WEBVTT - Get Me Out! 0:00:13.119 --> 0:00:16.320 Hello, and welcome to What Goes Up, a Bloomberg weekly 0:00:16.400 --> 0:00:19.760 market podcast. I'm Sarah Pontzek, or reporter on the Cross 0:00:19.760 --> 0:00:22.759 Asset Team and on Mike Reagan, a senior editor on 0:00:22.800 --> 0:00:27.960 the Market Team and the Garfuncle two. Sarah's Paul Simon. 0:00:30.560 --> 0:00:32.800 I think it's a good one. I like it. We're 0:00:32.840 --> 0:00:35.360 gonna I'm serious, We're gonna see how long we can 0:00:35.440 --> 0:00:38.960 keep us going, prove how creative Mike Reagan really is. 0:00:39.040 --> 0:00:41.480 Updating myself a little bit with these references. I need 0:00:41.479 --> 0:00:44.320 I need some some some millennial reference for the kids 0:00:44.320 --> 0:00:48.480 out there. Come up with some some more recent ones 0:00:48.560 --> 0:00:51.879 for you next time. But anyway, Mike, this week on 0:00:51.880 --> 0:00:54.880 the show, the last time our guests joined us on 0:00:54.920 --> 0:00:58.520 the podcast, we had this lengthy conversation about how could 0:00:58.520 --> 0:01:02.720 stocks be near record when the economic outlook was so uncertain? 0:01:03.080 --> 0:01:06.880 Sound familiar, Well that was actually last summer in two 0:01:06.920 --> 0:01:10.120 thousand and nineteen, and it's just a reminder that the 0:01:10.120 --> 0:01:12.520 stock market and the economy are not one and the same. 0:01:12.600 --> 0:01:16.680 We've had this conversation many times over the last couple 0:01:16.720 --> 0:01:19.840 of weeks. But again he'll tackle the question, but in 0:01:19.880 --> 0:01:24.120 different circumstances, and as always, will close out the episode 0:01:24.120 --> 0:01:27.399 with the craziest thing I saw in markets this week. 0:01:27.520 --> 0:01:30.360 So if you saw something crazy, please do give us 0:01:30.360 --> 0:01:34.039 a call on the Bloomberg Podcast hotline at six four 0:01:34.080 --> 0:01:37.800 or six three two four three four nine. Oh, and 0:01:37.880 --> 0:01:40.560 leave us a voicemail with the craziest thing you saw 0:01:40.560 --> 0:01:43.640 in markets this weekend. Maybe we'll play your crazy thing 0:01:43.680 --> 0:01:47.639 on the air. But Sarah, let's let's introduce that guest. 0:01:48.160 --> 0:01:51.840 Very happy to have him back. His name is Shawn Snyder. 0:01:51.920 --> 0:01:57.760 He's the head of investment strategy at City Personal Wealth Management. Sean, 0:01:57.840 --> 0:02:01.600 welcome to the show, Thank you, glad you back. Great, Um, 0:02:01.640 --> 0:02:05.080 and we got some notes, some talking points of yours 0:02:05.200 --> 0:02:10.120 uh this week. And I'm I'm fascinated with this notion, Um, 0:02:10.320 --> 0:02:13.560 that all that basically matters to a lot of investors 0:02:13.639 --> 0:02:16.079 right now is the Fed's balance sheet. You point out 0:02:16.160 --> 0:02:19.600 that at least for part of the last Bowl market 0:02:19.639 --> 0:02:21.840 there was like a ninety I think it's a percent 0:02:21.960 --> 0:02:25.640 correlation between the size of the balance sheet and what 0:02:25.760 --> 0:02:29.000 the stock market did. Obviously, now the FED is expanding 0:02:29.040 --> 0:02:33.640 that balance sheet again aggressively. Is that really? Is that 0:02:33.800 --> 0:02:37.200 all that matters right now as far as the level 0:02:37.240 --> 0:02:39.799 of the stock market. I mean, I'm looking at valuations, 0:02:39.840 --> 0:02:43.320 and here we are among the highest valuations we've had 0:02:43.440 --> 0:02:47.760 on a forward basis SMP about twenty five times earnings 0:02:47.800 --> 0:02:52.880 forward earnings, NASTAC one hundred, almost thirty times forward earnings. 0:02:52.880 --> 0:02:55.120 Probably that in the at least the top decile, maybe 0:02:55.120 --> 0:02:58.880 even higher than that of this century. But yet, as 0:02:58.919 --> 0:03:02.440 you point out, when the it is in stimulation mode, 0:03:02.760 --> 0:03:06.040 um evaluations really even matter at this point. You know, 0:03:06.120 --> 0:03:09.120 you ask if the Federal Reserve stimulus is all that matters, 0:03:09.160 --> 0:03:11.160 and I think the answer is that it's not all 0:03:11.240 --> 0:03:14.560 that matters. You know, health data is now economic data. 0:03:14.840 --> 0:03:18.560 If you saw a second wave of a coronavirus, then obviously, uh, 0:03:18.600 --> 0:03:20.640 you know, just having that FED stimulus may not be 0:03:20.760 --> 0:03:23.400 enough to keep the market on its pace. So there 0:03:23.400 --> 0:03:26.360 are things that do matter outside of the FED stimulus, 0:03:26.400 --> 0:03:30.080 without a doubt. But one things that I've referenced lately 0:03:30.120 --> 0:03:34.160 is how fast and how powerful the reaction has been 0:03:34.200 --> 0:03:37.880 in terms of stimulus. During the global financial crisis, it 0:03:37.920 --> 0:03:41.560 took the Federal Reserve almost six years to increase their 0:03:41.560 --> 0:03:44.480 balance sheet by three trillion dollars. We've done that in 0:03:44.520 --> 0:03:47.360 just three months. UM, So it hasn't been exactly one 0:03:47.360 --> 0:03:49.760 trillion dollar every month. It's been a little bit less, 0:03:49.760 --> 0:03:51.880 a little bit more, but it's about one trillion dollars 0:03:51.880 --> 0:03:55.720 each month UM. So far balance sheets at about seven 0:03:55.760 --> 0:03:59.400 trillion now projected to go to maybe nine trillion in 0:03:59.440 --> 0:04:01.720 the next few months, and that made me moderate. But 0:04:02.040 --> 0:04:04.720 just the sheer speed at which they operated this time 0:04:04.760 --> 0:04:09.040 around UM I think does volumes for the speed at 0:04:09.040 --> 0:04:11.920 which the stock markets recovered. It's not the only thing 0:04:11.920 --> 0:04:15.840 that matters, but it is really important. Speed has really 0:04:15.840 --> 0:04:18.400 been unbelievable. You kind of mapped out the speed of 0:04:18.480 --> 0:04:21.360 balance sheet growth, but there's a statistic. We just had 0:04:21.400 --> 0:04:25.280 the fastest fifty day rally for the SMP fire ever. 0:04:25.480 --> 0:04:27.880 I mean, pretty unbelievable when you think about that. The 0:04:28.000 --> 0:04:32.479 SMP now up roughly or so off the bottom. We 0:04:32.600 --> 0:04:36.480 actually got a question on Twitter for you, Sean um 0:04:36.520 --> 0:04:39.520 from a listener at tweet view or nine, so I 0:04:39.520 --> 0:04:42.360 wanted to ask the question for him. He said, one, 0:04:43.360 --> 0:04:46.400 when and if FED support will ever be removed? So 0:04:46.480 --> 0:04:50.440 will FED support ever actually be removed? And what is 0:04:50.480 --> 0:04:54.160 the downside if this support actually just goes on indefinitely 0:04:54.160 --> 0:04:56.600 and they can't remove it. I think the most important 0:04:56.640 --> 0:04:59.680 thing is what happens to the unemployment rate, And right 0:04:59.720 --> 0:05:02.320 now you're seeing an unemployment rate that's headed towards the 0:05:02.400 --> 0:05:05.760 highest level we've seen in decades, and one of the 0:05:05.800 --> 0:05:09.120 mandates of the Federal Reserve is to have full employment 0:05:09.120 --> 0:05:11.240 in the country. So I think the notion that they're 0:05:11.240 --> 0:05:14.080 going to back off of stimulus will start to normalize 0:05:14.120 --> 0:05:18.760 it anytime soon is probably not accurate. Even if COVID 0:05:18.839 --> 0:05:21.960 nineteen is come and gone and we're past the worst 0:05:22.000 --> 0:05:24.800 of it, which I'm not necessarily confident about um. But 0:05:24.880 --> 0:05:27.120 if you still have high levels of unemployment, I think 0:05:27.120 --> 0:05:30.720 there's still going to continue to have that policy backstop. 0:05:31.440 --> 0:05:34.039 What is the downside if they remove it? It depends 0:05:34.080 --> 0:05:37.440 on the economic environment we're in. We did see them 0:05:37.480 --> 0:05:39.800 start to remove it two thousand seventeen and two thousand 0:05:39.800 --> 0:05:42.479 and eighteen in the market climbed higher, but it was 0:05:42.640 --> 0:05:44.240 in this case it was on the back of fiscal 0:05:44.240 --> 0:05:47.320 stimulus from Congress, So it really depends on what the 0:05:47.400 --> 0:05:49.400 environment looks like. Then, if we're at the end of 0:05:50.160 --> 0:05:53.560 one and the economy is booming because it's so much 0:05:53.560 --> 0:05:57.599 pent up demand and so much stimulus, well well done. Shot. 0:05:57.720 --> 0:06:00.120 You know, whatever someone preps is a question with I've 0:06:00.120 --> 0:06:02.240 got a question for you from someone on Twitter. I mean, 0:06:02.560 --> 0:06:05.039 that's reason to get nervous right there. So I uh, 0:06:05.279 --> 0:06:08.560 I think i'd be sweating a little bit. This is 0:06:08.560 --> 0:06:10.599 a question like that. You all know where that one's 0:06:10.600 --> 0:06:14.440 gonna go. Next week? Uh, this upcoming week the FED 0:06:14.480 --> 0:06:18.400 will meet uh for the regular meeting. We did have, uh, 0:06:18.560 --> 0:06:22.440 some comments from William Dudley, the former head of the 0:06:22.480 --> 0:06:28.359 New York FED, talking about those old boogeyman words moral hazard, 0:06:28.400 --> 0:06:32.840 you know, worrying that the FED is incentivizing excessive risk 0:06:32.960 --> 0:06:38.040 taking with its latest measures. Now, obviously, I I think, 0:06:38.080 --> 0:06:39.880 as you pointed out, the FED has the mandate to 0:06:39.960 --> 0:06:44.839 keep unemployment low and to keep inflation stable and you know, 0:06:44.960 --> 0:06:49.960 relatively near that that two percent target. I wonder though, 0:06:50.000 --> 0:06:52.440 if they will at least try to try to talk 0:06:52.680 --> 0:06:56.120 the market out of this this sort of phase of exuberance, 0:06:56.680 --> 0:06:59.000 sort of the way Dudley did bringing up that moral 0:06:59.080 --> 0:07:01.680 hazard that sort of thing. Could could you see that 0:07:01.720 --> 0:07:06.479 type of scenario where you know, the FED maybe someone 0:07:06.560 --> 0:07:09.600 uses that irrational exuberant or or or or sort of 0:07:09.640 --> 0:07:14.960 warns about the risk of getting too aggressive in your 0:07:14.960 --> 0:07:18.640 investments at this time of of a cycle. Normally they 0:07:18.680 --> 0:07:21.920 try to stay away from making commentsary about the stock market. 0:07:22.520 --> 0:07:25.160 I have seen a few comments over the last few 0:07:25.200 --> 0:07:28.800 months where they did make reference to the equity markets, 0:07:28.800 --> 0:07:32.080 which is a bit unusual. I don't think that they're 0:07:32.080 --> 0:07:35.120 going to back away or talk down stimulus in the 0:07:35.200 --> 0:07:40.000 current environment with so much uncertainty right now, Um, what 0:07:40.080 --> 0:07:42.040 does it mean for risk assets? What does it mean 0:07:42.080 --> 0:07:44.960 for valuations? I do think you could get to a 0:07:45.000 --> 0:07:47.840 point where the valuations become so stretched that they do 0:07:48.000 --> 0:07:51.200 start to warn about, uh, you know, risk assets being 0:07:51.240 --> 0:07:54.080 in a bubble, like we have heard that before. But 0:07:54.200 --> 0:07:57.480 I think we're ways away from that. Staying on the 0:07:57.520 --> 0:08:01.160 stimulus theme, but kind of shifting over to Washington and 0:08:01.240 --> 0:08:04.360 fiscal stimulus. I mean, I I know that the unemployment 0:08:04.360 --> 0:08:06.800 boost of the Cares Act is supposed to kind of 0:08:06.840 --> 0:08:09.640 fall off and expire at the end of July. There's 0:08:09.800 --> 0:08:13.840 talk of more stimulus in Washington, d C. But it 0:08:13.880 --> 0:08:16.880 makes me wonder. I mean, we look at the Nasdaq 0:08:17.000 --> 0:08:20.000 this past week putting in a record high. We know 0:08:20.200 --> 0:08:23.560 that this administration does like to look at the stock 0:08:23.600 --> 0:08:27.480 market quite often and almost use it as a barometer 0:08:27.600 --> 0:08:30.160 of success sometimes of policy. We saw it with the 0:08:30.240 --> 0:08:33.040 US China trade war in a way when all of 0:08:33.080 --> 0:08:34.840 a sudden, when the stock market would go back up, 0:08:34.880 --> 0:08:37.080 maybe they would get a little bit more aggressive with 0:08:37.160 --> 0:08:39.240 their tactics. I mean, do you do you think it's 0:08:39.280 --> 0:08:41.880 possible at all, though, that what we're seeing happen in 0:08:41.880 --> 0:08:45.559 the stock market could at least bring down the urgency 0:08:45.920 --> 0:08:50.559 of further stimulus measures to help the economy and there 0:08:50.600 --> 0:08:52.720 by the stock market. Albeit they're not in the same 0:08:52.840 --> 0:08:55.560 but still it almost makes you feel if you're only 0:08:55.559 --> 0:08:57.720 looking at the stock market, like there isn't this urgency 0:08:57.760 --> 0:09:01.680 for more help. And understand that theory, but I do 0:09:01.720 --> 0:09:03.320 want to make a couple of points that I think 0:09:03.400 --> 0:09:07.720 go against that notion. Uh this the impact of COVID 0:09:07.800 --> 0:09:12.280 nineteen has been felt very unevenly across the demographics in 0:09:12.280 --> 0:09:15.920 the United States that Fetcher Powell made reference to. At 0:09:15.920 --> 0:09:20.960 one point that of households with income under forty thousand 0:09:21.280 --> 0:09:24.079 had lost jobs. If you look at the unemployment rate 0:09:24.080 --> 0:09:27.240 divided by education, the unemployment rate for those of the 0:09:27.280 --> 0:09:30.600 bachelor's degree to higher is eight point five percent. The 0:09:30.640 --> 0:09:33.160 unemployment rate for someone with a high school degree or 0:09:33.280 --> 0:09:39.040 lower is closer to so really really big divide on 0:09:39.120 --> 0:09:43.439 how it's impacted Americans. So, even though the stock market 0:09:43.480 --> 0:09:45.720 seems to be doing well, if you're working remotely and 0:09:45.760 --> 0:09:48.160 you have that ability, which is maybe say thirty percent 0:09:48.160 --> 0:09:50.559 of the US population, you probably feel okay because it's 0:09:50.559 --> 0:09:53.120 getting sunny out and it feels like the health data 0:09:53.120 --> 0:09:55.480 has gotten better. But for a lot of people, there's 0:09:55.520 --> 0:09:58.160 a lot of uncertainty about will they be able to 0:09:58.200 --> 0:10:00.720 return to a job. And don't think we knew that 0:10:00.720 --> 0:10:03.280 answer yet. So I hope that they keep that in 0:10:03.360 --> 0:10:06.360 mind when they think about the stimulus, and I think 0:10:06.400 --> 0:10:08.840 they'll go through with more. I'm not sure what the 0:10:08.920 --> 0:10:11.520 number will be. I've heard three trillion, I've heard one trillion. 0:10:12.200 --> 0:10:14.640 But I think they'll do it again based on that premise. 0:10:30.720 --> 0:10:33.960 Show on another interesting point you've made in your notes 0:10:34.000 --> 0:10:37.040 here is uh you talk about as the economy reopens, 0:10:37.160 --> 0:10:40.199 investors are kind of rotating out of those stay at 0:10:40.240 --> 0:10:44.280 home stocks you know, your your social networks, your zoom, uh, 0:10:44.480 --> 0:10:46.920 that sort of thing, and into what you call get 0:10:46.960 --> 0:10:50.440 me out stocks, which I like that that. I like 0:10:50.559 --> 0:10:53.400 that everyone else is calling them reopening stocks, but no, 0:10:53.559 --> 0:10:55.360 they're get me out there, get me out. I think 0:10:55.400 --> 0:10:57.760 I think we can all sympathize with that feeling of 0:10:57.800 --> 0:11:00.240 get get me out of here, Sarah there in her 0:11:00.240 --> 0:11:02.360 parents house in Florida. Although you seem to have a 0:11:02.440 --> 0:11:06.199 very happy domestic life with with the folks down in Florida. Look, 0:11:06.320 --> 0:11:08.320 I'm not I'm not complaining. A lot of people have 0:11:08.320 --> 0:11:10.120 it much worse than I do right now, so I'll 0:11:10.120 --> 0:11:14.240 I'll handle any annoyances that I have to do very 0:11:14.320 --> 0:11:16.600 well right now. I think your dad probably listens to 0:11:16.640 --> 0:11:19.040 the show, so you can't. You can't criticize the home 0:11:19.080 --> 0:11:21.400 life too much. I guess right, no, not right now, 0:11:22.000 --> 0:11:26.480 just in private, not publicly over the airwaves. But anyway, Sean, 0:11:26.520 --> 0:11:28.319 you talk about you say you still think it makes 0:11:28.320 --> 0:11:30.800 sense to get in the companies that are sort of 0:11:30.840 --> 0:11:34.160 the future of of America. Look us through kind of 0:11:34.160 --> 0:11:36.920 what you mean by that, because I think that is 0:11:37.280 --> 0:11:40.520 I think that's a wise call. Sure. So, initially the 0:11:40.600 --> 0:11:43.440 concept was the core of America and the future of America. 0:11:43.480 --> 0:11:45.760 And what I meant was the core of America was 0:11:45.840 --> 0:11:50.280 like food and staples, retailing, um, you know, the basics 0:11:50.320 --> 0:11:52.440 of the world that we all need to survive. Right. 0:11:52.480 --> 0:11:54.959 We saw a huge surgeon demand for toilet paper. That's 0:11:54.960 --> 0:11:57.320 an example of something we all needed at one point. 0:11:57.400 --> 0:12:00.920 That's kind of the core the future of America. And 0:12:00.960 --> 0:12:02.480 I think it's always been this way, but it's been 0:12:02.520 --> 0:12:06.920 accelerated by COVID nineteen. UH is rise in demand for 0:12:07.000 --> 0:12:11.480 cloud computing, UM, tele medicine, UH in this case because 0:12:11.520 --> 0:12:14.640 of COVID nineteen, thermal imaging so that you can check temperatures. 0:12:15.080 --> 0:12:18.559 Those things have really done well, including in home entertainment, 0:12:18.600 --> 0:12:20.680 the more popular names that we tend to think about, 0:12:21.000 --> 0:12:23.920 they actually have positive returns year to date, whereas the 0:12:24.200 --> 0:12:28.840 get me out stocks are still quite depressed, but they're improving. UH. 0:12:28.840 --> 0:12:31.160 And there's several data points that I can walk through 0:12:31.200 --> 0:12:34.360 if you'd like, that point towards Americans actually getting out 0:12:34.360 --> 0:12:37.040 of their house. UH. There's several things that t s 0:12:37.080 --> 0:12:39.719 A is reported for seven consecutive weeks. The number of 0:12:39.720 --> 0:12:42.640 flyers are picking up, still quite depressed, but you know, 0:12:42.679 --> 0:12:45.679 we saw a large airline announced today that they're actually 0:12:45.720 --> 0:12:49.760 adding flights according to routing requests for directions. More people 0:12:49.760 --> 0:12:52.320 are driving, and if you look at open table data, 0:12:52.320 --> 0:12:54.960 and more people are dining. UH, not just in the US, 0:12:55.000 --> 0:12:58.160 but also in Germany and other countries, and they're reduced capacities, 0:12:58.200 --> 0:13:01.479 but in many cases are actually hitting those reduced capacities. 0:13:02.360 --> 0:13:04.280 Do you think that what you see in that data, 0:13:04.360 --> 0:13:07.320 this like high frequency data that shows people getting out 0:13:07.360 --> 0:13:10.839 and about finally leaving their homes, does it show enough 0:13:11.080 --> 0:13:14.760 pent up demand almost to justify this run that we've 0:13:14.800 --> 0:13:16.640 seen in the markets. I mean, something that was really 0:13:16.640 --> 0:13:19.000 interesting about this past week was not just that we 0:13:19.080 --> 0:13:22.560 saw continuation in the stock market rally, but it almost 0:13:22.600 --> 0:13:25.120 seemed as though we started to see the bond market 0:13:25.320 --> 0:13:28.120 giving as well. I mean, we saw a nice shoot 0:13:28.200 --> 0:13:31.600 up in bond yields almost this capitulation what you look 0:13:31.840 --> 0:13:35.240 at in the data of this reopening, does it actually 0:13:35.280 --> 0:13:39.280 justify this right now? Possibly, but we don't know yet. 0:13:39.760 --> 0:13:42.199 We don't know yet. So it's what you would call 0:13:42.320 --> 0:13:44.840 it if you're an economicy called green shoots. Right, there's 0:13:44.880 --> 0:13:47.680 signs of recovery. You know, there are going to be 0:13:47.760 --> 0:13:49.760 people that need to fly on a plane because they 0:13:49.800 --> 0:13:51.559 went and moved in with their parents in Florida and 0:13:51.559 --> 0:13:53.959 they need to get back to New York. I drove, 0:13:55.440 --> 0:13:58.319 but I would be requesting Apple maps direct. Yeah, those 0:13:58.520 --> 0:14:00.440 are the people that might be flying my that could 0:14:00.440 --> 0:14:02.720 be some of that, but I would say something that 0:14:02.800 --> 0:14:05.920 supports it more than just those things I mentioned earlier 0:14:06.000 --> 0:14:10.080 is continuing claims, which is a component of the unemployment 0:14:10.080 --> 0:14:13.960 insurance claims we see each week on Thursdays. UH, continuing 0:14:14.000 --> 0:14:16.160 claims look like they have peaked and they're starting to 0:14:16.200 --> 0:14:19.160 calm down. That means people are going back to work. 0:14:19.160 --> 0:14:22.640 And traditionally, when you see a decline in continuing claims, 0:14:22.680 --> 0:14:24.920 that tends to kind of happen around the time when 0:14:24.920 --> 0:14:28.440 the economy bottles and starts to recover. So it's not 0:14:28.480 --> 0:14:30.720 it's not just these anecdotal things about people going out 0:14:30.720 --> 0:14:33.680 of their house. It's also labor market data. So I 0:14:33.720 --> 0:14:37.160 think it's real, but it's really early sean. Obviously. The 0:14:37.240 --> 0:14:39.840 other big news in the past week or so has 0:14:39.960 --> 0:14:44.480 been this uh massive civil unrest with you know, protests 0:14:44.480 --> 0:14:48.120 and looting and riots across the country. I was a 0:14:48.120 --> 0:14:50.680 bit surprised that we didn't see a little bit of 0:14:50.680 --> 0:14:52.800 a risk off reaction to that. I mean, I guess 0:14:52.840 --> 0:14:54.360 I guess you shouldn't be. If you go back in 0:14:54.760 --> 0:14:56.760 history and look at the sixties riots and that sort 0:14:56.800 --> 0:14:59.760 of thing, it never seemed to put much of a 0:15:00.200 --> 0:15:04.360 in the market. But I'm wondering if these events are 0:15:04.400 --> 0:15:09.080 influencing your thinking at all about the economy, about markets, 0:15:09.560 --> 0:15:13.160 and specifically we're kind of all waiting for this next 0:15:13.200 --> 0:15:16.600 batch of fiscal stimulus from the government, and whether this 0:15:16.640 --> 0:15:20.600 could kind of maybe reshape what that looks like. A 0:15:20.640 --> 0:15:23.080 little bit less help for the corporation, is a little 0:15:23.120 --> 0:15:26.320 bit more help for the individuals, perhaps you know, something 0:15:26.360 --> 0:15:29.400 to to try to sort of soothe the masses here. 0:15:29.520 --> 0:15:33.320 Um is that you know, is is this working its 0:15:33.320 --> 0:15:36.320 way into your your thought process at all when you 0:15:36.440 --> 0:15:39.240 try to figure out where the market's going next? It is? 0:15:39.360 --> 0:15:41.080 It is? And and I'll get to my point in 0:15:41.080 --> 0:15:44.560 a second. I mean, I think has been a difficult 0:15:44.640 --> 0:15:46.720 year for many people, for us to be at COVID nineteen. 0:15:47.280 --> 0:15:49.920 You know, now we have the protests acrostination, and you know, 0:15:49.960 --> 0:15:52.920 I think at this time we'd all probably benefit from 0:15:52.920 --> 0:15:54.840 being kinded in one another mower form. That is, so 0:15:54.880 --> 0:15:57.600 I hope that's, you know, the way we had with things. 0:15:58.440 --> 0:16:02.800 My primary thinking about the protests, aside from you know, 0:16:02.880 --> 0:16:06.520 the stuff we all feel strongly about, is what does 0:16:06.560 --> 0:16:11.440 it mean for the coronavirus? We saw very large Memorial 0:16:11.560 --> 0:16:14.440 Day celebrations in the United States and certain regions, and 0:16:14.480 --> 0:16:18.360 now we're seeing very large protests in very emergent, major 0:16:18.560 --> 0:16:22.280 urban areas. Um, if there's gonna be a second wave, 0:16:22.400 --> 0:16:26.880 that seems like a time perfect catalyst to me. I'm 0:16:26.920 --> 0:16:29.440 not saying that's going to happen. I'm not an epidemiologist. 0:16:29.520 --> 0:16:31.200 I have no idea as a strategist. I have to 0:16:31.200 --> 0:16:35.800 say I'm not an epidemiologist because everyone says that clearly 0:16:35.800 --> 0:16:38.960 I am not. I don't know. Maybe it hates sunshine, 0:16:38.960 --> 0:16:43.000 and sunshine kills it great. But if there's any catalyst, uh, 0:16:43.040 --> 0:16:44.800 this seems like an obvious one to me. But you're 0:16:44.800 --> 0:16:46.880 not gonna know for a while. It's gonna take time 0:16:47.960 --> 0:16:50.960 for that to spread. If you look at China, they 0:16:50.960 --> 0:16:54.280 actually re entered a lockdown again and it was about 0:16:54.280 --> 0:16:57.080 a month later. So you know, maybe the market will 0:16:57.120 --> 0:16:59.880 care and maybe there will be some market impact from 0:16:59.880 --> 0:17:03.800 these protests through that form, do you get the sense 0:17:03.840 --> 0:17:07.920 at all through listening to communication maybe from from government 0:17:07.920 --> 0:17:11.280 officials and also taught medical officials that we've been hearing 0:17:11.320 --> 0:17:13.320 from that if there were to be a second wave, 0:17:13.880 --> 0:17:17.640 that we will see a lockdown reminiscent of what we 0:17:17.720 --> 0:17:20.640 have all been going through and facing over the last 0:17:20.640 --> 0:17:23.600 couple of months. I mean, I've been thinking about this. 0:17:23.680 --> 0:17:25.240 We all think, Okay, if we get a second way, 0:17:25.280 --> 0:17:27.399 there's no question that we have to shut down again. 0:17:27.920 --> 0:17:30.879 But is that true? I mean, is that what we 0:17:30.960 --> 0:17:33.359 already saw the destruction that can cost to the economy, Like, 0:17:33.640 --> 0:17:35.720 when you think about it from a strategist point of view, 0:17:36.000 --> 0:17:37.680 do you think that's something we'd have to deal with again. 0:17:37.960 --> 0:17:40.600 This question comes from Sarah's dad, who's wondering if you 0:17:40.600 --> 0:17:42.480 should build a new wing on the house or not 0:17:42.760 --> 0:17:46.400 that right? Oh, that's from my mom who keeps complaining 0:17:46.400 --> 0:17:49.160 that we need a larger house because there's too many 0:17:49.200 --> 0:17:52.520 of us and the other the other siblings are supposedly 0:17:52.560 --> 0:17:56.199 going to show up as well, so everyone needs now 0:17:56.400 --> 0:18:01.840 just build a wing. Right. So, I actually think the 0:18:01.880 --> 0:18:06.520 odds of a second shutdown nationwide at least are relatively low. 0:18:06.560 --> 0:18:09.120 And there's a few reasons I think that. One, I 0:18:09.160 --> 0:18:11.720 think that we've lost some of the political will to 0:18:11.840 --> 0:18:16.440 do so. Um, people have seen high rates of unemployment, 0:18:16.520 --> 0:18:19.960 and at some point, if you're on a balance and 0:18:20.119 --> 0:18:25.120 on each side there's the economic damage or the human damage, 0:18:25.640 --> 0:18:27.840 it starts to tilt the other way, and I think 0:18:27.880 --> 0:18:30.359 that's what we've seen. Uh. The other thing I think 0:18:30.440 --> 0:18:34.040 that's important is shutting down the system and flattening the 0:18:34.040 --> 0:18:36.240 curve is not only designed to save life, but it's 0:18:36.320 --> 0:18:40.160 designed to keep the health care system from being overwhelmed. 0:18:40.760 --> 0:18:44.000 Now we don't have a vaccine yet, we do maybe 0:18:44.000 --> 0:18:47.520 have some treatments. If those treatments are effective in getting 0:18:47.520 --> 0:18:51.600 patients out of the hospital quicker, so instead of fifteen days, 0:18:51.680 --> 0:18:54.879 they're out in eleven days. Even though that might seem minor, 0:18:55.480 --> 0:18:57.879 that reduces the burden on the health care system and 0:18:57.920 --> 0:18:59.800 maybe lowers the odds that we have to lock down 0:18:59.800 --> 0:19:02.159 and and and to me, reduces the odds of a 0:19:02.320 --> 0:19:05.320 W shaped recession. Back to that letter what what is 0:19:05.359 --> 0:19:09.320 the letter shape? Uh? You know, My thinking is that 0:19:09.880 --> 0:19:13.359 they can't we can't do the lockdowns again. The lockdowns 0:19:13.359 --> 0:19:15.919 are over, not because the virus is going away, but 0:19:16.040 --> 0:19:19.240 because it's not going away, and we simply cannot just 0:19:19.280 --> 0:19:22.040 stay locked down forever. We have to sort of, um, 0:19:22.320 --> 0:19:24.880 put the masks on and and try to get back 0:19:24.920 --> 0:19:28.040 to some semblance of life. I'm wondering if that sort 0:19:28.040 --> 0:19:32.080 of goes into your thinking about everyone's favorite letter shape 0:19:32.080 --> 0:19:34.879 of this recovery you called a a V, but a 0:19:35.000 --> 0:19:38.480 lazy V, meaning that that recovery is not quite as 0:19:38.560 --> 0:19:43.760 sharp as the decline at the beginning. UM, but it 0:19:43.840 --> 0:19:47.400 is perhaps if I'm if I'm interpreting the lazy V correctly, 0:19:48.000 --> 0:19:51.600 it is kind of a slow and steady uh grind 0:19:51.680 --> 0:19:56.760 higher and recovery without sort of another nasty dip, sort 0:19:56.760 --> 0:19:59.000 of a double dip before we're all the way back 0:19:59.560 --> 0:20:02.439 to the play as we started at right, So some 0:20:02.480 --> 0:20:04.520 people would call it a squosh. I just think lazy 0:20:04.600 --> 0:20:07.520 be kind of is an easy way to interpret for me. Ironically, 0:20:07.560 --> 0:20:10.120 I actually think, you know, you make that a hand 0:20:10.160 --> 0:20:12.760 symbol when you're at a restaurant for the check and 0:20:12.880 --> 0:20:14.840 you kind of do a little dip down and a 0:20:14.920 --> 0:20:17.440 longer thing. That's kind of what it looks like to make, 0:20:17.560 --> 0:20:20.080 which is, you know, kind of ironic. In the current environment, 0:20:20.520 --> 0:20:25.600 I think that a lot of the forecasts are probably 0:20:26.359 --> 0:20:28.679 you know, I see more and more economists sort of 0:20:28.680 --> 0:20:30.879 focusing in on that's the shape, what it looks like, 0:20:31.040 --> 0:20:33.159 and I don't disagree. I think you will see a 0:20:33.240 --> 0:20:37.399 rebound in some areas quicker uh and if you have 0:20:37.960 --> 0:20:43.480 manufacturing or automation, or you have simplely the social distance 0:20:43.960 --> 0:20:47.960 that enables you to reopen, they're gonna do. So there's 0:20:47.960 --> 0:20:51.280 gonna be pent up demand. Uh. If you're in industries 0:20:51.840 --> 0:20:56.280 like restaurants, it's less clear. Again, pretty positive news on 0:20:56.440 --> 0:20:59.480 people going back to restaurants, but if you do see 0:20:59.480 --> 0:21:01.800 a second way if then it could be very difficult 0:21:01.960 --> 0:21:04.560 slog for them. So I think it's gonna be a 0:21:04.600 --> 0:21:07.080 long recovery in some sectors. You know, if we think 0:21:07.080 --> 0:21:09.920 in New York City, I believe about a hundred and 0:21:09.960 --> 0:21:13.720 eighty thousand of two hundred and seventy four thousand food 0:21:13.760 --> 0:21:17.800 and beverage workers lost their jobs. About are they all 0:21:17.800 --> 0:21:19.480 going to have a job to go back to because 0:21:19.520 --> 0:21:23.400 they reopened outdoor dining? I doubt it. Uh, And those 0:21:23.440 --> 0:21:25.040 people are going to be misplaced and it's going to 0:21:25.160 --> 0:21:28.680 take time to find a new role for them. It 0:21:29.040 --> 0:21:31.159 really is striking and their questions that none of us 0:21:31.359 --> 0:21:33.439 know the answers too yet. But Sean, I have to 0:21:33.440 --> 0:21:36.440 give it to you for the creative descriptions the lazy 0:21:36.520 --> 0:21:39.440 V get me out stocks. I mean, we hear similar, 0:21:39.640 --> 0:21:43.000 similar descriptions often, but those are two new ones. So 0:21:43.560 --> 0:21:46.680 it's it's refreshing to hear I was sitting at home, 0:21:46.760 --> 0:21:49.520 locked into quarantine when I was just randomly thinking up 0:21:49.560 --> 0:21:53.280 weird terms. You really need to come up with an 0:21:53.320 --> 0:21:55.320 acronym to make it in this business, No Sewan, you know, 0:21:55.440 --> 0:21:58.480 fanger or bricks or something. Do you get working on that? 0:22:00.080 --> 0:22:05.280 They will sean how important is the energy market UM 0:22:05.720 --> 0:22:08.960 in terms of what this recovery looks like, what the 0:22:09.000 --> 0:22:12.600