WEBVTT - Surveillance: Virus Far From Over, Koh Says

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<v Speaker 1>Ye, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene

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<v Speaker 1>jay Leye. We bring you insight from the best in economics, finance, investment,

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<v Speaker 1>and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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<v Speaker 1>Bloomberg dot Com, and of course, on the Bloomberg. Want

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<v Speaker 1>to start this morning's conversation with Lesia the longest He

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<v Speaker 1>joins us from invest Goo unless As always, we will

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<v Speaker 1>not ask our guests to be epidemiologists if they are

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<v Speaker 1>not epidemiologists. What I'm interested in from an investor's perspective

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<v Speaker 1>this morning, it's not just how the pandemic data changes,

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<v Speaker 1>but how investor attitudes changes to those changes in the data.

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<v Speaker 1>Can you walk me through how you think investors will

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<v Speaker 1>respond to the latest increase in infections we're seeing across

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<v Speaker 1>several states. Well, this, this beginning of a second wave,

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<v Speaker 1>is quite concerning because I think all of us as

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<v Speaker 1>investors would have expected it a second wave, but would

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<v Speaker 1>have expected it maybe in the fall. So this second

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<v Speaker 1>wave starting, especially here in the US, so early on

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<v Speaker 1>in the summer, is a bit counterintuitive and really assigned

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<v Speaker 1>that that reopening is is a very delicate situation. I

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<v Speaker 1>think this puts a spotlight also on the reopening process

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<v Speaker 1>in Europe. We had successful reopening so to speak. In

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<v Speaker 1>Asia with the new exceptions right in South Korea, for example,

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<v Speaker 1>we had a concerning rise. But in Asia broadly speaking,

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<v Speaker 1>these second waves were contained rather quickly. The implications for

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<v Speaker 1>investors are are are meaningful because the rotation between defensive

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<v Speaker 1>and cyclicals, or say from growth to value, or from

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<v Speaker 1>large cups to small cups. We're really really large themes

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<v Speaker 1>that were taking place in the last couple of weeks.

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<v Speaker 1>Unless yeah, there is a belief that they bought to

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<v Speaker 1>another lockdown is much much high because so many of

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<v Speaker 1>these states have now built out healthcare capacity that track

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<v Speaker 1>and trace is far more far forward it was, say

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<v Speaker 1>several months ago. What's your response to that, Well, the

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<v Speaker 1>it is natural to assume that over the last three

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<v Speaker 1>or four months, we uh we have gotten more prepared

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<v Speaker 1>with respect to testing, with respect to amount of capacity

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<v Speaker 1>in the healthcare system to handle this UM. I think

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<v Speaker 1>it's reasonable to assume that the second wave will not

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<v Speaker 1>cut us as unprepared as we were the first time. So,

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<v Speaker 1>in my opinion, again with that in mind, the investment

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<v Speaker 1>strategies should be focused on, as we have argued before,

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<v Speaker 1>on actually harvesting more credit premium across the credit spectrum,

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<v Speaker 1>in high yield, in investment rate as these spaces tend

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<v Speaker 1>to rely more on the amount of monetary stimulus and

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<v Speaker 1>credit stimulus that we're seeing, which continues, well, equities will

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<v Speaker 1>suffer to your point earlier about the impact on cyclical

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<v Speaker 1>equities will suffer more from the disappointment or lack of

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<v Speaker 1>momentum in earnings that were likely to see in the

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<v Speaker 1>second half of the year, unless you know it's the

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<v Speaker 1>V shape recovery died yesterday with Chairman Powell's persistent comments,

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<v Speaker 1>how does the equity market adjust to that? I mean,

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<v Speaker 1>if it's another wall of worry, doesn't that benefit stocks? Well? So,

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<v Speaker 1>maybe not to the same extent, to be honest, because

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<v Speaker 1>the first wave since the FED and fiscal stimulus um,

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<v Speaker 1>not only the FED but globally was really about uh,

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<v Speaker 1>multiples expansion, right, but stocks rows, and there was a

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<v Speaker 1>V shaped recovery in stocks. It was entirely driven by

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<v Speaker 1>the price component and multiples expansion. Earnings, as we know,

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<v Speaker 1>are still in a very very difficult situations and continue

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<v Speaker 1>to fall from this point on to maintain that recovering stocks,

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<v Speaker 1>we need to see earnings growth at the cost even

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<v Speaker 1>multiples compression or or multiple staying flat. But it's critical

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<v Speaker 1>here in the second phase of potential stocks rally to

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<v Speaker 1>see the support from earnings growth. While for credit as

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<v Speaker 1>we're as we're arguing earlier, being senior in claims, just

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<v Speaker 1>being able to avoid a serious round of defaults and

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<v Speaker 1>having the backstop of the Federal Reserve that should allow

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<v Speaker 1>for credit premium to be harvested by investors. Lessio, let's

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<v Speaker 1>pick up on that and build I know that you've

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<v Speaker 1>been recommending taking credit risk, or you have been taking

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<v Speaker 1>credit risk within the high yield space over investment grade

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<v Speaker 1>in order to capture that extra risk premia. I'm trying

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<v Speaker 1>to understand the fedback stopping valuations to an extent, but

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<v Speaker 1>not necessarily preventing companies from going bankrupt as we see

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<v Speaker 1>the bankruptcy rates rising to the highest level since two

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<v Speaker 1>thousand and nine. So how do you draw this distinction

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<v Speaker 1>and how big of a risk is it that you're

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<v Speaker 1>still going to see this wave of bankruptcies escalate. It

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<v Speaker 1>is a serious risk, um and these are risky UH

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<v Speaker 1>credits in some parts of the high old market from

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<v Speaker 1>our perspective, As I said, allocators, the reminder is always

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<v Speaker 1>to be to be very diversified in your or credit

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<v Speaker 1>portfolios in in order to avoid those ideas idiosyncrasies. For

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<v Speaker 1>more nimble investors, one valid approach this early on into

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<v Speaker 1>the recovery is to invest in defensive fixed income factors

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<v Speaker 1>such as quality, high your credit, staying down into the

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<v Speaker 1>into the curve spectrum, into the into the maturity spectrum,

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<v Speaker 1>stay staying fub sub five years on both investment grade

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<v Speaker 1>and high yield, and focusing on on um for the

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<v Speaker 1>same ratings co horts on on attractive quality and attractive spreads.

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<v Speaker 1>So when you look at the fixed income universe, you

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<v Speaker 1>can draw an analogy as you have in equities, focusing

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<v Speaker 1>on quality and low volatility factors UM rather than value

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<v Speaker 1>and up in the risk spectrum in credit. Unless you're

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<v Speaker 1>very quickly here does text still lead? I mean, with

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<v Speaker 1>all the adjustments, the grimness that we heard from Chairman Powell,

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<v Speaker 1>is there revenue build of the text that be all

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<v Speaker 1>and end all of the equity market? Uh? Text still

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<v Speaker 1>still leads in the sense that it's the it's where

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<v Speaker 1>quality is today is where the you know, in a

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<v Speaker 1>low growth world and in a world where more than

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<v Speaker 1>ever a globalized and diversified source of revenue growth will

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<v Speaker 1>be important in order to diversify the economic risk. UH

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<v Speaker 1>text still leads um and and it will provide a

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<v Speaker 1>little bit less ceclicality, especially at these inflection points where

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<v Speaker 1>we're beginning to question the sustainability of that v shape. Alessia.

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<v Speaker 1>I always tried to catch up with this, Alessia the

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<v Speaker 1>longest that of invested because journal Lisa have mentioned there

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<v Speaker 1>is a change in the air, and it's not funny.

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<v Speaker 1>There has been good news on a pandemic over the

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<v Speaker 1>last number of days, a trend improved and that is

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<v Speaker 1>abruptly reversed in the last two or three days as

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<v Speaker 1>a pandemic spreads across this nation and spreads out of

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<v Speaker 1>troll in so many developing economies. Howard co is a doctor.

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<v Speaker 1>He is a physician out of Yale University. And yes

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<v Speaker 1>he had public service with Barack ob Obama in the

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<v Speaker 1>Department of Health, but far more in the people of

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<v Speaker 1>the Boston community know this. He has been a true

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<v Speaker 1>star of medicine in a very medical community. How much

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<v Speaker 1>so he's done the rarest of rare things in medicine.

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<v Speaker 1>He's thrown out the first pitch at Fenway Park, and

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<v Speaker 1>we're thrilled that Dr Coh could join us this morning

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<v Speaker 1>on the pandemic. Dr co you are so esteemed in dermatology,

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<v Speaker 1>in oncology, a broad set of internal medicine. Do you

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<v Speaker 1>buy the idea of a second wave or is it

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<v Speaker 1>just a spread of the first wave of this virus?

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<v Speaker 1>Well on March of their tief, the President declared a

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<v Speaker 1>natural emergency for our country, and unfortunately, the latest data

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<v Speaker 1>indicate that that emergency is far from over, and we're

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<v Speaker 1>seeing rising cases and hospitalizations in the West, in the South,

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<v Speaker 1>and the southeast and rural parts of our country. Rising

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<v Speaker 1>hospitalizations in particular concern all of us because if hospitals

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<v Speaker 1>are overwhelmed, patients can't get the care they need and deserve.

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<v Speaker 1>And as we enter the summer and businesses want to reopen,

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<v Speaker 1>everybody wants to have a confidence that this pandemic is

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<v Speaker 1>behind us, and we can't say that at all. So

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<v Speaker 1>we have to follow all these trends very very carefully,

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<v Speaker 1>especially as we move into the fall and beyond. So

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<v Speaker 1>Dr Cole, I want to draw a distinction between a

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<v Speaker 1>second wave that stems from people actually in a reopening

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<v Speaker 1>economy getting back out there in a second wave resulting

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<v Speaker 1>from policy that perhaps isn't securing against a resurgence in

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<v Speaker 1>the virus. Is what we're seeing right now in Texas

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<v Speaker 1>and Arizona, an inevitable outcome to the reopening of the economy. Well, Lisa,

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<v Speaker 1>we're very concerned because we know what works to prevent

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<v Speaker 1>infections and prevent death, and that is the best public

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<v Speaker 1>health practices possible. Some states have followed that and watched

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<v Speaker 1>the indicators and the trends very very closely as they've

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<v Speaker 1>opened up. Others have proceeded despite the fact that cases

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<v Speaker 1>and hostilizations and deaths have been increasing. So this is

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<v Speaker 1>a combination about biological threat but also policy issues that

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<v Speaker 1>need to be coordinated better on the federal level. At

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<v Speaker 1>least we have right now fifty states going in fifty

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<v Speaker 1>different directions. We need a one country, one government approach

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<v Speaker 1>to this pandemic going forward. Dr CO a lot of

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<v Speaker 1>people saying there is little appetite to review some of

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<v Speaker 1>these shutdowns that we saw throughout the nation going forward

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<v Speaker 1>just because of the economic hit. What other policy tools

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<v Speaker 1>do you see being effective, they could potentially reduce the

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<v Speaker 1>number of cases and the potential for a serious second

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<v Speaker 1>wave going forward without shutting down the economy again. So

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<v Speaker 1>we have a try the trends very closely. That that's

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<v Speaker 1>the number one message here. We have to watch those cases, hostilizations, deaths.

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<v Speaker 1>We have to target our efforts to high risk communities.

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<v Speaker 1>We know, for example, the communities of Color have taken

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<v Speaker 1>a real disproportionate burden of the death and suffering to date.

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<v Speaker 1>We have to make sure that the testing and the

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<v Speaker 1>contact tracing, and the preparations for PPE for the fall

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<v Speaker 1>and beyond have to be coordinated at the highest level.

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<v Speaker 1>These are the things we have to be paying attention

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<v Speaker 1>to as one country, not fifty states going forward. Howard,

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<v Speaker 1>Professor Delta, fantastic to catch up with you this morning,

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<v Speaker 1>said thank you very much for your inputs. Right now,

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<v Speaker 1>George Bory with us. He's well as far ago, and

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<v Speaker 1>he writes brilliant, brilliant note summarizing the what to do

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<v Speaker 1>in the fixed income markets. George Bory, what do I

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<v Speaker 1>do right now? I've got a small pot of money.

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<v Speaker 1>I don't want to be inequities. I own enough Apple

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<v Speaker 1>or I own enough Amazon whatever and I need coupon

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<v Speaker 1>Where is it? Tom? Good morning, John, Lisa, it's great

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<v Speaker 1>to be on the show. Thanks for having me, and

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<v Speaker 1>you ask one of the most important questions I think

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<v Speaker 1>all investors face today, Tom is sort of what do

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<v Speaker 1>I do with my money? And you know what people

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<v Speaker 1>have done with their money in the last you know,

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<v Speaker 1>call a couple of months, as we've seen a math

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<v Speaker 1>to rush into UH into very secure money market and

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<v Speaker 1>government like securities, specifically in the fixed income markets. You've

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<v Speaker 1>seen money market funds kind of grow by up to

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<v Speaker 1>two trillion dollars. It's truly a spectacular amount of money. UM. Now,

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<v Speaker 1>Historically that money will tend to stay in the in

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<v Speaker 1>the front end of the curve while the economy UH

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<v Speaker 1>starts to kind of shake itself out. And as we've

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<v Speaker 1>seen today, UH, you know, we're seeing a bit of

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<v Speaker 1>a risk adjustment, as you know, people take a little

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<v Speaker 1>bit of a breather after a pretty spectacular run in

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<v Speaker 1>most markets. And I think at this particular point in time,

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<v Speaker 1>it is still a good idea to sort of incrementally

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<v Speaker 1>move yourself out of the out the risk spectrum. UM

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<v Speaker 1>yields are very low cash yields are BURO effectively UM

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<v Speaker 1>and keeping maintaining income is going to be an increasing

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<v Speaker 1>challenge as we move forward. The FED told us yesterday

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<v Speaker 1>FED funds are staying at zero, are very close to

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<v Speaker 1>zero through the end of That means the reach for

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<v Speaker 1>yield for any saver, for any investor is going to

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<v Speaker 1>be UH is going to be pretty significant. And Tom,

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<v Speaker 1>you and I've been on the I've been on the

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<v Speaker 1>show for many years. We've we've discussed this. UH. This

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<v Speaker 1>is not a new phenomena. It's just something that it's

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<v Speaker 1>a reminder. It's gonna be with us for a long

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<v Speaker 1>period of time. So we look for safe places to

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<v Speaker 1>park money, to basically try and earn a little bit

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<v Speaker 1>of income and protect your capital. Capital protection is absolutely critical,

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<v Speaker 1>and we find many places in the world have fixed

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<v Speaker 1>income to be able to do that. Well. George and

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<v Speaker 1>my long risk because I'm longer this economy or long

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<v Speaker 1>risk because I'm long financial repression. I think, well, you

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<v Speaker 1>are you you are long risk up to a point.

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<v Speaker 1>I mean, I think what the FED has done over

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<v Speaker 1>the last you know, certainly over the last two three months,

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<v Speaker 1>you know, there's been a massive reduction in volatility. And

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<v Speaker 1>I think what the FED has done very well is

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<v Speaker 1>they've they've allowed markets to reopen, they've reliquefied markets, they've

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<v Speaker 1>repressed volatility. Uh. And you know, there's I guess there's

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<v Speaker 1>some theoretical limits to how how much risk they can

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<v Speaker 1>ultimately repressed, but that we don't seem to have reached

0:13:39.480 --> 0:13:43.560
<v Speaker 1>that point yet. But they've been very successful at reliquifying markets.

0:13:43.760 --> 0:13:47.720
<v Speaker 1>Now that's encouraged investors to basically reach back out the

0:13:47.800 --> 0:13:51.880
<v Speaker 1>risk spectrum. The basic mantra of don't fight the Fed,

0:13:52.280 --> 0:13:54.600
<v Speaker 1>you know, is alive and well today and markets have

0:13:54.720 --> 0:13:58.839
<v Speaker 1>responded accordingly. Now, yesterday, I think the FED did a

0:13:59.000 --> 0:14:02.480
<v Speaker 1>very interested, very interesting kind of pivot, if you will. Uh.

0:14:02.520 --> 0:14:04.840
<v Speaker 1>You know, the way we viewed it is, they delivered

0:14:04.840 --> 0:14:09.040
<v Speaker 1>a very strong statement of concern. They highlighted the uncertainties.

0:14:09.080 --> 0:14:12.480
<v Speaker 1>It wasn't necessarily new information, but it was a stark

0:14:12.480 --> 0:14:16.880
<v Speaker 1>reminder that the out the outlook is very unclear. And

0:14:16.880 --> 0:14:22.720
<v Speaker 1>and and they've increased credit availability. They've allowed reasonably healthy

0:14:22.720 --> 0:14:26.800
<v Speaker 1>borrowers to access capital markets. But credit availability it might

0:14:26.920 --> 0:14:31.200
<v Speaker 1>smooth and economic shock, but it doesn't eliminate the economic cycle.

0:14:31.320 --> 0:14:33.720
<v Speaker 1>And I think that's what they told us yesterday, you know,

0:14:33.880 --> 0:14:38.320
<v Speaker 1>expect a long drawn out recovery with the potential of

0:14:38.360 --> 0:14:42.040
<v Speaker 1>more shocks, and so you're seeing markets respond accordingly, George.

0:14:42.160 --> 0:14:45.160
<v Speaker 1>To see the cycle play out means that we are

0:14:45.160 --> 0:14:47.880
<v Speaker 1>going to continue seeing bankruptcies. When you say going out

0:14:47.920 --> 0:14:50.920
<v Speaker 1>the risk spectrum, are you talking triple C s even

0:14:50.920 --> 0:14:53.240
<v Speaker 1>though there is the high degree of likelihood to federal

0:14:53.360 --> 0:14:56.840
<v Speaker 1>not backstop these companies, We say, you make an excellent point.

0:14:56.920 --> 0:14:59.080
<v Speaker 1>You know, in the world of fixed income, is is

0:14:59.160 --> 0:15:03.160
<v Speaker 1>tranched by risk, typically by ratings, and the higher quality

0:15:03.200 --> 0:15:07.240
<v Speaker 1>companies we're talking triple A to mostly triple these. You know,

0:15:07.280 --> 0:15:10.600
<v Speaker 1>those companies have been able to access the liquidity that

0:15:10.640 --> 0:15:13.120
<v Speaker 1>the FETE has been able to create. And these companies

0:15:13.160 --> 0:15:16.680
<v Speaker 1>are largely in survival mode right now. They've increased their

0:15:16.720 --> 0:15:21.400
<v Speaker 1>cash holdings, they've refinanced their maturities, They've basically bolstered up

0:15:21.440 --> 0:15:24.960
<v Speaker 1>their balance sheets. I think in anticipation of you know,

0:15:25.120 --> 0:15:27.840
<v Speaker 1>rougher times ahead, and I think they've taken what a

0:15:27.920 --> 0:15:31.000
<v Speaker 1>what a big, large, mature company should do. They're they're

0:15:31.040 --> 0:15:35.800
<v Speaker 1>exercising their financial flexibility, so their position for weaker times

0:15:35.840 --> 0:15:38.680
<v Speaker 1>going ahead. As you go down the risk spectrum, though

0:15:38.880 --> 0:15:42.160
<v Speaker 1>it gets increasingly difficult to do that, and we would

0:15:42.160 --> 0:15:44.040
<v Speaker 1>still have sort of, I think a bit of a

0:15:44.120 --> 0:15:47.520
<v Speaker 1>higher quality bias um. As you get further down the

0:15:47.600 --> 0:15:50.200
<v Speaker 1>risk spectrum, there's less support. You know, the fet is

0:15:50.240 --> 0:15:55.160
<v Speaker 1>not willing to to help these companies, there's less financial flexibility,

0:15:55.240 --> 0:15:58.320
<v Speaker 1>and then there's very acute economic pressures to our central

0:15:58.360 --> 0:16:00.920
<v Speaker 1>expectation is at default rates are going to continue to

0:16:01.040 --> 0:16:04.880
<v Speaker 1>rise this year, you know, upwards of eight on a

0:16:04.920 --> 0:16:08.840
<v Speaker 1>trailing twelve month basis. Now that's not a historical high,

0:16:08.880 --> 0:16:12.400
<v Speaker 1>but it's certainly a very kind of stressed level, and

0:16:12.440 --> 0:16:15.280
<v Speaker 1>that means there's more pain to come. So when you

0:16:15.360 --> 0:16:19.080
<v Speaker 1>go down the risk spectrum, our our point of focus

0:16:19.280 --> 0:16:23.880
<v Speaker 1>is cash flow durability. There are functioning companies, you know

0:16:24.040 --> 0:16:27.960
<v Speaker 1>in the single buble b maybe some triple seas that

0:16:28.000 --> 0:16:31.360
<v Speaker 1>are that are functioning, that actually have durable cash flow

0:16:31.680 --> 0:16:34.200
<v Speaker 1>and they actually have very limited borrowing needs. So those

0:16:34.200 --> 0:16:37.520
<v Speaker 1>companies are good opportunities, but they're few and far between. George,

0:16:37.520 --> 0:16:39.080
<v Speaker 1>I've gotta leave it. That send up best to the

0:16:39.120 --> 0:16:45.440
<v Speaker 1>saying why get George Bowery of Franco's right now? And

0:16:45.480 --> 0:16:50.680
<v Speaker 1>this is in celebration of constructive infrastructure in America is

0:16:50.720 --> 0:16:54.600
<v Speaker 1>Amy lou She's at the Brookings Institution, but far more

0:16:54.640 --> 0:16:59.280
<v Speaker 1>importantly does urban policy and is known for success or

0:16:59.320 --> 0:17:04.320
<v Speaker 1>public service to the nation under Henryson's is noted, but

0:17:04.520 --> 0:17:09.760
<v Speaker 1>far more her policy program at Brookings is truly world class.

0:17:10.440 --> 0:17:13.359
<v Speaker 1>Amy Louise, thank you so much for joining us. We

0:17:13.440 --> 0:17:17.440
<v Speaker 1>are celebrating in New York with a pandemic, the miracle

0:17:17.680 --> 0:17:23.200
<v Speaker 1>that is a new terminal at LaGuardia. One of our

0:17:23.280 --> 0:17:26.960
<v Speaker 1>viewers and listeners want to know why we can't do

0:17:27.200 --> 0:17:32.439
<v Speaker 1>more Laguardias coast to coast. Why is it so hard

0:17:32.480 --> 0:17:37.399
<v Speaker 1>to succeed it infrastructure in this country. Well, good morning,

0:17:37.400 --> 0:17:40.639
<v Speaker 1>thank you for having me. Well, the good news is

0:17:40.680 --> 0:17:46.600
<v Speaker 1>there is by partisan support for infrastructure reform and UM

0:17:46.680 --> 0:17:51.560
<v Speaker 1>investment in infrastructure. The challenge right now is there is

0:17:51.600 --> 0:18:00.359
<v Speaker 1>not agreement on UM how to finance that infrastructure or

0:18:00.440 --> 0:18:05.880
<v Speaker 1>what is the infrastructure of the future, And there's enormous

0:18:05.920 --> 0:18:10.639
<v Speaker 1>debates that we can't just continue repay highways UM in

0:18:10.680 --> 0:18:16.159
<v Speaker 1>the same way or connect rural areas together as the

0:18:16.240 --> 0:18:19.800
<v Speaker 1>Highway Act had traditionally done, but instead we need to

0:18:19.840 --> 0:18:27.920
<v Speaker 1>invest in more digital infrastructure global connectivity. As you mentioned UM,

0:18:28.040 --> 0:18:33.399
<v Speaker 1>UM and UM more multimodal choice given the fact that

0:18:33.440 --> 0:18:36.479
<v Speaker 1>people today move in very different ways, So we do

0:18:36.600 --> 0:18:41.560
<v Speaker 1>need to think about a huge oriented UM infrastructure with

0:18:41.840 --> 0:18:45.359
<v Speaker 1>a much more diverse mix of public private resources. Okay,

0:18:45.520 --> 0:18:48.400
<v Speaker 1>I let me make clear, folks, I'm the only one

0:18:48.440 --> 0:18:52.119
<v Speaker 1>in this conversation that can remember Dwight David Eisenhower and

0:18:52.160 --> 0:18:55.639
<v Speaker 1>the advent of the interstate highway system, and tons has

0:18:55.680 --> 0:18:58.800
<v Speaker 1>been written about that in all Why can't we have

0:18:58.880 --> 0:19:03.480
<v Speaker 1>an interstate away system of the digital world. Why can't

0:19:03.560 --> 0:19:08.200
<v Speaker 1>America be Apollo class on that go to the Moon

0:19:08.680 --> 0:19:13.040
<v Speaker 1>class on that UM. I do think the US is

0:19:13.119 --> 0:19:19.640
<v Speaker 1>incredibly behind in thinking about a world class UM modern

0:19:19.760 --> 0:19:23.520
<v Speaker 1>infrastructure UM the way a lot of our international peers

0:19:23.560 --> 0:19:27.920
<v Speaker 1>have done. UM. We actually need a vision for infrastructure.

0:19:28.160 --> 0:19:30.880
<v Speaker 1>I think what's so interesting right now is we've had

0:19:31.680 --> 0:19:35.639
<v Speaker 1>calls for even up to you know, a trillion dollars

0:19:35.680 --> 0:19:40.240
<v Speaker 1>of an infrastructure package, but no one has said, UM,

0:19:40.320 --> 0:19:45.800
<v Speaker 1>what that infrastructure is. We do need air connectivity, we

0:19:45.880 --> 0:19:50.520
<v Speaker 1>do need water sewer infrastructure upgrades, and to make sure

0:19:50.560 --> 0:19:53.880
<v Speaker 1>that every single household, including those in flints, have access

0:19:53.920 --> 0:19:58.160
<v Speaker 1>to clean water. We have to have digital infrastructure. As

0:19:58.200 --> 0:20:02.240
<v Speaker 1>you said like a new digital highway, and each of

0:20:02.240 --> 0:20:08.400
<v Speaker 1>those systems UM are financed differently, right, not going through

0:20:08.440 --> 0:20:12.479
<v Speaker 1>the state d OT systems the way the highway system

0:20:12.560 --> 0:20:15.280
<v Speaker 1>was built. It's a lot more complicated, which means we

0:20:15.359 --> 0:20:20.760
<v Speaker 1>need even stronger public private partnerships to make sure that UM,

0:20:20.760 --> 0:20:26.400
<v Speaker 1>this more diverse and broader set of businfrastructure UM is supported, invested,

0:20:26.440 --> 0:20:29.960
<v Speaker 1>and modernized. AMY. We're talking about infrastructure, which maybe in

0:20:30.000 --> 0:20:32.960
<v Speaker 1>the future when the government gets together with some sort

0:20:32.960 --> 0:20:35.919
<v Speaker 1>of infrastructure bill to help stimulate growth and do some

0:20:36.000 --> 0:20:37.960
<v Speaker 1>of these major projects. But in the here and now,

0:20:38.000 --> 0:20:41.800
<v Speaker 1>we're reopening economies. This week New York City reopening, and

0:20:41.800 --> 0:20:44.840
<v Speaker 1>there's a question of what the fate of the of

0:20:44.840 --> 0:20:47.600
<v Speaker 1>the United States is major cities will be coming out

0:20:47.600 --> 0:20:50.320
<v Speaker 1>of this pandemic. Given the fact that the spread has

0:20:50.400 --> 0:20:53.640
<v Speaker 1>been fastest in some of these areas. How concerned are

0:20:53.680 --> 0:20:56.119
<v Speaker 1>you about the death of the modern city as we

0:20:56.160 --> 0:20:58.879
<v Speaker 1>know it and sort of the dwindling and population that

0:20:58.920 --> 0:21:02.440
<v Speaker 1>a lot of people are calling for. Well, first of all,

0:21:02.440 --> 0:21:06.240
<v Speaker 1>I think we have to remind people that UM this

0:21:06.320 --> 0:21:12.240
<v Speaker 1>pandemic is impacting everyone, no matter what kind of community

0:21:12.280 --> 0:21:15.760
<v Speaker 1>you live in. In fact, UM the fastest growth in

0:21:15.800 --> 0:21:18.640
<v Speaker 1>New cases are not in the big cities, but they're

0:21:18.640 --> 0:21:21.199
<v Speaker 1>in the suburbs there, in the smaller cities and the

0:21:21.320 --> 0:21:24.800
<v Speaker 1>rural areas. So the pandemic actually has no borders. So

0:21:24.880 --> 0:21:27.159
<v Speaker 1>when I hear questions about what is the future of

0:21:27.200 --> 0:21:31.359
<v Speaker 1>the city UH in a post COVID world, there's an

0:21:31.400 --> 0:21:35.159
<v Speaker 1>assumption that density puts you at high risk. Yet the

0:21:35.200 --> 0:21:40.480
<v Speaker 1>reality is that the risk infection is true no matter

0:21:40.520 --> 0:21:43.600
<v Speaker 1>where you live. And in the long run, what we've

0:21:43.600 --> 0:21:46.840
<v Speaker 1>seen is that cities will continue have continued to rise

0:21:47.440 --> 0:21:52.119
<v Speaker 1>over the centuries, and the knowledge economy, the global economy

0:21:52.240 --> 0:21:55.800
<v Speaker 1>continues to reward places with a high density of talent,

0:21:56.320 --> 0:22:01.119
<v Speaker 1>of amenities, top tier research in UH, universities, mobile airports,

0:22:01.160 --> 0:22:04.280
<v Speaker 1>and other innovative firms. So I don't see that changing,

0:22:04.640 --> 0:22:07.800
<v Speaker 1>but only accelerating in the years to come. Um. But

0:22:07.960 --> 0:22:11.240
<v Speaker 1>that's said, I do think for high cost cities like

0:22:11.359 --> 0:22:15.560
<v Speaker 1>New York, like the Day area, there are real questions

0:22:15.560 --> 0:22:18.880
<v Speaker 1>about whether one can afford to live in a superstar

0:22:18.920 --> 0:22:23.760
<v Speaker 1>city without a job or with economic uncertainty. You know.

0:22:23.920 --> 0:22:26.639
<v Speaker 1>Facebook and Twitter, as you know, has announced that some

0:22:26.720 --> 0:22:29.760
<v Speaker 1>of their employers and employees can now tele a work

0:22:29.840 --> 0:22:33.719
<v Speaker 1>permanently and that may spur some workers to jump at

0:22:33.760 --> 0:22:37.680
<v Speaker 1>the opportunity to move to more affordable cities in the heartland,

0:22:38.119 --> 0:22:40.840
<v Speaker 1>which to me is actually really great for those cities

0:22:41.200 --> 0:22:45.639
<v Speaker 1>and still good for the economy overall. Dr thank you

0:22:45.680 --> 0:22:47.920
<v Speaker 1>so much for joining us. Thank you, thank you, thank

0:22:47.920 --> 0:22:50.480
<v Speaker 1>you for being with us. Thanks for listening to the

0:22:50.520 --> 0:22:57.000
<v Speaker 1>Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

0:22:57.359 --> 0:23:01.560
<v Speaker 1>or whichever podcast platform you per I'm on Twitter at

0:23:01.640 --> 0:23:05.880
<v Speaker 1>Tom Keane Before the podcast. You can always catch us worldwide.

0:23:06.359 --> 0:23:07.439
<v Speaker 1>I'm Bloomberg Radio