WEBVTT - Surveillance: Virus Woes Overshadow Stimulus 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.360 Bloomberg dot Com, and of course on the Bloomberg. It 0:00:27.400 --> 0:00:29.240 was a book of the Year a few years ago, 0:00:29.320 --> 0:00:31.760 and it is a book that has aged well across 0:00:31.800 --> 0:00:36.080 the financial crisis. The Age of Oversupply Daniel Albert joins 0:00:36.120 --> 0:00:39.800 us in Westwood Capital. UH this morning. Daniel, It's been 0:00:39.840 --> 0:00:43.479 an extraordinary year, a year everybody wants to forget as 0:00:43.560 --> 0:00:46.760 we slide into two thousand twenty one. Where is the 0:00:46.840 --> 0:00:52.400 output gap? Where is the dynamics of our oversupply? Well, 0:00:52.440 --> 0:00:55.440 I think we what we've seen recently, which is fascinating, 0:00:55.560 --> 0:01:00.560 is the huge resurgence in imports from China and the country. 0:01:00.640 --> 0:01:05.759 So what we haven't seen is the reshoring of manufacturing, 0:01:05.800 --> 0:01:09.880 the reshoring of production channel. UH. And when I look 0:01:09.880 --> 0:01:12.080 at the when I look at the import export data, 0:01:12.560 --> 0:01:15.119 it's it's just fascinating to me how much we are 0:01:15.240 --> 0:01:20.600 reliant on exaginous oversupply. UH. And of course, at the 0:01:20.600 --> 0:01:22.920 worst possible time, when a good deal of our labor 0:01:22.959 --> 0:01:25.640 force is underemployed and unemployed. Well, I want to sorry 0:01:25.640 --> 0:01:27.720 where I wanted to go, Daniel Airport. Many of us 0:01:27.720 --> 0:01:31.840 folks have projects for two thousand twenty that we have 0:01:31.959 --> 0:01:35.840 not accomplished. Dan Alpert is the opposite with Cornell Law. 0:01:35.959 --> 0:01:39.560 He has put together a terrific analysis of the labor 0:01:39.680 --> 0:01:44.720 dynamics of the nation. Dan Albert, how bad is it? Well, 0:01:44.880 --> 0:01:47.560 we have, you know, somewhere around twelve million people who 0:01:47.640 --> 0:01:52.040 are not employed, whereas prior to the pandemic they were. 0:01:52.960 --> 0:01:56.520 I think that that masks considerable softness in the labor 0:01:56.600 --> 0:01:59.960 force that's exhibited every week when we look at unemployed 0:02:00.040 --> 0:02:05.280 the claims. These unemployment claims are no longer original layoffs, 0:02:05.320 --> 0:02:09.639 Meaning if you aggregate the entire amount of unemployment claims today, 0:02:09.680 --> 0:02:13.560 you're nearly thirty of the labor force. And clearly we 0:02:13.600 --> 0:02:17.280 don't have thirty of the labor force unemployed. So what 0:02:17.320 --> 0:02:21.200 you're seeing is incredible instability and the ability of workers 0:02:21.280 --> 0:02:24.720 to hold on to jobs. And you know, classic example 0:02:24.760 --> 0:02:27.000 of that, obviously is what happened in the restaurant industry 0:02:27.000 --> 0:02:30.080 over the summer. Uh, you know, warm weather and what 0:02:30.160 --> 0:02:34.079 have you allowed people to re emerge, open their restaurants, 0:02:34.400 --> 0:02:38.440 and now you're seeing the same thing play out in reverse. Um. 0:02:38.560 --> 0:02:41.400 So not just the restaurant sector, but throughout the economy. 0:02:41.800 --> 0:02:46.799 You're seeing repeat layoffs, repeat unemployment. The same people, many 0:02:46.880 --> 0:02:49.520 of the same people who filed in the spring, are 0:02:49.560 --> 0:02:53.080 being forced to refile again. Daniel. How far does this 0:02:53.160 --> 0:02:56.360 nine billion dollar stimulus effort in Washington, d C. Go 0:02:56.880 --> 0:02:59.240 to bridge the gap for all of these individuals that 0:02:59.280 --> 0:03:02.360 you're talking about. It well, as a calendar matter, obviously, 0:03:02.400 --> 0:03:06.560 it goes through the first quarter, UM And it's clearly uh, 0:03:06.600 --> 0:03:13.440 you know, enormously enormously necessary. Uh. The three weekly benefit 0:03:14.080 --> 0:03:18.919 for a weekly supplement for unemployment is urgently needed. These 0:03:19.040 --> 0:03:21.280 these people are going to go many of these pupplements, 0:03:21.400 --> 0:03:24.280 all of their benefits. So the extension of the benefits 0:03:24.280 --> 0:03:27.000 and the addition of the three hundred supplement, it was 0:03:27.160 --> 0:03:30.480 clearly needed. My big concern right now is the re 0:03:31.240 --> 0:03:35.760 the re establishment of the PPP program. It's interesting because 0:03:35.920 --> 0:03:39.400 the PPP program really was an alternative way of getting 0:03:39.920 --> 0:03:43.840 payroll back to people have not actually been called back 0:03:43.880 --> 0:03:48.120 to work, but we're given the opportunity to receive funds. 0:03:48.680 --> 0:03:52.080 The problem this time around isn't so much that the 0:03:52.400 --> 0:03:55.760 unemployment system isn't working. This three supplements really going to 0:03:55.840 --> 0:03:58.360 help UH and and we're going to get that. We 0:03:58.480 --> 0:04:02.040 clearly have a fairly high level household savings. It's gradually 0:04:02.080 --> 0:04:05.400 burning off. The problem right now is how the businesses 0:04:05.400 --> 0:04:08.200 are going to survive. So I'm very interested to see 0:04:08.240 --> 0:04:11.040 the language in the bill, specifically with regard to the 0:04:11.160 --> 0:04:15.160 use of the new PPP proceeds, Meaning I think it's 0:04:15.160 --> 0:04:19.240 about two and thirty billion dollars, whether or not businesses 0:04:19.240 --> 0:04:21.520 are going to be able to use these proceeds not 0:04:21.640 --> 0:04:25.720 just to supplement or put people back on payroll who 0:04:25.720 --> 0:04:29.920 they currently can't employ um, but also whether or not 0:04:29.960 --> 0:04:32.520 they're going to be able to use it for other 0:04:32.560 --> 0:04:36.279 expenses such as rent and other payables that they've accrued 0:04:36.320 --> 0:04:39.839 over the last several months. Well, you talked about, in 0:04:39.880 --> 0:04:42.599 addition to the companies and their concerns, the high savings 0:04:42.680 --> 0:04:45.919 rate among individuals. Do you think that the direct payments 0:04:46.279 --> 0:04:49.000 to individuals will be effective given the fact that they 0:04:49.040 --> 0:04:51.800 will target the people who are most vulnerable, or do 0:04:51.839 --> 0:04:54.160 you think that that money would have been more efficient elsewhere? 0:04:55.120 --> 0:04:56.680 But what I do think is going to happen is 0:04:56.720 --> 0:04:59.600 we're going to see an increase in the savings rate 0:04:59.600 --> 0:05:02.160 in the first quarters. So you have the six you 0:05:02.160 --> 0:05:04.479 have the six in a dollar per person checks for 0:05:05.480 --> 0:05:08.680 the middle class and working class. Those will go out, 0:05:08.880 --> 0:05:12.520 Those may get expended or they may not. As as 0:05:12.560 --> 0:05:15.880 the lockdown period demonstrated. In that period we had a 0:05:15.960 --> 0:05:20.560 huge increase in retention of funds um Right now, given 0:05:20.560 --> 0:05:24.080 the viral surge, you have to ask yourself whether or 0:05:24.120 --> 0:05:27.400 not the h this period is going to see the 0:05:27.400 --> 0:05:29.680 first quarter is going to see an increase in consumption 0:05:30.240 --> 0:05:33.400 as opposed to savings because if people are sitting at 0:05:33.440 --> 0:05:36.120 home and worried about the virus and not getting vaccinated 0:05:36.240 --> 0:05:39.560 until the second or third quarter, um, you know you're 0:05:39.640 --> 0:05:41.800 you're probably going to see at least some of the 0:05:41.880 --> 0:05:46.520 same phenomena you saw in in March through June. Dan, 0:05:46.839 --> 0:05:50.040 congratulations on your work with Cornell Law this year. Truly 0:05:50.080 --> 0:05:53.400 adding value to the view of our labor economy. Daniel 0:05:53.480 --> 0:05:56.200 Otforts with Westwood Capital. I can't say enough about it, really, 0:05:56.240 --> 0:05:59.719 what has become a timeless book over a decade age 0:06:00.120 --> 0:06:07.480 of oversupply on the fixed income market. George Bori, he 0:06:07.640 --> 0:06:11.159 is with Wells Fargo and is hugely attuned to the 0:06:11.200 --> 0:06:15.560 clipping of coupons and the search for total return. George 0:06:15.560 --> 0:06:18.159 boy In two twenty one, and I contempt to clip 0:06:18.200 --> 0:06:21.680 a coupon, what little it is, or dare I can say, 0:06:21.760 --> 0:06:26.839 I'm looking to try to find total return. Yeah, good morning, Tom, 0:06:26.880 --> 0:06:30.080 and thank you very much, calling from Wells Fargo Asset 0:06:30.160 --> 0:06:33.240 Management to kind of talk you through fixed income. And 0:06:33.400 --> 0:06:35.919 as you point out, yields are still very low. But 0:06:36.040 --> 0:06:39.159 as we said, just mentioned, you can't give up on 0:06:39.279 --> 0:06:42.400 bonds just yet, whether it's the dollar or U S treasuries. 0:06:42.800 --> 0:06:45.320 You know, when people get uncertain, you know, bonds to 0:06:45.480 --> 0:06:48.159 you know, bonds rally and they tend to really be 0:06:48.279 --> 0:06:52.000 the anchor for your portfolio as we think about next year, 0:06:52.080 --> 0:06:54.640 what you're seeing right now is a little bit of 0:06:54.640 --> 0:06:57.680 a reversal of the trend that's been pretty well established. 0:06:57.680 --> 0:07:00.520 In our view is that as we get into next year, 0:07:00.760 --> 0:07:03.440 that view is going to continue. Yields are likely to 0:07:03.480 --> 0:07:05.880 continue to creep a bit higher. And I say a 0:07:05.920 --> 0:07:09.320 bit because there are a lot of very strong forces 0:07:09.360 --> 0:07:14.440 you mentioned several already limited inflation growth that's uncertain, the 0:07:14.480 --> 0:07:18.400 trajectory of COVID it's very difficult to just simply, you know, 0:07:18.480 --> 0:07:20.720 throw in the towel and give up on your bond trade. 0:07:20.960 --> 0:07:23.520 Bond yields are low for a very good reason. They're 0:07:23.560 --> 0:07:26.440 likely to stay pretty low, but we'll see a little 0:07:26.480 --> 0:07:30.920 bit of incremental move up. So for us, your biggest job, 0:07:31.040 --> 0:07:34.000 your most important job as a bond investor is number one. 0:07:34.320 --> 0:07:38.440 It is capital preservation, making sure you maintain the games 0:07:38.480 --> 0:07:42.600 you've captured over the last one, three, five, ten, twelve, 0:07:42.720 --> 0:07:45.960 thirty years, bonds have had a great run. Uh, but 0:07:46.080 --> 0:07:49.000 look for extra income, look for that coupon, look for 0:07:49.040 --> 0:07:53.400 that just the little bit of payment that's coming your direction. 0:07:53.760 --> 0:07:56.920 It's not easy, but you know, we do find corners 0:07:56.960 --> 0:07:59.800 of the market pockets to try and add that in 0:08:00.200 --> 0:08:04.280 to the portfolio. Georgia, I'm struck by what one noted 0:08:04.480 --> 0:08:07.680 bond manager said last week, Scott Minor, who came out 0:08:07.680 --> 0:08:10.480 and said, you don't want to hire an optimistic bond 0:08:10.520 --> 0:08:12.760 manager because you just want to get paid back. And 0:08:12.760 --> 0:08:15.040 I'm looking right now, and bond managers seem to be 0:08:15.120 --> 0:08:18.400 really optimistic when you look at what people are demanding 0:08:18.440 --> 0:08:21.680 to own the lowest rated debt. Given the fact that 0:08:21.840 --> 0:08:24.880 companies are still struggling. The economy is not back to normal. 0:08:25.400 --> 0:08:27.800 Do you feel like people have gotten a little bit 0:08:27.840 --> 0:08:31.280 exuberant when they've gone into this lowest rated debt given 0:08:31.520 --> 0:08:33.920 that it's paying almost record low yields at this point, 0:08:35.000 --> 0:08:38.320 there's a big assumption baked into the markets, and that's 0:08:38.440 --> 0:08:41.679 that's both fixed income in equities and the first the 0:08:41.760 --> 0:08:44.840 first big assumption is that the Fed's got your back. 0:08:44.880 --> 0:08:46.640 The FED is going to be with you every step 0:08:46.640 --> 0:08:49.000 of the way, and they're they're not going to allow 0:08:49.120 --> 0:08:53.600 yields to rise significantly. The second is that interest that 0:08:53.720 --> 0:08:57.840 inflation is going to remain very well contained. Those those 0:08:57.840 --> 0:09:00.400 are the two factors that I think, you know, we 0:09:00.480 --> 0:09:04.120 think underpin you know, kind of that bond market enthusiasm, 0:09:04.200 --> 0:09:07.000 if you will. There's good reason for both of those, 0:09:07.040 --> 0:09:08.800 as we said, you know, as you mentioned that data 0:09:08.840 --> 0:09:11.840 looks to support the inflation uh story, And the Fed 0:09:11.960 --> 0:09:14.360 was pretty committal last week in terms of its willingness 0:09:14.360 --> 0:09:17.000 to support support the market. So I don't know if 0:09:17.040 --> 0:09:21.200 it's a it's an optimistic bond investor, but they're certainly content, 0:09:21.640 --> 0:09:24.400 and there is there is a certain amount of complacency 0:09:24.440 --> 0:09:27.240 in the market that does concern US, and and and 0:09:27.280 --> 0:09:29.319 in spots to the market. We think the markets run 0:09:29.360 --> 0:09:32.640 a little too far, a little too fast. Investment grade 0:09:32.679 --> 0:09:36.000 corporate debt is one of those parts of the market. 0:09:36.080 --> 0:09:38.600 If you look this year, an interesting stat you know, 0:09:38.880 --> 0:09:42.720 spreads are basically credit spreads for corporates are just about 0:09:42.760 --> 0:09:44.600 back to where they were at the beginning of the year. 0:09:44.800 --> 0:09:48.240 You're over here, one of the smallest changes in credit 0:09:48.280 --> 0:09:52.680 spreads almost in history, but one of the largest ranges 0:09:52.920 --> 0:09:55.160 from top to bottom over the course of the year. 0:09:55.240 --> 0:09:56.960 So if you look at this in the history books, 0:09:57.000 --> 0:09:59.640 you're going to say not much happen for investment grade 0:09:59.640 --> 0:10:02.560 credits spreads in two thousand twenty, But anyone that lives 0:10:02.559 --> 0:10:05.160 through it knows it's been one heck of a wild ride. 0:10:05.640 --> 0:10:08.400 Spreads there look tight. We want to take some profits, 0:10:08.480 --> 0:10:10.960 not sell at all, but take some profits and move 0:10:11.040 --> 0:10:14.280 that money into other things, maybe a more kind of 0:10:14.280 --> 0:10:18.080 conservative position in mortgage backed securities higher rated or even 0:10:18.120 --> 0:10:21.520 go down in quality. And it will take some optimistic, 0:10:22.120 --> 0:10:29.680 optimistic check optimistic strategies in high yield, which again, but 0:10:29.760 --> 0:10:32.440 we gotta find We've got to find those coupons. George, 0:10:32.440 --> 0:10:34.240 just keep plowing through. That's what we all do. I 0:10:34.240 --> 0:10:36.880 will say, you know, that's that's well done that morning. 0:10:37.520 --> 0:10:39.520 So if we gotten to the point where safe bonds 0:10:39.559 --> 0:10:43.960 aren't so safe anymore, well that's a great point, Lisa. 0:10:44.000 --> 0:10:46.880 And based on that sort of belief about the fan 0:10:47.000 --> 0:10:49.760 and interest rates, your biggest challenge today is not so 0:10:49.840 --> 0:10:52.880 much your your sort of your your corporate behavior, but 0:10:52.960 --> 0:10:55.520 just very long durations. You know, the long maturity you 0:10:55.559 --> 0:10:58.480 have in a bond with very low yields means any 0:10:58.559 --> 0:11:03.520 marginal increase in yields could represent a pretty big loss 0:11:03.520 --> 0:11:06.520 in your portfolio. So we're watching that. As I mentioned 0:11:06.520 --> 0:11:09.360 capital preservation, you have to be very careful about where 0:11:09.360 --> 0:11:12.160 you position along the curve. We do have a preference 0:11:12.160 --> 0:11:15.040 for short to intermediate dated bonds that provides you with 0:11:15.080 --> 0:11:18.439 a little bit of protection. Long dated purchases need to 0:11:18.480 --> 0:11:21.559 be for long dated investment. These are these are investments 0:11:21.559 --> 0:11:25.360 and pensions in saving in very long term savings accounts 0:11:25.600 --> 0:11:28.400 and for longer duration insurance companies. We want to be 0:11:28.440 --> 0:11:30.520 careful at the long end of the curve. We want 0:11:30.559 --> 0:11:33.240 to try and maximize as much yield as possible at 0:11:33.240 --> 0:11:35.240 the front end. And I think that we think that's 0:11:35.240 --> 0:11:37.839 a that's a sensible strategy right now, George. I've been 0:11:37.840 --> 0:11:41.920 doing this way back to fleet and one of the 0:11:41.960 --> 0:11:45.120 things that upsets me no end is the belief that 0:11:45.280 --> 0:11:50.240 bond money will move into equities. What is your experience 0:11:50.960 --> 0:11:55.480 of psychological bond money all of a sudden finding the 0:11:55.520 --> 0:12:01.160 equity market. Does that actually happen? It happened, not, not 0:12:01.160 --> 0:12:03.800 not as much as as maybe we think, I mean, 0:12:04.000 --> 0:12:07.199 there there does you know? Obviously there's there's very large 0:12:07.200 --> 0:12:11.840 asset allocation teams that are constantly managing between bonds and stocks, 0:12:12.160 --> 0:12:14.240 and as one runs ahead of the other, you know, 0:12:14.240 --> 0:12:16.800 they'll allocate back and forth. We have a whole team 0:12:16.800 --> 0:12:19.160 that does that, many of our competitors do, and that 0:12:19.360 --> 0:12:21.320 is sort of the balance of the market. The big 0:12:21.400 --> 0:12:24.520 run up in equities, you know, has driven a fair 0:12:24.559 --> 0:12:28.160 bit of money into bonds. We expect that trend to continue. 0:12:28.920 --> 0:12:31.280 We have not seen the trend go the other way, 0:12:31.360 --> 0:12:34.200 at least not yet. There are some discussions about why 0:12:34.240 --> 0:12:36.480 you hold bonds and how long you should hold them for, 0:12:36.960 --> 0:12:39.480 but as it stands today, there's still a bias to 0:12:39.559 --> 0:12:42.600 move out of equities and into bonds and trying to 0:12:42.640 --> 0:12:46.000 immunize portfolios as you move through time. So in my 0:12:46.200 --> 0:12:49.760 long tenure, uh, it's been mostly the other way. And 0:12:50.320 --> 0:12:52.720 although there's a lot of discussion about it this year, 0:12:53.080 --> 0:12:56.079 we've yet to really see a meaningful shift going from 0:12:56.160 --> 0:12:59.280 bonds into equities. But we really don't think that's going 0:12:59.320 --> 0:13:02.400 to happen just yet. Great Monday briefing, particularly in this market, 0:13:02.440 --> 0:13:04.480 tomul George Boy, thank you so much, as well as 0:13:04.520 --> 0:13:15.160 Fertile Asset Management. Mercedes Carnathon is the Northwestern University in Chicago. 0:13:15.240 --> 0:13:18.680 I should say Evanston. They like to say Evanston, not Chicago. 0:13:19.080 --> 0:13:24.040 Excuse me, professor and joins us on preventative medicine. Right now, Mercedes, 0:13:24.120 --> 0:13:26.560 I want you to address to our public on radio 0:13:26.640 --> 0:13:30.360 and television, how you have less of a fear of 0:13:30.520 --> 0:13:34.240 mutation of variant as we look at the United Kingdom 0:13:34.320 --> 0:13:37.079 this morning, how do you, as a pro and preventative 0:13:37.120 --> 0:13:43.080 medicine treat the known that there will be mutations. Yes, 0:13:43.160 --> 0:13:45.480 that's a really good point. You know, it is certainly 0:13:46.080 --> 0:13:49.239 scary to us and concerning when we hear about these mutations, 0:13:49.440 --> 0:13:52.840 especially when that message is coupled with knew that it 0:13:52.960 --> 0:13:57.079 is spreading more rapidly. But we've known from multiple viruses 0:13:57.200 --> 0:14:00.480 over time that they do mutate. That's how they managed 0:14:00.520 --> 0:14:03.200 to stay alive. They've got to keep changing so that 0:14:03.280 --> 0:14:08.080 they can keep infecting people and preferably keep their stream 0:14:08.280 --> 0:14:12.599 of people UH as open as possible by even changing 0:14:12.880 --> 0:14:15.360 in the long run enough so that they can start 0:14:15.400 --> 0:14:18.559 to reinfect people. So we do expect this, But why 0:14:18.600 --> 0:14:21.840 it doesn't concern me quite as much is that the 0:14:21.880 --> 0:14:25.200 types of vaccines right now that are being developed can 0:14:25.240 --> 0:14:29.320 address that directly. They they're different than the flu vaccine, 0:14:29.320 --> 0:14:33.160 which have to be repeated annually um, and so they 0:14:33.200 --> 0:14:36.280 will right now. We still believe they'll be effective even 0:14:36.320 --> 0:14:39.680 with mutations. So there's a question about the vaccine, Mercedes, 0:14:39.680 --> 0:14:41.840 But there's also a question of just how long it 0:14:41.880 --> 0:14:44.360 will be before we can get back to normal, And 0:14:44.440 --> 0:14:47.880 given the schedule of the vaccinations, the fact that we've 0:14:47.920 --> 0:14:49.200 seen a little bit of a delay here in the 0:14:49.280 --> 0:14:51.920 United States, there's a question about supply chains with the 0:14:52.000 --> 0:14:55.680 recent lockdown in the United Kingdom. How much does this 0:14:55.800 --> 0:14:59.120 new strain of the virus prolong the pandemic as we 0:14:59.160 --> 0:15:03.360 know it. Currently right now, there's no evidence to suggest 0:15:03.480 --> 0:15:07.760 that the current micro RNA vaccines will not be effective 0:15:08.200 --> 0:15:10.760 against this new strain, and so I wouldn't say that 0:15:10.760 --> 0:15:13.680 that's likely to be the delay in our return to normal. 0:15:14.240 --> 0:15:17.000 What's going to happen. What the delay will be is 0:15:17.040 --> 0:15:21.400 if our behaviors don't continue to hold the line on 0:15:21.520 --> 0:15:24.560 social distancing and masking. Because as you think about our 0:15:24.640 --> 0:15:28.680 vaccine rollout strategy here in the United States, we're first 0:15:28.760 --> 0:15:33.680 protecting the infrastructure, and that's the medical infrastructure by vaccinating 0:15:33.720 --> 0:15:37.480 healthcare workers, and then knows with the highest risk of death. 0:15:37.640 --> 0:15:41.080 So individuals who are older or in nursing homes, but 0:15:41.160 --> 0:15:44.280 who we aren't vaccinating first are the people we think 0:15:44.280 --> 0:15:47.640 are the super spreaders. And so as long as that 0:15:47.760 --> 0:15:52.160 twenty to nine year old group is not being vaccinated, 0:15:52.400 --> 0:15:54.680 we think they're the ones who are spreading it. And 0:15:54.720 --> 0:15:58.960 so that's what's going to slow down our return to normal. Mercedes, 0:15:59.120 --> 0:16:04.880 the success smallpox, of ramis of polio, do you do 0:16:04.960 --> 0:16:08.720 you place this tragedy in that group and that we 0:16:08.760 --> 0:16:13.960 can be successful with this vaccine and literally eradicate COVID. 0:16:15.360 --> 0:16:18.080 You know it's possible. Um However, doing so it's going 0:16:18.120 --> 0:16:21.520 to take is going to require a global strategy. You know, 0:16:21.560 --> 0:16:25.120 I was reading concerning reports coming out of Africa, coming 0:16:25.120 --> 0:16:28.880 out of other developing um out of the continent of Africa, 0:16:28.960 --> 0:16:32.280 and then coming out of developing world countries where they 0:16:32.280 --> 0:16:35.720 don't have a vaccine right now, they certainly don't have 0:16:35.480 --> 0:16:39.000 to have the ability to maintain a vaccine a negative 0:16:39.080 --> 0:16:42.080 eighty degree celsius, which which is what's required of these 0:16:42.120 --> 0:16:46.800 two vaccines. And because of global travel eradication is going 0:16:46.800 --> 0:16:49.360 to be hard if we don't focus our attention on 0:16:49.440 --> 0:16:53.520 reaching every corner of the world. Mercedes, just quickly here. 0:16:53.560 --> 0:16:55.680 I'm wondering what you think of the schedule of the 0:16:55.760 --> 0:16:59.360 vaccinations as they've been laid out. Who is essential and 0:16:59.400 --> 0:17:03.200 how quickly can they get vaccinated? Yeah? No, I am 0:17:03.240 --> 0:17:06.800 pleased with the schedule because I think protecting the infrastructure 0:17:06.800 --> 0:17:10.240 of healthcare workers who have to interact directly with patients 0:17:10.280 --> 0:17:13.840 who have COVID does need to be our highest priority. Next, 0:17:13.920 --> 0:17:16.320 we do need to address those who have the highest 0:17:16.400 --> 0:17:19.840 rate of death or poor outcomes, and so I'm pleased 0:17:19.840 --> 0:17:21.919 with that. I was also pleased over the weekend to 0:17:21.960 --> 0:17:26.000 see that essential workers were prioritized. Those individuals who are 0:17:26.119 --> 0:17:29.959 educating our our children, those individuals who are providing food 0:17:30.000 --> 0:17:33.920 and manufacturing services that cannot be done from home, so 0:17:33.960 --> 0:17:36.840 I do think that that is the right route. And 0:17:36.920 --> 0:17:41.000 if we can bolster the supply chain to get things 0:17:41.000 --> 0:17:44.000 out to as many people as who want this vaccine 0:17:44.040 --> 0:17:47.480 by late spring, early summer, perhaps by fall, we can 0:17:47.520 --> 0:17:50.480 start to see somewhat over return to normal. Mercedes, thank 0:17:50.480 --> 0:17:52.800 you so much. She's too short of visit today, Sadies 0:17:52.840 --> 0:18:03.440 Carnithon of Northwestern University and Preventive Medicine. The news here 0:18:04.200 --> 0:18:07.359 is extraordinary out of the United Kingdom where they are 0:18:07.440 --> 0:18:11.520 simply overwhelmed with a mutation of variant of the COVID 0:18:11.640 --> 0:18:15.000 nineteen virus, and there is a shutdown of the United 0:18:15.080 --> 0:18:19.680 Kingdom with all other nations reacting. One of those best 0:18:19.880 --> 0:18:23.240 qualified to speak on this is Megan Green, with her 0:18:23.280 --> 0:18:26.679 time in the United Kingdom now at Harvard Kennedy School 0:18:27.040 --> 0:18:30.080 and a senior fellow there as well. Megan, with the 0:18:30.119 --> 0:18:33.480 news of the virus. The stimulus has just been subsumed 0:18:33.520 --> 0:18:36.840 as well. And am I reading last night and into 0:18:36.880 --> 0:18:40.280 this morning on the stimulus. It's stunning to me how 0:18:40.359 --> 0:18:44.440 quickly it will all end. Do you just assume it's 0:18:44.480 --> 0:18:48.240 almost a stop gip stimulus until we get out to 0:18:48.359 --> 0:18:53.359 March or April or May. Yes, So the stimulus package 0:18:53.800 --> 0:18:56.240 Tom was always meant to bridge to the other side, 0:18:56.280 --> 0:18:59.800 and the other side is a vaccine, which thankfully we 0:19:00.000 --> 0:19:01.639 have a lot of good news on though I do 0:19:01.720 --> 0:19:05.200 think this new contagious strain in the UK does raise 0:19:05.320 --> 0:19:08.320 questions about how quickly this virus will mutate, and whether 0:19:08.400 --> 0:19:11.400 the vaccine you know, will be effective on it, how 0:19:11.440 --> 0:19:13.920 often we have to update the vaccine, all those things. 0:19:13.920 --> 0:19:17.400 But this stimulus really is a stop gap. It's come 0:19:17.480 --> 0:19:20.920 really late, and it's a little lame. Honestly, it's It's 0:19:20.960 --> 0:19:23.800 not as big as I would have liked, but it's 0:19:23.840 --> 0:19:26.320 better than no stimulus the end of the year at all. 0:19:26.359 --> 0:19:29.159 If we had waited into till the new administration had 0:19:29.240 --> 0:19:33.720 come into power, particularly if the Republicans control the Senate, 0:19:33.760 --> 0:19:36.080 then it probably would have been even smaller. So I 0:19:36.119 --> 0:19:38.159 think this was probably the best that we could have 0:19:38.200 --> 0:19:42.119 realistically hoped for. Do you expect that policy will be 0:19:42.280 --> 0:19:46.280 committed within the Biden administration. I know you're gonna say, 0:19:46.320 --> 0:19:49.399 we gotta wait to see the Georgia elections plural. I 0:19:49.520 --> 0:19:54.320 get that, But are you optimistic about policy or will 0:19:54.359 --> 0:19:58.879 it be gridlock as seen for years? So I do 0:19:58.960 --> 0:20:02.480 think the Biden administer as is committed to both managing 0:20:02.560 --> 0:20:05.760 this virus, containing it as a top priority, and then 0:20:06.119 --> 0:20:09.280 to building back better, so taking a more medium term outlook, 0:20:09.359 --> 0:20:11.640 so not just filling in the hole that we all 0:20:11.680 --> 0:20:14.440 fell down when we shut down our economies this year, 0:20:14.760 --> 0:20:17.440 but also looking towards how to upgrade the labor force, 0:20:17.560 --> 0:20:21.960 how to fundamentally retool our economy for stain sustainability, those 0:20:22.040 --> 0:20:24.760 kinds of things. But the Biden folks are coming in. 0:20:24.840 --> 0:20:27.920 They had a really ambitious spending plan, and I think 0:20:27.960 --> 0:20:31.440 that will be significantly curtailed, so things like healthcare reform, 0:20:31.880 --> 0:20:35.200 tax reform, that's gonna be a lot harder um now 0:20:35.280 --> 0:20:37.640 than than it would have been if there had been 0:20:37.720 --> 0:20:41.399 any kind of significant majority in the Senate, particularly for 0:20:41.440 --> 0:20:43.800 the Democrats. But whoever wins in Georgia, it's going to 0:20:43.880 --> 0:20:47.640 be a razor slim majority. So that will mean that, 0:20:47.800 --> 0:20:50.240 you know, the Biden administration can do everything it wanted 0:20:50.280 --> 0:20:52.879 to do. So, Megan, you said that this fiscal support 0:20:52.920 --> 0:20:55.680 bill was a little lame, which I imagine is high 0:20:55.760 --> 0:20:58.480 level cf A speak, But there is a question of 0:20:58.520 --> 0:21:02.119 the efficacy and the directness of this support. Do you 0:21:02.200 --> 0:21:04.719 call it a little lame simply because of the size, 0:21:04.760 --> 0:21:07.000 because you'd like to have seen it be bigger, or 0:21:07.080 --> 0:21:10.680 is it because of the type of support being delivered. 0:21:11.840 --> 0:21:14.040 So both because of the size, I think it should 0:21:14.040 --> 0:21:16.400 have been somewhere between one and one and a half trillion, 0:21:16.480 --> 0:21:19.119 and it's it's below that, clearly, but also because it 0:21:19.280 --> 0:21:22.760 left out any kind of real direct support to state 0:21:22.760 --> 0:21:25.679 and local governments. So it did offer some indirect support 0:21:25.720 --> 0:21:30.880 in terms of education, virus um measures, also testing and tracing, 0:21:31.080 --> 0:21:34.000 but they were generally pretty small. I mean, they devoted 0:21:34.080 --> 0:21:38.840 less money to um testing and tracing and the vaccine 0:21:38.920 --> 0:21:41.920 than they did to the airlines, although the airlines, to 0:21:42.000 --> 0:21:44.880 be fair, was for kind of payroll support, so it's 0:21:44.920 --> 0:21:48.280 not um useless. But I'm surprised by how little was 0:21:48.320 --> 0:21:51.600 actually devoted to the virus itself, because unless we can 0:21:51.640 --> 0:21:53.920 actually contain this virus, we're just going to keep having 0:21:53.960 --> 0:21:56.240 to do this over and over and over again, passing 0:21:56.320 --> 0:21:59.800 stimulus after stimulus. So go ahead, Well, no, I mean 0:21:59.840 --> 0:22:02.719 this such a politicized point, This question of what's the 0:22:02.760 --> 0:22:06.200 best source of or what's the best method of financing here? 0:22:06.240 --> 0:22:09.560 Is it to give direct payments to individuals and households, 0:22:09.640 --> 0:22:11.880 or is it to give money to state and local governments. 0:22:11.880 --> 0:22:15.000 And it's been so highly politicized because Democrats have been 0:22:15.040 --> 0:22:17.440 for that state and local funding and Republicans have been 0:22:17.640 --> 0:22:21.600 adamantly against it. Yet economists have come out also pretty 0:22:21.680 --> 0:22:24.560 much on either side, with some people saying direct infusions 0:22:24.560 --> 0:22:27.320 into lower income households is a very direct injection of 0:22:27.359 --> 0:22:30.480 cash into the economy and others saying that satan local 0:22:30.520 --> 0:22:33.119 governments need it more. Where do you weigh in on 0:22:33.160 --> 0:22:36.760 this debate? I think we should have done both. Real 0:22:36.880 --> 0:22:40.840 borrowing costs are negative, the markets are begging the government 0:22:40.920 --> 0:22:43.320 to borrow. The FED is begging the government to borrow 0:22:43.720 --> 0:22:45.919 to fight this war. So I think the answer is 0:22:45.960 --> 0:22:48.000 we shouldn't have felt strained in the size and we 0:22:48.000 --> 0:22:51.280 should have allocated money to both. But policy is generally 0:22:51.320 --> 0:22:54.639 a question of trade offs, and so you know, I 0:22:54.640 --> 0:22:56.720 think in this case it was inappropriate that we felt 0:22:56.720 --> 0:22:59.560 we had to accept some trede offs. I think we 0:22:59.560 --> 0:23:02.640 could have did both. I think another really interesting point 0:23:02.680 --> 0:23:06.919 in this is the reaction to the FEDS facilities. I 0:23:06.960 --> 0:23:08.920