Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily
Speaker 1: we bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com and of course on the Bloomberg Right
Speaker 1: Now on fixed income and really framing in a global
Speaker 1: macro strategy. At Morgan Stanley is Matthew Hornback, and he
Speaker 1: joins us on this day of election results, this day
Speaker 1: of plans for COVID, and this day of a jump
Speaker 1: condition in the market. Matt, let's go back to Vasser
Speaker 1: economics where you had to define a jump condition. Is
Speaker 1: this a jump condition? Tom, Thanks for having me on.
Speaker 1: This is clearly an important day for the world. Um,
Speaker 1: you know, it's we still have some way to job right.
Speaker 1: I mean, we still have to get the vaccine further tested.
Speaker 1: It has to be distributed around the world. Uh, And
Speaker 1: so it's that we're still not out of the woods yet,
Speaker 1: but certainly a bright day for the globe. And I
Speaker 1: think you can see this playing out very clearly in
Speaker 1: markets that you've just discussed. So, um, you know, we
Speaker 1: think that there is also an important underlying backdrop to
Speaker 1: all of this time, which is the amount of central
Speaker 1: bank liquidity that is being pumped into the system on
Speaker 1: a monthly basis, and we expect to continue throughout the
Speaker 1: entirety of next year. So a tremendous day for the world,
Speaker 1: and I think next year looks looks to be a
Speaker 1: bright one. Matt. What does a bond market look like
Speaker 1: with a vaccine? Are we looking at a one percent
Speaker 1: tenure more? Lisa? We you know, we do think that
Speaker 1: that yields are going to be angled higher over the
Speaker 1: course of the coming year. Uh. You know, we have
Speaker 1: recently been very barished on the treasury market. It's a rare,
Speaker 1: rare day for me to be barished on the treasury market,
Speaker 1: but we have been barished up until this point. You
Speaker 1: do think that there is good scope for the curve
Speaker 1: to steep in further, and clearly today as a day
Speaker 1: in which you'll see the treasury curve continue to move steeper. So, um,
Speaker 1: we think a treasury market with a vaccine is one
Speaker 1: where the Fed is going to slow play it for sure.
Speaker 1: That's going to prevent intermediate yields from rising too much.
Speaker 1: But the back end of the yield curve should be
Speaker 1: lifted higher, especially as great even inflation rates continue to expand. So, Matt,
Speaker 1: here's the story for me. We know what the world
Speaker 1: looks like with a vaccine because we know what the
Speaker 1: world looks like without COVID nineteen, and treasury yields didn't
Speaker 1: exactly get away from them south back then either, And
Speaker 1: most people might make the argument this morning, the looking
Speaker 1: gut over the next several years, in with COVID nineteen
Speaker 1: under control, trend growth could while still be lower, inflation
Speaker 1: could while still below, and rates we might not see
Speaker 1: a recovery in Europe once again, that justifies a right hike.
Speaker 1: So Matt, what would your response to that be? Why
Speaker 1: would a cycle recover free with a vaccine be any
Speaker 1: difference to what we saw in the previous ten years
Speaker 1: when we didn't even have COVID night see John. I
Speaker 1: think the answer here ultimately comes down to central bank
Speaker 1: monetary policy strategy, and what we've seen from these central
Speaker 1: banks is that they're willing to keep interest rates much
Speaker 1: lower for longer. I mean, we've been using that phrase
Speaker 1: for over a decade now, so why not continue to
Speaker 1: use it. But we do think that these new monetary
Speaker 1: policy strategies are going to end up weighing on the
Speaker 1: equilibrium level of long term interest rates, the equilibrium level
Speaker 1: of the yield current um. I mean everything is going
Speaker 1: to be lower and flatter for longer. That doesn't mean
Speaker 1: that yields are going to stay low in perpetuity, but
Speaker 1: it does mean that the equilibrium levels are coming down. John,
Speaker 1: do you assume that, Matt, that the previous peake on
Speaker 1: a tenure yield of the previous psycho just won't be
Speaker 1: achieved again. I think it's going to be a long
Speaker 1: time before we see a three and a quarter percent
Speaker 1: tenure deal, which bear in mind, occurred really on the
Speaker 1: back of a communication FOCA, which is in general terms,
Speaker 1: you know, when you ever you see interest rates move
Speaker 1: higher very quickly to really unsustainable levels, it typically occurs
Speaker 1: on the back of a communications or right. We saw
Speaker 1: that in two thousand and thirteen, We saw that at
Speaker 1: the end of two thousand and eighteen. So, you know,
Speaker 1: we think that central bankers have have learned this less
Speaker 1: than time and time again. They may have to learn
Speaker 1: it again, John, but I think for the time being,
Speaker 1: these new monetary policy frameworks are going to really try
Speaker 1: to anchor those rate expectations much lower than ever before. Man,
Speaker 1: I want you to channel one, Michael Wilson. You talk
Speaker 1: about frameworks. Does this equity market frame the forecast or
Speaker 1: the expectation for revenue growth and earnings growth? Well, Tom,
Speaker 1: we we've been long term bowls here on on the
Speaker 1: equity market. Mike Wilson, I'm sure would would be the
Speaker 1: first to admit that, you know, when you come to
Speaker 1: these recent corrections, which he's called absolutely correctly, Um, you know,
Speaker 1: it does suggest that you know, his longer term view,
Speaker 1: which is very bullish, is very very likely going to
Speaker 1: play out, especially in a world where consumer activity is
Speaker 1: going to get back on track, hopefully sooner rather than later.
Speaker 1: That the economic data in the US and around the world,
Speaker 1: safe for Europe of course, has been robust. Uh. And
Speaker 1: so yes, this long term bullishness that Mike Wilson talks about, Uh,
Speaker 1: we we're going to continue to to to aim in
Speaker 1: that direction and we think that we will hit those
Speaker 1: targets next year. Right now, a lot of people are
Speaker 1: looking at credit versus stock, some people saying stocks hold
Speaker 1: the most potential for possible upside. Others I believe Morgan
Speaker 1: Stanley seeing credit is a possible brighter spot going forward.
Speaker 1: What does the vaccine that excuse me? The vaccino news,
Speaker 1: it's so exciting, I can't get my words out. Due
Speaker 1: to the prospect of credit outperforming given the fact that
Speaker 1: the FED will have less impetus to keep rates very low, well,
Speaker 1: I mean, you know, so it's not clear to me
Speaker 1: just yet that the impetus from the FED is going
Speaker 1: to change anytime soon. Right. We just went through the
Speaker 1: November fo MC meeting. We're going to have very shortly
Speaker 1: the December FOMC, meaning the FED is going to update
Speaker 1: its DOT. POD's going to include a couple of more
Speaker 1: charts in its in its materials. UM. I highly doubt
Speaker 1: that the media in two thousand and twenty three DOT
Speaker 1: is going to move up. The Fed is going to
Speaker 1: keep policy at zero four probably the entirety of the
Speaker 1: SEP DOT pot at least an expectation. UM. And so
Speaker 1: I don't really think that there's less impetus necessarily, which
Speaker 1: is why the vaccine has the power to really drive
Speaker 1: risk assets higher, credit spreads tighter, the equity market higher,
Speaker 1: emerging market currencies stronger. This is one of our key
Speaker 1: calls right now is that we do think that emerging
Speaker 1: market currencies are going to perform extremely well against the dollar.
Speaker 1: We've beenmbarished on the dollar a yel year and we
Speaker 1: continue to be barished on the dollar. We think this
Speaker 1: liquidity has to find a home in higher yielding assets.
Speaker 1: US corporate credit is obviously going to be one of
Speaker 1: those thesis. So when you talk about emerging markets credit,
Speaker 1: let's go there emerging markets in general, because they are
Speaker 1: flying with stocks and currencies at near record highs, currencies
Speaker 1: at the strongest versus the dollar. Since how much of
Speaker 1: this story is China and how much of this story
Speaker 1: is commodity producing nations Latin America that have been really
Speaker 1: beaten up and underperforming up until now, well, you know,
Speaker 1: we we think we think that this uh you know,
Speaker 1: change in leadership in the United States has the potential
Speaker 1: to help a wide variety of of emerging markets Mexico
Speaker 1: for example, Russia, um and we're also looking at China.
Speaker 1: We we do think that the currency there has further
Speaker 1: scope for appreciation. We like to pare the yuan against
Speaker 1: the Japanese gyain. We think high are you on against
Speaker 1: the end is really the way to play it. But
Speaker 1: in general, we see this loquidity going to a wide
Speaker 1: variety of emerging markets, both in Latin as well as
Speaker 1: in Asia. Uh and and again you know this uh,
Speaker 1: this environment that we're going into hopefully next year with
Speaker 1: the vaccine as soon as is practically in safely possible,
Speaker 1: that's going to have I think a really positive impact
Speaker 1: on a variety of emerging market currencies, credits and rates.
Speaker 1: Matt grant to catch up as otherwise, what am wanting
Speaker 1: for mars at it? Say, Matt home back of Morgan Stanni,
Speaker 1: thank you, sir. Part of it is math. The math
Speaker 1: of medicine. The statistics of medicine is profound. Mercedes Carnathon
Speaker 1: con front of this and the dreaded Stanford statistics program
Speaker 1: a few years ago, and she moved on to an
Speaker 1: esteemed academic career and epidemiology at Northwestern University of Chicago.
Speaker 1: This morning, I should say Evanston, I miss speak. Of course,
Speaker 1: it's not Chicago, it's Evans and professor, wonderful to have
Speaker 1: you with us. If we talk about an efficacy and
Speaker 1: Dr Fauci and others say, hey, if we can only
Speaker 1: get efficacy, is it mission accomplished? You know? Um, I
Speaker 1: am very heartened by the news, particularly since we know
Speaker 1: that these trials were well designed, they were monitored very well,
Speaker 1: and they involved a large number of people. And yes,
Speaker 1: isn't that you'd like to hear. However, that is about
Speaker 1: as effective as any vaccine, and perhaps slightly higher than
Speaker 1: what we see for effectiveness of the flu vaccine, so
Speaker 1: that the majority, the vast majority of cases of people
Speaker 1: who happened to be exposed were reduced when they have
Speaker 1: this vaccine. So I'm I'm feeling very pleased about that.
Speaker 1: So can we fast forward how quickly Dr Carnathon will
Speaker 1: we end up stopping this pandemic base in the data
Speaker 1: that we got today, Well, let's flow our breaks on
Speaker 1: that one. Unfortunately, this isn't going to be a magic
Speaker 1: shot that's going to reverse course from what we need
Speaker 1: to do to slow the spread, because there's going to
Speaker 1: be a phased rollout of this vaccine. It's availability, even
Speaker 1: with the claims of Operation Warp speed and involving the
Speaker 1: army to help distribute it. We have to have a
Speaker 1: priority list of those who are protecting us, those who
Speaker 1: are helping us get along in society, and those who
Speaker 1: are educating us. So those are the essential worker categories
Speaker 1: who need to receive the vaccine first before it goes
Speaker 1: to the broader population, Professor, is the distribution that I'm
Speaker 1: really interested in. Let's assume and let's hope this goes
Speaker 1: forward and it is conclusive. Then let's talk about distribution
Speaker 1: and the transition peered between two governments that is set
Speaker 1: to take place over the next three months. How closely
Speaker 1: will find a have to work with the government to
Speaker 1: make sure the people who need this get this and quickly. Yes,
Speaker 1: you know, I'm very pleased that what I've heard from
Speaker 1: President elect Joe Biden is that he has already appointed
Speaker 1: a coronavirus task Force filled with professionals, with medical experts,
Speaker 1: with public health experts, and so I do believe he
Speaker 1: will be ready to launch this distribution plan. There is
Speaker 1: already a priority list of essential workers, nursing home residents,
Speaker 1: other people in um congregate settings, including prisons, who are
Speaker 1: at the highest risk for capturing this, and so I
Speaker 1: do believe that there is a plan in place. There
Speaker 1: have been national academies who have contributed to this plan,
Speaker 1: and so I do think that the government is going
Speaker 1: to be ready to roll this out right away. Professor.
Speaker 1: When I look at immunological memory. It reminds me of
Speaker 1: the dreaded booster shots of my youth. John and Lisa,
Speaker 1: I have no idea what I'm talking about, But folks,
Speaker 1: you'd have to go back and back and back to
Speaker 1: get booster shots on tetanus, on the Bacterium de theoria.
Speaker 1: But what about on vexi on viruses. Do you just
Speaker 1: assume we're all going to have booster shots until the
Speaker 1: tots win. We may end up we may end up
Speaker 1: needing to have repeated shots. One thing that's not clear,
Speaker 1: because we're so early on in this pandemic, is how
Speaker 1: long one maintains those antibodies that you either get from
Speaker 1: contracting the illness or that you develop from a vaccine.
Speaker 1: We don't know how long those antibodies will last. We
Speaker 1: also don't know whether the coronavirus will adapt itself so
Speaker 1: that it can continue to be inspectious. Now, that's one
Speaker 1: of the reasons why we have a flu vaccine every year,
Speaker 1: because it mutates, it changes year to year. We may
Speaker 1: be in that position, but at least where the strong
Speaker 1: starting point with the great vaccine. For right now, I
Speaker 1: will say Tom, we've learned this morning that you are
Speaker 1: very scared of shots because first you're talking about holding
Speaker 1: your hand and then you're talking about the dredg which
Speaker 1: for the record, we still get Professor carnadon us to
Speaker 1: wrap this up in the near term. Coming in this morning,
Speaker 1: before this COVID vaccine news was announced, the discussion really
Speaker 1: was around the worsening wave of COVID around the world
Speaker 1: and the potential for hundreds of thousands of potential additional
Speaker 1: deaths given where we are, given the fact that the
Speaker 1: vaccine news does not change the near term. As John
Speaker 1: has been talking about, what kind of winter months are
Speaker 1: we looking at right now, we're looking at a winter
Speaker 1: that's going to look very similar to our last spring
Speaker 1: here in America. Worldwide, they had their peaks earlier. I
Speaker 1: think we're gonna see governments meeting to step up and
Speaker 1: have rolling shut down, particularly of those businesses and industries
Speaker 1: where we see rapids spread and it happens to be
Speaker 1: the types of places that you would frequent where you
Speaker 1: can't wear a mask, so when you're inside, eating and drinking,
Speaker 1: and we're going to have to adhere to those policies.
Speaker 1: What I'm hopeful we can maintain this time is availability
Speaker 1: of our hospital systems. I'm hopeful that we won't become overwhelmed. However,
Speaker 1: with the rate that these cases are going up, our
Speaker 1: hospitalizations here in Illinois are matching what they were last spring.
Speaker 1: And that's a very scary prospect because we still have
Speaker 1: cardiovasca to these cancers, respiratory illnesses that we would need
Speaker 1: to still treat. Professor, what a time the interview. Thank
Speaker 1: you Tom this morning, Thank you very much. Right now,
Speaker 1: to sort out some of the policy drive forward, Jared
Speaker 1: Sieberg joins us with Cowen and their acclaimed Washington policy
Speaker 1: and Analysis team. Jared, so many different flows, so many
Speaker 1: different smaller elections, smaller issues as well, sort of the debris.
Speaker 1: Who won the election. Oh, I think this is a
Speaker 1: clear victory for the moderate side of the Democratic Party. Uh.
Speaker 1: You had coalition really get behind Joe Biden. Uh, you know.
Speaker 1: I I think you had losses in the House that
Speaker 1: over time are going to be attributed to some of
Speaker 1: the socialist labeling that's associated with some of the more
Speaker 1: radical members of the Democratic Party. And I think as
Speaker 1: we dissect this election, it's going to show that the
Speaker 1: path to national power is still through the more waterrate
Speaker 1: side of the party. And not through the most progressive side. Jerry,
Speaker 1: You're gonna have a lot of Monday morning quarterbacking for
Speaker 1: a very long time with respect to this race. Right
Speaker 1: now that we are moving forward and looking toward a
Speaker 1: pandemic that is worsening, what will the transition between the
Speaker 1: Trump administration and the Biden administration look like? And will
Speaker 1: it be different than what we have seen in the past.
Speaker 1: Is going to be different because we have a g
Speaker 1: s A, which is an obscure government agency that normally
Speaker 1: nobody ever hears of, but g s A gets to
Speaker 1: officially start the transition. It's run by a Trump appointee,
Speaker 1: and at least as of earlier this morning, they still
Speaker 1: have not signaled that the transition is ready to start,
Speaker 1: and it may very well be until mid December until
Speaker 1: that transition starts. So at a time when we are
Speaker 1: perhaps in the greatest part of the COVID nineteen crisis,
Speaker 1: with with cases spiking each day, sitting in a new record,
Speaker 1: this transition maybe four to five weeks behind where it
Speaker 1: should be. Jo It talked to me about the transition
Speaker 1: in a little bit more detail. Michael lewis a fifth risk.
Speaker 1: He wrote beautifully in that in a very short pace
Speaker 1: about how important it is. Can you can communicate to
Speaker 1: our audience who might not be familiar with how much
Speaker 1: work goes into that transition exactly what happens over the
Speaker 1: next three months. Well, you know what's so interesting is
Speaker 1: when you think about the transition from four years ago,
Speaker 1: there almost was no transition. It wasn't that Obama's people
Speaker 1: were unwilling to engage. It's that Trump didn't embrace the transition,
Speaker 1: and they were very late in getting people in. And
Speaker 1: what you saw was it took almost a full year
Speaker 1: before work Team Trump really got control of the regulatory agencies.
Speaker 1: Biden's people understand that you can't waste a year, and
Speaker 1: they're gonna want to get on this much more quickly. Uh.
Speaker 1: The fact that Gary Gensler, who is a former Goldman
Speaker 1: Park partner but also ironically well respected by the progressive
Speaker 1: side of the Democratic parties. Uh, he looks like he's
Speaker 1: going to lead the financial side of the transition, and
Speaker 1: I think that should be widely embraced. You know, he
Speaker 1: could have been Treasury secretary of Hillary Clinton won. He's
Speaker 1: somebody who understands the markets, and as we always say,
Speaker 1: it's better to have people who understand our business leading
Speaker 1: the charge than people who don't geared. Do you see
Speaker 1: the obligatory Republican cabinet appointing? I think of William Cohen
Speaker 1: of years ago. Do you see something along that line? So,
Speaker 1: you know, I wish I could be that optimistic and
Speaker 1: to say that, you know, Joe Biden is going to
Speaker 1: go back to the way it was where you're initial
Speaker 1: cabinet appointees always included one person from the other party. Uh,
Speaker 1: you know, we're not We're not that hopeful. I think
Speaker 1: there's still so much animosity, uh, that it would be difficult.
Speaker 1: You know. The only are a few names that could
Speaker 1: even come to mind, like a Mitt Romney, and I'm
Speaker 1: not sure he really would want to come inside and administration.
Speaker 1: In addition, you know, there's a lot of Democrats who
Speaker 1: are looking h to come back to Washington, and I
Speaker 1: think they're gonna have a hard time giving up a
Speaker 1: prominent enough job to a Republican. Jack right to catch
Speaker 1: up book The count. Senior policy analyst Daniel Alford is
Speaker 1: someone we can talk to about the American labor economy,
Speaker 1: but we can also talk about his classic book, The
Speaker 1: Age of Oversupply, and dan Alford very simply here it
Speaker 1: is two nations. We learned that on election day an
Speaker 1: election week, but it is one age of oversupply. How
Speaker 1: does the president elect adapt to your age of oversupply? So,
Speaker 1: I think the first thing is that he has to
Speaker 1: recognize he was elected by a shift in what was
Speaker 1: effectively a bipolar group of voters that you know, elected
Speaker 1: Trump UM the first time. Uh, and these are voters
Speaker 1: who have uh future prospects still. Then, job quality has
Speaker 1: come down again during the Trump administration in terms of
Speaker 1: and I'm talking about prior to COVID, in terms of
Speaker 1: the number of low wage, low hour jobs compared to
Speaker 1: higher wage jobs or higher income jobs. The the up
Speaker 1: shot there, of course, is that families still are looking
Speaker 1: for stable financial futures, for the ability to save for retirement,
Speaker 1: to do all of the things that are that are needed.
Speaker 1: In those voters, some of some more of them voted
Speaker 1: for by then Trump this time. But they're on both sides.
Speaker 1: They're both Republicans and Democratic were breaking news along with FISER.
Speaker 1: Now add another vaccine to it, novavax, and their COVID
Speaker 1: vaccine candidate. It gets f D a fast track designation.
Speaker 1: It seems to be a different stream of headlines and
Speaker 1: what we saw from Fiser. But nevertheless, there it is,
Speaker 1: and we see an immediate lift in the market SPX
Speaker 1: up a hundred and fifty nine points and the dial
Speaker 1: I can now go on thirty thousand, Watch in the
Speaker 1: down thousand, eight forty four. Daniel Upford, you and I
Speaker 1: have lived jump conditions. Is this a jump condition? Well,
Speaker 1: you know, here's a here's an interesting thing, Dow thirty thousand,
Speaker 1: and they wrote a column on it. Um before the crisis,
Speaker 1: well before the crisis is very interesting because right now
Speaker 1: we're seeing industries get to a level of multiples that
Speaker 1: are of course historic, but also um are you know,
Speaker 1: really only forecast on a restoration of the status quo? Right?
Speaker 1: So the question is, let's going to happen after we
Speaker 1: recognize the fact that this crisis has pushed us off trend?
Speaker 1: Uh And you know that will and in and of itself,
Speaker 1: be a big question mark for the equity markets going forward.
Speaker 1: There's also a question, Dan, of how the CFOs, the
Speaker 1: CEOs of the world plan their strategy around the world.
Speaker 1: That is influx. I mean that the number of headlines
Speaker 1: this morning, we can't over emphasize we came in thinking
Speaker 1: it was the election, and now it's very much the
Speaker 1: vaccine and possibly early next year we're gonna be talking
Speaker 1: about fiscal support and maybe higher taxes for corporations. What's
Speaker 1: the main narrative you would tell corporate executives to pay
Speaker 1: attention to in terms of how to plan their strategy
Speaker 1: come the beginning of Yeah, aggregate demand. Aggregate demand. That's
Speaker 1: really the bottom line here. And you know, the jobs
Speaker 1: picture last week was very interesting what was announced on Friday.
Speaker 1: We picked up nine hundred thousand private sector jobs, but
Speaker 1: six hundred thousand of those were low wage, lower jobs
Speaker 1: who people were being restored for their work um and
Speaker 1: then off remaining better quality. We lost a hundred thirty
Speaker 1: thousand state local jobs and of course all those census workers.
Speaker 1: So the question is how does that translate into demanding
Speaker 1: the economy it You know, keep in mind that a
Speaker 1: lot of those workers returning to their low wage, low
Speaker 1: hour jobs are actually making less than they were on
Speaker 1: the federal unemployment benefit supplement um, and so that actually
Speaker 1: translate you have to actually look forward and calculate what
Speaker 1: this means in terms of restoration of aggregate demand. Because
Speaker 1: that's what drives the business. And against that you have
Speaker 1: to look at the seven hundred fifty or eight hundred
Speaker 1: thousand weekly unemployment claims. There must be massive rotation going
Speaker 1: on of employer employees in and out of work in
Speaker 1: this economy. We won't know for several more weeks or months,
Speaker 1: but the at the end of the day, the only
Speaker 1: thing that's important is how much demand there is, how
Speaker 1: much consumption there is in this economy. Well, when I
Speaker 1: a suite individual, the CEO, the CFO, the CEO will
Speaker 1: get around the table and talk about the labor market.
Speaker 1: The outlook for twenty one, demand, which you describe quite rightly,
Speaker 1: is the crucial issue here. As they anticipate demand. Do
Speaker 1: you think the vaccine news of this morning makes them
Speaker 1: a little bit more constructive about twenty one and maybe
Speaker 1: pushes them to hold off on additional firing and maybe
Speaker 1: encourages them to do a little bit high ring. I
Speaker 1: think it's fabulous news. I think the faster the vaccine
Speaker 1: can be brought to bear, the better off everyone is.
Speaker 1: In terms of making forward projections. Um, you know there
Speaker 1: are certain sectors in this economy that are going to
Speaker 1: take a long time to come back hospitality, particularly obviously
Speaker 1: the restaurant industry and everybody else associated with leasuring hospitality sector.
Speaker 1: You know, people are still going to be cautious. Companies,
Speaker 1: corporations are going to be very cautious about putting the
Speaker 1: people back on the road for travel, vacation. Travel is
Speaker 1: still going to be impacted. And of course I note
Speaker 1: the huge rally in airlines and cruise stocks and sorts
Speaker 1: of stuff, and that's natural, right, um. But but at
Speaker 1: the end of the day, you know this is going
Speaker 1: to play out over a long period of Time's going
Speaker 1: to take a while to your people vaccinated. But this
Speaker 1: news today and hopefully more good news going forward, is
Speaker 1: going to be a huge uh impetus to to, as
Speaker 1: you say, hold off on additional uh expense control. I
Speaker 1: think that's the biggest challenge right now down for a
Speaker 1: lot of people. You look at the price action this morning,
Speaker 1: and of course we discount about the future. It looks
Speaker 1: like we might have a vaccine coming on the horizon.
Speaker 1: Not there yet, but it's encouraging news. But in the
Speaker 1: here and now, COVID case is still north of a
Speaker 1: hundred thousand daily in the United States. Restrictions from Massachusetts
Speaker 1: than Utah and maybe New Jersey a little bit later. Today, Dan,
Speaker 1: how much damage do you think we could do between
Speaker 1: now and then then being that optimistic point that we
Speaker 1: get that vaccine. I actually think you mapped it very
Speaker 1: very well, because what we need right now is we
Speaker 1: need sufficient relieve from Congress to ensure that we don't
Speaker 1: get a second real deep deep um, And there is
Speaker 1: everything You're actually right, there's everything out there that points
Speaker 1: to a potential for another recessionary quarter. Um. However, with
Speaker 1: with some sanity we introduced to Washington after this election,
Speaker 1: and obviously the market rallying in part not just on
Speaker 1: the vaccine, but on the stability of perceives will come
Speaker 1: from uh, from from the Biden administration. Um. Not. You
Speaker 1: know a lot of people say that government that that
Speaker 1: markets are rallying on divided government. I don't really think that.
Speaker 1: I think I think markets are really rallying on stable government.
Speaker 1: Um and uh. And I think the the belicocity from
Speaker 1: from folks in the Republican Party that was obviously naturally
Speaker 1: associated with an election season will subside and people do
Speaker 1: the right thing in terms of relief. So I'm hoping
Speaker 1: that what we need to do which is exactly what
Speaker 1: you're what you're going after here is we have a
Speaker 1: period of uncertainty and probably weakness because of the spike
Speaker 1: and COVID. Can we actually plug that gap? And I
Speaker 1: think the prospects now are probably better than they working
Speaker 1: for Dan. Just to tie this all together, we have
Speaker 1: a lot more certainty with respect to what the administration
Speaker 1: may look like come the beginning of next year, as
Speaker 1: well as when we may have a vaccine. Given all
Speaker 1: of that, and given your background, your vast background with restructurings,
Speaker 1: have we avoided the bankruptcy cycle that many people had expected.
Speaker 1: I doubt that. I mean only in comparison with the
Speaker 1: Great Recession. Obviously there we had a lot of bailouts.
Speaker 1: We had very very few bankruptcies relatively speaking. But look
Speaker 1: at the large sector, you know, big, big, big companies
Speaker 1: that have been forced to file and retail in other areas.
Speaker 1: I'm seeing more of that going forward. There's going to
Speaker 1: be uh, you know, significant impetus for restructure and hopefully,
Speaker 1: look the thing about the bankruptcy laws that you can
Speaker 1: restructure businesses and keep them alive and have them be
Speaker 1: there when this is all behind us. And that's really
Speaker 1: The bottom line here is that we absolutely must make
Speaker 1: sure that employers are still they're able to employ people
Speaker 1: at the end of this crisis, or at least when
Speaker 1: the vaccine controls the virus um and and so if
Speaker 1: we you know that bankruptcy works very very well for
Speaker 1: large businesses that are capable of restructuring. My concern is
Speaker 1: what are we doing with the SME sector. Were we're
Speaker 1: doing a small and medium sized businesses um that that
Speaker 1: really can't go into Chapter eleven uh, And I think
Speaker 1: that's going to require additional attention. As I wrote in
Speaker 1: a column a couple of weeks ago, bail ends, not
Speaker 1: bail outs, are probably the answer. Smart ohway smart, and
Speaker 1: tried to catch up with you this morning. Done out
Speaker 1: of that of Westwood Capital. Thank you. Thanks for listening
Speaker 1: to the Bloomberg Saveillas podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio