1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Daily we bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,640 --> 00:00:27,440 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Well 5 00:00:27,520 --> 00:00:29,400 Speaker 1: we like to do with surveillance is not talked to 6 00:00:29,440 --> 00:00:32,760 Speaker 1: the fancy people, all the pundans, pund training, more pundits. 7 00:00:33,080 --> 00:00:35,400 Speaker 1: We like to talk to the people that they read 8 00:00:35,600 --> 00:00:38,360 Speaker 1: and they listen to. One of those is Jared Bernstein 9 00:00:38,360 --> 00:00:41,040 Speaker 1: and the steam career at the Center on Budget and 10 00:00:41,080 --> 00:00:44,520 Speaker 1: Policy Priorities, and a senator from Delaware a few years 11 00:00:44,520 --> 00:00:48,040 Speaker 1: ago discovered this and said Dr Bernstein joined the team. 12 00:00:48,120 --> 00:00:52,840 Speaker 1: Jared Bernstein part of the transition team for the President elect. Jared, 13 00:00:52,960 --> 00:00:54,440 Speaker 1: I know we need to break some news here, and 14 00:00:54,480 --> 00:00:56,600 Speaker 1: I do want to know the Secretary Treasury is going 15 00:00:56,640 --> 00:00:59,600 Speaker 1: to be, but I really want to go to transition Minutia. 16 00:01:00,200 --> 00:01:03,520 Speaker 1: You are lined up I think to walk Champ and Major. 17 00:01:03,640 --> 00:01:07,959 Speaker 1: You're gonna be like first dog walker for the Biden administration. 18 00:01:08,440 --> 00:01:13,640 Speaker 1: What is it like being on a transition team. I 19 00:01:13,680 --> 00:01:16,720 Speaker 1: think the most important thing to recognize there is that 20 00:01:16,800 --> 00:01:20,840 Speaker 1: this is such a critical moment for a smooth, normal 21 00:01:20,880 --> 00:01:24,399 Speaker 1: transition process to happen, And what's happening right now is 22 00:01:24,440 --> 00:01:27,920 Speaker 1: anything but normal. Remember I was the chief economist to 23 00:01:28,000 --> 00:01:31,080 Speaker 1: the then Vice president elect back in two thousand and eight, 24 00:01:31,520 --> 00:01:35,160 Speaker 1: and at this point we were actively planning. Remember that 25 00:01:35,280 --> 00:01:38,240 Speaker 1: was the Great Recession. We were actively planning for a 26 00:01:38,240 --> 00:01:41,679 Speaker 1: fiscal relief package that was legislated less than four weeks 27 00:01:41,760 --> 00:01:45,000 Speaker 1: after Obama and Biden took office. That's what should be 28 00:01:45,080 --> 00:01:48,320 Speaker 1: happening now. But this is not normal, my friends, for 29 00:01:48,440 --> 00:01:51,440 Speaker 1: this transition to be thrown off this way, and it's 30 00:01:51,480 --> 00:01:54,280 Speaker 1: coming at great cost in terms of health and in 31 00:01:54,400 --> 00:01:57,080 Speaker 1: terms of the economy. Okay, a delicate question, then you know, 32 00:01:57,080 --> 00:01:59,600 Speaker 1: we make fun of Champion Major the dogs. Returning to 33 00:01:59,600 --> 00:02:03,000 Speaker 1: the White with the President Elec Jared, what's so important 34 00:02:03,040 --> 00:02:05,880 Speaker 1: here is? And what is your action plan if this 35 00:02:05,960 --> 00:02:11,480 Speaker 1: is transition interrupted? Are you planning out a budget process 36 00:02:11,520 --> 00:02:15,880 Speaker 1: without the knowledge of the President White House? Well, certainly 37 00:02:15,960 --> 00:02:19,520 Speaker 1: we are, obviously, and you'll hear the President like talking 38 00:02:19,520 --> 00:02:23,120 Speaker 1: about this, thinking about a fiscal package with great urgency 39 00:02:23,440 --> 00:02:25,200 Speaker 1: one of the things he said. And by the way, 40 00:02:25,240 --> 00:02:27,840 Speaker 1: President elecs, they like to wait till they're in the 41 00:02:27,919 --> 00:02:30,920 Speaker 1: office to start moving legislation. He has said that is 42 00:02:30,960 --> 00:02:33,360 Speaker 1: not the case when it comes to fiscal relief. That 43 00:02:33,440 --> 00:02:36,680 Speaker 1: should happen in the lame Duck. And I couldn't agree more. 44 00:02:37,120 --> 00:02:41,760 Speaker 1: But if you're talking about preparing for uh, the UH 45 00:02:41,919 --> 00:02:44,680 Speaker 1: for for this job that he is UH, that the 46 00:02:44,720 --> 00:02:47,480 Speaker 1: American people have elected him for, you've got to talk 47 00:02:47,520 --> 00:02:50,400 Speaker 1: about virus control and that of course you can see 48 00:02:50,440 --> 00:02:53,920 Speaker 1: the President elect is very active on planning virus control. 49 00:02:54,000 --> 00:02:57,680 Speaker 1: But you know his UH Vivic Murdy, who's the former 50 00:02:57,720 --> 00:03:01,440 Speaker 1: surgeon general on the covid T recently talked about how 51 00:03:01,480 --> 00:03:05,240 Speaker 1: important it is to get that information in transition from 52 00:03:05,240 --> 00:03:07,840 Speaker 1: folks from bunks that are currently in the White House, 53 00:03:08,040 --> 00:03:11,840 Speaker 1: and that's not happening. Again, avoidable suffering to Americans in 54 00:03:11,919 --> 00:03:16,320 Speaker 1: terms of healthcare and economic hardship because this transition is 55 00:03:16,360 --> 00:03:19,760 Speaker 1: not occurring the way it should. Jaredy, We're lucky to 56 00:03:19,800 --> 00:03:21,080 Speaker 1: have a bit of time with you this morning, so 57 00:03:21,120 --> 00:03:22,720 Speaker 1: we can talk about the transition a little bit more. 58 00:03:22,720 --> 00:03:23,960 Speaker 1: In just the moment, I want to talk about a 59 00:03:23,960 --> 00:03:27,200 Speaker 1: fiscal plan just a bit with you. The Republican Senate 60 00:03:27,320 --> 00:03:29,519 Speaker 1: was the obstacle to getting the deal that Pelosi wanted 61 00:03:29,800 --> 00:03:31,880 Speaker 1: was still likely to have a Republican Senate. We have 62 00:03:31,919 --> 00:03:34,200 Speaker 1: one now, will likely have one off the January as well. 63 00:03:34,639 --> 00:03:36,520 Speaker 1: What is it that you think that President elect Biden 64 00:03:36,520 --> 00:03:41,880 Speaker 1: can achieve the Speaker Pelosi couldn't. Well, I think the 65 00:03:41,880 --> 00:03:44,640 Speaker 1: way you teed it up is exactly right. I mean, 66 00:03:45,400 --> 00:03:48,280 Speaker 1: the President elect continues to talk about how people can 67 00:03:48,320 --> 00:03:51,480 Speaker 1: decide to cooperate and now is is the perfect time 68 00:03:51,480 --> 00:03:55,000 Speaker 1: for them to do so. We have heard positive sounds 69 00:03:55,080 --> 00:03:59,800 Speaker 1: about a fiscal package from members of the Republican squad 70 00:03:59,840 --> 00:04:03,200 Speaker 1: and including McConnell himself. What we're not seeing is the 71 00:04:03,280 --> 00:04:06,200 Speaker 1: kinds of negotiations that the President elect has been stressing, 72 00:04:06,480 --> 00:04:09,080 Speaker 1: and that needs to happen as of yesterday. You know, 73 00:04:09,200 --> 00:04:14,600 Speaker 1: we have an unemployment insurance system where over twenty million 74 00:04:14,640 --> 00:04:18,919 Speaker 1: people are making claims and at least twelve million we 75 00:04:19,000 --> 00:04:23,599 Speaker 1: recently learned UH could lose their h support as that's 76 00:04:24,000 --> 00:04:26,280 Speaker 1: as as as it expires at the at the end 77 00:04:26,320 --> 00:04:28,679 Speaker 1: of the year. We have over four hundred thousand small 78 00:04:28,680 --> 00:04:32,479 Speaker 1: business instead of clothes. The long term unemployment is increasing 79 00:04:32,520 --> 00:04:34,800 Speaker 1: at a rate we haven't seen in the history of 80 00:04:34,800 --> 00:04:39,000 Speaker 1: that series. We learned this morning that according to zip recruiter. 81 00:04:39,279 --> 00:04:42,480 Speaker 1: Job growth is slowing, not just in places where the 82 00:04:42,560 --> 00:04:45,160 Speaker 1: virus is surging, but in other places as well. So 83 00:04:45,240 --> 00:04:48,360 Speaker 1: I think the urgency of the economic situation has and 84 00:04:48,440 --> 00:04:51,800 Speaker 1: the health situation, which of course are intimately connected, just 85 00:04:51,960 --> 00:04:54,839 Speaker 1: has to reach legislators. I'm an economist, I'm not a politician. 86 00:04:54,880 --> 00:04:57,360 Speaker 1: I can't tell you the strategy to get them there, 87 00:04:57,360 --> 00:04:59,960 Speaker 1: but I can certainly stress the urgency of this moment 88 00:05:00,000 --> 00:05:02,800 Speaker 1: in that regard, Well, let's talk about the urgency and 89 00:05:02,839 --> 00:05:04,640 Speaker 1: the size, because currently there is a one and a 90 00:05:04,680 --> 00:05:07,040 Speaker 1: half trillion dollar spread between the two sides, and I'm 91 00:05:07,040 --> 00:05:09,320 Speaker 1: not sure how that's closed, that's all, if it has, 92 00:05:09,360 --> 00:05:12,239 Speaker 1: it's all in the last month. What kind of size 93 00:05:12,279 --> 00:05:14,720 Speaker 1: package do you need in a moment like this, Jared, 94 00:05:16,480 --> 00:05:18,240 Speaker 1: I think probably the best way to think about is 95 00:05:18,279 --> 00:05:21,200 Speaker 1: start from the bottom up and start adding up what's necessary. 96 00:05:21,240 --> 00:05:25,320 Speaker 1: State and local budgets are are really hurting. Remember they 97 00:05:25,360 --> 00:05:28,960 Speaker 1: can't run budget deficits. UH. The unemployment insurance system, as 98 00:05:29,000 --> 00:05:33,159 Speaker 1: I mentioned, needs work. Nutritional support has to be on 99 00:05:33,240 --> 00:05:37,520 Speaker 1: the table. There's lots of people facing a potential evictions 100 00:05:37,560 --> 00:05:41,440 Speaker 1: and foreclosures, so we need those programs to continue and 101 00:05:41,480 --> 00:05:44,800 Speaker 1: to be re upped, and of course virus control is 102 00:05:44,839 --> 00:05:46,479 Speaker 1: at the top of the list. Now, if you start 103 00:05:46,800 --> 00:05:49,800 Speaker 1: summing that up, you'll get into the neighborhood of the 104 00:05:49,800 --> 00:05:53,120 Speaker 1: Heroes Act, which is what the President elect was touting 105 00:05:53,160 --> 00:05:56,479 Speaker 1: the other day. Uh and at least the second version 106 00:05:56,480 --> 00:05:58,840 Speaker 1: of that was somewhere in the two to three trillion range. 107 00:05:58,880 --> 00:06:02,040 Speaker 1: But let me say this, I think what matters most 108 00:06:02,160 --> 00:06:05,640 Speaker 1: right now is speed. So there's speed, their size, their composition, 109 00:06:05,680 --> 00:06:08,520 Speaker 1: they're all important, but I would put speed at the 110 00:06:08,560 --> 00:06:10,440 Speaker 1: top of the list because I think this economy is 111 00:06:10,480 --> 00:06:13,560 Speaker 1: at a precarious point. Jared, can you elaborate on that. 112 00:06:13,600 --> 00:06:17,000 Speaker 1: If speed is the biggest issue right now, do you 113 00:06:17,080 --> 00:06:20,120 Speaker 1: think that Democrats should cave to the Republican demand of 114 00:06:20,160 --> 00:06:23,240 Speaker 1: a smaller bill and just get something anything past even 115 00:06:23,279 --> 00:06:26,240 Speaker 1: it's if it's substantially less than what you think is required. 116 00:06:26,760 --> 00:06:29,520 Speaker 1: You know, I just don't think cave is the word 117 00:06:29,560 --> 00:06:32,479 Speaker 1: that anyone should be thinking about up there. It's actually 118 00:06:32,560 --> 00:06:37,479 Speaker 1: cooperation working together to serve both the healthcare and economic 119 00:06:37,520 --> 00:06:40,640 Speaker 1: needs of the American people. And you know, as the 120 00:06:40,680 --> 00:06:43,159 Speaker 1: President elect has stressed, I mean, there are uh, not 121 00:06:43,440 --> 00:06:47,800 Speaker 1: avoidable there are avoidable deaths that could occur if if 122 00:06:48,160 --> 00:06:50,920 Speaker 1: both sides would get together and start cooperating. Now, by 123 00:06:50,960 --> 00:06:54,720 Speaker 1: the way, Ron Klain, incoming chief of staff, someone who 124 00:06:54,720 --> 00:07:00,440 Speaker 1: knows a lot about about about pandemics, keep winting out 125 00:07:00,440 --> 00:07:02,279 Speaker 1: something the other day that I want to stress. He said, 126 00:07:02,320 --> 00:07:07,120 Speaker 1: you know, yes, vaccine, that's important, it's essential. But you know, 127 00:07:07,279 --> 00:07:11,920 Speaker 1: vaccine without vaccination doesn't get you very far. So along 128 00:07:11,920 --> 00:07:14,920 Speaker 1: with all this other transition planning that should be happening now, 129 00:07:15,160 --> 00:07:19,480 Speaker 1: the manufacturer and the distribution of the vaccine is essential 130 00:07:19,520 --> 00:07:21,760 Speaker 1: planning that has to occur. And I don't think anybody 131 00:07:21,800 --> 00:07:23,840 Speaker 1: needs the cave to each other to get to work 132 00:07:23,880 --> 00:07:26,920 Speaker 1: on serving the American people. In that regard, Jared, given 133 00:07:26,920 --> 00:07:29,400 Speaker 1: that there is some sort of bridge right now to 134 00:07:29,440 --> 00:07:31,600 Speaker 1: try to get us through the next very difficult couple 135 00:07:31,640 --> 00:07:33,960 Speaker 1: of months, what do you think is necessary when it 136 00:07:33,960 --> 00:07:37,440 Speaker 1: comes to potential infrastructure spending, which has been something that's 137 00:07:37,440 --> 00:07:39,440 Speaker 1: been sort of touted out there, and how should we 138 00:07:39,480 --> 00:07:43,040 Speaker 1: pay for something like that? Yeah, that's a really uh, 139 00:07:43,160 --> 00:07:46,120 Speaker 1: that's a really good question. I I think that the 140 00:07:46,120 --> 00:07:49,320 Speaker 1: the we we I focus so much on relief and 141 00:07:49,400 --> 00:07:51,640 Speaker 1: this fiscal bridge to the other side of the crisis. 142 00:07:52,000 --> 00:07:54,560 Speaker 1: I don't think we should forget. And certainly the President 143 00:07:54,560 --> 00:07:58,160 Speaker 1: ELECTA has a has an agenda that is extremely I 144 00:07:58,200 --> 00:08:01,240 Speaker 1: think rich and important in this regard that simply getting 145 00:08:01,280 --> 00:08:03,080 Speaker 1: to the other side of the crisis, back to where 146 00:08:03,080 --> 00:08:06,120 Speaker 1: we were, isn't nearly good enough. We have to the 147 00:08:06,400 --> 00:08:08,760 Speaker 1: way he puts it is build back better. That is, 148 00:08:08,840 --> 00:08:12,280 Speaker 1: have a far more resilient economy on the other side 149 00:08:12,520 --> 00:08:15,920 Speaker 1: of the crisis. And resiliency in the case that you're raising, 150 00:08:16,240 --> 00:08:19,320 Speaker 1: has to do with investments in clean energy and infrastructure, 151 00:08:19,560 --> 00:08:24,080 Speaker 1: healthcare infrastructure, safety net infrastructure, an unemployment insurance system that's 152 00:08:24,120 --> 00:08:27,080 Speaker 1: up to the task, a healthcare system that's up to 153 00:08:27,120 --> 00:08:29,840 Speaker 1: the task, and all of those investments I think need 154 00:08:29,920 --> 00:08:32,080 Speaker 1: to be made now. In terms of pay for us, 155 00:08:32,200 --> 00:08:35,040 Speaker 1: that's a discussion that's going to have to happen when 156 00:08:35,120 --> 00:08:38,920 Speaker 1: the President elect becomes the president we start those negotiations. 157 00:08:38,960 --> 00:08:41,640 Speaker 1: I will say that in terms of relief packages right now, 158 00:08:41,960 --> 00:08:45,080 Speaker 1: it is essential to recognize that interest rates are so 159 00:08:45,280 --> 00:08:47,840 Speaker 1: low and locked in at such a low rate, so 160 00:08:47,920 --> 00:08:51,360 Speaker 1: government borrowing given the return on the kinds of investments 161 00:08:51,400 --> 00:08:54,360 Speaker 1: I'm talking about, I mean, we can literally save lives 162 00:08:54,760 --> 00:08:59,360 Speaker 1: at a and extremely uh favorable interest rate, and the 163 00:08:59,400 --> 00:09:02,200 Speaker 1: idea that Congress isn't acting with urgency to do that 164 00:09:02,320 --> 00:09:06,079 Speaker 1: right now, I think it's just a huge mistake. Four 165 00:09:06,120 --> 00:09:08,240 Speaker 1: basis points on a ten yere Jarek right to catch up, 166 00:09:08,280 --> 00:09:11,319 Speaker 1: appreciate time, come back, saying John Bernstein that at the 167 00:09:11,440 --> 00:09:21,200 Speaker 1: Center on Budget and Policy, priorities made come surveillance to 168 00:09:21,280 --> 00:09:24,600 Speaker 1: speak the experts on this pandemic long ago and far away. 169 00:09:24,760 --> 00:09:29,960 Speaker 1: I think March. My first conversation was with an esteemed 170 00:09:30,080 --> 00:09:34,320 Speaker 1: radiologist at Mount Sinai this morning, these many months on 171 00:09:34,360 --> 00:09:38,680 Speaker 1: a conversation with Dr David richie's president of the Mount 172 00:09:38,720 --> 00:09:43,120 Speaker 1: Sinai Hospital, a radiologist of Mount Sinai who long ago 173 00:09:43,200 --> 00:09:48,720 Speaker 1: and far away actually bought radiological images snapshots of the 174 00:09:48,800 --> 00:09:53,120 Speaker 1: lungs of Wuhan. That was our first important interview on 175 00:09:53,200 --> 00:09:56,559 Speaker 1: this pandemic. Today, David rich joins as president of Mount 176 00:09:56,600 --> 00:10:00,079 Speaker 1: Sinai Hospital in Mount Sinai, Queens. David, I looked on 177 00:10:00,160 --> 00:10:03,760 Speaker 1: a hundred first Street and I count the ambulances. It's 178 00:10:03,840 --> 00:10:06,520 Speaker 1: not as bad as it was in April. It's not 179 00:10:06,640 --> 00:10:09,320 Speaker 1: as bad as what is in May, and yet we're 180 00:10:09,400 --> 00:10:13,160 Speaker 1: hearing about increasing troubles. Give us a snapshot of Mount 181 00:10:13,280 --> 00:10:17,520 Speaker 1: Sinai this Friday morning. This Friday morning, and really for 182 00:10:17,559 --> 00:10:20,920 Speaker 1: the past thirty days, Mount Sawei Hospital has about fifty 183 00:10:20,960 --> 00:10:25,520 Speaker 1: patients with active COVID infection UH. That is a significantly 184 00:10:25,600 --> 00:10:28,040 Speaker 1: last At the peak of the crisis, there were seven 185 00:10:28,120 --> 00:10:32,360 Speaker 1: hundred and seventy including patients in the tents across the streets. 186 00:10:32,440 --> 00:10:36,200 Speaker 1: So it is a markedly less severe surge than what 187 00:10:36,280 --> 00:10:38,920 Speaker 1: we saw in the first wave. Then why are we 188 00:10:38,960 --> 00:10:43,400 Speaker 1: closing schools? Why are we seeing hospitals in North Dakota, 189 00:10:43,880 --> 00:10:47,320 Speaker 1: in Utah and Idaho. So challenge is it just a 190 00:10:47,400 --> 00:10:52,400 Speaker 1: new pandemic of geography or is there something different this time? Well, 191 00:10:52,480 --> 00:10:54,880 Speaker 1: this time we see what's coming at US. We have 192 00:10:55,080 --> 00:10:57,760 Speaker 1: testing in the region. It's certainly not as good as 193 00:10:57,760 --> 00:11:00,160 Speaker 1: it needs to be in the in the long term, 194 00:11:00,200 --> 00:11:03,120 Speaker 1: but we can see the positivity rates. And we didn't 195 00:11:03,160 --> 00:11:06,120 Speaker 1: know back in February and March what was coming towards US. 196 00:11:06,160 --> 00:11:09,840 Speaker 1: There was no capacity and then we were overwhelmed. This time, 197 00:11:09,880 --> 00:11:12,760 Speaker 1: we can see the increase coming at US and take 198 00:11:12,840 --> 00:11:17,360 Speaker 1: proactive public health measures in advance of effective vaccines in 199 00:11:17,440 --> 00:11:20,240 Speaker 1: order to control the spread so that we don't see 200 00:11:20,320 --> 00:11:23,840 Speaker 1: the incredible amount of death and excess death outside of 201 00:11:23,880 --> 00:11:27,600 Speaker 1: COVID that we saw during March April and may Dr 202 00:11:27,679 --> 00:11:31,720 Speaker 1: Rich good morning from London. Is it a different type 203 00:11:31,760 --> 00:11:35,040 Speaker 1: of population that's being affected this time? Is this why 204 00:11:35,240 --> 00:11:37,760 Speaker 1: you know fewer people are ending up in hospital or 205 00:11:37,800 --> 00:11:40,800 Speaker 1: is it because of the viral load that we're seeing. Well, 206 00:11:40,840 --> 00:11:43,320 Speaker 1: there there are certain things that are different about this 207 00:11:43,480 --> 00:11:46,679 Speaker 1: second wave of just looking at it from our perspective. 208 00:11:47,200 --> 00:11:51,360 Speaker 1: For impatients, we see that they're slightly younger, implying that 209 00:11:51,400 --> 00:11:54,640 Speaker 1: we're doing a better job of protecting our elders. We 210 00:11:54,800 --> 00:11:58,800 Speaker 1: see a slightly decreased length of stay, and we're very 211 00:11:58,840 --> 00:12:02,040 Speaker 1: happy that the mortality rate came down from in the 212 00:12:02,080 --> 00:12:05,520 Speaker 1: first wave to five point one percent in the second wave. 213 00:12:05,559 --> 00:12:08,959 Speaker 1: While still a very deadly disease, this does give some 214 00:12:09,080 --> 00:12:12,040 Speaker 1: hope that something that we're doing, something in terms of 215 00:12:12,080 --> 00:12:17,240 Speaker 1: therapeutics or better management of oxygen levels is improving the 216 00:12:17,280 --> 00:12:21,480 Speaker 1: outcome of patients. But still not a disease to take 217 00:12:21,559 --> 00:12:25,800 Speaker 1: lightly at all. The World Health Organization has ruled using 218 00:12:25,840 --> 00:12:29,959 Speaker 1: anti vale m desivere as a treatment has ruled against 219 00:12:30,080 --> 00:12:32,960 Speaker 1: using web deservere as a treatment of COVID nineteen. What 220 00:12:33,040 --> 00:12:36,920 Speaker 1: treatments are available right now that you are using well 221 00:12:37,080 --> 00:12:40,360 Speaker 1: remdesse of your it does have some data that are 222 00:12:40,440 --> 00:12:44,520 Speaker 1: are contradictory, but in the early phase of inpatient care, 223 00:12:45,320 --> 00:12:51,079 Speaker 1: remdesivie and inpatients not yet showing their own antibody response 224 00:12:51,559 --> 00:12:55,960 Speaker 1: convalescent plasma are tools that we're using. And then as 225 00:12:56,000 --> 00:12:59,680 Speaker 1: the disease progresses and we see more involvement, the use 226 00:12:59,720 --> 00:13:03,320 Speaker 1: of UH gluba corticoids commonly noticed steroids such as decks 227 00:13:03,320 --> 00:13:07,360 Speaker 1: and methad zone and UH drugs that in the blood 228 00:13:07,440 --> 00:13:12,000 Speaker 1: or prevent clotting have been very effective for us in 229 00:13:12,120 --> 00:13:14,400 Speaker 1: preventing some of the complications that we saw in the 230 00:13:14,440 --> 00:13:18,120 Speaker 1: first wave. Dr Richard, your thirty six years at Mount Sinai, 231 00:13:18,160 --> 00:13:22,160 Speaker 1: in doing the hard work of innesesology, you have seen 232 00:13:22,400 --> 00:13:25,280 Speaker 1: bed to bed. What people do I want you to 233 00:13:25,320 --> 00:13:29,080 Speaker 1: speak to our audience worldwide about the emotion of the 234 00:13:29,160 --> 00:13:33,400 Speaker 1: CDC yesterday basically canceled Thanksgiving or what we're seeing in 235 00:13:33,440 --> 00:13:37,120 Speaker 1: London about cancel Christmas. How does a pro like you 236 00:13:37,720 --> 00:13:43,240 Speaker 1: observe the political maelstrom of this pandemic. Well, it's it's 237 00:13:43,360 --> 00:13:46,880 Speaker 1: very hard for many of us to see that science 238 00:13:47,000 --> 00:13:50,199 Speaker 1: is not being taken in the in the proper regard 239 00:13:50,320 --> 00:13:54,000 Speaker 1: throughout the really throughout the United States. I can't speak 240 00:13:54,000 --> 00:13:56,640 Speaker 1: as much to the rest of the world, but it's 241 00:13:56,880 --> 00:14:01,840 Speaker 1: a problem when we don't have universal acceptance by public 242 00:14:01,840 --> 00:14:05,920 Speaker 1: health officials and by governments that we must mask be 243 00:14:06,080 --> 00:14:10,360 Speaker 1: much socially distanced. That the Thanksgiving holiday is in many 244 00:14:10,400 --> 00:14:14,400 Speaker 1: ways the worst of possible situations for spread of the inspirers, 245 00:14:14,480 --> 00:14:17,960 Speaker 1: because having large groups of people indoors sharing a meal 246 00:14:18,480 --> 00:14:22,480 Speaker 1: is probably the most effective way of spreading. There for 247 00:14:22,640 --> 00:14:26,200 Speaker 1: something we must we must avoid. David rich mount sign 248 00:14:26,280 --> 00:14:28,760 Speaker 1: I throught we could take generous time with us today. 249 00:14:28,800 --> 00:14:30,560 Speaker 1: Of course it's thirty five. I think it's thirty four, 250 00:14:30,600 --> 00:14:33,480 Speaker 1: maybe thirty six, excuse me, thirty six years at Mount 251 00:14:33,480 --> 00:14:40,560 Speaker 1: sin I truly committed to that institution. The market on 252 00:14:40,640 --> 00:14:44,080 Speaker 1: a hand, whilst founder securities equity strategist joins us right now, Anna, 253 00:14:44,280 --> 00:14:47,239 Speaker 1: we started this program by talking about the cross currents 254 00:14:47,240 --> 00:14:50,320 Speaker 1: for financial market participants. How do you react to the 255 00:14:50,320 --> 00:14:53,880 Speaker 1: news this morning? Well, the news this morning is encouraging 256 00:14:53,920 --> 00:14:56,280 Speaker 1: for equities, and like you were talking about earlier, that 257 00:14:56,320 --> 00:14:59,160 Speaker 1: tugger war. It's one of those items that might be 258 00:14:59,240 --> 00:15:02,200 Speaker 1: able to join the market a little bit higher, but 259 00:15:02,280 --> 00:15:04,640 Speaker 1: in the near term you know, we think that equity 260 00:15:04,640 --> 00:15:08,880 Speaker 1: of bolatility and equity uncertainty still remains elevated. So in 261 00:15:08,920 --> 00:15:12,240 Speaker 1: the immediate term, it's it's hard to say what's gonna 262 00:15:12,280 --> 00:15:15,360 Speaker 1: win out the rising COVID cases or is it gonna 263 00:15:15,400 --> 00:15:19,600 Speaker 1: be this vaccine and uh, you know, perhaps rekindle stimulus 264 00:15:19,680 --> 00:15:23,760 Speaker 1: talks on both ends. Maybe that's gonna be the winning factor. 265 00:15:24,080 --> 00:15:26,720 Speaker 1: But you know, six months out, John, we still do 266 00:15:26,880 --> 00:15:30,360 Speaker 1: think equity risk and unsearchain t will decay and equities 267 00:15:30,360 --> 00:15:33,800 Speaker 1: will march higher. And I want to talk really importantly 268 00:15:33,800 --> 00:15:36,000 Speaker 1: here and I want to drive it into a physics discussion. 269 00:15:36,000 --> 00:15:39,040 Speaker 1: And you're you're working Yale. Do we know the coefficients 270 00:15:39,160 --> 00:15:42,280 Speaker 1: right now? In this divisive week of bulls and bears? 271 00:15:42,400 --> 00:15:46,720 Speaker 1: Are you flying blind or within your equation your expectations 272 00:15:46,720 --> 00:15:49,400 Speaker 1: that you see Do you actually feel like you've got 273 00:15:49,400 --> 00:15:53,960 Speaker 1: to handle on how the equations pieced together for us? 274 00:15:54,040 --> 00:15:57,000 Speaker 1: You know, we do think we have some sense, especially 275 00:15:57,040 --> 00:15:59,840 Speaker 1: you see what the rotation has been as the market 276 00:15:59,840 --> 00:16:02,640 Speaker 1: has been pretty flat this week. Like you mentioned, still 277 00:16:02,760 --> 00:16:06,200 Speaker 1: underneath the hood, you're seeing certain groups have a higher 278 00:16:06,280 --> 00:16:09,760 Speaker 1: beta to the more positive COVID news. You're seeing more 279 00:16:09,840 --> 00:16:13,840 Speaker 1: the cyclicals and the value trade out performing, and that 280 00:16:13,880 --> 00:16:16,480 Speaker 1: has been the trend month to date. We think that 281 00:16:16,560 --> 00:16:18,720 Speaker 1: has legs and has much longer to go in the 282 00:16:18,800 --> 00:16:22,120 Speaker 1: longer term outside of six months. Okay, in the longer term. 283 00:16:22,200 --> 00:16:23,760 Speaker 1: In the short term, how much of a hit could 284 00:16:23,800 --> 00:16:27,880 Speaker 1: that cyclical trade take. Well, as you know, the cyclicality, 285 00:16:27,960 --> 00:16:31,480 Speaker 1: it's very sensitive to economic indicators and how the economic 286 00:16:31,520 --> 00:16:35,520 Speaker 1: recovery is going. So far, recovery seems to be chugging along, 287 00:16:35,800 --> 00:16:38,840 Speaker 1: but we know the biggest risk it hasn't has always 288 00:16:38,880 --> 00:16:43,240 Speaker 1: been what happens with the coronavirus cases isn't manageable. You know, 289 00:16:43,360 --> 00:16:46,160 Speaker 1: for example in New York City, you're seeing schools close, 290 00:16:46,200 --> 00:16:49,320 Speaker 1: You're seeing restaurant dining get rolled back an hour short. 291 00:16:49,840 --> 00:16:52,160 Speaker 1: These things are concerning if we get them out of 292 00:16:52,280 --> 00:16:57,800 Speaker 1: nationwide uh spread, the more concerned again of my policy 293 00:16:57,840 --> 00:17:00,240 Speaker 1: mistikens okay, And I think that's why the biggest news 294 00:17:00,240 --> 00:17:02,920 Speaker 1: perhaps of the night around this market was the gap 295 00:17:03,000 --> 00:17:06,359 Speaker 1: that's emerging between the Federal Reserve Chairman Pale and the 296 00:17:06,400 --> 00:17:09,080 Speaker 1: Treasury Secretary Minute in to him. I think for many 297 00:17:09,119 --> 00:17:11,240 Speaker 1: people in this credit market right now, there's a worry 298 00:17:11,240 --> 00:17:13,399 Speaker 1: that if the fedbacks away, you start to see a 299 00:17:13,400 --> 00:17:15,880 Speaker 1: gapping out and it's signing of financial conditions that would 300 00:17:15,880 --> 00:17:17,439 Speaker 1: be my concern this morning. I have to say I 301 00:17:17,520 --> 00:17:20,119 Speaker 1: was surprised that I didn't see if they're moving this market. 302 00:17:20,119 --> 00:17:21,320 Speaker 1: We had a bit of one eye of the night. 303 00:17:21,560 --> 00:17:24,160 Speaker 1: Then we erased it pretty quickly. Oh. I think everybody 304 00:17:24,200 --> 00:17:27,240 Speaker 1: in Washington at least is overwhelmed by the constitutional news. 305 00:17:27,240 --> 00:17:30,040 Speaker 1: But what's so important here, John, to your good point 306 00:17:30,520 --> 00:17:34,480 Speaker 1: is the fiscal stimulus timeline has been adjusted. There's no 307 00:17:34,600 --> 00:17:37,280 Speaker 1: question about that. And I want to go back to beta. 308 00:17:37,359 --> 00:17:39,480 Speaker 1: You mentioned beta, and let's call it sector beta. To 309 00:17:39,640 --> 00:17:43,160 Speaker 1: full disclosure, folks, I don't believe in beta on individual securities. 310 00:17:43,480 --> 00:17:46,480 Speaker 1: And is beta now in the beta change into two 311 00:17:46,480 --> 00:17:49,960 Speaker 1: thousand twenty one? Is it an absolute change or is 312 00:17:50,000 --> 00:17:54,040 Speaker 1: it a relative change? Can I still own tech? You 313 00:17:54,080 --> 00:17:58,160 Speaker 1: can still own tech. But we think, you know, market 314 00:17:58,200 --> 00:18:01,400 Speaker 1: can move higher. But we're thinking more pedestrian growth than 315 00:18:01,400 --> 00:18:03,560 Speaker 1: we've seen in the past two or three years. So 316 00:18:03,640 --> 00:18:07,200 Speaker 1: for us, the game becomes the more relative beta game. 317 00:18:07,560 --> 00:18:09,520 Speaker 1: We want to know if the market is going to 318 00:18:09,600 --> 00:18:13,439 Speaker 1: be more pedestrian returns and growth, well, what about underneath that, 319 00:18:13,520 --> 00:18:17,199 Speaker 1: which sectors are going to have that relative outperformance? That 320 00:18:17,320 --> 00:18:21,200 Speaker 1: relative beta for us, we think it's more that economically 321 00:18:21,240 --> 00:18:24,760 Speaker 1: sensitive names that COVID time names. So that's what we've 322 00:18:24,760 --> 00:18:27,639 Speaker 1: been recommending to investors right now. When you look out 323 00:18:27,520 --> 00:18:31,760 Speaker 1: the financials part of that story on a even with 324 00:18:31,800 --> 00:18:33,440 Speaker 1: the bond market doing what it's done over the last 325 00:18:33,480 --> 00:18:37,000 Speaker 1: couple of weeks, it is it is John, And within 326 00:18:37,119 --> 00:18:41,080 Speaker 1: financial specifically, you know the trodden and beaten down and 327 00:18:41,240 --> 00:18:44,560 Speaker 1: unloved banks. You know, recently we've pounded the table and 328 00:18:44,640 --> 00:18:48,000 Speaker 1: being overweight banks for a longer term trade because you know, 329 00:18:48,359 --> 00:18:51,440 Speaker 1: evaluations look right for the picking and as we've seen 330 00:18:51,840 --> 00:18:55,639 Speaker 1: that book to price factor has performed since March and 331 00:18:55,720 --> 00:18:57,919 Speaker 1: we think it has more to go. That helps that 332 00:18:58,040 --> 00:19:02,240 Speaker 1: banks argument. And you know, eventually with rates staying at zero, 333 00:19:02,560 --> 00:19:05,840 Speaker 1: even if we don't get the biggest physical stimulus package, 334 00:19:06,119 --> 00:19:08,480 Speaker 1: and now that we do have concerns what happens to 335 00:19:08,560 --> 00:19:12,440 Speaker 1: that credit support rules off, but seeing if that maintains 336 00:19:12,440 --> 00:19:15,960 Speaker 1: status quo, that's going to help bas come back, especially 337 00:19:16,040 --> 00:19:18,720 Speaker 1: longer down the road we get a little reflation. We're 338 00:19:18,720 --> 00:19:21,439 Speaker 1: speaking with an a hand of what Wells Fargo securities, 339 00:19:21,520 --> 00:19:23,200 Speaker 1: and I want to go back to something John was 340 00:19:23,240 --> 00:19:26,080 Speaker 1: talking about this rift that's emerging between the Federal Reserve 341 00:19:26,119 --> 00:19:29,480 Speaker 1: and the Treasury Secretary Stephen Manuchin about this extra money 342 00:19:29,760 --> 00:19:32,360 Speaker 1: that was going toward corporate bond purchases, that was going 343 00:19:32,440 --> 00:19:35,480 Speaker 1: towards main street lending facilities, that was going towards musicpal 344 00:19:35,520 --> 00:19:40,439 Speaker 1: bond UH purchases. I'm wondering how much this threatens the 345 00:19:40,520 --> 00:19:43,240 Speaker 1: idea that the Fed can swoop in as a backstop 346 00:19:43,320 --> 00:19:45,600 Speaker 1: to markets. Frankly, this has been one of the biggest 347 00:19:45,680 --> 00:19:48,879 Speaker 1: arguments for equities and valuations where they are. Does this 348 00:19:49,000 --> 00:19:53,080 Speaker 1: threaten that on any level? Based on the sudden inconsistency 349 00:19:53,200 --> 00:19:57,560 Speaker 1: here in messaging Lisa, you know, you're right, it's absolutely 350 00:19:57,560 --> 00:19:59,959 Speaker 1: a bit of a shock to here suddenly treasuring WENUS 351 00:20:00,040 --> 00:20:03,400 Speaker 1: and then the Fed are taking different stances. As you mentioned, 352 00:20:03,640 --> 00:20:06,520 Speaker 1: one of the reasons why we can justify such inflated 353 00:20:06,600 --> 00:20:10,439 Speaker 1: equity multiples, especially on the SMP five compared to history, 354 00:20:10,840 --> 00:20:15,119 Speaker 1: it's this liquidity. We've had, this monetary accommodation, and you know, 355 00:20:15,200 --> 00:20:18,280 Speaker 1: now you have traging volution asking for a refund. That's 356 00:20:18,359 --> 00:20:21,359 Speaker 1: unexpected because one of the one steady things we've had 357 00:20:21,400 --> 00:20:25,000 Speaker 1: through a lot of this turmoil has been monetary support. Now, 358 00:20:25,480 --> 00:20:28,880 Speaker 1: if that is sapped away. If companies lose their access 359 00:20:28,960 --> 00:20:32,960 Speaker 1: to capital, that comes into stress for equities, and equities 360 00:20:33,000 --> 00:20:35,400 Speaker 1: are likely to see a big pullback. But so far 361 00:20:35,880 --> 00:20:39,439 Speaker 1: we've seen credit spreads tight well behaved both in the 362 00:20:39,480 --> 00:20:42,560 Speaker 1: investment grade and the high old markets. So as long 363 00:20:42,600 --> 00:20:45,840 Speaker 1: as that can remain capped, we think equity volatility stays 364 00:20:45,920 --> 00:20:49,119 Speaker 1: muted as well, and you know multiples can continue and 365 00:20:49,320 --> 00:20:51,280 Speaker 1: great to catch up as always, and a hand that 366 00:20:51,480 --> 00:20:59,240 Speaker 1: of one stonger securities person why it works. Gott Kleiman 367 00:20:59,280 --> 00:21:02,040 Speaker 1: and Jim's l or Apollo Management in a week moment 368 00:21:02,520 --> 00:21:04,800 Speaker 1: took one of the best economists in the street and 369 00:21:04,880 --> 00:21:08,680 Speaker 1: drag them over into the dark side of asset management 370 00:21:08,760 --> 00:21:13,440 Speaker 1: economic analysis. They still touristed Slack from Deutsche Bank. Huge 371 00:21:13,480 --> 00:21:16,040 Speaker 1: loss for Peter Hooper in their team, and we're thrilled 372 00:21:16,080 --> 00:21:18,600 Speaker 1: that Mr Slack could join us. And this one touristed 373 00:21:19,080 --> 00:21:22,720 Speaker 1: a global Wall Street question, how's it different being an 374 00:21:22,720 --> 00:21:27,760 Speaker 1: economist for a massive global bank versus being an economist 375 00:21:28,000 --> 00:21:33,280 Speaker 1: for asset managers? Well, the data and then ASIS is 376 00:21:33,720 --> 00:21:36,879 Speaker 1: a really littlely identical. I mean trying to think about 377 00:21:36,960 --> 00:21:40,240 Speaker 1: what markets are doing and where they're going. Then atisis 378 00:21:40,359 --> 00:21:43,119 Speaker 1: ends up being exactly and the same. So and that 379 00:21:43,200 --> 00:21:46,280 Speaker 1: sends uh, the job that we all have of trying 380 00:21:46,320 --> 00:21:48,159 Speaker 1: to think about where is the economy and going, and 381 00:21:48,160 --> 00:21:50,399 Speaker 1: where a financial marker is going is the same for 382 00:21:50,440 --> 00:21:52,240 Speaker 1: all of us. You're at the cross section at a 383 00:21:52,320 --> 00:21:55,760 Speaker 1: very interesting time that we have Dallas FED President Robert 384 00:21:55,800 --> 00:21:59,120 Speaker 1: Kaplan coming out saying that he could expect a contraction 385 00:21:59,240 --> 00:22:02,680 Speaker 1: even in Q for as a result of the worsening pandemic. 386 00:22:02,960 --> 00:22:04,760 Speaker 1: And then you have Jim Paulson of Luthhole who just 387 00:22:04,800 --> 00:22:07,280 Speaker 1: came on and says that he expects a five percent 388 00:22:07,359 --> 00:22:10,399 Speaker 1: expansion in Q four. This sort of bullish attitude in 389 00:22:10,440 --> 00:22:13,960 Speaker 1: markets versus the parishness of economists. Where do you come 390 00:22:13,960 --> 00:22:17,280 Speaker 1: out in this divide that seems to be growing. Yeah, 391 00:22:17,280 --> 00:22:20,040 Speaker 1: what it's very important to watch is the high frequency 392 00:22:20,119 --> 00:22:23,880 Speaker 1: data and Jodan has claims yesterday as you also talked about, 393 00:22:24,000 --> 00:22:26,800 Speaker 1: of course what's going up that means that more people 394 00:22:26,800 --> 00:22:30,680 Speaker 1: are becoming unemployed. This is a yellow light for risky assets. 395 00:22:30,720 --> 00:22:32,560 Speaker 1: I mean, there's something here that's going on in the 396 00:22:32,560 --> 00:22:35,959 Speaker 1: economic data where the nightmare scenario for marguts would be 397 00:22:36,160 --> 00:22:39,119 Speaker 1: if the unemployer rate November will begin to go higher. 398 00:22:39,520 --> 00:22:42,000 Speaker 1: I mean we are still waiting for the vaccine. There 399 00:22:42,040 --> 00:22:44,199 Speaker 1: is still some time before the vaccine comes. We have 400 00:22:44,240 --> 00:22:47,280 Speaker 1: now more conversations about whether we need a second generation 401 00:22:47,320 --> 00:22:49,200 Speaker 1: of a vaccine, and there's a lot of still question 402 00:22:49,240 --> 00:22:52,760 Speaker 1: marks around how the vaccine will be both deployed and 403 00:22:52,760 --> 00:22:55,320 Speaker 1: how it will function, etcetera. But the short answer to 404 00:22:55,320 --> 00:22:57,880 Speaker 1: your question, Lisa is that then in the short term, 405 00:22:58,400 --> 00:23:01,560 Speaker 1: it's very different from as a podcast the way normally is. 406 00:23:01,600 --> 00:23:03,480 Speaker 1: Normally you have a lot of certainty about the short 407 00:23:03,560 --> 00:23:06,280 Speaker 1: term and much certainty about the long term. But here 408 00:23:06,280 --> 00:23:08,320 Speaker 1: it's a complete opposite. We have a much better idea 409 00:23:08,359 --> 00:23:10,720 Speaker 1: about what things will look like in two thousands twenty 410 00:23:10,720 --> 00:23:12,560 Speaker 1: one than what we have in the next two months. 411 00:23:13,520 --> 00:23:16,159 Speaker 1: It's also and I really underestimated the resilience of the 412 00:23:16,200 --> 00:23:18,600 Speaker 1: US economy and how quickly it would bounce back, and 413 00:23:18,600 --> 00:23:21,080 Speaker 1: many other people did as well, and we're repeating that 414 00:23:21,160 --> 00:23:24,119 Speaker 1: again as we work our way through winter. So it 415 00:23:24,240 --> 00:23:26,280 Speaker 1: is the case that the US economy is more resilient 416 00:23:26,280 --> 00:23:28,000 Speaker 1: than any other economy in the world. We have much 417 00:23:28,040 --> 00:23:31,280 Speaker 1: more dynamic labor markets, product markets, We have more competition 418 00:23:31,640 --> 00:23:34,280 Speaker 1: across all markets than literally any other country in the world. 419 00:23:34,440 --> 00:23:37,120 Speaker 1: So in that sense, the dynamism of the US economy 420 00:23:37,600 --> 00:23:42,119 Speaker 1: is not being impacted, at least not dramatically at the moment. 421 00:23:42,600 --> 00:23:46,919 Speaker 1: That being said, the cyclical movements around that structural issue, 422 00:23:47,440 --> 00:23:49,520 Speaker 1: it continued to be a risk here in the short term, 423 00:23:49,520 --> 00:23:52,320 Speaker 1: and that's why some of the high frequently indicators, both 424 00:23:52,320 --> 00:23:54,720 Speaker 1: of mobility you have started to go down. Also, open 425 00:23:54,760 --> 00:23:57,600 Speaker 1: table restaurant bookies have also started to go down. We 426 00:23:57,760 --> 00:24:00,760 Speaker 1: have some rollers. Even New York City rented mpt A 427 00:24:00,880 --> 00:24:03,119 Speaker 1: data has also started to show some more weakness in 428 00:24:03,119 --> 00:24:05,160 Speaker 1: the last few weeks. So we're a little bit worried 429 00:24:05,160 --> 00:24:07,159 Speaker 1: about where the high frequency data is taking us at 430 00:24:07,160 --> 00:24:10,480 Speaker 1: the moment. Well, let's talk about the policy composition, the 431 00:24:10,520 --> 00:24:13,440 Speaker 1: policy prescription. Often on programs like this you talk about 432 00:24:13,440 --> 00:24:15,959 Speaker 1: speed and size. We talked about that with Jaan Bernstein 433 00:24:16,000 --> 00:24:18,680 Speaker 1: earlier this morning. Let's talk about composition. Where you would 434 00:24:18,680 --> 00:24:20,960 Speaker 1: target the stimulus right now, toss them where does it 435 00:24:21,000 --> 00:24:23,800 Speaker 1: need to go? I think it is highly unusual, as 436 00:24:23,800 --> 00:24:25,760 Speaker 1: you also just spoke about a little while ago, there's 437 00:24:25,840 --> 00:24:28,119 Speaker 1: highly unusual that you have the Federal Reserve and the 438 00:24:28,160 --> 00:24:32,000 Speaker 1: Central Bank asking fiscal policy for aggressive action. I mean, 439 00:24:32,240 --> 00:24:33,720 Speaker 1: as you all know, I used to work at the 440 00:24:33,800 --> 00:24:35,679 Speaker 1: i n F and they're the main lesson is that 441 00:24:35,720 --> 00:24:38,600 Speaker 1: the central bank should be telling polititions to spend less money. 442 00:24:38,720 --> 00:24:40,760 Speaker 1: Now you both have in Europe and in the US 443 00:24:40,840 --> 00:24:44,920 Speaker 1: the central bankers almost asking and pleading polsititions to spend 444 00:24:44,920 --> 00:24:48,960 Speaker 1: more money, Please increase government expenditures, please cut taxes. That 445 00:24:49,119 --> 00:24:52,120 Speaker 1: is just a really unusual signal and tells you how 446 00:24:52,440 --> 00:24:55,280 Speaker 1: significant the messages from the Federal Reserve at the moment 447 00:24:55,280 --> 00:24:57,439 Speaker 1: and telling that we do need some more supportant. It 448 00:24:57,440 --> 00:24:59,560 Speaker 1: comes really from the fact that we're still ten milland 449 00:24:59,640 --> 00:25:03,439 Speaker 1: jobs below today where we were in February, and that 450 00:25:03,480 --> 00:25:06,040 Speaker 1: sense the holding the economy is pretty deep and that's 451 00:25:06,040 --> 00:25:08,280 Speaker 1: why they need a bhiscal expansion and the call from 452 00:25:08,320 --> 00:25:11,560 Speaker 1: that from the Federal Reserve is so significant. Towards into 453 00:25:11,680 --> 00:25:16,080 Speaker 1: York claim charts. What has moved is service sector inflation 454 00:25:16,720 --> 00:25:22,199 Speaker 1: has become service sector disinflation. What are you advising, Apollo management. 455 00:25:22,240 --> 00:25:26,960 Speaker 1: Does it sustain here, does it become more disinflationary or 456 00:25:26,960 --> 00:25:30,080 Speaker 1: do we just assume a reversion of that three percent 457 00:25:30,320 --> 00:25:33,920 Speaker 1: level on the great service sector question. Yeah, this is 458 00:25:33,920 --> 00:25:37,040 Speaker 1: a really important point time because the shock to the 459 00:25:37,080 --> 00:25:40,320 Speaker 1: economy with this pandemic came to the service sector. It 460 00:25:40,480 --> 00:25:43,680 Speaker 1: was restaurants, it was retailed, and therefore we saw significant 461 00:25:43,720 --> 00:25:47,679 Speaker 1: declines in prices and significant declines in employment in the 462 00:25:47,720 --> 00:25:50,640 Speaker 1: service sector. That's not rebounding. So that's why we're seeing 463 00:25:50,640 --> 00:25:53,800 Speaker 1: in reversal of that. But historically over the last twenty years, remember, 464 00:25:54,080 --> 00:25:57,840 Speaker 1: if you separate CPI into goods, inflation has basically been 465 00:25:57,960 --> 00:26:00,800 Speaker 1: zero for the last twenty years. All the inflation that 466 00:26:00,880 --> 00:26:03,119 Speaker 1: we have seen and most of the variation inflation has 467 00:26:03,160 --> 00:26:06,040 Speaker 1: come from the service sector. That's why the unusual situation 468 00:26:06,080 --> 00:26:08,680 Speaker 1: here with the service sector being a driver of inflation 469 00:26:08,760 --> 00:26:11,520 Speaker 1: first to the downside, now to the upside, is something 470 00:26:11,560 --> 00:26:14,080 Speaker 1: that is very important for the inflation outlogal role that 471 00:26:14,119 --> 00:26:17,200 Speaker 1: we have had this compositional shift where the service sector 472 00:26:17,240 --> 00:26:20,000 Speaker 1: suddenly is playing a most tychnical role re creative to 473 00:26:20,040 --> 00:26:23,359 Speaker 1: the good sector. So are you framing the American economy 474 00:26:23,480 --> 00:26:27,440 Speaker 1: as a return to previous trend or are we establishing 475 00:26:27,480 --> 00:26:31,119 Speaker 1: a new level of trend that will be a lesser level. 476 00:26:31,920 --> 00:26:35,320 Speaker 1: So in trillions of dollars, we're still one point three 477 00:26:35,359 --> 00:26:38,440 Speaker 1: trillion in at least in Q three in terms of 478 00:26:38,480 --> 00:26:40,159 Speaker 1: how far a where we are from getting back to 479 00:26:40,200 --> 00:26:42,400 Speaker 1: the trend that we had pre pandemic. If you want 480 00:26:42,400 --> 00:26:44,679 Speaker 1: to fill up completely the whole that has been treated 481 00:26:44,720 --> 00:26:47,000 Speaker 1: in the last two or three quarters, then we need 482 00:26:47,119 --> 00:26:49,280 Speaker 1: something more like folt trillion. This gives you some idea 483 00:26:49,320 --> 00:26:53,640 Speaker 1: about what is the magnitude of fiscal need, if you will. 484 00:26:53,720 --> 00:26:56,600 Speaker 1: And the question exactly is, as you're asking, well, do 485 00:26:56,680 --> 00:26:58,320 Speaker 1: we want to get just back up to the trendline 486 00:26:58,400 --> 00:26:59,800 Speaker 1: or do we want to fill up the whole completely 487 00:27:00,040 --> 00:27:01,760 Speaker 1: the wets how quickly do we want to get the 488 00:27:01,960 --> 00:27:03,399 Speaker 1: floor rate to come back to the three and a 489 00:27:03,400 --> 00:27:05,359 Speaker 1: half per cent that we had in February. So in 490 00:27:05,359 --> 00:27:07,960 Speaker 1: that sense and all this will depend, of course on 491 00:27:08,000 --> 00:27:09,600 Speaker 1: the speed of when the vaccine will come back. But 492 00:27:09,600 --> 00:27:11,960 Speaker 1: it also will depend on this issue that we also 493 00:27:12,040 --> 00:27:14,159 Speaker 1: talk about all the time, if we will get another 494 00:27:14,200 --> 00:27:16,919 Speaker 1: fiscal stimulus or not yet, either before the end of 495 00:27:16,960 --> 00:27:19,240 Speaker 1: this year or sometime in the beginning of the new Yet, 496 00:27:19,320 --> 00:27:22,120 Speaker 1: of course, as we try to plug this hole by 497 00:27:22,119 --> 00:27:25,040 Speaker 1: borrowing money, there is a question of that overhang of debt, 498 00:27:25,320 --> 00:27:30,159 Speaker 1: the unbelievable expansion of debt globally over the past nine months. 499 00:27:30,160 --> 00:27:32,159 Speaker 1: In order to plug this hole, what that will do 500 00:27:32,240 --> 00:27:34,520 Speaker 1: to growth going forward and I'm just thinking about our 501 00:27:34,560 --> 00:27:38,560 Speaker 1: conversation about zombie companies. Not that long ago, twenty percent 502 00:27:38,760 --> 00:27:41,879 Speaker 1: of the large US companies considered zombies. What does that 503 00:27:41,960 --> 00:27:44,480 Speaker 1: do to long term growth in the United States? Do 504 00:27:44,520 --> 00:27:47,320 Speaker 1: you think it's adequately priced in? So, the b I 505 00:27:47,600 --> 00:27:49,800 Speaker 1: S has done a lot of work on this, and 506 00:27:49,840 --> 00:27:52,760 Speaker 1: what they have repeatedly said now the possable years actually 507 00:27:52,920 --> 00:27:56,600 Speaker 1: is that if we have a bigger share of companies 508 00:27:56,640 --> 00:28:03,080 Speaker 1: that ultimately more unproductive and using resources, using capex, using workers, 509 00:28:03,440 --> 00:28:05,480 Speaker 1: then you do run the risk that begins to have 510 00:28:05,520 --> 00:28:08,520 Speaker 1: some macroeconomic implications. And on top of that comes also 511 00:28:08,560 --> 00:28:10,919 Speaker 1: the other issue to your question, leadser that if you 512 00:28:10,960 --> 00:28:13,080 Speaker 1: do have such a significant increase in the amount of 513 00:28:13,200 --> 00:28:16,159 Speaker 1: US treasury is outstanding, what should you then be watching. 514 00:28:16,200 --> 00:28:19,920 Speaker 1: You should be watching for risks of potentially talking about 515 00:28:19,960 --> 00:28:23,560 Speaker 1: downgrades to the sovereign of the U S. Fitch already 516 00:28:23,560 --> 00:28:26,720 Speaker 1: has US sovereign on negative watch. Should also be looking 517 00:28:26,760 --> 00:28:28,960 Speaker 1: at treasury auctions, but what is a bit to coverage 518 00:28:28,960 --> 00:28:30,879 Speaker 1: you're doing. You should also be looking more broadly for 519 00:28:30,920 --> 00:28:34,040 Speaker 1: the demanders supplying the treasury markets. So far everything is fine, 520 00:28:34,040 --> 00:28:36,359 Speaker 1: but it's pretty clear that when you think about the 521 00:28:36,480 --> 00:28:39,440 Speaker 1: very significant actions from the Federal Reserve. There is some 522 00:28:39,520 --> 00:28:42,240 Speaker 1: very important questions about demanders applying treasuries that we all 523 00:28:42,280 --> 00:28:46,040 Speaker 1: need to think about also over the coming ones. Tolsto, 524 00:28:46,080 --> 00:28:49,200 Speaker 1: what are you optimistic about next year? So I am 525 00:28:49,320 --> 00:28:52,200 Speaker 1: optimistic about the vaccine and I do think it will work. 526 00:28:52,320 --> 00:28:55,240 Speaker 1: But this very unusual situation where there's more clarity about 527 00:28:55,240 --> 00:28:57,240 Speaker 1: two thousand twenty one then there is about the rest 528 00:28:57,240 --> 00:29:00,520 Speaker 1: of two thousand twenty that is really making it very 529 00:29:00,520 --> 00:29:03,160 Speaker 1: difficult when you sit with your spreadsheet and try to 530 00:29:03,240 --> 00:29:06,400 Speaker 1: put together your forecast for the global economy. It does 531 00:29:06,480 --> 00:29:08,720 Speaker 1: make it quite complicated to think about well, with market's 532 00:29:08,720 --> 00:29:10,680 Speaker 1: trade on the bat news and the near term and 533 00:29:10,720 --> 00:29:13,440 Speaker 1: the downside risks, or with markets look through that and 534 00:29:13,480 --> 00:29:15,800 Speaker 1: just focus on the vaccine next year. That's why there 535 00:29:15,840 --> 00:29:17,680 Speaker 1: is still a risk that things could be still a 536 00:29:17,720 --> 00:29:19,880 Speaker 1: bit bumpy in the next few months before we have 537 00:29:20,520 --> 00:29:23,000 Speaker 1: their final answer on the vaccine, whether this is something 538 00:29:23,040 --> 00:29:25,360 Speaker 1: that will help everyone and really will be as helpful 539 00:29:25,400 --> 00:29:27,400 Speaker 1: as we're all hoping at the moment. And toast them 540 00:29:27,400 --> 00:29:29,040 Speaker 1: wonderful to catch up and great to see you in 541 00:29:29,120 --> 00:29:33,240 Speaker 1: a new seat. Fantastic toastin's luck that now have Apollo Management. 542 00:29:33,240 --> 00:29:36,880 Speaker 1: Thank you. Thanks for listening to the Bloomberg Surveillance podcast. 543 00:29:37,280 --> 00:29:42,280 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 544 00:29:42,360 --> 00:29:46,680 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 545 00:29:46,760 --> 00:29:50,640 Speaker 1: Keane before the podcast. You can always catch us worldwide. 546 00:29:51,120 --> 00:29:52,160 Speaker 1: I'm Bloomberg Radio