Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. So, as we mentioned at
Speaker 1: the top of our broadcast, certainly one of the themes
Speaker 1: that we are seeing is what's going on with food
Speaker 1: and restaurants. They are especially hard hit. Chris pop us
Speaker 1: as chairman, president and CEO of the Chef's Warehouse. It's
Speaker 1: a distributor of specialty food products. They sell to restaurants, hotels,
Speaker 1: cruise lines, casinos, food specialty stores and more so they
Speaker 1: are on the front line of certainly seeing the impact
Speaker 1: of the coronavirus. Who joins us right now on the
Speaker 1: phone from Ridgefield, Connecticut. Chris, Nice to have you here. Um.
Speaker 1: First of all, tell us a little bit about your world.
Speaker 1: We you and your family are safe, tell us what
Speaker 1: about your employees, how everyone's doing? Thank you. Obviously this
Speaker 1: was like, you know, a nuclear bomb for the whole
Speaker 1: hospitality industry, and uh you know, it's obviously not not
Speaker 1: easy for all our customers. You know, we saw a
Speaker 1: little a thirty five thousand of the top chefs in
Speaker 1: the country and most of these restaurants today are closed. So, uh,
Speaker 1: you know, we we started meeting. I have an unbelievable staff,
Speaker 1: and we got together and started thinking, so, you know,
Speaker 1: what do we do? We know the retail uh supply
Speaker 1: chains are really being challenged right now. We're getting thousands
Speaker 1: of phone calls from people saying how do I buy
Speaker 1: from you? People? We know you have a thousand trucks
Speaker 1: and warehouse is full of food. So we've quickly pivoted.
Speaker 1: We've got our food safety teams out there and say,
Speaker 1: how do we keep our employees safe? Um, how do
Speaker 1: we get some trucks on the road. How do we
Speaker 1: get food to people they're gonna want it delivered? And
Speaker 1: we really quickly transformed ourselves right now into a supplying
Speaker 1: retailers and going right to the consumer through our websites,
Speaker 1: whether it be our sites for Allen Brothers UH, our
Speaker 1: our Ellen Brothers dot com, which cuts the most uh
Speaker 1: the best steaks for the most famous steakhouses around the country,
Speaker 1: to our chef Warehouse dot com. We've added a new
Speaker 1: site says shop at Home, so UH, We're keep adding
Speaker 1: more and more items. UM. It's impossible to put all
Speaker 1: thirty five thousand items uh in one week available, So
Speaker 1: what we decided was to tone it down, you know,
Speaker 1: not to offer two hundred different types of olive oil.
Speaker 1: Get it down to a really good selection. UM. You
Speaker 1: know the team that's at chef because we are pressed
Speaker 1: with supplying the best chefs in the world that we're
Speaker 1: food experts. So I think the consumer could feel comfortable
Speaker 1: that maybe they've never heard of us before, but our
Speaker 1: reputation of a thirty five years supplying the best chefs
Speaker 1: in the world, they could feel comfortable that they're buying
Speaker 1: from someone who understands food safety, understands quality. And we've
Speaker 1: quickly put up new sites that they can come online
Speaker 1: and they can either get it through ups UM. People
Speaker 1: are loading up their freezers right now with steaks and
Speaker 1: lamb chops and really great, great food that they would
Speaker 1: normally in the steakhouse. And they're also starting to order
Speaker 1: to their homes. Um an array of I think we
Speaker 1: have a few hundred items up already, and every day
Speaker 1: we'll keep adding and we'll keep adding new cities and
Speaker 1: neighborhoods that the trucks will be rolling. Uh they can
Speaker 1: get online, they can pay with a credit card, and uh,
Speaker 1: we're trying to do it within you know, one to
Speaker 1: three days, we will be at their door with the
Speaker 1: greatest ingredients you can set you could find. Well, it's
Speaker 1: an amazing pivot, as they say, I mean, this is
Speaker 1: really impressive and we appreciate you giving us how the
Speaker 1: detail else there I do want to ask you, Chris,
Speaker 1: you know, given that you do work with some of
Speaker 1: the best known chefs in the world. We're talking about
Speaker 1: Thomas Keller, Dan Barber, Nancy Silverton, Daniel Blue, who will
Speaker 1: be a guest on this program next week. I should
Speaker 1: point out jose Andre's obviously he has been very vocal
Speaker 1: about this. As you talk to those folks, you know them, Well,
Speaker 1: what are they saying about the future of restaurants the
Speaker 1: short term in mid term future? Yeah, well, short term.
Speaker 1: I think you know everybody is still spinning, very upset
Speaker 1: with the insurance companies. You know this is uh, this
Speaker 1: we should you know, business interruption. Every restaurant should get
Speaker 1: business interruption. Um. If this isn't business interruption, I don't
Speaker 1: know what is. So um they're pushing that. I know
Speaker 1: they're on the phone with the White House. So h.
Speaker 1: I spoke to Thomas, I spoke to Danielle the other day,
Speaker 1: Jean George, and you know they're they're sitting there and
Speaker 1: they're you know, they're pushing um and the sun will
Speaker 1: come out and UM, that's why, chef. You know, we
Speaker 1: are doing everything we can. You know, thirty fifth anniversary
Speaker 1: didn't plan this would be the way we celebrated it.
Speaker 1: But you know we're going to be here for the
Speaker 1: next thirty five years and they depend on us. When
Speaker 1: the sun comes out, you know, they'll start slowly and
Speaker 1: as it builds and people feel more comfortable going out.
Speaker 1: We are social animals. I've been doing this for thirty
Speaker 1: five years, and UM, I watched people love to go
Speaker 1: to restaurants and they love to meet and have family
Speaker 1: gatherings and bar mitzvahs and christenings and weddings and do
Speaker 1: you name it so it will come back, Chris, I
Speaker 1: do wonder about when we get on the other side
Speaker 1: of this. That's certainly the restaurant industry. I mean I
Speaker 1: saw one number, was it like fifteen point six million
Speaker 1: workers in the US restaurant industry. That is huge. But
Speaker 1: I do wonder about the safety nets, um, that are
Speaker 1: there for those kinds of workers. What changes on the
Speaker 1: other side, what can realistically change? I mean the restaurant business,
Speaker 1: it's a hard one. It's uh, it's always been a business.
Speaker 1: But you know, people are resilient. Americans are resilient. Um.
Speaker 1: I've been through even I've been through the financial crashes,
Speaker 1: and UM, I'm always amazed how people come back to restaurants,
Speaker 1: you know, as soon as they're feeling a little better
Speaker 1: about themselves. Uh. But what but what financially can change
Speaker 1: to help some of those workers. I mean what in
Speaker 1: the business, um, or the financial structure of a restaurant industry,
Speaker 1: or whether it's insurance, like you said, what needs to
Speaker 1: change so that those workers. I feel like this crisis
Speaker 1: is showing us really some of the weak spots in
Speaker 1: our society is certainly within our workers society, So what
Speaker 1: needs to change? Sure, well, you can see again most
Speaker 1: of the restaurants have closed down to most of their
Speaker 1: employees are unemployment, so they are receiving money. And they're
Speaker 1: talking about a package where especially small businesses can get
Speaker 1: up to I think three times uh their their payroll
Speaker 1: to to keep their employees uh employed. So I think
Speaker 1: the government absolutely has to do something as long as
Speaker 1: well as with the insurance companies. But when we went
Speaker 1: through nine eleven, it was amazing how generous society is.
Speaker 1: And that's what we're doing right now in this new business.
Speaker 1: You know, we give over seven figures of money away
Speaker 1: to charities every year. The hospitality industry is so charitable um.
Speaker 1: And I think that people are going to rally UM.
Speaker 1: I see a lot of restaurants would go fund me
Speaker 1: pages for their employees. We're gonna be donating a portion
Speaker 1: of our money. We want to double that seven the
Speaker 1: amount that we were able to give last year through
Speaker 1: new initiatives to raise money to take care of especially
Speaker 1: all the people on the front end of this sort
Speaker 1: are most you know that hurts the most. I think
Speaker 1: you're gonna have a tremendous rally of generosity and fundraisers,
Speaker 1: and we got to put these people back to work
Speaker 1: and America needs its restaurants. All right, We're gonna leave
Speaker 1: it there. Thank you so much. We really appreciate your time.
Speaker 1: We know it's incredibly busy, especially as you launched this
Speaker 1: entirely new business in a lot of ways. Chris Poppas
Speaker 1: is the chairman and CEO of The Chef's Warehouse, joining
Speaker 1: us on the phone from Ridgefield, Connecticut. Carol, Uh, so interesting.
Speaker 1: I mean this is at the crux of what we've
Speaker 1: been talking about this industry, you know, truly one of
Speaker 1: the most affected by this massive, massive crisis. Yeah, exactly.
Speaker 1: So good to hear from him and get some input
Speaker 1: on what is happening and what can be done. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. Well around this time every day, Carol,
Speaker 1: we've been trying to go to a medical expert to
Speaker 1: really help keep us honest about where we are, what
Speaker 1: we should be doing, just as human beings, to try
Speaker 1: and get through this. Uh, get smart about the medical
Speaker 1: aspects but also the social aspects of this. Uh. No
Speaker 1: better person to talk about than the dr Patrice Harris.
Speaker 1: She's the president of the American Medal Medical Association. Excuse me,
Speaker 1: joining us on the phone from Atlanta. Dr Harris, Great
Speaker 1: to have you with us. Well, thank you, it's good
Speaker 1: to be with you. All right. So here we are,
Speaker 1: Carol and I working from our respective homes. You know,
Speaker 1: we're working for a company like many that basically is
Speaker 1: saying don't come into the office. Social distancing. Help us
Speaker 1: understand what we know so far. I know it hasn't
Speaker 1: been a super long time. Uh, it's been a couple
Speaker 1: of weeks for a lot of us here in the
Speaker 1: New York area. What are we learning about whether we
Speaker 1: are in fact going to flatten this curve? So let
Speaker 1: me start with the endpoint. Social distancing works, physical distancing works. Certainly,
Speaker 1: we all hear about what's going on in New York
Speaker 1: as I sit here in Atlanta, our I see you
Speaker 1: beds are at or near full capacity, and we see
Speaker 1: the cases spike in New Orleans, and so it is
Speaker 1: important for everyone to know. People may not appreciate that
Speaker 1: individual accents lead to collective impact. And if everyone commits
Speaker 1: to staying at home, of course, you know, going out
Speaker 1: for for groceries or or medical needs medicines. But if
Speaker 1: everyone stays at home when they can, they are not
Speaker 1: only helping themselves, but they are helping the medical community.
Speaker 1: So when you hear the presidents say let's let's talk
Speaker 1: about creating zones around the country, some of them not
Speaker 1: as hard hit um and thinking about reopening the economy,
Speaker 1: what do you think? What do you say? Well, here's
Speaker 1: what we are all going to have to commit to.
Speaker 1: We are going to have to commit to being led
Speaker 1: by the science and the evidence and the data. There's
Speaker 1: no question we all want things to open back up,
Speaker 1: but that has to be defined and determined by the data.
Speaker 1: And as I heard Dr Fauci say, we just don't
Speaker 1: have the data to make those decisions right now, and
Speaker 1: and and and certainly we want to try to guard
Speaker 1: against a false choice here umbok health forces the economy.
Speaker 1: You know, it's it's we're either going to choose to
Speaker 1: follow the science and the evidence and save lives or
Speaker 1: ignore the science and evidence and lives will be lost.
Speaker 1: So Dr Harris, let me ask you this because part
Speaker 1: of what you're saying, which I certainly believe in, and
Speaker 1: I know Carol does too, and many of our listeners do.
Speaker 1: Is this notion of the most important thing you can do,
Speaker 1: this proactive thing, is to stay home. And yet I
Speaker 1: think a lot of us feel like, but are there
Speaker 1: other things we can be doing even from the safety
Speaker 1: uh and hopeful, hopefully for most people sort of comfort
Speaker 1: of their homes, to somehow help out. Are there places
Speaker 1: we should be supporting financially? Are there things that we
Speaker 1: can be doing from a distance to help this along? Well?
Speaker 1: Certainly each individual locale will be different. But people are
Speaker 1: talking about while we are at home, if you can,
Speaker 1: and I want to say not everybody will be able
Speaker 1: to another conversation. Not The subject of today is we
Speaker 1: have to appreciate that there's a diversity of needs out there.
Speaker 1: For instance, I'll just give you a quick example and
Speaker 1: get back on topic. But we talk about handwashing, and
Speaker 1: we know folks who are homeless, uh, you know, don't
Speaker 1: have hot running water. There's a group in Atlanta that
Speaker 1: filled up some water. Takes is going out to the
Speaker 1: homeless in Atlanta to do that. So we have to
Speaker 1: appreciate that. But the other things that we can do
Speaker 1: is again, check on a neighbor. I've heard folks talk
Speaker 1: about buying a gift card from a restaurant. Certainly, Um,
Speaker 1: they can get the money now and then can be
Speaker 1: used later once we get through this piece. Uh, make
Speaker 1: sure you stay connected. You know you could if you're
Speaker 1: healthy and and no risk factors. And maybe you have
Speaker 1: a neighbor or a family member who um is elderly
Speaker 1: or is in a risk factor. Maybe a grocery shop
Speaker 1: when you grocery shop for yourself and your family grocery
Speaker 1: shop for them. So those are the other things that
Speaker 1: we can do. I do want to mention a headline
Speaker 1: crawl seeing the Bloomberg terminal autopy. US regulator is exploring
Speaker 1: whether to throw a lifeline to mortgage services that are
Speaker 1: stressed by the coronavirus pandemic, thinking about tapping a program
Speaker 1: meant to address natural disaster. So watching that we're talking
Speaker 1: about Jenny May and they're weighing that disaster aid relief
Speaker 1: for virus hit mortgage services and Jason, this speaks to
Speaker 1: that very big story that people aren't paying mortgages or
Speaker 1: don't have the ability. You know, there is a trickle
Speaker 1: down effect. Uh, and then it becomes this health crisis
Speaker 1: becomes more of a financial crisis. We are talking with
Speaker 1: Dr Patrice Harris, President of the American Medical Association, on
Speaker 1: the phone from Atlanta. Dr Harris, um, your members, You
Speaker 1: guys represent the decisians across the countries, but you also,
Speaker 1: you know, are tapped into, uh, the drugmakers, the healthcare
Speaker 1: industry in a big way. Are we getting to a
Speaker 1: point where our system is going to be overstressed and
Speaker 1: doctors will be making some critical decisions about who gets
Speaker 1: what equipment because we just have enough. Well, certainly that's
Speaker 1: one of the reasons we want to be proactive about
Speaker 1: the number of ventilators, which is why the American Medical
Speaker 1: Association has called on the President to use all levels
Speaker 1: of government to be proactive and particularly the Defense Production
Speaker 1: Act to make sure we have the number of ventilators.
Speaker 1: I do know that there has been a conversation around
Speaker 1: making choices. I can tell you that at the American
Speaker 1: Medical Association, we have a Code of Medical Ethics that
Speaker 1: talks and speaks to what to do when there are
Speaker 1: scarce resources, and that information is available on our websites.
Speaker 1: But hospitals and health systems are having these conversations ahead
Speaker 1: of time and developing policies, and that's as it should be.
Speaker 1: Should the President though, impose the Defense Production Act. We
Speaker 1: just did a story about General Motors, and you know
Speaker 1: there are companies out there in the private sector who
Speaker 1: are ready to go and ramp up to make ventilators
Speaker 1: and so on. And yet there's a lot of confusion
Speaker 1: because the President hasn't done that. What conversation aation have
Speaker 1: you had with him or your or the A M
Speaker 1: A to do this And do you think it would
Speaker 1: be the right thing to do at this point? Yes,
Speaker 1: we know it's my understanding that the President is signed
Speaker 1: the act, but we have UH communicated in writing UM
Speaker 1: and UH in other media forms to please invoke, activate
Speaker 1: whatever the appropriate term is the Defense Production Act. And also,
Speaker 1: by the way, we we have asked for a national
Speaker 1: tracking system and right now, as you are aware, sort
Speaker 1: of ad hoc, but it would be I think much
Speaker 1: more productive to UM you know, have a database or
Speaker 1: tracking system where we know who has what, who needs what,
Speaker 1: and then we can prioritize that. We hope that the
Speaker 1: President activates that and also develops a tracking system. Dr
Speaker 1: Harris just thirty seconds left. But I have to ask you,
Speaker 1: you're a psychiatrist, what can we do from a mental
Speaker 1: health perspective for ourselves right now. Well, just a couple
Speaker 1: of think First of all, it's important conversation to have
Speaker 1: because a poll released by the American Psychiatric Associations just
Speaker 1: the other day revealed that that folks were experiencing anxiety.
Speaker 1: And so I would encourage everyone to practice self care,
Speaker 1: try to get as much sleep as they can, get
Speaker 1: some activity, even if it's walking around your neighborhood and
Speaker 1: putting on your favorite record today at and sometimes you
Speaker 1: have to you have to, uh stay informed, but sometimes
Speaker 1: you have to take a break from the news and
Speaker 1: social media. All right, Well, that's very very good advice.
Speaker 1: We really appreciate your time. Hope you'll come back and
Speaker 1: join us. Dr Patrice Harris, president of the American Medal
Speaker 1: Medical Association, joining us on the phone from Atlanta. This
Speaker 1: is Bloomberg Business Week with Carol Masser and Jason Kelly
Speaker 1: on Bloomberg Radio. Bloomberg Business Week Food editor k Crater
Speaker 1: writing this week about how the golden age of restaurants
Speaker 1: maybe over because of the coronavirus. Earlier, we talked with
Speaker 1: the CEO of the Chef's Warehouse and really got a
Speaker 1: um firsthand indication of how stressed this industry is. Kate
Speaker 1: joins us now along with Bloomberg business Week editor Joel Webber,
Speaker 1: both of them on the phone. Joel, Uh, you know,
Speaker 1: we've been talking with Kate a lot. I mean, the
Speaker 1: restaurant industry, the hospitality industry, they've really been hit hard.
Speaker 1: I mean understatement, I think really and and I think
Speaker 1: as um Kate and Richard vines right in this story.
Speaker 1: You know, like keep in mind the context for restaurants.
Speaker 1: The past few decades have just been just literally this
Speaker 1: golden age where we've just seen restaurants coming to their
Speaker 1: own chefs have become effectively celebrities. Um. And here comes
Speaker 1: a coronavirus that suddenly means that you're not eating in restaurants.
Speaker 1: And this is not just a New York or London phenomenon.
Speaker 1: It's like almost a global one at this point. And
Speaker 1: even pivots to delivery or take out have been hamstrung.
Speaker 1: So it's really this existential moment for restaurants and and
Speaker 1: about how they're going to actually even make it through this.
Speaker 1: And Kate, what do you what is the future according
Speaker 1: to the people that you've talked to, what is the
Speaker 1: future of restaurants start to look like? Now? I mean,
Speaker 1: the future is so uncertain. It's really, as you say,
Speaker 1: it's just heartbreaking. And it seemed like there was restaurants
Speaker 1: are always there for you, and it seriously has been
Speaker 1: the Golden Age for maybe three decades now, building and
Speaker 1: building and unstoppable and suddenly stopped and its tracks. But
Speaker 1: there's definitely a feeling. Certainly restaurants are trying pativo to
Speaker 1: take out, some with more success than others. But there's
Speaker 1: so many safty concerns now, a lot of stuff that
Speaker 1: I got to talk to Jonathan Waxman, who loved Master
Speaker 1: from Barbudo, and he had this fantastic take out service
Speaker 1: going for maybe like a week, two weeks, and he
Speaker 1: shut it down. He was like, it's not safe, and
Speaker 1: so Kate, you know, it's so interesting because you know,
Speaker 1: we're talking to Chris Poppas earlier, who I know you've
Speaker 1: spoken to a lot about what he's doing with Chess Warehouse,
Speaker 1: and he was talking about some of the very famous
Speaker 1: chefs that he's supplies to and sort of how they're
Speaker 1: both individually and collectively dealing with this. I mean, the
Speaker 1: economics have so radically changed here and that filters through
Speaker 1: not just obviously to diners like us, but to the owners,
Speaker 1: the operators and the workers. What are the good things
Speaker 1: that are being done at this point, because I know
Speaker 1: you're seeing a lot of them. I mean, well there's
Speaker 1: there's you know, there's like little silver linings. And also
Speaker 1: it must be said, um, the package that was past
Speaker 1: age very good for employees seeing what it means for restaurants. Um,
Speaker 1: but definitely in terms of unemployment, for people who went
Speaker 1: from paycheck to being desperate, it's, um, it's very good
Speaker 1: news for them right now. But supter um sucter. You
Speaker 1: know they've turned some of them are turning to restaurants
Speaker 1: into corner stores and they even have toilet paper get
Speaker 1: they're throwing along with bottles of wine and they're take
Speaker 1: out food. Um, but there is lots you can do
Speaker 1: for in it next week with Chris Poppas from Seft
Speaker 1: Warehouse about how the that's that Um, the fact that
Speaker 1: chefs aren't buying have they are and dancy teases and
Speaker 1: pastas and wade beat anymore means that customers, consumers can
Speaker 1: get them at a discount. So look out for that
Speaker 1: story next week. You know, Kate, you're talking to you
Speaker 1: know Danny Meyer, You're you're talking to all the all
Speaker 1: these big you know, Dan barbera the chef, and Cohner
Speaker 1: a blue Hill. I mean, these these folks, Danny Meyer,
Speaker 1: you say, was forced to lay off eighty percent of
Speaker 1: his workforce, or two thousand people. Dan Barber is saying,
Speaker 1: this is the worst hard time. I mean, these are
Speaker 1: individuals who've been through nine eleven, They've been through the
Speaker 1: eight seven Black Friday crash, They've been through the AIDS epidemic,
Speaker 1: They've been through so many crises that our science society
Speaker 1: has faced, and yet this is like no other. I mean,
Speaker 1: Danny Meyer, Danny Meyer, Well, Danny Meyers always like always
Speaker 1: has something to say. He really is always glass half fool,
Speaker 1: and he is devastated. He um, he absolutely for him
Speaker 1: to lay up one person's hard he had to lay
Speaker 1: up eight percent of the workforce, which is systematic of
Speaker 1: what's going on in the restaurant industry right now. And
Speaker 1: for that, Jonathan Waxton said, he's seen like the financial crass, crass,
Speaker 1: the eighth crisis, so many things and this is by
Speaker 1: far the worst he's ever seen. And of course, right,
Speaker 1: I mean like this speaks to just how devastating. This
Speaker 1: particular scenario is where we're just seeing service, the service
Speaker 1: sector be the one that takes it on the nose here. Usually,
Speaker 1: you know recessions, and we have this in the current
Speaker 1: issue of the magazine and our Eco section. Usually recessions
Speaker 1: start basically with the manufacturing sector sector. So the fact
Speaker 1: that this is UM hitting service so hard is going
Speaker 1: to be really one of the memorable things about this
Speaker 1: particular precament. And when you think about all the cascading
Speaker 1: effects here, obviously, like you know, going out to restaurants
Speaker 1: is sort of out of the question at the moment,
Speaker 1: but you think about you know, restaurants have to pay leases,
Speaker 1: and leases being commercial real estate, and commercial real estate
Speaker 1: will be heavily impacted by this as much as frankly,
Speaker 1: like you know, residents. So it was going to be
Speaker 1: there too, because people are suddenly losing jobs and not
Speaker 1: able to pay their mortgages. But we haven't seen a
Speaker 1: commercial real estate catastrophe that looks like this before, and
Speaker 1: restaurants will be a big reason for that. I think
Speaker 1: this is going to be really bad. I think this
Speaker 1: is gonna be really bad for cities like New York
Speaker 1: and San Francisco Ditive had um really high, relatively high rent.
Speaker 1: The restaurant workers can barely afford to pay anyway. And
Speaker 1: I think now with no restair, you know, even even
Speaker 1: when it comes back, I think, um, a lot of
Speaker 1: a lot of workers are going to say, why am
Speaker 1: I even living here? Like why don't I just go
Speaker 1: home to Oklahoma? I think I think it's right. I mean,
Speaker 1: I I'm increasingly thinking that this is going to be
Speaker 1: this great reset button for many, many different um ways
Speaker 1: that we look at our life and asset classes and
Speaker 1: all kinds of stuff. And I think you're right. Like,
Speaker 1: one thing that the last decade is really shown is
Speaker 1: that when you have a monetary driven rescue package, if
Speaker 1: you have capital, it was really good to you. And
Speaker 1: this this could be like that breaking point that a
Speaker 1: lot of people go, you know what, I need to
Speaker 1: reevaluate everything. Yeah, exactly, all right. Joe Weber, editor of
Speaker 1: Bloomberg Business Sweet Kate Crater, our food expert for Bloomberg
Speaker 1: and Bloomberg Pursuits. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. It is time
Speaker 1: for the Drive to the Close. Emily Rowland is with us,
Speaker 1: head of Capital Markets forgive me Co, Chief Investment Strategies
Speaker 1: at John Hancock Investment Management, on the phone from Boston, Emily,
Speaker 1: nice to have you here with us. So interesting week,
Speaker 1: a little bit of a breather. It feels like when
Speaker 1: you look at the financial markets, the equity markets, the
Speaker 1: credit markets, do you feel like things are functioning as
Speaker 1: normal as they can be in this situation? Yeah, thanks
Speaker 1: for having me, I think certainly, you know, as it
Speaker 1: relates to fixed income markets, it was it was pretty
Speaker 1: jarring for investors over the past couple of weeks to
Speaker 1: see their bonds or what's supposed to be the ballast
Speaker 1: of their portfolio not really acting as diversifiers the way
Speaker 1: that they are supposed to. So on those days where
Speaker 1: we saw the big declines and equity markets and seeing
Speaker 1: bond yields actually back up, um, you know, was it
Speaker 1: was a pretty remarkable thing to see, and it was
Speaker 1: really had a lot to do with investors just trying
Speaker 1: to raise cash and a lot of selling pressure in
Speaker 1: the high quality bond market. Um. Now, of course we've
Speaker 1: got you know, the FED reacting to this, throwing the
Speaker 1: alphabet soup at the different types of liquidity measures that
Speaker 1: they've put into place, and that has restored some order
Speaker 1: to the fixed income markets, and we do think that
Speaker 1: bonds can continue to act as a ballast of a
Speaker 1: portfolio heading forward. So emily give us a report card
Speaker 1: for the FED so far. I mean, we've heard a
Speaker 1: lot of praise for for J. Powell and the team
Speaker 1: Sam The FED presidents have been out talking. We had
Speaker 1: a couple of exclusive interviews with them with I believe
Speaker 1: Mr Kaplan and Mr Bostick today here on Bloomberg. We
Speaker 1: played that out earlier. How do you rate the FED here? Yeah,
Speaker 1: I think they're doing an exceptional job. I mean, they're
Speaker 1: they've reiterated that they're going to do whatever it takes
Speaker 1: here to prevent a you know, sinister type of credit
Speaker 1: crunch or solvency issue. They can't prevent a recession from happening.
Speaker 1: We are likely in one or entering one right now,
Speaker 1: but they're almost acting as if this is a wartime
Speaker 1: type of environment right now and really throwing everything that
Speaker 1: they can. Um. I've been very busy trying to learn
Speaker 1: every single acronym here um and there again, the FED
Speaker 1: is working hard to kind of deliver like the liquidity
Speaker 1: that the markets so desperately need. Is the fed's cure
Speaker 1: worse than the disease? I think that's you know, that's
Speaker 1: the key question. I mean, you think about the fact
Speaker 1: that we're going to be continuing to grow the amount
Speaker 1: of debt um that's that you know, the US has
Speaker 1: been um, you know, implementing for a long time now.
Speaker 1: I mean you look at the debt to GDP ratio
Speaker 1: for the US or right over right now. Certainly that's
Speaker 1: going to grow, you know, probably not to the levels
Speaker 1: that we've seen in places like Japan UM, but you know,
Speaker 1: that's going to be an issue that we need to
Speaker 1: contend with down the road. Right now, I think there's
Speaker 1: much more pressing matters, and again that's really about providing
Speaker 1: liquidity and a set doing whatever it takes to be
Speaker 1: there for the market. And so Emily, how much do
Speaker 1: you were we I feel like we've heard a fayment
Speaker 1: fair a bit today, especially as sucks across all the
Speaker 1: major industries have traded off about you know, kind of
Speaker 1: a double dip or certainly the sort of roller coaster
Speaker 1: ride that we're in for. How do you plan for
Speaker 1: something like that? How do you sort of position yourself
Speaker 1: correctly for that potential scenario. Listen, trying to call the
Speaker 1: bottom and markets as a feudal effort, and I commend
Speaker 1: people that are trying to be precise in doing but
Speaker 1: it's really challenging. So our view is that you need
Speaker 1: to dollar cost average into this market so you can
Speaker 1: have the ability to participate but also have some protection there.
Speaker 1: We may have further to go here in forming a
Speaker 1: durable bottom. The low point in markets usually comes when
Speaker 1: the economic data bottoms. We're about to get some freely
Speaker 1: ugly economic data. Um, we probably need to see the
Speaker 1: number of cases in the US peak. We're still at
Speaker 1: least a few weeks away from that. And then sentiment,
Speaker 1: I mean sentiment is not, you know, fully washed out here.
Speaker 1: I'm hearing from a lot of advisors that I talked
Speaker 1: to every day asking me, where can I put money
Speaker 1: to work? How do I you know, should I go
Speaker 1: into sick locality? How do I play this? I would
Speaker 1: look to see people become completely pessimistic before I would say, hey,
Speaker 1: look we've seen capitulation. This is a durable bottom. I'm
Speaker 1: open to it. I hope we get there soon, but
Speaker 1: we might have a little bit more pain here as
Speaker 1: we try to form that bottom. I want to go back, though,
Speaker 1: do you think the US is headed to being Japan?
Speaker 1: And you know, I think, yeah, you can talk about that,
Speaker 1: and yes, you know Japan, we've got this low growth,
Speaker 1: low inflation environment. But as you know, if you think
Speaker 1: about it, Japan actually hasn't really done that poorly. Um.
Speaker 1: You look at you know their GDP. Yes, it's one
Speaker 1: and a half percent a year. Is that great? No,
Speaker 1: They've had a great employment market. Um, they've had a
Speaker 1: strong participation rate there. And all the predictions of this
Speaker 1: kind of fiscal catastrophe that everybody's talked about with Japan
Speaker 1: really haven't come to fruition. So is it great that
Speaker 1: we're increasing the deficit? No? Is it? Would it be
Speaker 1: a disaster to be Japan? Maybe not? But I do
Speaker 1: wonder about the FED getting into other areas of buying.
Speaker 1: I mean, typically they can't do any buying unless it's
Speaker 1: you know, securities that have a that have a government guarantee.
Speaker 1: And yet we understand that the FED is is moving
Speaker 1: way beyond that. Um. And I do want her about
Speaker 1: you know, what kind of danger we get into? And
Speaker 1: I do wonder ultimately what's the responsibility, especially those bigger corporations,
Speaker 1: to be ready to have some kind of safety net. Yeah.
Speaker 1: I mean, the FET has definitely done some extraordinary things.
Speaker 1: I never thought I would see the day where they
Speaker 1: were buying corporate bonds and even corporate bond ets like
Speaker 1: l QT. This is pretty remarkable. But back to Japan,
Speaker 1: we still haven't gone as far as Japan. I mean,
Speaker 1: they've been buying equity e t F for a decade now. Um,
Speaker 1: So there's still some unusual tools that the FED hasn't
Speaker 1: even come close to using here. But again I think
Speaker 1: they're they're doing whatever it takes for now. There's still
Speaker 1: things kind of in that in that bag of tools
Speaker 1: that the FED could bring out, but for now, it
Speaker 1: looks like they've done a really nice job restoring order
Speaker 1: to the market. But bottom line, we don't want to
Speaker 1: become Japan. This is not the model that everybody Okay, no,
Speaker 1: we don't, um, but it hasn't been a the disaster
Speaker 1: that I think it's it's made out to be, and
Speaker 1: in fact, a low growth, low and play an environment
Speaker 1: it does punish favors, but it's actually been a good
Speaker 1: environment for both stocks and bonds. If you think about
Speaker 1: it over the last number of years until very recently.
Speaker 1: All Right, we're gonna leave it there. Thank you so much.
Speaker 1: We really appreciate your time. Emily Rowland is co chief
Speaker 1: investment strategist for John Hancock Investment Management, joining us on
Speaker 1: the phone from Boston. We hope you have a safe
Speaker 1: and healthy and hopefully RESTful weekend. I think we can
Speaker 1: all use a couple of days to kind of catch
Speaker 1: our breath, Carol, as we look around and uh, get
Speaker 1: through this week, which really was something. Thanks for listening
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