WEBVTT - Surveillance: Congress Must Act Now, Swonk Says 0:00:00.080 --> 0:00:13.800 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene Jaylie. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.520 Bloomberg dot Com, and of course, on the Bloomberg Every 0:00:27.520 --> 0:00:30.319 single second. Half guestimate that you will hear over the 0:00:30.360 --> 0:00:32.479 coming days, weeks, and month will hinge on a very 0:00:32.560 --> 0:00:35.360 uncertain view of how long mitigation efforts will stay in place, 0:00:35.840 --> 0:00:37.960 and any hopes for a sharp rebound will be shaped 0:00:37.960 --> 0:00:40.159 by how well a fiscal plant is executed. And at 0:00:40.159 --> 0:00:43.319 the moment there is no agreement in Washington. That will 0:00:43.360 --> 0:00:45.560 be the folkus of this program over the next couple 0:00:45.560 --> 0:00:47.080 of hours. And joining us on the phone, I'm pleased 0:00:47.120 --> 0:00:49.440 to say is Peter Hooper, Deutsche Bank Global head of 0:00:49.479 --> 0:00:52.599 Economic Research. Peter. First question to you, sir, just how 0:00:52.680 --> 0:00:55.600 much damage is being done every day we go without 0:00:56.000 --> 0:01:00.800 a big package from Washington. Well, good morning on Tom, Lisa, 0:01:00.920 --> 0:01:05.279 delighted to be on. Certainly, the failure of Congress to 0:01:06.080 --> 0:01:09.880 agree on a package is problematic. We we've been expecting 0:01:10.480 --> 0:01:13.520 something from the Senate in the in the in by 0:01:13.680 --> 0:01:16.280 very early this week, and this has to then make 0:01:16.280 --> 0:01:20.560 it through the House. But no question that on on 0:01:20.600 --> 0:01:25.640 a number of fronts, rescue is certainly needed, not just 0:01:25.760 --> 0:01:28.920 to get us a recovery down the road, but to 0:01:30.160 --> 0:01:34.920 prevent major damage. Um as as the economy goes into 0:01:34.959 --> 0:01:38.720 free fall here, which it is doing in the near term, 0:01:38.720 --> 0:01:40.760 no question, the numbers are gonna be falling off a 0:01:40.800 --> 0:01:44.240 cliff as we go into this week and next. Um 0:01:44.319 --> 0:01:47.560 So we we we absolutely need we have to have 0:01:48.160 --> 0:01:52.320 unemployment insurance back stopped. Uh. Millions are going to be 0:01:52.320 --> 0:01:55.680 out of jobs. Congress has to get it act together 0:01:55.800 --> 0:01:59.480 and beef up our unemployment surance insurance system that's in 0:01:59.520 --> 0:02:02.480 the bill needs to be beefed up even more. Uh. 0:02:02.640 --> 0:02:06.960 Number two, we absolutely have to back up backstop small 0:02:07.040 --> 0:02:11.040 business in the US and and UH and corporate debt 0:02:11.240 --> 0:02:14.799 um uh. And number three the muni market. I mean 0:02:14.840 --> 0:02:17.400 to get unemployment insurance out. States are going to have 0:02:17.440 --> 0:02:21.600 to have to borrow more muni markets frozen right now, 0:02:21.840 --> 0:02:24.280 New York State, New York City cannot bring money on 0:02:24.760 --> 0:02:29.000 paper to the market. Um UH. In this bill that 0:02:29.080 --> 0:02:34.200 Commerce is considering, they're they're looking at putting funds into 0:02:34.880 --> 0:02:40.120 UH direct backstopping business, but also importantly most important, I 0:02:40.120 --> 0:02:45.040 think getting getting the FED system operating here? Peter, what's 0:02:45.040 --> 0:02:47.359 so important here? And thank you so much for taking 0:02:47.360 --> 0:02:49.400 time away if you were to deutsch you bank clients 0:02:49.440 --> 0:02:53.600 this morning. What's so important here is we've watched John, 0:02:53.680 --> 0:02:57.440 Lisa and I have watched wills moved from forty billion 0:02:57.520 --> 0:03:00.600 to two billion, one trillion to trill you in an 0:03:00.800 --> 0:03:03.800 up if we now know the shock better than we 0:03:03.840 --> 0:03:08.000 did a week ago, what is the downside of a 0:03:08.040 --> 0:03:13.160 massive three, four or five trillion dollar phased in program 0:03:13.280 --> 0:03:17.079 until we figure out the virology of this virus? What's 0:03:17.400 --> 0:03:20.840 what's the so what of throwing a wall of money 0:03:20.840 --> 0:03:26.079 at this? Okay, Well, several questions you raised, Number one. 0:03:26.200 --> 0:03:28.840 I don't think I've seen numbers yet that have accurately 0:03:28.880 --> 0:03:33.680 gotten the downside. I'll say we're coming out with a 0:03:33.720 --> 0:03:36.560 report later today that, uh, well would you do? Come on, 0:03:36.640 --> 0:03:38.680 No one's listening to the program, Peter, give us a 0:03:38.720 --> 0:03:43.400 heads up on that report later today. Well, well, the 0:03:43.440 --> 0:03:46.880 heads up is I have not seen numbers the downside 0:03:46.960 --> 0:03:52.600 yet that are are near accurate. Okay, number one, We 0:03:52.680 --> 0:03:56.400 have no idea what accuracy is here, but reasonable guesses 0:03:56.560 --> 0:04:00.200 when you're looking at a major the whole economies being 0:04:00.200 --> 0:04:05.120 shut down, when you're looking at major states going through this, 0:04:05.320 --> 0:04:08.680 and and the spread still accelerating in the US UH. 0:04:08.960 --> 0:04:12.360 I mean, we were still assuming that this is something 0:04:12.400 --> 0:04:14.800 that's gonna last a matter of one month, two months, 0:04:14.800 --> 0:04:17.760 three months. UH. And and how much that how much 0:04:17.800 --> 0:04:21.320 it does UH determines how far things fall in the 0:04:21.320 --> 0:04:24.360 second quarter, which is going to be tremendous, no question. 0:04:25.160 --> 0:04:27.400 We're also assuming that we begin to see some bounce, 0:04:27.560 --> 0:04:31.279 and all this UH fiscal ammunition, this bring being brought 0:04:31.360 --> 0:04:36.320 to bear will have a major UH impact. The question 0:04:36.400 --> 0:04:41.360 is how much can we prevent the damage from a 0:04:41.440 --> 0:04:45.080 free fall in the economy by back stopping business, by 0:04:45.120 --> 0:04:49.480 back stopping households, and and the earnings losses through through 0:04:49.560 --> 0:04:52.960 unemployment insurance, and by in the in the in the 0:04:53.080 --> 0:04:55.680 very near term, in the day's ahead, getting the credit 0:04:55.720 --> 0:04:59.680 market functioning, getting the muni market functioning. I mean, we 0:04:59.760 --> 0:05:02.880 have to get the FED. I mean, the Fed is 0:05:03.040 --> 0:05:05.200 the FED is going all out. But the FED has 0:05:05.200 --> 0:05:07.200 more that can do if it gets if it gets 0:05:07.200 --> 0:05:10.360 awhere with awful Congress, A lot of talk right now 0:05:10.400 --> 0:05:14.560 about this UH package and and four billion plus two 0:05:15.080 --> 0:05:18.239 UH to put into a facility to allow the Fed 0:05:18.720 --> 0:05:22.400 to purchase UH CORP longer term corporate bonds and munies 0:05:22.480 --> 0:05:24.960 and and that's that's critical. We've got to get that going. 0:05:25.560 --> 0:05:28.360 So right now, there are sort of dual crises here. 0:05:28.400 --> 0:05:31.080 There's the economic crisis we're talking about, and then there's 0:05:31.120 --> 0:05:34.160 the financial crisis that a lot of people think is 0:05:34.320 --> 0:05:38.000 getting to be a much more real possibility, which speaks 0:05:38.000 --> 0:05:42.080 to the speed people are hoping that this UH stimulus 0:05:42.080 --> 0:05:45.080 will get past. How important is the speed of the 0:05:45.120 --> 0:05:51.360 passage versus the details. UH. Both are important, but speed 0:05:51.560 --> 0:05:54.640 is now of the essence. I think given what's happening 0:05:54.640 --> 0:05:59.600 in the credit markets UM States, States are gonna this 0:05:59.640 --> 0:06:03.680 week going to see unemployment claims jump into the millions. 0:06:04.480 --> 0:06:08.080 States are going to be totally swamped on on their 0:06:08.120 --> 0:06:12.640 ability to handle this without being able to go to 0:06:12.680 --> 0:06:16.400 the market to float more debt. The Fed has to 0:06:16.640 --> 0:06:19.800 has to get the market going, has to back stop 0:06:19.839 --> 0:06:24.920 this market to allow this allow this to happen. If households, UH, 0:06:25.160 --> 0:06:29.640 you know, many households are are living paycheck to paycheck. 0:06:29.880 --> 0:06:34.080 If if if people can't go out and buy their necessities, 0:06:34.400 --> 0:06:37.719 it's it's going to be a real problem. I mean, 0:06:38.320 --> 0:06:41.760 and then there's many firms are starting to let people go, 0:06:42.640 --> 0:06:45.200 uh if they can, if they can be backed off, 0:06:45.240 --> 0:06:48.160 if they can get the loans that are needed to 0:06:48.240 --> 0:06:51.000 tide them over. This what we think is going to 0:06:51.040 --> 0:06:54.800 be a transitory crisis. Then we prevent having many many 0:06:54.839 --> 0:06:57.960 people lose their jobs, and we have an economic system 0:06:58.000 --> 0:07:01.560 that can come back. I mean, you've put a lot 0:07:01.600 --> 0:07:04.960 of people out of work and and it's difficult of 0:07:04.960 --> 0:07:07.360 getting things back together. The economy needs happen, it needs 0:07:07.400 --> 0:07:09.520 how quickly paid. We appreciate your time this morning, So 0:07:09.680 --> 0:07:11.200 my best to the team, won't you Peter Hoop at 0:07:11.240 --> 0:07:13.680 that to which your bank glob ahead of economic research 0:07:13.760 --> 0:07:18.880 this Thursday speaking might note down we have camp On 0:07:18.960 --> 0:07:21.720 as chief economist, the macro strategist might always great to 0:07:21.720 --> 0:07:23.880 get you on this program. Fantastic to have you with us. 0:07:24.200 --> 0:07:28.040 Your thoughts from what you've heard so far this morning, Well, John, 0:07:28.080 --> 0:07:31.840 thanks for having me. You know, I'm encouraged here by 0:07:31.920 --> 0:07:35.920 the recent actions of the Federal Reserve. Initially it seemed 0:07:35.960 --> 0:07:39.880 like they were just totally being overwhelmed and toppled over 0:07:40.040 --> 0:07:44.800 by the huge, unrelenting surge in money and liquidity demand 0:07:45.040 --> 0:07:48.320 and actually starting Friday, we were we we it was 0:07:48.360 --> 0:07:51.360 the first day we started to see real yields fallback 0:07:51.440 --> 0:07:55.400 and the tips inflation break even market, and they've moved 0:07:55.600 --> 0:07:59.400 lower again today. So remember from about the sixth of March, 0:08:00.160 --> 0:08:03.480 most of last week there was a huge surgeon real rates, 0:08:03.960 --> 0:08:07.840 collapse in inflation expectations, and obviously a lot of carnage 0:08:08.520 --> 0:08:11.360 UH in a broader array of credit markets. So we 0:08:11.440 --> 0:08:15.119 might be seeing the very first signs that the Fed 0:08:15.760 --> 0:08:19.000 is starting to get some traction again. It's preliminary, but 0:08:19.120 --> 0:08:22.880 every journey starts with one step. Michael Dard, If we 0:08:23.080 --> 0:08:27.560 throw billions, hundreds of billions, trillions of dollars at this 0:08:27.760 --> 0:08:32.480 natural disaster, this verological disaster, is there any harm to 0:08:32.520 --> 0:08:34.959 the economy? I mean, don't we just pull that back 0:08:35.000 --> 0:08:37.920 over the quarters in the years once we get through 0:08:38.000 --> 0:08:43.040 this natural event. Tom, listen, if this were isolated to 0:08:43.200 --> 0:08:47.920 simply a supply side shock, it should be contractionary and inflationary. 0:08:48.000 --> 0:08:50.679 That's what a supply side shock is. If it's adverse 0:08:50.720 --> 0:08:54.360 and an aggregate supply aggregate demand model. What these money 0:08:54.360 --> 0:08:57.480 markets are telling us is that we have an incredible 0:08:57.600 --> 0:09:01.200 adverse demand shock unfold, and that's going to require a 0:09:01.280 --> 0:09:06.120 tremendous amount of monetary and fiscal action that is sustained. 0:09:06.320 --> 0:09:09.640 That's the key here, sustained. If it's just viewed as 0:09:09.720 --> 0:09:12.320 temporary and likely to be yanked back as soon as 0:09:12.360 --> 0:09:15.720 conditions um start to to normalize, then we have the 0:09:15.760 --> 0:09:18.880 prospect of of you know, limping out of this without 0:09:18.880 --> 0:09:22.040 a full throated V shaped recovery. That has to be 0:09:22.120 --> 0:09:24.080 the key. So the risk here is that we do 0:09:24.200 --> 0:09:27.120 too little and back off too soon. That was the 0:09:27.160 --> 0:09:29.720 mistake made after two thousand eight, and we cannot afford 0:09:29.720 --> 0:09:32.160 another lost decade for the labor market. That would be 0:09:32.200 --> 0:09:36.280 an utter human tragedy. Mike Darta, As I was reading 0:09:36.400 --> 0:09:38.840 all the headlines and the news over the weekend, it 0:09:38.880 --> 0:09:41.360 seemed like there was a competition for the most dire 0:09:41.720 --> 0:09:44.520 prediction for the economy in the second quarter and beyond, 0:09:44.880 --> 0:09:47.600 and depression started to become a word that was used 0:09:47.640 --> 0:09:51.800 more and more frequently. A sustained UH downturn over the 0:09:51.840 --> 0:09:54.199 course of years. Do you see that as an increasing 0:09:54.240 --> 0:09:56.400 possibility or is that a little bit too far in 0:09:56.440 --> 0:10:00.080 the gloom school, I'd say only if policymakers complete at 0:10:00.120 --> 0:10:02.679 least fail so that will be a choice. You know 0:10:02.760 --> 0:10:06.200 that that is not a destination. Um. You know that 0:10:06.559 --> 0:10:10.000 is etched into stone. We know there's a huge contraction 0:10:10.080 --> 0:10:13.720 coming that you know is unavoidable. But how quickly and 0:10:13.800 --> 0:10:17.800 forcefully recover we recover is a choice. And so that means, 0:10:17.960 --> 0:10:22.200 you know, policymakers doing whatever it takes in keeping it 0:10:22.320 --> 0:10:25.520 up until we're there. So we're going to take a 0:10:25.600 --> 0:10:27.840 huge hit in the short term. But the key now 0:10:28.000 --> 0:10:29.920 is how do we come out of this if and 0:10:29.960 --> 0:10:33.760 when the pandemic either ends or starts to let up. Uh, 0:10:33.800 --> 0:10:36.640 And that's that's really a policy choice. So let's not 0:10:36.760 --> 0:10:38.760 make the mistakes we made in two thousand and eight, 0:10:38.760 --> 0:10:41.000 where the fear was we're doing too much. We're going 0:10:41.040 --> 0:10:44.280 to debase the dollar. There's going to be inflation utterly 0:10:44.360 --> 0:10:47.160 wrong across the board. And guess what the labor market 0:10:47.240 --> 0:10:50.160 paid the price with a ten year period before we 0:10:50.200 --> 0:10:54.640 got back to full employment. If that happens again, capitalism 0:10:54.640 --> 0:10:56.560 could be on the chopping block. So let's not go 0:10:56.640 --> 0:10:59.480 down that path. Mike, you you raise a good point. 0:10:59.559 --> 0:11:02.920 It goes to John's point earlier about speed, about how 0:11:02.960 --> 0:11:06.080 there already has been a lot of missed opportunity here 0:11:06.559 --> 0:11:09.520 with how slow, even though they're moving really quickly, how 0:11:09.559 --> 0:11:13.079 slow Congress has been trying to pass this bill. Have 0:11:13.240 --> 0:11:17.280 they already been too late at this point? You know, 0:11:17.960 --> 0:11:20.760 I think I think they have, but you know they 0:11:20.960 --> 0:11:23.360 but they can still do good by trying to to 0:11:23.400 --> 0:11:25.760 catch up and to get the policy mix right. So 0:11:25.840 --> 0:11:27.760 no doubt about it, I think, you know, too late 0:11:27.800 --> 0:11:31.120 across the board. Listen, just a few short weeks ago, 0:11:31.440 --> 0:11:33.679 all of us together that are on the that around 0:11:33.679 --> 0:11:37.400 the air waves. Now we're talking about the yield curve reinverting. Right, 0:11:37.440 --> 0:11:39.920 The federal Reserve came into the year with short term 0:11:39.920 --> 0:11:42.560 interest rates above long rates. That's a sign right there 0:11:43.360 --> 0:11:46.760 that policies out of whack and you are vulnerable to shocks. 0:11:46.800 --> 0:11:50.040 So no one could have predicted the pandemic. But clearly, 0:11:50.080 --> 0:11:52.920 I think we've made some policy mistakes and you know, 0:11:52.960 --> 0:11:55.560 in the past and in the recent past, that have 0:11:55.600 --> 0:11:58.360 made us more vulnerable. But that doesn't mean we shouldn't 0:11:58.400 --> 0:12:02.439 try everything, uh in our power to make sure that 0:12:02.480 --> 0:12:05.480 we vault this economy out of what's certain to be 0:12:06.040 --> 0:12:09.440 you know, a sharp contraction, uh, back to full health 0:12:09.520 --> 0:12:11.480 within a year year and a half. That needs to 0:12:11.520 --> 0:12:13.600 be the goal, and if you can find the right 0:12:13.640 --> 0:12:15.760 policy mix, I think we can do it. Let's hope 0:12:15.800 --> 0:12:17.880 we can achieve it. You know, better early than late, 0:12:17.920 --> 0:12:20.040 but better late than never. But for me, at the moment, Mike, 0:12:20.040 --> 0:12:23.240 the sequencing of this is already so so messy. We 0:12:23.320 --> 0:12:26.720 needed a huge ESIME support before the shutdowns. We needed 0:12:26.800 --> 0:12:28.720 ESTIME is convinced that they would get the house. They 0:12:28.720 --> 0:12:31.160 didn't lay off people. We're in the shutdown. We don't 0:12:31.200 --> 0:12:33.080 have the support that already laying off people we need 0:12:33.160 --> 0:12:35.720 to checks in a post yesterday. Those checks water a 0:12:35.720 --> 0:12:37.520 couple of weeks away. Even if we get that past 0:12:37.559 --> 0:12:39.240 to day, hopefully we can get that quicker than that. 0:12:39.320 --> 0:12:42.040 But Mike, this is already really tough, and I'm wondering 0:12:42.040 --> 0:12:44.920 whether an economic shock has already become a credit crunch. 0:12:44.960 --> 0:12:47.560 We're there already, aren't we, Mike, Oh yeah, no doubt 0:12:47.600 --> 0:12:49.439 about it. If you look at the commercial paper and 0:12:49.520 --> 0:12:53.280 high yield markets, we're seeing spreads there as of Friday 0:12:53.920 --> 0:12:56.719 of last week that we hadn't seen since the you know, 0:12:56.760 --> 0:12:59.959 the essentially the worst of the two thousand to two 0:13:00.120 --> 0:13:03.880 thousand seven, two thousand nine global financial crisis, and so 0:13:04.720 --> 0:13:09.400 what's happening now is expectations of collapsing nominal GDP and 0:13:09.400 --> 0:13:13.440 nominal incomes are feeding into the credit markets. So consider 0:13:13.480 --> 0:13:17.199 the Scott Sumner Market monitor is quote that nominal income 0:13:17.320 --> 0:13:20.840 is the resources with which behave back debt. And so 0:13:20.920 --> 0:13:23.839 if you have an economic shock, demand shock, that can 0:13:23.880 --> 0:13:27.720 actually cause what looks like a credit crisis. So you know, 0:13:27.800 --> 0:13:30.319 so it's not you know, the credit markets are reflecting 0:13:30.320 --> 0:13:33.040 that in real time, but it's tied that huge collapse 0:13:33.040 --> 0:13:36.439 and inflation expectations. That's why it's important when you hear 0:13:36.480 --> 0:13:39.320 people say, oh, printing money. Yes, that's what you do here, 0:13:39.520 --> 0:13:42.520 right if you have a deflationary shock, you print money 0:13:42.520 --> 0:13:44.880 and the risk is print enough. That was the O 0:13:45.040 --> 0:13:49.240 eight lesson. Let's not fail again, joining us worldwide and 0:13:49.280 --> 0:13:53.240 across this nation. Michael Dart of MKM Partners, Uh Michael 0:13:53.280 --> 0:13:57.200 as celebrity emails in from Coventry, England. Mrs Faraoh emails 0:13:57.200 --> 0:14:01.080 and it says more Euclidean geometry. We need it right now, 0:14:01.400 --> 0:14:03.760 Let's go I s l M right now. Michael Darted. 0:14:03.840 --> 0:14:08.480 The supply curve in this supply shock is shifted and 0:14:08.600 --> 0:14:12.600 many would suggest has become any elastic. How does the 0:14:12.679 --> 0:14:19.000 supply shock shift back to normal supply? Well, Tom, I'll 0:14:19.040 --> 0:14:21.240 give you some So with the I s l M, 0:14:21.320 --> 0:14:23.280 I think we can think about this big shock to 0:14:23.360 --> 0:14:26.680 liquidity demand. Right, So, we were seeing real interest rates 0:14:26.800 --> 0:14:30.240 shoot up from the sixth of March until last Thursday, huge, 0:14:30.240 --> 0:14:33.320 over a hundred basis point move, you know, in in 0:14:33.400 --> 0:14:35.920 less than two weeks. That was even more forceful than 0:14:35.960 --> 0:14:37.880 what we were seeing in the dark days of oh eight. 0:14:37.960 --> 0:14:40.640 So that's like the l M curve shifting to the right. 0:14:40.720 --> 0:14:43.240 Higher real rates and a reduction and output not what 0:14:43.320 --> 0:14:45.080 you want to see. So it looks like that might 0:14:45.120 --> 0:14:47.800 be starting to reverse it the margin. But back to 0:14:47.840 --> 0:14:50.280 what I where we started. If you tie the I 0:14:50.520 --> 0:14:53.920 s l M into the aggregate supply aggregate demand model, 0:14:54.480 --> 0:14:58.560 just a simple supply side shock should give you a 0:14:58.600 --> 0:15:02.320 contract you know, contrac action. But with inflation, that's what happens. 0:15:02.840 --> 0:15:06.400 What we're dealing with here looks like a demand side shock, 0:15:06.560 --> 0:15:09.280 and that's why policymakers are are really going to be 0:15:09.360 --> 0:15:12.000 required to do things that are more permanent this time. 0:15:12.480 --> 0:15:15.200 If all of these actions are viewed as temporary, sure 0:15:15.320 --> 0:15:17.880 you'll put out the liquidity panic. But the risk is 0:15:17.920 --> 0:15:21.320 that the economy won't come back to full health. And 0:15:21.560 --> 0:15:23.960 you know, and that's really something that that we can 0:15:24.040 --> 0:15:27.280 avoid and that we should avoid. Michael Donna always great 0:15:27.320 --> 0:15:29.360 to get your thoughts. Shout out to the docks and 0:15:29.400 --> 0:15:31.600 to the missus as well. Mike Data that m campotent 0:15:31.600 --> 0:15:37.760 as chief economist and Macros strategists. I would suggest the 0:15:37.800 --> 0:15:40.880 senator from Massachusetts would like to hear from the economists 0:15:40.920 --> 0:15:44.960 from Chicago. She's with Grant Thornton Diane Swack listening to 0:15:45.040 --> 0:15:49.840 Senator Warren uh this morning. Diane, the urgency is profound, 0:15:50.560 --> 0:15:52.920 and I want to go to the idea of the 0:15:53.000 --> 0:15:56.840 economic impact not in the big companies, but on the 0:15:57.040 --> 0:16:01.200 thousands of suppliers they have of you are in the 0:16:01.320 --> 0:16:05.480 absolute crucible of that in Chicago. How beleaguered will the 0:16:05.520 --> 0:16:09.560 suppliers be in four weeks time. Well, it's important to 0:16:09.560 --> 0:16:12.800 remember they are already feeling pain in mid February as 0:16:12.840 --> 0:16:16.600 the supply disruptions coming out of China. We're compounding and 0:16:16.680 --> 0:16:19.960 so this is something kind of graph much like the 0:16:20.000 --> 0:16:23.640 infections that goes up on an exponential curve. And that's 0:16:23.640 --> 0:16:27.280 what's critical to remember is that the losses we're seeing UM. 0:16:27.320 --> 0:16:29.960 It's not just individuals. We need cash and money hands 0:16:29.960 --> 0:16:32.200 of individuals, we need small business. But you have to 0:16:32.200 --> 0:16:35.760 deal with the whole economy, because that is where we're at. 0:16:35.920 --> 0:16:37.280 If you can only pass it for part of the 0:16:37.280 --> 0:16:39.000 economy now, then in two days pass up for the 0:16:39.040 --> 0:16:41.120 rest of the economy. But we need it hit on 0:16:41.160 --> 0:16:44.080 all sides. To blow to state and local government budgets 0:16:44.360 --> 0:16:47.000 is also extraordinary, and there on the precipice of having 0:16:47.040 --> 0:16:49.600 to deal with deep cuts at the state and local 0:16:49.680 --> 0:16:52.760 level as they're at the front lines of this crisis. 0:16:52.800 --> 0:16:55.160 That's just not acceptable. And I sort of agree with 0:16:55.240 --> 0:16:57.920 Jonathan here is that you know, everyone's standing on their 0:16:57.960 --> 0:17:02.800 ideal ideological UM platforms is not helping us. We've got 0:17:02.800 --> 0:17:05.960 to shelve all of the ideology and help everyone. And 0:17:06.040 --> 0:17:09.359 we can't discriminate because the virus doesn't discriminate. We have 0:17:09.520 --> 0:17:11.800 to help on all sides, which is what the FET 0:17:11.840 --> 0:17:14.720 acknowledged today that you need to hit everyone. But the 0:17:14.840 --> 0:17:18.359 set is only on one aspect of the economy. Credit 0:17:18.400 --> 0:17:20.840 markets and people don't want it. Small businesses don't want 0:17:20.880 --> 0:17:23.120 to take out loans they can't pay back, they don't 0:17:23.119 --> 0:17:24.879 want to take out loans to pay workers that they 0:17:24.880 --> 0:17:27.000 don't have anymore, and then have to pay it back 0:17:27.040 --> 0:17:30.080 if they don't have those workers anymore. Congress needs to 0:17:30.119 --> 0:17:32.600 get their arms around this and just act, even if 0:17:32.600 --> 0:17:34.760 it's just to get the first trunch out, get it out, 0:17:34.920 --> 0:17:36.879 get the second trunch out. We're talking days here, and 0:17:36.880 --> 0:17:39.119 they need to learn to vote remote because they're all 0:17:39.160 --> 0:17:42.560 infecting each other too. Diane ats entering point there at 0:17:42.600 --> 0:17:44.800 the end, Diane, So we've over the weekend we've had 0:17:44.840 --> 0:17:47.000 a lot of the Wall Street banks come out with 0:17:47.040 --> 0:17:49.879 their GDP Outlook, where do you stand? How bad is 0:17:49.960 --> 0:17:52.840 Q two going to be? And will it be? How 0:17:52.920 --> 0:17:56.280 will there be recoveries in queues three and four? Um? 0:17:56.280 --> 0:17:58.000 I don't think there will be a recovery in three 0:17:58.040 --> 0:18:00.000 and four. In a curse, it's a moving target ross 0:18:00.000 --> 0:18:03.080 sing on quicksand with little stability. And the way that 0:18:03.200 --> 0:18:04.800 the problem is the way that we do this, I 0:18:04.800 --> 0:18:07.480 mean I have almost to client from the banks of 0:18:08.440 --> 0:18:12.080 others are talking client. You can get all those numbers, um. 0:18:12.280 --> 0:18:14.640 And the problem is on unemployment you have a huge, 0:18:14.720 --> 0:18:18.560 certain precipitous drop in payrolls immediately, which we'll see in 0:18:18.560 --> 0:18:21.920 the unemployment claim so not everyone is is eligible for 0:18:22.000 --> 0:18:25.320 unemployment insurance. You also have you know, when we start 0:18:25.359 --> 0:18:28.640 measuring unemployment, what does it mean when are you participating 0:18:28.640 --> 0:18:30.640 in the labor force if the whole economy is shut 0:18:30.720 --> 0:18:32.840 down and you can't look for a job, that could 0:18:32.920 --> 0:18:36.479 influence our unemployment rates. So you know, this is um 0:18:36.800 --> 0:18:39.320 I think that what we have is something you have 0:18:39.400 --> 0:18:42.159 to think of. In stages. There was the denial, the contagion, 0:18:42.640 --> 0:18:45.880 and now we're you know, into the part of dealing 0:18:46.000 --> 0:18:49.640 with the pandemic, which is global in scope. And when 0:18:49.720 --> 0:18:53.159 we start to do with efforts of testing, tracking and 0:18:53.320 --> 0:18:57.080 trying to manage the focus our efforts more aggressively, I'm 0:18:57.119 --> 0:18:59.119 bringing up the economy that will be a slow process 0:18:59.280 --> 0:19:01.639 of ramp up and we don't get to The new 0:19:01.680 --> 0:19:04.280 economy we will emerge into will be different than the 0:19:04.320 --> 0:19:07.240 one we had before, because now pandemics are no longer 0:19:07.400 --> 0:19:09.560 just something you see in a horror movie. They are 0:19:09.720 --> 0:19:12.200 a reality. We have to manage every day and ensure 0:19:12.280 --> 0:19:15.800 the health of our employees, our workers, and our customers. Dan, 0:19:15.920 --> 0:19:17.840 thank you so much, too short of visit will do 0:19:18.000 --> 0:19:21.359 something longer next time. Dane Swunk with Grant Thorn this morning. 0:19:24.960 --> 0:19:28.119 This is the Conversation of the day. Ben Layler is 0:19:28.119 --> 0:19:31.720 with Tara Hudson in London. He writes very short, very 0:19:31.960 --> 0:19:35.040 dense notes, and he usually has written them with a 0:19:35.119 --> 0:19:39.160 sense of optimism, a glass half full feel feel. Then 0:19:39.280 --> 0:19:42.399 I loved, loved, loved your note in the last twelve hours. 0:19:42.480 --> 0:19:45.520 I believe it was where you really make a distinction 0:19:45.600 --> 0:19:49.000 between two thousand and eight and two thousand twenty, and 0:19:49.160 --> 0:19:52.720 you say, what's fascinating this time is you really don't 0:19:52.760 --> 0:19:55.400 want to be near the financials. You've got other places 0:19:55.480 --> 0:19:57.920 to go. Let's begin with that idea. Why are you 0:19:58.040 --> 0:20:02.680 avoiding financials? I think for a lot of reasons, you know, 0:20:02.920 --> 0:20:05.439 I think that there's a sort of the view out there. 0:20:05.480 --> 0:20:07.920 There's all about main Street, not about Wall Street. Certainly 0:20:07.960 --> 0:20:10.600 main Street leading it down, but um, there is a 0:20:10.640 --> 0:20:14.240 transmission straight back into the financials. Yes, they've got you know, 0:20:14.320 --> 0:20:16.600 big capital buffers you know this time around, but they're 0:20:16.600 --> 0:20:18.600 still going to take quite a lot of pain here, 0:20:18.680 --> 0:20:21.760 I think, um fundamentally. Um, we've also written quite a 0:20:21.760 --> 0:20:24.159 lot about share buy backs. They've suspended show buy backs, 0:20:24.600 --> 0:20:26.399 which I don't think it's a huge surprise given the 0:20:26.400 --> 0:20:28.879 amount of support they're getting from the FED here, but 0:20:29.960 --> 0:20:33.520 they had a five percent share buy back yield last year. 0:20:33.600 --> 0:20:35.560 They were some of the biggest buyers back of their 0:20:35.600 --> 0:20:38.280 own shares. That that's the key support that I think 0:20:38.359 --> 0:20:40.840 has gone to the whole market. But I think it's 0:20:40.880 --> 0:20:43.960 going to be especially keenly felt for financials. And and 0:20:44.040 --> 0:20:47.560 I also think we're in a world of obviously bonyals 0:20:47.560 --> 0:20:50.399 staying low for forever, and I think that's some you know, 0:20:50.440 --> 0:20:53.520 pretty difficult for financials. So I think there are, um, 0:20:54.240 --> 0:20:57.520 I think there are more attractive ways to play this 0:20:57.640 --> 0:21:02.160 than uhother than financials. For sure. It's interesting ben looking 0:21:02.200 --> 0:21:04.360 and we've had a lot of economists come out from 0:21:04.880 --> 0:21:08.760 Wall Street with forecasts and you know, just some huge, 0:21:08.920 --> 0:21:12.680 huge declines in the second quarter. But thinking about Goldman Sacks, 0:21:13.119 --> 0:21:16.120 they have a clear V shaped outlook. You know, after 0:21:16.240 --> 0:21:19.600 a decline in GDP, U S GDP and Q two, 0:21:19.880 --> 0:21:22.760 they have gains significant double digit gains in Ques three 0:21:22.800 --> 0:21:25.879 and four. As you think about the market, how are 0:21:25.920 --> 0:21:31.199 you thinking about how the economy will perform? Yeah, I mean, 0:21:31.280 --> 0:21:34.600 I think anyone that tells you they really know is 0:21:34.880 --> 0:21:37.760 is you know, it's been a little bit disingenuous you know, 0:21:37.800 --> 0:21:41.520 I think the base cases, uh that UM you've got 0:21:42.080 --> 0:21:44.280 you know, a V or a moderate u UM. But 0:21:44.640 --> 0:21:46.560 you know, I think the problem is I think there's 0:21:46.560 --> 0:21:48.000 two issues. I think one of the depth of that 0:21:48.200 --> 0:21:50.560 V and I think that's what's so important about this week. 0:21:50.880 --> 0:21:53.200 You know, we're going to get this terrible data on 0:21:53.480 --> 0:21:55.800 the joblest side. We're gonna get this terrible pm MY data. 0:21:56.280 --> 0:21:59.000 And I think economists, really for the first time, we're 0:21:59.000 --> 0:22:01.240 going to start putting hard numbers in those forecasts. We've 0:22:01.280 --> 0:22:05.240 only just begun to see those Q two trough numbers, 0:22:05.280 --> 0:22:08.280 whether it's GDP or EPs begin to come down, and 0:22:08.320 --> 0:22:11.080 I think I'm beginning to put some sort of more 0:22:11.200 --> 0:22:14.280 realistic numbers on That is really important in terms or 0:22:14.320 --> 0:22:16.320