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 --> 00:00:27,240
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. To me,

5
00:00:27,360 --> 00:00:29,800
Speaker 1: the story that struck out to me over the weekend

6
00:00:30,320 --> 00:00:34,199
Speaker 1: was about how some drillers are now paying people to

7
00:00:34,280 --> 00:00:38,040
Speaker 1: take the oil away from them. Basically negative pricing in

8
00:00:38,080 --> 00:00:40,440
Speaker 1: the oil patch given the glut that we're seeing in

9
00:00:40,440 --> 00:00:43,599
Speaker 1: the lack of storage available, just shocking. Well, let's talk

10
00:00:43,640 --> 00:00:46,120
Speaker 1: about that with Francisco Blanche Bank America Global head of

11
00:00:46,120 --> 00:00:49,559
Speaker 1: Commodities and Derivotius Research. Lucky to have Francisco join us

12
00:00:49,560 --> 00:00:52,320
Speaker 1: on the phone this morning. Fantastic to have you with us. Francisco,

13
00:00:52,400 --> 00:00:55,240
Speaker 1: let's start the show. We are we breaching storage capacity

14
00:00:55,560 --> 00:01:00,760
Speaker 1: in various parts of the United States. Thanks for having me. Jonathan, Um,

15
00:01:00,800 --> 00:01:02,720
Speaker 1: we are. We are not yet, but we are going

16
00:01:02,760 --> 00:01:06,440
Speaker 1: to get there very soon. I remember you were asking before,

17
00:01:06,600 --> 00:01:09,120
Speaker 1: what's the bigger show because the demand show sply shock.

18
00:01:09,600 --> 00:01:12,479
Speaker 1: Well it's the demand shok. We think that demand will

19
00:01:12,520 --> 00:01:15,559
Speaker 1: be down seventeen million barrels a day in the month

20
00:01:15,600 --> 00:01:20,760
Speaker 1: of April globally. Remember that's a seventeen percent decline on

21
00:01:20,760 --> 00:01:25,759
Speaker 1: a hundred million barrel base. So UM the supply self,

22
00:01:25,800 --> 00:01:28,000
Speaker 1: by contrast, I think it's probably gonna be about three

23
00:01:28,040 --> 00:01:32,000
Speaker 1: or four million barrels in April. UM. So, so now

24
00:01:32,040 --> 00:01:34,360
Speaker 1: we're looking at a massive glass that we've never seen before.

25
00:01:34,800 --> 00:01:38,679
Speaker 1: When when when you say, when you say Francisco demand

26
00:01:38,680 --> 00:01:43,080
Speaker 1: goes down seventeen million barrels, What demand drops? I mean

27
00:01:43,160 --> 00:01:47,600
Speaker 1: what usage causes that drop? And demand do we stop?

28
00:01:47,840 --> 00:01:50,360
Speaker 1: I mean is it John stop? And do using ubers

29
00:01:50,400 --> 00:01:55,840
Speaker 1: in the Bentley and all that? What causes it? Well? So, so,

30
00:01:55,960 --> 00:01:58,960
Speaker 1: first of all, um, I would say the most impacted

31
00:01:59,040 --> 00:02:03,480
Speaker 1: sector is UH airlines. In the U s Alone, we've

32
00:02:03,520 --> 00:02:08,200
Speaker 1: seen traffic traffic down more than eighty five percent um

33
00:02:08,320 --> 00:02:11,839
Speaker 1: TOM eighty five I mean, we've basically shut down most

34
00:02:11,840 --> 00:02:15,639
Speaker 1: domestic travel in Europe. We can see similar numbers down

35
00:02:15,680 --> 00:02:19,079
Speaker 1: eighty nine percent across most countries. UM. If you look

36
00:02:19,120 --> 00:02:23,440
Speaker 1: at China, however, which is interesting, the drop there also

37
00:02:23,520 --> 00:02:27,560
Speaker 1: was about eighty five percent at the trial. However, they've

38
00:02:27,560 --> 00:02:33,240
Speaker 1: only recovered to around of normal levels despite having been

39
00:02:33,320 --> 00:02:36,200
Speaker 1: dealing with the virus for three months. So so clearly

40
00:02:36,200 --> 00:02:39,400
Speaker 1: the airline sector is the most impacted one. Uh, followed

41
00:02:39,400 --> 00:02:43,760
Speaker 1: by UM, you know you're asking about Uger's and I

42
00:02:43,760 --> 00:02:45,840
Speaker 1: think a lot of people are working from home now,

43
00:02:46,280 --> 00:02:49,680
Speaker 1: so that's a lot of restaurants are shut down. Uh.

44
00:02:50,040 --> 00:02:53,880
Speaker 1: Basically two people are going are losing jobs, so there's

45
00:02:53,919 --> 00:02:56,080
Speaker 1: a lot of people staying home either because then at

46
00:02:56,080 --> 00:02:58,760
Speaker 1: have jobs because they're working remotely. So it's also heard

47
00:02:58,760 --> 00:03:03,639
Speaker 1: in gulfiling demand. We're in numbers down thirty uh year

48
00:03:03,639 --> 00:03:07,520
Speaker 1: and year in gasoline man here, so it's really across

49
00:03:07,520 --> 00:03:10,840
Speaker 1: the board, but the most impacted sector is the airline sector.

50
00:03:11,360 --> 00:03:14,200
Speaker 1: So going forward, Sebastian Gailey of Nordea Bank earlier in

51
00:03:14,200 --> 00:03:16,400
Speaker 1: the show was saying that he expects oil to go

52
00:03:16,440 --> 00:03:19,840
Speaker 1: back up to forty five barrel at some point in

53
00:03:19,919 --> 00:03:23,240
Speaker 1: the not so distant future. How realistic is that and

54
00:03:23,280 --> 00:03:26,000
Speaker 1: how long lasting is this period of time where we

55
00:03:26,040 --> 00:03:30,639
Speaker 1: could see sub twenty dollars a barrel oil? Um. So

56
00:03:31,480 --> 00:03:35,000
Speaker 1: we're we're looking at this crisis into UH looking at

57
00:03:35,040 --> 00:03:37,680
Speaker 1: the two main parameters. One is the depth of the

58
00:03:37,720 --> 00:03:43,040
Speaker 1: initial drop and then second is the dulation of the crisis. UM.

59
00:03:43,080 --> 00:03:44,920
Speaker 1: I think we have a you know, I think we

60
00:03:45,160 --> 00:03:48,480
Speaker 1: have a reasonable handle on the droop. We think seventeen

61
00:03:48,480 --> 00:03:51,440
Speaker 1: million barrels today is the right number. It could be twenty,

62
00:03:51,480 --> 00:03:55,480
Speaker 1: it could be fifteen. Again, it's hard to tell, right, Um,

63
00:03:55,520 --> 00:03:58,240
Speaker 1: there's a lot of guesswork going on here. But then

64
00:03:58,280 --> 00:04:01,120
Speaker 1: the duration is a little more complete hit it um.

65
00:04:01,200 --> 00:04:03,280
Speaker 1: Now in China, as I said before, we started to

66
00:04:03,280 --> 00:04:07,720
Speaker 1: see a very modest recovery, although for example, traffic, which

67
00:04:07,840 --> 00:04:10,800
Speaker 1: which also took a big hitting China, is back to

68
00:04:10,880 --> 00:04:14,880
Speaker 1: about normal, so roughly down fifteen percent year and year.

69
00:04:15,000 --> 00:04:20,640
Speaker 1: I suppose we're not earlier um earlier in in in

70
00:04:20,680 --> 00:04:24,360
Speaker 1: the first quarter. So those are the key numbers really

71
00:04:24,400 --> 00:04:27,640
Speaker 1: to watch the recovery rate. Do you just assume a

72
00:04:27,760 --> 00:04:31,960
Speaker 1: week bundled commodity index? Do you just assume weaker Aussie

73
00:04:32,040 --> 00:04:35,200
Speaker 1: dollar versus the yan or other metrics? I mean, is

74
00:04:35,240 --> 00:04:39,560
Speaker 1: it just a fade away for commodities. Um, it's gonna

75
00:04:39,560 --> 00:04:41,400
Speaker 1: be a little bit of straight away for a little bit.

76
00:04:41,520 --> 00:04:43,599
Speaker 1: But but then remember the other thing that's gonna happen

77
00:04:43,680 --> 00:04:45,320
Speaker 1: tom in the in the second half of the year

78
00:04:45,360 --> 00:04:48,840
Speaker 1: maybe is that we are going to to lose a

79
00:04:48,880 --> 00:04:53,080
Speaker 1: lot of supply either because in cases like copper, we

80
00:04:53,160 --> 00:04:55,960
Speaker 1: have fifteen percent of supply at risk, or in cases

81
00:04:56,000 --> 00:04:59,960
Speaker 1: like oil, we're just gonna decimate investment across a broad

82
00:05:00,120 --> 00:05:02,880
Speaker 1: range of regions, which in turn will lead to a

83
00:05:02,920 --> 00:05:07,400
Speaker 1: supply decline into one UM and then then as it

84
00:05:07,480 --> 00:05:10,359
Speaker 1: released to our culture. That's the news about you know,

85
00:05:10,480 --> 00:05:17,600
Speaker 1: news about UH. Potentially the some some agricultural commodity producers

86
00:05:18,000 --> 00:05:23,880
Speaker 1: facing UM coronavirus risks as well at their at their plans.

87
00:05:23,920 --> 00:05:26,440
Speaker 1: So I think I think the biggest risk really is

88
00:05:26,440 --> 00:05:30,480
Speaker 1: is UH demand goes down nationally, prices go down. Then

89
00:05:31,000 --> 00:05:34,320
Speaker 1: as we recover, we will have hampered, we will have

90
00:05:34,440 --> 00:05:37,080
Speaker 1: heard our productive capacity and thus what leads to the

91
00:05:37,160 --> 00:05:41,160
Speaker 1: price rally at some point in in the recovery cycle.

92
00:05:41,240 --> 00:05:44,640
Speaker 1: Whether that's end of twenty one, I don't know. It

93
00:05:44,680 --> 00:05:48,600
Speaker 1: depends on how long this this UH crisis last. Francisco Blach,

94
00:05:48,680 --> 00:05:51,400
Speaker 1: the Bank America winking on the commodity round. They crew

95
00:05:51,520 --> 00:05:56,400
Speaker 1: dressed specifically. We would like to welcome to the SIS

96
00:05:56,440 --> 00:06:00,160
Speaker 1: President Jo Bollard, to Bloomberg Television and Radio Worldwide, thank

97
00:06:00,200 --> 00:06:03,279
Speaker 1: you for joining us this morning. I want to see

98
00:06:03,320 --> 00:06:05,440
Speaker 1: if we can't catch up a little bit about ten

99
00:06:05,560 --> 00:06:08,640
Speaker 1: days ago you predicted we could see unemployment as high

100
00:06:08,680 --> 00:06:12,000
Speaker 1: as thirty percent in the second quarter, and you call

101
00:06:12,120 --> 00:06:15,880
Speaker 1: for a massive stimulus program. We got a massive stimulus program.

102
00:06:15,960 --> 00:06:22,200
Speaker 1: So does that change your forecast for unemployment and growth? Yeah,

103
00:06:22,200 --> 00:06:26,080
Speaker 1: thanks for having me this morning. I did want to

104
00:06:26,120 --> 00:06:29,240
Speaker 1: see pandemic relief. I wouldn't call it stimulus. I would

105
00:06:29,240 --> 00:06:33,919
Speaker 1: call it pandemic relief. Uh. What I interpret the program

106
00:06:34,000 --> 00:06:38,800
Speaker 1: is trying to do is stabilize incomes and stabilize businesses

107
00:06:39,040 --> 00:06:43,000
Speaker 1: as we work our way through this investment in our

108
00:06:43,120 --> 00:06:47,160
Speaker 1: national health over the next couple of months. Here on

109
00:06:47,279 --> 00:06:51,560
Speaker 1: the unemployment, uh, we do have a blog on this. Uh.

110
00:06:51,600 --> 00:06:54,320
Speaker 1: If you read the blog carefully, you'll see that there

111
00:06:54,640 --> 00:06:58,760
Speaker 1: is a way to bound the unemployment rate. It's going

112
00:06:58,760 --> 00:07:02,359
Speaker 1: to be somewhere between ten and I think the upper

113
00:07:02,360 --> 00:07:08,160
Speaker 1: bound is like but that's because we're just identifying vulnerable

114
00:07:08,200 --> 00:07:13,040
Speaker 1: workers in this environment. And what's going to happen is

115
00:07:13,080 --> 00:07:16,680
Speaker 1: that those workers, some of those workers are going to

116
00:07:16,760 --> 00:07:19,080
Speaker 1: have to seek relief so that they can pay their

117
00:07:19,080 --> 00:07:22,160
Speaker 1: bills through this period. So we're expecting the unemployment rate

118
00:07:22,200 --> 00:07:26,320
Speaker 1: to spike, but let's call that pandemic relieve. Then they

119
00:07:26,360 --> 00:07:29,960
Speaker 1: can pay their bills and once the virus goes away,

120
00:07:30,000 --> 00:07:32,640
Speaker 1: then we'll be able to return to normal. So hopefully,

121
00:07:32,800 --> 00:07:35,560
Speaker 1: if this all works smoothly, and there's a lot in

122
00:07:35,560 --> 00:07:38,640
Speaker 1: the legislation as well, UM, we'll be able to come

123
00:07:38,640 --> 00:07:42,360
Speaker 1: out on the other side and get the economy rock

124
00:07:42,400 --> 00:07:46,280
Speaker 1: and again. Well, Wednesday is April one. Mortgage payments are due,

125
00:07:46,320 --> 00:07:49,240
Speaker 1: rent payments are due, Utility bills are do. Could we

126
00:07:49,280 --> 00:07:56,280
Speaker 1: have a problem if people can't pay their bills on Wednesday? Uh?

127
00:07:56,920 --> 00:08:00,280
Speaker 1: My sense is, of course, we're in a crisis situation ration.

128
00:08:00,440 --> 00:08:04,240
Speaker 1: But my sense is that everyone really understands what's going

129
00:08:04,320 --> 00:08:09,160
Speaker 1: on here now because obviously it's been the topic number one,

130
00:08:09,240 --> 00:08:11,200
Speaker 1: not just in the US but around the world. So

131
00:08:11,520 --> 00:08:18,239
Speaker 1: I think people pretty much understand that, Uh, the relief

132
00:08:18,320 --> 00:08:21,320
Speaker 1: is supposed to enable people to pay their bills as

133
00:08:21,400 --> 00:08:26,840
Speaker 1: best they can. Um, there might be some uh delays

134
00:08:26,960 --> 00:08:30,320
Speaker 1: and things you'd expect that in a crisis situation, but

135
00:08:30,480 --> 00:08:33,400
Speaker 1: by and large, I think there are plenty of resources

136
00:08:33,440 --> 00:08:37,319
Speaker 1: in the fiscal package to handle what we're going to

137
00:08:37,400 --> 00:08:40,320
Speaker 1: go through here. Well, the main street lending program that

138
00:08:40,360 --> 00:08:42,920
Speaker 1: you guys have announced is in the package. How's that

139
00:08:42,960 --> 00:08:48,440
Speaker 1: going to work? And when does that start? Uh? That's

140
00:08:48,480 --> 00:08:52,960
Speaker 1: in the design phase right now. So I think from

141
00:08:52,960 --> 00:08:56,120
Speaker 1: a firm's point of view, there are two ways to

142
00:08:56,640 --> 00:09:00,640
Speaker 1: handle the crisis. One would be the traditional, which would

143
00:09:00,640 --> 00:09:05,280
Speaker 1: be to shut down temporarily and send the workers over

144
00:09:05,480 --> 00:09:10,080
Speaker 1: to the pandemic relief or unemployment line. And a lot

145
00:09:10,080 --> 00:09:12,240
Speaker 1: of that is going to occur. That's already occurred. We

146
00:09:12,280 --> 00:09:16,680
Speaker 1: sell the claims number last week, UH, and that's okay,

147
00:09:16,760 --> 00:09:20,720
Speaker 1: you're getting UH, and the the umployment insurance benefit is

148
00:09:20,760 --> 00:09:24,720
Speaker 1: beefed up, so they're going to get closer to acent

149
00:09:24,840 --> 00:09:27,000
Speaker 1: or maybe a dent of what they would would have

150
00:09:27,080 --> 00:09:30,960
Speaker 1: gotten had they just continued to work. So I think

151
00:09:30,960 --> 00:09:33,600
Speaker 1: that part that's one way to go. But if if

152
00:09:33,640 --> 00:09:36,520
Speaker 1: the firm goes in that direction, they might lose connection

153
00:09:36,600 --> 00:09:40,800
Speaker 1: with their workers. So another direction to go is to

154
00:09:40,800 --> 00:09:43,880
Speaker 1: go to the Small Business Administration get a loan, which

155
00:09:43,920 --> 00:09:48,480
Speaker 1: is ultimately forgivable if you meet certain conditions, mainly that

156
00:09:48,559 --> 00:09:53,080
Speaker 1: you keep your payroll more or less intact. So if

157
00:09:53,120 --> 00:09:55,240
Speaker 1: you go that route as a firm, then you might

158
00:09:55,280 --> 00:09:58,320
Speaker 1: be able to retain all your workers and then when

159
00:09:58,679 --> 00:10:03,080
Speaker 1: the startup occurs later, you'll be able to have the

160
00:10:03,120 --> 00:10:06,280
Speaker 1: same workers and you don't have to go higher all

161
00:10:06,320 --> 00:10:09,600
Speaker 1: over again and get your business ramped up again. So

162
00:10:10,240 --> 00:10:13,480
Speaker 1: that might be a better way to go for many companies.

163
00:10:13,600 --> 00:10:16,840
Speaker 1: If companies decide to go that way, then we'll see

164
00:10:17,000 --> 00:10:21,040
Speaker 1: lower unemployment and more uptake on sp a loan side.

165
00:10:21,600 --> 00:10:24,880
Speaker 1: Your district has a lower incidence of infection rate at

166
00:10:24,920 --> 00:10:27,320
Speaker 1: this point, So what's happening in your district? I normally

167
00:10:27,559 --> 00:10:29,319
Speaker 1: ask you what the CEOs are telling you, but I

168
00:10:29,360 --> 00:10:31,440
Speaker 1: also want to know what mom and pop are telling

169
00:10:31,440 --> 00:10:36,360
Speaker 1: you from the mom and pop stores. Yeah, we do

170
00:10:36,559 --> 00:10:40,880
Speaker 1: have a lower rate of infection, but boy, it's pretty quiet,

171
00:10:41,640 --> 00:10:44,880
Speaker 1: uh the you know where I live here in the

172
00:10:45,280 --> 00:10:49,600
Speaker 1: fameless metro area. You know, most things are shut down.

173
00:10:49,760 --> 00:10:53,400
Speaker 1: People stay at home. So that makes me think, uh,

174
00:10:53,600 --> 00:10:57,160
Speaker 1: and just reading about it across the country that the

175
00:10:57,280 --> 00:11:00,520
Speaker 1: idea that there's a lot of regional variation here probably

176
00:11:00,640 --> 00:11:03,600
Speaker 1: not the right way to think about this. I think

177
00:11:04,120 --> 00:11:08,160
Speaker 1: pretty much everywhere has has bought into the idea that

178
00:11:08,920 --> 00:11:11,360
Speaker 1: you should be very careful about going out and very

179
00:11:11,440 --> 00:11:15,200
Speaker 1: careful about spreading this vibrus. Also, I think another thing

180
00:11:15,240 --> 00:11:17,839
Speaker 1: to keep in mind, this is not just things that

181
00:11:17,920 --> 00:11:23,199
Speaker 1: are ordered by health officials. This is individuals and families

182
00:11:23,480 --> 00:11:26,880
Speaker 1: making their own decisions and businesses making their own decisions

183
00:11:26,920 --> 00:11:29,120
Speaker 1: about how they want to handle the situation. So what

184
00:11:29,360 --> 00:11:33,240
Speaker 1: you have is a kind of private sector and household

185
00:11:33,520 --> 00:11:37,959
Speaker 1: response to the crisis, which includes them not wanting to

186
00:11:38,040 --> 00:11:41,520
Speaker 1: get sick and not wanting to get others that are

187
00:11:41,559 --> 00:11:45,760
Speaker 1: in their circle sick. So because of that, um, regardless

188
00:11:45,760 --> 00:11:47,920
Speaker 1: of what the health officials would say, at this point,

189
00:11:48,040 --> 00:11:51,400
Speaker 1: I think everyone wants to basically stay home until this

190
00:11:52,320 --> 00:11:55,120
Speaker 1: virus goes away. And so because of that, I think

191
00:11:55,160 --> 00:11:59,280
Speaker 1: all across the country you're basically in a partial shutdown situation.

192
00:12:00,120 --> 00:12:01,559
Speaker 1: Let me ask you a couple of things about the

193
00:12:01,840 --> 00:12:04,720
Speaker 1: bill that passed and the defense new powers. The language

194
00:12:05,200 --> 00:12:09,200
Speaker 1: in the bill says you can buy corporate bonds down

195
00:12:09,280 --> 00:12:13,360
Speaker 1: to the lowest rating for corporates, and uh, those are

196
00:12:13,480 --> 00:12:15,839
Speaker 1: obviously the ones who are going to need the most help,

197
00:12:15,920 --> 00:12:18,360
Speaker 1: But they're also the ones most likely to see their

198
00:12:18,480 --> 00:12:22,160
Speaker 1: ratings downgraded into junk, which in theory, you can't own.

199
00:12:22,200 --> 00:12:27,920
Speaker 1: So how much risk are you willing to take on? Yeah,

200
00:12:28,400 --> 00:12:32,480
Speaker 1: well we've got we've got to think about exactly how

201
00:12:32,520 --> 00:12:35,439
Speaker 1: to execute on that one. But the main idea of

202
00:12:35,559 --> 00:12:39,240
Speaker 1: a program like that is to restore basic market functioning.

203
00:12:40,360 --> 00:12:43,760
Speaker 1: Which broke down as this crisis broke out here. So

204
00:12:44,320 --> 00:12:48,600
Speaker 1: I think we've got backing from the Treasury that's at

205
00:12:48,880 --> 00:12:53,000
Speaker 1: three program very powerful, and I think we'll be able

206
00:12:53,040 --> 00:12:59,199
Speaker 1: to keep price discovery going in that in that sector there. Uh,

207
00:12:59,640 --> 00:13:02,360
Speaker 1: you need bus also getting a nod in the bill.

208
00:13:02,800 --> 00:13:04,880
Speaker 1: Is that going to be a new program to buy

209
00:13:05,120 --> 00:13:07,240
Speaker 1: immunees or are you just going to use the existing

210
00:13:07,520 --> 00:13:12,040
Speaker 1: program that you set up last week? Well, again, I

211
00:13:12,120 --> 00:13:17,760
Speaker 1: think uh. And eventually that kind of market is mostly

212
00:13:18,000 --> 00:13:21,439
Speaker 1: that we want market functioning to occur. So I think

213
00:13:21,520 --> 00:13:24,760
Speaker 1: investors got so worried about state and local government that

214
00:13:25,400 --> 00:13:28,640
Speaker 1: they started to pull away from those kinds of investments,

215
00:13:29,240 --> 00:13:33,719
Speaker 1: which have historically been pretty solid. So hopefully we'll get

216
00:13:34,120 --> 00:13:38,640
Speaker 1: price discovery going in and and uh, I think the

217
00:13:39,080 --> 00:13:41,839
Speaker 1: market will actually be fine here. Again, I think there

218
00:13:41,880 --> 00:13:45,880
Speaker 1: are plenty of resources in the bill uh to handle

219
00:13:46,120 --> 00:13:50,200
Speaker 1: our current situation, and that should reassure investors that state

220
00:13:50,240 --> 00:13:53,679
Speaker 1: and local governments will be made whole here. Uh, the

221
00:13:53,800 --> 00:13:56,880
Speaker 1: law unintended consequences is kicked it in the mortgage market.

222
00:13:57,000 --> 00:14:00,320
Speaker 1: The big massive purchases you've made it NBA are now

223
00:14:00,440 --> 00:14:05,199
Speaker 1: leading to big margin calls for brokers. Uh. Is that

224
00:14:05,360 --> 00:14:07,600
Speaker 1: something you can do something about, or there are other

225
00:14:08,280 --> 00:14:15,120
Speaker 1: possible unintended consequences you worry about. UM. We we have

226
00:14:15,320 --> 00:14:19,640
Speaker 1: heard reports of that, and I think that uh, the

227
00:14:20,120 --> 00:14:24,920
Speaker 1: MBS purchases can be adjusted so that we get uh

228
00:14:25,280 --> 00:14:29,040
Speaker 1: sort of accurate pricing in that in that market to

229
00:14:30,080 --> 00:14:34,520
Speaker 1: meet the needs of those that are producing mbs. Uh.

230
00:14:34,760 --> 00:14:37,920
Speaker 1: We'll see how that goes. That's a very uh, minute

231
00:14:37,960 --> 00:14:43,320
Speaker 1: by minute kind of decision on intervention and purchases of MBS.

232
00:14:43,440 --> 00:14:46,320
Speaker 1: But we have a great team in New York that's

233
00:14:46,840 --> 00:14:48,560
Speaker 1: that's working on that. I think we'll be able to

234
00:14:48,640 --> 00:14:53,080
Speaker 1: get good outcomes there. I'm wondering when you think about

235
00:14:53,200 --> 00:14:57,640
Speaker 1: where all this leads what you see ahead. You're going

236
00:14:57,680 --> 00:15:01,640
Speaker 1: to have trillions in a aditional national debt. You're going

237
00:15:01,680 --> 00:15:05,400
Speaker 1: to have billions in loans out to companies at very

238
00:15:05,480 --> 00:15:08,120
Speaker 1: low rates. Can you raise rates? Are you pretty much

239
00:15:08,200 --> 00:15:15,320
Speaker 1: stuck forever? Now? Stuck forever? Well? I think near term,

240
00:15:16,040 --> 00:15:18,720
Speaker 1: as we come out of this, interest rates so will

241
00:15:18,840 --> 00:15:23,280
Speaker 1: probably stay very low for quite a while. UM. We

242
00:15:23,400 --> 00:15:27,080
Speaker 1: are taking on more debt as a nation, but we're

243
00:15:27,120 --> 00:15:29,320
Speaker 1: taking it on a very low interest rate, so that

244
00:15:29,520 --> 00:15:33,920
Speaker 1: part should work good well for the near term. UM.

245
00:15:34,520 --> 00:15:37,400
Speaker 1: You know, as we get further out past the crisis,

246
00:15:37,720 --> 00:15:41,440
Speaker 1: we'll have to evaluate our fiscal strategy and see it.

247
00:15:41,640 --> 00:15:45,120
Speaker 1: But that'll be up to Congress what they want to do. Uh.

248
00:15:45,280 --> 00:15:48,080
Speaker 1: It's a big country. We can carry, you know, ten

249
00:15:48,160 --> 00:15:51,200
Speaker 1: percent more debt. You know, it's not ideal, but we

250
00:15:51,280 --> 00:15:53,040
Speaker 1: can certainly do it. And if there was ever a

251
00:15:53,160 --> 00:15:57,920
Speaker 1: time where you wanted to uh do something like this,

252
00:15:58,120 --> 00:16:01,240
Speaker 1: now is that time? Uh? One last question here. Someone said,

253
00:16:01,240 --> 00:16:03,440
Speaker 1: when you first cut rates and set up lending programs,

254
00:16:03,480 --> 00:16:05,840
Speaker 1: you were throwing the kitchen sink at things. And then

255
00:16:05,880 --> 00:16:08,120
Speaker 1: you cut rates again and set up more programs and

256
00:16:08,360 --> 00:16:10,600
Speaker 1: through the kitchen sink again. Do you have more than

257
00:16:10,680 --> 00:16:13,200
Speaker 1: one sink or do you throw the same sink over

258
00:16:13,280 --> 00:16:18,400
Speaker 1: and over again? Basically what's left in the toolbox. Well,

259
00:16:18,520 --> 00:16:22,360
Speaker 1: I think the bottom line is that this these thirteen

260
00:16:22,480 --> 00:16:26,560
Speaker 1: three authorities that are in the Federal Reserve Act are

261
00:16:26,720 --> 00:16:32,120
Speaker 1: very powerful and uh because they're they're set up to

262
00:16:32,600 --> 00:16:35,960
Speaker 1: allow the FED to do lending in unusual and excitent

263
00:16:36,200 --> 00:16:40,920
Speaker 1: circumstances with the consent of the Treasury, and so you

264
00:16:41,040 --> 00:16:43,040
Speaker 1: can do a lot with that. And I think that's

265
00:16:43,080 --> 00:16:45,440
Speaker 1: what we're seeing right now. And if we had to

266
00:16:45,480 --> 00:16:47,560
Speaker 1: do more with that we could. It's a board of

267
00:16:47,640 --> 00:16:51,280
Speaker 1: governors programs now an FMC programers aboard, and we do

268
00:16:51,440 --> 00:16:55,880
Speaker 1: need treasury authority, but in special situations like this one,

269
00:16:55,960 --> 00:16:58,800
Speaker 1: and what could be more special than this one, makes

270
00:16:58,840 --> 00:17:00,960
Speaker 1: a lot of sense to go ahead use that power

271
00:17:01,720 --> 00:17:05,280
Speaker 1: and uh and simply in smooth out this ride as

272
00:17:05,320 --> 00:17:08,159
Speaker 1: we get to the other side of this virus very quickly.

273
00:17:08,560 --> 00:17:10,720
Speaker 1: Do you think baseball season stants this year? You're a

274
00:17:10,760 --> 00:17:14,640
Speaker 1: big Cardinals fan, I adam, I haven't seen anything about

275
00:17:14,680 --> 00:17:17,480
Speaker 1: baseball so far, so I was actually I don't know

276
00:17:17,520 --> 00:17:20,040
Speaker 1: about you, but I was. One of the aspects of

277
00:17:20,119 --> 00:17:24,720
Speaker 1: this crisis is I was very shocked when when sports

278
00:17:25,480 --> 00:17:30,040
Speaker 1: decided to shut down. That really jolted me. So one

279
00:17:30,119 --> 00:17:33,280
Speaker 1: of one of many jolts during this crisis, but it

280
00:17:33,400 --> 00:17:36,800
Speaker 1: was shocking. Jim Bullard, President of the St. Louis Fat

281
00:17:36,840 --> 00:17:38,520
Speaker 1: thank you very much for joining us this morning on

282
00:17:38,560 --> 00:17:47,080
Speaker 1: Bloomberg Radio and television worldwide. I found myself watching football

283
00:17:47,119 --> 00:17:50,440
Speaker 1: games from twenty years ago, watching the highlights this seasons

284
00:17:50,480 --> 00:17:54,480
Speaker 1: twenty years ago, over the weekend, just trying to also, yeah,

285
00:17:54,480 --> 00:17:57,600
Speaker 1: I just trying to keep in touch with with sport. Yeah,

286
00:17:57,640 --> 00:17:59,479
Speaker 1: I just didn't do that. What I know is Bullard

287
00:17:59,520 --> 00:18:02,359
Speaker 1: mentioned he's a Cardinals fan, and that Bill started barking

288
00:18:02,520 --> 00:18:05,320
Speaker 1: right away. You know, well that Bill was Red Cells, right,

289
00:18:05,760 --> 00:18:10,639
Speaker 1: die Hard. Well, you know he loves the Dodgers. He

290
00:18:10,760 --> 00:18:15,760
Speaker 1: likes love Okay, Yeah, Hayley from Beverly Hills got him

291
00:18:15,760 --> 00:18:18,000
Speaker 1: into the Dodgers. He's got the coat and the whole thing.

292
00:18:18,840 --> 00:18:21,399
Speaker 1: That Bill can come on and talk about. You know,

293
00:18:21,440 --> 00:18:23,520
Speaker 1: we're talking about Jim Bullers and we gotta go to break,

294
00:18:23,520 --> 00:18:25,440
Speaker 1: we gotta come back and talk about this. I mean,

295
00:18:26,080 --> 00:18:28,760
Speaker 1: I just what are these guys supposed to say? I mean,

296
00:18:28,800 --> 00:18:30,720
Speaker 1: they gotta wait to see what happens. We're gonna carry

297
00:18:30,760 --> 00:18:34,840
Speaker 1: on talking about this. We've got missed the castle. Great

298
00:18:34,840 --> 00:18:36,840
Speaker 1: to have you with us on the fine, fantastic to

299
00:18:36,920 --> 00:18:38,359
Speaker 1: have you with us. In fact, let's talk about the

300
00:18:38,400 --> 00:18:41,760
Speaker 1: Federal Reserve. That a meet again until April twenty nine.

301
00:18:42,359 --> 00:18:44,480
Speaker 1: We've learned that that doesn't really matter. Do you expect

302
00:18:44,520 --> 00:18:48,159
Speaker 1: anything else from them anytime soon? Well, there's a lot

303
00:18:48,240 --> 00:18:51,280
Speaker 1: of details to come out, especially about this main street

304
00:18:51,400 --> 00:18:54,119
Speaker 1: lending program um and I think they're going to roll

305
00:18:54,200 --> 00:18:56,960
Speaker 1: with the punchers here. And I think you heard from

306
00:18:57,000 --> 00:18:59,800
Speaker 1: Bullard and we've been seeing the set is very creative

307
00:18:59,840 --> 00:19:03,359
Speaker 1: and very aggressive here when it's these problems. So UM

308
00:19:03,760 --> 00:19:05,600
Speaker 1: I wouldn't rule out more FED action, but we're not

309
00:19:05,680 --> 00:19:09,639
Speaker 1: forecasting anything specifically at this point. First, we're making it

310
00:19:09,840 --> 00:19:12,800
Speaker 1: up as we go, and all of our listeners, whatever

311
00:19:12,840 --> 00:19:17,840
Speaker 1: their level of sophistication, know that what's the attribute of

312
00:19:18,040 --> 00:19:20,200
Speaker 1: how we make this up as we go that we

313
00:19:20,240 --> 00:19:24,000
Speaker 1: should focus on. Well, I would say from the point

314
00:19:24,040 --> 00:19:27,760
Speaker 1: of view of government policy, there's there's two pieces to this.

315
00:19:27,960 --> 00:19:29,800
Speaker 1: One is not making it up. We've gone through the

316
00:19:30,240 --> 00:19:33,919
Speaker 1: global financial crisis, We've dealt with issues that are threatened

317
00:19:33,920 --> 00:19:38,280
Speaker 1: systemic uh stability. We've kind of created an infrastructure around that,

318
00:19:38,359 --> 00:19:40,200
Speaker 1: and we're drawing on that and that's a really good

319
00:19:40,240 --> 00:19:42,960
Speaker 1: thing and it's happening really quickly. The thing that's really

320
00:19:43,040 --> 00:19:47,120
Speaker 1: unique about this crisis is how much we're hurting individuals,

321
00:19:47,160 --> 00:19:50,680
Speaker 1: small businesses, and a targeted way in a very short time.

322
00:19:50,800 --> 00:19:53,760
Speaker 1: And that's where making things up in terms of getting

323
00:19:53,800 --> 00:19:56,959
Speaker 1: these loan programs out, having the FED to a remarkable

324
00:19:57,000 --> 00:20:00,919
Speaker 1: amount to actually become a creditor to the corporate sector

325
00:20:00,960 --> 00:20:04,159
Speaker 1: at the at the lowest level, UM is really starting

326
00:20:04,200 --> 00:20:07,760
Speaker 1: to be kind of really unprecedented, and as you say,

327
00:20:08,119 --> 00:20:10,119
Speaker 1: it's really making things up. So there's some of this

328
00:20:10,240 --> 00:20:12,879
Speaker 1: which is got a very good toolbox, but there definitely

329
00:20:12,960 --> 00:20:15,480
Speaker 1: is some stuff here which we're we're really responding in

330
00:20:15,520 --> 00:20:18,560
Speaker 1: an unprecedented way. I want to talk about that unprecedented

331
00:20:18,640 --> 00:20:21,760
Speaker 1: function here, the fiscal stimulus function right now. If the

332
00:20:21,800 --> 00:20:24,320
Speaker 1: Federal Reserve, essentially with the four hundred and fifty billion

333
00:20:24,359 --> 00:20:27,480
Speaker 1: dollars they're being provided by the US Treasury that they're

334
00:20:27,480 --> 00:20:31,000
Speaker 1: going to lever up and lend out, how are they

335
00:20:31,080 --> 00:20:35,560
Speaker 1: going to do that given their staffing and expertise. Well,

336
00:20:35,640 --> 00:20:37,480
Speaker 1: I think to a large degree, they're going to work

337
00:20:37,560 --> 00:20:42,200
Speaker 1: through banks and other financial intermediaries. The SPA is basically

338
00:20:42,440 --> 00:20:44,920
Speaker 1: going to guarantee loans taken by banks. The FED is

339
00:20:44,960 --> 00:20:47,080
Speaker 1: going to oversee it, Treasury is going to oversee it

340
00:20:47,119 --> 00:20:49,240
Speaker 1: in some ways. But you have to work through the

341
00:20:49,359 --> 00:20:52,560
Speaker 1: channels that exist. If you had to have the Treasury

342
00:20:52,600 --> 00:20:55,399
Speaker 1: and the Fed manage the individual loan decisions that we

343
00:20:55,480 --> 00:20:57,080
Speaker 1: made here, we'd never get things out. And this is

344
00:20:57,119 --> 00:20:59,560
Speaker 1: a big issue. Even going through the banking system. We've

345
00:20:59,560 --> 00:21:02,120
Speaker 1: been going through channels. As Bullard was saying a few

346
00:21:02,160 --> 00:21:05,040
Speaker 1: minutes ago, we know unemployment is rising, people are being

347
00:21:05,119 --> 00:21:07,160
Speaker 1: laid off. The question is can you get the money

348
00:21:07,560 --> 00:21:10,760
Speaker 1: into the system quickly enough to limit the damage. Cushion

349
00:21:10,760 --> 00:21:13,159
Speaker 1: has provide us with a sense that not too much

350
00:21:13,240 --> 00:21:15,440
Speaker 1: damage is being done once the economy turns on the

351
00:21:15,520 --> 00:21:18,480
Speaker 1: lights again, Bruce, That's where I wanted to go, this

352
00:21:18,680 --> 00:21:21,560
Speaker 1: question of speed and the sense that it needed to

353
00:21:21,600 --> 00:21:25,000
Speaker 1: be done last week, two weeks ago, not now, And

354
00:21:25,080 --> 00:21:26,960
Speaker 1: we still don't have the program up and running. And

355
00:21:27,000 --> 00:21:28,960
Speaker 1: I'm wondering, do you have a sense of how much

356
00:21:29,000 --> 00:21:32,040
Speaker 1: of the damage has already been done in an irreversible

357
00:21:32,160 --> 00:21:34,879
Speaker 1: way in terms of layoffs and small businesses that have

358
00:21:35,040 --> 00:21:38,520
Speaker 1: to shut down. UM, I don't think we know what.

359
00:21:38,640 --> 00:21:40,840
Speaker 1: We can see a hint of that in last week's

360
00:21:40,880 --> 00:21:43,600
Speaker 1: claims numbers. We know there's going to be a huge

361
00:21:43,760 --> 00:21:47,399
Speaker 1: rise in unemployment in the next month or two. How

362
00:21:47,440 --> 00:21:49,399
Speaker 1: many businesses closed, I don't know, but it's going to

363
00:21:49,480 --> 00:21:51,240
Speaker 1: be a lot. And let me just say, because I

364
00:21:51,280 --> 00:21:54,840
Speaker 1: think there's an interesting international comparison here. Europe has a

365
00:21:54,920 --> 00:21:59,720
Speaker 1: system where institutionally it's a lot harder to have that flexibility,

366
00:21:59,800 --> 00:22:02,720
Speaker 1: and and I think over long periods of time, flexibility

367
00:22:02,760 --> 00:22:05,600
Speaker 1: has been very helpful for the US, but in this situation,

368
00:22:05,720 --> 00:22:09,679
Speaker 1: their structures, their programs that actually provided a very important

369
00:22:09,960 --> 00:22:12,480
Speaker 1: circuit breaker. And I don't think you're gonna see unemployment

370
00:22:12,600 --> 00:22:15,360
Speaker 1: rise in Europe anyway like what we're expecting to see

371
00:22:15,400 --> 00:22:18,439
Speaker 1: in the US in the coming few months. Why can't

372
00:22:18,480 --> 00:22:20,760
Speaker 1: we be like that? Man, it's a brilliant insight. Dr

373
00:22:20,960 --> 00:22:24,159
Speaker 1: kas was great. Okay, everybody out there wants us to

374
00:22:24,240 --> 00:22:27,200
Speaker 1: be like Europe for a cup of coffee, maybe three

375
00:22:27,240 --> 00:22:29,400
Speaker 1: cups of coffee maybe out of the fourth of July.

376
00:22:29,920 --> 00:22:33,639
Speaker 1: Why can't we european ee and then pull back and

377
00:22:33,760 --> 00:22:38,760
Speaker 1: become like we are later on? Well, I think that's

378
00:22:38,800 --> 00:22:40,800
Speaker 1: in some ways what we're trying to do. All those

379
00:22:40,880 --> 00:22:44,119
Speaker 1: to be to be accurate. Here, we are still largely

380
00:22:44,200 --> 00:22:46,800
Speaker 1: providing the support to income to people who are laid off,

381
00:22:47,280 --> 00:22:49,600
Speaker 1: providing checks to people. We're not doing what the UK

382
00:22:49,800 --> 00:22:53,320
Speaker 1: is doing, which is providing companies support for their payrolls.

383
00:22:53,520 --> 00:22:56,120
Speaker 1: We're not doing the German government is doing in terms

384
00:22:56,160 --> 00:22:59,399
Speaker 1: of subsizing short term work. I mean, that's a good question.

385
00:22:59,640 --> 00:23:01,840
Speaker 1: I mean, is the institutional side, which you can't change

386
00:23:01,880 --> 00:23:04,440
Speaker 1: at this point, but the way our approach is going

387
00:23:04,480 --> 00:23:07,240
Speaker 1: on policy, well, it could be different, but but it

388
00:23:07,359 --> 00:23:09,320
Speaker 1: is definitely a different one right now than what the

389
00:23:09,359 --> 00:23:11,879
Speaker 1: Europeans are doing. The backdrop to give you guys a

390
00:23:11,920 --> 00:23:15,240
Speaker 1: window window this listening across this nation is JP Morgan

391
00:23:15,400 --> 00:23:19,040
Speaker 1: launches off the great work of Robert Melman from years ago,

392
00:23:19,600 --> 00:23:23,040
Speaker 1: a fifteen page report Friday Evening which is a must

393
00:23:23,119 --> 00:23:26,400
Speaker 1: read on Global Wall Street, and Faroly Walas is through

394
00:23:26,440 --> 00:23:29,240
Speaker 1: with the US view, and then Kasmin drops in with

395
00:23:29,440 --> 00:23:32,080
Speaker 1: the Global view and it just has you, brother, there,

396
00:23:32,119 --> 00:23:35,000
Speaker 1: how many people put that report together, Bruce, like, literally

397
00:23:35,080 --> 00:23:38,840
Speaker 1: like fifteen people right, well globally now we've got actually

398
00:23:38,840 --> 00:23:42,480
Speaker 1: a bit more than thirty economists, Yeah, exactly, And it's

399
00:23:42,520 --> 00:23:47,600
Speaker 1: just extraordinary. And so I I just I'm absolutely fascinated

400
00:23:48,200 --> 00:23:52,800
Speaker 1: by what the American outcome is. If the EU approach

401
00:23:52,920 --> 00:23:57,000
Speaker 1: works so well, do you just assume income substitution two,

402
00:23:57,560 --> 00:24:00,520
Speaker 1: income substitution three? I mean, is that where we're heading?

403
00:24:01,760 --> 00:24:05,280
Speaker 1: So I think the the issue here is you've got attention,

404
00:24:05,359 --> 00:24:07,720
Speaker 1: because just remember when we when we get to the

405
00:24:07,760 --> 00:24:09,480
Speaker 1: point where we turn the lights on, and that's the

406
00:24:10,040 --> 00:24:12,320
Speaker 1: big call, when the virus starts to fade, when we

407
00:24:12,400 --> 00:24:16,119
Speaker 1: begin to take the restrictive policies off, you're gonna get

408
00:24:16,160 --> 00:24:18,760
Speaker 1: a huge bouncing growth, You're gonna have some rebound. The

409
00:24:18,920 --> 00:24:23,000
Speaker 1: question really is how much lingering damage is done and

410
00:24:23,119 --> 00:24:25,720
Speaker 1: whether the cushions we put in place here make it

411
00:24:25,800 --> 00:24:27,960
Speaker 1: such that we can come mostly back to normal and

412
00:24:28,080 --> 00:24:30,119
Speaker 1: our our view as we're not. You know, we have

413
00:24:30,240 --> 00:24:32,240
Speaker 1: a big rebound in the second half of the year.

414
00:24:32,840 --> 00:24:35,440
Speaker 1: We have the US growing at all nine pace in

415
00:24:35,520 --> 00:24:37,200
Speaker 1: the second half of the year, but that still leaves

416
00:24:37,280 --> 00:24:40,920
Speaker 1: output three percentage points below where it was on the

417
00:24:41,000 --> 00:24:43,439
Speaker 1: path we were following. So there's a lot of damage

418
00:24:43,480 --> 00:24:44,879
Speaker 1: we think is going to get done, and this is

419
00:24:44,880 --> 00:24:48,280
Speaker 1: going to take a long time to heal. Um. We

420
00:24:48,440 --> 00:24:50,280
Speaker 1: hope it's not going to be like the global financial

421
00:24:50,320 --> 00:24:53,560
Speaker 1: crisis where really we haven't healed fully from that that damage.

422
00:24:53,600 --> 00:24:55,600
Speaker 1: But you know, it's way too early to kind of

423
00:24:55,720 --> 00:24:58,280
Speaker 1: judge how the path ahead is gonna is going to

424
00:24:58,400 --> 00:25:00,480
Speaker 1: be filled. And you know, the other in here just

425
00:25:00,560 --> 00:25:02,359
Speaker 1: keep in mind is the amount of debt that's going

426
00:25:02,400 --> 00:25:05,160
Speaker 1: to be needed, both on the public and private sector

427
00:25:05,240 --> 00:25:07,640
Speaker 1: side to fill the gap in the next few months

428
00:25:07,760 --> 00:25:10,280
Speaker 1: is going to be an overhang issue that the ramifications

429
00:25:10,320 --> 00:25:13,520
Speaker 1: of which we still really I don't think understand and

430
00:25:13,600 --> 00:25:16,560
Speaker 1: that the ramifications of which everyone is trying to understand

431
00:25:16,640 --> 00:25:19,600
Speaker 1: with whatever data, however sports it may be, is that

432
00:25:19,720 --> 00:25:22,360
Speaker 1: we have. We're speaking with Bruce Kasman, JP, Morgan's chief

433
00:25:22,359 --> 00:25:25,960
Speaker 1: economist Managing director of Global Research UH and Bruce, you're

434
00:25:26,000 --> 00:25:28,639
Speaker 1: the perfect person for us to speak with, given your

435
00:25:28,640 --> 00:25:32,480
Speaker 1: intersection of working at the New York FED and the

436
00:25:32,520 --> 00:25:35,280
Speaker 1: sort of mechanics of the market, as well as working

437
00:25:35,720 --> 00:25:39,879
Speaker 1: globally and covering everything as a senior international economist at

438
00:25:39,880 --> 00:25:42,760
Speaker 1: Morgan Stanley Howd of JP Morgan, and I'm wondering as

439
00:25:42,840 --> 00:25:46,800
Speaker 1: we head forward, a key question is are we poised

440
00:25:46,880 --> 00:25:52,240
Speaker 1: for a inflationary or deflationary environment going forward? What's your

441
00:25:52,280 --> 00:25:55,280
Speaker 1: take on that? Well, I think over the next six

442
00:25:55,400 --> 00:25:58,600
Speaker 1: months it's pretty clear it's going to be deflationary. Just

443
00:25:58,720 --> 00:26:01,600
Speaker 1: look at what oil prices are doing. The service sector

444
00:26:01,640 --> 00:26:04,920
Speaker 1: is much bigger than goods producing industries, which might have

445
00:26:05,000 --> 00:26:09,480
Speaker 1: some supply chain pressures, so you look at the entertainment, hotels, airlines,

446
00:26:09,600 --> 00:26:12,560
Speaker 1: things of that. Inflation is going to calm down sharply.

447
00:26:13,400 --> 00:26:15,040
Speaker 1: The question is where do we come out of this.

448
00:26:15,240 --> 00:26:17,440
Speaker 1: I think certainly for the next couple of years, you

449
00:26:17,560 --> 00:26:20,879
Speaker 1: have to believe the rise and unemployment. The weakness and

450
00:26:20,960 --> 00:26:23,360
Speaker 1: growth that's not going to be completely paid back. It's

451
00:26:23,359 --> 00:26:25,960
Speaker 1: going to be disinflationary. We'll have negative inflation in the

452
00:26:26,000 --> 00:26:29,240
Speaker 1: near term, will have low inflation, and obviously that's a

453
00:26:29,280 --> 00:26:31,880
Speaker 1: big challenge for central bankers who have already been having

454
00:26:31,960 --> 00:26:35,320
Speaker 1: a very hard time getting inflation up over the last decade.

455
00:26:35,960 --> 00:26:37,760
Speaker 1: So what does that mean in terms of how much

456
00:26:37,920 --> 00:26:42,800
Speaker 1: debt some of these developed markets can incur? Well, I

457
00:26:42,840 --> 00:26:46,080
Speaker 1: don't think there's a real constraint on the public sector side,

458
00:26:46,200 --> 00:26:49,040
Speaker 1: especially given how low interest rates are and how much

459
00:26:49,119 --> 00:26:51,840
Speaker 1: central banks are supporting in terms of the funding. I

460
00:26:51,920 --> 00:26:54,800
Speaker 1: think the bigger issue for the next couple of years

461
00:26:55,400 --> 00:26:57,639
Speaker 1: is really the build up of debt on the private

462
00:26:57,680 --> 00:27:00,800
Speaker 1: sector side and how much that hinders the recovery once

463
00:27:00,840 --> 00:27:03,680
Speaker 1: we get back to more normal conditions over a longer

464
00:27:03,720 --> 00:27:06,200
Speaker 1: period of time. The build up in public sector dead

465
00:27:06,280 --> 00:27:09,159
Speaker 1: has issues that particularly I think in Europe is an

466
00:27:09,160 --> 00:27:11,480
Speaker 1: important issue where there's not enough burden sharing going on

467
00:27:12,040 --> 00:27:14,720
Speaker 1: across countries. But that's more of a chronic issue, which

468
00:27:14,760 --> 00:27:17,520
Speaker 1: has I think hard it's hard to figure out exactly

469
00:27:17,560 --> 00:27:20,560
Speaker 1: how that's gonna affect us over the next five seven years.

470
00:27:20,560 --> 00:27:22,280
Speaker 1: There's so many things you don't know about the next

471
00:27:22,359 --> 00:27:24,760
Speaker 1: three months, so it's hard to go there at this point.

472
00:27:25,720 --> 00:27:28,440
Speaker 1: Bruce Casmin, thank you so much for joining us today.

473
00:27:28,560 --> 00:27:32,479
Speaker 1: Greatly greatly appreciate that Bruce Casmin is with JP Morgan.

474
00:27:35,000 --> 00:27:37,560
Speaker 1: It is also a time to when you get Foreign

475
00:27:37,600 --> 00:27:41,400
Speaker 1: Affairs Magazine, not reading two articles, but because if everybody's

476
00:27:41,440 --> 00:27:45,400
Speaker 1: stuck at home reading three or four articles, are going

477
00:27:45,760 --> 00:27:49,680
Speaker 1: to what he invented, which is the CFR website, which

478
00:27:50,160 --> 00:27:52,400
Speaker 1: we make light of it now, but folks, when Richard

479
00:27:52,480 --> 00:27:56,720
Speaker 1: Hass invented the modern Council on Foreign Relations website, it

480
00:27:56,840 --> 00:27:59,639
Speaker 1: was an act of God never before as you had.

481
00:27:59,720 --> 00:28:02,960
Speaker 1: So it's smart programming slammed in front of you on

482
00:28:03,160 --> 00:28:08,800
Speaker 1: International relations website designer Richard Has the President of the

483
00:28:08,880 --> 00:28:12,080
Speaker 1: Council on Foreign Relations. Richard, did you know what you

484
00:28:12,160 --> 00:28:14,920
Speaker 1: would rot when you were screaming, we've got to do

485
00:28:15,040 --> 00:28:17,160
Speaker 1: a website and do it right? Did you have any

486
00:28:17,280 --> 00:28:22,720
Speaker 1: idea where this would lead? Not even close? Uh, not

487
00:28:23,000 --> 00:28:26,200
Speaker 1: even uh close. But it really is an amazing resource

488
00:28:26,320 --> 00:28:28,040
Speaker 1: now and I feel like I have the right to

489
00:28:28,119 --> 00:28:31,720
Speaker 1: brag on it. Please so many well because other people

490
00:28:31,760 --> 00:28:36,480
Speaker 1: doing of of the work. But and it's it highlights

491
00:28:36,520 --> 00:28:38,320
Speaker 1: our work, but also the best one anywhere. I think

492
00:28:38,360 --> 00:28:40,080
Speaker 1: one of the one of the reasons it's so good

493
00:28:40,720 --> 00:28:43,400
Speaker 1: is we curate and we've tried to create one stop

494
00:28:43,440 --> 00:28:46,800
Speaker 1: shopping whether you're an expert or also whether you're also

495
00:28:46,880 --> 00:28:50,280
Speaker 1: if you're a beginner. We have, for example, the most

496
00:28:50,360 --> 00:28:53,200
Speaker 1: traffic part of the website, Tom, all these backgrounders and

497
00:28:54,960 --> 00:28:57,640
Speaker 1: who are not experts, case, okay, let me come me

498
00:28:57,720 --> 00:29:00,800
Speaker 1: interrupting Ambassador hass and paulse when wants to jump here

499
00:29:01,080 --> 00:29:05,640
Speaker 1: as well, folks, dirty little secret, Tom Keene, isn't that smart?

500
00:29:06,080 --> 00:29:08,600
Speaker 1: I just go over to see how far and read

501
00:29:08,680 --> 00:29:13,000
Speaker 1: the backgrounders as fast as I can. They go, Paul Richard,

502
00:29:13,040 --> 00:29:16,880
Speaker 1: they go, oh god, he's just unbelievable, and Paul, Paul

503
00:29:17,000 --> 00:29:19,680
Speaker 1: chump in here. But I was reading the backgrounders, right.

504
00:29:19,800 --> 00:29:22,240
Speaker 1: We know that we we know the truth. So Richard's

505
00:29:22,560 --> 00:29:24,320
Speaker 1: as we sit back and take a look at what's

506
00:29:24,360 --> 00:29:26,280
Speaker 1: going on around the world here with this virus, what

507
00:29:27,000 --> 00:29:29,800
Speaker 1: did you some of your takeaways as to some of

508
00:29:29,840 --> 00:29:35,720
Speaker 1: the governmental responses that we've observed. My first takeaway is

509
00:29:35,840 --> 00:29:38,400
Speaker 1: that this is part and parcel of the world we

510
00:29:38,480 --> 00:29:40,440
Speaker 1: live in. All these people who talk about it being

511
00:29:40,520 --> 00:29:42,640
Speaker 1: a black swan are coming out of the blue or

512
00:29:42,680 --> 00:29:46,240
Speaker 1: dead rock. This was predictable, it happened now, and guess

513
00:29:46,280 --> 00:29:48,400
Speaker 1: what if things like this are going to happen again.

514
00:29:48,840 --> 00:29:51,920
Speaker 1: That's my my first takeaway. So governments need to be prepared.

515
00:29:52,000 --> 00:29:54,600
Speaker 1: They should have been better prepared than they were. The

516
00:29:54,720 --> 00:29:57,800
Speaker 1: international health machinery should have been much more oil than

517
00:29:57,920 --> 00:30:00,440
Speaker 1: it was. We all ought to have had stock files.

518
00:30:01,000 --> 00:30:04,800
Speaker 1: China ought to have communicated openly and honestly about its

519
00:30:05,080 --> 00:30:09,160
Speaker 1: uh you know what had happened there, and then moving forward,

520
00:30:09,200 --> 00:30:13,400
Speaker 1: governments have to have against stockpiles, they've got to have testing,

521
00:30:13,960 --> 00:30:16,880
Speaker 1: they've got to have protocols ready. Essentially, the world was

522
00:30:16,960 --> 00:30:20,280
Speaker 1: caught flat footed for this, and most of the responses

523
00:30:20,440 --> 00:30:25,520
Speaker 1: have been inadequate at incoherent, ours in particular. Uh So,

524
00:30:25,800 --> 00:30:28,480
Speaker 1: you know, it seems to me what's inevitable is that

525
00:30:28,640 --> 00:30:31,960
Speaker 1: there will be COVID twenty or COVID twenty one or

526
00:30:32,000 --> 00:30:34,760
Speaker 1: some other disease, and that we have to be prepared

527
00:30:34,840 --> 00:30:38,000
Speaker 1: for it much better than we work for this. So

528
00:30:38,840 --> 00:30:43,200
Speaker 1: how do you think you know life will change after this? Extly?

529
00:30:43,240 --> 00:30:45,040
Speaker 1: We let we get to the other side here. Do

530
00:30:45,160 --> 00:30:49,000
Speaker 1: you really believe that governments can in fact, you know,

531
00:30:49,200 --> 00:30:53,280
Speaker 1: kind of prepare as you were just suggesting. To some extent,

532
00:30:53,720 --> 00:30:55,440
Speaker 1: I would think that you're going to see a larger

533
00:30:55,560 --> 00:30:58,240
Speaker 1: role for government. A couple of areas that come to mind,

534
00:30:58,280 --> 00:31:02,080
Speaker 1: as I do think you'll have more stockpiles of say

535
00:31:02,080 --> 00:31:05,960
Speaker 1: equipment or ventilators. I think something like the Defense Production

536
00:31:06,000 --> 00:31:09,360
Speaker 1: Act that idea will become more of a peacetime or

537
00:31:09,480 --> 00:31:13,040
Speaker 1: normal things. So we're gonna have relationships established between the

538
00:31:13,120 --> 00:31:17,080
Speaker 1: private sector and government much more elaborate than they are now.

539
00:31:17,800 --> 00:31:21,880
Speaker 1: I think you'll see less supply, less supply chain dependency.

540
00:31:22,160 --> 00:31:23,920
Speaker 1: So I would think in a couple of years you're

541
00:31:23,920 --> 00:31:26,680
Speaker 1: going to see a policy where the United States will

542
00:31:26,720 --> 00:31:29,640
Speaker 1: say two things, we are not going to single source

543
00:31:29,840 --> 00:31:32,680
Speaker 1: anything that's critical it in China or anywhere else we may.

544
00:31:32,720 --> 00:31:35,040
Speaker 1: We're going to multiple sources so we're less dependent on

545
00:31:35,120 --> 00:31:37,960
Speaker 1: an interruption from one source. And second of all, we're

546
00:31:37,960 --> 00:31:40,800
Speaker 1: going to build a domestic capacity, so we're going to

547
00:31:40,880 --> 00:31:43,080
Speaker 1: become a little bit more self reliant. I think that's

548
00:31:43,120 --> 00:31:47,400
Speaker 1: in our future. Tell me about Laurie Garrett. You have

549
00:31:47,520 --> 00:31:50,720
Speaker 1: one of the jewels in our coverage of these viruses,

550
00:31:50,800 --> 00:31:54,520
Speaker 1: and Laurie Garrett, her work on Ebola was original and

551
00:31:54,680 --> 00:31:58,120
Speaker 1: path breaking as well. I'm sure you're calling up Laura.

552
00:31:58,160 --> 00:32:00,239
Speaker 1: You're running into her in the hallway it's thee far

553
00:32:00,320 --> 00:32:04,280
Speaker 1: and saying Lorie, what's going on? How does she report

554
00:32:04,360 --> 00:32:07,400
Speaker 1: to you? Well, actually, Laurie, while she's still a member

555
00:32:07,400 --> 00:32:09,840
Speaker 1: of the Council Foreign Relation, is not on our staff anymore.

556
00:32:11,000 --> 00:32:14,760
Speaker 1: Medias's active on MSNBC and she's been an important voice

557
00:32:14,960 --> 00:32:17,280
Speaker 1: in this debate for years, and she was one of

558
00:32:17,320 --> 00:32:19,240
Speaker 1: those who first said you had better get ready, this

559
00:32:19,440 --> 00:32:22,440
Speaker 1: is coming. We have three people. We have three people.

560
00:32:22,640 --> 00:32:24,960
Speaker 1: One is Tom Frieden, the former head of the c

561
00:32:25,160 --> 00:32:29,040
Speaker 1: d C. He's active on our staff. You have a

562
00:32:29,080 --> 00:32:31,800
Speaker 1: guy named Tom Boiki who started up a new really

563
00:32:31,840 --> 00:32:36,000
Speaker 1: important sight called Think Global Health. It's on CFAR dot org.

564
00:32:36,240 --> 00:32:40,480
Speaker 1: It has become actually the best virtual venue where the

565
00:32:40,560 --> 00:32:45,120
Speaker 1: leading experts in the world have conversations about global health issues.

566
00:32:45,160 --> 00:32:48,440
Speaker 1: It started off just weeks before this happened, coincidentally, but

567
00:32:48,560 --> 00:32:52,600
Speaker 1: it's already become a central hub of the conversation. And

568
00:32:52,640 --> 00:32:55,720
Speaker 1: then we have one other person, youngs and Wang, who's

569
00:32:55,760 --> 00:32:58,600
Speaker 1: an expert on Chinese public health is as it turns out,

570
00:32:58,640 --> 00:33:01,680
Speaker 1: so we've actually got three people on staff. As well

571
00:33:01,760 --> 00:33:04,320
Speaker 1: as any number of members I know my board, for example,

572
00:33:04,360 --> 00:33:07,160
Speaker 1: we have people like Peggy Hamburg, the former head of

573
00:33:07,200 --> 00:33:10,200
Speaker 1: the f D A H. Sylvia Burwell, the former head

574
00:33:10,200 --> 00:33:13,440
Speaker 1: of j J. We've got several former heads of Homeland Security.

575
00:33:13,800 --> 00:33:16,840
Speaker 1: So it turns out that we have an enormous access

576
00:33:16,880 --> 00:33:20,479
Speaker 1: to resource. So, Richard, what do you think this virus

577
00:33:20,960 --> 00:33:24,080
Speaker 1: again kind of looking ahead a little bit means for globalization?

578
00:33:24,200 --> 00:33:30,440
Speaker 1: Is that have we seen peak globalization? Globalization continues. Globalization

579
00:33:30,520 --> 00:33:33,920
Speaker 1: itself is just a reality. It's about the globalization is

580
00:33:33,960 --> 00:33:36,760
Speaker 1: simply the reality that an awful lot of stuff crosses

581
00:33:36,880 --> 00:33:40,520
Speaker 1: borders in great value, of great velocity. That doesn't change

582
00:33:41,480 --> 00:33:45,440
Speaker 1: the real What could change is the collective response to globalization,

583
00:33:45,560 --> 00:33:48,360
Speaker 1: and so far it's been anemic. Whether it's in the

584
00:33:48,440 --> 00:33:53,080
Speaker 1: health area, obviously, climate change, you name it, global response

585
00:33:53,160 --> 00:33:56,720
Speaker 1: to globalization has been inadequate. I wish I could sit

586
00:33:56,800 --> 00:33:58,520
Speaker 1: here and say it's going to be a lot better

587
00:33:58,600 --> 00:34:01,240
Speaker 1: at going forwardly with a little in our lesson. But

588
00:34:01,400 --> 00:34:03,560
Speaker 1: I'm worried that we're entering a period where a lot

589
00:34:03,600 --> 00:34:05,720
Speaker 1: of countries are going to be looking inward. They're going

590
00:34:05,760 --> 00:34:08,160
Speaker 1: to be strapped for cash. Given everything that this is

591
00:34:08,200 --> 00:34:10,600
Speaker 1: going to cost. So I don't I don't think this

592
00:34:10,760 --> 00:34:12,799
Speaker 1: is going to be a great era of what people

593
00:34:12,840 --> 00:34:16,560
Speaker 1: in my business called global governance. I worried that they

594
00:34:16,560 --> 00:34:19,400
Speaker 1: will continue to be a large gap between these global

595
00:34:19,480 --> 00:34:24,040
Speaker 1: challengers and the collective response. I I look at Bessador

596
00:34:24,120 --> 00:34:27,799
Speaker 1: has at the challenges forward, and they sent her back

597
00:34:27,920 --> 00:34:30,719
Speaker 1: to your book. We should mention that, Richard as Folks

598
00:34:30,800 --> 00:34:33,160
Speaker 1: is a new book coming up May twelve, on the world.

599
00:34:33,239 --> 00:34:37,279
Speaker 1: It's a wonderful briefing forward. Your previous book was on

600
00:34:37,400 --> 00:34:41,960
Speaker 1: disarray and our fiscal responsibility. I believe the helicopters over

601
00:34:42,080 --> 00:34:45,720
Speaker 1: Central Park are dropping money from what I can observe

602
00:34:45,840 --> 00:34:51,080
Speaker 1: from here, Richard Hass give us an update your report

603
00:34:51,160 --> 00:34:56,640
Speaker 1: on our fiscal responsibility. Well, helicopters are dropping money, and

604
00:34:56,640 --> 00:34:58,680
Speaker 1: they're gonna have to drop a lot more. Not only

605
00:34:58,800 --> 00:35:03,200
Speaker 1: is taking care of the public health directly expensive, UH

606
00:35:03,640 --> 00:35:06,759
Speaker 1: relief for American firms and citizens and workers. So we

607
00:35:06,920 --> 00:35:10,919
Speaker 1: just passed a two trillion dollar not. My prediction, Tom

608
00:35:11,000 --> 00:35:13,239
Speaker 1: is that's the first of several and the longer this

609
00:35:13,400 --> 00:35:15,719
Speaker 1: goes on, the more we're going to need. Now, before

610
00:35:15,800 --> 00:35:18,919
Speaker 1: this crisis even hit us, we were already racking off

611
00:35:19,040 --> 00:35:21,640
Speaker 1: deficits at the tune of more than a trillion dollars

612
00:35:21,680 --> 00:35:24,759
Speaker 1: a year. So we're gonna start racking up deficits at

613
00:35:24,800 --> 00:35:28,359
Speaker 1: the tune of three five trillion dollars this year. Our

614
00:35:28,480 --> 00:35:31,960
Speaker 1: debt UH is going to grow well into the twenties

615
00:35:32,080 --> 00:35:35,600
Speaker 1: or thirty trillions of dollars. And the question is to

616
00:35:35,680 --> 00:35:38,480
Speaker 1: what extent is the world going to be permanently willing

617
00:35:38,600 --> 00:35:42,440
Speaker 1: to to finance it. Richard has thank you so much

618
00:35:42,480 --> 00:35:45,360
Speaker 1: for your time today across this morning. He is the

619
00:35:45,480 --> 00:35:48,680
Speaker 1: president of the cons on Foreign Relations on LinkedIn and Twitter.

620
00:35:48,800 --> 00:35:53,439
Speaker 1: I've just put out this extraordinary compendium of medicine, think

621
00:35:53,480 --> 00:35:56,360
Speaker 1: global health and look for that and study that in

622
00:35:56,440 --> 00:36:03,520
Speaker 1: the coming days with the Council on Foreign Relations joining

623
00:36:03,600 --> 00:36:07,280
Speaker 1: us now A step gallon of Northdea Bank, Celia macro strategies.

624
00:36:07,320 --> 00:36:09,480
Speaker 1: That always great to get your voice on this program.

625
00:36:09,719 --> 00:36:12,680
Speaker 1: A nineteen handle on w T I. Just how much

626
00:36:12,719 --> 00:36:15,600
Speaker 1: does that complicate things in this market? What's the both

627
00:36:15,840 --> 00:36:17,759
Speaker 1: a negative and a good thing? And it's a huge

628
00:36:17,760 --> 00:36:20,200
Speaker 1: transfer of wealth not immediately been but in the coming

629
00:36:20,239 --> 00:36:22,920
Speaker 1: month as things start to normalize. And the question that

630
00:36:23,000 --> 00:36:24,800
Speaker 1: you have to ask yourself if you're a bank and

631
00:36:24,880 --> 00:36:27,600
Speaker 1: you're letting to shill or the industry is whether this

632
00:36:27,760 --> 00:36:30,239
Speaker 1: is shock is temporary or not. And behind that, it's

633
00:36:30,239 --> 00:36:33,440
Speaker 1: about whether the Russians and the saalities that will be

634
00:36:33,600 --> 00:36:36,439
Speaker 1: ascate the process and arrive at an agreement they both

635
00:36:36,520 --> 00:36:39,239
Speaker 1: need to. The problem is they're both authoritarian figures and

636
00:36:39,239 --> 00:36:42,360
Speaker 1: therefore they would lose if they would back down. And

637
00:36:43,000 --> 00:36:45,959
Speaker 1: that means several weeks at least of this process before

638
00:36:45,960 --> 00:36:47,560
Speaker 1: it happens. And I think this is a part which

639
00:36:47,640 --> 00:36:50,200
Speaker 1: is not expected that eventually we're going to get some

640
00:36:50,320 --> 00:36:52,880
Speaker 1: kind of normalization. Having said that, there's an oil gl

641
00:36:53,080 --> 00:36:55,840
Speaker 1: whatever happens. Because of the production right now, uh and

642
00:36:56,040 --> 00:36:57,959
Speaker 1: and because of the speed with which will be able

643
00:36:58,040 --> 00:37:00,239
Speaker 1: to reduce some of their output, that should be a uh.

644
00:37:00,719 --> 00:37:03,319
Speaker 1: It obviously will have an impact. Uh. And that means

645
00:37:03,400 --> 00:37:05,719
Speaker 1: that old prices is probably going to be back up

646
00:37:05,800 --> 00:37:08,759
Speaker 1: to forty five dollars within a few months. So it's uh,

647
00:37:08,840 --> 00:37:11,120
Speaker 1: it's a complex story. It's an important story from the

648
00:37:11,160 --> 00:37:13,080
Speaker 1: point of view of the bags because whether they kill

649
00:37:13,239 --> 00:37:16,920
Speaker 1: the shield or industry or not is the strategic decision.

650
00:37:17,160 --> 00:37:19,719
Speaker 1: And behind that there's a lot of backing so from

651
00:37:19,840 --> 00:37:22,120
Speaker 1: some of the credit facility who which are available, but

652
00:37:22,239 --> 00:37:26,360
Speaker 1: it's a it's an important conundrum from a high yield perspective,

653
00:37:26,360 --> 00:37:28,040
Speaker 1: and of course it needs There are a lot of

654
00:37:28,160 --> 00:37:32,120
Speaker 1: things which are attractive from within the resource sector, but

655
00:37:32,239 --> 00:37:35,160
Speaker 1: from a yield perspective, from an equity perspective, lots of

656
00:37:35,239 --> 00:37:38,920
Speaker 1: dislocations which means they themselves were exploited by merging or

657
00:37:39,120 --> 00:37:41,800
Speaker 1: foreign investors like ourselves. We opened a credit fund, for example,

658
00:37:42,239 --> 00:37:46,120
Speaker 1: are actively in this business, Sebastian, I'm you said a

659
00:37:46,160 --> 00:37:47,880
Speaker 1: lot of things that are very controversial. A lot of

660
00:37:47,920 --> 00:37:50,480
Speaker 1: people would disagree that it's a positive right now to

661
00:37:50,560 --> 00:37:53,200
Speaker 1: have lower oil prices just because nobody's going out and

662
00:37:53,239 --> 00:37:56,759
Speaker 1: spending any money or traveling forty five dollars a barrel.

663
00:37:56,800 --> 00:38:01,920
Speaker 1: How do we get there, Well, we get there by

664
00:38:02,360 --> 00:38:04,880
Speaker 1: an agreement between the Sautheast and the Russians. That should

665
00:38:04,880 --> 00:38:06,400
Speaker 1: be enough to squeeze basically a lot, a lot of

666
00:38:06,440 --> 00:38:08,239
Speaker 1: the various positions you have in the old market, and

667
00:38:08,320 --> 00:38:11,160
Speaker 1: that eventually should recenter the market source that and that

668
00:38:11,280 --> 00:38:13,840
Speaker 1: the equivalmrate. I think shouldn't be a surprised too to

669
00:38:13,960 --> 00:38:16,200
Speaker 1: anyone that the question is how fast we get there

670
00:38:16,239 --> 00:38:18,440
Speaker 1: they is it five months or is it a year

671
00:38:18,600 --> 00:38:20,439
Speaker 1: or is it two years or is it a few weeks?

672
00:38:20,480 --> 00:38:23,920
Speaker 1: And the odds because the escalation processed by definition, it's

673
00:38:23,920 --> 00:38:28,960
Speaker 1: a very slow process. Uh, it'll take probably a few months. Sebasti.

674
00:38:29,120 --> 00:38:32,960
Speaker 1: What are the ramifications of an extension of what I'm

675
00:38:33,000 --> 00:38:36,640
Speaker 1: going to call a grim virus outlook from March to

676
00:38:36,840 --> 00:38:41,239
Speaker 1: April and even into May. How does that fold into

677
00:38:41,400 --> 00:38:47,080
Speaker 1: economic calculations? What it means that the pain from a

678
00:38:47,120 --> 00:38:48,880
Speaker 1: deficit point of view is it is probably gonna be

679
00:38:49,040 --> 00:38:52,360
Speaker 1: higher than is currently expected. Having said that, the fiscal

680
00:38:52,400 --> 00:38:54,560
Speaker 1: package combined with the package one from the set is

681
00:38:54,600 --> 00:38:57,040
Speaker 1: a very impressive one. People should be reassured if they

682
00:38:57,400 --> 00:38:59,560
Speaker 1: if you believe in apple Pie basically should believe in

683
00:38:59,600 --> 00:39:02,040
Speaker 1: the US governments and and the Federal Reserve, then they

684
00:39:02,120 --> 00:39:05,280
Speaker 1: actually will manage the crisis very well. But he focus

685
00:39:05,360 --> 00:39:07,400
Speaker 1: on this not on the United States, some parts of

686
00:39:07,520 --> 00:39:10,919
Speaker 1: emerging markets, such as India, where the situation is getting

687
00:39:11,000 --> 00:39:15,480
Speaker 1: dire very rapidly. It's it means it's a difficult environment

688
00:39:15,520 --> 00:39:18,080
Speaker 1: for some better for other. It's probably the US. I'm

689
00:39:18,120 --> 00:39:20,880
Speaker 1: glad you mentioned this because you know percolating folks in

690
00:39:20,920 --> 00:39:23,840
Speaker 1: the literature over the weekend is what will be the

691
00:39:24,000 --> 00:39:27,120
Speaker 1: action step for the I m F. I guess they

692
00:39:27,200 --> 00:39:30,440
Speaker 1: got one trillion dollars available. That's what Pharaoh has available

693
00:39:30,480 --> 00:39:34,759
Speaker 1: as well. But you know these got one trillion dollars available.

694
00:39:35,160 --> 00:39:37,920
Speaker 1: Do you expect I m F to be more vocal

695
00:39:38,080 --> 00:39:44,360
Speaker 1: this week in beginning to assist em? So when I shoot,

696
00:39:44,800 --> 00:39:46,279
Speaker 1: my father was an I m F first, and I

697
00:39:46,320 --> 00:39:47,920
Speaker 1: guess I was trained in that in that group. But

698
00:39:48,000 --> 00:39:50,279
Speaker 1: the I m F is ultimately that some of its part,

699
00:39:50,360 --> 00:39:52,000
Speaker 1: in the biggest part in it is in the United

700
00:39:52,040 --> 00:39:54,919
Speaker 1: States cossion. It's not what it's not what the US,

701
00:39:55,239 --> 00:39:57,279
Speaker 1: it's not what the IMF wants, it's what the United

702
00:39:57,320 --> 00:39:59,680
Speaker 1: States want, and what the United States will want is

703
00:39:59,760 --> 00:40:03,040
Speaker 1: to stabilize some of its allies and to some extent

704
00:40:03,120 --> 00:40:05,319
Speaker 1: to help other emerging markets because it's not really good

705
00:40:05,360 --> 00:40:09,160
Speaker 1: for for US products are going forward. So the discussions

706
00:40:09,200 --> 00:40:12,120
Speaker 1: are probably ongoing, but from a reputational point of view,

707
00:40:12,120 --> 00:40:15,799
Speaker 1: it's very difficult for India, which whose data is probably questionable,

708
00:40:16,560 --> 00:40:18,320
Speaker 1: is to go to the I m F at this

709
00:40:18,360 --> 00:40:20,200
Speaker 1: point in time would be seen very badly by the

710
00:40:20,280 --> 00:40:23,800
Speaker 1: populations and by the government. None that means that delays

711
00:40:23,880 --> 00:40:26,520
Speaker 1: the eventual intervention by by the MS. So you have

712
00:40:26,640 --> 00:40:30,319
Speaker 1: some major economies such a Danya, which definitely needs some help,

713
00:40:30,920 --> 00:40:34,120
Speaker 1: and you have some economies like Mexico, which has a

714
00:40:34,239 --> 00:40:38,239
Speaker 1: currency that you've appreciated by is in difficulty, but it's

715
00:40:38,280 --> 00:40:41,359
Speaker 1: extremely well positioned. And once the US rebounds, we've seen

716
00:40:41,400 --> 00:40:44,000
Speaker 1: record lows for the Randwana Mexican pay. So in the

717
00:40:44,040 --> 00:40:45,680
Speaker 1: last couple of weeks, eve I just wanted to finish

718
00:40:45,800 --> 00:40:48,040
Speaker 1: up by talking about the FED. Last week. Quite rightly,

719
00:40:48,480 --> 00:40:50,239
Speaker 1: we spent a lot of time thinking about where the

720
00:40:50,280 --> 00:40:52,880
Speaker 1: FED was having success. Let's spend a little bit of

721
00:40:52,920 --> 00:40:55,720
Speaker 1: time talking about how much they're spending to have that success.

722
00:40:55,880 --> 00:40:59,600
Speaker 1: The bannet sheet expanded six hundred billion dollars in one week,

723
00:41:00,080 --> 00:41:02,719
Speaker 1: and if George can Carve, as formerly of Namora pointed out,

724
00:41:02,760 --> 00:41:04,880
Speaker 1: that's the equivalent of QUE two coming out of the

725
00:41:04,920 --> 00:41:10,280
Speaker 1: financial crisis SEP. That's huge. Sure. I mean, the center

726
00:41:10,320 --> 00:41:12,440
Speaker 1: banks learned from the past and they anticipate in the

727
00:41:12,640 --> 00:41:15,359
Speaker 1: They basically become very adaptive and you should expect them

728
00:41:15,400 --> 00:41:17,719
Speaker 1: to to become very original going forward. This is not

729
00:41:17,840 --> 00:41:20,399
Speaker 1: the end process. From a FET point of view, they're

730
00:41:20,600 --> 00:41:22,919
Speaker 1: very efficient and if you believe the FET, you believe

731
00:41:22,920 --> 00:41:25,319
Speaker 1: in apple Pie then then believe that they're actually doing

732
00:41:25,400 --> 00:41:27,800
Speaker 1: the right thing, and they definitely are. The shock is

733
00:41:27,840 --> 00:41:30,240
Speaker 1: a brutal one, but they will continue to steadily innovate

734
00:41:30,280 --> 00:41:32,640
Speaker 1: and surprises, and I think that will translate to health

735
00:41:32,719 --> 00:41:35,000
Speaker 1: for moments and pop shops and people who think they

736
00:41:35,000 --> 00:41:37,160
Speaker 1: won't have access to that credit because they're too small.

737
00:41:37,960 --> 00:41:41,440
Speaker 1: It eventually will happen. So nobody should be discouraged by this. Well,

738
00:41:41,480 --> 00:41:43,520
Speaker 1: it certainly have last week, that's for sure. Sep. Always

739
00:41:43,520 --> 00:41:45,879
Speaker 1: appreciate your time, Sep Galty that of not da Bank.

740
00:41:46,440 --> 00:41:50,480
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

741
00:41:50,680 --> 00:41:55,960
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

742
00:41:56,040 --> 00:42:00,279
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

743
00:42:00,320 --> 00:42:04,120
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

744
00:42:04,239 --> 00:42:04,520
Speaker 1: Radio