Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: listen to our radio show weekdays at two pm Eastern
Speaker 1: only on Bloomberg Radio. Carol, we are keeping an eye on, obviously,
Speaker 1: everything related to the health side of this. No one
Speaker 1: is following it more closely at Bloomberg than Drew Armstrong.
Speaker 1: He leaves all of our health coverage here in the US.
Speaker 1: He is spearheading a massive team that is coming at
Speaker 1: this from all angles. He joins us on the phone today, Drew,
Speaker 1: how are you hey, guys? Um, greetings from the suburbs
Speaker 1: of New York City. I'm too and well good good um.
Speaker 1: So tell us what's the one thing we need to
Speaker 1: know today? I mean, you're seeing all of this so
Speaker 1: in depth. What do we need to know, based on
Speaker 1: what we've heard from public officials, what you're hearing from
Speaker 1: health officials, and sort of squaring that with maybe this
Speaker 1: market enthusiasm. Yeah, And I think the big thing that
Speaker 1: people are watching right now, and this has really been,
Speaker 1: you know, the thing to watch all along is what
Speaker 1: are we seeing in new US cases in the various
Speaker 1: outbreaks here, And that's I want to be clear, you know,
Speaker 1: looking at the number of new cases is a leading indicator,
Speaker 1: but it's also a very imperfect one just because of
Speaker 1: the significant problems in the US with broad comprehensive testing
Speaker 1: for this disease you would like to do. I'm sure
Speaker 1: a lot of your listeners have read stories, many of
Speaker 1: them written by us, about some of the problems with
Speaker 1: getting enough test out they are getting everybody tested and
Speaker 1: who needs to be tested and so on and so forth.
Speaker 1: But you know, right now, as a leading indicator, it's
Speaker 1: kind of the best thing that we have right now.
Speaker 1: And we've seen a number of, you know, indications that
Speaker 1: in New York and New Jersey, which are two of
Speaker 1: the hottest outbreaks going on in the United States, that
Speaker 1: new infections imperfectly counted as they may be, appear to
Speaker 1: be slowing, and that, you know is overall good news
Speaker 1: in terms of when can some of these restrictions on
Speaker 1: movement and on business being open and on people having
Speaker 1: to stay home begin to be loosened. There are a
Speaker 1: ton of caveats attached to that, but if you were
Speaker 1: looking for good news, this does feel to be a
Speaker 1: little bit of that right. Global cases topping one point
Speaker 1: thirty nine million deaths succeeding seventy nine thousand. Those are
Speaker 1: the latest numbers from John's Hopkins. You know, you speak
Speaker 1: of um imperfect models. Drew is China the model from
Speaker 1: a health case basis the right model to be looking
Speaker 1: in terms of the trajectory. You know, I think there
Speaker 1: are some things that China tells us and some things
Speaker 1: that don't. There's there's two ways to think about, Like
Speaker 1: when we look at what happened in China and will Hunt,
Speaker 1: we've seen the exact theme dynamic play out in other
Speaker 1: locations around the world. You know, I mean and I
Speaker 1: and I and I mean that from the standpoint that
Speaker 1: you know, there are some significant screw ups and then
Speaker 1: problems and then consequences that happened there that has happened
Speaker 1: everywhere else. I mean you know, first in China, we
Speaker 1: had basically the authorities say, hey, this isn't that big
Speaker 1: of a deal. We have this well in hand, you know,
Speaker 1: I think they were even saying it doesn't appear to
Speaker 1: be human human transmission. And then we entered a period
Speaker 1: where they didn't really have enough testing capacity, and so
Speaker 1: it seemed like cases will only rising a little bit.
Speaker 1: But in fact we had no idea how big the
Speaker 1: outbreak was there because they didn't have great testing capacity.
Speaker 1: Then all of a sudden they got it. Cases exploded,
Speaker 1: and then by the time that happened, the healthcare system
Speaker 1: in Wuhan got overwhelmed and they had to build immense
Speaker 1: new capacity. They had a lot of excess death. Um.
Speaker 1: Those that's exactly what happened in Italy. Um, that's a
Speaker 1: that's that's very similar what happened in the United States. Mean,
Speaker 1: we had, you know, federal leadership here that was saying,
Speaker 1: this is well contained, it's not that big of a deal,
Speaker 1: and then we had a massive problem with testing and
Speaker 1: then all of a sudden this thing was out of
Speaker 1: the list. I mean, we've seen the same exact dynamic
Speaker 1: play out. Um. What I think the lessons we can't
Speaker 1: take away from from China. Are you know, one, they
Speaker 1: did a lockdown that I think would never be allowed
Speaker 1: in a democracy period. I mean, people were physically unable
Speaker 1: to leave their homes. In many cases, there were reports
Speaker 1: of house to house searches to find six people and
Speaker 1: um haul them off to quarantine centers. Um. You know,
Speaker 1: it may look similar in some respects, but I think
Speaker 1: that there are some aspects of that that were much
Speaker 1: more um uh severe. And you know the other issues
Speaker 1: that we've seen reports from you know, the US intelligence
Speaker 1: community that they appeared to significantly undercounted, um or underrepresented
Speaker 1: the severity of the of the outbreak there. And so
Speaker 1: I think we still have some missing pieces of information
Speaker 1: from China, uh that we really don't know how that
Speaker 1: it was, and that may have influenced how the world
Speaker 1: thought about this disease as well. I mean, you know,
Speaker 1: academics and healthcare folks, they're they're early understanding this thing
Speaker 1: was really relied upon by what we heard coming out
Speaker 1: of China, and it's possible that we got a very
Speaker 1: imperfect picture of that. So, Drew, we were just talking
Speaker 1: with our colleague Sarah Ponzac, you know, well, uh just
Speaker 1: a few minutes ago. She drove from New York to
Speaker 1: Florida over the past few days, and you know, painted
Speaker 1: a picture for US of a country, as you know
Speaker 1: very well, that is very uneven in its response. As
Speaker 1: you talked to bureau chiefs, your reporters across the country.
Speaker 1: What's this sense you're getting of the US response which
Speaker 1: feels sort of checkered at best. I think there's something
Speaker 1: that you you all have to understand about the response here.
Speaker 1: And I and I say that I and I agree
Speaker 1: with you as the response is checkered. But also you know,
Speaker 1: outbreaks are local disease commission happened locally. It is a
Speaker 1: person to person phenomenon, and so you know it is
Speaker 1: when we talk about a US response, UM, I don't
Speaker 1: think there should be you know, it doesn't feel like
Speaker 1: there should be homogenevy. And that's just because that's not
Speaker 1: how it works. I mean, neither are These are responses
Speaker 1: that need to be locally calibrated. And one thing that
Speaker 1: you know, there has been quite a quite a bit
Speaker 1: of criticism of the federal government in its response to this,
Speaker 1: But you know, a response that's appropriate in New York,
Speaker 1: where we have hundred forty thousand almost cases confirmed so far,
Speaker 1: maybe very very different than a what a response looks
Speaker 1: like in Wyoming, which you know, doesn't have a massive
Speaker 1: subway system where everybody's holding the same pole and shared
Speaker 1: cars and you know, close confines and things like that. Um,
Speaker 1: you know, responses are almost inevitably going to be appropriate
Speaker 1: to the local situation, even if they do share some
Speaker 1: um some commonalities throughout aspects of social distancing and things
Speaker 1: like that, in order to avoid spreading cases. But in
Speaker 1: urban location is gonna be really different than a rural one. Um,
Speaker 1: A dense city is going to be very you know,
Speaker 1: dense public transportation city is going to be very different
Speaker 1: from a car are driven city. So, you know, I
Speaker 1: think that when we talk about a patchwork, I think
Speaker 1: in some cases, you know, that is appropriate. I think
Speaker 1: what you don't want to see is a patchwork of
Speaker 1: how seriously people take it or how closely they you know,
Speaker 1: follow the expert recommendations that are being given to them
Speaker 1: based on those circumstances. Hey, just quickly, you know you
Speaker 1: write about treatment versus cure? Is it the race for
Speaker 1: a treatment versus the race for a cure for the
Speaker 1: virus helping or complicating the US and the world's ability
Speaker 1: to get on top of all of this. Well, you know,
Speaker 1: that's a really important dynamic that you that you bring up,
Speaker 1: because in reality, a cure here in almost certainly does
Speaker 1: not mean, you know, a drug that eliminates, that just
Speaker 1: kills off the virus. We have we have cured. We
Speaker 1: have cured in the in the true sense, one virus ever,
Speaker 1: and that's hepatitis c UM. So it's you know, humanity
Speaker 1: one UH viruses a whole lot more than that. However,
Speaker 1: we're pretty good at developing vaccines, and our own immune
Speaker 1: systems are a relatively good at at pushing back some
Speaker 1: of these infections, and so when we talk about cure,
Speaker 1: we should really be talking about vaccines. UM. You know,
Speaker 1: therapeutics are are are in all likelihood going to be
Speaker 1: the type of things that are used for people who
Speaker 1: are sick enough to be in the hospital and need them. Um.
Speaker 1: You don't need to be administering therapeutics UM in all
Speaker 1: likelihood to people who are experiencing the you know, relatively mild,
Speaker 1: if extremely unpleasant version of this. You know, the body
Speaker 1: patients from what we've seen so far, are recovering from
Speaker 1: this disease more or less on their own. You know,
Speaker 1: some of those books are getting hospitalizing and are getting
Speaker 1: supportive care, and some of that can be quite intense.
Speaker 1: But you know, I think that when we think about
Speaker 1: how therapeutics, what the role therapeutics are gonna play, it's
Speaker 1: probably going to be for some of the people who
Speaker 1: are the most most severe folks and in most in
Speaker 1: need of medical attention. And so when you're talking to
Speaker 1: your medical folks, Drew Armstrong, what are they saying about
Speaker 1: this whole push within the administration or at least in
Speaker 1: corners of the administration around this time? Llaria drug which
Speaker 1: I will not try and pronounce, Uh, that is certainly
Speaker 1: catching on in at least rhetorically with the president. Yeah,
Speaker 1: so that drug and hydroxy chloroquine. It's an old malaria drug, listen.
Speaker 1: I mean, you know, if you look around at the evidence,
Speaker 1: it's extremely limited. Um, there haven't really been redoubts from
Speaker 1: any meaningful trial that tells you whether or not this
Speaker 1: thing actually works. People say, you know, hey, we gave
Speaker 1: this to temptatients and they all got better, Um, you know,
Speaker 1: or a lot of them got better, or you know,
Speaker 1: six out of ten of them got better in the
Speaker 1: reality is that most people do get better on their own.
Speaker 1: I think the data on this has been extremely checkery.
Speaker 1: There's been a lot of christmatism of these studies. There
Speaker 1: has not been a large conclusive study that tests this
Speaker 1: drug against a placebo Um. You know, President Trump has
Speaker 1: faced pushed back from the stage by people like um,
Speaker 1: you know Dr Tony Faucci, who's ahead of the sub
Speaker 1: unit of the of the NH. There's just very very
Speaker 1: little evidence right now in support is if it works,
Speaker 1: that's fantastic news. I think, you know, one of the
Speaker 1: things that we hear over and over and over again
Speaker 1: from the people though who are developing these drugs is
Speaker 1: you need to find out what actually does work. And
Speaker 1: you know, having a system where we let everyone try
Speaker 1: everything without any proof whatsoever muddies the waters terribly, puts
Speaker 1: people on therapies that may or may not work, and
Speaker 1: excludes them from therapies that may that we that actually
Speaker 1: may and it it it makes it much harder for
Speaker 1: us to get an answer on what works here, what
Speaker 1: is going to help the most number of people to
Speaker 1: get that answer quickly and then to get people onto
Speaker 1: those drugs. So Um, there is a There is an
Speaker 1: urging inside the scientific community to do this the right way. Um.
Speaker 1: You know, you want to you want to give people
Speaker 1: hope and you want to give people care, but you
Speaker 1: also want to give people something that works and that's
Speaker 1: backed by evidence. So we don't waste their you know,
Speaker 1: their medical opportunities, their time, their money, all of those things, um,
Speaker 1: while while testing you know, while while trying therapies that
Speaker 1: don't have an effect, and right. We want to get
Speaker 1: it right because we also don't want to see any
Speaker 1: kind of relapse of an outbreak. You know. One thing
Speaker 1: I want to ask you, Drew is and this was
Speaker 1: based on a conversation Jason I had yesterday, you know
Speaker 1: where one of our guests said, basically, we're not gonna
Speaker 1: be able to get back to work fully or you know,
Speaker 1: embrace kind of our social lives like we used to
Speaker 1: like big stadiums until we get a vaccine. Is that
Speaker 1: the case? I think that's probably you know, there are
Speaker 1: definitely aspects to that. I think you're you know, think
Speaker 1: about your own lives and you know, if if someone
Speaker 1: if Governor Cuomo or President Frum said, hey, you know
Speaker 1: we've mostly got the all clear, there's some circulating. I
Speaker 1: don't know if you know how many people would necessarily
Speaker 1: hop right out to a restaurant, you know, start hugging
Speaker 1: and you know, shaking hands with people they haven't seen
Speaker 1: in months, you know, grab the subway pole, getting a taxicab,
Speaker 1: go back to work. I think this is going to
Speaker 1: take time. You know. One thing that vaccines are are
Speaker 1: good at also is you know, is creating a level
Speaker 1: of certainty and comfort. Um. You know, people want to
Speaker 1: know not only have we successfully pushed back this disease
Speaker 1: into a small or smaller and smaller and smaller number
Speaker 1: of people through the social distancing measures and the mitigation measures,
Speaker 1: but also that you know, even if they are struck
Speaker 1: by it, that they are you know that they or
Speaker 1: they are exposed to it, that they're protective. I think
Speaker 1: a vaccine is pretty crucial in all likelihood and creating
Speaker 1: that level of confidence just from a personal comfort standpoint.
Speaker 1: And Drew, what about this notion of the antibody test,
Speaker 1: How realistic is that? Because that's something that a lot
Speaker 1: of folks that I've been talking to even casually are
Speaker 1: saying that could be something that sort of helps spur
Speaker 1: us back to work or back into something resembling normal life. Yeah,
Speaker 1: it's theoretically a very very interesting idea. And if it's
Speaker 1: perfect and if it's perfectly accurate, you know, which is
Speaker 1: not necessarily given. Let's be really clear here. You can
Speaker 1: have all of these tests comes when tend to come
Speaker 1: with some level of false positives or false negatives. And
Speaker 1: one of the things that you know, critics of this
Speaker 1: idea say is that, well, you know, if two percent
Speaker 1: of the population has it, you know, or ten percent
Speaker 1: of the population has it, and the false positive rate
Speaker 1: on these antibody tests, which you know, these are detections
Speaker 1: of did you at some point have this virus and
Speaker 1: might you now have some level of immunity? You know,
Speaker 1: if your rate of the disease in society is anywhere
Speaker 1: close to the false positive rate on your trial, you
Speaker 1: might run, you know, you might run these antibody tests
Speaker 1: on ten thousand people and say, you know, well, hey,
Speaker 1: we found you know, x number of people who are positives.
Speaker 1: These people, you know, presumably they're immune, but it might
Speaker 1: just be that, you know, those are the people who
Speaker 1: are who are the false positives in your test, And
Speaker 1: what you're detecting isn't people who are immune but just
Speaker 1: erroneous test um. So I think they're going to be
Speaker 1: you know, I think one of the things that we
Speaker 1: people do think that they're going to be quite useful
Speaker 1: for is measuring the prevalence of this disease, especially in
Speaker 1: places that have had a lot of it like New York, um,
Speaker 1: and where I think it may be, you know where
Speaker 1: I think it. It remains to be seen how useful
Speaker 1: it is is going to be on a purely individual basis,
Speaker 1: And I think to do that, you're going to need
Speaker 1: a level of certainty about the accuracy of these and
Speaker 1: that is something that you know that that we know
Speaker 1: people are looking at now. I mean you obviously there
Speaker 1: is a desire to have this be as accurate as possible,
Speaker 1: so you can get exactly the type of answers about, Hey,
Speaker 1: do I have some level of community here? Can I
Speaker 1: go back to work? You know? Did I have this?
Speaker 1: And was I perhaps mildly symptomatical? Was that you know
Speaker 1: the thing that I thought was flew back in February
Speaker 1: in fact this Those are the types of questions that
Speaker 1: you can get answers to if these tests are accurate enough. Right,
Speaker 1: you are are rock star, No doubt about it. Drew Armstrong,
Speaker 1: thank you so much. It is a must read on
Speaker 1: the Bloomberg terminal and also at Bloomberg dot com, so
Speaker 1: everyone should check it out. Drew Armstrong busy, busy guy
Speaker 1: and his team. He is the team leader for US Healthcare,
Speaker 1: a Bloomberg News joining us once again on the phone
Speaker 1: from New York City. I always feel like I get
Speaker 1: clarity after I talk to Drew. Listen, I've told the
Speaker 1: entire New York hereau of this that when we look
Speaker 1: back on this, Drew Armstrong is going to be the
Speaker 1: hero and all of it. I mean, the way he's
Speaker 1: coordinated to the coverage has just been unbelievable and highly
Speaker 1: highly recommend and we talked about this, we recommended all
Speaker 1: the time. If you go to Bloomberg dot com slash Coronavirus,
Speaker 1: you will get all of his team's coverage and much more. Uh,
Speaker 1: it's it's a great destination. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Jason Kelly on Bloomberg Radio.
Speaker 1: Let's talk about a story that is in the magazine. Well,
Speaker 1: and it's not just a story, it's a book. Carol,
Speaker 1: I can't I've been so excited for this book to
Speaker 1: come out. Sarah Fryer wrote it. It's called No Filter,
Speaker 1: It's about Instagram. There's a fantastic excerpt in the magazine
Speaker 1: this week. Can't get enough of it. Uh, Sarah joins
Speaker 1: us on the phone from San Francisco. First of all, congratulations,
Speaker 1: this is an amazing, amazing accomplishment. How are you feeling?
Speaker 1: I feel good? I mean it. This is what was
Speaker 1: crazy to me about this story is just how much
Speaker 1: of it hadn't been hadn't been uncovered, And so I'm
Speaker 1: really excited to share the first experts today. Also feel
Speaker 1: like there's there's so much that people will be able
Speaker 1: to learn about, not just the tension between Instagram and Facebook,
Speaker 1: but also Instagram's cultural impact on our world. So I
Speaker 1: want to also bring in Joe Webber, of course, editor
Speaker 1: Bloomberg Business Week. He's on the phone from Brooklyn. I mean,
Speaker 1: this is such you know, it's a great we know,
Speaker 1: a great book already, Uh, and you've got an excerpt
Speaker 1: in the magazine, but it is such a Business Week
Speaker 1: story as well. We've been following Instagram and Facebook and
Speaker 1: kind of I just want to say the strife between
Speaker 1: the two Joe. Yeah, I am so excited for Sarah. Um.
Speaker 1: I think this book is just going to be amazing.
Speaker 1: And I was really honored to be able to publish
Speaker 1: um this particular excerpt because I think it really shows
Speaker 1: a side of Instagram and Facebook that you know, we've
Speaker 1: just no one's really seen it like this before. And
Speaker 1: you know, Instagram was this little darling app just barely
Speaker 1: a decade ago, and you know, it just looks like
Speaker 1: this bargain that Mark Zuckerberg happened to pick up for
Speaker 1: you know, pennies, and now he's turned it into a
Speaker 1: major cash cow that is part of this family of
Speaker 1: apps that he's built at Facebook. But in order to
Speaker 1: get there, along the way, there was a lot of
Speaker 1: internal stripes and tension, and that's ultimately what Sarah was
Speaker 1: able to bring to light in this particular part of
Speaker 1: our excerpt. And Um, Sarah, you know, like there's this
Speaker 1: pastry that makes an appearance and I just asked you,
Speaker 1: this is what what is uh? What is the cruffin? Oh,
Speaker 1: It's it's the San Francisco version of the Rainbow bagel. Basically,
Speaker 1: it's it's a it's a crispant muffin and it plays
Speaker 1: the launch event for Instagram TV. This this launch event
Speaker 1: was like the most Instagram a little thing possible. They
Speaker 1: had Assay e Bols and Macho Late's and UM at
Speaker 1: a Tistor event in New York have like champagne filled
Speaker 1: this cotton candy. Uh really. I use that events as
Speaker 1: an example to show the contract between Instagram and Facebook.
Speaker 1: Instagram is really about UM presenting your life as this
Speaker 1: this beautiful, manicured version, and Facebook is about this building
Speaker 1: your network and having friend connections, and the philosophies of
Speaker 1: the two products really aligned with the founders and what
Speaker 1: kind of people they are. Zuckerberg being this dominant force
Speaker 1: trying to win over more and more of of humanity's attention,
Speaker 1: and Instagram trying to create a place where you know,
Speaker 1: culture can be appreciated and people can become uh, become
Speaker 1: recognized for their own brands and so so eventually these
Speaker 1: two clash, and when they're announcing I DTV in twenty team,
Speaker 1: that was a moment for System realizing that Instagram wasn't
Speaker 1: really going to be allowed to thrive without without Zuckerberg's
Speaker 1: intense involvement in every step of the way, which is
Speaker 1: very different than the independence the company rejected in the past.
Speaker 1: And and Mark Zuckerberg, I mean you really tease out
Speaker 1: some sort of personality conflicts too, that Ivious had huge
Speaker 1: business applications as you're alluding to, Uh, Sarah, I would
Speaker 1: imagine there's much more in the book about this, because
Speaker 1: that was sort of the the key point of tension
Speaker 1: that Carol alluded to at the top of the conversation. Yeah,
Speaker 1: Zuckerberg is is all about winning. He He's not about
Speaker 1: you know, being careful and and having um, you know,
Speaker 1: a lot of attention to detail and so and so
Speaker 1: we see that play out in their product strategy. Means
Speaker 1: Zuckerberg tried a million different things to counter the rise
Speaker 1: of Snapchat. Instagram tried one and it worked and and
Speaker 1: I think that uh, eventually, when Instagram's growth actually accelerated
Speaker 1: after copying Snapchat stories, Zuckerberg saw a threat to Facebook.
Speaker 1: He saw that the Instagram way of doing things was
Speaker 1: gaining popularity, maybe at the expense of Facebook's longevity. And
Speaker 1: being the dominating force that he is and really caring
Speaker 1: about his flagship products, he started talking about cannibalization, the
Speaker 1: idea that Instagram success would eat into Facebook potential and
Speaker 1: started driving the fingers away right and a pact basically
Speaker 1: his baby Facebook. Like, it's just it's really phenomenal. Um, Sarah, congratulations,
Speaker 1: were so excited for you. The book is No Filter,
Speaker 1: the inside story of Instagram. Check out the book, check
Speaker 1: out the excerpt that is in the magazine. This week,
Speaker 1: you're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. Well, companies, as we know,
Speaker 1: are retrenching. We talk about cutting back on spending, letting
Speaker 1: go of workers, stopping buy backs and conserving cash and
Speaker 1: cutting costs in light of the virus. Here with what
Speaker 1: that means for I T spending, the good and the bad.
Speaker 1: Crawford del Perette his president of I DC Research Xerox
Speaker 1: or I d C forgive me I d C, and
Speaker 1: he's on the phone from Framingham, Massachusetts. UM, nice to
Speaker 1: have you back with us. Crawford talked to us a
Speaker 1: little bit about UM I T spending because we do
Speaker 1: know companies are retrenching. Any kind of early data that
Speaker 1: you guys are seeing, yeah, absolutely, thanks for having me, Carol. Um,
Speaker 1: so there is some early data. I mean, this has
Speaker 1: been an extraordinary set of circumstances that we've seen. So
Speaker 1: we were looking at an I T market UH last year. UM,
Speaker 1: you know, you're looking at a market that is growing
Speaker 1: in excess of UH two years ago, excess five percent
Speaker 1: last year, excess in n SS of almost five per
Speaker 1: so for point eight percent in January this year, we're
Speaker 1: forecasting a market to grow about five point one percent.
Speaker 1: We've taken that down to the I T market will
Speaker 1: shrink by almost three percent this year, down about two
Speaker 1: point seven percent. And that's based on a GDP forecast
Speaker 1: of about a two percent decline, which is not uncommon
Speaker 1: where I T tends to UM, you know, get stalled.
Speaker 1: There's a lot of tangible things that you can stop buying,
Speaker 1: and then you you tend to see a slap down. UM.
Speaker 1: There's a lot of characteristics here that are different and
Speaker 1: UH different from say the cycle that we saw in
Speaker 1: two thousand and eight, UH in two thousand nine, where
Speaker 1: we think this might be a little bit less severe.
Speaker 1: But for sure, we've seen a huge a huge readjust
Speaker 1: and and not surprisingly we're seeing it across the board,
Speaker 1: but of course we're seeing it in the vertical segments.
Speaker 1: The industry segments like hospitality, transportation, um man, parts of manufacturing.
Speaker 1: But we're also seeing it in the category you were
Speaker 1: just talking about, which is the small and medium business,
Speaker 1: particularly the emerging companies, where they just need a lockdown,
Speaker 1: own all their expenses and really try to go into
Speaker 1: survival mode a bit until we get through this well.
Speaker 1: And survival mode is exactly where I was going to
Speaker 1: go next, Crawford, you and spend it so beautifully. You know,
Speaker 1: this notion that you had a lot of companies and
Speaker 1: I mean, I think our company would fall into this
Speaker 1: category who probably did some I wouldn't call it panic spending,
Speaker 1: but some unexpected spending to get everybody set up and
Speaker 1: sort of get people in a place where they could
Speaker 1: continue operating and and if not blowing budgets, at least
Speaker 1: reallocating things. And I wonder how long that takes to
Speaker 1: sort out. So take us a level down and help
Speaker 1: us understand what what companies generally are thinking around that. Yeah.
Speaker 1: So it's a great point, Jason. And we've seen a
Speaker 1: lot of this, right, We've seen you know, we've been
Speaker 1: in constant communication with the end customers as well as
Speaker 1: the intermediary companies. The companies that provide the technology and
Speaker 1: provide the services. And we've seen that across the board,
Speaker 1: you know, I've I've talked to large service providers that
Speaker 1: have had to stand up health organizations in places like um,
Speaker 1: large major cities, large government bodies where you know, over
Speaker 1: a weekend that they need an instant you know, a
Speaker 1: new set of laptops for you know, multiple hundreds of customers. Um.
Speaker 1: You know, good luck if you if you're in the
Speaker 1: market right now for a laptop as a as a
Speaker 1: small business or a consumer. We've seen a big surge
Speaker 1: in demand there. But interestingly, when you get underneath that
Speaker 1: for the whole year, we actually still think that you'll
Speaker 1: see um contraction UM in those in those kinds of segments.
Speaker 1: We think that you know, you look at the you
Speaker 1: look at the PC market, which it had you know,
Speaker 1: a relatively you know, nice run. We're looking at you know,
Speaker 1: an I T spending, you know, we we expect that
Speaker 1: market to drop in almost including tablet's almost ten percent.
Speaker 1: We expect the infrastructure market, you know, servers and large
Speaker 1: storage systems that will drop by about four percent UM.
Speaker 1: I T services that will drop between two and four percent.
Speaker 1: The only category that will likely show growth. To your
Speaker 1: point is interesting. It's software business. UM, that business we
Speaker 1: expect well and that that business will just for perspective,
Speaker 1: that business was between about nine percent growth, that'll go
Speaker 1: down to about two growth. But again, what and this
Speaker 1: is an interesting trend that you know, we we've been
Speaker 1: talking about for a while, and that is that when
Speaker 1: you start buying these things as a service, right, you
Speaker 1: can't shut them off. You've basically bet your business as
Speaker 1: so that basically means that you know you're in it
Speaker 1: for a penny, you're in for a pound, and and
Speaker 1: you're going to continue to buy these services if you're
Speaker 1: a thing going forward, which we expect most men, many
Speaker 1: companies today. Crawford, you're one of those individuals that we
Speaker 1: folks at Bloomberg have been talking to for years, and
Speaker 1: we have talked to you through various crises, whether it's
Speaker 1: coming out of the financial crisis, you know, whether it's
Speaker 1: after nine eleven. I mean, we have talked to you
Speaker 1: for a long time about UM, the industry and the
Speaker 1: tech industry generally speaking. I want to ask you, I mean,
Speaker 1: I hope you guys are doing okay. I hope your
Speaker 1: team is doing okay, And I'm curious how you see
Speaker 1: this virus um changing the world. I mean, what do
Speaker 1: you see is the most important in a way that
Speaker 1: the world's going to be different on the other side. Yeah, well,
Speaker 1: thanks for thanks for that, and you know, we're all
Speaker 1: doing it is best that we can. You know, we're
Speaker 1: we're a company a thousand people in in fifty countries
Speaker 1: around the world, and we're all basically working from home
Speaker 1: right now. But as far as we can tell, most
Speaker 1: people are safe, and that's that's that's very important. So
Speaker 1: I think that what you're going to see on the
Speaker 1: other side is a couple of things, and some will
Speaker 1: be very tangible and some sorry sorry very um I
Speaker 1: think top of mind, and some maybe a little bit less.
Speaker 1: So I think that one of the most tangible things
Speaker 1: you'll see, the barriers are going to come down in
Speaker 1: some things that regulation has been stopping those barriers from
Speaker 1: coming down. I'm talking about stuff like Hella medicine. I
Speaker 1: think you're going to start to see a scenario where
Speaker 1: you know what, payers are going to have to get
Speaker 1: out of the way, and if a cursing can be
Speaker 1: diagnosed over a webcam, if if a person can can
Speaker 1: still be part of the system and get a quality diagnosis. Um,
Speaker 1: whether that's crossing state lines that aren't able to be
Speaker 1: crossed today, I think those things start to change. So
Speaker 1: I think we're gonna see a big change in in
Speaker 1: those kinds of services going forward as we come out
Speaker 1: the other side. I also think we're going to see
Speaker 1: that how um the sort of people are willing to
Speaker 1: work and where they live. I think we might see
Speaker 1: more of a move to you know what, it's okay
Speaker 1: if I don't commute every single day, It's okay for
Speaker 1: me to work at home. You're not going to see
Speaker 1: that same stigma. So I mean, I'm just gonna put
Speaker 1: it out there and stigma associated with you know, what's
Speaker 1: going on with that person because they're working at home. Well,
Speaker 1: the fact of the matter is we've proven that the
Speaker 1: world can be very productive from home, and I think
Speaker 1: the tools are there, and I think it was it's
Speaker 1: really about things like social norms and social etiquette when
Speaker 1: you're in the office, to be inclusive of the people
Speaker 1: that are not necessarily in the office. And I think
Speaker 1: that now with new kinds of services, we're gonna be
Speaker 1: a lot more inclusive. On the other side. I think
Speaker 1: the one that's debatable and one that comes up a
Speaker 1: lot is what does this do for education? And I
Speaker 1: think for for education, I think that UM, the underserved
Speaker 1: and the nonserved people in emerging legions around the world,
Speaker 1: they will take advantage of these kinds of tools. But
Speaker 1: I'm a little more cynical when it comes to the
Speaker 1: Western education system. I think that, unfortunately, it's a system
Speaker 1: that's based on classrooms. It's a system that was set
Speaker 1: up for classrooms, and I just think that, UM, there's
Speaker 1: sort of an eliteness that comes from being in that
Speaker 1: classroom at a university, and I think we're probably gonna
Speaker 1: fall back into that um in the future. But I
Speaker 1: do think that on the other side, this is going
Speaker 1: to be a moment, and it's gonna be a moment
Speaker 1: where things are going to change. I agree with you.
Speaker 1: I think you make some really really good points. I
Speaker 1: hope you're right on a lot of them. Uh, And
Speaker 1: we'd love to keep checking in with you because we
Speaker 1: know you really have you and your team, uh, your
Speaker 1: finger on the pulse of how we think about technology,
Speaker 1: because you've got the data. We love the data, all right.
Speaker 1: Crawford del Prett thank you so much, President of I
Speaker 1: d C International Data Corp. Joining us on the phone
Speaker 1: from Framingham, Massachusetts. I'm bro Macro a journal. Yeah, but
Speaker 1: you let me drive? Oh no, no, no, no, who's
Speaker 1: going to drive home? Honey? Please, I'll do the right
Speaker 1: drivel Let me. I want to drive, Just drive baby.
Speaker 1: The question trying This is the drive to the globe.
Speaker 1: Give me thanks. We'll drying us down on Bloomberg Radio.
Speaker 1: It is time for the drive to the clothes back
Speaker 1: with us as George Mateo, chief investment officer at Key
Speaker 1: Private Bank, joining us on the phone from Cleveland. George,
Speaker 1: nice to have you here with us. Um, how do
Speaker 1: you look at this market? Bear market or could we
Speaker 1: be at the beginning of a new bull market? Well,
Speaker 1: great to be with you, and thanks for having me back.
Speaker 1: You know, I think it's probably good of both. I mean,
Speaker 1: I think we're just going to be in this sideways
Speaker 1: shop for a while. So we'll have days like today
Speaker 1: we'll so good about things, and days will still probably
Speaker 1: a little less good. So I think we just have
Speaker 1: to kind of fasten our seatbelt and hold on. And
Speaker 1: so what are you hearing from uh, customers and clients
Speaker 1: and and one of the reasons I'm especially interested to
Speaker 1: I think we're both interested to hear you answer that, George,
Speaker 1: is because you're not in New York City. You're there
Speaker 1: in in Cleveland, And obviously I think this crisis looks, uh,
Speaker 1: while broadly the same, maybe individually locally and regionally a
Speaker 1: little bit different. So how are how are people reacting,
Speaker 1: how are they interacting with you? Yeah, well, I hope
Speaker 1: you both are keeping safe too, and all your listeners
Speaker 1: for sure. I mean, I think Ohio is a little
Speaker 1: bit of as a curve. It seems like we've had
Speaker 1: a pretty progressive government get out in front of this,
Speaker 1: but I think everybody is still in the same level
Speaker 1: anxiety where wherever you live, uh, And that's just kinda
Speaker 1: feels more anxiety to some that but I think people
Speaker 1: are trying to measure about it and trying to kind
Speaker 1: of maintain their composure, and investors need to do the
Speaker 1: same thing. So, you know, in spite of all this uncertainty,
Speaker 1: we really want to encourage people to maintain their long
Speaker 1: term discipline and stay stay in the market excep they can,
Speaker 1: and really stick to their long term plan. And that's
Speaker 1: really the message we've been trying to emphasize how many
Speaker 1: of those of your clients their long term plan has
Speaker 1: really been upended by such a dramatic pullback in the
Speaker 1: equity markets. You know, A good questions, not a lot though,
Speaker 1: I mean I think people um not to this extent certainly,
Speaker 1: but I think people might have been anticipating in some
Speaker 1: degree of alatility. We try to take a long term approach.
Speaker 1: We try to counsel clients to expect volatility will be
Speaker 1: a feature of the investment landscape. Again, the magnitude has
Speaker 1: probably been unprecedented for sure, and often use word but
Speaker 1: I think it's fits. But I think people know that
Speaker 1: volatility is something that kind of comes with the territory.
Speaker 1: So we've got some great financial planning tools and techniques
Speaker 1: that really kind of focus that folk on that first,
Speaker 1: and then from there you can really hopefully build a
Speaker 1: long term investment plan and shake to it. In market
Speaker 1: site today. So, George, we love talking names with you.
Speaker 1: Tell us about Microsoft. I'm especially interested because we had
Speaker 1: a great conversation just a little while ago with Crawford
Speaker 1: del Prett over at I d C. You know, talking
Speaker 1: about uh I T spending. But one of the bright
Speaker 1: spots and maybe this is why you have this pick
Speaker 1: Uh is around software that obviously is an area where
Speaker 1: we've seen tremendous growth, and his team is essentially predicting
Speaker 1: that it's the one area in I T where we
Speaker 1: might still see a little bit of optimism this year. Yeah,
Speaker 1: I would agree with that, and I think it again
Speaker 1: speaks to the notion of really signing high quality companies
Speaker 1: with really strong balance sheets. You know, people are companies
Speaker 1: that are led by strong management teams and people can
Speaker 1: really identify with their services. Software. I think you're right
Speaker 1: is kind of a goacher areas. It's kind of a
Speaker 1: good core defensive name within the tech landscape, really strong
Speaker 1: cash flow generation, strong balance sheet, good earning. The visibility
Speaker 1: I mean Abody's tarningt pssibilities a little bit mired DSE days,
Speaker 1: but we think that Microsoft can shine through an environment
Speaker 1: like this, going toward about a good sect of hell
Speaker 1: and set their back to it really can describe that
Speaker 1: grows form, we think. So does that mean when it
Speaker 1: dipped to below one forty, well below one forty, that
Speaker 1: you guys were doing some buying. I think the low
Speaker 1: I'm just looking the most recent lows around one thirty
Speaker 1: four and change or so, did you do a bunch
Speaker 1: of buying into Microsoft? I say, we'd be a bunch
Speaker 1: of buying, but yeah, we've been nibbling at it. For sure.
Speaker 1: It's come back and um, you know we still like
Speaker 1: the name though, so on a long term basis, we'd
Speaker 1: be buying it today. Actually, what about something like a
Speaker 1: dollar general? Weal, Yeah, we talked about this a lot,
Speaker 1: and we've been talking, um, Jason and I about the
Speaker 1: overall retail sector and what's going on. UM, tell us
Speaker 1: a bit about what's your what's your thesis is for
Speaker 1: this one? Well? Does that much extent? They're kind of
Speaker 1: a mass of their own destiny. I mean something the
Speaker 1: macro environment is going to be headwind for a lot
Speaker 1: of folks, and hopefully these things are more short term
Speaker 1: in nature, but they really do offer the best a
Speaker 1: breach format within kind of a smaller size box. Um,
Speaker 1: They've got some really good levers they can pull to
Speaker 1: try and and enhance their merchandizing. They've got some new
Speaker 1: initiatives that are really poised for some growth going forward.
Speaker 1: They've also got a environment where they their closest competitor
Speaker 1: is a little bit hampered as antar term and so
Speaker 1: I think there's a lot of things they can do
Speaker 1: to kind of get through this better than others. So
Speaker 1: I think they're well positioned over the long term as
Speaker 1: well well. And it's interesting to think about that name
Speaker 1: to George right, like knowing enough to be dangerous about
Speaker 1: their history. You know, KKR bought them kind of at
Speaker 1: the tail end of the last thing, right before the
Speaker 1: financial crisis, and it was a great name to have
Speaker 1: as we went into a period of economic uncertainty where
Speaker 1: a discount retailer maybe more attractive, and they are servicing
Speaker 1: a big chunk of the country that is largely under
Speaker 1: market or undermarketed or under under retail sways underserved. Yeah,
Speaker 1: I agree with you, Yeah, hardly. I think that's so
Speaker 1: that's a key part the thesis for sure. But I
Speaker 1: do wonder. I do wonder too, that's going to be
Speaker 1: the segment of I feel like our population that's going
Speaker 1: to be hit the hardest. So does a dollar general
Speaker 1: benefit or get hurt because of that? You know, there
Speaker 1: are some short term headwinds for sure, But I think
Speaker 1: that they've plun to be seller operators. Uh, they're finding
Speaker 1: people definding ways to get people into the store. Some
Speaker 1: continuing options they've set up at the back of the
Speaker 1: store that allow people to take up their goods, um,
Speaker 1: you know, without having to go in the store, are
Speaker 1: a big part of their growth also um. But again,
Speaker 1: I think they're really kind of focused on the core demographic.
Speaker 1: Really freshen of the stores a little bit too, which
Speaker 1: will actually hope we drive traffic. And adding new categories
Speaker 1: like food for example, will be another key driver for that.
Speaker 1: And people still need to eat. Yeah, well, and one
Speaker 1: exactly and one of the things that they have on
Speaker 1: their side, I think, right, George, is this notion that
Speaker 1: they are in these underserved markets, and it's it's sort
Speaker 1: of the general part of the Dollar General that like
Speaker 1: they're the only game in town or one of the
Speaker 1: few games in town, and a lot of these more
Speaker 1: rural parts of the South and elsewhere. I think that's right. Yeah,
Speaker 1: that's too why I put it the general part of
Speaker 1: the stores, It was just the Dollar General. I think
Speaker 1: that's a good analogy. Yeah, they've definitely been hiring. I
Speaker 1: was just looking at some of the most recent headlines
Speaker 1: are hiring up to fifty thousand new employees to support
Speaker 1: their operations. By the end of April they were doing that,
Speaker 1: and then they were also giving a bunch of their
Speaker 1: employees a bunch of bonuses, like thirty million dollars in bonuses. Yeah.
Speaker 1: Now it's really interesting. Great, great to catch up with you.
Speaker 1: We really appreciate it. George Mateo is chief investment officer
Speaker 1: out of Keep Private Bank, on the phone from Cleveland.
Speaker 1: We hope you and your team stay safe and and
Speaker 1: hope you guys continue to be ahead of the curve.
Speaker 1: As you say, Uh, Mike Dwyne, I believe the governor
Speaker 1: of Ohio, as George pointed out, you know, he was
Speaker 1: one of the first he moved the primary bat. You know,
Speaker 1: there were a lot of big actions uh that uh
Speaker 1: he was taking up. Believe he's a Republican to you know.
Speaker 1: So it's an interesting, uh case study in many ways
Speaker 1: as we continue to talk about governors and what not,
Speaker 1: so interesting to hear his perspective. As always, thanks for
Speaker 1: listening to Bloomberg Business Week. You can subscribe to the
Speaker 1: podcast on iTunes, SoundCloud, or Bloomberg dot com. You can
Speaker 1: also listen to our radio show every weekday at two
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