Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Dailey.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg with
Speaker 1: the son Michael Clody with ubs out of US rates strategies.
Speaker 1: Let's start with that idea, Michael Clorty, who has their
Speaker 1: foot on the two year yield? Well, the Fed does, um,
Speaker 1: so you know with their guidance um, you know they're
Speaker 1: they're sort of suggestion that they're gonna keep race low
Speaker 1: for a long time. Uh, they all continue to hold
Speaker 1: this front end down. I think when you look at
Speaker 1: the bottom market, you want to look at the Fed's
Speaker 1: actions in in two different parts of the curve. So
Speaker 1: the front of the curve is all about what they're
Speaker 1: gonna tell us they're gonna do with the policy rate.
Speaker 1: The back of the curve is sort of chewy driven.
Speaker 1: But the Treasury is issuing a lot more at the
Speaker 1: back of the curve than the FEDS buying. So let's
Speaker 1: talk about the issuance here. Issuance is a flood of
Speaker 1: paper onto the market, and to be clear, that means
Speaker 1: yield up priced down. How much of that movement would
Speaker 1: you calculate? So what's been surprising is how well we've
Speaker 1: been able to handle the supply so far. That said,
Speaker 1: it's it's just relentless. So if we look again, only
Speaker 1: focusing on the long end front end supply, during Operation Twists,
Speaker 1: the FEDS sold six thirty billion dollars of three year
Speaker 1: and shorter treasuries and it barely moved yields at all.
Speaker 1: So long end is where the supply matters. Seven year
Speaker 1: and longer auctions between March and October is going to
Speaker 1: be up eight fo So even though the Feds buying
Speaker 1: it's peanuts relative to what the Treasury is issuing out there. Um,
Speaker 1: you know, we think we're just gonna see this steady
Speaker 1: weight of supply dragging yields a bit higher. Michael, Not
Speaker 1: a trick question, a genuine cure us from me. What's
Speaker 1: the history of supply mattering in the treasury market? So
Speaker 1: generally it matters that extremes. So it mattered a lot
Speaker 1: when the US ran a surplus for four years UM
Speaker 1: back around the turn of the sentry UM. So back
Speaker 1: then we saw two S tens invert fifty basis points
Speaker 1: two S tens swaps stayed positive that whole time. So
Speaker 1: you had this incredible richness of long treasuries back then. Um,
Speaker 1: you know it, it mattered a little bit coming out
Speaker 1: of the last crisis when we saw you know, a
Speaker 1: lot the Treasury initially issued lots of bills to handle
Speaker 1: the jump in supply. As they turned it out, it
Speaker 1: really did offset some of the effects of QUE. And
Speaker 1: that's what we think right here is is the issuance
Speaker 1: matters more than QUE right now. Um, you know, the
Speaker 1: Fed would have to upsize enormously to offset this supply. Well,
Speaker 1: let me throw this in there, Micaul. What matters ultimately
Speaker 1: more the outlook for inflation or the outlook for supply
Speaker 1: the long end, right, So, so the I guess within
Speaker 1: this inflation will set a fundamental level for bond yields. Supply,
Speaker 1: can you know, create some significant swings within that. Um,
Speaker 1: so we think we're so low right now, there's just
Speaker 1: not much upside. I mean, we we've seen a lot.
Speaker 1: We saw equities move pretty substantially in the last month
Speaker 1: tenure and yields stayed in the six basis point range
Speaker 1: the whole month, So you know, you're just not seeing
Speaker 1: much of a hedge benefit from treasuries at these levels.
Speaker 1: That means there's less fundamental value in treasuries. Treasury is
Speaker 1: underperform corporates the vast majority of the time. The only
Speaker 1: reason you own a treasury is because when the outperform
Speaker 1: corporates is when the equity market gets hurt. When you
Speaker 1: lose some of that hedge value, that diversification value, uh,
Speaker 1: treasury is fundamentally worthless. This is such an important point,
Speaker 1: and it's one that a lot of people are highlighting
Speaker 1: this morning, saying that treasuries can no longer be a
Speaker 1: hedge right, they never could, no longer can be a
Speaker 1: ballast to your sixty forty portfolio. Do you think that
Speaker 1: it is too soon to ring the death tool for
Speaker 1: bond's acting as this ballast or or do you think
Speaker 1: that this is an accurate characterization. I think these ear
Speaker 1: levels is accurate. You know, we back up a little
Speaker 1: bit in yields and I think it will the behavior
Speaker 1: will come back. But you know, with with the US
Speaker 1: rates pended zero on the front end, you know, the
Speaker 1: Fed is repeatedly said they're not going to go through zero.
Speaker 1: If they do go through zero, it threatens disruptions in
Speaker 1: the repo market. Um, when the Uncle Sam has twenty
Speaker 1: trillion dollars of debt to roll over, the last thing
Speaker 1: you want to do is interfere with the funding of
Speaker 1: those treasuries. So you know, at these ear levels, I
Speaker 1: don't think there's much benefit if we cheapen a little bit.
Speaker 1: I do think it comes back, all right. Uh so
Speaker 1: can you give us a sense of where you start
Speaker 1: seeing value again? Just to give you a perspective. The
Speaker 1: thirty year treasure yield right now the highest since June
Speaker 1: at one point of five. Yeah, I think we we
Speaker 1: need to sort of back up another twenty bit before
Speaker 1: uh you get a little more interested, and then before
Speaker 1: we get some of that hedge value back in the
Speaker 1: equation with pointing out Tom here today long treasuries t
Speaker 1: l T, the E t F. I think the key
Speaker 1: clause in what Michael is pushing right now is just
Speaker 1: the idea that at these levels they don't present the
Speaker 1: same opportunity they did this year. And let's think about
Speaker 1: how many people came on the program last year saying
Speaker 1: that the next test for treasuries the budget deficit, all
Speaker 1: those bad things, and what happened to treasuries when things
Speaker 1: hit the fan? They rallied and they rallied aggressive. I mean,
Speaker 1: this is really important, Michael, Clarity very quickly here. I
Speaker 1: just think it's so important. The great measurement of a
Speaker 1: bond bear market is when your clients gets three months
Speaker 1: in a row statements of their for sure, like a
Speaker 1: rock bond portfolio going down in price, where's that equivalent
Speaker 1: ten year yield? Now, I mean on a full faith
Speaker 1: and credit tenure, where does the pain really click? And well,
Speaker 1: again that's that's one of the issues is at these
Speaker 1: year levels, I'm not seeing much income, um. So you know,
Speaker 1: normally you could have prices fall a little bit, but
Speaker 1: it gets offset by the income. Getting these year levels.
Speaker 1: My income is so small um that you know, again
Speaker 1: it all depends on distribution. But we get up. We
Speaker 1: we sort of sell off five basis points a month
Speaker 1: and more than gets you there into negative territor. Michael,
Speaker 1: would you still call the US the high yolda compared
Speaker 1: to what's playing out in Europe at the moment? Given
Speaker 1: what we on a ten year in Germany negative fifty
Speaker 1: four basis points for a foreign investor right now from
Speaker 1: an international perspective look into the United States, just how
Speaker 1: attractive our things that actually there's still some value there. Um.
Speaker 1: You know, what we've seen is some of the the
Speaker 1: FX hedging costs have actually come down, um recently. There
Speaker 1: seems to be a lot of street balance sheet out
Speaker 1: there right now that's reduced those costs. So there is
Speaker 1: a little bit of value for some of those foreign investors.
Speaker 1: But you know, again not exactly to jump up and
Speaker 1: down sort of price. Michael clad to catch up, sir,
Speaker 1: Thank you, Michael Clotty. There of ubs on this right.
Speaker 1: Smart David Riley gets started with the asset management. We're
Speaker 1: thrilled you could join us today, David. First, chart I
Speaker 1: looked at today where those five year out, five year
Speaker 1: forward break evens so different for the United States with
Speaker 1: a whiff of inflation versus the disinflation of Europe. What
Speaker 1: does that signal? Well, I think that signal is that
Speaker 1: Europe is in a very difficult situation in terms of
Speaker 1: the extent of the bitch inflationary deflationary forces. I mean,
Speaker 1: we've had a record loot um inflation prints recently, and
Speaker 1: I think that's going to prompt THECP too UM and
Speaker 1: spent more policy action, but probably not until the end
Speaker 1: of the year or um early next year. Well, I
Speaker 1: think in the US, you know, there is still a
Speaker 1: challenge on the inflation from but I think there's more
Speaker 1: upside potential, particularly if we do get a substantive physical
Speaker 1: stimulus after the U S elections. Given that, David, do
Speaker 1: you think that the euro, the rally that we've seen
Speaker 1: versus the dollar is overdone? Well, I think if we
Speaker 1: get a situation where um, you know you were discussing before,
Speaker 1: let's you know, a Democrat clean suite, then I think
Speaker 1: market expectations will be for a very significant um US
Speaker 1: physical stimulus sometime in the early one I think it's
Speaker 1: going to be associated, at least initially with a weaker dollar. Um,
Speaker 1: I think you're rightly does that play out with a
Speaker 1: stronger euro. I actually think it will benefit the sort
Speaker 1: of laggered of this recent dollar weakness which has been
Speaker 1: emerging market currencies. I think a sort of Biden and
Speaker 1: Democratic clean sweep is unambiguously positive for emerging market assets,
Speaker 1: including currency. So that's where I'd rather play. Where I
Speaker 1: think we're going to see some future dollar weakness. Is
Speaker 1: that just a trade policy trade David? What is that? Yeah?
Speaker 1: I mean I do think that there is a sort
Speaker 1: of trade policy premium uncertainty associated with a Trump administration,
Speaker 1: and that extends not just too obviously relationships with China,
Speaker 1: but also the way that tariff policy is being used
Speaker 1: with a number of trading partners, including allies of UM
Speaker 1: the US as well. So I think if you take
Speaker 1: that out that other things being called, that implies a
Speaker 1: weaker dollar, and I think a big US past stimulus
Speaker 1: package would also be then a sort of signal for
Speaker 1: the market to sort of more aggressively would decisively go
Speaker 1: into a rotation trade and a kind of global reflation trade.
Speaker 1: I think you get a steeper treasury curve. But as
Speaker 1: part of that as well, I think he gets some
Speaker 1: rotation from dare I say, from growth to value, but
Speaker 1: also into I think some of those assets like emerging
Speaker 1: markets that do better in a sort of global reflation world.
Speaker 1: Dare I say, you said it, David, So let's discuss it.
Speaker 1: This rotation, the elusive rotation, this idea that banks can
Speaker 1: start doing wow, that curves can start stepening. I mean,
Speaker 1: that's the European trade that's the long right there, That's
Speaker 1: the trade everyone wants to see work and just hasn't
Speaker 1: for so long. David, If it work in the United States,
Speaker 1: can it work in Europe? Um? Well? Yeah, I mean
Speaker 1: I think it can help. I think if we see
Speaker 1: that kind of move in in the US and steeper curves,
Speaker 1: then to some extent, that would sort of show the
Speaker 1: way for European policymakers. I mean, we have seen a
Speaker 1: better and more coherent policy response from European policymakers, particularly
Speaker 1: on the fiscal side, in this crisis, um, than we've
Speaker 1: seen in previous crisis. But I do think that a
Speaker 1: part of you know, in order to get that take
Speaker 1: how that kind of Japanization story for for for Europe,
Speaker 1: We're going to need continued fiscal policy support, and I
Speaker 1: think the ECB is going to have to accommodate that
Speaker 1: by extending its asset purchases, but eventually saying we're going
Speaker 1: to backstop government borrowing and don't worry about how much
Speaker 1: debt there is right now, keep on borrowing, keep on
Speaker 1: supporting the recovery. And I think if we get that
Speaker 1: as a story not only in the US but also
Speaker 1: in Europe, then I think we will seem stupid curves,
Speaker 1: and I think it will be beneficial for the cyclicals
Speaker 1: and value like financials. David, what's your hedge? What's your
Speaker 1: go to asset to counteract if you're wrong about this
Speaker 1: reflation trade? Yeah, I mean it's it's actually um you know,
Speaker 1: not an easy thing to do to find hedges for
Speaker 1: portfolios right now, bigause. I think the way that fixed
Speaker 1: income has behaved core government bonds, you know, during September,
Speaker 1: shows that it has become very asymmetric. I think it's
Speaker 1: hard for those shields to go much lower. And I
Speaker 1: think if we do get some positive news incremental policy news,
Speaker 1: particularly on the fiscal side, but but also in terms
Speaker 1: for example a vaccine before year end, then then I
Speaker 1: think those shields sort of moved higher. How do you
Speaker 1: try to sort of mitigate that risk a little bit?
Speaker 1: I mean, we've reduced some of the risk within our
Speaker 1: portfolio has given the level of uncertainty at the moment,
Speaker 1: but also you stick with your biased to sort of
Speaker 1: up in quality to sectors like utilities, um in high
Speaker 1: grade credit, de Haven greater catch up. As always get
Speaker 1: to see a Sir David running their fluid asset manage
Speaker 1: around the latest in Europe. We're not Julie Norman with
Speaker 1: us with UCL Professor of Political Science. And what's fascinating
Speaker 1: about her is her study and her expertise and academics
Speaker 1: for conflict. Her focuses on arab Is really uh conflicts
Speaker 1: and particularly a focus around the Palestinians, But far more
Speaker 1: it is just simply about the politics of our conflict. Julie.
Speaker 1: I don't mean to make light of it, but you
Speaker 1: could take your conflict over the culture wars of the
Speaker 1: United States of America. How will they play out in
Speaker 1: the next twenty nine days. Well, Tom, that's certainly what
Speaker 1: we're all going to be looking at. This has obviously
Speaker 1: been such a polarized gear, a very polarized election, and
Speaker 1: with the events of the recent days, with Trump's diagnosis,
Speaker 1: with the response to that, it's looking like the end
Speaker 1: of the campaign is going to look even more different
Speaker 1: than we had thought before. We all chained up in
Speaker 1: both Dividing campaign and the Trump campaign and how they
Speaker 1: move forward in its crucial time leading up to election
Speaker 1: day in November. I mean, you lead up to election
Speaker 1: day in November, all the focus on the president tweeting
Speaker 1: out massively single line all cap tweets. He just put
Speaker 1: out moments ago one that looked like it was pre
Speaker 1: programmed an election tweet as well. What should we look
Speaker 1: for from the other guy from Vice President Biden? Well,
Speaker 1: Biden really needs to keep up his own momentum for
Speaker 1: these crucial weeks. He has already decided to suspend negative
Speaker 1: ads while Trump is is sick and has counseled a
Speaker 1: few events, but for the most part is moving ahead
Speaker 1: with his plans of planned events on starting and sported
Speaker 1: this week. So it's really crucial that Biden keeps that going.
Speaker 1: He needs to make sure that he gets out the
Speaker 1: vote and keeps that enthusiasm going as it gets closer
Speaker 1: to November, and doesn't play it to safe even though
Speaker 1: he's the head in the polls. Julia, at what point
Speaker 1: do some of these Senate Republicans look at these polls
Speaker 1: and start to break away and go solo. Well, you know,
Speaker 1: that's something that we've been wondering really from the start
Speaker 1: of Trump's ascendency, and so far most Republican senators have
Speaker 1: stayed aligned with Trump, of course, with a few pretty
Speaker 1: notable exceptions, But I think for Senate Republicans right now,
Speaker 1: especially with the Amy Coney rate nomination trying to push
Speaker 1: through the Senate, there's a sense of commitment to conservative values,
Speaker 1: conservative policies, and really trying to look more at the
Speaker 1: long game of staying committed to those aims rather than
Speaker 1: necessarily making a break from Trump and saying keeping a
Speaker 1: kind of a standard strong front with the Republican Party
Speaker 1: with the conservative values seems to be the best way
Speaker 1: forward for most of those Senators right now. Judy, just
Speaker 1: on process, just quickly, how difficult is it to get
Speaker 1: the Senate operational now, given that some Senate Republicans have
Speaker 1: actually been exposed to COVID nineteen. Can you walk us
Speaker 1: through the process just briefly for the next couple of
Speaker 1: weeks what that might look like down in Washington. Sure. So,
Speaker 1: we've heard from Mitch McConnell's that most Senate activity will
Speaker 1: be suspended this week and not start again until on
Speaker 1: the week of October twelfth at least um. But McConnell
Speaker 1: has emphasized that the confirmation process for Anny Tony Barrett
Speaker 1: will move forward in that regards some of the meetings
Speaker 1: and procedures they're currently having people even if they're sick
Speaker 1: or don't feel face coming in can tune in virtually.
Speaker 1: Where that's going to change and change is when there's
Speaker 1: actually a vote for a vote, they will actually need
Speaker 1: senators to come and be physically present, and so that
Speaker 1: is really when it will probably depend on the health
Speaker 1: of those senators who have been infected so far and
Speaker 1: the extent to which the virus has moved between other
Speaker 1: other numbers. By that point, there's so much confusion around
Speaker 1: the virus and how it's hitting Washington and President Trump,
Speaker 1: even with conflicting data, conflicting information from his own doctors
Speaker 1: over the weekend, Julie, from an international relations perspective, given
Speaker 1: the fact that President Trump is on the end, he
Speaker 1: does appear to be. Although there is such a lack
Speaker 1: of consistency and the information. How much does it put
Speaker 1: the US at risk or put the US at a
Speaker 1: more vulnerable position when it comes to dealing with other countries. Well,
Speaker 1: you know, we we have seen some reports, even as
Speaker 1: recently is today, that this is a rather vulnerable loan
Speaker 1: for the United States. Having the president hospitalized, so, as
Speaker 1: you noted, does seem to be recovering, and hopefully we'll
Speaker 1: confer within the next few days, but hopefully you have
Speaker 1: a president who is um who is hospitalized. You also
Speaker 1: have a number of other members from the highest levels
Speaker 1: of government who are sick or potential for being thick.
Speaker 1: And also just the country really quite distracted at this
Speaker 1: moment um. You know, from the security point of view,
Speaker 1: the United States is uh, you know, relatively vulnerable. But
Speaker 1: I say that relatively uh strongly the US. Everything else
Speaker 1: that we have is in place. There are so many
Speaker 1: agencies and people beyond the President and beyond the White
Speaker 1: House that are really gage much more of our international
Speaker 1: relations that this is not a time to be afraid,
Speaker 1: so to speak, but just to be mindful that it
Speaker 1: is a rather unprecedented situation. Late start to the year
Speaker 1: for universities here in the United Kingdom if you're not
Speaker 1: familiar with the education system, and I believe first day
Speaker 1: of the term today over us. Good luck jo He
Speaker 1: tries to catch up Julie Norman, University College, London, Professor
Speaker 1: of Political Science, Brett Ryan with us a Dutsche Banker,
Speaker 1: senior US economist, and he went right to where I
Speaker 1: was in. The unemployment report is a good report, mixed report.
Speaker 1: Markets certainly reacting to it. But Bret Ryan, you went
Speaker 1: to median duration, which really shows two America's discuss what
Speaker 1: you saw in a little bit more difficult media duration statistic. Right,
Speaker 1: So the median duration is basically how many weeks people
Speaker 1: have been unemployed. And so you know, one of the
Speaker 1: things that we've been following is people that say their
Speaker 1: own temporary layoff versus permanent layoff. And the issue with
Speaker 1: that is those it's sort of a distinction without a
Speaker 1: difference when the number of weeks that people are unemployed
Speaker 1: keeps extending. And so right now you're seeing the media
Speaker 1: duration go out to uh, seventeen point six weeks. That's
Speaker 1: the longest um really uh. And so you know, one
Speaker 1: of the issues that we had in the last in
Speaker 1: the week of the financial crisis was long term unemployed
Speaker 1: because the longer you're out of out of a job,
Speaker 1: the more your skills around, and the harder news to
Speaker 1: get back into the end of the labor force. But
Speaker 1: to Peter Hooper, team has absolutely nailed this, I mean
Speaker 1: full disclosure force. Deutsche Bank has its moments where it's
Speaker 1: very optimistic on the direction and you guys rolled over
Speaker 1: here a number of weeks reaffirm right now, your caution
Speaker 1: on the American recovery. Yeah, so, you know, it's been
Speaker 1: a faster it's been a certainly surprisingly fast start out
Speaker 1: of the gates. There's no question about that. We've recovered
Speaker 1: half of the jobs lost between February and April. The
Speaker 1: problem is looking forward, and every member of the Federal
Speaker 1: Reserve has basically said, we need more fiscal support. Without that,
Speaker 1: without f PUC benefits, which have now been used up,
Speaker 1: the seam of money is now gone. That's three billion
Speaker 1: in income that's going to be lost between Q three
Speaker 1: and Q four. That's gonna come during the holiday spending season,
Speaker 1: and it's going to come upon those with the least
Speaker 1: amount of savings and the highest marginal propensity to consume.
Speaker 1: So that's why, you know, while we've had a faster start,
Speaker 1: looking forward, it only gets more difficult for here. And
Speaker 1: there's a real risk that consumer spending could be negative
Speaker 1: in Q four and that's one of the reasons why
Speaker 1: we're more cautious. Right there's a narrative that's becoming increasingly
Speaker 1: popular that even if we don't get fiscal support from
Speaker 1: Washington before the election, we'll get it at some point,
Speaker 1: and it doesn't really matter when it will help support
Speaker 1: the economic recovery on the other side. And then you
Speaker 1: have other people say, well, if you get bad data,
Speaker 1: if it really shows a market deterioration of the economic situation,
Speaker 1: that changes the dynamic and you have to start counting
Speaker 1: for that in your calculus when you decide whether to invest.
Speaker 1: Have we already crossed that rubicon? Are we already at
Speaker 1: the point where the data is showing a material deterioration
Speaker 1: in the momentum of the economic recovery and people have
Speaker 1: to take count of it? Well, I think number one.
Speaker 1: I mean, tell that to the twenty million people who
Speaker 1: are collecting some from unemployment insurance right now and they're
Speaker 1: seeing their income cut and half. You know, tell that
Speaker 1: to the restaurants that are going into the winter season.
Speaker 1: The p P P loan money has dried up. There's
Speaker 1: a hundred and thirty billions still sitting there. Why why
Speaker 1: not allow them to take out another loan and get
Speaker 1: through the winter. Because these programs were designed to deal
Speaker 1: with a four to six months shutdown, not a year
Speaker 1: shutdown or at least restricting capacity. Uh. And these businesses
Speaker 1: need help now, and airlines as well, they need help now,
Speaker 1: not three months from now, because you're going to have
Speaker 1: you know, businesses that go under in the meantime. So
Speaker 1: I think that's the one the one thing. Um. But yes,
Speaker 1: will there be fisicals debates at some point, yes, but
Speaker 1: it's more important for that You're going to delay the
Speaker 1: recovery by causing hardship over the next three months for
Speaker 1: thousands of businesses restaurants that are going to go under
Speaker 1: if they don't get more PPP money, um, And you're
Speaker 1: gonna it's it's gonna hurt demand, especially during the holiday season,
Speaker 1: and so companies are gonna be less likely or less
Speaker 1: willing at least to hire. And it just sets you
Speaker 1: back unnecessarily. Okay, a lot of policymakers will say, show
Speaker 1: me the numbers, right, how much will it set us back?
Speaker 1: If it sets us back a little bit, but we
Speaker 1: can remove some of the political silly season around us,
Speaker 1: then it's worth it. How much does it set us
Speaker 1: back if we don't get fiscal support before the election,
Speaker 1: it's prolonged for months to come. Well, I think it
Speaker 1: risks the consumer consumer spending recovery, and you could have
Speaker 1: a negative quarter of consumer spending and basically that that's
Speaker 1: fifty chance that you're going to have a negative quarter
Speaker 1: of growth and the economy is not exiting recession, and
Speaker 1: it's hard for the N A b E to you know,
Speaker 1: to um, you know, to declare the end of the recession,
Speaker 1: and it could weigh on jobs. We've already is slowing
Speaker 1: in the pace of job games as we saw the
Speaker 1: last report, as the BLS noted itself, is the unemployment rate, Well, yeah,
Speaker 1: it did tick down. It would have been um forty
Speaker 1: basis points higher if not for misclassification issues. So you're
Speaker 1: still really at three percent unemployment rate. Well great, but
Speaker 1: that doesn't help me. Where's the Deutsche Bank real unemployment rate?
Speaker 1: Was a parlor game we've been playing bright where we
Speaker 1: go through the math and everybody says, the math doesn't work.
Speaker 1: What's the real number? What's your recalculated real number? Is
Speaker 1: it double digit or can you be more optimistic than that? Well,
Speaker 1: I would say, I mean the from the U three perspective,
Speaker 1: it's it should be a three from a US. But
Speaker 1: I want the EU Deutsche Bank. I want the EU
Speaker 1: Deutsche Bank perspective. Come on, we all we all see
Speaker 1: out there, what's going on? The U three is a joke.
Speaker 1: What's going on? What's the real number? Yeah, I think
Speaker 1: it's definitely a double digit number right now. Thank you.
Speaker 1: When you're looking at it. When you're looking at what's
Speaker 1: happening here, Tom, is that as you see continuing claims
Speaker 1: on the state levels start to start to go down,
Speaker 1: you're seeing a commitment, not a commensurate but a good
Speaker 1: portion of those rolling off are going on to Pandemic
Speaker 1: Emergency Unemployment Compensation. So that's the federal program with extended
Speaker 1: benefits that go towards year end. Same thing you're seeing PUA,
Speaker 1: even though California had some issues with reporting PUA, which
Speaker 1: is Pandemic Unemployment Assistance, that's also taking higher. So the
Speaker 1: total number of people collecting claims is not coming down
Speaker 1: as fast as what you would think just looking at
Speaker 1: the state continuing claims. By the way, p U A
Speaker 1: and p e U C both expire December three, at
Speaker 1: the end of the year. If Congress doesn't do anything,
Speaker 1: then that's another big hit to income, possibly another couple
Speaker 1: hundred billion two D three hundred billion UM, and that
Speaker 1: further dense you know, profile for spending Bright Just quickly,
Speaker 1: you've quantified the kind of damage that would happen to
Speaker 1: the U S economy if we didn't get that fiscal help.
Speaker 1: Let's just talk about what kind of damage, not just
Speaker 1: in the anunted states, in the UK as well. Hit
Speaker 1: a Chancellor talking almost about embracing creative destruction and not
Speaker 1: allowing it to rip, but acknowledging the around permanent changes
Speaker 1: in this economy and some businesses that won't be valuable
Speaker 1: in the long term. Can you embrace creative destruction to
Speaker 1: any degree in a pandemic with the restrictions to this
Speaker 1: government has on right now? Uh? When it comes to
Speaker 1: you know, restaurants, Do I want to see my father
Speaker 1: with four restaurants go out of business? Um? Is that
Speaker 1: creative destruction or is that somebody who, through no fault
Speaker 1: of his own is being restricted to fifty percent capacity?
Speaker 1: So I think industry by industry, and when we talk
Speaker 1: about creative destruction, businesses that you know are no longer
Speaker 1: are not longer viable through technology or some sort of
Speaker 1: natural process. Sure, but for businesses that, through no fault
Speaker 1: of their own are being restricted by the state right
Speaker 1: and they can't operate profitably, there needs to be some
Speaker 1: sort of state aid. Brett right to catch up. I
Speaker 1: send up best to the family. Why don't you It's
Speaker 1: a tough industry. Brett Ronnet, don't with your bank Stadia
Speaker 1: US economists. Thanks for listening to the Bloomberg Surveillance podcast.
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Speaker 1: Keane before the podcast. You can always catch us worldwide.
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