1 00:00:02,640 --> 00:00:05,360 Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,760 Speaker 1: Along with my co host Lisa Brahmas. Each day we 3 00:00:07,880 --> 00:00:10,440 Speaker 1: bring you the most noteworthy and useful interviews for you 4 00:00:10,560 --> 00:00:12,640 Speaker 1: and your money. Whether at the grocery store or the 5 00:00:12,680 --> 00:00:16,000 Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast 6 00:00:16,160 --> 00:00:18,080 Speaker 1: or wherever you listen to podcasts, as well as at 7 00:00:18,079 --> 00:00:22,160 Speaker 1: Bloomberg dot com. We've been hearing over and over again 8 00:00:22,400 --> 00:00:25,400 Speaker 1: flatten the curve. Bill de Blasio, Mayor of New York City, 9 00:00:25,440 --> 00:00:27,840 Speaker 1: coming out and saying that the numbers are looking encouraging, 10 00:00:27,880 --> 00:00:30,120 Speaker 1: that you're actually seeing them go down when it comes 11 00:00:30,160 --> 00:00:32,880 Speaker 1: to the death counts as well as the hospitalizations and 12 00:00:33,000 --> 00:00:37,200 Speaker 1: diagnosed cases of the coronavirus in New York. But what 13 00:00:37,320 --> 00:00:41,240 Speaker 1: will this curve look like? That is the question that 14 00:00:41,320 --> 00:00:46,199 Speaker 1: Kathy O'Neil explored in a column recently for Bloomberg Opinions. 15 00:00:46,240 --> 00:00:48,360 Speaker 1: Just to give you a sense of her background, her 16 00:00:48,400 --> 00:00:52,240 Speaker 1: math background, which I deeply respect. She founded worka o 17 00:00:52,600 --> 00:00:55,240 Speaker 1: r C. A a and algorithmic auditing company, and she's 18 00:00:55,280 --> 00:00:58,800 Speaker 1: the author of Weapons of Math Destruction, which I love 19 00:00:58,840 --> 00:01:01,520 Speaker 1: the title of and can joins us now you wrote 20 00:01:01,520 --> 00:01:04,240 Speaker 1: in a recent column. Cathy, this isn't the flattened curve 21 00:01:04,319 --> 00:01:07,360 Speaker 1: we were promised. What do you mean by that? Well, 22 00:01:07,760 --> 00:01:10,000 Speaker 1: thanks for having me. Um. Every time you go to 23 00:01:10,160 --> 00:01:15,080 Speaker 1: a Cuomo press conference midday, he he'll have slides, and 24 00:01:15,160 --> 00:01:19,280 Speaker 1: often those slides have models of what the flattened curve 25 00:01:19,319 --> 00:01:22,959 Speaker 1: looks like and what the current curve looks like. The models, UM, 26 00:01:23,000 --> 00:01:25,160 Speaker 1: which I think are often made by McKinsey or some 27 00:01:25,240 --> 00:01:28,880 Speaker 1: other modeling group. UM, there are symmetrical, which is to say, 28 00:01:28,920 --> 00:01:31,240 Speaker 1: they go up to a peak and they come back down. 29 00:01:31,280 --> 00:01:34,600 Speaker 1: They often look like normal distribution curves. UM. That is 30 00:01:34,640 --> 00:01:37,720 Speaker 1: not the actual empirical information we've had. If you look 31 00:01:37,720 --> 00:01:41,280 Speaker 1: at Italy, Spain, France, UM, places that are a couple 32 00:01:41,280 --> 00:01:43,720 Speaker 1: of weeks in front of us, what actually looks like 33 00:01:44,120 --> 00:01:46,720 Speaker 1: this is both for the counts of people infected and 34 00:01:46,840 --> 00:01:48,800 Speaker 1: as well as for the death counts. It looks like 35 00:01:48,840 --> 00:01:51,440 Speaker 1: a pretty rapid rise at the beginning. So the first 36 00:01:51,440 --> 00:01:54,000 Speaker 1: part of the curve looks right, It hits the top, 37 00:01:54,080 --> 00:01:57,800 Speaker 1: and then it just slowly plateaus and then slowly descends. 38 00:01:57,880 --> 00:02:01,440 Speaker 1: It is not coming down as fast as it went up. So, Cathy, 39 00:02:01,440 --> 00:02:04,480 Speaker 1: what do you think I mean? I remember we've heard 40 00:02:05,000 --> 00:02:07,160 Speaker 1: Governor Cuomo talked about a plateau ing, you know, as 41 00:02:07,160 --> 00:02:09,920 Speaker 1: opposed to the apex and then coming down. Um, so 42 00:02:10,120 --> 00:02:13,000 Speaker 1: is it your sense that the the coming down on 43 00:02:13,040 --> 00:02:16,640 Speaker 1: the backside will be significantly longer than kind of that 44 00:02:16,800 --> 00:02:20,160 Speaker 1: ramp up we saw in the month of March. That's correct, 45 00:02:20,200 --> 00:02:23,080 Speaker 1: And I should mention by the way that, um, the 46 00:02:23,160 --> 00:02:26,440 Speaker 1: weekends are always looking better than during the week So 47 00:02:26,639 --> 00:02:28,880 Speaker 1: the fact that the last couple of days looked pretty good, 48 00:02:28,919 --> 00:02:31,040 Speaker 1: I'm happy about that, of course, but I want us 49 00:02:31,040 --> 00:02:33,720 Speaker 1: to be prepared for what's going to happen today and tomorrow. 50 00:02:33,960 --> 00:02:36,880 Speaker 1: But by tomorrow night it will look a little bit 51 00:02:36,960 --> 00:02:39,120 Speaker 1: less positive than it does now. And then it happened 52 00:02:39,160 --> 00:02:41,720 Speaker 1: last Tuesday, it happened the tuesday before that. So that's 53 00:02:41,760 --> 00:02:43,359 Speaker 1: one thing to keep in mind when we look at 54 00:02:43,440 --> 00:02:46,760 Speaker 1: these these daily data tables. But yeah, the real, the 55 00:02:46,840 --> 00:02:50,520 Speaker 1: real reason I think that this matters, this asymmetry of 56 00:02:50,560 --> 00:02:53,160 Speaker 1: this curve, is that when Cuomo says, you know, we're 57 00:02:53,200 --> 00:02:56,480 Speaker 1: past the peak, and when he says the worst is over, 58 00:02:56,919 --> 00:02:59,920 Speaker 1: that's technically possibly true, but it doesn't mean we like 59 00:03:00,080 --> 00:03:02,720 Speaker 1: half the people who have died have died, or have 60 00:03:02,880 --> 00:03:05,480 Speaker 1: the people who will have died, have died. We might 61 00:03:05,560 --> 00:03:08,799 Speaker 1: be looking at many, many weeks of lots of multi 62 00:03:08,880 --> 00:03:12,519 Speaker 1: hundred UM deaths per day. We don't actually know how 63 00:03:12,520 --> 00:03:15,480 Speaker 1: long it's gonna last and how quickly it will descend. Now, 64 00:03:15,520 --> 00:03:18,120 Speaker 1: of course I hope that it descends very quickly, but 65 00:03:18,440 --> 00:03:21,040 Speaker 1: the evidence from Italy and Spain, where they had quite 66 00:03:21,120 --> 00:03:25,320 Speaker 1: strong restrictions for social distancing and saying your home and 67 00:03:25,400 --> 00:03:28,919 Speaker 1: quarantining um, those graphs do not go down quickly. They're 68 00:03:28,960 --> 00:03:31,080 Speaker 1: still at hundreds of deaths per day in both of 69 00:03:31,080 --> 00:03:34,960 Speaker 1: those countries. The importance of this isn't just to understand 70 00:03:35,080 --> 00:03:37,600 Speaker 1: what we're in for that perhaps we have a whole 71 00:03:37,680 --> 00:03:40,480 Speaker 1: lot more pain ahead of us, but also when to 72 00:03:40,560 --> 00:03:42,960 Speaker 1: reopen Kathy. Is that right? I mean, in other words, 73 00:03:43,240 --> 00:03:45,600 Speaker 1: if a lot of people are still getting diagnosed with 74 00:03:45,600 --> 00:03:49,080 Speaker 1: the coronavirus, being over the peak in the short term 75 00:03:49,160 --> 00:03:54,200 Speaker 1: doesn't necessarily mean that the danger necessarily is gone. Right, 76 00:03:54,960 --> 00:03:57,600 Speaker 1: That's very true. I mean, I think what what Cuomo 77 00:03:57,800 --> 00:04:01,160 Speaker 1: cares about very much, and and it's a very real concern, 78 00:04:01,440 --> 00:04:04,880 Speaker 1: especially if for the governor, is that the hospitals are 79 00:04:04,880 --> 00:04:07,880 Speaker 1: not overwhelmed, that the number of ventilators we have in 80 00:04:07,920 --> 00:04:11,839 Speaker 1: our state or in our country UM is sufficient. And 81 00:04:12,000 --> 00:04:14,040 Speaker 1: so in that sense, the fact that we have passed 82 00:04:14,080 --> 00:04:16,880 Speaker 1: our peak, it's very very important. It's it's crucial in fact, 83 00:04:16,920 --> 00:04:20,040 Speaker 1: because the peak is of course a very real thing 84 00:04:20,160 --> 00:04:24,080 Speaker 1: for hospital UM, you know usage. However, it doesn't say 85 00:04:24,080 --> 00:04:27,200 Speaker 1: a lot about timing UM. And for that matter, even 86 00:04:27,240 --> 00:04:30,360 Speaker 1: if even if the number of deaths per day goes 87 00:04:30,400 --> 00:04:34,080 Speaker 1: down to quite small, reopening too early before we actually 88 00:04:34,080 --> 00:04:36,719 Speaker 1: have control whether we have don't have treatment, we don't 89 00:04:36,720 --> 00:04:39,320 Speaker 1: have a vaccine UM, and we don't have UM you know, 90 00:04:39,360 --> 00:04:42,120 Speaker 1: widespread testing might be a huge mistake because that curve 91 00:04:42,200 --> 00:04:44,760 Speaker 1: can pick right back up again. So, Kathy, that's kind 92 00:04:44,800 --> 00:04:46,479 Speaker 1: of where I wanted to go, because that seems to 93 00:04:46,520 --> 00:04:49,840 Speaker 1: be where the conversation is shifting now is to when 94 00:04:50,560 --> 00:04:55,160 Speaker 1: and how do we reopen UH the economy, And in 95 00:04:55,160 --> 00:04:58,360 Speaker 1: the absence of any federal guidelines, which we don't seem 96 00:04:58,400 --> 00:05:00,640 Speaker 1: to be getting, it's kind of left up to the states. 97 00:05:01,080 --> 00:05:03,640 Speaker 1: How do you think it should go based upon some 98 00:05:03,680 --> 00:05:05,599 Speaker 1: of the data we've seen from some of the countries 99 00:05:05,640 --> 00:05:09,160 Speaker 1: that maybe a little bit ahead of us. Yeah, I mean, 100 00:05:09,240 --> 00:05:11,360 Speaker 1: and I'm no, I'm no expert, and I'll just say 101 00:05:11,360 --> 00:05:15,120 Speaker 1: it this way, there's lots of ways to define success UM, 102 00:05:15,200 --> 00:05:17,960 Speaker 1: and in this case, Cuomo has defined success as the 103 00:05:18,000 --> 00:05:21,240 Speaker 1: peak has passed, and really that is only success in 104 00:05:21,279 --> 00:05:24,680 Speaker 1: a very narrow sense. It's a success for hospital um, 105 00:05:24,880 --> 00:05:28,760 Speaker 1: hospitals not being overwhelmed. It says almost nothing about when 106 00:05:28,800 --> 00:05:30,599 Speaker 1: we should open, how we should open, how we should 107 00:05:30,640 --> 00:05:33,200 Speaker 1: do that, beyond the fact that we don't want this 108 00:05:33,279 --> 00:05:34,960 Speaker 1: to happen again, and we don't want this to happen 109 00:05:35,000 --> 00:05:38,039 Speaker 1: again worse than it happened the first time. Kathy, as 110 00:05:38,040 --> 00:05:41,320 Speaker 1: a mathematician and a hedge former hedge fund analysts, and 111 00:05:41,320 --> 00:05:44,760 Speaker 1: a professor, you look at data a lot, and there's 112 00:05:44,760 --> 00:05:47,120 Speaker 1: a question about the integrity of the data that we're 113 00:05:47,160 --> 00:05:50,600 Speaker 1: getting when it comes to virus counts. Just by virtue 114 00:05:50,640 --> 00:05:54,599 Speaker 1: of the lack of testing. By one asktimate Johns Hopkins data, 115 00:05:54,760 --> 00:05:57,919 Speaker 1: it shows that about one percent of the US population 116 00:05:58,080 --> 00:06:01,800 Speaker 1: has been tested. Do you trust the extrapolations that we're 117 00:06:01,839 --> 00:06:06,080 Speaker 1: seeing as accurate based on the numbers, as being a 118 00:06:06,120 --> 00:06:09,919 Speaker 1: full representation at least of how far this has spread? 119 00:06:11,040 --> 00:06:13,320 Speaker 1: Absolutely not, and thank you for the question. I wrote 120 00:06:13,320 --> 00:06:17,080 Speaker 1: another column last week about ten data flaws that I 121 00:06:17,120 --> 00:06:20,159 Speaker 1: have observed with the daily data UM. One of them 122 00:06:20,200 --> 00:06:22,720 Speaker 1: that I was quite adamant about was that we are 123 00:06:22,839 --> 00:06:25,800 Speaker 1: just missing a whole slew of nursing home depths, and that, 124 00:06:25,880 --> 00:06:28,200 Speaker 1: of course has been coming out in the last few days. 125 00:06:28,839 --> 00:06:34,200 Speaker 1: There's so many biases going on in the in these numbers, UM, 126 00:06:34,240 --> 00:06:36,880 Speaker 1: the very first and most prominent one being that I 127 00:06:36,920 --> 00:06:40,080 Speaker 1: believe that the actual number of infected people is around 128 00:06:40,160 --> 00:06:43,240 Speaker 1: ten times as many as as as are reported, simply 129 00:06:43,279 --> 00:06:46,320 Speaker 1: because there are so many asymptomatic people. But there's also 130 00:06:46,320 --> 00:06:49,800 Speaker 1: other problems like besides the nursing home death, besides death 131 00:06:49,880 --> 00:06:53,359 Speaker 1: that happened in homes, besides death that happened where people 132 00:06:53,560 --> 00:06:55,279 Speaker 1: where there's more than one cause of death and we 133 00:06:55,279 --> 00:06:57,760 Speaker 1: don't really know because there was no test available. We 134 00:06:57,839 --> 00:07:01,320 Speaker 1: simply have tests themselves that have more false negatives and 135 00:07:01,400 --> 00:07:05,040 Speaker 1: false positives. Some doctors are thinking, some researchers think that 136 00:07:05,080 --> 00:07:08,479 Speaker 1: the solve false negative rate is more than which is 137 00:07:08,520 --> 00:07:11,600 Speaker 1: to say that if you get tested and you get negative, 138 00:07:11,800 --> 00:07:14,480 Speaker 1: there's a chance that you are positive. UM. That's for 139 00:07:14,520 --> 00:07:17,280 Speaker 1: the individual, but for the for the overall data set, 140 00:07:17,360 --> 00:07:19,720 Speaker 1: what it means is that we are vastly underestimating the 141 00:07:19,800 --> 00:07:22,040 Speaker 1: number of positives, even for the people that we're testing. 142 00:07:22,440 --> 00:07:25,160 Speaker 1: So it's a major problem. Our data is not good 143 00:07:25,480 --> 00:07:28,160 Speaker 1: and we are so spoiled for data. We think of 144 00:07:28,280 --> 00:07:31,120 Speaker 1: data as just being as available as the Internet, and 145 00:07:31,120 --> 00:07:33,040 Speaker 1: in a lot of ways it is. But this is 146 00:07:33,080 --> 00:07:35,080 Speaker 1: a whole new kind of data set that we just 147 00:07:35,120 --> 00:07:39,240 Speaker 1: don't have do not have yet. So, Kathy, you know 148 00:07:39,280 --> 00:07:42,000 Speaker 1: there's a role here for technology. And I think in 149 00:07:42,040 --> 00:07:44,120 Speaker 1: the last week or so, Apple and Google have talked about, 150 00:07:44,160 --> 00:07:47,720 Speaker 1: you know, getting a COVID nineteen tracking app, and I 151 00:07:47,720 --> 00:07:49,240 Speaker 1: know you've done some work on that. What do you 152 00:07:49,320 --> 00:07:52,280 Speaker 1: do you think that holds some hope for really tracking 153 00:07:52,320 --> 00:07:56,720 Speaker 1: this and getting better data. You know, we would get 154 00:07:56,760 --> 00:07:59,520 Speaker 1: some more data. My biggest concern about that are the 155 00:07:59,520 --> 00:08:02,480 Speaker 1: blind boss of that data set because UM, as I 156 00:08:02,560 --> 00:08:06,040 Speaker 1: understand it, almost all of the tracking apps UM that 157 00:08:06,080 --> 00:08:09,440 Speaker 1: have been suggested are opt in. So who would opt 158 00:08:09,480 --> 00:08:11,360 Speaker 1: into The first question have to ask is who would 159 00:08:11,400 --> 00:08:13,840 Speaker 1: opt in for that UM And the answer is people 160 00:08:13,920 --> 00:08:17,240 Speaker 1: who are worried but do not? Uh do not? You 161 00:08:17,280 --> 00:08:20,920 Speaker 1: know that basically have the luxury of being worried if 162 00:08:20,960 --> 00:08:22,960 Speaker 1: you will. So in other words, the people that are 163 00:08:23,000 --> 00:08:26,880 Speaker 1: delivering our food, the people that are the frontline workers, 164 00:08:27,320 --> 00:08:30,320 Speaker 1: they don't have the option of sort of not going 165 00:08:30,360 --> 00:08:34,160 Speaker 1: to work because they need the money, or they even 166 00:08:34,200 --> 00:08:36,440 Speaker 1: even more stark, they might not even have the option 167 00:08:36,520 --> 00:08:38,640 Speaker 1: of getting treated if they do get sick because they're 168 00:08:38,640 --> 00:08:41,120 Speaker 1: not insured. So I just think there's a whole slew 169 00:08:41,160 --> 00:08:43,560 Speaker 1: of people, and it's not just a random selective of people. 170 00:08:43,840 --> 00:08:46,360 Speaker 1: It's the people that are most at risk, most likely 171 00:08:46,600 --> 00:08:49,040 Speaker 1: to be getting infected, that will simply not opt in. 172 00:08:49,320 --> 00:08:51,640 Speaker 1: And so then the question becomes how useful is a 173 00:08:51,720 --> 00:08:55,960 Speaker 1: tracking app where the most infected population, the most vulnerable population, 174 00:08:56,000 --> 00:08:57,680 Speaker 1: not to mention people that don't have cell phones, that 175 00:08:57,679 --> 00:09:00,120 Speaker 1: live in nursing homes or prisons. Those people are the 176 00:09:00,200 --> 00:09:02,079 Speaker 1: very ones that will not be part of the system. 177 00:09:02,440 --> 00:09:05,080 Speaker 1: So I feel like it is actually a pretty limited 178 00:09:05,320 --> 00:09:07,360 Speaker 1: amount of good that could be done. Although you could 179 00:09:07,440 --> 00:09:11,360 Speaker 1: collect some data, the data you're most interested in would 180 00:09:11,400 --> 00:09:14,160 Speaker 1: be invisible to you. Kathey O'Neill, thank you so much 181 00:09:14,160 --> 00:09:17,120 Speaker 1: for being with us. Kathy O'Neil a mathematician, a Bloomberg 182 00:09:17,160 --> 00:09:21,280 Speaker 1: opinion columnist, also a former Hedge fund analyst and professor 183 00:09:21,800 --> 00:09:26,320 Speaker 1: UH and of course author of fantastic book. I recommend 184 00:09:26,480 --> 00:09:30,200 Speaker 1: you do read it. Who all about the practice of 185 00:09:30,320 --> 00:09:35,520 Speaker 1: math and the intersection between it and the financial world. Paul, 186 00:09:35,679 --> 00:09:38,200 Speaker 1: very much. The financial world right now focused on the 187 00:09:38,200 --> 00:09:40,559 Speaker 1: price of oil as we look at a plunge to 188 00:09:40,720 --> 00:09:44,439 Speaker 1: lois and two, a lot of disparities between the front 189 00:09:44,520 --> 00:09:47,960 Speaker 1: end contract that expires tomorrow, not a lot of volume, 190 00:09:48,040 --> 00:09:51,040 Speaker 1: people kind of discrediting it as it plummets and looking 191 00:09:51,080 --> 00:09:54,280 Speaker 1: to the June contract. Nevertheless, what it highlights to me 192 00:09:54,640 --> 00:09:58,040 Speaker 1: is the massive gap between where you can actually buy 193 00:09:58,280 --> 00:10:02,160 Speaker 1: or sell a barrel of oil versus the futures contracts. 194 00:10:02,320 --> 00:10:05,760 Speaker 1: In other words, the physical demand is just non existent, 195 00:10:05,840 --> 00:10:08,920 Speaker 1: and there are circumstances where I say, in Texas, uh, 196 00:10:09,160 --> 00:10:13,280 Speaker 1: some shell producers and drillers are actually accepting two dollars 197 00:10:13,280 --> 00:10:16,160 Speaker 1: per gallon in order just to get it off of 198 00:10:16,240 --> 00:10:18,760 Speaker 1: their lots. And it raises this question of of what 199 00:10:18,840 --> 00:10:21,760 Speaker 1: this does longer term, how long this will persist, and 200 00:10:22,040 --> 00:10:24,280 Speaker 1: what kind of cuts would be required turn it around. 201 00:10:28,000 --> 00:10:31,640 Speaker 1: What we've been talking about today is oil uh w 202 00:10:31,720 --> 00:10:35,120 Speaker 1: T I training down about here today to ten and 203 00:10:35,160 --> 00:10:37,240 Speaker 1: seventy five cents a barrel that's on that may contract 204 00:10:37,320 --> 00:10:40,160 Speaker 1: that June contracts, which is a more actively traded one 205 00:10:40,200 --> 00:10:42,760 Speaker 1: that is up north of that. But still down for 206 00:10:42,800 --> 00:10:44,520 Speaker 1: the day. It's got a sense of what is going 207 00:10:44,679 --> 00:10:48,280 Speaker 1: on in the global energy space. Vince Signarella, global macro 208 00:10:48,400 --> 00:10:51,400 Speaker 1: strategist for Bloomberg News, joins us on the phone. So, Vince, 209 00:10:51,559 --> 00:10:53,160 Speaker 1: what do you make of what's going on with w 210 00:10:53,240 --> 00:10:55,959 Speaker 1: t I today. Well, I mean this, you know, the 211 00:10:56,000 --> 00:11:00,360 Speaker 1: story just hasn't changed really. Um, we're seeing basically drop 212 00:11:00,360 --> 00:11:02,719 Speaker 1: and demand of what O pe plus has put at 213 00:11:02,720 --> 00:11:05,920 Speaker 1: something around thirty million barrels a day and potential O 214 00:11:06,080 --> 00:11:10,040 Speaker 1: pep plus cuts between ten and fifteen million barrels a day. 215 00:11:10,040 --> 00:11:12,040 Speaker 1: So at the end of the day, it doesn't really 216 00:11:12,120 --> 00:11:15,000 Speaker 1: change the story. It just means oil will fall in 217 00:11:15,240 --> 00:11:19,400 Speaker 1: in theory, uh, you know, more slowly, but we're getting 218 00:11:19,480 --> 00:11:23,000 Speaker 1: towards levels and I think this is running it around 219 00:11:23,000 --> 00:11:26,120 Speaker 1: my British petroleum days of of the late eighties, where 220 00:11:26,120 --> 00:11:28,520 Speaker 1: I think ten dollars or so was about as low 221 00:11:28,520 --> 00:11:30,200 Speaker 1: as we got in the oil. So it kind of 222 00:11:30,200 --> 00:11:33,440 Speaker 1: have to wonder if we're getting, you know, pretty close 223 00:11:33,440 --> 00:11:36,560 Speaker 1: to the bottom of this. Can US equities rally if 224 00:11:36,600 --> 00:11:40,640 Speaker 1: you have oil this kind of level. Yeah, you know, 225 00:11:40,760 --> 00:11:46,400 Speaker 1: the the the correlation between US equities and crew is 226 00:11:46,800 --> 00:11:50,800 Speaker 1: very very tight historically. Um, but it moves. This moves 227 00:11:50,840 --> 00:11:53,600 Speaker 1: more on the demand side of things. So it's the 228 00:11:53,679 --> 00:11:58,400 Speaker 1: demand side of oil that that that correlates with equities, 229 00:11:58,480 --> 00:12:01,600 Speaker 1: not the supply side. And this drop in oils supply 230 00:12:01,679 --> 00:12:06,280 Speaker 1: related um um in the sense that there's way too 231 00:12:06,400 --> 00:12:08,600 Speaker 1: much of it, uh and they can't cut down to 232 00:12:08,640 --> 00:12:11,319 Speaker 1: where the to where the demand is. But I think 233 00:12:11,360 --> 00:12:14,640 Speaker 1: we're now at a place where we've we've reached as 234 00:12:14,640 --> 00:12:16,520 Speaker 1: pretty much as low as we're going to get. You 235 00:12:16,520 --> 00:12:19,760 Speaker 1: know this, this lack of demand is what weighed I 236 00:12:19,760 --> 00:12:24,040 Speaker 1: think equities looking backwards now, the equity market is looking 237 00:12:24,120 --> 00:12:27,720 Speaker 1: forward and they're looking past this next month or two. 238 00:12:27,800 --> 00:12:31,040 Speaker 1: I think they maybe a little prematurely, but they seem 239 00:12:31,080 --> 00:12:33,880 Speaker 1: to have discounted it, and they're looking at demand being 240 00:12:35,040 --> 00:12:38,720 Speaker 1: aggressively picking up in the future from these levels. At least. 241 00:12:38,720 --> 00:12:40,360 Speaker 1: This is what folks are telling me when I talked 242 00:12:40,360 --> 00:12:43,200 Speaker 1: to guys this morning about career futures, and what they're 243 00:12:43,200 --> 00:12:45,080 Speaker 1: doing is yelling at me and telling me, don't look 244 00:12:45,080 --> 00:12:47,719 Speaker 1: at the as we as we hothead oil flowing to 245 00:12:47,800 --> 00:12:50,400 Speaker 1: the lowest in April, don't look at the front contract 246 00:12:50,520 --> 00:12:54,320 Speaker 1: expires tomorrow. The June contract down eight point six percent, 247 00:12:54,480 --> 00:12:57,120 Speaker 1: is more indicative of to where the price of oil 248 00:12:57,160 --> 00:12:59,480 Speaker 1: really is. Yeah, this is what I'm struggling with. People 249 00:12:59,520 --> 00:13:02,760 Speaker 1: expecting that demand will pick up in the following months, 250 00:13:02,760 --> 00:13:05,400 Speaker 1: and you're seeing this in the steepening of the forwards 251 00:13:05,880 --> 00:13:09,559 Speaker 1: curve when it comes to two futures in the oil pad. 252 00:13:09,960 --> 00:13:12,200 Speaker 1: I'm starting to understand why people think that the demand 253 00:13:12,240 --> 00:13:14,480 Speaker 1: is going to pick up so much. In other words, yes, 254 00:13:14,520 --> 00:13:17,320 Speaker 1: we're going to have some sort of reopening, but is 255 00:13:17,360 --> 00:13:19,720 Speaker 1: that going to be enough at a time when in 256 00:13:19,800 --> 00:13:23,280 Speaker 1: Texas there some producers are paying two dollars for for 257 00:13:23,320 --> 00:13:24,880 Speaker 1: people to come and take the oil off their off 258 00:13:24,960 --> 00:13:27,880 Speaker 1: their property. Yeah. No, I I totally agree with the least. 259 00:13:27,880 --> 00:13:30,719 Speaker 1: I think that's I think the market is way too optimistic, 260 00:13:30,920 --> 00:13:32,480 Speaker 1: and I think, you know, one of the things we 261 00:13:32,520 --> 00:13:35,520 Speaker 1: really need to look forward to look toward, and what 262 00:13:35,920 --> 00:13:38,400 Speaker 1: you know people like Dr Fauci are reminding us of 263 00:13:38,600 --> 00:13:41,960 Speaker 1: is opening up too quickly or reopening too quickly and 264 00:13:42,040 --> 00:13:44,480 Speaker 1: perhaps seeing a second surge in the virus. That is 265 00:13:44,600 --> 00:13:47,640 Speaker 1: without question or real possibility. The state of Texas is 266 00:13:48,240 --> 00:13:54,080 Speaker 1: looking at reopening um plans when they've tested from what 267 00:13:54,160 --> 00:13:57,280 Speaker 1: I understand, one percent of the population. So it's really 268 00:13:57,320 --> 00:13:59,679 Speaker 1: difficult to see how you can be looking at reopening 269 00:13:59,760 --> 00:14:02,760 Speaker 1: things is where you have absolutely no handle on really 270 00:14:02,760 --> 00:14:06,400 Speaker 1: the spread of the of the virus. So Vin's just 271 00:14:06,440 --> 00:14:09,080 Speaker 1: going at the overall volatility in the equity markets. I'm 272 00:14:09,080 --> 00:14:11,319 Speaker 1: looking at the vix here something Tom likes to call out. 273 00:14:11,320 --> 00:14:13,120 Speaker 1: Tom King likes to call out. And you know, we 274 00:14:13,240 --> 00:14:16,640 Speaker 1: peaked at over eighty, but we're certainly a long ways 275 00:14:16,679 --> 00:14:19,640 Speaker 1: from the you know, the mid teens level that we've enjoyed. 276 00:14:19,680 --> 00:14:22,560 Speaker 1: I guess pre virus give us a sense of kind 277 00:14:22,600 --> 00:14:25,280 Speaker 1: of what that tells you is the market getting a 278 00:14:25,280 --> 00:14:31,120 Speaker 1: little maybe too sanguine about kind of the near intermediate term. Yeah, 279 00:14:31,160 --> 00:14:33,360 Speaker 1: I mean in a way it doesn't mean you look, 280 00:14:33,720 --> 00:14:35,520 Speaker 1: you know, I have to say I looked. I look, 281 00:14:35,720 --> 00:14:38,040 Speaker 1: when I look at futures in the evenings, you know, 282 00:14:38,120 --> 00:14:40,480 Speaker 1: the night before, I'm like, they're only down four hundred. 283 00:14:40,680 --> 00:14:43,440 Speaker 1: You start to think like, I'm getting accustomed to these 284 00:14:43,480 --> 00:14:47,680 Speaker 1: moves of of being, you know, almost getting getting used 285 00:14:47,680 --> 00:14:50,320 Speaker 1: to the fact that you know, two point moving into doubt. 286 00:14:50,320 --> 00:14:52,600 Speaker 1: It's really not that big a deal anymore in terms of, 287 00:14:52,960 --> 00:14:56,200 Speaker 1: you know, comparatively speaking, And I think the markets starting 288 00:14:56,240 --> 00:14:59,520 Speaker 1: to fall into that trap as well. Where you know, 289 00:14:59,600 --> 00:15:01,400 Speaker 1: a lot of the money that we're trading right now, 290 00:15:01,440 --> 00:15:03,240 Speaker 1: a lot of what we're seeing. You know, everybody talks 291 00:15:03,280 --> 00:15:05,200 Speaker 1: about it, but it's it is a reality. It's a 292 00:15:05,240 --> 00:15:08,280 Speaker 1: lot of it as machine driven. Um. I think the 293 00:15:08,280 --> 00:15:12,760 Speaker 1: the interesting point is these are algorithmic, algorithmic programs that 294 00:15:12,800 --> 00:15:17,920 Speaker 1: are pre virus written. They're running I think in a way, 295 00:15:18,560 --> 00:15:20,560 Speaker 1: I think that's trading on the world things. I mean, 296 00:15:20,600 --> 00:15:22,760 Speaker 1: they're just not built for this type of the move 297 00:15:23,080 --> 00:15:25,080 Speaker 1: So that's why I think we're seeing this volatility and 298 00:15:25,080 --> 00:15:27,960 Speaker 1: we'll see it continue for a while. Vince Signarella, I 299 00:15:27,960 --> 00:15:29,640 Speaker 1: would love to keep talking with you. We have to 300 00:15:29,680 --> 00:15:31,840 Speaker 1: leave it there for Tom constrains. Vince Ignerella, global macro 301 00:15:31,880 --> 00:15:35,520 Speaker 1: strategist for Bloomberg speaking to us about those algories which 302 00:15:35,520 --> 00:15:37,800 Speaker 1: are written for another era. Everything written for another era, 303 00:15:37,960 --> 00:15:41,240 Speaker 1: nothing written for this era, which is unprecedented in every 304 00:15:41,440 --> 00:15:46,720 Speaker 1: which way. Let me take a look at gold that 305 00:15:46,840 --> 00:15:50,200 Speaker 1: is up eleven percent year to date. Is people look 306 00:15:50,240 --> 00:15:53,360 Speaker 1: for a safe haven among other issues here in this 307 00:15:53,520 --> 00:15:56,600 Speaker 1: incredible time we're living through. Will Ryan is a founder 308 00:15:56,600 --> 00:15:58,800 Speaker 1: and CEO of Granite Charity Space in New York City, 309 00:15:59,160 --> 00:16:01,800 Speaker 1: UH and spends a lot of time looking at the 310 00:16:01,880 --> 00:16:04,920 Speaker 1: gold market, So will give us your thoughts as we 311 00:16:05,040 --> 00:16:07,480 Speaker 1: take a look at gold. How do you think gold 312 00:16:07,480 --> 00:16:10,440 Speaker 1: should be used in investors portfolio in these uncertain times? 313 00:16:11,320 --> 00:16:13,640 Speaker 1: All right, Paul, good morning. Um, well, I think the 314 00:16:13,680 --> 00:16:15,840 Speaker 1: main demand for gold at the moment is the people 315 00:16:15,960 --> 00:16:19,760 Speaker 1: that are really looking for some kind of protection, some 316 00:16:19,840 --> 00:16:23,880 Speaker 1: kind of installation from what's happening. And typically these times, 317 00:16:24,160 --> 00:16:27,320 Speaker 1: people are not investing in gold to make money per se, 318 00:16:27,360 --> 00:16:30,160 Speaker 1: They just don't want to lose money. And that's really 319 00:16:30,800 --> 00:16:33,360 Speaker 1: been the main theme I think since this crisis has started. 320 00:16:33,440 --> 00:16:37,280 Speaker 1: So you know, gold typically acts as a diversifier because 321 00:16:37,320 --> 00:16:40,240 Speaker 1: it's uncorrelated to the stock markets. In other words, of 322 00:16:40,320 --> 00:16:43,680 Speaker 1: the stock market falls, typically you can see gold rising 323 00:16:44,080 --> 00:16:47,000 Speaker 1: and really that's created a big demand for investors who 324 00:16:47,000 --> 00:16:50,880 Speaker 1: are fearful about you know, losses in the portfolio. So 325 00:16:51,040 --> 00:16:54,120 Speaker 1: gold has been a big winner recently. Is people look 326 00:16:54,240 --> 00:16:58,400 Speaker 1: to the potential for money printing around the world and 327 00:16:58,480 --> 00:17:01,120 Speaker 1: just sort of a lack of stability. Uh, as we 328 00:17:01,160 --> 00:17:05,120 Speaker 1: head towards are in a global recession, I'm wondering though 329 00:17:05,160 --> 00:17:08,000 Speaker 1: going forward, what arguments people should really be looking at 330 00:17:08,040 --> 00:17:10,120 Speaker 1: in terms of deciding whether to buy or sell gold. 331 00:17:10,160 --> 00:17:12,960 Speaker 1: In other words, is it the money printing argument that 332 00:17:13,040 --> 00:17:16,959 Speaker 1: the idea that developed markets are going to somehow devalue 333 00:17:17,000 --> 00:17:21,480 Speaker 1: their currencies because they are engaging in unprecedented stimulus and 334 00:17:21,520 --> 00:17:25,960 Speaker 1: bailout efforts, or is it more behaven investment strategy. During 335 00:17:25,960 --> 00:17:29,159 Speaker 1: a tumultuous time, people want something to anchor their bets to, 336 00:17:29,560 --> 00:17:33,520 Speaker 1: and gold is a good place. I think it's both, Lisa. 337 00:17:33,680 --> 00:17:36,160 Speaker 1: I mean, I think you've got a verse situation that's 338 00:17:36,280 --> 00:17:38,640 Speaker 1: very similar to what happened in two thousand and eight. 339 00:17:39,080 --> 00:17:41,280 Speaker 1: Of course, in two thousand and eight, you had those 340 00:17:41,359 --> 00:17:45,960 Speaker 1: two particular situations at play, where you had a lot 341 00:17:46,000 --> 00:17:49,080 Speaker 1: of money printing here in the US but all around 342 00:17:49,160 --> 00:17:52,919 Speaker 1: the world. At the same time as you had, you know, 343 00:17:53,119 --> 00:17:58,359 Speaker 1: fears about the market in general and people looking for 344 00:17:58,920 --> 00:18:02,280 Speaker 1: an alternative two stocks and bombs. So I think you 345 00:18:02,280 --> 00:18:04,040 Speaker 1: give the same thing this time around. I would just 346 00:18:04,080 --> 00:18:07,159 Speaker 1: add in one more thing that, of course, all this 347 00:18:07,280 --> 00:18:10,920 Speaker 1: money printing is unprecedented. We said that last time in 348 00:18:11,000 --> 00:18:13,840 Speaker 1: two thousand and eight, but um, this time around, it 349 00:18:13,960 --> 00:18:16,600 Speaker 1: it's even bigger in terms of the magnitude and the scale. 350 00:18:17,240 --> 00:18:19,240 Speaker 1: I think what comes with it this time, which is 351 00:18:19,240 --> 00:18:21,120 Speaker 1: different from two thousand and eight is I think we'll 352 00:18:21,160 --> 00:18:25,760 Speaker 1: see a lot more spending from the federal government. In 353 00:18:25,760 --> 00:18:28,760 Speaker 1: many ways, a lot of the policies that were enacted 354 00:18:28,800 --> 00:18:32,200 Speaker 1: post two thousand and eight were more restrictive. You could 355 00:18:32,320 --> 00:18:34,760 Speaker 1: you might argue that they were sort of austere or 356 00:18:34,760 --> 00:18:38,119 Speaker 1: policies of austerity, um, and that limited or put the 357 00:18:38,119 --> 00:18:42,240 Speaker 1: brakes on inflation. I think this time around, Um, we've 358 00:18:42,280 --> 00:18:45,639 Speaker 1: already already started talking about what the administration is talking about, 359 00:18:46,040 --> 00:18:49,440 Speaker 1: you know, potential two trillion dollars of infrastructure other types 360 00:18:49,440 --> 00:18:51,439 Speaker 1: of spending, and I think that this time around that 361 00:18:51,480 --> 00:18:55,840 Speaker 1: could lead to inflation. So it's it's interesting, Will, So 362 00:18:56,920 --> 00:18:59,000 Speaker 1: what is your sense as two bonds here? I mean, 363 00:18:59,040 --> 00:19:02,959 Speaker 1: we've had tremendous for school stimulus, monetary easy looking at 364 00:19:02,960 --> 00:19:07,159 Speaker 1: the bond market right here. Yeah, so the bond market, 365 00:19:07,280 --> 00:19:11,159 Speaker 1: I means has been big mess um as you know, 366 00:19:11,359 --> 00:19:15,320 Speaker 1: but obviously the Federal Reserve is stepped in and really 367 00:19:15,400 --> 00:19:18,159 Speaker 1: backstop the entire bondmark. And then you know, clearly that 368 00:19:18,240 --> 00:19:21,199 Speaker 1: started with treasuries as one would expect, which is the 369 00:19:21,200 --> 00:19:25,200 Speaker 1: playbook from the last financial crisis of from two thousand 370 00:19:25,280 --> 00:19:27,800 Speaker 1: and eight. And then what's different this time is that's 371 00:19:27,800 --> 00:19:32,640 Speaker 1: been extended into corporate bombs and now obviously the latest 372 00:19:32,640 --> 00:19:35,479 Speaker 1: as jump bonds, and so really the entire market has 373 00:19:35,480 --> 00:19:38,560 Speaker 1: been back stopped by the Federal Reserve, which has made 374 00:19:38,600 --> 00:19:42,280 Speaker 1: that again unprecedented versus what we've seen in the past. 375 00:19:43,600 --> 00:19:45,960 Speaker 1: And you're just talking about inflations, you sort of have 376 00:19:46,080 --> 00:19:48,320 Speaker 1: the fedbackstop, and then you also have the idea that 377 00:19:48,359 --> 00:19:52,600 Speaker 1: you do believe that inflation is going to start picking up. 378 00:19:52,680 --> 00:19:54,840 Speaker 1: I'm trying to square that with the reality that we're 379 00:19:54,840 --> 00:19:58,119 Speaker 1: looking at right now of oil and the fact that 380 00:19:58,200 --> 00:20:01,640 Speaker 1: oil prices have fallen to the lower since nine two 381 00:20:01,840 --> 00:20:03,800 Speaker 1: and just keep falling. And I'm talking about the front 382 00:20:03,880 --> 00:20:06,119 Speaker 1: end contract and let's just put aside some of the 383 00:20:06,160 --> 00:20:09,720 Speaker 1: technical backings here. It's clear that there is a glut 384 00:20:09,720 --> 00:20:12,160 Speaker 1: of oil and we are running out of storage capacity. 385 00:20:12,560 --> 00:20:16,600 Speaker 1: Square that with the idea of inflation. Well, oil is 386 00:20:16,640 --> 00:20:20,600 Speaker 1: a very very specific thing at the moment, and you 387 00:20:20,640 --> 00:20:24,679 Speaker 1: know you have again this is really quite incredible situation 388 00:20:24,760 --> 00:20:28,080 Speaker 1: where we're probably here in terms of Cushing, which is 389 00:20:28,119 --> 00:20:31,879 Speaker 1: the main storage you know, hub for W T I oil, 390 00:20:31,880 --> 00:20:34,040 Speaker 1: We're probably going to reach the top of the tanks 391 00:20:34,560 --> 00:20:37,959 Speaker 1: in terms of storage capacity sometime maybe as early as 392 00:20:38,040 --> 00:20:41,760 Speaker 1: next month, and really there's no other place or very 393 00:20:41,800 --> 00:20:46,800 Speaker 1: few options as to where else you can store excess capacity. 394 00:20:46,960 --> 00:20:51,520 Speaker 1: As you know, the the coronavirus has taken all transportation 395 00:20:51,880 --> 00:20:54,640 Speaker 1: for the most majority of transportation offline, and you need 396 00:20:55,040 --> 00:20:58,560 Speaker 1: to see a recovery in in the gasoline market to 397 00:20:58,880 --> 00:21:02,280 Speaker 1: increase oil prices. But I think, coming back to the 398 00:21:02,320 --> 00:21:06,359 Speaker 1: inflation re argument, you can have a situation where this 399 00:21:06,680 --> 00:21:11,520 Speaker 1: money printing, extreme kind of debasement leads to inflation, albeit 400 00:21:12,440 --> 00:21:16,600 Speaker 1: albeit while you have severe sort of economic indicators that 401 00:21:16,600 --> 00:21:18,360 Speaker 1: that are down and an oil is a big one, 402 00:21:19,359 --> 00:21:22,359 Speaker 1: all right, So there's this idea of the print a 403 00:21:22,359 --> 00:21:24,880 Speaker 1: lot of money and it loses its value and prices 404 00:21:24,920 --> 00:21:26,720 Speaker 1: go up, and then you have oil is sort of 405 00:21:26,760 --> 00:21:29,280 Speaker 1: a barometer of global trade and global growth. Do you 406 00:21:29,320 --> 00:21:33,560 Speaker 1: expect oil prices to remain depressed for a long period 407 00:21:33,560 --> 00:21:36,320 Speaker 1: of time or do you adhere to the idea that 408 00:21:36,359 --> 00:21:38,600 Speaker 1: in the short roum we're going to see production drop off, 409 00:21:38,640 --> 00:21:41,680 Speaker 1: We're going to see oil producers just stop out their 410 00:21:41,880 --> 00:21:45,719 Speaker 1: their wells, and then that will lead to a spike 411 00:21:45,760 --> 00:21:49,040 Speaker 1: in oil prices when the economy comes to some sort 412 00:21:49,080 --> 00:21:54,520 Speaker 1: of new normal post pandemic um. You know, I I 413 00:21:54,600 --> 00:21:58,560 Speaker 1: don't know, is the honest answer, because there's so much 414 00:21:58,960 --> 00:22:01,160 Speaker 1: play here. I mean, one thing I will say is 415 00:22:01,560 --> 00:22:04,560 Speaker 1: there's been a lot of talk about the Opeque Russia 416 00:22:05,240 --> 00:22:09,920 Speaker 1: UM supply cuts that were announced just over a couple 417 00:22:09,920 --> 00:22:12,639 Speaker 1: of weeks ago, but that doesn't come into play until 418 00:22:12,680 --> 00:22:16,000 Speaker 1: May one, So we've still got another month to play 419 00:22:16,000 --> 00:22:20,080 Speaker 1: out of all that supply cut takes place. But even then, 420 00:22:20,720 --> 00:22:23,919 Speaker 1: I don't think that's enough to, you know, to stave 421 00:22:23,960 --> 00:22:27,520 Speaker 1: off the sheer demand destruction that we've seen. I mean, 422 00:22:27,760 --> 00:22:31,400 Speaker 1: as you know, the biggest, you know, the biggest contributor 423 00:22:31,480 --> 00:22:37,960 Speaker 1: to demand is transportation. And if transportation it's just not operating, 424 00:22:38,040 --> 00:22:40,239 Speaker 1: then you don't have that demand. And that's why we've 425 00:22:40,240 --> 00:22:44,960 Speaker 1: seen this unprecedented build up in capacity. So I think 426 00:22:45,000 --> 00:22:48,160 Speaker 1: that you're going to exceed this continue for as long 427 00:22:48,200 --> 00:22:51,520 Speaker 1: as that, um, you know, that sector stays down, our 428 00:22:51,640 --> 00:22:55,280 Speaker 1: dormant and so we start driving again. And if that's 429 00:22:55,320 --> 00:23:00,359 Speaker 1: into the into a that's into a market where apply 430 00:23:00,520 --> 00:23:03,480 Speaker 1: as being cut or adjusted to coordinate, and you could 431 00:23:03,520 --> 00:23:06,399 Speaker 1: see as blank in demand. But I think right now, UM, 432 00:23:06,440 --> 00:23:09,120 Speaker 1: you know, the clear and obvious thing is the oil 433 00:23:09,160 --> 00:23:11,600 Speaker 1: prices are going to be low for some time until 434 00:23:11,640 --> 00:23:14,679 Speaker 1: this this is correct grafted. Yeah, well Ryan, thank you 435 00:23:14,680 --> 00:23:16,600 Speaker 1: so much for being with us. Will Ryan, chief executive 436 00:23:16,600 --> 00:23:19,359 Speaker 1: officer of Granite Shares talking to us about a range 437 00:23:19,359 --> 00:23:22,800 Speaker 1: of commodities as we face a recession and the question 438 00:23:22,880 --> 00:23:26,000 Speaker 1: is for how long and how will we restart the economy. 439 00:23:26,880 --> 00:23:29,120 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 440 00:23:29,280 --> 00:23:31,920 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 441 00:23:31,960 --> 00:23:35,080 Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on 442 00:23:35,080 --> 00:23:37,760 Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woyds. I'm on 443 00:23:37,760 --> 00:23:40,639 Speaker 1: Twitter at Lisa A. Bramwoits one before the podcast, you 444 00:23:40,680 --> 00:23:43,200 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.