1 00:00:01,360 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,200 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,360 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,400 --> 00:00:13,600 Speaker 1: along with essential market moving news. Find the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:22,240 Speaker 1: and on Bloomberg dot com, Kayak price Line, Open Table, 7 00:00:22,400 --> 00:00:25,400 Speaker 1: Rental Cars dot Com. They all have something in common, 8 00:00:25,440 --> 00:00:28,760 Speaker 1: there are the properties of booking holdings. It's a very 9 00:00:28,800 --> 00:00:31,880 Speaker 1: tough time for the likes of these websites. But let's 10 00:00:31,880 --> 00:00:34,120 Speaker 1: bring on Glenn Fogel, who is president and CEO of 11 00:00:34,159 --> 00:00:38,800 Speaker 1: Booking Holdings, because they're not going away without fight. Let's 12 00:00:38,800 --> 00:00:40,800 Speaker 1: put it that way. Glenn, thank you so much for 13 00:00:40,880 --> 00:00:43,480 Speaker 1: joining talk to us about the state of this kind 14 00:00:43,520 --> 00:00:46,360 Speaker 1: of industry right now. I'm still getting, you know, very 15 00:00:46,360 --> 00:00:49,840 Speaker 1: optimistic emails daily from the likes of Open Table, price 16 00:00:49,880 --> 00:00:53,840 Speaker 1: Line and so on. But things have changed, and I'm 17 00:00:53,840 --> 00:00:57,720 Speaker 1: curious as to how your various properties are adapting to 18 00:00:57,760 --> 00:01:01,040 Speaker 1: the change. Well, thank you for having me. And look, 19 00:01:01,160 --> 00:01:04,280 Speaker 1: this is a difficult time for the travel industry, and 20 00:01:04,319 --> 00:01:06,480 Speaker 1: it's been a difficult time since the beginning of the 21 00:01:06,560 --> 00:01:09,560 Speaker 1: year when we first saw things happening in China, and 22 00:01:09,600 --> 00:01:13,160 Speaker 1: it's of course gotten worse throughout the world. But now 23 00:01:13,319 --> 00:01:15,760 Speaker 1: people are feeling a little more positive about the future. 24 00:01:16,240 --> 00:01:19,600 Speaker 1: Certainly we're reading the news about the potential vaccine coming 25 00:01:19,600 --> 00:01:22,600 Speaker 1: down the pike. And once people feel safe, they start 26 00:01:22,640 --> 00:01:24,520 Speaker 1: to travel. And we know that by just saying how 27 00:01:24,600 --> 00:01:28,600 Speaker 1: much our numbers have improved since uh the April Low's 28 00:01:28,760 --> 00:01:31,039 Speaker 1: where people once they felt that it was safer in 29 00:01:31,040 --> 00:01:33,440 Speaker 1: certain parts of the world, they started traveling right away. 30 00:01:33,480 --> 00:01:36,640 Speaker 1: So there is absolutely hope in the future. All right, 31 00:01:36,680 --> 00:01:39,839 Speaker 1: let's talk about current trends there. Um, if you don't mind, 32 00:01:39,840 --> 00:01:42,560 Speaker 1: I know that in this in your June quarter room, 33 00:01:42,600 --> 00:01:46,000 Speaker 1: Knight's book tumbled from the same period of year ago. 34 00:01:46,120 --> 00:01:49,560 Speaker 1: Revenue fell by about four percent. What have you seen 35 00:01:49,960 --> 00:01:54,080 Speaker 1: What have you seen over the last several weeks and months. Well, 36 00:01:54,120 --> 00:01:56,360 Speaker 1: you know, we talked about it earning this call that 37 00:01:56,520 --> 00:02:00,200 Speaker 1: we we've been having, um, you know, significant improvement. We 38 00:02:00,240 --> 00:02:02,440 Speaker 1: were pleased with what was going on. But there's no 39 00:02:02,440 --> 00:02:04,360 Speaker 1: doubt there have been some parts of the world where 40 00:02:04,400 --> 00:02:08,000 Speaker 1: there have been flare ups and things have gotten things plateau. 41 00:02:08,120 --> 00:02:12,280 Speaker 1: There's a great correlation between when a government puts down 42 00:02:12,360 --> 00:02:15,560 Speaker 1: some sort of restriction or people start seeing the infection 43 00:02:15,680 --> 00:02:18,480 Speaker 1: rates going up, that those people in the area start saying, hey, 44 00:02:18,520 --> 00:02:20,280 Speaker 1: I'm not sure I want to travel right now. And 45 00:02:20,280 --> 00:02:22,640 Speaker 1: we see that throughout the world, and I can pretty 46 00:02:22,720 --> 00:02:25,440 Speaker 1: much predict if there's a problem in an area without 47 00:02:25,520 --> 00:02:27,840 Speaker 1: knowing the data on the infections, by just looking at 48 00:02:27,880 --> 00:02:30,120 Speaker 1: our data on the people who are willing to block. 49 00:02:30,960 --> 00:02:32,960 Speaker 1: Then I want to point out that you've foregotten your 50 00:02:32,960 --> 00:02:36,720 Speaker 1: salary as part of the current cost controls. What else 51 00:02:36,760 --> 00:02:38,960 Speaker 1: are you doing to lower staff costs. You've said you're 52 00:02:38,960 --> 00:02:42,040 Speaker 1: trying to do it as painlessly as possible. Well, look, 53 00:02:42,040 --> 00:02:44,440 Speaker 1: we went through so many different things to cut costs, 54 00:02:44,440 --> 00:02:47,120 Speaker 1: and everything from stopping marketing for the most part, to 55 00:02:47,560 --> 00:02:50,720 Speaker 1: no travel of any kind, cutting out all sorts of events, 56 00:02:51,000 --> 00:02:55,560 Speaker 1: and including cutting my salary and other senior executives in 57 00:02:55,600 --> 00:02:58,079 Speaker 1: all those things, because that's the first thing to do. 58 00:02:58,520 --> 00:03:01,200 Speaker 1: But then what happened as we looked at our numbers 59 00:03:01,200 --> 00:03:02,880 Speaker 1: and we look at what our buyos are always say, 60 00:03:02,919 --> 00:03:05,160 Speaker 1: you know, we're going to have to do the unfortunate thing, 61 00:03:05,240 --> 00:03:07,639 Speaker 1: and that has cut people. And we've been through that 62 00:03:07,680 --> 00:03:10,920 Speaker 1: process for the last few months, well last week, we 63 00:03:10,960 --> 00:03:13,079 Speaker 1: had to tell our people at booking dot Com that 64 00:03:13,200 --> 00:03:15,280 Speaker 1: we're going to have to do some cuts there too, 65 00:03:15,560 --> 00:03:17,960 Speaker 1: And it's it's it's so hard on the people who've 66 00:03:17,960 --> 00:03:20,360 Speaker 1: done nothing wrong. It's not as what they're doing a 67 00:03:20,400 --> 00:03:23,320 Speaker 1: bad job, but this virus has just been horrific for 68 00:03:23,360 --> 00:03:26,639 Speaker 1: our industry. Glenn, give us your thoughts. I know it 69 00:03:26,840 --> 00:03:28,680 Speaker 1: it might be a little bit earlier, but certainly, you 70 00:03:28,720 --> 00:03:31,680 Speaker 1: know you have I'm guessing in some perspective here, what 71 00:03:31,800 --> 00:03:34,680 Speaker 1: is your sense as to consumer behavior as it relates 72 00:03:34,760 --> 00:03:37,360 Speaker 1: to traveling. Do you get a sense on the other 73 00:03:37,480 --> 00:03:40,840 Speaker 1: side of this that consumer behavior will kind of go 74 00:03:40,920 --> 00:03:45,520 Speaker 1: back to normal. People will go on cruise ships, the hotels, 75 00:03:46,240 --> 00:03:49,160 Speaker 1: mass gatherings, that type of thing. Are you concerned that 76 00:03:49,200 --> 00:03:53,520 Speaker 1: maybe there may be a fundamental change to how, uh 77 00:03:53,560 --> 00:03:56,080 Speaker 1: you know, people travel? Well, I think in the big 78 00:03:56,120 --> 00:03:58,920 Speaker 1: picture and travel will go right back to where it 79 00:03:59,040 --> 00:04:02,520 Speaker 1: was over all. And I say that with great confidence 80 00:04:02,560 --> 00:04:05,600 Speaker 1: because there have been tragic things in our world for 81 00:04:05,640 --> 00:04:08,520 Speaker 1: a hundred years and people then went back to traveling, 82 00:04:08,760 --> 00:04:12,160 Speaker 1: and World War Two was a devastating thing for this world. 83 00:04:12,280 --> 00:04:14,440 Speaker 1: Yet just a few years after the end of World 84 00:04:14,440 --> 00:04:17,040 Speaker 1: War Two, people were traveling to Europe. I am not 85 00:04:17,320 --> 00:04:20,880 Speaker 1: concerned about people not willing to travel orgather. That is 86 00:04:20,920 --> 00:04:23,719 Speaker 1: how human beings are. We're social. But there are some 87 00:04:23,760 --> 00:04:25,880 Speaker 1: things that are going to change, I think a little bit. 88 00:04:25,920 --> 00:04:29,279 Speaker 1: And we see that already. Whereas in the past, UM, 89 00:04:29,480 --> 00:04:32,279 Speaker 1: not that many people said they wanted to stay in 90 00:04:32,320 --> 00:04:35,799 Speaker 1: a home what we call alternative accommodation instead of a hotel. 91 00:04:36,040 --> 00:04:38,280 Speaker 1: But right now what we have seen we talked about 92 00:04:38,320 --> 00:04:40,799 Speaker 1: in our four in our second quarter, we saw forty 93 00:04:41,240 --> 00:04:44,400 Speaker 1: of our bookings we're going for this alternative accommodation, basically 94 00:04:44,400 --> 00:04:46,599 Speaker 1: going to a home, which is much higher than have 95 00:04:46,640 --> 00:04:49,479 Speaker 1: been previously because people want to stay away from a 96 00:04:49,560 --> 00:04:52,200 Speaker 1: big lobby with a lot of people. Now here's the thing. 97 00:04:52,600 --> 00:04:55,680 Speaker 1: When people feel safer, they still will. They'll say, hey, 98 00:04:55,720 --> 00:04:58,279 Speaker 1: I'll go back to a hotel. Sure, but having tried 99 00:04:58,320 --> 00:05:01,120 Speaker 1: a hotel, they may say, hey, maybe we had more 100 00:05:01,160 --> 00:05:03,280 Speaker 1: fun in the hotel, maybe it's better. So I see 101 00:05:03,320 --> 00:05:05,839 Speaker 1: a shift of their potential. And the other really big 102 00:05:05,880 --> 00:05:09,640 Speaker 1: thing is business travel. Uh. People have learned that, hey, 103 00:05:09,760 --> 00:05:13,279 Speaker 1: we can do our business real well by video communications, 104 00:05:13,520 --> 00:05:15,560 Speaker 1: so we don't need to take that business trip on 105 00:05:15,600 --> 00:05:19,839 Speaker 1: the jet. And that will impact the airlines. UM revenue 106 00:05:19,880 --> 00:05:21,960 Speaker 1: significantly because I get a lot of the profits are 107 00:05:21,960 --> 00:05:24,200 Speaker 1: coming from the front of that plane with people paying 108 00:05:24,200 --> 00:05:28,479 Speaker 1: those high first class or business class pairs, and the hotels, 109 00:05:28,520 --> 00:05:30,920 Speaker 1: some of the big international chains that really get a 110 00:05:30,920 --> 00:05:33,840 Speaker 1: lot of revenue from the business guy or a woman 111 00:05:33,880 --> 00:05:36,560 Speaker 1: who is traveling and they're paying the bigger rates, and 112 00:05:36,600 --> 00:05:39,080 Speaker 1: that's gonna hurt now for us because we do a 113 00:05:39,120 --> 00:05:42,760 Speaker 1: lot more leisure than business. And actually, unfortunately, I say 114 00:05:42,839 --> 00:05:44,680 Speaker 1: unfortunate says you don't want to win this way, but 115 00:05:44,800 --> 00:05:47,200 Speaker 1: this is going to help us a little bit because 116 00:05:47,240 --> 00:05:50,240 Speaker 1: it's going to be more supply. And when there's more 117 00:05:50,279 --> 00:05:53,520 Speaker 1: supply than this demand, a distributor like us of benefits 118 00:05:53,560 --> 00:05:56,400 Speaker 1: from that. Glenn, you know, you have to have done 119 00:05:56,400 --> 00:05:59,359 Speaker 1: the math on this. You have to have consultants doing 120 00:05:59,600 --> 00:06:03,480 Speaker 1: you know, various different calculations. How does it change operating 121 00:06:03,520 --> 00:06:06,279 Speaker 1: margins if you now have to be way more lenient 122 00:06:06,720 --> 00:06:10,040 Speaker 1: on terms for customers, so they will very likely for 123 00:06:10,160 --> 00:06:13,800 Speaker 1: the longest time want to book much much much less 124 00:06:13,800 --> 00:06:16,120 Speaker 1: in advanced so at shorter notice. They also want to 125 00:06:16,160 --> 00:06:19,440 Speaker 1: have the ability to cancel, you know, way closer to 126 00:06:19,480 --> 00:06:21,520 Speaker 1: their booking period than they ever would have been allowed 127 00:06:21,520 --> 00:06:24,880 Speaker 1: to in the past. How does that change your business? Well, 128 00:06:24,920 --> 00:06:27,599 Speaker 1: and it helps us because our Booking dot Com company 129 00:06:27,720 --> 00:06:32,279 Speaker 1: has always had a great percentage of its hotel reservation 130 00:06:32,720 --> 00:06:36,120 Speaker 1: rates to be fully canceable, so that has always been 131 00:06:36,160 --> 00:06:38,000 Speaker 1: a big selling point for us. So this just helps 132 00:06:38,080 --> 00:06:40,960 Speaker 1: us that much more. Of course, other people will of 133 00:06:40,960 --> 00:06:43,279 Speaker 1: course try to adopt that too now because it is 134 00:06:43,640 --> 00:06:48,200 Speaker 1: a competitive selling rate. People like to have a totally flexible, 135 00:06:48,240 --> 00:06:51,160 Speaker 1: freely canceable rate, which is what booking dot Com offers, 136 00:06:51,360 --> 00:06:54,040 Speaker 1: and we are seeing most of our bookings are going 137 00:06:54,200 --> 00:06:57,440 Speaker 1: on that on that rate. It's people are saying, you know, 138 00:06:57,520 --> 00:07:00,279 Speaker 1: I'm willing to take that flexible rate because I can 139 00:07:00,320 --> 00:07:02,880 Speaker 1: cancel it if I need to. Glenn, give us just 140 00:07:02,920 --> 00:07:05,279 Speaker 1: an update on kind of your relationship with Google right now. 141 00:07:05,320 --> 00:07:07,520 Speaker 1: I know the search engine has been a big part 142 00:07:07,560 --> 00:07:11,520 Speaker 1: of the travel business as well in terms of driving traffic. Yeah, 143 00:07:11,640 --> 00:07:14,480 Speaker 1: Google is a big player in the industry, without doubt, 144 00:07:14,600 --> 00:07:17,680 Speaker 1: and it's certainly we were very well together over a 145 00:07:17,800 --> 00:07:22,120 Speaker 1: very very long time. But are our Our overall theme 146 00:07:22,240 --> 00:07:24,680 Speaker 1: is that we want to have a direct relationship with 147 00:07:24,760 --> 00:07:28,160 Speaker 1: our customers. We want our customers to come to us directly, 148 00:07:28,240 --> 00:07:30,920 Speaker 1: not through any intermediary whether it be a player like 149 00:07:30,960 --> 00:07:33,520 Speaker 1: a Google or any other type of meta or any 150 00:07:33,560 --> 00:07:35,240 Speaker 1: type of thing. We want people just when they think 151 00:07:35,240 --> 00:07:38,160 Speaker 1: about travel, they type in Booking dot Com or even 152 00:07:38,160 --> 00:07:41,520 Speaker 1: more so, they go to our Booking dot Com app 153 00:07:41,640 --> 00:07:44,640 Speaker 1: on the mobile device. That's really the secret to a 154 00:07:44,760 --> 00:07:48,160 Speaker 1: long term success is that relationships that's so tight, right, 155 00:07:48,200 --> 00:07:50,920 Speaker 1: people know they're getting better value. They come to us directly. 156 00:07:51,400 --> 00:07:53,720 Speaker 1: And Glenn, thanks so much for joining us here. We 157 00:07:53,720 --> 00:07:56,400 Speaker 1: really appreciate your thoughts in your time. Glenn Fogel, President, 158 00:07:56,440 --> 00:08:01,760 Speaker 1: chief executive officer of Booking Holdings. It was a lot 159 00:08:01,760 --> 00:08:03,240 Speaker 1: of excitement at the weekend. We had a p g 160 00:08:03,400 --> 00:08:06,040 Speaker 1: A championship. It was the first major tournament since the 161 00:08:06,040 --> 00:08:09,840 Speaker 1: pandemic stolled the sports world. Well. The winner was twenty 162 00:08:09,920 --> 00:08:13,520 Speaker 1: three year old Colin Morrikawa, and he'll probably be remembered 163 00:08:13,520 --> 00:08:15,920 Speaker 1: for that eagle on the sixteenth on Sunday that carried 164 00:08:15,960 --> 00:08:19,360 Speaker 1: him really to the championship. I spoke with Colin yesterday 165 00:08:19,400 --> 00:08:22,920 Speaker 1: and asked him how he just turned pro last year 166 00:08:23,200 --> 00:08:26,040 Speaker 1: and yet people are already talking about his future. I 167 00:08:26,040 --> 00:08:28,400 Speaker 1: asked him if he sees a record number of majors 168 00:08:28,400 --> 00:08:31,600 Speaker 1: in that future, you know, I hope. So, Um, you know, 169 00:08:31,640 --> 00:08:34,560 Speaker 1: there's no ceiling for me. I just want to keep winning. 170 00:08:34,679 --> 00:08:37,920 Speaker 1: And after winning this past week, you know, there's obviously 171 00:08:37,960 --> 00:08:39,360 Speaker 1: gonna be a lot of more work that's going to 172 00:08:39,400 --> 00:08:41,920 Speaker 1: be need to put in to win and to get 173 00:08:41,960 --> 00:08:45,960 Speaker 1: to those uh you know, major number of wins. Um. 174 00:08:46,080 --> 00:08:48,880 Speaker 1: But you know, for me, I just got a vengjoy. 175 00:08:49,200 --> 00:08:50,800 Speaker 1: I have to enjoy this one. I have to keep 176 00:08:50,800 --> 00:08:53,800 Speaker 1: moving forward. Learned from it, um, but it you know, 177 00:08:53,840 --> 00:08:55,760 Speaker 1: it gave me a taste of what it's like to 178 00:08:55,800 --> 00:08:58,680 Speaker 1: be a major champion. And I love it. You know, 179 00:08:58,760 --> 00:09:00,800 Speaker 1: I love being in this spot. Uh you know, I 180 00:09:00,840 --> 00:09:03,000 Speaker 1: want to be in it again. Um. So I really 181 00:09:03,040 --> 00:09:05,000 Speaker 1: look forward to seeing what the majors are like because 182 00:09:05,000 --> 00:09:07,520 Speaker 1: this is what all the best players look forward to. Yes, 183 00:09:07,640 --> 00:09:09,959 Speaker 1: every other event matters to me. I still want to win. 184 00:09:10,040 --> 00:09:13,040 Speaker 1: I want to go out every single week and play well. Um, 185 00:09:13,080 --> 00:09:15,440 Speaker 1: but I have that extra, you know, sense of what 186 00:09:15,440 --> 00:09:18,560 Speaker 1: it feels like to win a major. Now, speaking of which, 187 00:09:18,720 --> 00:09:21,000 Speaker 1: you were facetiming right afterwards, as you were waiting for 188 00:09:21,000 --> 00:09:23,000 Speaker 1: the other players to come in. Was it your parents? 189 00:09:23,080 --> 00:09:26,199 Speaker 1: What do they say? There's a lot of talking and laughing. Yeah, 190 00:09:26,320 --> 00:09:29,280 Speaker 1: it was them. Uh, they're just screaming. There was no talking. 191 00:09:29,720 --> 00:09:32,680 Speaker 1: There's a lot of screaming. My mom had no clue 192 00:09:32,679 --> 00:09:35,720 Speaker 1: how to kind of angle the camera. They're covering the camera. 193 00:09:36,200 --> 00:09:39,160 Speaker 1: My brother's seventeen, So both my parents and my mom 194 00:09:39,200 --> 00:09:42,200 Speaker 1: and dad and my brother were just so excited. Um. 195 00:09:42,240 --> 00:09:44,120 Speaker 1: You know, a small little story. They had a balloon 196 00:09:44,160 --> 00:09:46,959 Speaker 1: flying to the yard. Uh. It was a number one 197 00:09:46,960 --> 00:09:49,240 Speaker 1: balloon and that's all. They had no clue where it 198 00:09:49,280 --> 00:09:51,559 Speaker 1: came from. But it was sitting there since Friday. They 199 00:09:51,600 --> 00:09:53,960 Speaker 1: never touched it. Um, And I think that bloom just 200 00:09:54,000 --> 00:09:57,160 Speaker 1: means a little something special. Uh, after this entire week 201 00:09:57,240 --> 00:09:59,200 Speaker 1: finished off. Oh my gosh, I hope they went out 202 00:09:59,280 --> 00:10:03,360 Speaker 1: and called it bef or Blue Way. That's a great story. 203 00:10:03,920 --> 00:10:06,640 Speaker 1: You're a golden Bear. You were at Ucal for the 204 00:10:06,720 --> 00:10:10,800 Speaker 1: last four years Bachelors of Business Administration. Interestingly, so what 205 00:10:11,000 --> 00:10:13,439 Speaker 1: would your top business ideas for the game of golf 206 00:10:13,440 --> 00:10:17,679 Speaker 1: pay particularly right now? Oh my god, Um, there there 207 00:10:17,679 --> 00:10:19,559 Speaker 1: are so many. I mean, you look at the state 208 00:10:19,600 --> 00:10:21,760 Speaker 1: of where we're at, obviously with all the quarantine and 209 00:10:21,840 --> 00:10:24,600 Speaker 1: COVID and um, you know, I think golf being back, 210 00:10:24,640 --> 00:10:27,040 Speaker 1: we're very fortunate to do what we love every single day, 211 00:10:27,440 --> 00:10:29,920 Speaker 1: come out and play against the best players in the world. Um. 212 00:10:29,920 --> 00:10:32,160 Speaker 1: It sucks that we have no fans, but if you 213 00:10:32,160 --> 00:10:35,480 Speaker 1: look at the sport of golf, I think we're doing amazing. 214 00:10:35,679 --> 00:10:37,600 Speaker 1: You know, you look at everyone, people that have never 215 00:10:37,600 --> 00:10:41,320 Speaker 1: played golf, people that have played golf but stopped playing golf. Everyone, 216 00:10:42,200 --> 00:10:44,000 Speaker 1: no matter what their age, I think is getting into 217 00:10:44,000 --> 00:10:45,880 Speaker 1: it because it is something that you can do very 218 00:10:45,920 --> 00:10:48,000 Speaker 1: safely as long as you know, you stay away from 219 00:10:48,720 --> 00:10:51,400 Speaker 1: large crowds. And it's been really cool to see a 220 00:10:51,440 --> 00:10:52,880 Speaker 1: lot of my friends pick up the game over the 221 00:10:52,880 --> 00:10:55,720 Speaker 1: past couple of months, especially with me coming back and 222 00:10:55,760 --> 00:10:59,000 Speaker 1: playing in playing pretty well. Um So I think there's 223 00:10:59,280 --> 00:11:02,760 Speaker 1: you know, a lot of business opportunities come that, you know, 224 00:11:02,800 --> 00:11:05,880 Speaker 1: that stretch of golf. Um of just you know, any 225 00:11:05,920 --> 00:11:11,800 Speaker 1: type of golf, you know, whether it's recreational, country club tournaments, uh, 226 00:11:11,840 --> 00:11:14,520 Speaker 1: you know, whatever it is. I think someone and everyone 227 00:11:14,679 --> 00:11:16,800 Speaker 1: is trying to do something golf related in their house 228 00:11:16,920 --> 00:11:20,400 Speaker 1: because I know I got to a point where, you know, 229 00:11:20,440 --> 00:11:22,400 Speaker 1: I was almost tired of just sitting on the couch 230 00:11:22,400 --> 00:11:25,640 Speaker 1: and watching TV during these past few months. Well, it's interesting. 231 00:11:25,679 --> 00:11:27,840 Speaker 1: We just did the story here at Boomberg based on 232 00:11:28,080 --> 00:11:31,320 Speaker 1: data visual data that shows that one of the top 233 00:11:31,559 --> 00:11:35,480 Speaker 1: visited you know venues right now are golf courses around 234 00:11:35,480 --> 00:11:38,640 Speaker 1: the country obviously for those with the means, and of 235 00:11:38,640 --> 00:11:41,360 Speaker 1: course TPC Harding and the PGA Championship was the top 236 00:11:42,160 --> 00:11:46,040 Speaker 1: ranked watched show on Sunday or a few hours of 237 00:11:46,120 --> 00:11:48,640 Speaker 1: play on Sunday. So there's that to bring to your sponsors. 238 00:11:48,840 --> 00:11:50,559 Speaker 1: What are you going to be telling them when they 239 00:11:50,800 --> 00:11:52,839 Speaker 1: when they try and do a deal with you, If 240 00:11:52,840 --> 00:11:55,920 Speaker 1: they say that you know, it's a it's going to 241 00:11:55,960 --> 00:11:58,600 Speaker 1: be a less watch sports from now on. How are 242 00:11:58,600 --> 00:12:02,160 Speaker 1: you going to play your sponsors? Um, well, it's great 243 00:12:02,200 --> 00:12:03,840 Speaker 1: to know that this was you know, one of the 244 00:12:03,840 --> 00:12:07,120 Speaker 1: most watched things for a while now. Um, it's it's 245 00:12:07,120 --> 00:12:09,280 Speaker 1: cool to be in that position and obviously get the 246 00:12:09,320 --> 00:12:13,880 Speaker 1: TV time. But you know, my sponsors Omega, Zurich, Um, 247 00:12:13,920 --> 00:12:18,080 Speaker 1: Taylor Man, Adidas, their their body. Um. You know, they've 248 00:12:18,120 --> 00:12:21,439 Speaker 1: all been part of that group that has helped grow 249 00:12:21,760 --> 00:12:23,800 Speaker 1: and build me to where I'm at now. I wouldn't 250 00:12:23,800 --> 00:12:27,559 Speaker 1: be here without them, you know. I think everyone, my family, 251 00:12:27,800 --> 00:12:32,200 Speaker 1: my coaches, my caddie, my agents, everyone, you know, even 252 00:12:32,240 --> 00:12:34,480 Speaker 1: my girlfriend, like everyone that I've kind of built this 253 00:12:34,559 --> 00:12:37,760 Speaker 1: small group around me. UM has only helped me get 254 00:12:37,800 --> 00:12:39,720 Speaker 1: to where I am because without them, I wouldn't have 255 00:12:39,760 --> 00:12:42,640 Speaker 1: these extra little steps and making things a little easier 256 00:12:42,679 --> 00:12:45,520 Speaker 1: every single week. Um, just to help me out. And 257 00:12:45,840 --> 00:12:48,120 Speaker 1: I don't think they get enough credit. I wish they can. 258 00:12:48,280 --> 00:12:51,040 Speaker 1: I could give them more credit. UM. You know, I 259 00:12:51,080 --> 00:12:54,360 Speaker 1: wish my name had every everyone else's name next to it, 260 00:12:54,640 --> 00:12:57,120 Speaker 1: um at the end of the day. But unfortunately it 261 00:12:57,200 --> 00:12:59,360 Speaker 1: is just my name. UM. But you know I'm very 262 00:12:59,360 --> 00:13:05,480 Speaker 1: thankful for that. UM. Yeah. Yeah. Speaking of your name, 263 00:13:05,480 --> 00:13:07,040 Speaker 1: I think it was Jimance that said that you would 264 00:13:07,080 --> 00:13:09,360 Speaker 1: be one of the few golfers known for your first 265 00:13:09,440 --> 00:13:11,880 Speaker 1: name in the future, which is a big, big forecast 266 00:13:11,920 --> 00:13:13,679 Speaker 1: to try and live up to. But the only other 267 00:13:13,760 --> 00:13:15,959 Speaker 1: Colin I know from golf is called Montgomery and he 268 00:13:16,080 --> 00:13:17,719 Speaker 1: only has one L. Do you think your parents gave 269 00:13:17,760 --> 00:13:20,320 Speaker 1: you the second el on purpose? I have no clue, 270 00:13:20,320 --> 00:13:21,920 Speaker 1: but I love the two ils. I think two else 271 00:13:21,960 --> 00:13:26,240 Speaker 1: looks a lot more, even it looks a little better. Um. Yeah, 272 00:13:26,320 --> 00:13:28,679 Speaker 1: you know it just to have Jim Nancy that is 273 00:13:28,800 --> 00:13:31,560 Speaker 1: mind blowing. Um, it's pretty special. Who knows you know 274 00:13:31,600 --> 00:13:34,040 Speaker 1: what that will turn out to be, but you know 275 00:13:34,280 --> 00:13:36,920 Speaker 1: it'll be nice. Hopefully people know how to pronounce my name. 276 00:13:37,000 --> 00:13:41,320 Speaker 1: The starter yesterday mispronounced my last name, um, and I 277 00:13:41,360 --> 00:13:43,000 Speaker 1: gave me a little laugh to start off the round. 278 00:13:43,000 --> 00:13:45,720 Speaker 1: For sure, that's for sure. You're a trail laser in many, 279 00:13:45,760 --> 00:13:48,600 Speaker 1: many different ways. Colin, what's your next goal? You're already 280 00:13:48,679 --> 00:13:53,040 Speaker 1: number two for the FedEx standings this year. You know, 281 00:13:53,040 --> 00:13:55,480 Speaker 1: my next goal is to win Northern Trust. You know, 282 00:13:55,520 --> 00:13:57,880 Speaker 1: that's that's next up on the list at TPC Boston. 283 00:13:58,559 --> 00:14:01,160 Speaker 1: UM the playoffs is a three week stretched obviously finishing 284 00:14:01,160 --> 00:14:04,320 Speaker 1: at East Lake and yeah, you know, if we talked 285 00:14:04,320 --> 00:14:06,120 Speaker 1: about the next month, that's the goal is to win 286 00:14:06,160 --> 00:14:09,000 Speaker 1: the FedEx Cup playoffs, to be the last man standing 287 00:14:09,040 --> 00:14:11,240 Speaker 1: and win that event. But you know, I still have 288 00:14:11,280 --> 00:14:13,080 Speaker 1: two more events before that, and if I start getting 289 00:14:13,080 --> 00:14:16,400 Speaker 1: ahead of myself, things can go sideways. So you know, 290 00:14:16,400 --> 00:14:18,480 Speaker 1: I'm gonna sit back and enjoy this week for sure 291 00:14:18,640 --> 00:14:21,880 Speaker 1: and really cherish what has happened, but I really look 292 00:14:21,920 --> 00:14:25,280 Speaker 1: forward to what's next. That was PGA Champion Colin more 293 00:14:25,400 --> 00:14:29,040 Speaker 1: Cow's sit down chatting with our very own uh Vanny Quinn. 294 00:14:29,080 --> 00:14:31,520 Speaker 1: So funny. Seems like a you know, pretty bright, you know, 295 00:14:31,600 --> 00:14:34,080 Speaker 1: well spoken young man with a you know, a pretty 296 00:14:34,800 --> 00:14:37,840 Speaker 1: appreciative outlook about the game of golf and what it's 297 00:14:37,880 --> 00:14:40,000 Speaker 1: done to him and what he hopes to do going forward. Well, 298 00:14:40,000 --> 00:14:41,640 Speaker 1: a couple of million dollars in a day will do 299 00:14:41,680 --> 00:14:43,800 Speaker 1: that for you. Maybe, call that's for sure. But a 300 00:14:43,840 --> 00:14:46,280 Speaker 1: twenty three year old, a new name on the block, 301 00:14:46,520 --> 00:14:49,120 Speaker 1: just her and pro and it really is probably excellent 302 00:14:49,160 --> 00:14:51,120 Speaker 1: for the sport because as much as we all love 303 00:14:51,160 --> 00:14:52,920 Speaker 1: to watch the books Is of the World and the 304 00:14:53,000 --> 00:14:55,480 Speaker 1: Dustin Johnson's and so on, it is nice to have 305 00:14:55,680 --> 00:14:59,320 Speaker 1: a young face come in and particularly you know, Japanese American, 306 00:14:59,440 --> 00:15:01,960 Speaker 1: which you don't see too often. So he's trailblazing in 307 00:15:02,000 --> 00:15:04,240 Speaker 1: many senses of the word. In fact, I think it 308 00:15:04,280 --> 00:15:06,400 Speaker 1: was said that he would be known by his first name, 309 00:15:06,480 --> 00:15:08,880 Speaker 1: as so few in golf. Are you think of Tiger, 310 00:15:08,960 --> 00:15:11,240 Speaker 1: you think of Rory? He might be the first column 311 00:15:11,240 --> 00:15:14,320 Speaker 1: because Colin Montgomery sure didn't do it. Yeah, exactly, it's 312 00:15:14,320 --> 00:15:16,680 Speaker 1: in the Colin Montgomery posted a nice tweet after Colin 313 00:15:17,000 --> 00:15:20,800 Speaker 1: more co one saying, finally a Colin wins a major title. 314 00:15:20,880 --> 00:15:22,760 Speaker 1: So I thought that was pretty funny book, you know, 315 00:15:22,760 --> 00:15:24,920 Speaker 1: having a little fun is his own expensive boy. It's 316 00:15:24,960 --> 00:15:27,080 Speaker 1: an important time for golf with all the major's coming up, 317 00:15:27,120 --> 00:15:29,800 Speaker 1: the FedEx Cup, uh, you know, everything kind of happening 318 00:15:29,840 --> 00:15:32,920 Speaker 1: in a really condensed period of time. So uh, you know, 319 00:15:32,960 --> 00:15:36,280 Speaker 1: golf is gonna have the spotlight here for the next 320 00:15:36,280 --> 00:15:39,120 Speaker 1: several months. Is a lot of activities really piling up here, 321 00:15:39,240 --> 00:15:40,960 Speaker 1: and so any one of the only sports actually on 322 00:15:41,080 --> 00:15:43,600 Speaker 1: the goal right now. I mean, obviously the NBA next 323 00:15:43,600 --> 00:15:45,480 Speaker 1: week we're going to see the playoffs, so that would 324 00:15:45,480 --> 00:15:48,000 Speaker 1: be exciting, but golf is something that you can definitely 325 00:15:48,040 --> 00:15:53,800 Speaker 1: do on the weekend and perhaps even outside socially distanced well. 326 00:15:53,880 --> 00:15:56,479 Speaker 1: So we are five or six months into this pandemic 327 00:15:56,520 --> 00:15:59,560 Speaker 1: and lot various stages of lockdown and the economic impact 328 00:15:59,560 --> 00:16:04,400 Speaker 1: that the SCUT increasingly is moving towards that of a vaccine. 329 00:16:04,480 --> 00:16:08,520 Speaker 1: When will a vaccine be available? How effective will it be? 330 00:16:08,880 --> 00:16:11,800 Speaker 1: Peter Koy, economics editor for Bloomberg Business Week, joins us 331 00:16:11,800 --> 00:16:15,440 Speaker 1: here with a his story on entitled where we are 332 00:16:15,520 --> 00:16:18,200 Speaker 1: on the path to a vaccine and what comes next? 333 00:16:18,240 --> 00:16:20,920 Speaker 1: That's in this week's edition of Bloomberg Business Week. Peter, 334 00:16:20,920 --> 00:16:23,240 Speaker 1: thanks so much for joining us here. Let's just start 335 00:16:23,400 --> 00:16:25,640 Speaker 1: right at the top. What is your kind of number 336 00:16:25,680 --> 00:16:29,160 Speaker 1: one takeaway from your story about the where we are 337 00:16:29,200 --> 00:16:35,320 Speaker 1: on this situation. I think where we are is somewhere 338 00:16:35,320 --> 00:16:41,680 Speaker 1: between total optimism and kind of the pessimism you're getting 339 00:16:41,680 --> 00:16:44,240 Speaker 1: a lot from a lot of people. The point is 340 00:16:44,320 --> 00:16:48,960 Speaker 1: that we we we are going to have vaccines plural. 341 00:16:50,200 --> 00:16:53,200 Speaker 1: The only question is gonna be how well they work. Um. 342 00:16:53,240 --> 00:16:56,440 Speaker 1: It's not looking like we're gonna have a knockout vaccines 343 00:16:56,560 --> 00:17:00,880 Speaker 1: where you just stopped a virus dead with one shot. Uh. 344 00:17:01,120 --> 00:17:03,840 Speaker 1: It's possible that it will be something of a more 345 00:17:03,880 --> 00:17:07,960 Speaker 1: akin to a flu vaccine, where it doesn't completely stop 346 00:17:08,000 --> 00:17:13,679 Speaker 1: the vaccine the virus, and maybe it eases the symptoms. Uh, 347 00:17:13,800 --> 00:17:16,640 Speaker 1: and some people stops at and others, And it might 348 00:17:16,800 --> 00:17:22,520 Speaker 1: you might have to have booster shots every year. Um. 349 00:17:23,240 --> 00:17:26,639 Speaker 1: And the virus might not work as well on old 350 00:17:26,640 --> 00:17:30,440 Speaker 1: people whose immune systems just aren't as strong and so 351 00:17:30,520 --> 00:17:35,760 Speaker 1: that they don't get fortified as much by a via vaccine. Um. 352 00:17:35,800 --> 00:17:40,880 Speaker 1: That's the again, that's the likelihood. Nobody knows for sure. Um. 353 00:17:40,920 --> 00:17:43,600 Speaker 1: There's a lot of cool, cool science going on, and 354 00:17:43,640 --> 00:17:47,119 Speaker 1: I think my articles mainly just trying to walk people 355 00:17:47,160 --> 00:17:51,159 Speaker 1: through the awesomeness of the human immune system and the 356 00:17:51,200 --> 00:17:53,359 Speaker 1: awesomeness of all the scientists who are doing what they 357 00:17:53,400 --> 00:17:56,600 Speaker 1: can to bolster it. Yeah, we had a story yesterday, 358 00:17:56,600 --> 00:17:59,280 Speaker 1: Peter about market you know, taking a different approach, looking 359 00:17:59,520 --> 00:18:02,440 Speaker 1: at the longer term. Well, several other companies are trying 360 00:18:02,440 --> 00:18:05,200 Speaker 1: to get something out there as fast as possible, and 361 00:18:05,720 --> 00:18:09,280 Speaker 1: they received wisdom is that it normally takes four years 362 00:18:09,320 --> 00:18:11,840 Speaker 1: to develop anything like this. What do you make of 363 00:18:11,880 --> 00:18:15,920 Speaker 1: the news today that Russia says it has a vaccine, Well, 364 00:18:16,880 --> 00:18:19,960 Speaker 1: they just barely begin Phase three trials on this, so 365 00:18:20,200 --> 00:18:23,600 Speaker 1: they really can't say with any certainty if it is 366 00:18:23,640 --> 00:18:27,520 Speaker 1: safe and effective. Even though that's what Vladimir Putin argued today, 367 00:18:28,480 --> 00:18:33,159 Speaker 1: I would say it's it's premature to be you know, 368 00:18:33,359 --> 00:18:37,040 Speaker 1: so called registering a vaccine. It's this early stage. And 369 00:18:37,080 --> 00:18:39,400 Speaker 1: I hope that Donald Trump is not going to take 370 00:18:39,440 --> 00:18:42,119 Speaker 1: the cue from Putin and try to do a similar 371 00:18:42,119 --> 00:18:44,479 Speaker 1: thing in the United States because it just it's not 372 00:18:44,600 --> 00:18:48,200 Speaker 1: fair to the scientists or working on the vaccine are 373 00:18:48,240 --> 00:18:51,280 Speaker 1: certainly not fair to the general public to expose them 374 00:18:51,280 --> 00:18:57,000 Speaker 1: to vaccine whose safety and efficacy is not completely determined. So, Peter, 375 00:18:57,119 --> 00:18:58,640 Speaker 1: I know, you know, for a lot of these big 376 00:18:58,640 --> 00:19:02,480 Speaker 1: farmer companies vaccines has not been a real business line 377 00:19:02,480 --> 00:19:05,119 Speaker 1: for them over the years. So I'm wondering here, A 378 00:19:05,160 --> 00:19:07,359 Speaker 1: lot of resources from a lot of big pharma, a 379 00:19:07,400 --> 00:19:10,879 Speaker 1: lot of biotech leaders are focused on this. Is there 380 00:19:11,560 --> 00:19:14,520 Speaker 1: coordination between these companies or is are they each in 381 00:19:14,560 --> 00:19:18,160 Speaker 1: their own lane pursuing their own tests and their own product. 382 00:19:19,119 --> 00:19:21,399 Speaker 1: It's more the latter. I mean, I think on a 383 00:19:21,440 --> 00:19:25,320 Speaker 1: fundamental science point of view, there is still sharing, which 384 00:19:25,359 --> 00:19:29,800 Speaker 1: is a positive, but the nationalism that you're seeing from 385 00:19:29,840 --> 00:19:34,160 Speaker 1: the governments is sort of driving people apart. And as 386 00:19:34,200 --> 00:19:37,320 Speaker 1: you said, each in its own lane. Uh. The ideal 387 00:19:37,520 --> 00:19:41,320 Speaker 1: would be some sort of a patent pooling approach where 388 00:19:41,359 --> 00:19:43,800 Speaker 1: we just all agree, Okay, if it's a patent that's 389 00:19:44,040 --> 00:19:47,879 Speaker 1: necessary for the development of COVID nineteen vaccine, it'll just 390 00:19:47,920 --> 00:19:50,679 Speaker 1: be placed into a pool where everybody can share it, 391 00:19:51,000 --> 00:19:56,080 Speaker 1: the royalties are split on some equitable basis, and that 392 00:19:56,119 --> 00:19:59,840 Speaker 1: would move the science forward much faster. But um it, 393 00:20:00,760 --> 00:20:03,320 Speaker 1: the United States, among other countries, has not gone along 394 00:20:03,359 --> 00:20:08,120 Speaker 1: with proposals for patent cooling. Yeah, I mean, good luck 395 00:20:08,160 --> 00:20:10,080 Speaker 1: with that. As much as it seems to be the 396 00:20:10,119 --> 00:20:13,600 Speaker 1: obvious thing for all rational thinking people to do. Then 397 00:20:13,760 --> 00:20:17,000 Speaker 1: you know, I'm not sure if Russia would go along 398 00:20:17,000 --> 00:20:18,439 Speaker 1: with it, if China would go along with it, if 399 00:20:18,440 --> 00:20:21,680 Speaker 1: the US would go along with us. Peter, where should 400 00:20:21,720 --> 00:20:27,480 Speaker 1: we be looking for the first batch of potential vaccines? Well, so, 401 00:20:27,840 --> 00:20:31,120 Speaker 1: as my article lays out, and there's an accompanying graphic 402 00:20:31,200 --> 00:20:35,040 Speaker 1: which I worked on with Sean hasta Um, you sort 403 00:20:35,040 --> 00:20:38,600 Speaker 1: of have three broad categories of vaccines. What is the 404 00:20:38,640 --> 00:20:42,399 Speaker 1: whole pathogen approach, which is a traditional uh, you know, 405 00:20:42,440 --> 00:20:45,320 Speaker 1: like a polio vaccine, where it's either a killed or 406 00:20:45,440 --> 00:20:49,040 Speaker 1: weakened virus, the actual virus that gets injected into your 407 00:20:49,040 --> 00:20:52,560 Speaker 1: body and stimulates the immune system. And then that the 408 00:20:52,720 --> 00:20:55,840 Speaker 1: other kinds most of what's being worked on is new 409 00:20:55,840 --> 00:20:58,439 Speaker 1: stuff that really is not as well tested. One is 410 00:20:58,480 --> 00:21:01,399 Speaker 1: where you actually give the body sort of a piece 411 00:21:01,960 --> 00:21:04,320 Speaker 1: of the virus, some kind of sub unit, maybe a 412 00:21:04,359 --> 00:21:08,040 Speaker 1: protein or something, and have the see how the body 413 00:21:08,080 --> 00:21:11,080 Speaker 1: reacts to that. And then the third is really cool. 414 00:21:11,440 --> 00:21:14,760 Speaker 1: You actually give the body some of the nucleic acid 415 00:21:14,840 --> 00:21:19,679 Speaker 1: from the virus, and the body itself manufactures portions of 416 00:21:19,800 --> 00:21:24,600 Speaker 1: the virus, not the whole virus, but portions that stimulating 417 00:21:24,640 --> 00:21:27,600 Speaker 1: the immune system. So in infect you turn your own 418 00:21:27,640 --> 00:21:33,080 Speaker 1: body into a vaccine production factory. I mean, it's just 419 00:21:33,160 --> 00:21:36,760 Speaker 1: amazing what scientists are up to today, and and I 420 00:21:36,840 --> 00:21:41,960 Speaker 1: really obviously you got to wish them well because you 421 00:21:42,000 --> 00:21:45,360 Speaker 1: want to be a participant at some point. Right. One 422 00:21:45,359 --> 00:21:47,280 Speaker 1: of the things that's also kind of a roadblock out 423 00:21:47,280 --> 00:21:50,320 Speaker 1: there that we've talked about before is production and distribution. 424 00:21:50,400 --> 00:21:53,399 Speaker 1: Let's say that one or more vaccines come onto the 425 00:21:53,400 --> 00:21:55,960 Speaker 1: market sometime late this year or early mid next year, 426 00:21:56,800 --> 00:22:01,719 Speaker 1: is the industry set up to produce industry well. One 427 00:22:01,760 --> 00:22:03,800 Speaker 1: of the things about that latter class I just mentioned, 428 00:22:03,800 --> 00:22:07,600 Speaker 1: the nucleic acid vaccines is that the production aspect is 429 00:22:08,080 --> 00:22:12,440 Speaker 1: pretty easy. Um. And that's one of the big pluses 430 00:22:12,480 --> 00:22:16,920 Speaker 1: and that column because again the body itself has producing 431 00:22:16,960 --> 00:22:21,160 Speaker 1: the vaccines for you. The other two kinds do require 432 00:22:21,240 --> 00:22:26,000 Speaker 1: more manufacturing. UM. I have something in my article saying, 433 00:22:26,040 --> 00:22:30,280 Speaker 1: you know, given the fact that the incredible damage that 434 00:22:30,320 --> 00:22:33,360 Speaker 1: the vaccine is doing to the world economy, you could 435 00:22:33,359 --> 00:22:38,560 Speaker 1: spend three billion dollars to accelerate the introduction of a 436 00:22:38,640 --> 00:22:41,080 Speaker 1: vaccine by a single month, and it would be worthwhile 437 00:22:41,160 --> 00:22:44,000 Speaker 1: from the point of view society as a whole. So 438 00:22:44,359 --> 00:22:48,680 Speaker 1: it makes sense to over build capacity for factories. For example, 439 00:22:49,160 --> 00:22:52,160 Speaker 1: um build factories for vaccines that may not get approved, 440 00:22:52,720 --> 00:22:55,720 Speaker 1: just to cover your bets. And a little bit of 441 00:22:55,800 --> 00:22:59,440 Speaker 1: that's going on thanks to the Gates Foundation in some 442 00:23:00,280 --> 00:23:03,520 Speaker 1: national efforts, but not enough. And we could afford even 443 00:23:03,600 --> 00:23:06,840 Speaker 1: more spending on vaccines and vaccine production than we're doing 444 00:23:06,920 --> 00:23:10,639 Speaker 1: right now. Said we, I mean the world, Peter. We 445 00:23:10,680 --> 00:23:12,439 Speaker 1: do have to leave it there, but I would like 446 00:23:12,680 --> 00:23:15,840 Speaker 1: to recommend that everybody read this article. It's in the 447 00:23:15,880 --> 00:23:19,720 Speaker 1: current and new edition of Business Week, Bloomberg Business Week, 448 00:23:19,720 --> 00:23:23,360 Speaker 1: and of course it's Peter Koy, so it's always very thoughtful. 449 00:23:23,440 --> 00:23:27,600 Speaker 1: It's always very easy to understand, Paul, for those of 450 00:23:27,640 --> 00:23:30,760 Speaker 1: us who may not be completely fluent in vaccine language 451 00:23:30,840 --> 00:23:35,560 Speaker 1: or other types of language. Well, as investors start to 452 00:23:35,680 --> 00:23:37,879 Speaker 1: lay some bets that there may be some light at 453 00:23:37,880 --> 00:23:39,960 Speaker 1: the end of the tunnel of this pandemic, and given 454 00:23:40,000 --> 00:23:42,679 Speaker 1: the stimulus that we've seen coming out of Congress, the 455 00:23:42,760 --> 00:23:46,200 Speaker 1: FED easing of rates and injecting liquiding in the marketplace, 456 00:23:46,240 --> 00:23:48,359 Speaker 1: one of the areas that may benefit going forward is 457 00:23:48,400 --> 00:23:51,120 Speaker 1: the high yield bond market. And there's no one better 458 00:23:51,119 --> 00:23:53,280 Speaker 1: to chat about that market than Andrew Felt Is, Co 459 00:23:53,359 --> 00:23:56,800 Speaker 1: director of Global high Yield at a Mundi Pioneer located 460 00:23:57,000 --> 00:24:01,520 Speaker 1: at Durham Bulls Athletic Park and during North Carolina. Andrew, 461 00:24:01,840 --> 00:24:03,880 Speaker 1: thanks so much. You have one of my favorite offices 462 00:24:03,960 --> 00:24:06,480 Speaker 1: to visit there. I can catch a game sometimes with 463 00:24:06,520 --> 00:24:09,360 Speaker 1: the Durham Bulls. Talk to us about the high yield 464 00:24:09,359 --> 00:24:12,919 Speaker 1: market here. How much risk are you guys thinking about 465 00:24:13,080 --> 00:24:15,280 Speaker 1: here as we try to process kind of what the 466 00:24:15,280 --> 00:24:17,240 Speaker 1: FED has been doing and what Congress is trying to 467 00:24:17,240 --> 00:24:20,280 Speaker 1: do in terms of stimulus. Well, we've had an enormous 468 00:24:20,320 --> 00:24:22,880 Speaker 1: rally in the market at then to March, we were 469 00:24:22,920 --> 00:24:26,640 Speaker 1: basically at a cyclical wides, but we've come into where 470 00:24:26,640 --> 00:24:30,400 Speaker 1: evaluations are about average at this point. Now that the backdrop, 471 00:24:30,520 --> 00:24:33,080 Speaker 1: as you point out, is that the FED is continuing 472 00:24:33,080 --> 00:24:36,000 Speaker 1: to push money into the system. Uh. Central banks around 473 00:24:36,040 --> 00:24:39,160 Speaker 1: the world are pushing that money into the system. Government 474 00:24:39,160 --> 00:24:43,720 Speaker 1: bonds really don't offer much yield, so we see continued demand. 475 00:24:44,080 --> 00:24:47,439 Speaker 1: Technicals are very strong, UH, but the easy money has 476 00:24:47,440 --> 00:24:50,960 Speaker 1: probably been made. UH. So spreads are about average relative 477 00:24:51,000 --> 00:24:54,400 Speaker 1: to long term UH. We accept to see default rise 478 00:24:54,520 --> 00:24:57,000 Speaker 1: very quickly, but this is an environment where you have 479 00:24:57,080 --> 00:24:59,800 Speaker 1: to be focused much more on the individual trees, not 480 00:24:59,880 --> 00:25:02,520 Speaker 1: the forced Make sure you have good security selection to 481 00:25:02,680 --> 00:25:05,760 Speaker 1: make sure you avoid those coming to faults. Yeah, I 482 00:25:05,760 --> 00:25:08,439 Speaker 1: mean to a certain extent, yes, But also I'm sure 483 00:25:08,480 --> 00:25:12,439 Speaker 1: for some credit managers, you know, they haven't gotten involved 484 00:25:12,520 --> 00:25:13,920 Speaker 1: yet and there will be a time down the road 485 00:25:13,960 --> 00:25:16,320 Speaker 1: where they're hoping that you know, all of the other 486 00:25:16,320 --> 00:25:20,840 Speaker 1: shoes will drop, right Andy, Yeah, Well, the that's a 487 00:25:20,880 --> 00:25:22,960 Speaker 1: lot of that's already in the price, and so I 488 00:25:22,960 --> 00:25:25,760 Speaker 1: think you're gonna have default spike up this year. We're 489 00:25:25,800 --> 00:25:29,000 Speaker 1: expectancye to faults around ten percent. But the market's really 490 00:25:29,000 --> 00:25:32,040 Speaker 1: looking ahead and the question has got to be, you know, 491 00:25:32,080 --> 00:25:34,879 Speaker 1: not what happens in two thousand and twenty, what happens 492 00:25:34,880 --> 00:25:37,920 Speaker 1: in two thousand one. And so if we do hit 493 00:25:38,280 --> 00:25:41,240 Speaker 1: bumps along the way, So if the recovery and the 494 00:25:41,280 --> 00:25:44,480 Speaker 1: COVID crisis is less than we expect in two thousand one, 495 00:25:45,359 --> 00:25:47,640 Speaker 1: or we see a pullback as far as FED actions 496 00:25:47,720 --> 00:25:50,960 Speaker 1: or other central banks uh weakness as far as central 497 00:25:51,000 --> 00:25:54,840 Speaker 1: government spending in fiscal stimulus, that could put pressure in 498 00:25:54,880 --> 00:25:56,919 Speaker 1: the market. And can I just push you on that, 499 00:25:57,000 --> 00:25:58,720 Speaker 1: You say, a lot of it's baked into the price. 500 00:25:58,800 --> 00:26:02,040 Speaker 1: But credit is rallying and there's huge demand, and bankruptcies 501 00:26:02,040 --> 00:26:05,119 Speaker 1: are piling up should it not not be selling off. 502 00:26:06,040 --> 00:26:09,520 Speaker 1: So it's really about what your average expectation is. So 503 00:26:09,920 --> 00:26:12,160 Speaker 1: right now spreads in how you market just a little 504 00:26:12,200 --> 00:26:14,800 Speaker 1: bit north of five percent over treasury, so it is 505 00:26:14,840 --> 00:26:18,560 Speaker 1: a relative that compared to treasuries, but five percent really 506 00:26:18,600 --> 00:26:22,880 Speaker 1: builds in about a five percent default rate on average. Now, 507 00:26:22,960 --> 00:26:25,280 Speaker 1: very rarely are you at a five percent default right 508 00:26:25,400 --> 00:26:28,399 Speaker 1: You're either at ten and that's the environment we're in 509 00:26:28,520 --> 00:26:31,040 Speaker 1: right now, at a very high level, or you're at 510 00:26:31,119 --> 00:26:34,080 Speaker 1: very low levels two to three percent. So if you 511 00:26:34,119 --> 00:26:37,080 Speaker 1: think ultimately we will cover three or four years out, 512 00:26:37,600 --> 00:26:39,879 Speaker 1: the average default rate is really going to be driven 513 00:26:39,880 --> 00:26:42,680 Speaker 1: by what happens in two thousand twenty one until lesser 514 00:26:42,680 --> 00:26:45,840 Speaker 1: extent two thousand twenty two. So we're looking beyond the 515 00:26:45,880 --> 00:26:47,800 Speaker 1: next six months and really trying to figure out what 516 00:26:47,880 --> 00:26:52,320 Speaker 1: happens in two thousand one. Alright, So, any given those 517 00:26:52,600 --> 00:26:55,199 Speaker 1: high end default rates that you just mentioned, what are 518 00:26:55,240 --> 00:26:58,359 Speaker 1: some of the sectors that you guys at a munty 519 00:26:58,400 --> 00:27:02,040 Speaker 1: pioneer taking a look at these, So you know, first 520 00:27:02,040 --> 00:27:03,879 Speaker 1: thing I note is that the very safe parts of 521 00:27:03,880 --> 00:27:08,080 Speaker 1: the high market are really tightly priced. We saw a 522 00:27:08,280 --> 00:27:11,679 Speaker 1: double B very high quality deal price fifty basis points 523 00:27:12,240 --> 00:27:15,520 Speaker 1: back of investment grades. So you really a lot of 524 00:27:15,520 --> 00:27:17,840 Speaker 1: people have discovered this trade. And the sectors that have 525 00:27:17,960 --> 00:27:23,600 Speaker 1: been thinning from the pandemic, so cable companies, provider broadband services, 526 00:27:23,920 --> 00:27:26,040 Speaker 1: you know, people who provide services for people to work 527 00:27:26,119 --> 00:27:28,720 Speaker 1: from home. All that's really priced and and and that 528 00:27:28,880 --> 00:27:31,840 Speaker 1: is relatively tight. There's not a lot of margin for error, 529 00:27:32,119 --> 00:27:34,239 Speaker 1: so you have to go down in credit quality. And 530 00:27:34,280 --> 00:27:37,160 Speaker 1: we see single bees as an opportunity to sort through 531 00:27:37,200 --> 00:27:40,480 Speaker 1: and find opportunities, but also in sell the sectors that 532 00:27:40,520 --> 00:27:44,480 Speaker 1: have been thrown out now retail and energy companies that 533 00:27:44,520 --> 00:27:47,919 Speaker 1: we think have secular challenges. Uh, and the pandemic is 534 00:27:47,960 --> 00:27:50,760 Speaker 1: just accelerating that a certain amount. But there are some 535 00:27:50,800 --> 00:27:53,000 Speaker 1: babies with the bath water. And we always look at 536 00:27:53,480 --> 00:27:57,040 Speaker 1: the pipeline sector with an energy it's within the energy sector, 537 00:27:57,119 --> 00:27:59,600 Speaker 1: but they're not driven by the price of oil or 538 00:27:59,640 --> 00:28:02,280 Speaker 1: the price of gas. They just need to transport it. 539 00:28:02,280 --> 00:28:05,320 Speaker 1: It's a very highly regulated business, so it's very predictable 540 00:28:05,320 --> 00:28:07,920 Speaker 1: as far as what those cash flows are, but investors 541 00:28:07,920 --> 00:28:10,960 Speaker 1: aren't giving them credit for that. When we think about 542 00:28:11,119 --> 00:28:13,680 Speaker 1: the sectors that are impacted by the pandemic. So I 543 00:28:13,760 --> 00:28:16,679 Speaker 1: think anything with travel, anything where people have to to 544 00:28:16,720 --> 00:28:20,520 Speaker 1: get together, like casinos are gaining, that's an area that 545 00:28:20,560 --> 00:28:24,560 Speaker 1: you have to to go name by name. So back 546 00:28:24,600 --> 00:28:28,440 Speaker 1: in March and April, casinos are very dislocated. Now that's 547 00:28:28,560 --> 00:28:32,920 Speaker 1: less of an opportunity. Airline so continue to be very dislocated, 548 00:28:33,240 --> 00:28:37,320 Speaker 1: and particularly higher quality airlines. We see opportunity within that space. 549 00:28:37,720 --> 00:28:40,320 Speaker 1: But you really have to dig through the financials understanding 550 00:28:40,320 --> 00:28:43,480 Speaker 1: how much liquidity these companies have, no pun intended, how 551 00:28:43,560 --> 00:28:47,240 Speaker 1: much runway they have before we see recovery briefly and 552 00:28:47,560 --> 00:28:49,200 Speaker 1: because we're pretty out of time, but do you see 553 00:28:49,200 --> 00:28:52,000 Speaker 1: any risks building because of this? Like you say, HI 554 00:28:52,160 --> 00:28:56,240 Speaker 1: yield is very tightly priced, is it properly priced? It isn't, 555 00:28:56,280 --> 00:29:00,240 Speaker 1: you know, exposing the market to risks. So we're fist 556 00:29:00,280 --> 00:29:02,880 Speaker 1: in line with the large arm averages. That's why I 557 00:29:02,960 --> 00:29:05,680 Speaker 1: focused so much on security selection. I think the biggest 558 00:29:06,120 --> 00:29:09,360 Speaker 1: event we have to worry about is the election because 559 00:29:09,440 --> 00:29:12,080 Speaker 1: that could put pressure on both fiscal and mint ary 560 00:29:12,120 --> 00:29:15,040 Speaker 1: stimulus and what the market expects from that. And if 561 00:29:15,080 --> 00:29:17,200 Speaker 1: the market gets a little scared, you know, we're not 562 00:29:17,240 --> 00:29:20,320 Speaker 1: giving this away anymore, and so that creates some downside risk. 563 00:29:20,400 --> 00:29:22,400 Speaker 1: So It's not a one way bet like it was 564 00:29:22,520 --> 00:29:24,760 Speaker 1: back at the beginning of April. You really have to 565 00:29:24,760 --> 00:29:30,000 Speaker 1: consider the political environment but also what you're buying. Andy, 566 00:29:30,280 --> 00:29:32,480 Speaker 1: thank you. Wish we had a double or triple the time, 567 00:29:32,600 --> 00:29:34,760 Speaker 1: but of course that's always the way. Andrew Feltis is 568 00:29:34,840 --> 00:29:37,600 Speaker 1: co director of Global High Yield at A Monday Pioneer 569 00:29:37,680 --> 00:29:41,000 Speaker 1: A Monday Pioneer with billion dollars in assets under management. 570 00:29:43,360 --> 00:29:46,800 Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe 571 00:29:46,840 --> 00:29:49,840 Speaker 1: and listen to interviews at Apple Podcasts or whatever a 572 00:29:49,880 --> 00:29:53,240 Speaker 1: podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter 573 00:29:53,480 --> 00:29:55,800 Speaker 1: at Bonny Quinn. And I'm Paul Sweeney. I'm on Twitter 574 00:29:55,880 --> 00:29:58,720 Speaker 1: at pt Sweeney. Before the podcast, you can always catch 575 00:29:58,760 --> 00:30:04,360 Speaker 1: us worldwide at Bloomberg Radio. H m hmmmm.