WEBVTT - Staffing CEO Sees Unemployment Maxing Out At 13-15% 0:00:02.640 --> 0:00:05.360 Welcome to the Bloomberg Penl Podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa brahma Witz. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.320 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:18.000 --> 0:00:22.439 at Bloomberg dot com. Well, US pay rolls fell seven 0:00:22.680 --> 0:00:26.440 and one thousand in March, just extraordinary. The unemployment rate 0:00:26.520 --> 0:00:29.720 jumped to four point four percent, the highest level since 0:00:29.800 --> 0:00:33.199 two thousand seven teen. We had those jobs claims yesterday, 0:00:33.320 --> 0:00:36.479 six point six five millions of the jobs numbers. The 0:00:36.600 --> 0:00:41.800 uh employment situation in this country deteriorating just extraordinarily rapidly. 0:00:42.040 --> 0:00:43.920 To get a sense of kind of how bad it 0:00:44.000 --> 0:00:46.960 could get, we welcome Tom gimbal CEO of Global Staff 0:00:47.000 --> 0:00:49.239 and Company, Last Sound Network. So Tom, thanks so much 0:00:49.320 --> 0:00:51.800 for joining us. Let's start right there. How bad do 0:00:51.840 --> 0:00:54.880 you think this is going to get on the jobless front? Oh? 0:00:54.920 --> 0:00:56.680 I think it's going to get bad. But the numbers 0:00:56.760 --> 0:00:59.240 that the government reports aren't going to be that applicable 0:00:59.280 --> 0:01:01.400 because what you're going to see if you see the 0:01:01.480 --> 0:01:04.200 jobless claims come in at such a high number, then 0:01:04.200 --> 0:01:06.840 the unemployment claims come in and under a million. Hard 0:01:06.880 --> 0:01:09.600 to believe. I'm saying that's an optimistic thing. But then 0:01:09.720 --> 0:01:12.320 with the p p P program, you're going to see 0:01:12.319 --> 0:01:15.520 that the unemployment claims go down because these people that 0:01:15.640 --> 0:01:18.200 filed will be back on their employer's payroll for the 0:01:18.240 --> 0:01:20.679 companies that get that money. And then we'll see in 0:01:20.800 --> 0:01:25.040 a higher unemployment number when traditional non restaurant, non hospitality 0:01:25.040 --> 0:01:27.920 companies have to let people go and those people file. 0:01:28.040 --> 0:01:30.520 So I think the May and June numbers are going 0:01:30.560 --> 0:01:32.680 to be a lot different than than what we're seeing, 0:01:32.680 --> 0:01:35.560 and it's really not maccurate read on what's going on. Tom. 0:01:35.600 --> 0:01:38.000 I think that everyone agrees on that nobody kind of 0:01:38.240 --> 0:01:41.120 put too much faith into the actual number. However, they 0:01:41.160 --> 0:01:43.880 did try to dig in to get some signs of 0:01:43.920 --> 0:01:47.520 how the economy was doing before the real shutdown began 0:01:47.640 --> 0:01:49.560 in the United States. I was really looking forward to 0:01:49.560 --> 0:01:52.360 speaking with you, in particular, because you've been particularly optimistic 0:01:52.800 --> 0:01:55.200 about a lot of some of the dark clouds for 0:01:55.240 --> 0:01:58.120 a long time, and I'm wondering, based on the fact 0:01:58.160 --> 0:02:02.120 that we saw companies freeze high airing before even the 0:02:02.240 --> 0:02:05.560 US economy shut down in Earnest and the true pain began. 0:02:06.560 --> 0:02:10.119 Are you revising some of it optimism? Well, I mean 0:02:10.480 --> 0:02:12.960 this is gonna go. Yes, my My whole perspective has 0:02:13.080 --> 0:02:15.480 changed immensely based on this. And I think we're gonna 0:02:15.560 --> 0:02:19.560 be in a in a bad place economically for probably 0:02:19.600 --> 0:02:22.000 longer than a lot of economists are saying. Is from 0:02:22.000 --> 0:02:24.680 what I'm seeing and and and what I believe to 0:02:24.720 --> 0:02:26.880 have happened. Now, what I think was going on with 0:02:26.919 --> 0:02:29.680 some companies prior to the shutdown was there's always a 0:02:29.680 --> 0:02:31.800 little bit of paranoia of are we in the last 0:02:31.800 --> 0:02:34.680 innings of the ballgame? And that was coming on. And 0:02:34.680 --> 0:02:36.560 there was also the fear that while it hadn't hit 0:02:36.600 --> 0:02:39.240 America before the shutdown, we had seen what was going 0:02:39.240 --> 0:02:42.040 on in China, and there was some precursor to that. 0:02:42.120 --> 0:02:44.920 So there were some bigger companies that really saw a 0:02:44.960 --> 0:02:47.239 little bit of the writing on the wall and started 0:02:47.240 --> 0:02:49.720 to prepare for it. But I was extremely bullish. Most 0:02:49.760 --> 0:02:51.919 of the companies I talked to, their first quarter numbers 0:02:51.919 --> 0:02:55.519 were really really good in going into March, and so 0:02:55.600 --> 0:02:58.320 now but with this, we're going to see an extended period. 0:02:58.360 --> 0:03:00.720 What's really going to happen that I'm quite certain of 0:03:00.840 --> 0:03:03.280 is a cash crunch coming in Q three and maybe 0:03:03.320 --> 0:03:06.680 even into Q four. So companies that are still spending 0:03:06.760 --> 0:03:08.400 right now to an extent, they're not going to be 0:03:08.400 --> 0:03:11.320 paying these bills for three, four or five six months, 0:03:11.320 --> 0:03:13.680 and that's gonna hurt some small and medium sized companies. 0:03:14.440 --> 0:03:16.720 So tom just thinking a little bit forward, where do 0:03:16.760 --> 0:03:19.040 you think unemployment rate, the real unemployment right in this 0:03:19.080 --> 0:03:22.200 country will will go over the next couple of quarters. 0:03:23.080 --> 0:03:24.919 I think there's no doubt that it will be double digits. 0:03:24.960 --> 0:03:28.240 The question is going to hold at fifteen percent, twelve percent, 0:03:28.600 --> 0:03:30.040 or is it going to get to twenty I think 0:03:30.040 --> 0:03:33.400 the estimates oft are very high and a little bit 0:03:33.440 --> 0:03:36.880 the sky is falling. I don't see that happening from 0:03:36.880 --> 0:03:40.400 what we've seen in China, that the rebounding of that, 0:03:40.440 --> 0:03:42.600 and then while spending may not come back as fast 0:03:42.640 --> 0:03:46.960 as we like, the consumer programs that we've set up 0:03:47.000 --> 0:03:50.160 the government has with PPP and the rebate checks, I 0:03:50.200 --> 0:03:52.240 think that it will come back and I think it 0:03:52.360 --> 0:03:56.600 maxes out probably around thirteen to fifteen. Tommy said that 0:03:56.640 --> 0:03:59.000 you thought that the pain would be felt for a 0:03:59.000 --> 0:04:02.000 lot longer than many economists even think how long will 0:04:02.000 --> 0:04:05.560 it take? Now? My guess is that we're looking I mean, 0:04:05.600 --> 0:04:08.880 for a real ian think about this. In two thousand nineteen, 0:04:08.880 --> 0:04:11.040 there were people saying we were still in a recovery 0:04:11.080 --> 0:04:15.160 from two thousand and eight. So this is while it's 0:04:15.240 --> 0:04:18.520 it's much faster and everything's happening at once, so there's 0:04:18.520 --> 0:04:21.279 a belief that it will come back faster. My guess 0:04:21.320 --> 0:04:25.679 is we're looking at at late early where it really 0:04:25.720 --> 0:04:29.039 feels que quote unquote normal from from a standpoint of 0:04:29.080 --> 0:04:32.359 hotels and travel and restaurants and and then and and 0:04:32.400 --> 0:04:35.320 traditional corporations hiring, it's going to be a little bit 0:04:35.320 --> 0:04:38.240 of a of a long sladre. So Tom, give us 0:04:38.480 --> 0:04:40.599 a sense of kind of we've seen obviously from some 0:04:40.640 --> 0:04:43.039 of the restaurant industries, some of the travel industries. Where 0:04:43.040 --> 0:04:44.440 do you think the next industries that are going to 0:04:44.520 --> 0:04:49.640 be at risk for significant job losses? Well, my my 0:04:49.800 --> 0:04:53.320 take on that is is you really don't know. However, 0:04:53.760 --> 0:04:56.000 what I think is going to start happening is and 0:04:56.080 --> 0:04:58.120 this will be an interesting thing to see through the 0:04:58.160 --> 0:05:01.560 big payroll companies, the a DP in the paychecks because 0:05:01.600 --> 0:05:05.599 as companies lay people off. They're not processing payroll for 0:05:05.640 --> 0:05:08.599 the same numbers, and the way payroll companies get paid 0:05:08.600 --> 0:05:11.120 on their traditional lines of businesses how many checks they 0:05:11.200 --> 0:05:14.760 processed a period. So as those numbers dip, you'll see 0:05:14.760 --> 0:05:17.800 that it's starting to affect the technology and software companies. 0:05:17.839 --> 0:05:22.040 And then you have software user licenses like a sales 0:05:22.080 --> 0:05:25.240 Force or linked In, And these companies, while huge and 0:05:25.240 --> 0:05:28.560 can withstand a setback in the economy, they get paid 0:05:28.560 --> 0:05:32.000 on a per user license and there's contracts the companies signed. 0:05:32.279 --> 0:05:35.960 But if you start to see that employee companies layoff employees, 0:05:36.440 --> 0:05:39.159 anything that's build out to their vendors on a per 0:05:39.279 --> 0:05:43.120 user basis, like software like payroll, you're gonna see those 0:05:43.160 --> 0:05:44.960 get hit as well. So I think it's going to 0:05:45.040 --> 0:05:46.920 come into areas that a lot of people aren't even 0:05:46.920 --> 0:05:49.680 talking about yet. Tom Gimble, thank you so much for 0:05:49.760 --> 0:05:51.320 being with us, and I hope you do come back 0:05:51.360 --> 0:05:54.200 and give us a sense of the progress being made 0:05:54.240 --> 0:05:56.520 and instr update us on your views. Tom Gimble is 0:05:56.600 --> 0:06:01.719 chief executive officer of the global staff and company Lascell Network. Paul, 0:06:02.400 --> 0:06:06.320 a mystery listener, made a suggestion to me recently, um 0:06:06.360 --> 0:06:09.240 that we have a dad joke of the day and 0:06:09.320 --> 0:06:11.800 that during this period of time, everybody needs a little 0:06:11.800 --> 0:06:13.839 bit of levity, and he had a suggestion for one. 0:06:14.480 --> 0:06:17.960 So we're gonna start this, and it is why can't 0:06:17.960 --> 0:06:22.080 a nose be twelve inches long? Why? Because then it 0:06:22.120 --> 0:06:25.360 would be a foot Okay, So if you think you 0:06:25.400 --> 0:06:30.320 could do better, if you let's start this though, And 0:06:30.360 --> 0:06:32.920 if anyone wants to write in suggestions, you can. You 0:06:32.960 --> 0:06:37.240 can email me l Abramoids at Bloomberg dot net. Um, 0:06:37.320 --> 0:06:39.800 and let's do this. Let's have a dad joke of 0:06:39.880 --> 0:06:43.039 the day throughout this whole period because everybody kind of 0:06:43.080 --> 0:06:45.240 needs a little bit of a break because it's only 0:06:45.279 --> 0:06:47.680 going to get worse when we look at the numbers 0:06:47.720 --> 0:06:49.919 and there's a lot of gloom and doom and Lisa 0:06:49.960 --> 0:06:52.960 Bromoids along with Paul Sweeney and this is Bloomberg Markets. 0:06:56.279 --> 0:06:58.960 While we keep hearing reports about how the hospitals are 0:06:59.000 --> 0:07:02.760 completely over whelmed, nurses and doctors working around the clock, 0:07:03.200 --> 0:07:06.760 having to buy all this additional equipment, having to pay 0:07:06.880 --> 0:07:10.920 for hundreds of thousands of new patients coming through their 0:07:10.960 --> 0:07:15.880 doors for extensive hospital stays, unventilators, all very high cost, 0:07:15.920 --> 0:07:18.640 and there's a question who's going to pay for it? Donathan. 0:07:18.880 --> 0:07:21.360 Dr Jonathan Grouper as a professor of economics at the 0:07:21.360 --> 0:07:24.240 Massachusetts Institute of Technology. He was one of the key 0:07:24.360 --> 0:07:28.240 architects of Obamacare and Romney Care, and he joins us 0:07:28.320 --> 0:07:32.480 now from Cambridge, Massachusetts. Dr Grouper, thank you so much 0:07:32.520 --> 0:07:35.960 for being with us. How big of a cost do 0:07:36.000 --> 0:07:38.960 you expect this to be for the health care system? 0:07:39.000 --> 0:07:43.200 Do we have any ballpark figures at all? Yeah, it's 0:07:43.040 --> 0:07:45.280 it's a great question. So there's sort of two ways 0:07:45.320 --> 0:07:48.080 to think about it. One way is how big is 0:07:48.120 --> 0:07:51.680 the cost of COVID nineteen And here I've seen estimates 0:07:51.760 --> 0:07:55.560 ranging from a hundred billion to five hundred billion. Uh, 0:07:55.600 --> 0:07:59.600 A hundred billion would be fairly manageably absorbed, five billion 0:07:59.640 --> 0:08:03.600 would not um But that's not really the right number. 0:08:03.640 --> 0:08:06.600 The right number is what is the net effect, which 0:08:06.600 --> 0:08:09.080 accounts the factor losing a lot of other business. So 0:08:09.120 --> 0:08:12.400 there's a lot of of places that are a lot 0:08:12.440 --> 0:08:15.480 of services aren't being delivered, in particular elective surgery. So 0:08:15.560 --> 0:08:17.680 figuring out the effect and healthcare sector has actually been 0:08:17.720 --> 0:08:20.480 complicated because on the there's being scissored. On the one hand, 0:08:20.520 --> 0:08:23.760 there to increased demand for this COVID nineteen services. That's 0:08:23.760 --> 0:08:25.920 gonna cost a lot of money. On the other hand, 0:08:26.320 --> 0:08:29.800 they are being um, they're losing all their sort of 0:08:29.840 --> 0:08:34.000 elective surgery business. So professor Okay, So a hundred billions 0:08:34.040 --> 0:08:37.480 to who at the end of the day pays for that, 0:08:37.600 --> 0:08:41.360 is that part of some federal fiscal stimulus that goes 0:08:41.440 --> 0:08:45.200 to the healthcare system directly? Uh No, A lot of 0:08:45.200 --> 0:08:48.360 it's gonna be private insurers. Um So, basically, once again, 0:08:48.400 --> 0:08:52.040 the scissors is exactly the opposite for private insurers. So 0:08:52.120 --> 0:08:56.440 to the extent that um, the elective surgery that doesn't 0:08:56.440 --> 0:09:00.840 happen never happens, then that hurts providers, but help private insurers. 0:09:01.320 --> 0:09:04.120 To the extent that there's more COVID nineteen cases, most 0:09:04.120 --> 0:09:07.600 of those people will have private insurance, and so that 0:09:07.800 --> 0:09:09.880 hurts private insurers. That helps the writers because they're not 0:09:09.880 --> 0:09:13.320 getting paid for that. Um So, I think really a 0:09:13.360 --> 0:09:15.560 lot of the costs are going to come from government 0:09:15.600 --> 0:09:18.880 and government through the Medicare and Medicaid program, but really 0:09:18.880 --> 0:09:21.760 private insurers with the primary payer. And then finally we 0:09:21.840 --> 0:09:25.440 have the uninsured rapidly increasing number with the huge job 0:09:25.440 --> 0:09:28.160 lost numbers we've seen and they're the questions who's gonna 0:09:28.200 --> 0:09:30.439 pay for them? And we haven't resolved that yet. Well, 0:09:30.559 --> 0:09:32.679 and I'm wondering, do we have a sense of how 0:09:32.880 --> 0:09:36.840 organized the effort is to try to coordinate payments and 0:09:36.920 --> 0:09:41.920 not necessarily create a complete mess of bills and and 0:09:41.920 --> 0:09:45.280 and bankruptcies personal bankruptcies is people try to grapple with 0:09:45.320 --> 0:09:48.000 the new reality after a visit to the hospital here, 0:09:48.760 --> 0:09:51.280 you know, I I think there's a huge issue, and 0:09:51.320 --> 0:09:54.000 there's a huge coordination issue, because remember a lot of 0:09:54.000 --> 0:09:57.360 our private health insurance is built around restricted networks, and 0:09:57.400 --> 0:09:59.040 the last thing you want to do is restrict where 0:09:59.080 --> 0:10:00.520 someone can go. You at them to go to the 0:10:00.559 --> 0:10:03.160 hospital has a space for him. Then you've got the 0:10:03.200 --> 0:10:06.600 fact that many people have high cost sharing deductibles and 0:10:06.640 --> 0:10:09.240 things where they haven't spent much health care yet this year, 0:10:09.240 --> 0:10:11.720 so they're gonna hit with their full deductibles. And then 0:10:11.760 --> 0:10:14.520 you've got the fact that many americ twenty million Americans 0:10:14.520 --> 0:10:17.120 and growing are uninsured. So I I think we have 0:10:17.160 --> 0:10:19.560 a big problem. I think the federal government hasn't taken 0:10:19.720 --> 0:10:22.120 very seriously as far as I can tell um, when 0:10:22.160 --> 0:10:24.439 they've been pushed on it, they've just said, well, we'll 0:10:24.520 --> 0:10:28.040 just divert. The latest is President Trump's announceds can divert 0:10:28.120 --> 0:10:30.960 some of the hundred billion dollar fund for hospitals into 0:10:30.960 --> 0:10:32.959 helping care for the uninsured, which is the last thing 0:10:32.960 --> 0:10:36.000 we need because the hospitals need that money. So I 0:10:36.000 --> 0:10:38.800 I think we need, we we urgently need much more 0:10:38.800 --> 0:10:42.439 action on dealing with these uncovered healthcare costs. So does 0:10:42.440 --> 0:10:44.920 that bring back some type of Afformable Care Act? Do 0:10:44.920 --> 0:10:47.840 you believe you think there's political will there for that? Well? 0:10:47.840 --> 0:10:49.640 I think you know, the Affordable Care Act was actually 0:10:49.679 --> 0:10:53.000 designed for situations like this. Remember the whole idea is 0:10:53.080 --> 0:10:56.440 that are you know, our reliance and employer sponsored insurance 0:10:56.559 --> 0:11:00.160 is a little fragile to situations like this. Unfortunately, the 0:11:00.160 --> 0:11:02.880 Affordable Careacter set up exchanges that people will be able 0:11:02.920 --> 0:11:05.480 to go to if they lose their jobs. And so 0:11:05.640 --> 0:11:08.880 I I think we're well prepared for that. UM in 0:11:08.960 --> 0:11:11.439 terms of having this exchange, that should make people appreciate 0:11:11.480 --> 0:11:15.360 the fact Affordable Care Act is there. Uh. That said, um, 0:11:15.400 --> 0:11:18.560 many people uh still can't afford insurance on the exchanges, 0:11:18.559 --> 0:11:19.800 so we're gonna have to think what we're gonna do 0:11:19.880 --> 0:11:23.640 for them. UM. And many people also if they have 0:11:23.960 --> 0:11:26.280 UM private insurance. UM, they might not want to go 0:11:26.320 --> 0:11:28.680 in exchange insurance. They wan't want to keep their employer insurance. 0:11:29.120 --> 0:11:32.240 They can do so buying buying COBRA, but that's quite expensive. 0:11:33.360 --> 0:11:35.800 Dr Gruber, if if you would, can we walk through 0:11:35.800 --> 0:11:40.800 a scenario in which the exchanges aren't reopened and Obamacare 0:11:40.880 --> 0:11:44.480 is not expanded, and there is no sort of redux 0:11:44.640 --> 0:11:48.439 in with respect to widening of the of the healthcare 0:11:48.520 --> 0:11:52.520 safety net. What happens, especially to the hospitals. If you 0:11:52.600 --> 0:11:55.640 have an increase in uninsured of newly laid off people 0:11:55.640 --> 0:11:59.640 without their their corporate insurance coming to emergency rooms for 0:11:59.679 --> 0:12:03.640 prime care, what is that due to the hospitals. Okay, 0:12:03.720 --> 0:12:06.200 so so let's let's let's be clear about this. So 0:12:06.360 --> 0:12:08.120 when we talk about the a c A did, there's 0:12:08.160 --> 0:12:11.280 two pieces. There's the Medicaid expansions, which means that everyone 0:12:11.360 --> 0:12:14.800 losing their job in thirty and thirty five states, everyone 0:12:14.880 --> 0:12:17.520 losing their job who's falling to be very poor will 0:12:17.559 --> 0:12:20.920 have free public coverage, and the other states they're totally 0:12:20.920 --> 0:12:22.880 out of luck, unfortunately. So one thing we can do 0:12:22.920 --> 0:12:25.320 is we can try to get those or calciern states 0:12:25.360 --> 0:12:28.000 to actually serve the interests of their residents rather than 0:12:28.120 --> 0:12:31.600 nasty politics, and actually span their Medicaid programs. In terms 0:12:31.640 --> 0:12:34.520 of the exchanges, there's no issue of reopening the exchanges. 0:12:34.720 --> 0:12:37.520 The exchanges actually have a provision that if you lose 0:12:37.559 --> 0:12:41.319 your job, you can sign up, So this is there's 0:12:41.360 --> 0:12:43.000 a bit of this kind of idea of a special 0:12:43.160 --> 0:12:45.320 Roman peer is a bit of a red herring. Um 0:12:45.559 --> 0:12:48.400 for people who lose their job, that's called the qualifying event, 0:12:48.520 --> 0:12:50.840 they can always sign up for the exchanges. So the 0:12:50.840 --> 0:12:55.160 exchanges are there for people. Um that said, um, you 0:12:55.160 --> 0:12:58.160 know states that haven't expanded Medicaid and people who don't 0:12:58.160 --> 0:13:00.960 go on the exchanges will be insured. And we're going 0:13:01.000 --> 0:13:04.079 to have to deal with the fact that hospitals are 0:13:04.080 --> 0:13:05.480 going to have to are going to be unable to 0:13:05.520 --> 0:13:08.480 eat those bills, and so part of part of the 0:13:08.520 --> 0:13:11.800 Hospital Bailout Fund is designing to help with that. But 0:13:11.840 --> 0:13:13.800 it's not enough money, and we're going to have to 0:13:13.840 --> 0:13:17.920 really have a new initiative either expanding access to these 0:13:17.920 --> 0:13:21.520 exchanges for people, or you could all think about a 0:13:21.559 --> 0:13:24.800 federal uncompensated care pool of the nature of the type 0:13:24.840 --> 0:13:27.080 that other states that some states have, where we basically 0:13:27.120 --> 0:13:31.000 absorb the uncompensated care costs of hospitals for COVID nineteen patients. 0:13:31.440 --> 0:13:33.320 We're gonna need some kind of initiative of that type. 0:13:34.040 --> 0:13:36.360 Jonathan Gruber, thank you so much for joining us and 0:13:36.400 --> 0:13:38.960 giving us that color on the health care system is 0:13:38.960 --> 0:13:41.719 that it grapples with the coronavirus. Jonathan Gruber, Professor of 0:13:41.760 --> 0:13:45.240 Economics at m I T just really interesting stuff. Least, 0:13:45.320 --> 0:13:48.000 it's a big issue, I gotta say, Paul. I mean, 0:13:48.080 --> 0:13:51.200 I'm struck by all of these needs, and they're all 0:13:51.280 --> 0:13:54.280 so important, and they're all so expensive, and really my 0:13:54.440 --> 0:13:57.640 question is just going forward, how all of these different 0:13:57.640 --> 0:14:00.320 needs are going to be prioritized at a time of 0:14:00.400 --> 0:14:03.520 crisis and when there isn't necessarily the economic growth to 0:14:03.520 --> 0:14:06.080 back it. Yep, and the states are dealing with at 0:14:06.080 --> 0:14:08.839 the federal government's dealing with it, and individuals are dealing 0:14:08.840 --> 0:14:15.720 with it. We've been listening to Governor Andrew Cuomo of 0:14:16.000 --> 0:14:19.760 New York talking about the latest from New York State, 0:14:19.840 --> 0:14:23.280 which is the epicenter with the number of cases crossing 0:14:23.360 --> 0:14:28.000 the one hundred thousand level. He talked about the dire 0:14:28.120 --> 0:14:31.120 shortage of equipment and the need for it and the 0:14:31.160 --> 0:14:35.440 idea that the state will take ventilators and other gear 0:14:35.760 --> 0:14:38.800 from businesses that do not need it right now, they 0:14:38.800 --> 0:14:43.120 will either return it or compensate those businesses for those 0:14:43.200 --> 0:14:47.720 items later. Also, he was talking about the apex coming 0:14:47.960 --> 0:14:50.440 very quickly and how all the hospitals here are now 0:14:50.840 --> 0:14:54.200 essentially COVID nineteen hospitals and that the jab At Center 0:14:54.400 --> 0:14:58.480 was going to be entirely a COVID nineteen facility. As 0:14:58.520 --> 0:15:02.560 the US tries to battle the epicenter of the crisis, 0:15:02.560 --> 0:15:06.040 which is at the moment in New York, saying that 0:15:06.080 --> 0:15:10.320 people are getting together volunteering, that there are hundreds of 0:15:10.360 --> 0:15:14.320 healthcare professionals coming to the city to volunteer their efforts 0:15:14.320 --> 0:15:17.760 in the city. New York City is uh the predominant 0:15:17.960 --> 0:15:23.280 majority of the cases currently. Paul really really dire situation 0:15:23.360 --> 0:15:26.280 that he talks about four healthcare workers in the hospitals 0:15:26.840 --> 0:15:29.640 and UH and laying it out is he becomes sort 0:15:29.680 --> 0:15:32.360 of the spokesman for the crisis right now in the 0:15:32.440 --> 0:15:35.480 United States. He really has been his UH these daily 0:15:35.480 --> 0:15:38.480 briefings that we can kind of must listen to, must watch, 0:15:38.760 --> 0:15:41.320 uh kind of to get information to get a sense 0:15:41.360 --> 0:15:44.680 of how this is really playing out uh down on 0:15:44.720 --> 0:15:47.240 the front lines and talking about an interesting concept Lisa 0:15:47.560 --> 0:15:49.520 about you know, we need the equipment. We being New 0:15:49.600 --> 0:15:51.680 York State, need the equipment now when we're done with it, 0:15:51.720 --> 0:15:54.000 and we will be done with it, but probably first 0:15:54.360 --> 0:15:58.120 uh then we will deploy redeploy the resources, including personnel 0:15:58.120 --> 0:16:00.600 to other parts of the country. So interesting concept about 0:16:00.600 --> 0:16:04.080 a national response. Yeah, and a real focus on equipment 0:16:04.160 --> 0:16:07.880 and making equipment. Telling even small businesses, if you could 0:16:07.880 --> 0:16:10.440 have cloth and put the strings on the sides, you 0:16:10.480 --> 0:16:12.960 can make a mask, you can make some medical gear. 0:16:13.480 --> 0:16:15.840 Do it. We will compensate you for it is a 0:16:15.880 --> 0:16:17.960 business opportunity, and you would think it was a business 0:16:17.960 --> 0:16:21.520 opportunity for three M, one of the biggest manufacturers of 0:16:21.560 --> 0:16:24.880 a lot of items, including things like face masks, and 0:16:25.000 --> 0:16:28.360 yet there has been controversy over their efforts. I want 0:16:28.360 --> 0:16:30.720 to bring in Karen evil Heart, who covers all things 0:16:30.800 --> 0:16:33.600 industrials for us at Bloomberg Intelligence. Karen, can you just 0:16:33.680 --> 0:16:38.320 lay out what the controversy is around this company? Uh? 0:16:38.400 --> 0:16:42.120 You know, um the president is saying that a they 0:16:42.120 --> 0:16:46.080 didn't UM, they dragged defeat in ramping up production. Number two, 0:16:46.120 --> 0:16:50.960 they're sending UM product to other countries and three that 0:16:51.000 --> 0:16:53.200 they're not doing enough to fight the price gouging that's 0:16:53.240 --> 0:16:57.080 going on in the in the personal youth market market. UM. 0:16:57.160 --> 0:17:02.280 And UH number one, they've doubled production in UM since 0:17:02.320 --> 0:17:06.240 since January. In the US UM production they're doubling it 0:17:06.280 --> 0:17:09.879 again UM over the next several months. UM. One of 0:17:09.880 --> 0:17:12.960 the problems is a lot of this production doesn't The 0:17:13.040 --> 0:17:16.399 masks aren't not that many are made here. UM. A 0:17:16.400 --> 0:17:18.320 lot of them are made overseas, and a lot of 0:17:18.359 --> 0:17:22.800 the countries have been holding the masks for themselves. UM. 0:17:22.840 --> 0:17:25.800 You know, honney Well barely makes any masks in the US. 0:17:25.920 --> 0:17:30.240 They largely import everything. Um G three M makes about 0:17:30.240 --> 0:17:32.960 a third of their masks here, but it's not enough. 0:17:33.440 --> 0:17:36.879 So it's uh, you know, it's hard to say. And 0:17:36.920 --> 0:17:38.800 on the price gouging, they have stepped in front of 0:17:38.840 --> 0:17:41.000 that and they've been, UM, you know, trying to fight that. 0:17:41.000 --> 0:17:42.760 Who knows if they did it quickly enough, It's hard 0:17:42.800 --> 0:17:46.440 to know. So, Karen, I mean, is there an opportunity, 0:17:46.560 --> 0:17:49.040 Is there an ability from some of these companies, these 0:17:49.080 --> 0:17:54.360 manufacturers like three M to significantly ramp up production and 0:17:54.480 --> 0:17:57.879 really make a difference in the near terms. Governor Cuomo 0:17:58.040 --> 0:18:03.679 so earnestly, you know, asked for I think collectively, Um, 0:18:03.760 --> 0:18:07.200 it could matter like um, honeywell, just now repurpose the 0:18:07.240 --> 0:18:09.800 plant in Phoenix to make some masks in the US, 0:18:09.920 --> 0:18:12.159 because most of them don't come from here. But it 0:18:12.200 --> 0:18:15.000 cannot happen overnight. And there's a supply chain impact as well. 0:18:15.080 --> 0:18:19.440 There's there's shortages of certain products, parts that go into 0:18:19.800 --> 0:18:22.280 the production of these masks and the productions of the ventilators. 0:18:22.280 --> 0:18:24.440 I mean I I read an article where Phillips that 0:18:24.520 --> 0:18:27.960 it's six hundred and fifty parts go in components go 0:18:28.080 --> 0:18:32.600 into ventilators, which is more sophisticated than the respiraries. But nonetheless, 0:18:32.640 --> 0:18:34.640 that's a lot of parts to round up and round 0:18:34.720 --> 0:18:38.040 up overnight. You know, companies typically take time to ramp 0:18:38.119 --> 0:18:40.480 up um and everybody scrambling to get up as quickly 0:18:40.520 --> 0:18:43.840 as possible. But it cannot happen over and that's the issue. 0:18:44.440 --> 0:18:47.400 I would think though that with the masks it would 0:18:47.400 --> 0:18:49.760 be a lot easier or why can't there be a 0:18:49.800 --> 0:18:52.879 more domestic supply chain if there is an issue of 0:18:52.960 --> 0:18:56.320 importing some of the parts, Well, they do have to 0:18:56.440 --> 0:18:58.520 they do have to reprioritize a lot, but a lot 0:18:58.560 --> 0:19:00.359 of you know a lot of componentry for a lot 0:19:00.400 --> 0:19:02.159 of things like I cover h VAC, A lot of 0:19:02.160 --> 0:19:05.560 the componentry comes from someplace else. Um, we have really 0:19:06.160 --> 0:19:09.080 I don't want to say decimated are our domestic supply chain, 0:19:09.119 --> 0:19:11.919 but we certainly shrunk it. And I think people started 0:19:11.920 --> 0:19:15.119 with the tariffs. We've seen companies, um change, you know, 0:19:15.160 --> 0:19:18.680 make alterations in their supply chaine to have more products locally. 0:19:18.720 --> 0:19:21.720 But that is a structural change that takes time. Um. 0:19:21.840 --> 0:19:24.879 You know, Um they three and the other thing is 0:19:24.920 --> 0:19:29.840 three M said of their masks. So went to industrial 0:19:29.840 --> 0:19:32.359 and the reason is that, you know, they have all 0:19:32.400 --> 0:19:35.760 these requirements, health requirements and social requirements. You could not 0:19:36.000 --> 0:19:40.400 use industrial mass, which was the US production for health 0:19:40.440 --> 0:19:43.000 care use now you can. They there was a monthorization 0:19:43.040 --> 0:19:45.240 that allowed them to do that, but only ten percent 0:19:45.240 --> 0:19:47.600 on what they made here went into healthcare. So you 0:19:47.800 --> 0:19:50.800 ten percent of sixteen million is not even enough for 0:19:51.200 --> 0:19:54.119 you know, two weeks in New York. So, um, it 0:19:54.200 --> 0:19:57.479 will happen. It is happening. It can't happen overnight. And 0:19:57.560 --> 0:19:59.879 now that they will have all the supply chain prior 0:20:00.040 --> 0:20:02.560 ties towards them. And you know, um, which is another 0:20:02.560 --> 0:20:05.119 step that the government is taking that anything in the 0:20:05.119 --> 0:20:07.080 supply chain is also going to be under the d 0:20:07.160 --> 0:20:09.400 p A so that all the need so that more 0:20:09.480 --> 0:20:12.439 of the needed componentry, etcetera. UM, and a lot of 0:20:12.440 --> 0:20:15.080 it's like chemical you know, like polypropyline stuff like that 0:20:15.119 --> 0:20:18.600 can get to the manufacturers of these masks very quickly. 0:20:19.280 --> 0:20:21.359 I kind of note that hunt Well isn't getting that 0:20:21.520 --> 0:20:25.720 banged at all and honeywell does we produced many here? So? UM, 0:20:26.240 --> 0:20:29.000 just so, how how is how is three M responded 0:20:29.040 --> 0:20:32.919 to some of the attacks from the administration. Well, you know, 0:20:34.160 --> 0:20:37.159 I know this management micro Roman is a pretty you know, 0:20:37.800 --> 0:20:41.159 even level headed guy, much more low key than the 0:20:41.160 --> 0:20:44.760 prior CEO. But he's come out as well as he 0:20:44.800 --> 0:20:47.439 can swinging and you know, if you hear some of 0:20:47.480 --> 0:20:51.400 his commentary, you know it's worded very diplomatically in the releases, 0:20:51.480 --> 0:20:54.960 but you know, on on TV today said the claims 0:20:54.960 --> 0:20:57.960 are completely false. Um, that we're not doing enough. We're 0:20:58.040 --> 0:21:00.159 killing ourselves to get this production up and the ray 0:21:00.160 --> 0:21:02.040