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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. We

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Speaker 1: begin this program with Jack Applett, a Crescent Wealth Advises,

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Speaker 1: the chief investment Officer. Jack, I'll start with a simple

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Speaker 1: one for you. What do you want to hear from

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Speaker 1: the chairman in two US time? Yeah, I want to

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Speaker 1: hear obviously that he recognizes the issues, but that he

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Speaker 1: is continues to pledge to not push rates into negative territory. Jack.

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Speaker 1: That Jack, that was too short an answer for Rack country. Sorry, Jack,

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Speaker 1: that was too short an answer for radio. I mean

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Speaker 1: we've got to have longer answer, so we could pause here.

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Speaker 1: I mean, the chairman has a huge, huge UH mandate

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Speaker 1: today and part of that mandate is his new stardom.

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Speaker 1: John brought this up the other day. I mean, basically,

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Speaker 1: he's the most popular guy in Washington. How does he

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Speaker 1: play that card today? Yeah? I think that you know,

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Speaker 1: he has certainly been very responsive to market forces after

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Speaker 1: his uh, you know, fourth quarter two thousand eighteen gaff Um.

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Speaker 1: But um, I think that he does need to be

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Speaker 1: that last line of defense against negative rates. And I

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Speaker 1: think the fact is that US rates have been consistently

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Speaker 1: higher than the rest of the world. And I don't

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Speaker 1: see a reason uh for negative rates uh in the US.

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Speaker 1: I think, you know, risk taking is actually um, you know,

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Speaker 1: at least right now pretty well at hand. So why

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Speaker 1: is the market pricing and negative rates? I inc where

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Speaker 1: they're looking around the world and there they see seventeen

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Speaker 1: trillion or so of uh negative rates worldwide, and that,

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Speaker 1: you know, I think they'll look at perhaps this is

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Speaker 1: that that tidal wave or or or at least tied

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Speaker 1: that could push US rates negative. But um, you know,

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Speaker 1: it's a I think it's a very very awkward situation

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Speaker 1: for a regulatory body that is designed to prevent runs

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Speaker 1: on banks. And if cash under the mattress yields more

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Speaker 1: than money in the bank, that's you know, that's a

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Speaker 1: dangerous place to be. Jack. Do you think that the

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Speaker 1: FED would rather buy stocks than taking take rates negative?

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Speaker 1: You know, a lot of um you know who knows

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Speaker 1: that they're getting pretty friendly with black rock tise days.

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Speaker 1: You know, maybe maybe someone over there has introduced them

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Speaker 1: to the you know, the spider I don't know these versations, Jack,

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Speaker 1: but I don't know Larry think is on the call

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Speaker 1: to Mr Powell saying, I think it's time to buy

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Speaker 1: the spidery. TF. Look, let's get let's get serious about

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Speaker 1: what's happening here. At some point in the next few years,

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Speaker 1: maybe in the next few months, someone at the Federal

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Speaker 1: Reserve wakes up and realizes, even with interest rates to zero,

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Speaker 1: the monetary policy is too tight because where inflation is.

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Speaker 1: And I think the risk is here, and I don't

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Speaker 1: expect it to come from the core of the f

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Speaker 1: O m C. It is likely at some point a

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Speaker 1: peripheral member of the Federal Reserve is going to wake

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Speaker 1: up one day, see where inflation is, feel like zero

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Speaker 1: is too tight, and start to come around to the

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Speaker 1: idea they should be doing something else. I don't think

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Speaker 1: they should be doing it, Tom. I'm just saying that

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Speaker 1: I don't think we should totally dismiss the conversation, because

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Speaker 1: I think at some point in the next few months

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Speaker 1: and flation drops aggressively, you will hear that voice. It

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Speaker 1: will come you sound like with the with the legacy

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Speaker 1: of the fifties and forties and thirties, even back to

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Speaker 1: Clementale where this was Germaine about wage reduction, folks, just

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Speaker 1: the heart of the matter. We're fortunate to have Jack

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Speaker 1: Albin with us who can do the math. Jack Irving

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Speaker 1: Fisher a million years ago. It's all linked together. What's

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Speaker 1: it mean for the discount rate of the financial system

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Speaker 1: of the Pharaoh scenario? We just and what does that

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Speaker 1: mean for equities? Sure? Um, so you know, I think

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Speaker 1: obviously the biggest uncertainty surrounding equities is, you know, how

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Speaker 1: long is this this economic coma gonna last? And what

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Speaker 1: does that really mean for future cash flows? And if

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Speaker 1: you believe, as I do, that stock prices are simply

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Speaker 1: the discounted UH present value of future cash flows, I

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Speaker 1: took comfort and saying, okay, let's assume we eliminate two

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Speaker 1: thousand twenty cash flows, eliminate two thousand twenty one cash flows,

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Speaker 1: and then resume UH in two thousand and twenty two. Um.

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Speaker 1: Even from a discounted cash flow basis, you're looking at

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Speaker 1: around eleven declined. So you know, we have to keep

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Speaker 1: in mind that equity investing is a long term endeavor

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Speaker 1: and at the present value. The stock price, you know,

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Speaker 1: reflects a long stream of cash flow. It's not just

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Speaker 1: two thousand one. We have to have conversations on programs

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Speaker 1: like these Jack about what the market is town of Gus,

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Speaker 1: the market in inverted commas. When you look beneath the market, yes,

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Speaker 1: we do see a handful of tech firms doing fantastically well.

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Speaker 1: If you pull up the chart at JP Morgan, that

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Speaker 1: stock has just basted along the bottom. We stand still

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Speaker 1: down or so off the highs. What are the financial

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Speaker 1: screaming at the moment for you? I think what the

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Speaker 1: bigger picture, Jonathan, is that the stock market is now

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Speaker 1: and equity investors now are behaving like the bond market

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Speaker 1: and like a bond investors. And you know the fact

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Speaker 1: is that this challenge is really in many for many companies,

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Speaker 1: maybe not a JPMorgan, but for many companies, a binary outcome, um,

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Speaker 1: you know, the best you can hope for in a

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Speaker 1: bond portfolios you get your money back. Um. That's how

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Speaker 1: a lot of equity investors are looking at their equity

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Speaker 1: portfolios these days. And so if you look at for example,

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Speaker 1: you know the share of below investment grade in the index,

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Speaker 1: I mean it's perfectly aligned. Um, the SNP one has

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Speaker 1: about three percent below investment grade, the SMP five has

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Speaker 1: about five percent below investment grade, and then mid caps

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Speaker 1: and small caps are you know, upwards? Um, So I

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Speaker 1: think that's what I think, that's what you're seeing in

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Speaker 1: JP Morgan. A lot of those customers carry below investment

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Speaker 1: grade ratings. So, Jack, are you saying that the market

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Speaker 1: seem fairly valued right now when you peel back the

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Speaker 1: surface and you see who the winners have been and

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Speaker 1: who the losers have been. Yeah, I mean, I think

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Speaker 1: it's pretty adequately aligned. One of the things that we

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Speaker 1: advised our clients early on was, which was hard for

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Speaker 1: me to do, was get out of passive index funds

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Speaker 1: and get into actively managed and then we provided them

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Speaker 1: with a what we call a belt and suspender's portfolio

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Speaker 1: of essentially double aer better companies that have a business

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Speaker 1: model that will sustain this coronavirus gulch. But um, it's yeah,

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Speaker 1: I think that's you know, now you could probably get

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Speaker 1: back into index funds because everything's seems to be aligned. Jack,

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Speaker 1: fantastic to catch out with you this morning. Always great

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Speaker 1: SKay thoughts Jack Applin, their a Crescent Wealth Stanley Druckumond

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Speaker 1: and making some headlights in the last twenty four hours.

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Speaker 1: You have this to say about the v shaped recovery hopes.

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Speaker 1: I just think that the v out is a fantasy, fantasy,

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Speaker 1: Tom King, a fantasy that I think a lot of

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Speaker 1: people would hope for. We all want the recovery, as

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Speaker 1: many people don't think it's going to happen in that form.

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Speaker 1: I jumped on this John on the other day and

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Speaker 1: I got some love notes. That's called hate mail folks

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Speaker 1: on this and it's a perfect guest to talk to

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Speaker 1: right now, John about this. I'm glad you bringing up

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Speaker 1: Christian color with us with Barclays ahead of their economic

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Speaker 1: coverage a Christian you know, I was gonna go like

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Speaker 1: eight ways towards Chairman Paul. But John is absolutely correct

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Speaker 1: to revisit the fantasy led by the Bank of England

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Speaker 1: up a down fourteen percent, up fifteen percent in short order.

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Speaker 1: Do you have any confidence those kind of fantasies could occur? Well,

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Speaker 1: you know, let's person a way, maybe look a little

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Speaker 1: bit back why they would even entertain such what you

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Speaker 1: call a fantasy. I mean fact is that should be

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Speaker 1: the following and all the research those from past recessions

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Speaker 1: and recoveries that if you have a recession where a

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Speaker 1: you have a lot of policy response, and be a

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Speaker 1: recession that's not driven by banking crisis, you should actually

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Speaker 1: recover relatively robust. Me Now, I guess Marcus and the

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Speaker 1: Bank Avergnment for that matter, looked at this and says, look,

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Speaker 1: we have an unprecedented policy response, a massive and very

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Speaker 1: quick policy response, and we have actually a banking system

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Speaker 1: that you know, went into this with high capital buffers,

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Speaker 1: and so once the health issue is gone, you would

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Speaker 1: expect to reopen the economy and things go very quickly

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Speaker 1: back up. Now, therefore, I don't think initially this was

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Speaker 1: necessarily fantasy. I think what it's dawning now on us

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Speaker 1: is that you know, the health issue unfortunately as virus

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Speaker 1: is still um you know, not that well understood, and

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Speaker 1: we are now looking into all the opening of economy

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Speaker 1: is being fairly gradual with the risk of actually having

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Speaker 1: to shut down plastic organic we have a second way

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Speaker 1: to et cetera. I think this is the issue. I

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Speaker 1: think otherwise, you know, it was not wrong to think

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Speaker 1: that this had all the ingredients for v shaped recovery

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Speaker 1: in principle question. I'm struck by your comment about an

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Speaker 1: unprecedented policy response and has been a common line, and

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Speaker 1: yet a growing number of investors and economists are saying

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Speaker 1: the response has barely approached the amount of demand destruction

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Speaker 1: in the economy. In other words, it has barely filled

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Speaker 1: the gap that we've opened up. Does this really even

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Speaker 1: count as stimulus as a response when it's just sort

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Speaker 1: of filling a sort of endless hole at this point. Yeah,

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Speaker 1: I think, you know, both both commons are true. You know,

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Speaker 1: it is true that this is the largest, at least

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Speaker 1: in recent history, the largest response, but it's also too

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Speaker 1: unfortunately that the decline activity is by far the largest

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Speaker 1: be seen in modern times. So um, look, I I

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Speaker 1: do agree there is a risk that regardless of the

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Speaker 1: you know, the magnitude of the policy response, it may

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Speaker 1: not be enough. And I think if we now look

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Speaker 1: at you know, this morning, we were surprised on the

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Speaker 1: upside of bit by some of the March data and

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Speaker 1: the Q one data, uh, you know things I'm being

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Speaker 1: as bet as deeply expected. But the second quarter, you know,

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Speaker 1: we will see massively clients and as I said, if

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Speaker 1: this is not completely lifted in two three, And at

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Speaker 1: this extent, I think we actually do get into the

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Speaker 1: situation whereby the policy response may simply not be enough,

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Speaker 1: and it's also a policy response that cannot be sustained forever.

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Speaker 1: If you do this for one two quarters, because you're

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Speaker 1: in this in the you know, the bottom of a

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Speaker 1: v you can do it. If you need to extend

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Speaker 1: this for several quarters, you know the negative impact of

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Speaker 1: you know, potentially looking at the sustainability of death and

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Speaker 1: all the you know, the liabilities to accumulate. I think

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Speaker 1: that will have an impact and on on sentiment as

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Speaker 1: well well. Christian. I don't want to make this the

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Speaker 1: doom and Gloom report, but Jimble out of the St.

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Speaker 1: Louis Fair, I think alluded to what you're discussing right now,

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Speaker 1: and he said, the longer you keep this economy lockdown,

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Speaker 1: we run the real risk of a depression scale recession.

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Speaker 1: Are they the kind of things you're thinking about, Christian?

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Speaker 1: If we have to think keep things locked down for

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Speaker 1: much longer, Look, I think you know this is as

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Speaker 1: I said, I there is not yet my scenario. I

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Speaker 1: do hope in a way that we we open reopened redually,

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Speaker 1: but we do get back on on on on to

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Speaker 1: a relatively normally functioning economy. But I think the risk

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Speaker 1: is exactly what you've stated, that this is prolonged. You know,

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Speaker 1: you keep unemployment high, that means, you know, people don't

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Speaker 1: go to work, they don't have income, and after while

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Speaker 1: equity markets will realize you know, yes, we get a

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Speaker 1: lot of liquidity boost, but if earnings are not supported

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Speaker 1: by demand, you know, we have to revise down and

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Speaker 1: you get into this kind of a doom loop. But

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Speaker 1: then yeah, ultimately, of course the pres could be the outcome.

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Speaker 1: Christian very quickly here when Chairman Paul speaks in an hour,

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Speaker 1: in ten minutes, is he speaking understanding he will see

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Speaker 1: a unemployment America. I do think that that has become

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Speaker 1: quite clear to everyone by now. You know, we're following

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Speaker 1: the date on a weekly datis of the will see that,

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Speaker 1: you know, the you know, the the situation as peak.

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Speaker 1: So we now see less new unemployment, but nevertheless we're

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Speaker 1: moving towards twenty percent. I think this has has has

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Speaker 1: been widely podcasted now and I think this is why,

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Speaker 1: you know, this is why the head had been as

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Speaker 1: aggressive as it has been, and this is why they

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Speaker 1: you know, don't worry about the fiscal a situation of

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Speaker 1: physical sustainability and about issuing depth at the moment, you know,

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Speaker 1: because they do see what is happening on the labor

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Speaker 1: market must be a major concern for that. Christen Keller

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Speaker 1: fantastic a thoughts on this program, Barkley's had of economics research.

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Speaker 1: I hope you're doing well, sir, and full faith and

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Speaker 1: credit with TV securities Preams rejoins as Preyer, just simply

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Speaker 1: what are you gonna listen for from Chairman Powell in

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Speaker 1: one hour? Alright, Tom, Hi, everyone, I think we are

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Speaker 1: been watching for what what next? So you know, what

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Speaker 1: we heard from chepaul in In in the last FED

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Speaker 1: meeting was considerable risk in the medium term. So that's

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Speaker 1: a bit of a departure from what he said earlier,

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Speaker 1: which was, you know, things are going to rebound on

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Speaker 1: the tech now if I think the FED rightfully so

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Speaker 1: is addressing that there is some structural dams being done here,

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Speaker 1: but they haven't talked about what next. So I think

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Speaker 1: to to tell us, you know, more forward guidance, perhaps

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Speaker 1: yield of control. We're looking for the FED to undertake

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Speaker 1: of control by the end of the year. I think

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Speaker 1: there's a lot of talk around negative rates. I wish

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Speaker 1: he can actually sort of squash that because negative rates

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Speaker 1: is going to create far more problems than anything it

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Speaker 1: can actually solve. So the market has been pricing in

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Speaker 1: negative rates. I think he needs to say no negative

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Speaker 1: rates or it's not an effective tool. But here's what

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Speaker 1: we can do. I think we need a little bit

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Speaker 1: of what next from the Fed. Okay, fine, I want

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Speaker 1: to go off Fabosi on your right now in the

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Speaker 1: interior movement of the yield market right now, pre what's

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Speaker 1: the attribute of the Fabosi analysis of the yield curve

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Speaker 1: that matters right now? That's the great um So I

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Speaker 1: think there's a lot of the front end is all

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Speaker 1: about FED pricing, So that ends up being more economics

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Speaker 1: when you talk about for both of you're talking about

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Speaker 1: on premium, which is the supply demand that we're dealing with.

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Speaker 1: That tug of war in the long end is all

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Speaker 1: about the U. S. Treasury that's issuing a ton of

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Speaker 1: long end paper and essentially the only buyer in town

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Speaker 1: is the FED. And but but the Fed buying has

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Speaker 1: been flexible. We don't know how long they're going to

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Speaker 1: buy what the what's the total amount. So that's why

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Speaker 1: the market every auction ends up being a liquarity event

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Speaker 1: because we have to wait to see will the demand

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Speaker 1: show up, will the FED buy enough? So there's a

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Speaker 1: sort of separate issue in the long end that I

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Speaker 1: don't think the FED is going to give up flexibility.

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Speaker 1: I think we're just going to have to trade auctions

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Speaker 1: with the hope that the FED is there as a backstop.

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Speaker 1: But the front end is much more anchored by the

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Speaker 1: economy by you know, when, when when will the FED hike?

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Speaker 1: And the market is not pricing in hikes until two

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Speaker 1: twenty four, so that's going to put a ceiling on

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Speaker 1: all eels. But I'd say that feeling is just a

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Speaker 1: lot softer in the long end because of the supply

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Speaker 1: demand issue. Well, let's talk about the front and just

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Speaker 1: a little bit more share away in fifty five minutes time. Look,

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Speaker 1: I imagine he's going to be asked the question about

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Speaker 1: negative interest rates. Do you expect there's many people expect

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Speaker 1: him to prayer just about that one away. Yes, I

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Speaker 1: think he's going to talk about them. You know. I

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Speaker 1: hope he's more specific rather than just saying no, because

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Speaker 1: as we've all lived through. Many unthinkable became possible over

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Speaker 1: the last two months. So I think just saying no,

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Speaker 1: that's not enough. I think that that will not really

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Speaker 1: squash all the speculation. I think if he addresses that

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Speaker 1: money market funds, there's five trillion of dollars in government

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Speaker 1: money market funds, they break the buck with negative rates.

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Speaker 1: This is something very peculiar to the US. Financial money

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Speaker 1: market doesn't exist in Europe and Japan. So just taking

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Speaker 1: what Europe and Japan have done and saying that can

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Speaker 1: work here, I think doesn't work. So if he addresses

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Speaker 1: that there are plumbing issues in the money market, or

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Speaker 1: there's a problem with financial intermediation. If you take rates negative,

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Speaker 1: I think credit creation actually goes away. So I think

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Speaker 1: it is most specific about the problems with money with

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Speaker 1: negative rates, and instead says, look, we've got thirteen three facilities,

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Speaker 1: we've got milk of control, we've got other tools, we've

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Speaker 1: got a balance sheet we can grow. And I think

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Speaker 1: forcefully saying that they can grow the balance sheet to

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Speaker 1: an unlimited amount, I think that will comfort the market

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Speaker 1: that we're not going to negative rates. But they have

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Speaker 1: other things that they can help out with, particularly as

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Speaker 1: fiscal there the fiscal easing that doesn't seem to be

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Speaker 1: a plan or or at least it doesn't seem to

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Speaker 1: be much consensus on what this phase four of the

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Speaker 1: fiscal easing will look like. You raised such an important point,

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Speaker 1: which is basically that Fedeficial after Fedeficial has come out

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Speaker 1: this week and in prior weeks and said we're not

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Speaker 1: taking rates negative and the market says, you still may.

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Speaker 1: Actually we're going to price that in. I want to

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Speaker 1: have home at home and there on the idea of

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Speaker 1: the balance sheet and then sort of this unlimited capacity.

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Speaker 1: Right now six point seven trillion dollars is the total

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Speaker 1: size up two trillion dollars from just two month ago.

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Speaker 1: How high could that go without triggering a political debate

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Speaker 1: in Washington? Right? I think it's more the political issues

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Speaker 1: so in Japan that the b o G balance sheet

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Speaker 1: as the share of GDP is much much higher, so

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Speaker 1: technically there is no level, but I think it starts

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Speaker 1: becoming a political issue, which is why I think if

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Speaker 1: the fact can strengthen forward guidance through yield of control

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Speaker 1: or through average inflation targeting, or go back to the

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Speaker 1: Evans rule, you know we're not going to hike until

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Speaker 1: the unemprolment rate is at five or inflation is above two.

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Speaker 1: They actually lower the amount they have to buy in

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Speaker 1: the front end, so then they can they would have

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Speaker 1: to still keep buying. So I expect the balance sheet

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Speaker 1: to get to twelve trillion by the time at least,

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Speaker 1: you know, with with the current supply dynamic by one

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Speaker 1: right by one by by the end of next year, right,

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Speaker 1: so you know, but there's no limit to how much

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Speaker 1: it can grow. But I think they'll want to prevent

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Speaker 1: buying more and for that just set the front end

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Speaker 1: like anchor it solidly with with forward guidance, and then

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Speaker 1: but they still have to buy a lot in the

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Speaker 1: long and I don't think they want to go into

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Speaker 1: yield of control. For Britania. The bo j didn't do

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Speaker 1: that because they don't want to buy more. But I think,

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Speaker 1: you know, tenure treasury is a very different environment. I

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Speaker 1: don't think the fact goes that far. But yeah, I

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Speaker 1: think they'll have to do more thirteen three and more

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Speaker 1: bond buying. So twelve tillion dollars is this going to

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Speaker 1: be the same type of composition that we've already been seeing,

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Speaker 1: or they're going to expand out into other kinds of assets,

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Speaker 1: you know, if they if risk assets are where they

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Speaker 1: are now, which I have struggled with how quickly we've rallied.

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Speaker 1: So I guess in my makeup there is going to

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Speaker 1: be another day of reckoning where the produce complex understands

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Speaker 1: that there is no great to be opening. The new

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Speaker 1: normal looks very different from what we lived in in Janets,

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Speaker 1: and then I think they'll have to do more thirteen

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Speaker 1: three facilities. But if risk assets for here, credit is here,

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Speaker 1: I think then the balance sheet will look much more

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Speaker 1: treasuries then it will risk asses. But I think it's

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Speaker 1: going to depend on how risk asses behave. This public

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Speaker 1: service announcement, folks, brought to you by Bloomberg Surveillance, John Farrell,

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Speaker 1: Lisa Bramo. It's in Tom Keane and now Pria Mr

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Speaker 1: will explain to our global audience what is yield curve control?

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Speaker 1: Lisa what Lisa pre what is curve control? I'll just

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Speaker 1: tell you it's a nightmare for a rage strategy, so easy.

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Speaker 1: Just imagine how difficult it is for me to even

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Speaker 1: suggest that what is it? But it is the FED.

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Speaker 1: It is a central bank that is credible and why

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Speaker 1: are they credible because they have an unlimited balance sheet.

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Speaker 1: It's a central bank saying we will not let rates

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Speaker 1: and a certain part of the curve go above a level,

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Speaker 1: or we'll target a certain level. I think they picked

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Speaker 1: the three of the so the Fed will not be

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Speaker 1: the first one to do it. Our b A is

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Speaker 1: targeting the three year point. The BUJ is targeting the

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Speaker 1: tenure point. So it's almost when you're sort of out

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Speaker 1: of bullets. Well here's a new creative tool. We just

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Speaker 1: tell you rates are not going above a level, so

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Speaker 1: then we gotta go. But Pa, you're out of bullets,

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Speaker 1: and you can see the whites of their eyes they're attacking.

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Speaker 1: I just come on, can you ready? Upset Tom prayer

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Speaker 1: and just tell Tom what the BJ targets on the

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Speaker 1: ten year maturity. It's like, what is he coming? Folks?

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Speaker 1: None of this is enabled Bernanke, None of this is

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Speaker 1: in Manque, none of this cod priya. That is true. Well,

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Speaker 1: we're living in historic times, so they have to become

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Speaker 1: more creative. And actually Brenerdrina has talked about this as

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Speaker 1: being a useful tool. We've got a laby that he's

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Speaker 1: an add he is out at sea. Of course, that

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Speaker 1: magisterial story of his first time coming out of San

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Speaker 1: Diego into the Pacific Ocean. I believe that was in

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Speaker 1: Sea Power, the new book Sailing True. Nor are stories

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Speaker 1: of admirals. No, Admiral, I can't imagine rick over in

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Speaker 1: a pandemic housebound? Is Travins has bent over the last

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Speaker 1: few days, Admiral Stevinus, You're out on Instagram with painful photos.

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Speaker 1: Painful photos, I say, of being a housebound. How's it

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Speaker 1: going at home? It's gone fine? Um. You know what

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Speaker 1: admirals do when there's a lockdown music. We practice our

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Speaker 1: admiral skills by playing the game Battleship Tom and well

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Speaker 1: I've won. Uh. I'm doing a whole theory for those Yeah. No,

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Speaker 1: I guess like all of us, I'm doing about percent

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Speaker 1: of normal, just doing it on the phone and video

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Speaker 1: and so forth. It's fine, right, Admiral of an important question.

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Speaker 1: This nation has soldiers, uh in duty sailors at sea

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Speaker 1: right now, and we hear the stories of the illnesses

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Speaker 1: on board these ships. You've been on those ships during

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Speaker 1: other illnesses. How do you, as an command officer on

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Speaker 1: one of these ships contain a virus? Yeah? Let's get

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Speaker 1: it in perspective. So think about your kitchen. Let's say

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Speaker 1: you live in the suburbs. You have a modest but

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Speaker 1: okay kitchen. Now picture your kitchen with fifteen people living

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Speaker 1: in it. That's what a birthing compartment on a navy

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Speaker 1: warship looks like. So, Tom, you're not going to social distance.

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Speaker 1: So what you've got to do is test constantly. If

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Speaker 1: you have the coronavibrus test kids, great. If not, you're

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Speaker 1: going with temperature and symptoms. As soon as you see somebody,

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Speaker 1: you isolate them. You probably have a birding compartment where

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Speaker 1: you keep all the people who are suspected to test them.

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Speaker 1: You get them off the ship. That's the only thing

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Speaker 1: you can do. Social distancing won't work, Admiral, I'm wondering

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Speaker 1: what the world is going to look like after the

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Speaker 1: pandemic is over. I'm not the only one. I've heard

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Speaker 1: Richard hass and Ian Bremer talking about how the distraction

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Speaker 1: of the pandemic is allowing some sort of rogue nations

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Speaker 1: to accelerate programs already in effect. How destabilizing do you

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Speaker 1: think that type of activity will be? Is it something

428
00:24:04,280 --> 00:24:08,400
Speaker 1: you're watching? It is indeed, and I talked to both

429
00:24:08,520 --> 00:24:10,760
Speaker 1: Richard and Ian quite a bit. We're good friends and

430
00:24:10,800 --> 00:24:14,239
Speaker 1: are fairly aligned in our views. Um China is going

431
00:24:14,280 --> 00:24:16,560
Speaker 1: to take advantage of this moment. They're coming out of

432
00:24:16,600 --> 00:24:19,480
Speaker 1: the turn faster than the United States. They'll use it

433
00:24:19,560 --> 00:24:24,879
Speaker 1: to implement the one Belt, one Road geo economic strategy

434
00:24:25,040 --> 00:24:28,159
Speaker 1: that they were already pursuing, to put more pressure on

435
00:24:28,280 --> 00:24:32,639
Speaker 1: Hong Kong, more pressure on Taiwan, more aggressive activity in

436
00:24:32,680 --> 00:24:35,280
Speaker 1: the South China. See the other two to watch are

437
00:24:35,440 --> 00:24:40,680
Speaker 1: the usual bad boys. It's uh North Korea with Kim. Unfortunately,

438
00:24:41,160 --> 00:24:44,320
Speaker 1: the rumors of his death were greatly exaggerated, as Mark

439
00:24:44,359 --> 00:24:48,520
Speaker 1: Twain said, he's back on station. He'll continue to be difficult.

440
00:24:49,160 --> 00:24:53,680
Speaker 1: And of course Iran, despite having a terrible coronavirus outbreak themselves,

441
00:24:54,080 --> 00:24:56,440
Speaker 1: we see them harassing our ships in the Gulf. So

442
00:24:56,640 --> 00:24:59,800
Speaker 1: look for them to take advantage of distraction. And here's

443
00:24:59,800 --> 00:25:02,080
Speaker 1: their hope. And I'll conclude with this. They want to

444
00:25:02,200 --> 00:25:08,280
Speaker 1: push the United States towards departing the international scene, towards isolationism,

445
00:25:08,359 --> 00:25:11,560
Speaker 1: towards coming home. That would be a terrible mistake for us.

446
00:25:12,119 --> 00:25:14,800
Speaker 1: Do you think that the signs are that that is

447
00:25:15,040 --> 00:25:17,200
Speaker 1: the path that the United States is going, or do

448
00:25:17,320 --> 00:25:19,639
Speaker 1: you get the sense that the US and Europe in

449
00:25:19,720 --> 00:25:23,560
Speaker 1: particular are coming closer together as they joined forces to

450
00:25:23,640 --> 00:25:26,959
Speaker 1: try to fight the pandemic. I think all bets are

451
00:25:27,040 --> 00:25:30,399
Speaker 1: often we get through the election, Lisa, So for the

452
00:25:30,520 --> 00:25:33,359
Speaker 1: next six months we're going to be very absorbed internally

453
00:25:33,400 --> 00:25:37,680
Speaker 1: as that unfold. After the election. I am hopeful that

454
00:25:37,800 --> 00:25:41,840
Speaker 1: we will avoid the dire history of the nineteen twenties

455
00:25:41,920 --> 00:25:45,000
Speaker 1: and third, when we had a pandemic Spanish and Clunza,

456
00:25:45,320 --> 00:25:47,520
Speaker 1: we had the rise of fascism. We ended up in

457
00:25:47,600 --> 00:25:50,840
Speaker 1: the Second World War following a great depression. We ought

458
00:25:50,880 --> 00:25:53,000
Speaker 1: to be able to learn from those lessons that we

459
00:25:53,160 --> 00:25:56,440
Speaker 1: can't simply retreat back here in the fortress America. We

460
00:25:56,560 --> 00:25:59,760
Speaker 1: need to stay engaged in the world. Everyone one for

461
00:25:59,800 --> 00:26:03,399
Speaker 1: a question. And with all that's going on with China

462
00:26:03,560 --> 00:26:07,760
Speaker 1: United States, we forget that there is an island. There

463
00:26:08,000 --> 00:26:12,280
Speaker 1: is Taiwan, and even more importantly, off of Taiwan, there

464
00:26:12,359 --> 00:26:16,280
Speaker 1: are other islands as well, Dongshy Islands, and you know

465
00:26:16,400 --> 00:26:18,720
Speaker 1: they maybe they're not in the map, maybe they're artificial.

466
00:26:18,800 --> 00:26:22,359
Speaker 1: There's a whole battle here, but there's real reports that

467
00:26:22,480 --> 00:26:27,159
Speaker 1: the Chinese may advance toward these little er islands. What

468
00:26:27,240 --> 00:26:31,440
Speaker 1: do we do? Show the flag? Indeed, um, I think

469
00:26:31,480 --> 00:26:35,360
Speaker 1: at that point our best bet is to continue our

470
00:26:35,520 --> 00:26:38,199
Speaker 1: show the flag. U S. Navy we call these freedom

471
00:26:38,240 --> 00:26:41,880
Speaker 1: of navigation patrols. But Tom, the real lever is closer

472
00:26:42,040 --> 00:26:46,280
Speaker 1: military cooperation with Taiwan. That is what China wants to avoid.

473
00:26:46,720 --> 00:26:49,320
Speaker 1: We can we can use that as a lever to

474
00:26:49,480 --> 00:26:53,320
Speaker 1: push China back the little islands, Koint Matsu and others

475
00:26:54,119 --> 00:26:56,440
Speaker 1: R and D targets of China. This is going to

476
00:26:56,520 --> 00:26:59,920
Speaker 1: be a flashpoint going forward. Very good, well, thank you

477
00:27:00,040 --> 00:27:02,159
Speaker 1: so much. There's a series of books up by almost

478
00:27:02,200 --> 00:27:03,840
Speaker 1: Devita's folks, and I'm going to be as clear as

479
00:27:03,880 --> 00:27:06,680
Speaker 1: I can. Start with a leader's bookshelf. In it our

480
00:27:06,800 --> 00:27:10,440
Speaker 1: forty fifty books or so, and you'll find some jewels

481
00:27:10,440 --> 00:27:13,399
Speaker 1: in there to help you get through this pandemic. Anmal,

482
00:27:13,480 --> 00:27:22,800
Speaker 1: thank you so much. Leadership is always interesting, and it's

483
00:27:22,880 --> 00:27:28,480
Speaker 1: particularly interesting during a pandemic. It is most most important

484
00:27:28,560 --> 00:27:31,959
Speaker 1: now to get the messages the experiences that people are

485
00:27:32,040 --> 00:27:35,639
Speaker 1: facing during this pandemic. David Rubinstone has been doing this.

486
00:27:35,880 --> 00:27:38,040
Speaker 1: He does it with a Dina Freedman of the Nasdac

487
00:27:38,480 --> 00:27:42,639
Speaker 1: a good conversation about what a Dina Freedman is doing. Now,

488
00:27:42,840 --> 00:27:45,239
Speaker 1: let's listen. Do you think you really need to bring

489
00:27:45,280 --> 00:27:47,560
Speaker 1: you all your people back into the offices because it

490
00:27:47,600 --> 00:27:49,280
Speaker 1: seems to be working pretty well right now, or do

491
00:27:49,359 --> 00:27:50,840
Speaker 1: you think that a lot of people may not want

492
00:27:50,840 --> 00:27:52,960
Speaker 1: to come back in the office because they're afraid of

493
00:27:53,240 --> 00:27:55,720
Speaker 1: traveling to the offices or they're just comfortable working at home.

494
00:27:56,359 --> 00:27:59,879
Speaker 1: And it's a great point, David, because we we did

495
00:28:00,080 --> 00:28:02,560
Speaker 1: survey of every employee to ask them what is their

496
00:28:02,560 --> 00:28:05,480
Speaker 1: comfort level to come back under certain conditions and based

497
00:28:05,560 --> 00:28:09,080
Speaker 1: on the status of different cities where we operate, and

498
00:28:09,400 --> 00:28:12,080
Speaker 1: we have we have some employees who are eager to

499
00:28:12,200 --> 00:28:15,320
Speaker 1: come back, but the vast majority of employees who want

500
00:28:15,320 --> 00:28:18,399
Speaker 1: to continue to wait and see how things progress in

501
00:28:18,440 --> 00:28:20,359
Speaker 1: the cities where they operate before they come back. We

502
00:28:20,520 --> 00:28:25,040
Speaker 1: have the luxury of patients, we have the ability to

503
00:28:25,119 --> 00:28:28,800
Speaker 1: work from home very effectively, so we will volunteer ask

504
00:28:28,880 --> 00:28:31,479
Speaker 1: people if they want to come back voluntarily and they

505
00:28:31,520 --> 00:28:33,800
Speaker 1: feel they can do it in a safe way, then

506
00:28:33,920 --> 00:28:36,520
Speaker 1: we would like to start to reopen offices to give

507
00:28:36,560 --> 00:28:38,720
Speaker 1: them that flexibility. But we then will put a whole

508
00:28:38,760 --> 00:28:42,080
Speaker 1: lot of protocols in place inside the offices to make

509
00:28:42,160 --> 00:28:46,160
Speaker 1: sure that they stay safe while they're there. aDNA Friedman

510
00:28:46,560 --> 00:28:50,080
Speaker 1: of the Nasdack Paul Swenian Time King with David Rubinstein

511
00:28:50,160 --> 00:28:53,160
Speaker 1: as he drives forward the conversation with his wonderful series

512
00:28:54,400 --> 00:29:00,120
Speaker 1: on leadership Live David, the fabric of this city? How

513
00:29:00,280 --> 00:29:02,200
Speaker 1: is it going to change? You are a great student

514
00:29:02,240 --> 00:29:06,480
Speaker 1: of this. You have been involved in commercial real estate transactions.

515
00:29:06,520 --> 00:29:12,360
Speaker 1: You've been involved in the distinction between goods transactions essential goods,

516
00:29:12,640 --> 00:29:16,959
Speaker 1: foods and medical performing services, and also as MS. Freedman

517
00:29:17,040 --> 00:29:21,840
Speaker 1: speaks of the service sector. How will the service sector change?

518
00:29:23,280 --> 00:29:26,600
Speaker 1: It's clear over the course of history that humans greatest

519
00:29:26,640 --> 00:29:31,320
Speaker 1: desire is to live and then to reproduce and to

520
00:29:31,440 --> 00:29:34,480
Speaker 1: have their children live and be healthy. And I think

521
00:29:34,560 --> 00:29:36,840
Speaker 1: people are not going to take chances going back to

522
00:29:36,920 --> 00:29:40,240
Speaker 1: work so quickly if they think their lives or maybe

523
00:29:40,240 --> 00:29:42,720
Speaker 1: their children's lives will be at stake. So I think

524
00:29:42,760 --> 00:29:45,160
Speaker 1: people are going to come back to work much more slowly.

525
00:29:45,560 --> 00:29:48,200
Speaker 1: And people have learned they can work from home just

526
00:29:48,440 --> 00:29:51,280
Speaker 1: as well, maybe in some cases better. So I think

527
00:29:51,320 --> 00:29:54,040
Speaker 1: you'll get a reversion to the mean over several years,

528
00:29:54,400 --> 00:29:58,560
Speaker 1: but not right away. So, David, as you were discussing

529
00:29:58,600 --> 00:30:01,800
Speaker 1: with Adina Freedman again, the CEO of NASDAC. You know,

530
00:30:02,040 --> 00:30:05,480
Speaker 1: we've seen a tremendous amount of altility and financial markets. David,

531
00:30:05,560 --> 00:30:08,760
Speaker 1: how is a Dina said that the NASDAC has dealt

532
00:30:08,840 --> 00:30:11,160
Speaker 1: with us again given that much of their work force

533
00:30:11,400 --> 00:30:14,040
Speaker 1: is uh kind of working from home. Well, they are

534
00:30:14,080 --> 00:30:16,160
Speaker 1: a high tech company and as you know, they're an

535
00:30:16,160 --> 00:30:19,400
Speaker 1: electronic exchange, so they never really needed people on the

536
00:30:19,480 --> 00:30:23,480
Speaker 1: floors to run around and exchange trading orders, so they're

537
00:30:23,520 --> 00:30:26,200
Speaker 1: they're pretty well equipped to do this. I would also

538
00:30:26,280 --> 00:30:28,560
Speaker 1: say that their their company has done well. In fact,

539
00:30:28,640 --> 00:30:30,920
Speaker 1: their their stock is up because there's a lot of

540
00:30:31,000 --> 00:30:33,840
Speaker 1: trading going on. Markets maybe up and down, but they

541
00:30:33,880 --> 00:30:35,640
Speaker 1: make money whether the markets go up or down. But

542
00:30:35,720 --> 00:30:39,600
Speaker 1: actually NASTAC has the five biggest tech companies in the world,

543
00:30:39,680 --> 00:30:42,120
Speaker 1: or at least in the United States on their exchange,

544
00:30:42,560 --> 00:30:47,560
Speaker 1: and therefore those companies are doing quite well. Amazon, Microsoft, Apple,

545
00:30:47,600 --> 00:30:50,920
Speaker 1: and so forth. David, you go down that river in

546
00:30:51,040 --> 00:30:54,720
Speaker 1: Pittsburgh where the river's meet and there is alcohola and

547
00:30:54,920 --> 00:30:58,240
Speaker 1: Paul O'Neal. I'm going to give him huge credit for

548
00:30:58,320 --> 00:31:03,080
Speaker 1: the modern serve sector floor the cubicles, spread the spread

549
00:31:03,120 --> 00:31:05,800
Speaker 1: out thing Carlisle lives as you guys have done this

550
00:31:06,000 --> 00:31:09,240
Speaker 1: so many times, so many transactions where you have to

551
00:31:09,360 --> 00:31:13,960
Speaker 1: deal with labor space, labor dynamics. Are the days the

552
00:31:14,120 --> 00:31:18,400
Speaker 1: cubicle done? Are the days of packing people in? You know,

553
00:31:18,760 --> 00:31:22,640
Speaker 1: you've got a synergistic guy going, we need a mate

554
00:31:22,800 --> 00:31:26,440
Speaker 1: feet three point two inches apart? Is that just gone?

555
00:31:27,320 --> 00:31:29,840
Speaker 1: They're too. Phenomenon that are going to go forward. One

556
00:31:30,080 --> 00:31:32,600
Speaker 1: is that there will be cubicles, but they will have

557
00:31:33,080 --> 00:31:36,440
Speaker 1: more protection so that people can't be breathing on other

558
00:31:36,480 --> 00:31:40,560
Speaker 1: people so readily. And secondly, fewer people will be living

559
00:31:40,760 --> 00:31:43,040
Speaker 1: and working in the cubicles because fewer people are going

560
00:31:43,080 --> 00:31:45,320
Speaker 1: to come back to their offices. Many people are gonna

561
00:31:45,320 --> 00:31:48,080
Speaker 1: be content to work at home or remotely, So you

562
00:31:48,160 --> 00:31:50,600
Speaker 1: have fewer people in my view, and those people that

563
00:31:50,680 --> 00:31:54,880
Speaker 1: do work in cubicles will be better protected. Yahoo. I

564
00:31:54,960 --> 00:31:57,720
Speaker 1: mean I remember one day a CEO, Yeah, I walked

565
00:31:57,760 --> 00:32:00,720
Speaker 1: and said this working at home stuff isn't working for productivity.

566
00:32:01,160 --> 00:32:03,240
Speaker 1: She had the curs to change it around. What is

567
00:32:03,320 --> 00:32:07,360
Speaker 1: your experience, David Rubenstein of people working at home? Is

568
00:32:07,400 --> 00:32:13,480
Speaker 1: it efficacious? It is efficient if you um don't have

569
00:32:13,600 --> 00:32:15,440
Speaker 1: a lot of young children running around that you have

570
00:32:15,520 --> 00:32:18,000
Speaker 1: to take care of. If you've got young children running

571
00:32:18,000 --> 00:32:19,760
Speaker 1: around and you don't have a lot of help, it

572
00:32:19,840 --> 00:32:22,680
Speaker 1: can be difficult. If you're my age and your children

573
00:32:22,720 --> 00:32:24,920
Speaker 1: out of the house, it's not that difficult. So that's

574
00:32:24,960 --> 00:32:28,280
Speaker 1: a big difference. So David, it's interesting here. I think

575
00:32:28,320 --> 00:32:29,880
Speaker 1: you know a lot of companies are trying to figure

576
00:32:30,200 --> 00:32:33,760
Speaker 1: this out here. Um, you know a lot of companies.

577
00:32:33,960 --> 00:32:38,440
Speaker 1: I think they're probably learning that there, uh, you know, efficiency,

578
00:32:38,480 --> 00:32:42,000
Speaker 1: the productivity is probably better than maybe they initially thought

579
00:32:42,120 --> 00:32:44,920
Speaker 1: of when they thought about working from home. I mean,

580
00:32:44,960 --> 00:32:46,800
Speaker 1: how do you think that's going to play out? I

581
00:32:46,920 --> 00:32:49,600
Speaker 1: think companies are surprised when I s CEOs on the

582
00:32:49,680 --> 00:32:52,640
Speaker 1: show Leadership Live. What they are most surprised about it

583
00:32:52,840 --> 00:32:56,040
Speaker 1: is that their companies have worked quite well remotely. What

584
00:32:56,200 --> 00:32:58,240
Speaker 1: I think is going to happen is you'll see more

585
00:32:58,320 --> 00:33:02,000
Speaker 1: people doing it remotely, that when their colleagues are going

586
00:33:02,040 --> 00:33:04,200
Speaker 1: back to work, more people will stay at home than

587
00:33:04,240 --> 00:33:07,120
Speaker 1: they would have otherwise thought. And secondly, I don't think

588
00:33:07,200 --> 00:33:09,160
Speaker 1: everybody will be brought back to work in other ways,

589
00:33:09,160 --> 00:33:12,600
Speaker 1: I'm not sure of all employees are going to be

590
00:33:12,800 --> 00:33:16,360
Speaker 1: rehired or or kept just because I think people will

591
00:33:16,400 --> 00:33:19,080
Speaker 1: realize that sales will be slower for a while, and

592
00:33:19,160 --> 00:33:21,640
Speaker 1: I think profitability will be lower for a while, and

593
00:33:21,720 --> 00:33:24,280
Speaker 1: I don't think everybody will come back to work in

594
00:33:24,360 --> 00:33:27,120
Speaker 1: the same job they had before this crisis. David, thank

595
00:33:27,120 --> 00:33:30,120
Speaker 1: you so much. An important conversation with the Dina Friedman

596
00:33:30,360 --> 00:33:35,920
Speaker 1: sax CEO. Look for that Friday, This Ism on Bloomberg Television.

597
00:33:36,280 --> 00:33:44,640
Speaker 1: David Rubinstein Leadership Live. At this time to day, we've

598
00:33:44,720 --> 00:33:49,479
Speaker 1: been talking with members of the Johns Hopkins University about

599
00:33:49,720 --> 00:33:52,440
Speaker 1: this pandemic. Laurence Soer has been kind enough to join

600
00:33:52,600 --> 00:33:56,400
Speaker 1: us repeatedly, always giving good perspective. Lauren, I want you

601
00:33:56,480 --> 00:34:01,000
Speaker 1: to talk about Dr Fauci, the virologist, speaking with the

602
00:34:01,120 --> 00:34:05,520
Speaker 1: ophthalmologist Ran Paul yesterday of Kentucky. What did you take

603
00:34:05,600 --> 00:34:10,440
Speaker 1: away from the two doctors, doctors of different fields going

604
00:34:10,560 --> 00:34:17,719
Speaker 1: at it over infectious disease. I think Dr Fauci is

605
00:34:18,080 --> 00:34:22,680
Speaker 1: um as you've demonstrated repeatedly, as steadfast expert and so

606
00:34:23,280 --> 00:34:25,719
Speaker 1: you know, as an intecious diview position. I think we

607
00:34:25,840 --> 00:34:29,160
Speaker 1: have to trust that his his paths forward and his

608
00:34:29,360 --> 00:34:32,720
Speaker 1: vision for how we can safely reopen the company. Reopened

609
00:34:32,719 --> 00:34:37,360
Speaker 1: the country is the is the most important path to follow.

610
00:34:37,760 --> 00:34:39,439
Speaker 1: We have to be safe, we have to be said

611
00:34:39,480 --> 00:34:42,759
Speaker 1: back and we have to be um. This is the

612
00:34:42,840 --> 00:34:48,840
Speaker 1: time when we need that voice of leadership where Lauren,

613
00:34:48,880 --> 00:34:51,839
Speaker 1: good morning from London. Where can you find a voice

614
00:34:51,880 --> 00:34:54,640
Speaker 1: of leadership? Is there anyone and and anything? When you

615
00:34:54,719 --> 00:34:56,840
Speaker 1: look at testing, when you look at you know, some

616
00:34:57,160 --> 00:34:59,120
Speaker 1: of the things that we know about what this actually

617
00:34:59,239 --> 00:35:04,719
Speaker 1: virus does that you would trust. Yeah, I think that's

618
00:35:04,760 --> 00:35:08,040
Speaker 1: one of our biggest challenges. You know, in that discussion

619
00:35:08,160 --> 00:35:11,640
Speaker 1: with Dr Fauci and Dr Paul and when Dr Fauci

620
00:35:11,719 --> 00:35:15,520
Speaker 1: called him cavalier for arguing that school should be reopen,

621
00:35:15,600 --> 00:35:19,600
Speaker 1: I think we saw that leadership gap. Unfortunately, I don't

622
00:35:19,680 --> 00:35:24,520
Speaker 1: feel like we have a strong national leadership front um

623
00:35:24,640 --> 00:35:27,080
Speaker 1: that we can go to for support. Normally you would

624
00:35:27,120 --> 00:35:30,560
Speaker 1: expect that from the CDC, and um, the CDC has

625
00:35:30,600 --> 00:35:34,439
Speaker 1: been sidelined here. I think Dr Fauci is our best

626
00:35:34,520 --> 00:35:36,680
Speaker 1: bet for who we can follow on how we can

627
00:35:36,800 --> 00:35:39,640
Speaker 1: safely you know, how we can take advice safely. But

628
00:35:40,080 --> 00:35:44,520
Speaker 1: but that conversation yesterday just demonstrated that we really still

629
00:35:44,640 --> 00:35:46,560
Speaker 1: have that need. Thank you so much. Too short of

630
00:35:46,600 --> 00:35:49,600
Speaker 1: time Lawrence sour Or JOHNS. Hompkins University, Assistant Professor of

631
00:35:49,800 --> 00:35:54,200
Speaker 1: Emergency Medicine. Thanks for listening to the Bloomberg Surveillance podcast.

632
00:35:54,600 --> 00:35:59,480
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

633
00:35:59,640 --> 00:36:03,600
Speaker 1: which ever podcast platform you prefer. I'm on Twitter at

634
00:36:03,719 --> 00:36:07,920
Speaker 1: Tom Keene before the podcast. You can always catch us worldwide.

635
00:36:08,440 --> 00:36:09,480
Speaker 1: I'm Bloomberg Radio