WEBVTT - Don't Refinance Your House Just Yet, Rates Going Lower

0:00:02.640 --> 0:00:05.320
<v Speaker 1>Welcome to the Bloomberg Penel Podcast. I'm Paul swing you

0:00:05.360 --> 0:00:07.760
<v Speaker 1>along with my co host Lisa Brahmas. Each day we

0:00:07.880 --> 0:00:10.399
<v Speaker 1>bring you the most noteworthy and useful interviews for you

0:00:10.520 --> 0:00:12.600
<v Speaker 1>and your money. Whether at the grocery store or the

0:00:12.640 --> 0:00:15.960
<v Speaker 1>trading floor, find a Bloomberg Penl podcast on Apple podcast

0:00:16.120 --> 0:00:18.040
<v Speaker 1>or wherever you listen to podcasts, as well as at

0:00:18.040 --> 0:00:20.759
<v Speaker 1>Bloomberg dot com. Everyone seeming to have a race to

0:00:20.800 --> 0:00:23.120
<v Speaker 1>the bottom in the face of the coronavirus threat, which

0:00:23.200 --> 0:00:26.840
<v Speaker 1>raises a question is this going to support risk assets

0:00:26.960 --> 0:00:30.040
<v Speaker 1>or does it signal a shift downward in the global

0:00:30.080 --> 0:00:34.280
<v Speaker 1>economy that will ultimately be bearish for anything that relies

0:00:34.280 --> 0:00:36.800
<v Speaker 1>on growth. And joining us here as Carra Kadonna, chief

0:00:36.960 --> 0:00:40.280
<v Speaker 1>US economist for Bloomberg Economics, as well as Damian Sassaur,

0:00:40.640 --> 0:00:44.120
<v Speaker 1>chief Emerging markets credit strategist for a Bloomberg Intelligence Carl,

0:00:44.159 --> 0:00:46.160
<v Speaker 1>I want to start with you, what do you think

0:00:46.200 --> 0:00:48.760
<v Speaker 1>the Bank of Canada saying that the coronavirus represents a

0:00:48.800 --> 0:00:52.280
<v Speaker 1>material negative shock to the Canadian and global outlooks. I

0:00:52.280 --> 0:00:55.000
<v Speaker 1>would agree completely with that type of assessment. So we're

0:00:55.000 --> 0:00:58.279
<v Speaker 1>seeing a supply shock, and then the question is how

0:00:58.280 --> 0:01:00.400
<v Speaker 1>big is the demand shock that accompanies it. Then when

0:01:00.400 --> 0:01:03.160
<v Speaker 1>you see canceled the air fairs and conferences being canceled,

0:01:03.200 --> 0:01:06.000
<v Speaker 1>that's the tip of the iceberg of things of being restricted.

0:01:06.000 --> 0:01:10.640
<v Speaker 1>And then you know, as we get more tests conducted

0:01:10.640 --> 0:01:12.360
<v Speaker 1>here in the US and actually get a better handle

0:01:12.360 --> 0:01:14.480
<v Speaker 1>on what the case count is, UH, then you're going

0:01:14.480 --> 0:01:17.280
<v Speaker 1>to see knock on effects in terms of you know,

0:01:17.319 --> 0:01:20.520
<v Speaker 1>potential schools being closed and that sort of thing, and

0:01:20.800 --> 0:01:23.880
<v Speaker 1>social distancing and quarantines will have a negative impact on

0:01:23.920 --> 0:01:27.400
<v Speaker 1>the economy. So the FED knows that it's medicine takes

0:01:27.400 --> 0:01:29.920
<v Speaker 1>a while to kick in, and so it's jumping out

0:01:29.959 --> 0:01:32.679
<v Speaker 1>there and acting now so that hopefully some of the

0:01:32.720 --> 0:01:35.480
<v Speaker 1>medicine will be flowing by the time we start to

0:01:35.480 --> 0:01:38.520
<v Speaker 1>see more severe impacts. Is a medicine enough damien to

0:01:38.959 --> 0:01:42.080
<v Speaker 1>UH to prompt people to go into emerging markets? Is

0:01:42.080 --> 0:01:45.000
<v Speaker 1>that where they should go now? So basically I would

0:01:45.040 --> 0:01:47.720
<v Speaker 1>say no. I mean, cal makes a great point where

0:01:47.760 --> 0:01:51.000
<v Speaker 1>we're talking about this is supply disruption, but in emerging markets,

0:01:51.040 --> 0:01:52.320
<v Speaker 1>we have to look at it and reverse. We have

0:01:52.360 --> 0:01:55.080
<v Speaker 1>to say, what does the supply disruption mean on demand

0:01:55.120 --> 0:01:58.600
<v Speaker 1>for U S dollars? What's a payment disruption? Look like right,

0:01:58.640 --> 0:02:01.840
<v Speaker 1>And so you know they of Apple, Apple basically is

0:02:01.880 --> 0:02:05.040
<v Speaker 1>now funding all of its key suppliers, most of which

0:02:05.040 --> 0:02:07.320
<v Speaker 1>are based in Southeast Asia, trying to help them through

0:02:07.360 --> 0:02:10.760
<v Speaker 1>the coronavirus and through this divide. Yeah. Um, eventually they're

0:02:10.760 --> 0:02:12.800
<v Speaker 1>going to run out of ammunition to continue helping them.

0:02:12.840 --> 0:02:14.560
<v Speaker 1>Then they go those those suppliers are gonna have to

0:02:14.639 --> 0:02:16.119
<v Speaker 1>turn in where they're gonna have to turn to local

0:02:16.160 --> 0:02:18.760
<v Speaker 1>banks and central banks, and then you start to see

0:02:18.760 --> 0:02:22.440
<v Speaker 1>stress and funding markets and that's becaust simply put, they

0:02:22.480 --> 0:02:26.760
<v Speaker 1>need dollars in order to pay their huge dollar debtloads

0:02:26.760 --> 0:02:29.520
<v Speaker 1>that they're basically incurring right now. And my concern is

0:02:29.560 --> 0:02:32.880
<v Speaker 1>that yesterday's FED cut was not one design to necessarily

0:02:32.919 --> 0:02:36.640
<v Speaker 1>stimulate the US economy. It was more designed to uh

0:02:36.840 --> 0:02:39.440
<v Speaker 1>respond to some of these bottlenecks and stresses that we're

0:02:39.440 --> 0:02:42.560
<v Speaker 1>seeing in the global financial market and that could manifest

0:02:42.639 --> 0:02:44.400
<v Speaker 1>itself in a lot of different ways and and J.

0:02:44.560 --> 0:02:48.040
<v Speaker 1>Powell was very clear about that during his press conference

0:02:48.160 --> 0:02:50.840
<v Speaker 1>that you know, they need to take preemptive action to

0:02:51.080 --> 0:02:54.160
<v Speaker 1>provide some buffers to the economy from financial stresses but

0:02:54.240 --> 0:02:57.640
<v Speaker 1>also from economic stresses and the very supply shock that

0:02:57.720 --> 0:03:00.600
<v Speaker 1>Damian describes for a m also becomes a demand shock.

0:03:00.680 --> 0:03:03.280
<v Speaker 1>If we look at the China p m I numbers

0:03:03.280 --> 0:03:05.760
<v Speaker 1>over the weekend and then some private numbers were released

0:03:05.760 --> 0:03:09.400
<v Speaker 1>after that, it showed a worse stoppage in the Chinese

0:03:09.480 --> 0:03:12.240
<v Speaker 1>economy than what we saw during the global financial crisis.

0:03:12.240 --> 0:03:17.280
<v Speaker 1>And so for Chilean's exporting copper and Australians exporting iron

0:03:17.360 --> 0:03:20.760
<v Speaker 1>ore and coal, UH, that shock becomes a real demand

0:03:20.760 --> 0:03:22.480
<v Speaker 1>shock they have to contend with, which is why we

0:03:22.560 --> 0:03:27.240
<v Speaker 1>saw Australia cutting rates earlier this week, Canada today, and

0:03:27.320 --> 0:03:29.639
<v Speaker 1>a couple other central banks piling in as well. The

0:03:29.919 --> 0:03:31.600
<v Speaker 1>one thing I'll just throw in here is a footnote.

0:03:31.960 --> 0:03:35.560
<v Speaker 1>The FED has a vast network of business contexts, both

0:03:35.560 --> 0:03:39.440
<v Speaker 1>financials and non financials, right so as they're assessing what's

0:03:39.480 --> 0:03:43.320
<v Speaker 1>happening at key economic shock events like a blizzard or

0:03:43.360 --> 0:03:46.480
<v Speaker 1>a hurricane or the current situation, they're talking to those

0:03:46.520 --> 0:03:49.440
<v Speaker 1>business contacts and getting a better sense of what's happening

0:03:49.440 --> 0:03:51.320
<v Speaker 1>on the ground. They're not waiting for it to show

0:03:51.360 --> 0:03:54.040
<v Speaker 1>up in the economic data. And I think contacting those

0:03:54.080 --> 0:03:58.240
<v Speaker 1>business businesses UH in the various districts led them to

0:03:58.280 --> 0:04:00.960
<v Speaker 1>a conclusion that this is a real shock that has

0:04:01.000 --> 0:04:02.680
<v Speaker 1>to be contended with. I mean, when we have to

0:04:02.680 --> 0:04:05.920
<v Speaker 1>remember here is that post global financial crisis, Basil three

0:04:06.080 --> 0:04:09.600
<v Speaker 1>was designed with the premise that it's really financial, non

0:04:09.720 --> 0:04:12.440
<v Speaker 1>operating deposits that are slippery, that can come and go

0:04:12.560 --> 0:04:15.360
<v Speaker 1>as they please. This is not that this is a

0:04:15.520 --> 0:04:18.960
<v Speaker 1>hit on operating deposits at banks, which if you look

0:04:19.000 --> 0:04:21.200
<v Speaker 1>at your high quality liquid as the portfolios and your

0:04:21.320 --> 0:04:23.479
<v Speaker 1>LCR ratios. I'm not going to go into the What

0:04:23.560 --> 0:04:26.080
<v Speaker 1>it means is that this is not something that Basil

0:04:26.160 --> 0:04:28.880
<v Speaker 1>three was designed to prevent. So despite you have these

0:04:28.880 --> 0:04:31.200
<v Speaker 1>swap lines in with central banks and all this other stuff,

0:04:31.440 --> 0:04:35.279
<v Speaker 1>it's really gonna weigh on bank reserves if this persists

0:04:35.279 --> 0:04:37.479
<v Speaker 1>for that much long. Okay, so let's take a step back,

0:04:37.560 --> 0:04:40.640
<v Speaker 1>because what we're really talking about is how much are

0:04:40.640 --> 0:04:45.279
<v Speaker 1>we seeing financial market stress in addition to potential economic

0:04:45.360 --> 0:04:48.000
<v Speaker 1>stress to come. And I think that that's been very

0:04:48.080 --> 0:04:51.119
<v Speaker 1>unclear to people who are watching the market saying, look,

0:04:51.560 --> 0:04:54.440
<v Speaker 1>this is a potential economic shock, but the banks are

0:04:54.520 --> 0:04:57.039
<v Speaker 1>in good shape. Damian, are you saying that's not true.

0:04:57.360 --> 0:04:59.960
<v Speaker 1>I'm saying that the banks are in good shape. I'm

0:05:00.040 --> 0:05:02.320
<v Speaker 1>just saying that a lot of the buffers that have

0:05:02.360 --> 0:05:04.800
<v Speaker 1>been put into place, we're not really ready to contend

0:05:04.839 --> 0:05:07.919
<v Speaker 1>with something like this, a real supply disruption on the

0:05:07.960 --> 0:05:10.080
<v Speaker 1>operating level. And so, you know, you just look at

0:05:10.080 --> 0:05:12.040
<v Speaker 1>Governor Karrel's recent speech, you know where he was talking

0:05:12.080 --> 0:05:14.599
<v Speaker 1>about opening up the discount window. I mean kind of

0:05:14.640 --> 0:05:16.360
<v Speaker 1>pre essent in the world we're living in right now.

0:05:16.400 --> 0:05:18.520
<v Speaker 1>And then you take in conjunction with that, Carl, you know,

0:05:18.720 --> 0:05:21.280
<v Speaker 1>just the fact that you know there is the market

0:05:21.320 --> 0:05:24.279
<v Speaker 1>now you see library spreads privately, you know, you just

0:05:24.320 --> 0:05:25.880
<v Speaker 1>see that the markets are starting to price in the

0:05:25.880 --> 0:05:28.279
<v Speaker 1>promise of quant easing could come. Well, but this raises

0:05:28.279 --> 0:05:32.039
<v Speaker 1>a question about the Fed's impact here. And people think

0:05:32.040 --> 0:05:35.719
<v Speaker 1>of it as mostly able to stimulate through the financial system,

0:05:35.760 --> 0:05:38.840
<v Speaker 1>through the banking system. What can the effect be on

0:05:38.920 --> 0:05:41.720
<v Speaker 1>the real economy? How can we start to look for

0:05:41.800 --> 0:05:44.240
<v Speaker 1>the medicine being felt to the real economy. Sure, well,

0:05:44.240 --> 0:05:48.160
<v Speaker 1>there's important psychological impacts from this, Right, So when we

0:05:48.400 --> 0:05:52.080
<v Speaker 1>look at the financial market shock, the wealth effect, which

0:05:52.360 --> 0:05:55.080
<v Speaker 1>which is true for both households and corporates of a

0:05:56.120 --> 0:05:59.320
<v Speaker 1>decline in the SMP. Right, we can compare this to

0:06:00.320 --> 0:06:03.400
<v Speaker 1>very recent history. In in Q four, we had a

0:06:04.120 --> 0:06:07.119
<v Speaker 1>correction in the smp UH and there was a very

0:06:07.560 --> 0:06:12.000
<v Speaker 1>visible negative consequence for consumer spending in the following couple

0:06:12.000 --> 0:06:15.040
<v Speaker 1>of quarters. In the same thing for business investment trends. Right,

0:06:15.080 --> 0:06:17.400
<v Speaker 1>if you're a business in your stock is getting pummeled,

0:06:17.880 --> 0:06:20.880
<v Speaker 1>You're you're probably gonna hesitate before you take some aggressive

0:06:21.320 --> 0:06:23.440
<v Speaker 1>investment measures and go out on a limb on new

0:06:23.440 --> 0:06:26.400
<v Speaker 1>projects and whatnot. So the Fed stepping in to lower

0:06:26.520 --> 0:06:31.400
<v Speaker 1>rates reduces your financing cost. Also, it helps to stifle

0:06:31.520 --> 0:06:34.160
<v Speaker 1>that risk off trade because it's a lot less appealing

0:06:34.560 --> 0:06:37.839
<v Speaker 1>to park money into uh you know something uh R

0:06:38.240 --> 0:06:40.800
<v Speaker 1>rating a return close to Fed funds now compared to

0:06:41.040 --> 0:06:43.919
<v Speaker 1>two days ago. And we're gonna be hearing from St.

0:06:43.960 --> 0:06:47.680
<v Speaker 1>Louis FED President James Bullard coming up in just about

0:06:47.800 --> 0:06:51.800
<v Speaker 1>five minutes here with Kathleen Hayes of Bloomberg Television, who

0:06:51.839 --> 0:06:55.279
<v Speaker 1>will be will be broadcasting that live. What are you

0:06:55.360 --> 0:06:58.719
<v Speaker 1>hoping to hear from Jim Bullard, Damien Well? I would

0:06:58.800 --> 0:07:00.520
<v Speaker 1>like to hear a little bit more about what was

0:07:00.600 --> 0:07:02.080
<v Speaker 1>the reason. I mean we didn't get much from share

0:07:02.080 --> 0:07:04.560
<v Speaker 1>Powell yesterday. I mean he was very tight lipped. I'd

0:07:04.560 --> 0:07:06.800
<v Speaker 1>like to see a little bit more um color as

0:07:06.839 --> 0:07:08.440
<v Speaker 1>to you know, what was this, what was the real

0:07:08.480 --> 0:07:11.120
<v Speaker 1>intention here? I think, you know, we heard moral hazard,

0:07:11.160 --> 0:07:14.240
<v Speaker 1>those words ballied about yesterday time and time again. How

0:07:14.320 --> 0:07:17.000
<v Speaker 1>you know, what does the FED know that we don't know? Right?

0:07:17.080 --> 0:07:19.440
<v Speaker 1>And so I think a lot of those questions are

0:07:19.520 --> 0:07:22.040
<v Speaker 1>very real, and like you said, the psychological impact of

0:07:22.120 --> 0:07:25.080
<v Speaker 1>that can be devastating if the FED is intended, and

0:07:25.160 --> 0:07:27.560
<v Speaker 1>given the Fed's designed to keep you know, uh, you know,

0:07:27.640 --> 0:07:32.320
<v Speaker 1>inflation low and employment full. Carl Well, I'm looking to

0:07:32.360 --> 0:07:35.560
<v Speaker 1>hear from Jim Bullard how he would expect to proceed

0:07:35.640 --> 0:07:37.840
<v Speaker 1>from here. So we've seen a fifty basis point cut.

0:07:38.480 --> 0:07:40.280
<v Speaker 1>I think that we're going to see more. So my

0:07:40.320 --> 0:07:43.160
<v Speaker 1>team is looking for two more five basis point cuts

0:07:43.200 --> 0:07:47.040
<v Speaker 1>at the actual meetings. Not not emergency moves, but certainly

0:07:47.080 --> 0:07:49.960
<v Speaker 1>if the narrative starts to get away from uh, you know,

0:07:50.080 --> 0:07:53.920
<v Speaker 1>uh reality or from a rational expectations here, then the

0:07:53.920 --> 0:07:57.120
<v Speaker 1>FED would have to be aggressive once again. So just

0:07:57.360 --> 0:08:01.040
<v Speaker 1>kind of hearing what he thinks is the appropriate response

0:08:01.080 --> 0:08:04.320
<v Speaker 1>from policy makers more broadly, not just monitoring policy makers.

0:08:04.520 --> 0:08:06.800
<v Speaker 1>No one, including the FED has the illusion here that

0:08:06.880 --> 0:08:08.400
<v Speaker 1>this is a problem that can be fixed by the

0:08:08.440 --> 0:08:12.400
<v Speaker 1>FED alone. So sorry, just one last thing. Don't refinance

0:08:12.440 --> 0:08:15.400
<v Speaker 1>your homelans just yecause rates are going lower. Damian Sasaur

0:08:15.560 --> 0:08:19.800
<v Speaker 1>with a prediction. Damien Sassaur of Bloomberg Intelligence, car Kadada

0:08:19.840 --> 0:08:22.560
<v Speaker 1>of Bloomberg Economics, thank you both so much for being

0:08:22.600 --> 0:08:31.760
<v Speaker 1>with us. How significant is the disruption from coronavirus fears?

0:08:31.800 --> 0:08:33.760
<v Speaker 1>This has been one of the big questions that people

0:08:33.760 --> 0:08:36.200
<v Speaker 1>are trying to grapple with and price in the markets

0:08:36.520 --> 0:08:39.520
<v Speaker 1>as we game out a scenario in which there could

0:08:39.520 --> 0:08:43.240
<v Speaker 1>be some sort of downturn recession, not recession, temporary V

0:08:43.360 --> 0:08:46.520
<v Speaker 1>shaped you shape. Joining us here is Shelley Banjo, Asia

0:08:46.559 --> 0:08:50.280
<v Speaker 1>tech reporter for Bloomberg. Had been living in Hong Kong

0:08:51.080 --> 0:08:53.880
<v Speaker 1>right now. Where are you living? We're camped out in

0:08:53.920 --> 0:08:56.960
<v Speaker 1>our parents and my parents house in Dallas, Texas. Okay,

0:08:56.960 --> 0:08:59.360
<v Speaker 1>So can you give us a sense before you decided

0:08:59.400 --> 0:09:02.360
<v Speaker 1>to leave of what it was like in Hong Kong

0:09:02.920 --> 0:09:06.839
<v Speaker 1>as the fear of coronavirus swirled in sure. So, Hong Kong,

0:09:06.960 --> 0:09:09.440
<v Speaker 1>I think is a really interesting case because if you

0:09:09.559 --> 0:09:12.640
<v Speaker 1>look at it right now, the cases are actually quite

0:09:12.679 --> 0:09:16.760
<v Speaker 1>lower percentage wise compared to China UM and so it

0:09:16.840 --> 0:09:19.480
<v Speaker 1>seems like a lot of these draconian measures are working,

0:09:19.600 --> 0:09:23.199
<v Speaker 1>and yet it's not. It's not the greatest place to

0:09:23.320 --> 0:09:25.600
<v Speaker 1>want to be right now. So a few weeks ago

0:09:26.080 --> 0:09:29.280
<v Speaker 1>we uh Bloomberg shut down their offices as as well

0:09:29.320 --> 0:09:33.400
<v Speaker 1>as many other businesses. Schools were closed. Um, and we

0:09:33.440 --> 0:09:35.720
<v Speaker 1>have an eighteen month old child, and so we decided,

0:09:35.840 --> 0:09:39.160
<v Speaker 1>you know what, it's very difficult to be in a

0:09:39.200 --> 0:09:43.239
<v Speaker 1>tiny apartment with a young child when playgrounds and playrooms

0:09:43.240 --> 0:09:45.880
<v Speaker 1>and things like that are closed. So we decided to um,

0:09:46.040 --> 0:09:48.520
<v Speaker 1>go to Dallas and stay with my parents for a

0:09:48.559 --> 0:09:50.960
<v Speaker 1>little while. Okay, And can you give us a sense

0:09:51.000 --> 0:09:54.600
<v Speaker 1>before that of just sort of the fear factor. Are

0:09:54.640 --> 0:09:57.720
<v Speaker 1>people staying inside? I mean it sounds like restaurants where

0:09:57.720 --> 0:10:00.640
<v Speaker 1>they open. Was everything just sort of closed? Yeah, at

0:10:00.640 --> 0:10:03.720
<v Speaker 1>the time, there were a fair amount of grocery stores

0:10:03.760 --> 0:10:08.200
<v Speaker 1>and um and restaurants that were open. But it was

0:10:08.280 --> 0:10:10.520
<v Speaker 1>right around then we started seeing people do runs on

0:10:10.600 --> 0:10:13.080
<v Speaker 1>toilet paper. That was like a really big thing in

0:10:13.120 --> 0:10:15.880
<v Speaker 1>Hong Kong. People started a rumor that there wasn't gonna

0:10:15.880 --> 0:10:18.400
<v Speaker 1>be enough toilet paper, and then everybody rushed. Um. You'd

0:10:18.400 --> 0:10:22.000
<v Speaker 1>see lines outside of the pharmacies every single morning as

0:10:22.000 --> 0:10:23.920
<v Speaker 1>soon as they opened up, and got a new shipment

0:10:24.120 --> 0:10:29.000
<v Speaker 1>in for hand sanitizer masks and things like. Okay, so

0:10:29.080 --> 0:10:31.760
<v Speaker 1>looking forward, can we get a sense of how quickly

0:10:31.800 --> 0:10:34.240
<v Speaker 1>things have come back online and how much of a

0:10:34.280 --> 0:10:37.800
<v Speaker 1>template this is for what we can expect potentially here

0:10:37.880 --> 0:10:40.520
<v Speaker 1>if it continues to spread. Well, schools are still closed

0:10:40.520 --> 0:10:42.640
<v Speaker 1>and a lot of businesses are still closed. Some of

0:10:42.679 --> 0:10:46.959
<v Speaker 1>the businesses have kept open throughout this entire thing. Um,

0:10:47.160 --> 0:10:50.760
<v Speaker 1>grocery stores are still being stocked. Um, you know, people

0:10:50.800 --> 0:10:53.280
<v Speaker 1>can now get toilet paper again. So people are happy

0:10:53.320 --> 0:10:57.600
<v Speaker 1>about that. Life goals now, But what about when it

0:10:57.679 --> 0:11:00.719
<v Speaker 1>comes to technology production? What it you know, that was

0:11:00.760 --> 0:11:03.319
<v Speaker 1>one of the big questions with manufacturing and supply chains.

0:11:03.559 --> 0:11:06.720
<v Speaker 1>So it's a completely different story. In mainland China, where

0:11:06.800 --> 0:11:09.560
<v Speaker 1>most of the production is, the lot of the supply

0:11:09.640 --> 0:11:14.080
<v Speaker 1>chains have started slowly opening up again, uh slowly, uh

0:11:14.360 --> 0:11:17.640
<v Speaker 1>you know, slowly adding production workers, but they're nowhere near

0:11:18.240 --> 0:11:22.080
<v Speaker 1>uh act capacity or um you know, bringing their workers

0:11:22.200 --> 0:11:25.760
<v Speaker 1>over and um they've reopen factories, but then they need

0:11:25.760 --> 0:11:28.199
<v Speaker 1>to quarantine their workers for a few weeks to make

0:11:28.200 --> 0:11:31.880
<v Speaker 1>sure that as they travel to wherever the factory is

0:11:31.920 --> 0:11:36.320
<v Speaker 1>from their hometowns, that they haven't contracted the virus, so

0:11:36.679 --> 0:11:42.200
<v Speaker 1>factory production is still you know, um not you know normal.

0:11:42.600 --> 0:11:45.840
<v Speaker 1>So there's been a lot of criticism around the Chinese

0:11:45.880 --> 0:11:50.959
<v Speaker 1>response to the coronavirus, lack of transparency, numbers changing. How

0:11:51.000 --> 0:11:55.280
<v Speaker 1>does the response from the Trump administration compare? Well, I

0:11:55.320 --> 0:11:58.600
<v Speaker 1>think that the Trump administration had a fair a bit

0:11:58.880 --> 0:12:01.920
<v Speaker 1>of more time to kind of decide what their response

0:12:02.040 --> 0:12:05.120
<v Speaker 1>was going to be. Uh So, you know, I think

0:12:05.200 --> 0:12:09.000
<v Speaker 1>that it is something important to take to take seriously.

0:12:09.120 --> 0:12:10.480
<v Speaker 1>You know, you get a lot of questions like is

0:12:10.520 --> 0:12:12.800
<v Speaker 1>this panic? Are people panicked? But you know what, this

0:12:12.880 --> 0:12:16.320
<v Speaker 1>is a really important thing to take seriously, and so

0:12:16.440 --> 0:12:19.160
<v Speaker 1>I don't think it's a panic at all all right,

0:12:19.240 --> 0:12:22.560
<v Speaker 1>and going forward, just based on how quickly things are

0:12:22.600 --> 0:12:25.680
<v Speaker 1>sort of getting back to normal within Hong Kong, does

0:12:25.679 --> 0:12:29.080
<v Speaker 1>it give you optimism a sense that things can come

0:12:29.120 --> 0:12:31.360
<v Speaker 1>back online pretty quickly, or does it give you a

0:12:31.400 --> 0:12:35.679
<v Speaker 1>sense of sort of a little bit of an ominous

0:12:36.200 --> 0:12:38.520
<v Speaker 1>sense going forward? I think Hong Kong is still in

0:12:38.559 --> 0:12:40.560
<v Speaker 1>a holding pattern. I don't think things are starting to

0:12:40.600 --> 0:12:45.320
<v Speaker 1>come back online yet. And so until uh, schools um open,

0:12:45.880 --> 0:12:48.840
<v Speaker 1>businesses won't open, and until businesses won't open, you know,

0:12:48.840 --> 0:12:53.240
<v Speaker 1>everybody's kind of working from home and productivity does slow. Um.

0:12:53.360 --> 0:12:56.200
<v Speaker 1>And so I think the uncertainty has driven a lot

0:12:56.240 --> 0:12:59.040
<v Speaker 1>of people out of Hong Kong altogether, and so it

0:12:59.080 --> 0:13:02.120
<v Speaker 1>has a big pet population in Hong Kong. I think

0:13:02.120 --> 0:13:04.480
<v Speaker 1>a lot of those people are gone and aren't going

0:13:04.559 --> 0:13:08.040
<v Speaker 1>to come back. Um. So we're going back. Um, we're

0:13:08.080 --> 0:13:10.920
<v Speaker 1>planning on going back right now. UM, so we'll see

0:13:10.960 --> 0:13:14.160
<v Speaker 1>any sense when. I don't know yet when. And what

0:13:14.200 --> 0:13:17.040
<v Speaker 1>about your ex pet friends. Uh, A lot of people

0:13:17.080 --> 0:13:19.160
<v Speaker 1>I know left and are not coming back. And they're

0:13:19.200 --> 0:13:21.400
<v Speaker 1>not coming back just because they think that this uncertainty

0:13:21.440 --> 0:13:24.120
<v Speaker 1>is going to happen again. Yeah, And Hong Kong has

0:13:24.120 --> 0:13:27.000
<v Speaker 1>a special uh circumstance of dealing with the protest for

0:13:27.040 --> 0:13:30.760
<v Speaker 1>the last six months before that, and so the economy

0:13:30.880 --> 0:13:34.960
<v Speaker 1>has really is in a recession. And h it's hard

0:13:35.040 --> 0:13:38.000
<v Speaker 1>to see mainland Chinese tourists coming back. It's hard to

0:13:38.040 --> 0:13:42.640
<v Speaker 1>see um, you know, tourism just generally coming back. And uh,

0:13:42.679 --> 0:13:45.560
<v Speaker 1>you know people who are living there, uh, you know

0:13:45.640 --> 0:13:48.200
<v Speaker 1>want to be there, and you know they but if

0:13:48.280 --> 0:13:51.160
<v Speaker 1>businesses closed and shut down, then people are not gonna

0:13:51.160 --> 0:13:52.439
<v Speaker 1>have jobs and they're not going to be able to

0:13:52.480 --> 0:13:55.240
<v Speaker 1>go out and spend and it's hard to see how

0:13:55.480 --> 0:13:58.679
<v Speaker 1>Hong Kong's economy comes back in the short term. Well,

0:13:58.679 --> 0:14:00.800
<v Speaker 1>Shelley Banto, it is great to see you in person,

0:14:01.559 --> 0:14:06.080
<v Speaker 1>however unfortunate under the circumstances. Shelley Banjo, Asia tech reporter

0:14:06.240 --> 0:14:09.439
<v Speaker 1>for Bloomberg News, normally based in Hong Kong, here in

0:14:09.480 --> 0:14:26.920
<v Speaker 1>New York City with US super Tuesday was quite a

0:14:27.000 --> 0:14:30.560
<v Speaker 1>day for Joe Biden with some decisive wins, particularly in

0:14:30.600 --> 0:14:35.720
<v Speaker 1>South Carolina, becoming the candidate for Bernie Sanders to beat.

0:14:35.960 --> 0:14:40.520
<v Speaker 1>Just crossing the terminal, UH, Michael Bloomberg, majority owner and

0:14:40.600 --> 0:14:45.520
<v Speaker 1>founder of Bloomberg LP was dropping his presidential or suspending,

0:14:45.560 --> 0:14:50.480
<v Speaker 1>i should say, his presidential candidate campaign and endorsing Joe Biden.

0:14:50.640 --> 0:14:55.640
<v Speaker 1>And this comes after Clobachar and Pete Puttag dropped out

0:14:55.720 --> 0:14:59.520
<v Speaker 1>and also went behind Joe Biden. They're also are reports

0:15:00.000 --> 0:15:04.000
<v Speaker 1>that Elizabeth Warren, Senator is reassessing her campaign, so it

0:15:04.040 --> 0:15:07.320
<v Speaker 1>appears that the field is getting narrowed down to Bernie

0:15:07.400 --> 0:15:10.920
<v Speaker 1>Sanders and Joe Biden. I want to bring in Rick Davis,

0:15:10.920 --> 0:15:14.520
<v Speaker 1>partner at Stone Court Capital of Bloomberg Politics contributor UH

0:15:14.520 --> 0:15:17.800
<v Speaker 1>and someone with incredible experience of both when it comes

0:15:17.880 --> 0:15:21.640
<v Speaker 1>to politics, and when it comes to Joe Biden. Rick,

0:15:21.920 --> 0:15:25.840
<v Speaker 1>what I'm curious from your perspective, how important is it

0:15:25.880 --> 0:15:28.760
<v Speaker 1>that there is a narrowing down of the field at

0:15:28.760 --> 0:15:32.400
<v Speaker 1>this point. Oh, I think thank you Lisa for first

0:15:32.440 --> 0:15:34.680
<v Speaker 1>of all for having me, and uh, I think it's

0:15:34.680 --> 0:15:37.440
<v Speaker 1>critically important. I mean, one of the lessons we've learned

0:15:37.480 --> 0:15:41.440
<v Speaker 1>recently in two thousand and sixteen is when various elements

0:15:41.440 --> 0:15:44.200
<v Speaker 1>of the party, in this case the Republican Party, divide

0:15:44.560 --> 0:15:48.080
<v Speaker 1>their vote amongst multiple candidates, it allows, you know, what

0:15:48.240 --> 0:15:50.680
<v Speaker 1>was at one point in time a French paniate, Donald Trump,

0:15:50.760 --> 0:15:54.080
<v Speaker 1>to be able to win not only a group of primaries,

0:15:54.080 --> 0:15:57.880
<v Speaker 1>but the actual nomination without ever going above And so

0:15:58.840 --> 0:16:02.600
<v Speaker 1>I think the Democrats partly have allowed the winnowing process

0:16:02.640 --> 0:16:05.120
<v Speaker 1>to occur. I mean, that's why we go to Iowa,

0:16:05.160 --> 0:16:07.320
<v Speaker 1>New Hampshire. It's not for the weather this time year.

0:16:07.880 --> 0:16:10.880
<v Speaker 1>And uh. And you you see the natural progression of

0:16:10.920 --> 0:16:14.840
<v Speaker 1>events and the egos have been put aside and uh,

0:16:14.840 --> 0:16:17.640
<v Speaker 1>and you can tell the Democrats are united in one

0:16:17.720 --> 0:16:21.280
<v Speaker 1>thing primarily that is the defeat of Donald Trump. And

0:16:21.320 --> 0:16:24.400
<v Speaker 1>that is what's motivating people like Mike Bloomberg to suspend

0:16:24.440 --> 0:16:27.680
<v Speaker 1>his campaign to rally the troops around Joe Biden on

0:16:27.720 --> 0:16:31.360
<v Speaker 1>the part as you mentioned of Amy Klobuchar and Pete Bout.

0:16:31.800 --> 0:16:33.840
<v Speaker 1>I mean, these are all things that had a major

0:16:33.920 --> 0:16:38.080
<v Speaker 1>impact leading up to Super Tuesday and will after Super Tuesday.

0:16:38.120 --> 0:16:40.840
<v Speaker 1>I think it's it's fair to say that this is

0:16:40.880 --> 0:16:47.240
<v Speaker 1>now a very simple campaign against two people, um, Joe Biden,

0:16:47.320 --> 0:16:50.920
<v Speaker 1>who represents the center and the establishment of the Democratic Party,

0:16:51.040 --> 0:16:54.440
<v Speaker 1>and Bernie Sanders, who wants a revolution, and and voters

0:16:54.440 --> 0:16:56.640
<v Speaker 1>are going to get to decide that. And believe me,

0:16:56.800 --> 0:16:59.440
<v Speaker 1>that is a fair choice, right. I mean, they're there,

0:16:59.480 --> 0:17:01.920
<v Speaker 1>they got play is chuse from there? Well, Rick, as

0:17:01.960 --> 0:17:05.760
<v Speaker 1>a former Republican strategist, former manager of Senator John McCain's

0:17:05.840 --> 0:17:12.040
<v Speaker 1>campaign for president, I'm wondering, how worried you here, Republicans

0:17:12.080 --> 0:17:15.639
<v Speaker 1>being from here, how worried President Trump should be about

0:17:15.640 --> 0:17:19.560
<v Speaker 1>the momentum that these two candidates are getting this early

0:17:19.720 --> 0:17:24.520
<v Speaker 1>in the race or not. Well, if I were Donald

0:17:24.520 --> 0:17:27.560
<v Speaker 1>Trump and his campaign, I would be very worried about

0:17:27.560 --> 0:17:30.080
<v Speaker 1>a couple of things I saw last night on Super Tuesday,

0:17:30.119 --> 0:17:34.080
<v Speaker 1>and one of them, principally is the gravitational pull that

0:17:34.200 --> 0:17:38.520
<v Speaker 1>Joe Biden has with white suburban voters, especially women. UM.

0:17:38.600 --> 0:17:40.880
<v Speaker 1>We know that these are the same voters that helped

0:17:40.920 --> 0:17:44.720
<v Speaker 1>Donald Trump win an election against Hillary Clinton and UH,

0:17:44.720 --> 0:17:47.520
<v Speaker 1>and we know that they abandoned the Republican Party at

0:17:47.600 --> 0:17:50.520
<v Speaker 1>large UH in two thousand eighteen in the mid terms.

0:17:50.600 --> 0:17:53.040
<v Speaker 1>You could chalk that up to parties in power had

0:17:53.080 --> 0:17:57.520
<v Speaker 1>bad mid terms. UM, but the fact that they rallied

0:17:57.560 --> 0:18:01.240
<v Speaker 1>around Biden's campaign and states like Tech, this in Minnesota

0:18:01.960 --> 0:18:05.920
<v Speaker 1>and throughout the South, and and really on a national basis,

0:18:06.280 --> 0:18:10.399
<v Speaker 1>um propelling his victory in states that he had really

0:18:10.440 --> 0:18:14.879
<v Speaker 1>no business to be winning from from just a tactical perspective, UM,

0:18:15.000 --> 0:18:18.119
<v Speaker 1>that ought to give the Republicans and Donald Trump some

0:18:18.200 --> 0:18:21.840
<v Speaker 1>pause that they're not doing a job of pulling those

0:18:21.960 --> 0:18:24.880
<v Speaker 1>those those suburban women back into their fold. And they

0:18:24.920 --> 0:18:29.240
<v Speaker 1>seem excited about Joe Biden. Just looking forward, Bernie Sanders

0:18:29.280 --> 0:18:31.560
<v Speaker 1>still very much in the race. So it's Bernie Sanders

0:18:31.600 --> 0:18:35.359
<v Speaker 1>and Joe Biden. How concerned are you about a contested

0:18:36.080 --> 0:18:41.960
<v Speaker 1>contested nomination or contested h yeah, convention? Yeah, less so

0:18:42.080 --> 0:18:44.720
<v Speaker 1>now right, I mean one of the things that you

0:18:44.760 --> 0:18:48.160
<v Speaker 1>had to watch on Super Tuesdays, whether or not candidates

0:18:48.200 --> 0:18:53.120
<v Speaker 1>like Mike Bloomberg, Elizabeth Warren could um could accumulate enough

0:18:53.200 --> 0:18:56.200
<v Speaker 1>delegates to want to be power players at a convention.

0:18:56.640 --> 0:19:00.040
<v Speaker 1>In other words, you know, the group at large to

0:19:00.080 --> 0:19:02.720
<v Speaker 1>accumulate enough delegates to keep Bernie at least you know,

0:19:02.760 --> 0:19:06.520
<v Speaker 1>that was conventionalism, right how you stopped Bernie um Um

0:19:06.920 --> 0:19:10.680
<v Speaker 1>yesterday before Super Tuesday and and they didn't write, I mean,

0:19:11.280 --> 0:19:17.680
<v Speaker 1>they did not score enough victories or accumulate enough delegates

0:19:18.160 --> 0:19:20.840
<v Speaker 1>on Super Tuesday to be a factor right to where

0:19:20.880 --> 0:19:23.760
<v Speaker 1>they could actually stop someone from getting the magic number

0:19:26.040 --> 0:19:29.360
<v Speaker 1>delegates before the convention. And so it is much more

0:19:29.440 --> 0:19:31.640
<v Speaker 1>likely in a two person race that you now look

0:19:31.720 --> 0:19:34.920
<v Speaker 1>like you have that one of them is going to prevail.

0:19:35.200 --> 0:19:37.680
<v Speaker 1>And uh, but I would say, right now, it's too

0:19:37.680 --> 0:19:39.760
<v Speaker 1>soon to tell who that's gonna be. Rick is real

0:19:39.840 --> 0:19:43.320
<v Speaker 1>quick here, I'm wondering what type of candidate Joe is

0:19:43.359 --> 0:19:46.680
<v Speaker 1>likely to pick for a vice president. Could it be uh,

0:19:46.800 --> 0:19:51.040
<v Speaker 1>someone on the left on at Sanders and Warren type side,

0:19:51.280 --> 0:19:53.240
<v Speaker 1>or is he going to stick to his his guns

0:19:53.240 --> 0:19:56.840
<v Speaker 1>and sort of stay centrist. You know, I think a

0:19:56.880 --> 0:19:58.679
<v Speaker 1>lot of that's going to determine what the state of

0:19:58.680 --> 0:20:02.000
<v Speaker 1>the race is this summer. Right, the Democrats have an

0:20:02.000 --> 0:20:05.400
<v Speaker 1>early convention at the end of July. UH, that's when

0:20:05.440 --> 0:20:07.760
<v Speaker 1>they will be forced to have to make a decision

0:20:07.880 --> 0:20:10.480
<v Speaker 1>on who the vice presidential running mate will be. And

0:20:10.560 --> 0:20:14.679
<v Speaker 1>they will look at what they need to score a victory,

0:20:14.840 --> 0:20:17.600
<v Speaker 1>because that'll be the number one thing, is how do

0:20:17.680 --> 0:20:20.800
<v Speaker 1>we actually win? And then they will want someone paired

0:20:20.880 --> 0:20:24.000
<v Speaker 1>up with them, with Joe Biden if he's a nominee,

0:20:24.480 --> 0:20:29.520
<v Speaker 1>to help him govern. When Joe Biden was selected, UH,

0:20:29.720 --> 0:20:32.840
<v Speaker 1>the running mate of Barack Obama, Barack Obama had a

0:20:32.920 --> 0:20:36.040
<v Speaker 1>fifteen point lead over John McCain. Believe me, I remember

0:20:36.080 --> 0:20:39.119
<v Speaker 1>I was running that campaign, and and he had the

0:20:39.240 --> 0:20:41.920
<v Speaker 1>luxury of knowing that it's highly likely that he was

0:20:41.960 --> 0:20:44.520
<v Speaker 1>going to win. So he wanted to pick someone he

0:20:44.640 --> 0:20:47.680
<v Speaker 1>got along with, you know, that was friendly, that would

0:20:47.800 --> 0:20:51.520
<v Speaker 1>uh complement his skill set, and Joe Biden was that guy.

0:20:51.600 --> 0:20:55.639
<v Speaker 1>Joe Biden never added a single vote to the Obama campaign,

0:20:55.720 --> 0:20:58.720
<v Speaker 1>but he was a great governing partner. That's gonna be

0:20:58.720 --> 0:21:02.520
<v Speaker 1>interesting to see if that's the option forward. Rick Davis, Unfortunately,

0:21:02.520 --> 0:21:03.960
<v Speaker 1>you've got to leave it there. Thank you so much

0:21:03.960 --> 0:21:06.080
<v Speaker 1>for taking the time. Rick Davis, partner at Stone Court

0:21:06.119 --> 0:21:09.280
<v Speaker 1>Capital as well as former Republican strategist and former manager

0:21:09.320 --> 0:21:12.840
<v Speaker 1>of Senator John McCain's presidential campaign. Thanks for listening to

0:21:12.840 --> 0:21:15.200
<v Speaker 1>the Bloomberg P and L podcast. You can subscribe and

0:21:15.280 --> 0:21:18.440
<v Speaker 1>listen to interviews at Apple Podcasts or whatever podcast platform

0:21:18.480 --> 0:21:21.560
<v Speaker 1>you prefer. I'm Paul Sweeney, I'm on Twitter at pt Sweeney.

0:21:21.600 --> 0:21:24.200
<v Speaker 1>I'm Lisa abram Woyds. I'm on Twitter at Lisa bramwo

0:21:24.160 --> 0:21:26.679
<v Speaker 1>wits one. Before the podcast, you can always catch us

0:21:26.800 --> 0:21:28.399
<v Speaker 1>worldwide on'm Bloomberg Radio