WEBVTT - Want Ventilators? Roll Back Trump's Tariffs 0:00:00.160 --> 0:00:02.639 I've been checking with the work opinion to join by Bloomber. 0:00:02.759 --> 0:00:08.119 Welcome to the Bloomberg Piano Podcast. Each day we bring 0:00:08.160 --> 0:00:11.719 you must noteworthy for you and your money, whether at 0:00:11.720 --> 0:00:16.000 the Social Store or the Bloomberg Podcast, on a couple podcasts, 0:00:16.160 --> 0:00:20.439 or wherever you listen to podcasts. Two point part issue. 0:00:20.520 --> 0:00:22.160 So on the one hand, I mean, I think it's 0:00:22.200 --> 0:00:25.000 worth remembering that, you know, these terrorists that were put 0:00:25.160 --> 0:00:28.920 in place did affect medical goods that we shipped over 0:00:29.080 --> 0:00:33.239 from China. So this includes face masks, hand sanitizer, protective 0:00:33.280 --> 0:00:36.040 gear that is now very much in demand. And the 0:00:36.080 --> 0:00:39.960 Trump administration did you know, offer exemptions for those products, 0:00:40.000 --> 0:00:42.240 but they took that very recently ago, as then you know, 0:00:42.360 --> 0:00:44.960 one to two weeks ago, and at that point, you know, 0:00:45.200 --> 0:00:47.919 some of the damage is already done. I mean, we've 0:00:47.960 --> 0:00:51.120 already then shifted the flow of goods now to places 0:00:51.200 --> 0:00:53.400 like Europe, which of course are battling their own issues 0:00:53.440 --> 0:00:55.640 with the coronavirus and may in the future be less 0:00:55.640 --> 0:00:58.640 willing to export some of those products to US UM 0:00:58.800 --> 0:01:01.280 And then you know, it's also an issue of whether 0:01:01.440 --> 0:01:04.800 or not you know or necessarily the the customer of 0:01:04.880 --> 0:01:09.120 first choice for um Chinese suppliers. You know, the Peterson 0:01:09.160 --> 0:01:11.280 Institute did a really great piece on this, just looking 0:01:11.360 --> 0:01:13.840 at the ways in which it changes incentives when you 0:01:13.959 --> 0:01:16.160 do have those tarrifts in place. So that certainly is 0:01:16.200 --> 0:01:18.320 not helpful. But I think about it also, you know, 0:01:18.400 --> 0:01:20.640 the second part of this is just in a broader sense, 0:01:21.400 --> 0:01:24.400 manufacturers are getting hit really hard by this, whether that's 0:01:24.440 --> 0:01:26.400 just you know, a total drop off in demand or 0:01:26.440 --> 0:01:28.800 a disruption of their supply chain, and the terrorists just 0:01:28.880 --> 0:01:32.640 seem like an extra tax that makes this harder on them. 0:01:32.720 --> 0:01:35.480 It just seems unnecessary. And that's particularly true at a 0:01:35.600 --> 0:01:38.040 time when we're really starting to see an emphasis on 0:01:38.520 --> 0:01:41.280 calling the manufacturers to step up and use their idol 0:01:41.360 --> 0:01:44.720 factories to make products like masks and ventilators helps to 0:01:44.800 --> 0:01:47.800 still this shortage in America right now. And if they 0:01:47.880 --> 0:01:50.280 do that is the reward then that when we go 0:01:50.360 --> 0:01:52.360 back to normal life, they still have to jump through 0:01:52.400 --> 0:01:55.280 the obstacles of tariffs when they answered their patriotic duty. 0:01:55.360 --> 0:01:57.640 I just I don't know if it makes sense, and 0:01:57.720 --> 0:01:59.400 it strikes me as more of a hindrance when we 0:01:59.400 --> 0:02:01.520 should be spilled a thing on everything that can possibly 0:02:01.560 --> 0:02:06.320 help us in this spite against coronavirus. Brook really interesting 0:02:06.640 --> 0:02:09.040 to take at a time when it's like whack a 0:02:09.120 --> 0:02:11.960 mole with respect the information coming at you every single 0:02:12.080 --> 0:02:14.760 day in terms of which part of the market, which 0:02:14.800 --> 0:02:17.440 part of the economy, which part of the political world, 0:02:17.520 --> 0:02:20.280 which part of the central banking world is in the 0:02:20.440 --> 0:02:23.480 front and in the focus. Amid all of this, we 0:02:23.639 --> 0:02:26.919 haven't talked as much about supply chains, just more broadly, 0:02:27.400 --> 0:02:30.600 and before we get into just what the tariff policy 0:02:30.680 --> 0:02:34.600 should be, how much our supply chains still disrupted from 0:02:34.639 --> 0:02:36.920 what happened in China and what's been going on now 0:02:37.000 --> 0:02:39.880 in in in Europe. I mean, how much are those 0:02:39.919 --> 0:02:44.160 supply chains still intact to begin with? Look, I mean 0:02:44.200 --> 0:02:47.720 I think they were significantly disrupted by what happened in China, 0:02:47.880 --> 0:02:50.080 and you know, at the time that sparked a conversation 0:02:50.200 --> 0:02:53.320 of oh, are we too dependent on China? But then 0:02:53.400 --> 0:02:56.239 as you've seen this virus spread across the world, I 0:02:56.320 --> 0:02:58.200 don't know if it really makes the difference at this 0:02:58.280 --> 0:03:00.720 point where your supply chains are. We're same factory shut 0:03:00.760 --> 0:03:03.480 down in Latin America, factories shut down in the US, 0:03:03.520 --> 0:03:06.560 factory shut down in Europe, and so you know, I 0:03:06.800 --> 0:03:09.679 think as we think about how supply change changed down 0:03:09.760 --> 0:03:12.000 the road. Initially I was thinking of this as more 0:03:12.040 --> 0:03:14.440 of a geographical rethink, but then I think that now 0:03:14.560 --> 0:03:17.079 maybe we pivot to what do these factories look like? 0:03:17.360 --> 0:03:20.600 You know, robots don't get coronavirus? Does this just speed 0:03:20.720 --> 0:03:23.040 the spread of automation? Do we see more and more 0:03:23.080 --> 0:03:26.280 companies relying on additive manufacturing where you don't need to 0:03:26.360 --> 0:03:28.840 get parts from different parts of the world. You can 0:03:28.919 --> 0:03:30.959 just have something come out of a printer and be 0:03:31.200 --> 0:03:33.760 in your factories. So I think those types of conversations 0:03:34.080 --> 0:03:36.560 are maybe now where we're more headed at this point 0:03:36.600 --> 0:03:39.200 in time, because you are seeing amazing disruption to the 0:03:39.200 --> 0:03:42.000 flow of goods um you know, across a broad range 0:03:42.040 --> 0:03:43.560 of products, and I think we're going to have to 0:03:43.640 --> 0:03:46.720 think about how we better safeguard those systems. Well, I 0:03:46.800 --> 0:03:48.880 think the line of the day Lisa is robots don't 0:03:48.920 --> 0:03:51.320 get coronavirus. Yeah, And I kind of malfunctioned a little 0:03:51.320 --> 0:03:53.440 bit earlier when I'm trying to speak, so I think 0:03:53.480 --> 0:03:58.480 I'm safe. So Brooke, just practically speaking, can I auto 0:03:58.520 --> 0:04:03.080 manufacturing plant? Switch were to make ventilators? So there are 0:04:03.240 --> 0:04:05.520 issues with this, So you know the UK is also 0:04:05.680 --> 0:04:09.000 calling on its manufacturers to make ventilators, and the confirm 0:04:09.080 --> 0:04:12.560 there that these are very heavily regulated devices, and we 0:04:12.880 --> 0:04:14.680 don't I think, want to be in the practice of 0:04:14.800 --> 0:04:17.320 vending those rules because obviously we don't want to do 0:04:17.400 --> 0:04:19.840 anything that might make this health crisis actually worse. But 0:04:19.960 --> 0:04:23.839 I do think, you know, companies that have experience making 0:04:24.040 --> 0:04:27.640 heavily regulated equipment UM might be in a better position 0:04:27.680 --> 0:04:29.800 to step up, at least as far as that is concerned. Now, 0:04:29.839 --> 0:04:34.359 I will say, you know, auto factories do require require 0:04:34.400 --> 0:04:37.640 assembly line somewhat similar to ventilators, and there are similarities 0:04:37.680 --> 0:04:39.480 that you think about. You know, the highly advantaged like 0:04:39.680 --> 0:04:42.200 h sex systems that are in those cars, and you 0:04:42.279 --> 0:04:44.440 know the technology that you would need to do a ventilators, 0:04:44.480 --> 0:04:47.200 So there are some similarities there. Also, there are hurdles 0:04:47.279 --> 0:04:50.480 that need to be worked out masks and hand sanitizer 0:04:50.560 --> 0:04:52.880 and protective year that is a lot easier to do. 0:04:53.560 --> 0:04:56.080 You may see more companies stepping up on that front, 0:04:56.120 --> 0:04:58.960 but I do think there is a path to make 0:04:59.080 --> 0:05:01.040 more ventilators. We will have to figure out some of 0:05:01.120 --> 0:05:03.280 the logistics of that, and it's not quite easy as 0:05:03.320 --> 0:05:06.080 just flipping a switch to making a totally different product. 0:05:06.279 --> 0:05:08.240 Brook Sutherland, thank you so much for being with us, 0:05:08.240 --> 0:05:12.480 brook Sutherland, Bloomberg Opinion industrials columnist, joining us to talk 0:05:12.680 --> 0:05:15.560 about the tariff situation rolling them back, but also the 0:05:15.600 --> 0:05:18.200 supply chains. And I do think, Paul, you raise really 0:05:18.279 --> 0:05:22.640 interesting point, which is in a wartime situation, typically, uh, 0:05:22.920 --> 0:05:27.680 the US has mustard all of its capabilities to manufacture 0:05:27.760 --> 0:05:30.920 weapons or manufacture clothing for the troops. And you have 0:05:31.000 --> 0:05:34.800 to wonder if this is being treated as a wartime situation, 0:05:34.960 --> 0:05:37.440 at what point will the factories that are offline to 0:05:37.520 --> 0:05:41.479 make cars be corralled into making ventilators and be making 0:05:41.880 --> 0:05:45.120 masks and purel and toilet paper, because that seems to 0:05:45.279 --> 0:05:50.120 also be a concern for a lot of people. There 0:05:50.279 --> 0:05:53.000 is a question though about the oil patch and how 0:05:53.120 --> 0:05:56.440 much is sort of exacerbated by the fact that Saudi 0:05:56.440 --> 0:05:58.680 Arabia and Russia appear to be in a tiff that 0:05:58.720 --> 0:06:01.520 does not seem to be going away anytime soon, where 0:06:01.640 --> 0:06:04.040 both of them are doubling down on production at a 0:06:04.120 --> 0:06:07.640 time when demand is falling off a cliff to try 0:06:07.720 --> 0:06:12.240 to understand this relationship, what happens if they come to 0:06:12.360 --> 0:06:14.720 some sort of accord and curb production. What will that 0:06:14.880 --> 0:06:17.520 mean for oil? What will that mean for the entire 0:06:17.640 --> 0:06:21.640 relationship of nations in the Middle East and Russia joining 0:06:21.760 --> 0:06:25.600 US right now? Professor Megan O'Sullivan, Professor of International Affairs 0:06:25.640 --> 0:06:29.479 at Harvard's Kennedy School, former National Security Council advisor, also 0:06:29.640 --> 0:06:33.160 a Bloomberg Opinion columnist. Professor, I'd love to get your 0:06:33.279 --> 0:06:37.680 opinion for starters of how long in the making this 0:06:37.880 --> 0:06:41.440 tiff between Saudi Arabia and Russia really was. I mean, 0:06:41.440 --> 0:06:45.040 in other words, how entrenched are they on their respective sides, 0:06:45.240 --> 0:06:48.280 unable or unwilling to come to the come to the 0:06:48.360 --> 0:06:52.520 table and stop producing as much oil. Well, as you know, 0:06:53.120 --> 0:06:56.159 Russia and Saudi Arabia and the rest of OPEC began 0:06:56.279 --> 0:07:02.640 producing and cooperating in an unprecedented fashion towards in ten, 0:07:02.800 --> 0:07:05.520 basically to deal with the price plunge of that time. 0:07:06.080 --> 0:07:09.600 And for quite a few years people predicted that this 0:07:09.680 --> 0:07:14.120 would be a very transitory relationship, both basically between Russia 0:07:14.440 --> 0:07:16.840 and between Saudi Arabia, and it was more resilient than 0:07:16.920 --> 0:07:20.920 people thought. Um every time there was an opportunity or 0:07:21.120 --> 0:07:24.000 needs to renew a production cut or to revisit it. 0:07:24.360 --> 0:07:27.400 People product predicted some kind of collapse like the one 0:07:27.480 --> 0:07:30.440 that we saw on March six. But Um, I would 0:07:30.480 --> 0:07:34.440 say that both sides have been taken by surprise at 0:07:34.520 --> 0:07:38.120 the market reaction, because unlike the other times when it 0:07:38.200 --> 0:07:42.120 looked like Russia might walk away from its cooperation with OPEC, 0:07:42.600 --> 0:07:46.200 this time it we have both a supply surge and 0:07:46.360 --> 0:07:49.800 we have this massive demand contraction. And so while both 0:07:49.880 --> 0:07:54.440 sides I don't think we're planning for this fallout to happen, um, 0:07:54.640 --> 0:07:57.480 the fact that it happened and that the repercussions have 0:07:57.600 --> 0:08:01.120 been so dramatic, I think does create at least some 0:08:01.360 --> 0:08:04.120 kind of an opportunity for the two sides to come 0:08:04.160 --> 0:08:07.680 together in the coming I would say months. However, the 0:08:07.800 --> 0:08:10.600 longer this goes on, I think there are certain new 0:08:10.720 --> 0:08:13.640 variables that are coming into the mix that could change 0:08:13.760 --> 0:08:17.680 the trajectory of what I think everyone began thinking was 0:08:17.840 --> 0:08:21.120 just going to be a temporary kind of tiff that 0:08:21.200 --> 0:08:24.680 would ultimately be resolved in coming together in a new 0:08:24.760 --> 0:08:29.440 production cut. So, Megan, it's just extraordinary to me that 0:08:29.760 --> 0:08:33.240 the behavior of Saudi Arabian Russia on the supply side, 0:08:33.240 --> 0:08:35.640 given what we now know, about the demand side and 0:08:35.720 --> 0:08:39.959 the creating demand for oil. Who do you think is 0:08:40.000 --> 0:08:43.760 going to blink first? And why? Well, I mean, we 0:08:43.840 --> 0:08:47.760 already have seen signs that the Russians are acknowledging that 0:08:47.920 --> 0:08:50.760 the economic impact here is going to be greater than 0:08:50.840 --> 0:08:53.920 they thought. We've seen the finance minister just a couple 0:08:53.960 --> 0:08:56.640 of days ago talk about how Russia is going to 0:08:56.760 --> 0:08:59.360 go into a deficit. You can see the impact on 0:08:59.440 --> 0:09:04.000 the ruble um. Russia has more difficulty borrowing than Saudi Arabia, 0:09:04.160 --> 0:09:08.199 so it probably is less well prepositioned to endure a 0:09:08.400 --> 0:09:12.160 long term slow price decline. So I would say, if 0:09:12.240 --> 0:09:14.599 we're really assuming that this is going to result in 0:09:14.640 --> 0:09:17.679 the two sides coming together that at some point, I 0:09:17.760 --> 0:09:21.080 think Saudi Arabia is not wrong in thinking that Russia 0:09:21.120 --> 0:09:23.000 will feel the pain and there'll be an opportunity to 0:09:23.040 --> 0:09:25.760 come back to the table. However, and I still think 0:09:25.800 --> 0:09:29.960 that is the main most likely scenario. However, there are 0:09:30.000 --> 0:09:32.560 a couple of things unfolding, as I mentioned that could 0:09:32.720 --> 0:09:37.640 change the perspectives of these two players. One, the demand 0:09:37.760 --> 0:09:40.880 plunge is so much deeper than people thought. I mean literally, 0:09:40.920 --> 0:09:44.360 it's only been two weeks since these two countries came apart, 0:09:44.840 --> 0:09:48.160 and we've seen that the projections for demand have changed dramatically. 0:09:48.440 --> 0:09:51.080 Two weeks ago, Saudi Arabia was arguing that a cut 0:09:51.160 --> 0:09:53.439 of one point five million barrels of oil a day 0:09:53.679 --> 0:09:56.760 would be enough to stabilize the situation. People are now 0:09:57.000 --> 0:10:00.400 talking about this quarter of oil demand going down by 0:10:00.520 --> 0:10:03.240 ten million barrels of a loyal day. So coming together 0:10:03.360 --> 0:10:06.079 to agree on a cut of a million barrels is actually, 0:10:06.640 --> 0:10:09.719 even within these two weeks, is no longer perceived to 0:10:09.880 --> 0:10:14.319 be sufficient to the challenge at hand. Also, we're seeing 0:10:14.600 --> 0:10:18.960 producers in the US, Brazil, Canada already coming together and saying, 0:10:19.120 --> 0:10:21.280 you know, it looks likely that our production is going 0:10:21.360 --> 0:10:24.679 to shrink, We're going to have capex limitations. And this 0:10:24.880 --> 0:10:28.280 is much quicker, I think than Saudi Arabia um expected. 0:10:28.360 --> 0:10:31.719 And it must be heartening to these producers Russia and 0:10:31.760 --> 0:10:34.959 Saudi Arabia that have been frustrated that their policies have 0:10:35.120 --> 0:10:39.319 basically helped high cost producers. So it's possible that you 0:10:39.440 --> 0:10:42.240 might have both of these sides, Saudi Arabian particular saying hey, 0:10:42.320 --> 0:10:45.319 we didn't expect to move to the situation where we 0:10:45.440 --> 0:10:48.160 were kind of playing for longer, and but here we are, 0:10:48.280 --> 0:10:50.439 and maybe we have to make the best of it 0:10:50.640 --> 0:10:54.079 given the situation. So despite that backdrop, given the glood 0:10:54.080 --> 0:10:56.800 of production, and given the fact that demand is falling 0:10:56.840 --> 0:10:59.679 off way faster than people had expected. I want to 0:10:59.760 --> 0:11:02.400 put the perspective the huge rise in prices that we 0:11:02.440 --> 0:11:05.600 saw yesterday after President Trump said that he could intervene, 0:11:06.240 --> 0:11:09.400 that he would intervene if this carries on, and that 0:11:09.679 --> 0:11:12.720 the US has great power to do so to bring 0:11:12.880 --> 0:11:16.600 Saudi Arabia and Russia to the table. What power does 0:11:16.720 --> 0:11:21.240 the United States have to to do that. Well, my 0:11:21.400 --> 0:11:24.480 feeling is the President probably overstating the US power here. 0:11:24.880 --> 0:11:28.640 The US does have a lot of diplomatic and political 0:11:28.760 --> 0:11:31.120 leverage with Saudi Arabia just because of the importance of 0:11:31.160 --> 0:11:35.679 that bilateral relationship, and so certainly you can imagine that 0:11:35.800 --> 0:11:38.120 the United States would be putting a lot of pressure 0:11:38.120 --> 0:11:40.720 on Saudi Arabia to come to the table, especially if 0:11:40.800 --> 0:11:44.280 Russia started the show indications that is interested in doing so. 0:11:45.120 --> 0:11:49.480 The United States does not have much control over Russian behavior, 0:11:49.679 --> 0:11:52.280 and the thought was that the United States could threaten 0:11:52.400 --> 0:11:55.760 some more sanctions. I actually think that could backfire We've 0:11:55.800 --> 0:11:59.839 seen repeatedly over the last five years that Vladimir Putin 0:12:00.120 --> 0:12:02.920 is willing to take an economic hit in order to 0:12:03.040 --> 0:12:05.439 stand up to the United States. So to imagine that 0:12:05.520 --> 0:12:10.000 the threat of sanctions could change Russia's calculation in a 0:12:10.080 --> 0:12:13.199 way that makes it look like Putin is acquiescing to Trump, 0:12:13.280 --> 0:12:16.600 I think that is not tenable. An interesting idea surface 0:12:16.720 --> 0:12:19.199 just this morning you had one of the commissioners of 0:12:19.559 --> 0:12:24.240 the Texas Railroad Commission saying, actually Texas could return to 0:12:24.320 --> 0:12:26.839 a policy of pro rationing that it hasn't had since 0:12:26.880 --> 0:12:30.280 the early seventies and rain in some of America's production. 0:12:30.720 --> 0:12:34.360 That opens the possibility still likes say distant, but for 0:12:34.559 --> 0:12:39.480 a Russia Saudi um uh Us conversation that the Russians 0:12:39.520 --> 0:12:42.120 have wanted to have for a long time, and that 0:12:42.280 --> 0:12:44.079 could be where this could go. This would be the 0:12:44.160 --> 0:12:47.480 real wild card in this situation. But absence that, I 0:12:47.559 --> 0:12:51.280 don't think the United States has the ability to solve 0:12:51.400 --> 0:12:54.520 this problem just through diplomatic pressure. A. Megan, thanks so 0:12:54.640 --> 0:12:57.840 much for your perspective. We really appreciate you helping us 0:12:58.000 --> 0:13:00.920 understand what's going on the global energy markets. Megan O'Sullivan, 0:13:00.960 --> 0:13:04.520 Professor of International Affairs at Harvard's Kennedy School, former National 0:13:04.600 --> 0:13:08.720 Security Council advisor, and a Bloomberg opinion columnists giving us 0:13:08.760 --> 0:13:11.000 her sense on the markets here weekend. We still have 0:13:11.040 --> 0:13:14.040 a little bit weaker oil today after the big, big 0:13:14.120 --> 0:13:17.800 pop yesterday, but still way way down supply and demand 0:13:18.080 --> 0:13:20.559 not good for the price of oil. The question is 0:13:20.600 --> 0:13:23.400 when will Saudi Arabia and Russia come to the table 0:13:23.760 --> 0:13:30.640 uh and come to an agreement. This is Bloomberg. We 0:13:30.720 --> 0:13:33.520 are looking at a markets that are trying to find 0:13:33.640 --> 0:13:38.400 some calm after a storm that was the biggest storm 0:13:38.640 --> 0:13:41.000 ever if you look at the VIX index and was 0:13:41.080 --> 0:13:45.160 certainly included some of the biggest whip saws since seven 0:13:45.280 --> 0:13:48.280 Black Monday. And the question is how do you find sane? 0:13:48.600 --> 0:13:50.520 How do you find sanity? How do you find a 0:13:50.640 --> 0:13:55.280 compass amid a complete dearth of any information? Peter Anderson, 0:13:55.320 --> 0:13:58.559 a voice of reason, a voice of calm, founder of 0:13:58.640 --> 0:14:01.520 Anderson Capital Management, joining us now. Peter, thank you so 0:14:01.640 --> 0:14:04.600 much for being with us. What's going to help people 0:14:05.120 --> 0:14:07.560 stay sane as they invest their money in this kind 0:14:07.559 --> 0:14:10.800 of environment? Well, Lisa, I know that you've talked to 0:14:10.880 --> 0:14:13.680 a lot of investors and a lot of investor managers, 0:14:13.720 --> 0:14:15.079 and I thought I'd take a little bit of a 0:14:15.160 --> 0:14:17.920 different take. Instead of just going back on histories of 0:14:18.520 --> 0:14:21.360 UH selloffs and how we react, I thought I could 0:14:21.440 --> 0:14:24.080 propose a couple of tools for everybody out there, because 0:14:24.120 --> 0:14:29.840 I think most investors are feeling really uncomfortable about the 0:14:29.960 --> 0:14:32.800 information and how they should act on this information. And 0:14:32.880 --> 0:14:35.360 if we could just get some simple categories, I think 0:14:35.400 --> 0:14:38.000 that might help people. So I have a couple of suggestions. 0:14:38.040 --> 0:14:42.440 The first thing is this concept of leading versus lagging indicators. 0:14:42.480 --> 0:14:45.680 Now we've used those a lot in economics and investing, 0:14:45.800 --> 0:14:48.640 but probably not so much when we're talking about something 0:14:48.720 --> 0:14:52.480 like the virus. And if you recall Dr Fauci recently 0:14:52.640 --> 0:14:55.120 mentioned he made a little bit of a reference to 0:14:55.240 --> 0:14:57.920 this when he said, look what we're seeing now are 0:14:58.000 --> 0:15:00.680 the results of what the virus did two weeks ago. 0:15:01.160 --> 0:15:04.200 So I find it very helpful. Whenever new information comes, 0:15:04.240 --> 0:15:07.760 I put it in a category. Is this leading indicator 0:15:07.960 --> 0:15:10.760 or a lagging indicator? And what should I do if 0:15:10.840 --> 0:15:13.440 it is lagging? It doesn't matter that much to me, 0:15:13.520 --> 0:15:15.640 But the leading indicators are the things I think we 0:15:15.640 --> 0:15:19.600 should focus on. Interesting, Peter, So as we think about 0:15:19.600 --> 0:15:22.120 this market volatility. Are you trying to Are you suggesting 0:15:22.160 --> 0:15:25.480 to your clients that they sit on the sidelines and 0:15:25.760 --> 0:15:28.720 not panic and maybe take the longer view here, And 0:15:28.800 --> 0:15:31.920 if so, are you having any success with that? Well? 0:15:31.960 --> 0:15:35.000 I am. You know, I've talked to all my clients 0:15:35.120 --> 0:15:39.400 and most of them are saying and mature that they say, Look, 0:15:39.520 --> 0:15:42.680 I've seen versions of this in the past. You know, 0:15:42.880 --> 0:15:45.840 the virus is a new twist, but in terms of selloffs, 0:15:46.600 --> 0:15:49.800 we've been here before, and we also are quite familiar 0:15:49.840 --> 0:15:53.440 with the way we react psychologically and from a behavioral perspective, 0:15:53.560 --> 0:15:57.360 So why don't we focus on what the leading indicators are? 0:15:57.480 --> 0:15:59.840 And so to me, the leading indicators are when we 0:16:00.040 --> 0:16:02.920 have the press conferences every day, I tell them to 0:16:03.000 --> 0:16:05.280 focus on the following you know, what are the what 0:16:05.480 --> 0:16:08.720 is the news about the vaccination? What's the news about 0:16:09.480 --> 0:16:13.040 trends in the current cases, not the past cases, but 0:16:13.160 --> 0:16:15.560 what might be happening in the future, Because when we 0:16:15.680 --> 0:16:18.920 get these cases reported to us now, they're just going 0:16:18.960 --> 0:16:22.320 to get worse because it's the results of the virus 0:16:22.360 --> 0:16:25.320 in the past. So looking forward, also, let's think of 0:16:25.680 --> 0:16:29.440 do they announce new innovative approaches, For instance, yesterday they 0:16:29.520 --> 0:16:33.920 mentioned cruise ships could be available for hospital beds. I 0:16:34.000 --> 0:16:37.000 think that's very creative if we need that. They've also 0:16:37.120 --> 0:16:40.560 mentioned drive by testing. So the more creative we get 0:16:40.640 --> 0:16:42.520 with this, and the more we get a handle on 0:16:42.800 --> 0:16:45.480 when the virus is going to peak, that is the 0:16:45.680 --> 0:16:49.680 main driver of everything. Everything else, to me is expendable 0:16:49.720 --> 0:16:52.080 at this point. But we should focus on what are 0:16:52.080 --> 0:16:54.840 the leading indicators to tell us when we think this 0:16:55.120 --> 0:16:57.800 might crest, and then we're off to the races, because 0:16:57.840 --> 0:17:00.280 then we have a data point and we can say, okay, 0:17:00.360 --> 0:17:02.680 what should our actions be as a result of now 0:17:02.840 --> 0:17:07.639 knowing that we've reached the maximum case accumulation. Well, and 0:17:07.720 --> 0:17:10.880 speaking of press conferences and paying attention, we will bring 0:17:10.960 --> 0:17:14.760 you some comments by Treasury Secretary Stephen Mnuchin and UH 0:17:15.040 --> 0:17:18.960 majority leader and seminjority leader Mitch McConnell. They will be 0:17:19.119 --> 0:17:25.280 joining shortly and with some comments that they gave in Washington, 0:17:25.359 --> 0:17:27.040 d C. And we will bring them to you when 0:17:27.119 --> 0:17:29.920 we get them. But there is a question when you 0:17:30.000 --> 0:17:32.960 start talking about how people have been through this type 0:17:33.000 --> 0:17:36.240 of thing before, have they? I mean, this is sort 0:17:36.280 --> 0:17:38.639 of one thing that I'm struck by the speed that 0:17:38.760 --> 0:17:42.680 this has occurred has just been so dramatic that in 0:17:42.880 --> 0:17:46.240 some ways it feels like perhaps this is a different 0:17:46.359 --> 0:17:49.199 kind of sell off and a different kind of economic 0:17:49.320 --> 0:17:53.160 downturn than we have seen in modern history. Do you agree, Yes, 0:17:53.280 --> 0:17:55.240 I do. I mean to a great extent, of course. 0:17:55.280 --> 0:17:57.640 You know, when you look back at the major sell offs, 0:17:57.800 --> 0:18:01.800 each one has its own story in its own cause, 0:18:02.080 --> 0:18:05.080 and who would have expected, uh, something like a virus 0:18:05.200 --> 0:18:09.040 to have this major world impact. So I agree with 0:18:09.160 --> 0:18:12.240 you on that level. However, I also say that we 0:18:12.400 --> 0:18:15.119 can look back at how we react to each one 0:18:15.200 --> 0:18:18.359 of these surprises. Peter Anderson, a voice of reason, founder 0:18:18.440 --> 0:18:23.320 of Anderson Capital Management, joining us by phone. Really interesting, 0:18:23.400 --> 0:18:26.040 trying to find that compass right now amid a sea 0:18:26.080 --> 0:18:28.639 of uncertainty. Paul, Yeah, it really is. At Lisa, and 0:18:28.680 --> 0:18:30.640 I think a lot of investors, Um, you know, they're 0:18:30.760 --> 0:18:32.919 if they haven't already panicked, Um, you know, I think 0:18:32.920 --> 0:18:34.960 they're obviously I was looking at their portfolios, looking at 0:18:34.960 --> 0:18:37.000 their flour one case, and just kind of in shock here. 0:18:37.080 --> 0:18:39.720 But um, you know, I think one constructive thing is 0:18:39.760 --> 0:18:42.280 to really take a look on the other side. When 0:18:42.320 --> 0:18:44.560 we do get the other side, How do you want 0:18:44.600 --> 0:18:46.440 to be positioned, what do you want to maybe look 0:18:46.520 --> 0:18:49.400 at in terms of some investment opportunities. So that's hard 0:18:49.440 --> 0:18:52.240 to do right now as we continue see the Baltilo 0:18:52.280 --> 0:18:54.359 in the markets. But I think that's what Peter was 0:18:54.400 --> 0:19:00.960 suggesting that his clients do. The Federal Reserve just announced 0:19:01.320 --> 0:19:05.280 coordinated Central Bank swap line enhancements. It says it will 0:19:05.320 --> 0:19:08.120 act with the Bank of England, Bank of Canada, Bank 0:19:08.160 --> 0:19:11.760 of Japan, the European Central Bank, and the Swiss National Bank. 0:19:12.119 --> 0:19:16.360 The swap lines to commence on March twenty through three, 0:19:16.840 --> 0:19:20.040 and they will go through UH the end of April 0:19:20.240 --> 0:19:23.359 at least. And this would be the dollar swap lines 0:19:23.400 --> 0:19:26.520 that they initiated over the past few weeks UH in 0:19:26.800 --> 0:19:29.960 order to ease up some of the dollars shortage and 0:19:30.080 --> 0:19:32.879 liquidity crunch there a few weeks, a few days, I 0:19:32.960 --> 0:19:36.560 should say, it's been weeks at least each day has 0:19:36.600 --> 0:19:39.200 felt like that. And meanwhile they're going to switch each 0:19:39.280 --> 0:19:45.840 swap line daily from weekly, just showing this ongoing effort 0:19:45.960 --> 0:19:49.040 to try to ease some of the kinks in the 0:19:49.680 --> 0:19:53.359 workings of financial markets right now. Yeah, global coordination there 0:19:53.359 --> 0:19:55.240 at least, I think that's the key takeaway here and 0:19:55.280 --> 0:19:57.840 again it goes to that liquidity issue or cross markets 0:19:58.359 --> 0:20:00.400 that we've been talking about. So it's ice to see 0:20:00.400 --> 0:20:05.000 the coordination. So our Jersey chief strate strategist at Bloomberg Intelligence, Uh, 0:20:05.280 --> 0:20:08.159 we have him standing by here to give us his 0:20:08.280 --> 0:20:11.000 sense on how important this is. And we have seen 0:20:11.119 --> 0:20:13.400 some dollar weakness today which has actually been a huge 0:20:13.440 --> 0:20:16.440 positive for global markets. I mean, are we seeing the 0:20:16.560 --> 0:20:19.520 beginnings of this bleed into markets the feed is actually 0:20:19.600 --> 0:20:23.320 being successful in easing some of the dollar shortage. Yes, 0:20:23.359 --> 0:20:26.080 so I I do think that this type of activity 0:20:26.119 --> 0:20:30.359 in particular will be helpful for markets globally and primarily 0:20:30.520 --> 0:20:33.320 for uh, those folks who have funded in dollars who 0:20:33.359 --> 0:20:35.920 aren't in the United States, right, So that that's really 0:20:35.960 --> 0:20:38.720 where the funding shortage in dollars has been. That people 0:20:38.720 --> 0:20:41.119 have been hoarding their dollars wanting to keep them as 0:20:41.160 --> 0:20:45.119 a safe haven currency. Um. So this allows basically for 0:20:45.240 --> 0:20:48.760 the flow of dollars in the global financial world to 0:20:48.960 --> 0:20:51.560 to continue. And the fact that they're doing these weekly 0:20:51.640 --> 0:20:54.800 operations on a daily basis I think is important because 0:20:55.200 --> 0:20:57.840 that means that there's liquidity on demand. So the way 0:20:57.920 --> 0:20:59.960 that they did it before by only having an offer 0:21:00.000 --> 0:21:02.680 and once a week is you only had liquidity on 0:21:02.800 --> 0:21:05.240 that day, you didn't have liquidity all those other days. 0:21:05.359 --> 0:21:07.919 So UM, while I think the total dollar amounts might 0:21:07.960 --> 0:21:10.760 not be massive in this program, UM, keep in mind 0:21:10.800 --> 0:21:13.040 they did get up to almost five hundred billion dollars 0:21:13.160 --> 0:21:15.879 during the crisis. So it's very possible that you can 0:21:15.960 --> 0:21:18.399 wind up with you know, fifty a hundred billion dollars 0:21:18.560 --> 0:21:22.119 of usage in these swap lines um every day. And 0:21:22.359 --> 0:21:24.119 and you know, so you wind up with with a 0:21:24.280 --> 0:21:27.680 rolling hundred billion dollars every day that that basically helps 0:21:27.680 --> 0:21:29.359 the financial markets to work. You know, some of the 0:21:29.400 --> 0:21:31.640 other things that the Fed's done, I don't think we'll 0:21:31.640 --> 0:21:34.840 have a massive issue. Like last night the FED announced 0:21:34.880 --> 0:21:37.879