:38:53,359 Speaker 1: the idea is we want to stop the virus from 693 00:38:53,400 --> 00:38:57,080 Speaker 1: steading from person to person without having to tell everyone 694 00:38:57,160 --> 00:39:00,319 Speaker 1: to go home and stay at home. Until you do. 695 00:39:00,480 --> 00:39:04,759 Speaker 1: Is you find someone who has the coronavirus, maybe they 696 00:39:04,840 --> 00:39:07,239 Speaker 1: got to have a test and they're positive. You call 697 00:39:07,320 --> 00:39:09,840 Speaker 1: them right away. You find out who they've been in 698 00:39:09,960 --> 00:39:14,399 Speaker 1: contact with during their infectious period, which is a couple 699 00:39:14,400 --> 00:39:19,719 Speaker 1: of days before they started symptoms, and then quick you 700 00:39:19,800 --> 00:39:22,239 Speaker 1: call them. You tell them that they may have been 701 00:39:22,280 --> 00:39:25,440 Speaker 1: exposed and that they should coins and themselves so that 702 00:39:25,520 --> 00:39:28,520 Speaker 1: when faith start getting infectious there's nobody for them to 703 00:39:28,560 --> 00:39:32,520 Speaker 1: give it to. That's the basic idea and it requires 704 00:39:32,760 --> 00:39:34,720 Speaker 1: a lot of people to do, and in New York 705 00:39:34,800 --> 00:39:38,279 Speaker 1: is planning to hire something like the thousand people. But 706 00:39:38,400 --> 00:39:41,000 Speaker 1: if you can do it, and even if it's not perfect, 707 00:39:41,360 --> 00:39:44,600 Speaker 1: you can really slow the spread of the virus. Joshua Chefs, 708 00:39:44,760 --> 00:39:47,640 Speaker 1: you know, the Johns Hopkins at University givings an update 709 00:39:47,680 --> 00:39:50,120 Speaker 1: and we'll do that through the week as well. Thanks 710 00:39:50,160 --> 00:39:54,400 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 711 00:39:54,640 --> 00:39:59,920 Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform 712 00:40:00,080 --> 00:40:04,320 Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast. 713 00:40:04,440 --> 00:40:07,920 Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio.