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Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahma Wicks. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: that Bloomberg dot com. Oil prices surging after President Trump

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Speaker 1: tweeted that he expects and hopes that both Saudi Arabia

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Speaker 1: and Russia would cut back about ten million barrels of

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Speaker 1: oil and maybe substantially more. However, there is a concern

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Speaker 1: about whether this actually is concrete, and you're seeing that

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Speaker 1: in oil prices coming off. Some of the earlier highs up.

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Speaker 1: Spokesman for Vladimir Putin Dmitri Peskovs and the Russian president

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Speaker 1: had not spoken to Crown Prince Mohammad and Bill's bin Selman,

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Speaker 1: raising some confusion about whether this is something that has

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Speaker 1: legs joining us now to discuss. I'm so pleased to

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Speaker 1: say is Stephen Schork, who's been tracking the oil market

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Speaker 1: UH for a very long time. President of the Short Group,

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Speaker 1: Steven Let's just start with the news the idea that

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Speaker 1: President Trump has made it very clear that he wants

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Speaker 1: to get involved to bring these two players to the table.

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Speaker 1: Let's say he succeeds. And let's say that, let's take

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Speaker 1: this on its face value, that they do both cut

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Speaker 1: ten million barrels of oil in production. How much will

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Speaker 1: that matter fundamentally at this point for the price of oil.

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Speaker 1: Uh from a obviously from a supply standpoint, is a

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Speaker 1: significant move. Do we have to keep in mind that

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Speaker 1: on the other side of the equation, And this is

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Speaker 1: what made the Russian Saudi move to put so much

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Speaker 1: oil on the market a month ago so odd, because

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Speaker 1: the world economy is dead for all intents and purposes.

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Speaker 1: And as we just saw with yesterday's report from the

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Speaker 1: weekly report from the e I, A U S crude

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Speaker 1: all producers are still producing way too much crude oil.

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Speaker 1: The price of US export is not even competitive anymore.

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Speaker 1: So the United it is going to now become even

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Speaker 1: more glutted with its own oil. And the refineries can't

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Speaker 1: make any money because the crack spreads, the margins between

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Speaker 1: gasoline and diesel fuel and crwdal have absolutely crashed, so

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Speaker 1: refinery demand here in the United States is dead. So

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Speaker 1: what we've had here is a massive crash on the

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Speaker 1: front end of the curve. Whereas prices today, which normally

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Speaker 1: in a healthy commodity market, trade at a premium to

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Speaker 1: prices tomorrow. But what's happened over the past week is

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Speaker 1: prices today have come crashing down. For instance, at one

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Speaker 1: point last week, oil on the spot market traded at

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Speaker 1: a discount for the same contract a year from now.

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Speaker 1: So what does that mean? Oil is bidding for storage?

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Speaker 1: There's only so much storage capacity around the globe. Here

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Speaker 1: in the United States, our biggest complex of storage is

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Speaker 1: in Oklahoma Cushion, That is the delivery complex of the

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Speaker 1: Namics contract. By July, we're going to be at max

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Speaker 1: capacity in that storage. So now what happens, even if

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Speaker 1: we're producing a greatly reduced rates, demand is going to

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Speaker 1: outpace that, and when we run out of storage capacity,

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Speaker 1: you're looking at potentially another significant leg lower in oil prices.

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Speaker 1: All right, so let me ask the simple question the

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Speaker 1: non energy person, why don't people stop? Why don't these

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Speaker 1: to stop producing oil? It's an excellent question. Here in

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Speaker 1: the United States, the biggest issue is debt. We have

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Speaker 1: a debt bomb in the shale patch. So it's this

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Speaker 1: nasty cycle where I have to produce more because I

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Speaker 1: need cash and to pay down my debt. Now, we

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Speaker 1: just saw Whiting Patroleum file for bankruptcy the other day.

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Speaker 1: That is the first domino and a number of dominoes

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Speaker 1: in this industry that are about to fall. So you

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Speaker 1: will start to see product production pulled back as these

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Speaker 1: smaller producers tip over. The bigger problem is Canada. Given

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Speaker 1: the way they uh dig their oil out of the ground,

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Speaker 1: It's not simply just shutting off production. It is an

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Speaker 1: extremely complicated process. So Canada is stuck. They cannot cut

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Speaker 1: down on their production. So what you're going to see,

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Speaker 1: and we have already started to see in some of

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Speaker 1: the more esoteric oil markets in the planes, you will

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Speaker 1: see negative crud all prices. That is to say, the

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Speaker 1: producers are going to pay you to take the oil

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Speaker 1: away from them. Yeah, we're already hearing about reports of

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Speaker 1: that actually occurring, and I'm just trying to to push

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Speaker 1: this forward. I mean, people are talking about how supplies

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Speaker 1: are not coming offline. Meanwhile, demand has absolutely plummeted. It's

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Speaker 1: not it's almost non existent. When you look at airplanes

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Speaker 1: just not flying around, and I'm just wondering, how much

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Speaker 1: does the supply picture even matt are, given how much

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Speaker 1: currently is in storage, and given the fact that we're

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Speaker 1: not seeing necessarily an end date for when this the

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Speaker 1: demand drop off is gonna is gonna just finally be

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Speaker 1: different or change. That's an excellent point and that's why

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Speaker 1: I'm not buying on this headline or this tweet about

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Speaker 1: US cutting off producers, because this is yes, part of

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Speaker 1: it is supply, but again it's the other side of

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Speaker 1: the variable and demand, and you nailed it. We don't know.

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Speaker 1: The economy is dead. The economy here, they're everywhere around

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Speaker 1: the globe is dead, and we don't know when it's

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Speaker 1: going to be, uh, come come back, because we don't

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Speaker 1: know yet how long this virus is going to stick around.

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Speaker 1: You've got reports that, oh, it will die in the

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Speaker 1: warm weather. You've got other reports, Oh no, it's going

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Speaker 1: to expand in the warm weather. So we still don't know.

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Speaker 1: So as we continue to kick down the road right

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Speaker 1: the the covid Um protocol pushed back to April, you

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Speaker 1: know what, and then it's gonna be pushed back to

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Speaker 1: May thirty one, we're already talking about potentially the NFL

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Speaker 1: season next fall being canceled or being greatly delayed because

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Speaker 1: we simply don't know. So the long we don't know,

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Speaker 1: demand will continue to outstrip whatever production is pulled off

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Speaker 1: of the market. This is unbelievably inconceivable situation we are

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Speaker 1: in right now. So what's the low point that you foresee, UH?

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Speaker 1: For crude prices nine dollars and seventy five cents. That

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Speaker 1: is below that we saw that in April six. So

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Speaker 1: that that so, so we the markets like to go

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Speaker 1: to the extremes nine dollars and seventy five cents for

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Speaker 1: for NIMEX w t I futures, that is the Shark

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Speaker 1: reports in our daily model. That is how low we

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Speaker 1: think we can go. And to that point, guys, we

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Speaker 1: are all into this together. So we hear at the

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Speaker 1: Short Group made a decision two and a half weeks

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Speaker 1: ago to offer our research for free to all market participants.

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Speaker 1: We all need to work together to get through this. So, yes,

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Speaker 1: it's nice that we're getting a pop today include all prices.

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Speaker 1: I don't think it's going to last. Wow, Stephen Shork,

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Speaker 1: thanks so much for joining us. Uh, nine dollars and

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Speaker 1: seventy five cents. I think that's the takeaway here. Stephen Shork,

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Speaker 1: president of the Short Group, Let's get a sense maybe

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Speaker 1: how to think about this market. We welcome Cole Smed.

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Speaker 1: He's a president in portfolio manager of Smed Capital Management. Cole,

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Speaker 1: thanks so much for joining us. Give us your sense

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Speaker 1: of kind of how you're thinking about the markets these

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Speaker 1: days given this just these incredible volatility that we're seeing.

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Speaker 1: But appreciate having me on. This is one of the

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Speaker 1: five greatest buying opportunities the last fifty years, which would

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Speaker 1: be the bottom and seventy four the bottom, and eighty

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Speaker 1: two the bottom, and eight seven the bottom of O

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Speaker 1: nine and today. And I say that because we always

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Speaker 1: get to these junctures and people can always tell you

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Speaker 1: how much worse it will become. Jeffrey Gunlock was the

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Speaker 1: poster child that of the last couple of weeks saying

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Speaker 1: we're not gonna we have not reached the loads of

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Speaker 1: what we're going to see. And at the same time,

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Speaker 1: look at the opportunities it's putting out there where people

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Speaker 1: have no optimism. The reason why oil is rolling is

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Speaker 1: because no one owns it. And if you've got to

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Speaker 1: put a by order in. They're all going into it

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Speaker 1: at the same time. So um so it's just it's

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Speaker 1: such a great time to be alive and be a

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Speaker 1: stock picker, because, um this isn't going to translate into

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Speaker 1: perfect perfection for the index, but it is going to

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Speaker 1: change how we price individual securities. Cool, I'm loving this.

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Speaker 1: I gotta say, I'm sitting here and we've just been

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Speaker 1: like bombarded by gloom for just day after day. It

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Speaker 1: is absolutely depressing. The number we got today actually was

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Speaker 1: emotionally horrific when it came to how many people are

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Speaker 1: being laid off. You said, this is a great time

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Speaker 1: to be alive. It is the buying opportunity of a lifetime.

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Speaker 1: You have economists saying they're flying in the dark and

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Speaker 1: every day they're downgrading their estimates of the US economy,

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Speaker 1: and yet you still have a lot of investors who,

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Speaker 1: like you, see this is a buying opportunity in Lori

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Speaker 1: Calvacina of OURBC just did actually a survey of investors

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Speaker 1: that found a lot of optimism. So where are you seeing.

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Speaker 1: It's sort of your conveying action being vindicated that this

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Speaker 1: is an incredible buying opportunity given how uncertain people are

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Speaker 1: about whether we're even headed towards the next depression. Yeah,

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Speaker 1: it's a it's a great question. Well, first off, you

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Speaker 1: gotta remember the consumer came into this in a great spot.

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Speaker 1: We had the lowest household debt service going back to

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Speaker 1: one we've ever had, and then secondly, last year we

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Speaker 1: had the highest savings rate of a non recessionary year

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Speaker 1: of the last fifty years. So the interesting part of

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Speaker 1: the consumer was actually ready for this because they just

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Speaker 1: weren't borrowing money like normal corporations. In comparison, we're borrowing

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Speaker 1: money and we're seeing some of the effects of that.

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Speaker 1: You know, we work would be the most recent example

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Speaker 1: of what has borrowed money and and you know, a

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Speaker 1: lot of money throwing. Look like now go back, let's

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Speaker 1: go back three years ago when the summer of retail

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Speaker 1: malaise was going on. Someone would have had to step

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Speaker 1: into what seemed like very dark circumstances in retail and

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Speaker 1: a business like Target, Well you look this, your Targets

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Speaker 1: getting lavish with praise by investors because that's a place

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Speaker 1: that you can go, click and collect, and their business

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Speaker 1: has done great through the process. So that that was

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Speaker 1: a kind of a similar circumstances in a sub industry

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Speaker 1: that had very particular circumstance around that. What is the

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Speaker 1: opportunity right now is cyclicality tied to the economy and

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Speaker 1: the consumer and things like oil and financials and things

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Speaker 1: like mal reads out there couldn't be more left for dead.

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Speaker 1: Macy's left the S and P five hundred index today

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Speaker 1: as an example. If those things make a big comeback

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Speaker 1: over the next three to five years, you're going to

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Speaker 1: find the SNP fix not owning them, as they typically

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Speaker 1: do at major low points in buying opportunities in the

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Speaker 1: history of the stock market. So what is your sense

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Speaker 1: of just to give a sense of your optimism, what

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Speaker 1: how do you think the economy is going to react

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Speaker 1: here over the next you know, year or so. Oh,

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Speaker 1: it's a great question. I have a wonderful book for

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Speaker 1: you guys that I picked, the Barton Bigs Wealth, Warre

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Speaker 1: and Wisdom, which really deals with the circumstances around World

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Speaker 1: War Two between nineteen and forty two, particularly what it

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Speaker 1: was like for the UK stock market, what it was

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Speaker 1: like for the U stock market. You get two points

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Speaker 1: where the news can't get worse and bad news continues

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Speaker 1: to come out after that. It's just it's less bad. Okay.

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Speaker 1: So when we talk about flattening the curve and that

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Speaker 1: kind of stuff type the coronavirus, we are talking about

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Speaker 1: news becoming less bad and and and the beautiful part

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Speaker 1: about this is it's fun to read a book and say,

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Speaker 1: here's what happened in the past, and you can understand

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Speaker 1: life looking back, but you have to live it forward.

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Speaker 1: And that's the great part about this opportunity is that

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Speaker 1: while people are telling you just terrible things, you know

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Speaker 1: that at some point the optimists always win. And by

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Speaker 1: the way, they always win. There's just no question about that.

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Speaker 1: And what you want to do with capital right now

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Speaker 1: is the most important question, not whether you want to

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Speaker 1: be an owner of businesses that are publicly traded. Cool.

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Speaker 1: I want to drink your kool aid so bad, just

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Speaker 1: because it's so depressing. I gotta say, you know, when

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Speaker 1: I say it's so depressing, you say that that that

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Speaker 1: news can't get it that much worse it is every day.

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Speaker 1: I mean, really, reach yeah it trust me here. You

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Speaker 1: know you gotta remember too, you guys are sitting in

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Speaker 1: New York. You know our companies based in Seattle. We

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Speaker 1: were one of the hotspots, just like you are. So

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Speaker 1: you gotta remember a lot of the news media is

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Speaker 1: tied to a geography that's being greatly affected in your lives,

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Speaker 1: just like ours have been greatly affected. The problem with

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Speaker 1: that is that's not Peory Illinois, and a lot of

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Speaker 1: this have to do about what's going to go on

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Speaker 1: in America. Secondly, some of your writers have been writing

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Speaker 1: about this. What typically happens when we trap Americans at

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Speaker 1: home for period of time. We tend to have a

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Speaker 1: lot of babies being birthed. And guess what that is

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Speaker 1: so good for the economy and the consumer and cyclical

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Speaker 1: businesses like autos and homes. And no one's saying, oh,

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Speaker 1: by the way, what do you do when the things

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Speaker 1: are slow? And your spouse it's quite a fun thing.

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Speaker 1: You go, you go to the alcohol story. You got

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Speaker 1: your alcohol story. I got four kids, So I'm preaching

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Speaker 1: to the choir. Al right, Okay, So aside been making

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Speaker 1: babies as people are sequestered in their homes, drinking and

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Speaker 1: sequestered with their spouses, I am wondering going forward in

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Speaker 1: terms of some of the massive shifts in the economy

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Speaker 1: that people are talking about this increases pushed toward Uh,

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Speaker 1: you know, an online world where you have online shopping,

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Speaker 1: where you have the retailers that were struggling before closing down,

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Speaker 1: where you have malls being either repurposed or left to die.

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Speaker 1: I mean, what do you say about that? Yeah? I

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Speaker 1: think about the oil shocks in the nineteen seventies. How

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Speaker 1: fun was it to sit in a gas line? I

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Speaker 1: mean I was not born then, but just the thought

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Speaker 1: of that, and you know, hearing it from my parents,

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Speaker 1: is that that that was That was not fun? That

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Speaker 1: was depressing. Um. Now, did they ever want to deal

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Speaker 1: with that circumstance again or be in that situation? The

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Speaker 1: answer is no. Forever they were changed because of that circumstance. So,

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Speaker 1: for example, to your question about online shopping, can I

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Speaker 1: shop online right now? Yes? The wonderful delivery person from

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Speaker 1: Amazon will come to my door anytime I want right now.

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Speaker 1: You're lucky because we're struggling with that to carry on. Yeah,

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Speaker 1: how fun is that? Oh? It's depressing. Reminds me of

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Speaker 1: that time we had COVID. You remember that. Well, that

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Speaker 1: does not sound like a lot of fun. So much

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Speaker 1: like if you came from communist Russia, thinking of bread

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Speaker 1: redlines that the connotation in your mind, it doesn't not

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Speaker 1: something you ever want to look at again. So I

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Speaker 1: think the one inevitable I can guarantee is change. And

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Speaker 1: what we're doing right now is not what we'll be

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Speaker 1: doing in twelve months. But the market has reoriented stock

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Speaker 1: market capitalizations around what we're doing right now. What the

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Speaker 1: wise man does at the beginning, the fool does at

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Speaker 1: the end. And I think there's a lot of fools

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Speaker 1: trying to say, well, what if this goes on for

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Speaker 1: two years? Just like they said, oh, Britain might be

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Speaker 1: obliterated as the Germans crossed the Channel and ruin the

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Speaker 1: world in nineteen forty, they could always tell us how

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Speaker 1: much worse it was going to get. The problem is,

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Speaker 1: you know, Churchill was optimistic even though he was depressed, Okay,

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Speaker 1: and that produced a lot of success in stocks the

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Speaker 1: next five to ten years when no one thought good

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Speaker 1: circumstances could come out of that either. All right, cool,

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Speaker 1: let me just I know you kind of touched on

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Speaker 1: a little bit. Just summarize for us kind of the

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Speaker 1: some sectors that you're looking at right now. Yeah, So, uh,

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Speaker 1: in the discretionary world. There's very interesting opportunities. Um. You know,

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Speaker 1: some of the things that could to open up is

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Speaker 1: there's businesses that can benefit from more people having trouble

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Speaker 1: in credit or income. So we've been out there looking

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Speaker 1: at businesses that have that cyclicality tied to the consumer. Um,

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Speaker 1: we own Chevron. The oil world is only looking more

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Speaker 1: attractive every day. Uh, we own mace rich a mall rate.

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Speaker 1: I mean, uh you could you could take the market

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Speaker 1: cap of most of anything dealing with stuff that you

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Speaker 1: do going out in the evening right now and you

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Speaker 1: could fit that into any technology stock you'd like in

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Speaker 1: terms of total market cap. So uh, you know, consumer cyclical,

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Speaker 1: tide economy and heavily beat up with insider buying. Right now,

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Speaker 1: the insiders are showing their hand and like I said,

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Speaker 1: it's a stock picker. It's just a dream. Course Mead,

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Speaker 1: keep living that dream. Thanks for bringing us some some

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Speaker 1: optimism on a day where there is very little of it.

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Speaker 1: Colsemeade Managing director and portfolio manager at Smeat Capital Management,

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Speaker 1: with three point three billion dollars of assets under management

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Speaker 1: based in Seattle, another one of the hotspots for the virus.

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Speaker 1: In addition, to New York City and parts beyond as

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Speaker 1: you like to save, Paul, Paul. The number that came

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Speaker 1: out today was devastating when it came to the jobless claims,

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Speaker 1: six point six five million jobless claims, blowing away the

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Speaker 1: previous record set last week a three point one million claims,

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Speaker 1: which was revised upward. The picture is bleak getting bleaker,

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Speaker 1: and it's dramatic, and it's painful, and the human stories

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Speaker 1: behind these numbers are devastating. Lena Shilgetava, Senior US economist

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Speaker 1: for Bloomberg Economics, joining us now, Helena, when you dig

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Speaker 1: into these numbers, what do you find when it comes

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Speaker 1: to the job sectors that are disproportionately affected? Good morning, Lisa. Indeed,

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Speaker 1: we are really lucky to be employed u in the

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Speaker 1: situation and working from home, but a lot of people there,

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Speaker 1: especially small businesses, devastated by this situation. So the extraordinary

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Speaker 1: increased reflected in today's numbers in jobless claims. This number

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Speaker 1: is not only showing the inflow of new layoffs, but

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Speaker 1: it is also showing a catch up in application processing. UH,

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Speaker 1: people were just filing for claims, but UH, the labor

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Speaker 1: departments were not able to process all the claims in

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Speaker 1: prior weeks. So we will continue to see the numbers

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Speaker 1: going forward for several weeks ahead. And if we see

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Speaker 1: these numbers in the vicinity of three to five million persisting,

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Speaker 1: the unemployment rate will climb towards uh something like fift

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Speaker 1: in April. Um. I I really think this situation is

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Speaker 1: not not precedented, and uh it's at this point, you know,

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Speaker 1: making economic forecast is uh very difficult task. So Elena,

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Speaker 1: that's unfortunate. Kind of where I think most people want

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Speaker 1: to go is trying to get a sense of, you know,

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Speaker 1: I guess the second quarter how that might check out.

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Speaker 1: We know it's gonna be bad. We've seen numbers as

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Speaker 1: GDP contractions UM, and then a lot of people had

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Speaker 1: it kind of bouncing back in the third and fourth quarter.

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Speaker 1: Given kind of just as Bloomberg Economics right now is

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Speaker 1: trying to digest this number this morning, just give us broadly,

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Speaker 1: you know, I don't have to give us exact numbers,

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Speaker 1: but broadly, how you think economic growth and contraction might

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Speaker 1: look for the remainder of the year. Uh. So, I

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Speaker 1: think we will not see a V shaped recovery, and

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Speaker 1: not even a U shaped recovery at all. I think

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Speaker 1: we have already um uh kind of course to the

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Speaker 1: point of no return for that. And I think that

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Speaker 1: we'll see very very slow l shaped sort of recovery

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Speaker 1: going forward. Uh. Yes, when this is over, and luckily

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Speaker 1: we will have the cure for uh you know, a

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Speaker 1: vaccine or some medicine for the virus. Uh. This will

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Speaker 1: the economy will slowly go back to normal. But a

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Speaker 1: lot of things I think have been changed, and it's

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Speaker 1: a structural change in my view. Uh. I think we

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Speaker 1: will not go back or cruising or uh, you know,

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Speaker 1: going out as much as we used to. So I

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Speaker 1: think services that will hurt most and for a very

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Speaker 1: long time. Um. In terms of payrolls numbers, remember that

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Speaker 1: we have pay rolls numbers coming out at the end

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Speaker 1: of this week tomorrow. The numbers for much will just

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Speaker 1: only catch the front ege of the economic shutdown in

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Speaker 1: response to the pandemic. April numbers will be mind boggling,

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Speaker 1: probably with millions losing jobs. In the Peril's report for April.

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Speaker 1: I'm looking right now at just some of the breakdown

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Speaker 1: of the state numbers, and you could see the states

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Speaker 1: with the highest number of filings California with more than

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Speaker 1: a million, Pennsylvania with almost eight hundred thousand, New York

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Speaker 1: with almost four hundred and fifty thousand. I mean, these

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Speaker 1: numbers are just mind boggling. Also in Michigan and Ohio

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Speaker 1: seeing some serious uh numbers coming out there. Can you elaborate, Elena,

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Speaker 1: what you say that you do not see people going

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Speaker 1: cruising for a very long time, that you don't think

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Speaker 1: services will recover for the foreseeable future. Why not? Well,

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Speaker 1: because think about it in terms of financial crisis or

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Speaker 1: September eleven. So that changed a lot of things for

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Speaker 1: us permanently, and we just uh, you know, we will

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Speaker 1: not go back as easily as we used to into

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Speaker 1: a lot of these things because people, even if we

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Speaker 1: get the vaccine, even if we have the cure, people

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Speaker 1: will be afraid to do that. And over time we

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Speaker 1: might get back to that. But right away, so let

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Speaker 1: me give you an example. We I'm a board member

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Speaker 1: of Money Mctius of New York. It's a nonprofit organization.

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Speaker 1: We can filt all the meetings go for the rest

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Speaker 1: of the season, so who knows, we will probably go

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Speaker 1: back to webinar, you know, sort of uh uh set

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Speaker 1: So people will not easily go back. People will be

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Speaker 1: scared for a very long time. Elena she Letvia, thank

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Speaker 1: you so much for your thoughts there. Elena she Letiva,

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Speaker 1: senior US economists for Bloomberg Economics, giving us her thoughts

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Speaker 1: and the thoughts of Bloomberg Economics on these just historic

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Speaker 1: jobless claims numbers, Lisa, six point six five million put

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Speaker 1: that in come in in addition to the three point

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Speaker 1: three from last week. That's ten million Americans filing jobs

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Speaker 1: claims just in the last two weeks, which is historic

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Speaker 1: and unprecedented. Last year we had the trade war, particularly

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Speaker 1: between the US and China. This year, it is an

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Speaker 1: information war that is becoming evident every day. Yesterday, Bloomberg

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Speaker 1: News reported that U S Intelligence agents reported that Beijing

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Speaker 1: concealed the extent of the coronavirus epidemic, and how China

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Speaker 1: meanwhile is accusing the United States of seeking to shift

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Speaker 1: the blame for its own handling of the outbreak. Andy

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Speaker 1: Brown joining US now editorial director for the Bloomberg New Economy,

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Speaker 1: joining us from New Hampshire, Andy, just can you give

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Speaker 1: us a sense of the broader picture here as the

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Speaker 1: China tries to sort of massage its image as the

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Speaker 1: beginning of the coronavirus pandemic and as the US perhaps

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Speaker 1: does try to pin the blame on not having better

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Speaker 1: surveillance about how to cope with the virus. Yeah, I mean,

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Speaker 1: just to start with this intelligence assessment that you mentioned, UM,

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Speaker 1: I mean, we don't have any details of how the

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Speaker 1: intelligence services put together this report, and and you know,

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Speaker 1: it has to be said that it would have been

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Speaker 1: far more useful to have had this uh several months

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Speaker 1: or even several weeks ago. Having having said that, the

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Speaker 1: broad assessment that China is faking the numbers UM is

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Speaker 1: not at all surprising. I mean, China, the way that

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Speaker 1: China has handled the data around coronavirus right from the

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Speaker 1: beginning has been problematic. UM. It has impeded a global

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Speaker 1: understanding of the nature of the virus and how it's

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Speaker 1: and how it's spread, and therefore has affected the way

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Speaker 1: that the rest of the world, UM, you know, has

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Speaker 1: has has mustered a defense. UM. You know, there's gigantic inconsistencies.

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Speaker 1: For instance, you know the way that UM, so few

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Speaker 1: cases have been reported outside of Wuhan and surrounding Hubei province,

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Speaker 1: when we know that hundreds of thousands and potentially millions

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Speaker 1: of people left Wuhan, um, you know, just before the

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Speaker 1: Chinese New Year and ceded the virus all around China,

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Speaker 1: uh and in the United States. Bloomberg's own reporting has

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Speaker 1: shown that, you know, patient zero in Seattle had made

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Speaker 1: a a trip to to Wuhan. Having said that, I

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Speaker 1: think you have to also understand this intelligence report within

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00:24:33,760 --> 00:24:36,520
Speaker 1: the context of what you just talked about, which is

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Speaker 1: the new battlefront that China has opened up in the

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Speaker 1: war on coronavirus. Having fought and one significant victories UM

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00:24:44,800 --> 00:24:48,640
Speaker 1: in what they call a people's war on coronavirus, they've

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00:24:48,640 --> 00:24:53,840
Speaker 1: now opened up a propaganda war with disinformation, which of

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00:24:53,840 --> 00:24:57,760
Speaker 1: course is a specialty UM you know of of the

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Speaker 1: authorities in China. So Andy, is there any sense or

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00:25:01,680 --> 00:25:07,400
Speaker 1: any guestimate that you've seen about the real extent in China? Look,

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00:25:07,480 --> 00:25:11,479
Speaker 1: I think you can exaggerate this, right. I mean, you know,

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00:25:12,240 --> 00:25:16,000
Speaker 1: you see we we know that Beijing is is returning

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00:25:16,040 --> 00:25:19,840
Speaker 1: to life. I mean, shoppers are out and about. Um,

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00:25:19,920 --> 00:25:24,320
Speaker 1: you see traffic jams on the Third Ring Road. Friends

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00:25:24,359 --> 00:25:28,639
Speaker 1: of mine who own factories sourced from factories, supply factories

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00:25:28,680 --> 00:25:33,639
Speaker 1: and China telling me that China is pretty much open

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00:25:33,760 --> 00:25:37,040
Speaker 1: for business. I mean not, but they're certainly getting there.

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00:25:37,040 --> 00:25:40,240
Speaker 1: Their problem now is not supply their problem is demanded

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00:25:40,359 --> 00:25:42,520
Speaker 1: that there's nobody in the rest of the world to

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00:25:42,760 --> 00:25:45,639
Speaker 1: buy the stuff coming out of these factories because you know,

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00:25:45,840 --> 00:25:48,800
Speaker 1: the US and Europe are in lockdown. So I think

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00:25:48,840 --> 00:25:51,679
Speaker 1: it's unlikely that China is totally faking it. And it

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00:25:51,760 --> 00:25:55,640
Speaker 1: also has to be said that US data aren't brilliant either.

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00:25:55,760 --> 00:25:58,159
Speaker 1: I mean, it's only in the last few days, you

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00:25:58,200 --> 00:26:00,600
Speaker 1: know that we've had mass testing in the US, which

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00:26:00,600 --> 00:26:03,680
Speaker 1: has enabled you know, the country to get a real

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00:26:03,800 --> 00:26:07,360
Speaker 1: handle on the extent of the problem over here. And

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00:26:07,400 --> 00:26:09,520
Speaker 1: also it hanging. It needs to be said that, you know,

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00:26:09,560 --> 00:26:13,360
Speaker 1: in terms of preparedness, sure, the world would have been

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00:26:13,440 --> 00:26:16,440
Speaker 1: far better off if the Chinese had been transparent right

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00:26:16,520 --> 00:26:20,320
Speaker 1: from the beginning. But you know, um, it's it's only

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00:26:20,359 --> 00:26:24,480
Speaker 1: recently that states in the United States have accepted the

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00:26:24,520 --> 00:26:27,719
Speaker 1: evidence that they've been seeing in in in Italy, in

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00:26:27,800 --> 00:26:31,440
Speaker 1: New York, I mean yesterday, Florida, you know, announces its

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00:26:31,480 --> 00:26:35,480
Speaker 1: stay at home policy. So data globally has been problematic.

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00:26:35,560 --> 00:26:38,800
Speaker 1: Politicians in the in the US, politicians and leaders in

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00:26:38,920 --> 00:26:42,720
Speaker 1: China have not covered themselves in glory in this whole episode,

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00:26:43,040 --> 00:26:45,200
Speaker 1: and so we are into a blame game now, trying

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00:26:45,240 --> 00:26:49,480
Speaker 1: to deflect blame onto the other. Alright, this blame game,

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00:26:49,760 --> 00:26:51,959
Speaker 1: I gotta be honest, this is kind of a time

469
00:26:52,119 --> 00:26:56,040
Speaker 1: of some catastrophic extrapolations on on behalf of the person

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00:26:56,080 --> 00:26:58,080
Speaker 1: speaking right now. So I'm just going to throw this

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00:26:58,240 --> 00:27:01,960
Speaker 1: out there. How much will the blame game escalate? In

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00:27:01,960 --> 00:27:05,639
Speaker 1: other words, what are the consequences besides just throwing you know,

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00:27:06,000 --> 00:27:09,600
Speaker 1: reports at one another and accusations. Is there some sort

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00:27:09,720 --> 00:27:14,440
Speaker 1: of practical consequence either when it comes to trade tensions

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00:27:14,640 --> 00:27:18,520
Speaker 1: or you know, hopefully not, but you know, military altercations

476
00:27:18,560 --> 00:27:22,040
Speaker 1: that could arise from the increasing blame game that we

477
00:27:22,080 --> 00:27:26,120
Speaker 1: see going on absolutely live, many thousands of lives will

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00:27:26,160 --> 00:27:29,639
Speaker 1: be lost, um as a result of the inability of

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00:27:29,760 --> 00:27:33,360
Speaker 1: China and the US to come together at this at

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00:27:33,400 --> 00:27:38,400
Speaker 1: this moment to coordinate their response to coronavirus. I mean,

481
00:27:38,800 --> 00:27:41,359
Speaker 1: you know, I've said this before on the show, but

482
00:27:41,840 --> 00:27:44,359
Speaker 1: scientists in the US, researches in the US, and China

483
00:27:44,440 --> 00:27:47,959
Speaker 1: need to be working together on a vaccine. Um. You know,

484
00:27:48,040 --> 00:27:52,000
Speaker 1: they ought to be coordinating the production and the supply

485
00:27:52,280 --> 00:27:55,680
Speaker 1: of emergency gear which from China, and China still dominates

486
00:27:55,720 --> 00:27:58,920
Speaker 1: the production of face masks, ventilators and so on. Um,

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00:27:59,119 --> 00:28:02,480
Speaker 1: and what's happening now? And we have had uh plane

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00:28:02,480 --> 00:28:06,399
Speaker 1: loans of supplies arriving in the US from China just

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00:28:06,440 --> 00:28:08,720
Speaker 1: the other day, I mean today, or yes, I believe

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00:28:09,160 --> 00:28:11,200
Speaker 1: New England patriots sent a plane over there to to

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00:28:11,520 --> 00:28:14,760
Speaker 1: bring back in. So it's it's happening, but it's happening

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00:28:14,800 --> 00:28:19,119
Speaker 1: in an ad hoc, uncoordinated way, in some cases, in

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00:28:19,240 --> 00:28:23,560
Speaker 1: clandestine way. You know, there's this there's this uh global

494
00:28:23,640 --> 00:28:26,679
Speaker 1: bidding war going on now. But you know between countries,

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00:28:26,720 --> 00:28:32,760
Speaker 1: between nonprofits, between private enterprises, between speculators to try to

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00:28:32,800 --> 00:28:36,760
Speaker 1: get their hands on you know, Chinese equipment. This needs

497
00:28:36,800 --> 00:28:39,400
Speaker 1: to be coordinated at a high level in the US

498
00:28:39,480 --> 00:28:42,760
Speaker 1: and China need to re establish a measure of trust

499
00:28:43,280 --> 00:28:48,680
Speaker 1: in order to make this happen. Andy's globalization dead. I

500
00:28:48,720 --> 00:28:52,080
Speaker 1: don't think globalization is dead, but I don't think we

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00:28:52,240 --> 00:28:55,640
Speaker 1: go back to the way it was before. Um. You know,

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00:28:56,160 --> 00:28:58,479
Speaker 1: it's it's it's one thing to put up borders. It's

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00:28:58,520 --> 00:29:01,000
Speaker 1: relatively easy to put up board. Isn't barriers, And it's

504
00:29:01,120 --> 00:29:03,200
Speaker 1: much much more difficult to take them down. I think

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00:29:03,240 --> 00:29:06,560
Speaker 1: we are going to see supply chains shifting out of China,

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00:29:06,720 --> 00:29:11,120
Speaker 1: starting with medical equipment, as the US realizes that, you know,

507
00:29:11,280 --> 00:29:14,720
Speaker 1: it is incredibly vulnerable in this critical area to Chinese

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00:29:14,760 --> 00:29:18,239
Speaker 1: supply chain. Interesting. Andy Brown, thank you so much for

509
00:29:18,360 --> 00:29:21,240
Speaker 1: joining us. We appreciate your thoughts in your perspective as always,

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00:29:21,280 --> 00:29:25,560
Speaker 1: Andy Brown, editorial director for Bloomberg New Economy. And I

511
00:29:25,560 --> 00:29:27,080
Speaker 1: want to get that last question then or at Lisa,

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00:29:27,120 --> 00:29:30,000
Speaker 1: because there's a lot of people saying that globalization is

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00:29:30,320 --> 00:29:35,520
Speaker 1: it may not be dead, but uh, clearly just on

514
00:29:35,560 --> 00:29:37,680
Speaker 1: the on the downside, it's not what it was. It's

515
00:29:37,720 --> 00:29:40,200
Speaker 1: a it's a good question, it's a really important question.

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00:29:40,240 --> 00:29:42,320
Speaker 1: It's when a lot of people were talking about last

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00:29:42,360 --> 00:29:45,240
Speaker 1: year even saying that you're already seeing supply chains become

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00:29:45,280 --> 00:29:48,640
Speaker 1: more domestic, and you have to wonder whether the coronavirus

519
00:29:48,680 --> 00:29:52,160
Speaker 1: and the effects will actually increase that, uh, that move

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00:29:52,320 --> 00:29:56,120
Speaker 1: to domestic supply chains, given the fact that any inter

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00:29:56,400 --> 00:29:58,800
Speaker 1: connection at this point is a liability, give them what

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Speaker 1: we're looking at. Thanks for listening to the Bloomberg P

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00:30:02,200 --> 00:30:04,760
Speaker 1: and L podcast. You can subscribe and listen to interviews

524
00:30:04,760 --> 00:30:07,920
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. I'm

525
00:30:07,960 --> 00:30:10,720
Speaker 1: Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa

526
00:30:10,720 --> 00:30:13,880
Speaker 1: abram Woyits. I'm on Twitter at Lisa Abramloits. One before

527
00:30:13,880 --> 00:30:16,720
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg

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00:30:16,760 --> 00:30:17,040
Speaker 1: Radio