1
00:00:09,840 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily

2
00:00:13,960 --> 00:00:17,560
Speaker 1: we bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,480
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,640 --> 00:00:27,800
Speaker 1: Bloomberg dot Com and of course on the Bloomberg Right now.

5
00:00:28,000 --> 00:00:30,680
Speaker 1: The Mayor of London City, Khan, is someone that we

6
00:00:30,720 --> 00:00:34,519
Speaker 1: have spoken too many times and with it the celebration

7
00:00:34,600 --> 00:00:37,920
Speaker 1: of the London economy. What he knows is the United

8
00:00:38,000 --> 00:00:41,879
Speaker 1: Kingdom celebrates something America can't do, which is the return

9
00:00:42,040 --> 00:00:45,840
Speaker 1: of Premier League football. His beloved Liverpool will go out

10
00:00:45,840 --> 00:00:48,839
Speaker 1: in the field, no doubt, with pay cuts involved for

11
00:00:48,880 --> 00:00:51,839
Speaker 1: all the players. But it's so grim and his London.

12
00:00:52,280 --> 00:00:55,520
Speaker 1: The Mayor has taken a pay cut to signify to

13
00:00:55,600 --> 00:00:59,600
Speaker 1: the United Kingdom the urgent need for revenues. It is

14
00:00:59,640 --> 00:01:02,800
Speaker 1: a story sory for America as well. Mayorica, and thank

15
00:01:02,840 --> 00:01:06,280
Speaker 1: you so much for joining us today. How urgent is

16
00:01:06,319 --> 00:01:10,280
Speaker 1: it the Prime Minister Johnson assist your great city. It's

17
00:01:10,319 --> 00:01:12,639
Speaker 1: really important. It's a pleasure to join you and Lisa

18
00:01:12,640 --> 00:01:16,200
Speaker 1: and Bloomberg TV, but it's really important the governments across

19
00:01:16,200 --> 00:01:21,000
Speaker 1: the globe, including my country, understand that the recession we're

20
00:01:21,040 --> 00:01:24,840
Speaker 1: facing could very soon turn into a depression, and that's

21
00:01:24,840 --> 00:01:29,720
Speaker 1: why we need an active industrial strategy as we come

22
00:01:29,720 --> 00:01:33,360
Speaker 1: out of lockdown. And although the government has actually been

23
00:01:33,520 --> 00:01:38,200
Speaker 1: pretty good in helping businesses in relation to staff being furloughed,

24
00:01:38,600 --> 00:01:41,560
Speaker 1: they've been pretty good in the short term, they need

25
00:01:41,600 --> 00:01:44,480
Speaker 1: to realize that as businesses come out of the lockdown,

26
00:01:44,840 --> 00:01:48,720
Speaker 1: they need additional assistance as well. I'll give you two examples, Tom.

27
00:01:49,080 --> 00:01:53,880
Speaker 1: Many public authorities have lost their tax basis from people

28
00:01:53,880 --> 00:01:56,320
Speaker 1: who used to pay what we call council tax now

29
00:01:57,760 --> 00:02:00,800
Speaker 1: in their jobs not paying those tax is. But also

30
00:02:00,960 --> 00:02:04,480
Speaker 1: businesses who used to pay business rates have stopped paying

31
00:02:04,520 --> 00:02:08,120
Speaker 1: business rates because their businesses have basically been incubated for

32
00:02:08,200 --> 00:02:12,080
Speaker 1: the last three months. That means, you know, governments haven't

33
00:02:12,160 --> 00:02:15,880
Speaker 1: Municipal governments haven't got the funds to provide services. So

34
00:02:15,919 --> 00:02:18,600
Speaker 1: I've led by example taken a pack up. But we

35
00:02:18,639 --> 00:02:21,680
Speaker 1: need the government to step in for the medium to

36
00:02:21,840 --> 00:02:26,200
Speaker 1: long term to support not just municipal governments but businesses too,

37
00:02:26,200 --> 00:02:28,880
Speaker 1: and I think governments across the globe will have to

38
00:02:28,919 --> 00:02:32,440
Speaker 1: do this. I'm reading wolf Hall right now, Mervin King

39
00:02:32,480 --> 00:02:36,160
Speaker 1: and I are rereading this Magisterial Hillary Mantell book, and

40
00:02:36,200 --> 00:02:39,880
Speaker 1: it's the spirit of London Mayor in a trading environment

41
00:02:40,000 --> 00:02:43,680
Speaker 1: of the sixteenth century, tell us about the need to

42
00:02:43,880 --> 00:02:48,760
Speaker 1: reopen trade to London and goods and services. How critical

43
00:02:48,960 --> 00:02:51,480
Speaker 1: is it to get the euros start back. How critical

44
00:02:51,639 --> 00:02:54,440
Speaker 1: is it to get the airlines up and running again.

45
00:02:54,639 --> 00:02:56,480
Speaker 1: It's crucial. I mean. One of the reasons why I

46
00:02:56,560 --> 00:02:58,320
Speaker 1: say this, and I know you're speaking to me from

47
00:02:58,320 --> 00:03:00,680
Speaker 1: New York, but you'll forgive me Learning is the greatest

48
00:03:00,680 --> 00:03:03,440
Speaker 1: city in the world is because of the people who

49
00:03:03,480 --> 00:03:06,560
Speaker 1: come to our city who make our city great, the students,

50
00:03:06,880 --> 00:03:11,720
Speaker 1: the tourists, the investors, their businesses, their sports fan and

51
00:03:11,880 --> 00:03:15,360
Speaker 1: that stopped over the last four months, and we need

52
00:03:15,360 --> 00:03:19,240
Speaker 1: that to return. I'm very concerned that as the new

53
00:03:19,280 --> 00:03:23,200
Speaker 1: academic year begins, many undergraduates may not come. I'm very

54
00:03:23,200 --> 00:03:27,359
Speaker 1: concerned those who are multinationals who have stopped sending their

55
00:03:27,360 --> 00:03:30,280
Speaker 1: staff here maybe risk averse to come in here. I'm

56
00:03:30,360 --> 00:03:33,960
Speaker 1: very concerned some of our world leading theaters, which have

57
00:03:34,040 --> 00:03:36,440
Speaker 1: been closed for the last four months, may not reopen

58
00:03:36,720 --> 00:03:39,760
Speaker 1: until next year. And you'll know, the world is a

59
00:03:39,800 --> 00:03:44,200
Speaker 1: smaller place now. Globalization has some disadvantages, but many advantages,

60
00:03:44,600 --> 00:03:47,920
Speaker 1: and our strength is our diversity, and that comes from

61
00:03:47,920 --> 00:03:50,400
Speaker 1: our visitors and as part of our DNA. And it's

62
00:03:50,480 --> 00:03:56,200
Speaker 1: really important we safely safely open our doors again to visitors,

63
00:03:56,200 --> 00:03:59,440
Speaker 1: to businesses and to investors, because we want to return

64
00:03:59,520 --> 00:04:02,280
Speaker 1: to not business as usual. But I think a new

65
00:04:02,360 --> 00:04:06,960
Speaker 1: normality will be recognized that actually, what this pandemic has

66
00:04:07,000 --> 00:04:12,640
Speaker 1: done is shut a spotlight on the fragility of society

67
00:04:12,840 --> 00:04:15,680
Speaker 1: and of our business model, and we need to make

68
00:04:15,680 --> 00:04:20,040
Speaker 1: sure the new normal addresses those issues. American I will

69
00:04:20,040 --> 00:04:23,560
Speaker 1: say that our colleague Jonathan Faroe reminds us of the

70
00:04:23,600 --> 00:04:26,240
Speaker 1: pre eminence of London on a regular basis. I do

71
00:04:26,400 --> 00:04:29,240
Speaker 1: wonder going forward about some of the social unrest that

72
00:04:29,240 --> 00:04:31,680
Speaker 1: we're seeing in the biggest cities around the world, with

73
00:04:31,760 --> 00:04:36,200
Speaker 1: Black Lives Matters protests in London that have been ongoing,

74
00:04:36,279 --> 00:04:39,560
Speaker 1: and I'm wondering how this complicates issues that you've been

75
00:04:39,560 --> 00:04:43,000
Speaker 1: calling for more police at a time with lower budgets

76
00:04:43,040 --> 00:04:46,720
Speaker 1: and a time with increasing pressure on that presence. How

77
00:04:46,760 --> 00:04:48,720
Speaker 1: do you go forward here? You know the thing, I'm

78
00:04:48,720 --> 00:04:51,760
Speaker 1: not sure if your American viewers realized this, but the

79
00:04:51,800 --> 00:04:55,200
Speaker 1: brutal killing of George Floyd didn't just have an impact

80
00:04:55,279 --> 00:04:59,640
Speaker 1: in Minnesota, Minneapolis and the USA, an impact around the world,

81
00:05:00,360 --> 00:05:04,160
Speaker 1: And if you're a black Londoner you could relate to

82
00:05:04,400 --> 00:05:07,240
Speaker 1: the awful way George Floyd was killed, but also black

83
00:05:07,240 --> 00:05:12,160
Speaker 1: people across the world could because they endure racism, discrimination

84
00:05:12,320 --> 00:05:15,919
Speaker 1: and inequality. So although I fully support the Black Lives

85
00:05:16,240 --> 00:05:19,479
Speaker 1: the Black Lives Matter movement, my concern has being that

86
00:05:19,560 --> 00:05:22,440
Speaker 1: during a global pandemic, when you're asking people to keep

87
00:05:22,440 --> 00:05:25,120
Speaker 1: their social distance, we're asking people to stay at home

88
00:05:25,160 --> 00:05:28,000
Speaker 1: where they can. What they shouldn't be doing is protesting

89
00:05:28,320 --> 00:05:31,240
Speaker 1: as they are allowed to do, because that may inadvertently

90
00:05:31,640 --> 00:05:34,560
Speaker 1: lead to the virus spreading. But separately, you're rightly so

91
00:05:34,600 --> 00:05:36,920
Speaker 1: this is highlighted that actually, even in London, the most

92
00:05:36,920 --> 00:05:40,520
Speaker 1: progressive city in the world, there's racism against black people,

93
00:05:40,800 --> 00:05:44,360
Speaker 1: discrimination against black people, and inequality faced by black people.

94
00:05:44,640 --> 00:05:47,119
Speaker 1: And those of us in positions of parent influence can't

95
00:05:47,120 --> 00:05:49,719
Speaker 1: be tone deaf to that. We've got to understand that,

96
00:05:50,279 --> 00:05:52,640
Speaker 1: empathize with that, but also take steps to address that.

97
00:05:52,680 --> 00:05:55,200
Speaker 1: This is a moment which I think we'd kick ourselves

98
00:05:55,560 --> 00:05:58,320
Speaker 1: if we didn't take advantage of to address the structural

99
00:05:58,480 --> 00:06:02,799
Speaker 1: racism that's that exist around the world in black people

100
00:06:03,040 --> 00:06:05,600
Speaker 1: now too much to talk about American We truly look

101
00:06:05,640 --> 00:06:09,200
Speaker 1: forward to seeing you when we revisit London soon and

102
00:06:09,320 --> 00:06:16,560
Speaker 1: again a city con the Mayor of London. Right now,

103
00:06:16,600 --> 00:06:18,839
Speaker 1: we have good news and that is Torsten Slock of

104
00:06:18,880 --> 00:06:22,440
Speaker 1: Deutsche Bank. He and Peter Hooper have been doing absolutely

105
00:06:22,520 --> 00:06:27,599
Speaker 1: spectacular work on a global basis, thinking about where we

106
00:06:27,680 --> 00:06:32,159
Speaker 1: are and thinking about the ramifications of all these actions

107
00:06:32,240 --> 00:06:35,600
Speaker 1: by central banks. And one of them is is overused

108
00:06:35,800 --> 00:06:41,280
Speaker 1: word zombie, the idea of a zombie company, a zombie nation,

109
00:06:41,640 --> 00:06:45,480
Speaker 1: or even a zombie global economy. Dr Slack joins us

110
00:06:45,600 --> 00:06:49,200
Speaker 1: this morning, Torston Slack, what is the Deutsche Bank distinction

111
00:06:49,600 --> 00:06:53,039
Speaker 1: when you address the word zombie is the definition of

112
00:06:53,080 --> 00:06:56,160
Speaker 1: a zombie company is a company that simply has so

113
00:06:56,240 --> 00:06:59,880
Speaker 1: much depth, so much leverage, that they do not have

114
00:07:00,080 --> 00:07:03,719
Speaker 1: enough profits to pay for the debt servicing costs. And

115
00:07:03,760 --> 00:07:06,800
Speaker 1: the problem is that since the Finanti crisis without NADA nine,

116
00:07:06,960 --> 00:07:10,200
Speaker 1: we're interest rates were very low and zero. It incentivized

117
00:07:10,240 --> 00:07:13,040
Speaker 1: the corporate sectors to go out and borrow. It incentivized

118
00:07:13,080 --> 00:07:16,680
Speaker 1: an increase in leverage across the non financial corporate sector.

119
00:07:16,880 --> 00:07:19,440
Speaker 1: So the consequence was that pet levels have gone up

120
00:07:19,440 --> 00:07:21,120
Speaker 1: for the last ten years. And this was the problem

121
00:07:21,280 --> 00:07:25,000
Speaker 1: even before the pandemic arrived here in March. And therefore,

122
00:07:25,240 --> 00:07:27,880
Speaker 1: what was the answer from the pandemic once the virus

123
00:07:27,880 --> 00:07:30,280
Speaker 1: came from pology Megan sydemic. Well, the answer was that

124
00:07:30,320 --> 00:07:33,160
Speaker 1: when when that was no cash flow coming into the

125
00:07:33,200 --> 00:07:36,960
Speaker 1: corporate sector, it was substituted by more debt, by more

126
00:07:37,040 --> 00:07:40,440
Speaker 1: loans in i G. High yields across the board, commercial paper.

127
00:07:40,640 --> 00:07:43,080
Speaker 1: And therefore we have just magnified some of these problems

128
00:07:43,080 --> 00:07:46,000
Speaker 1: that we already had with a significant yf the economy

129
00:07:46,040 --> 00:07:49,920
Speaker 1: being something companies even before the virus came along in March. Okay,

130
00:07:49,960 --> 00:07:52,400
Speaker 1: but tourist to its stempre terian, we've got to clear

131
00:07:52,440 --> 00:07:56,400
Speaker 1: the markets. Are we just simply afraid to go bankrupt? So,

132
00:07:56,640 --> 00:07:59,400
Speaker 1: I mean, the problem here is that the BIS started

133
00:07:59,440 --> 00:08:01,000
Speaker 1: looking at this a few years ago and we have

134
00:08:01,040 --> 00:08:03,480
Speaker 1: simply just updated what they have done. If you look

135
00:08:03,520 --> 00:08:06,720
Speaker 1: at the number of listed companies on exchanges in the

136
00:08:06,760 --> 00:08:09,240
Speaker 1: U it's not about eight thousand companies. And look at

137
00:08:09,240 --> 00:08:12,560
Speaker 1: the share of those that have higher depth servicing costs

138
00:08:12,560 --> 00:08:15,720
Speaker 1: than they have profits and here processes profits before interest payments.

139
00:08:16,080 --> 00:08:18,680
Speaker 1: That means that the interest coveras ratio for those companies

140
00:08:18,720 --> 00:08:21,040
Speaker 1: is below one. Well, that share has now gone up,

141
00:08:21,040 --> 00:08:23,040
Speaker 1: so that of all listed companies do now have that

142
00:08:24,240 --> 00:08:26,120
Speaker 1: are now in a situate they're not able to service

143
00:08:26,160 --> 00:08:28,320
Speaker 1: their death And this is of course something that becomes

144
00:08:28,320 --> 00:08:31,720
Speaker 1: more problematic because the bigger share you have of companies

145
00:08:31,760 --> 00:08:34,120
Speaker 1: that don't have enough revenue, the more it would actually

146
00:08:34,120 --> 00:08:36,480
Speaker 1: hold down the potential growth rate in economy, the more

147
00:08:36,480 --> 00:08:38,560
Speaker 1: it will weigh on the outlook for the economy and

148
00:08:38,640 --> 00:08:42,320
Speaker 1: long run welfare and long run limits of standards of

149
00:08:42,400 --> 00:08:45,199
Speaker 1: living over the next few years. Sosten, This is the

150
00:08:45,360 --> 00:08:49,480
Speaker 1: key question whether we are sacrificing longer term higher growth,

151
00:08:49,760 --> 00:08:54,120
Speaker 1: higher productivity for stability now in the near term. And

152
00:08:54,160 --> 00:08:57,199
Speaker 1: as we repeat that again and again and again every

153
00:08:57,240 --> 00:09:00,280
Speaker 1: time we come across a contraction, a pant a, make

154
00:09:00,600 --> 00:09:03,480
Speaker 1: a recession, whatever it might be, does it make it

155
00:09:03,559 --> 00:09:07,760
Speaker 1: more difficult to make the opposite decision. That's exactly right, John,

156
00:09:07,800 --> 00:09:10,040
Speaker 1: It's a trade off between the short run. Of course,

157
00:09:10,160 --> 00:09:12,520
Speaker 1: everything that fit did was correct. They did save the

158
00:09:12,600 --> 00:09:15,760
Speaker 1: financial system, they did stabilize financial markets that have made

159
00:09:15,760 --> 00:09:18,760
Speaker 1: sure that we don't have this significant amount of volatility intervelence.

160
00:09:18,800 --> 00:09:20,400
Speaker 1: We had in much, but it has come with a

161
00:09:20,480 --> 00:09:23,160
Speaker 1: number of side effects, and one side effect is exactly

162
00:09:23,160 --> 00:09:25,559
Speaker 1: this issue that the lack of revenue. When the doors

163
00:09:25,640 --> 00:09:28,080
Speaker 1: closed in corporate America and there were no dollars coming

164
00:09:28,120 --> 00:09:31,840
Speaker 1: into the bottom line, companies turned around to borrowing markets

165
00:09:31,880 --> 00:09:36,160
Speaker 1: and basically started borrowing in corporate I G. And high

166
00:09:36,240 --> 00:09:39,360
Speaker 1: yields and commercial paper markets. And that was essentially magnifying

167
00:09:39,760 --> 00:09:42,160
Speaker 1: a problem that we already had going into the virus.

168
00:09:42,360 --> 00:09:45,360
Speaker 1: So you're absolutely right, this is increasing the share of companies.

169
00:09:45,360 --> 00:09:48,240
Speaker 1: This is not only the US, this is also in Germany, France, UK,

170
00:09:48,600 --> 00:09:50,560
Speaker 1: around the world. The few of course, is that we

171
00:09:50,600 --> 00:09:52,600
Speaker 1: will begin to look somewhat similar to Japan in the

172
00:09:52,640 --> 00:09:55,079
Speaker 1: nine nineties, where you also had very high dead levels

173
00:09:55,080 --> 00:09:57,320
Speaker 1: in the corporate sector. And this is the problem down

174
00:09:57,320 --> 00:10:01,800
Speaker 1: the road that can companies survive these significant amounts of debtload,

175
00:10:01,840 --> 00:10:04,080
Speaker 1: the significant amounts of leverage that we now have that

176
00:10:04,120 --> 00:10:08,600
Speaker 1: are being magnified accelerated upwards because of the response from

177
00:10:08,640 --> 00:10:11,600
Speaker 1: the pharaohs. There's an irony baked in here. Tourist in

178
00:10:12,000 --> 00:10:14,599
Speaker 1: or the more that are surprises are kept up and

179
00:10:14,640 --> 00:10:18,920
Speaker 1: these companies are kept afloat with respect to higher debt loads,

180
00:10:19,200 --> 00:10:22,640
Speaker 1: the more people can have confidence in investing in these

181
00:10:22,679 --> 00:10:25,920
Speaker 1: even though growth is slowing. Do you expect that paradigm

182
00:10:25,960 --> 00:10:28,840
Speaker 1: to continue, for these zombies to be kept alive and

183
00:10:28,880 --> 00:10:32,199
Speaker 1: not allowed to go bankrupt period full stop? To Tom's point,

184
00:10:32,480 --> 00:10:35,120
Speaker 1: allowing the asset prices to continue to climb despite the

185
00:10:35,160 --> 00:10:38,320
Speaker 1: lack of growth, You're right, Lea. I mean, think about

186
00:10:38,320 --> 00:10:40,840
Speaker 1: the FATS response to what has sort of trickered the

187
00:10:40,880 --> 00:10:43,120
Speaker 1: lift in the share of companies that are zombies or

188
00:10:43,120 --> 00:10:45,199
Speaker 1: they don't have enough revenue to pay for the interest

189
00:10:45,240 --> 00:10:49,040
Speaker 1: statements that was triggered by low interest rates. And now

190
00:10:49,080 --> 00:10:50,679
Speaker 1: not only do we again have low interest rates, but

191
00:10:50,720 --> 00:10:53,120
Speaker 1: we actually also have the FAT actively buying I G

192
00:10:53,440 --> 00:10:55,840
Speaker 1: and buying phone angels. And what does that mean. That

193
00:10:55,880 --> 00:10:59,960
Speaker 1: means that they have also incentivized even furthermore credit extension

194
00:11:00,120 --> 00:11:03,480
Speaker 1: and more leverage increase in the corporate sector. And of

195
00:11:03,520 --> 00:11:06,920
Speaker 1: course you're non financials in particular have therefore resolved the

196
00:11:06,960 --> 00:11:09,880
Speaker 1: problem with the lack of revenue by adding on mode.

197
00:11:10,240 --> 00:11:14,240
Speaker 1: So somewhat ironically, we have exactly as Jonger said, We've

198
00:11:14,240 --> 00:11:16,240
Speaker 1: been making some trade halls. In the short run, we're

199
00:11:16,240 --> 00:11:19,640
Speaker 1: stabilizing things, but we still have this very important problem

200
00:11:19,920 --> 00:11:22,160
Speaker 1: that we need to look at the fundamental structure of

201
00:11:22,160 --> 00:11:25,120
Speaker 1: the corporate sector. And again the comparisons with Japan. Before

202
00:11:25,200 --> 00:11:27,400
Speaker 1: it was all about inflation, and that's of course also

203
00:11:27,440 --> 00:11:30,280
Speaker 1: still a debate, but now they're more parallels with Japan

204
00:11:30,520 --> 00:11:32,720
Speaker 1: that are coming into the radar screen. That becomes very

205
00:11:32,720 --> 00:11:35,800
Speaker 1: important for investors to your thinking about is it all

206
00:11:35,880 --> 00:11:37,960
Speaker 1: starts in the SUP or all list stocks in the

207
00:11:38,000 --> 00:11:40,040
Speaker 1: US that needs to go up, or are there very

208
00:11:40,040 --> 00:11:43,520
Speaker 1: important sector differences in terms of this leverage increase that

209
00:11:43,559 --> 00:11:45,640
Speaker 1: we have seen in some Texas and not another toast

210
00:11:45,720 --> 00:11:48,360
Speaker 1: And this is not capitalism. We should not pretend it is.

211
00:11:48,760 --> 00:11:51,240
Speaker 1: What is this So I would say, I know this

212
00:11:51,360 --> 00:11:53,200
Speaker 1: might sound very academic, but I would say this is

213
00:11:53,240 --> 00:11:56,600
Speaker 1: interfering with the process of creative destruction. I mean creative

214
00:11:56,600 --> 00:11:59,560
Speaker 1: destruction is of course that some companies go under. Some

215
00:11:59,640 --> 00:12:02,600
Speaker 1: company is open up every day on a normal day,

216
00:12:02,800 --> 00:12:05,280
Speaker 1: that's about one thousand, six hundred companies in the U

217
00:12:05,400 --> 00:12:07,560
Speaker 1: S that go out of business. And if you have

218
00:12:07,600 --> 00:12:09,600
Speaker 1: one thousand, six hundred companies that go out of business

219
00:12:09,600 --> 00:12:12,360
Speaker 1: every day in the US. Now that artificially i G

220
00:12:12,520 --> 00:12:14,880
Speaker 1: spreads have been narrowed and also, credit spreads have been

221
00:12:14,920 --> 00:12:17,199
Speaker 1: narrowed and the cost of capital have been lowered, which

222
00:12:17,240 --> 00:12:19,800
Speaker 1: makes complete sense from a business side perspective. That's just

223
00:12:19,840 --> 00:12:21,640
Speaker 1: beginning to open up a lot of questions. What does

224
00:12:21,679 --> 00:12:24,679
Speaker 1: this mean for the process of creative instructions of companies

225
00:12:25,080 --> 00:12:28,199
Speaker 1: give starting and companies going on too, And what does

226
00:12:28,240 --> 00:12:30,440
Speaker 1: that mean then how we think about how dynamic the

227
00:12:30,520 --> 00:12:32,960
Speaker 1: US economy normally is. It's already the most dynamic economy

228
00:12:33,000 --> 00:12:35,000
Speaker 1: in the world, is able to generate a lot of

229
00:12:35,040 --> 00:12:38,559
Speaker 1: growth and innovestative ideas and products and ways of being

230
00:12:38,640 --> 00:12:41,040
Speaker 1: much more productive and other countries. But the problem is

231
00:12:41,080 --> 00:12:43,520
Speaker 1: here that now, well, how is that process actually looking

232
00:12:43,559 --> 00:12:46,040
Speaker 1: going forward? If you shot me have a share and

233
00:12:46,040 --> 00:12:48,680
Speaker 1: a rising share of the corporate sector that is just

234
00:12:48,760 --> 00:12:52,400
Speaker 1: no longer able to do those significant increases and advances

235
00:12:52,480 --> 00:12:54,920
Speaker 1: innovations and in productivity that we have been so used

236
00:12:54,960 --> 00:12:57,520
Speaker 1: to for all these years. Tost and fascinating conversation on

237
00:12:57,640 --> 00:12:59,720
Speaker 1: one that we are going to have to continue for

238
00:12:59,760 --> 00:13:02,880
Speaker 1: a tome to com Tustin's look that of Deutsche Bank.

239
00:13:06,520 --> 00:13:10,200
Speaker 1: John you nicely framed that is the economics and maybe

240
00:13:10,240 --> 00:13:13,840
Speaker 1: the financial discussion of a Morgan Stanley or other optimists

241
00:13:13,840 --> 00:13:16,680
Speaker 1: that are out there, But then there is the reality

242
00:13:16,920 --> 00:13:19,840
Speaker 1: of opening up and no one wants to open up

243
00:13:19,840 --> 00:13:22,800
Speaker 1: with the agony that we've seen down south of large

244
00:13:23,040 --> 00:13:27,800
Speaker 1: gatherings which maybe lead to potential infection. The Lieutenant Governor

245
00:13:27,800 --> 00:13:30,960
Speaker 1: of the Empire State has provided leadership on this with

246
00:13:31,040 --> 00:13:35,120
Speaker 1: her Governor Cuomo to open up in a responsible way.

247
00:13:35,200 --> 00:13:39,600
Speaker 1: Lieutenant Governor Kathy Hokel joins us this morning. Lieutenant Governor,

248
00:13:39,720 --> 00:13:43,440
Speaker 1: I want you to give us one anecdote of what

249
00:13:43,600 --> 00:13:46,840
Speaker 1: it's like to open up state that people in the

250
00:13:46,840 --> 00:13:50,240
Speaker 1: bigger cities can understand. What is one of those tension

251
00:13:50,360 --> 00:13:54,400
Speaker 1: points that's been instructive for you. Well, thank you for

252
00:13:54,440 --> 00:13:56,240
Speaker 1: having me on the show again. And I have been

253
00:13:56,320 --> 00:13:59,520
Speaker 1: all over upstate in person, Rochester down to Jamestown. I

254
00:13:59,640 --> 00:14:02,400
Speaker 1: was in Look Tiny Only and yesterday, and I'll tell

255
00:14:02,440 --> 00:14:05,840
Speaker 1: you what I see. I'm seeing business owners who understand

256
00:14:05,880 --> 00:14:09,200
Speaker 1: the gravity of the situation. They have been shut down,

257
00:14:09,240 --> 00:14:11,560
Speaker 1: they've lost their income for three and a half months.

258
00:14:11,600 --> 00:14:14,439
Speaker 1: In order to them to survive, they know that they

259
00:14:14,480 --> 00:14:17,360
Speaker 1: need to first of all, create an environment that's safe,

260
00:14:17,760 --> 00:14:19,800
Speaker 1: that you walk in the door, that you are six

261
00:14:19,800 --> 00:14:23,160
Speaker 1: ft apart from other customers, that everybody wears the mask

262
00:14:23,320 --> 00:14:25,600
Speaker 1: or you don't walk in the door, and there's disrespected

263
00:14:25,680 --> 00:14:28,440
Speaker 1: on the counter shops. I've seen it everywhere. Because here's

264
00:14:28,480 --> 00:14:32,520
Speaker 1: where this is fast. We are all aligned in our interests, governments,

265
00:14:32,760 --> 00:14:34,800
Speaker 1: those of us who have been leading this charge. Governor

266
00:14:34,840 --> 00:14:37,040
Speaker 1: Cromo first of all, wants to make sure we get

267
00:14:37,040 --> 00:14:39,800
Speaker 1: it right. The business owners want to get it right.

268
00:14:39,840 --> 00:14:41,400
Speaker 1: They do not want to be in the news as

269
00:14:41,440 --> 00:14:45,080
Speaker 1: being the next hot spot or being uh blown in

270
00:14:45,120 --> 00:14:48,280
Speaker 1: by their employees or customers as being violators. So the

271
00:14:48,360 --> 00:14:51,360
Speaker 1: public interests, the business interests, and the government interests are

272
00:14:51,360 --> 00:14:53,320
Speaker 1: all aligned here to get it right. So I saw

273
00:14:53,440 --> 00:14:57,320
Speaker 1: countless examples walking down these streets. Business is proud to

274
00:14:57,360 --> 00:14:59,960
Speaker 1: put up they're open for business signs and whilst me

275
00:15:00,120 --> 00:15:02,600
Speaker 1: people back and they are being smart about it. And

276
00:15:02,600 --> 00:15:06,359
Speaker 1: that's all it takes. This is not a complicated concept

277
00:15:06,400 --> 00:15:09,400
Speaker 1: to doing what we've been doing while we've had this slow,

278
00:15:09,920 --> 00:15:14,480
Speaker 1: well thought out, methodical reopening. And it works here. It

279
00:15:14,560 --> 00:15:17,640
Speaker 1: works here, Lieutenant Governor. We hope it continues to work.

280
00:15:17,720 --> 00:15:19,640
Speaker 1: But you know, we all know the hard work of

281
00:15:19,680 --> 00:15:23,240
Speaker 1: this state can be undone by failures out swear, what

282
00:15:23,320 --> 00:15:26,040
Speaker 1: are you doing to protect New York from the outbreaks

283
00:15:26,080 --> 00:15:28,720
Speaker 1: that we're seeing in other states across this country. Yeah,

284
00:15:28,720 --> 00:15:31,640
Speaker 1: the irony of this is just incredible to consider that

285
00:15:31,800 --> 00:15:35,440
Speaker 1: just a few months ago we're the epicenter of this pandemic,

286
00:15:35,720 --> 00:15:38,600
Speaker 1: and other states for telling their residents not to come

287
00:15:38,640 --> 00:15:40,680
Speaker 1: to New York. Or if you're a New Yorker driving

288
00:15:40,720 --> 00:15:43,880
Speaker 1: the Floridas for your vacation, you were told you had

289
00:15:43,880 --> 00:15:47,600
Speaker 1: a quarantine for fourteen days. So it is extraordinary in

290
00:15:48,120 --> 00:15:51,120
Speaker 1: the turnaround and the fact that we are now have

291
00:15:51,240 --> 00:15:53,640
Speaker 1: the state with the lowest rate of in effective So, yes,

292
00:15:53,680 --> 00:15:56,880
Speaker 1: we are concerned. The Governor addressed this yesterday when asked

293
00:15:56,880 --> 00:15:59,440
Speaker 1: about what about places like Florida what we have in

294
00:15:59,480 --> 00:16:03,160
Speaker 1: New York. It's a lot of New York residents have

295
00:16:03,280 --> 00:16:05,800
Speaker 1: gone to Florida that becomes Snowberg. I guess they're technically

296
00:16:05,800 --> 00:16:08,080
Speaker 1: Florida residents then, but they come back to their summer

297
00:16:08,120 --> 00:16:12,040
Speaker 1: homes uh in the city, the Long Island area or upstate.

298
00:16:12,320 --> 00:16:15,920
Speaker 1: And unfortunately, we are starting to see paces where they're

299
00:16:15,960 --> 00:16:19,160
Speaker 1: bringing the virus now to us. And so the governor

300
00:16:19,240 --> 00:16:21,880
Speaker 1: is weighing all his options to speaking to experts about

301
00:16:21,920 --> 00:16:24,920
Speaker 1: what rights we have to protect us because we have

302
00:16:25,040 --> 00:16:27,680
Speaker 1: suffered too long and we've come back on a long,

303
00:16:28,400 --> 00:16:30,480
Speaker 1: slow road to get it right, and we're not going

304
00:16:30,520 --> 00:16:33,720
Speaker 1: to take any steps backwards because of what's going on elsewhere.

305
00:16:33,720 --> 00:16:35,360
Speaker 1: If we can, we can help it. You know, New

306
00:16:35,440 --> 00:16:38,080
Speaker 1: Yorkers cannot go through this twice. We will get through

307
00:16:38,120 --> 00:16:40,440
Speaker 1: this because we're continuing to ask people to follow the

308
00:16:40,480 --> 00:16:43,160
Speaker 1: social distinct, wear the mask, and we won't end up

309
00:16:43,200 --> 00:16:46,040
Speaker 1: like the other states. They're literally putting a halt order

310
00:16:46,080 --> 00:16:49,080
Speaker 1: on some of the reopenings and that's that's psychologically devastating

311
00:16:49,080 --> 00:16:52,040
Speaker 1: and it's horrible for the economy. Lieutenant Governor, how close

312
00:16:52,120 --> 00:16:55,000
Speaker 1: are we to having to actually cut services as a

313
00:16:55,040 --> 00:16:57,600
Speaker 1: result of the budget deficits in New York State? It's

314
00:16:57,640 --> 00:17:00,520
Speaker 1: almost inevitable. I mean, the only life time that we're

315
00:17:00,560 --> 00:17:06,120
Speaker 1: waiting for is have Congress and the President understand that

316
00:17:06,480 --> 00:17:09,879
Speaker 1: you cannot have a full economic recovery in this nation

317
00:17:09,960 --> 00:17:12,280
Speaker 1: without helping out states like New York there were the

318
00:17:12,280 --> 00:17:15,439
Speaker 1: hardest hit. We are an economic engine that has to

319
00:17:15,480 --> 00:17:18,000
Speaker 1: get some fuel back into us. And when we get

320
00:17:18,040 --> 00:17:20,639
Speaker 1: that money and we get that assistance, which we believe

321
00:17:20,680 --> 00:17:23,760
Speaker 1: should happen, and don't be playing politics. This is not

322
00:17:23,880 --> 00:17:26,240
Speaker 1: the time to talk about red states and blue states.

323
00:17:26,520 --> 00:17:28,840
Speaker 1: We are an important entity and important part of the

324
00:17:28,880 --> 00:17:31,560
Speaker 1: comeback for the nation, not just our state. So there

325
00:17:31,600 --> 00:17:34,280
Speaker 1: would be cutbacks. The reality is there will be cutbacks

326
00:17:34,320 --> 00:17:36,800
Speaker 1: if we don't get that support from the settle government.

327
00:17:36,920 --> 00:17:39,720
Speaker 1: But the governor has had conversations with the President. We're

328
00:17:39,760 --> 00:17:41,880
Speaker 1: speaking to our leaders in Congress, and we hope they

329
00:17:41,920 --> 00:17:44,880
Speaker 1: get it that we all want this economy to come back.

330
00:17:44,960 --> 00:17:47,320
Speaker 1: And I heard you speaking about, uh, you know that

331
00:17:47,480 --> 00:17:49,760
Speaker 1: the ten year decline, and you know it's going to

332
00:17:49,840 --> 00:17:52,720
Speaker 1: take a long time, and it doesn't have to. We

333
00:17:52,760 --> 00:17:55,520
Speaker 1: can come back much quicker and supports to settle government

334
00:17:55,560 --> 00:17:58,399
Speaker 1: spending with revenues from New York since we already donor state.

335
00:17:58,720 --> 00:18:00,440
Speaker 1: But we just need a little help during this time,

336
00:18:00,440 --> 00:18:03,000
Speaker 1: and we expected to get it, Lieutenant Governor, very quickly.

337
00:18:03,000 --> 00:18:05,199
Speaker 1: Here I had the clearest memory of the riots of

338
00:18:05,280 --> 00:18:08,320
Speaker 1: nineteen sixty four in Rochester, New York. It has been

339
00:18:08,359 --> 00:18:12,320
Speaker 1: a path with the courage of Nelson Rockefeller and others

340
00:18:12,359 --> 00:18:16,119
Speaker 1: to provide for African Americans in this nation and in

341
00:18:16,200 --> 00:18:19,879
Speaker 1: this state. Are you going to see a national holiday

342
00:18:19,960 --> 00:18:22,440
Speaker 1: off of what we saw from your governor a few

343
00:18:22,480 --> 00:18:25,800
Speaker 1: days ago on Juneteenth, two thousand and twenty. I can

344
00:18:25,800 --> 00:18:27,359
Speaker 1: only speak to what we're doing in the state of

345
00:18:27,400 --> 00:18:29,880
Speaker 1: New York, but I will tell you many times, when

346
00:18:29,880 --> 00:18:33,840
Speaker 1: New York leads, others follow, whether it's the lgbt Q rights,

347
00:18:33,880 --> 00:18:36,280
Speaker 1: whether it's women's rights, whether it's maybe many of the

348
00:18:36,280 --> 00:18:39,879
Speaker 1: civil rights initiatives, labor rights, environment rights, all those movements

349
00:18:39,920 --> 00:18:42,160
Speaker 1: started in New York. And I hope that the rest

350
00:18:42,200 --> 00:18:44,399
Speaker 1: of the the nation will be aware of what we did

351
00:18:44,440 --> 00:18:47,439
Speaker 1: in New York by finally giving the recognition that the

352
00:18:47,480 --> 00:18:50,560
Speaker 1: African Americans deserved to have as part of an important

353
00:18:50,560 --> 00:18:53,760
Speaker 1: part of their history, which was the Emancipation Proclamations finally

354
00:18:53,800 --> 00:18:58,320
Speaker 1: being uh enacted and actually executed in Texas, which was

355
00:18:58,359 --> 00:19:00,560
Speaker 1: a two year hold up. This is I've marched in

356
00:19:00,640 --> 00:19:03,720
Speaker 1: June Chief's Paris for the last twenty five years, and

357
00:19:03,760 --> 00:19:05,880
Speaker 1: I'm so delighted to see a year after year, more

358
00:19:05,880 --> 00:19:09,520
Speaker 1: people coming out, more people understanding this history and understanding

359
00:19:09,560 --> 00:19:13,480
Speaker 1: that the root of racism goes back centuries and it's

360
00:19:13,480 --> 00:19:15,639
Speaker 1: a time to right that wrong and have a have

361
00:19:15,720 --> 00:19:18,439
Speaker 1: an acknowledgment of that dark part of our history, but

362
00:19:18,520 --> 00:19:21,560
Speaker 1: also realizing that we can come into a brighter area

363
00:19:21,960 --> 00:19:25,800
Speaker 1: era if we become cognizant of that history and why

364
00:19:25,880 --> 00:19:28,040
Speaker 1: that may still be the remnists of that are still

365
00:19:28,040 --> 00:19:31,600
Speaker 1: affecting society today. Why there is systemic racism that goes

366
00:19:31,640 --> 00:19:34,200
Speaker 1: back to that time. Kathy. I think we all hope

367
00:19:34,200 --> 00:19:36,680
Speaker 1: we can make more progress. Fantastic to catch up with you,

368
00:19:36,880 --> 00:19:39,880
Speaker 1: as always, Lieutenant Governor of New York, Kathy how called

369
00:19:39,880 --> 00:19:42,639
Speaker 1: there on reopening at an important day for this nation.

370
00:19:47,160 --> 00:19:50,000
Speaker 1: Let's bring in about Michael. This is this is someone

371
00:19:50,040 --> 00:19:52,879
Speaker 1: that we know so well from our talk on the

372
00:19:52,920 --> 00:19:55,320
Speaker 1: yield market and course on the show The Real Yield.

373
00:19:55,320 --> 00:19:59,240
Speaker 1: Look for that coming up soon, folks, Bloomberg Television. Bob Michael.

374
00:19:59,280 --> 00:20:02,840
Speaker 1: Where is the yield? Bob Michael? When do I get

375
00:20:02,880 --> 00:20:06,320
Speaker 1: a real yield back? I know it just seems to

376
00:20:06,440 --> 00:20:09,720
Speaker 1: have been another one of these casualties of the crisis.

377
00:20:09,960 --> 00:20:13,080
Speaker 1: I guess we'll know things are further returning to normal

378
00:20:13,160 --> 00:20:16,399
Speaker 1: when it comes back, because by then all the value

379
00:20:16,440 --> 00:20:18,919
Speaker 1: will have been squeezed out of the bond market. Well,

380
00:20:19,440 --> 00:20:21,960
Speaker 1: you sound like you've become more constructive in the last

381
00:20:21,960 --> 00:20:23,800
Speaker 1: couple of weeks. Can you walk us through whether you

382
00:20:23,840 --> 00:20:28,720
Speaker 1: have and why for sure we have and when we

383
00:20:28,760 --> 00:20:35,320
Speaker 1: look at the overwhelming response by policy makers, both monetary

384
00:20:35,480 --> 00:20:39,159
Speaker 1: and on the fiscal side. It's been dramatic. It's not

385
00:20:39,240 --> 00:20:42,679
Speaker 1: just been a handful of developed markets. It's been in

386
00:20:42,720 --> 00:20:45,320
Speaker 1: the emerging markets. In the last couple of days, you've

387
00:20:45,359 --> 00:20:48,480
Speaker 1: had rate cuts out of Indonesia, You've had a rate

388
00:20:48,480 --> 00:20:51,880
Speaker 1: cut out of Brazil. Uh, you had a rate cut

389
00:20:51,880 --> 00:20:55,720
Speaker 1: out of Russia. I looked at where Brazil central bank

390
00:20:55,760 --> 00:20:58,920
Speaker 1: rates are there two and a quarter percent. That's where

391
00:20:58,960 --> 00:21:04,439
Speaker 1: the US was a year ago. So the policymakers have

392
00:21:04,720 --> 00:21:09,640
Speaker 1: no interest in watching the pandemic continue to shut down

393
00:21:09,680 --> 00:21:12,960
Speaker 1: the global economy. They're doing everything they can. Is this

394
00:21:13,000 --> 00:21:15,199
Speaker 1: a case if there is no alternative for you that

395
00:21:15,200 --> 00:21:16,720
Speaker 1: you've got to put this money to work and need

396
00:21:16,800 --> 00:21:19,120
Speaker 1: to return and the assets that he used to get

397
00:21:19,119 --> 00:21:21,680
Speaker 1: a return on just down there anymore, Bob? Or is

398
00:21:21,760 --> 00:21:25,720
Speaker 1: it something more constructive than that. Um, it's a combination

399
00:21:25,760 --> 00:21:29,720
Speaker 1: of both. I love Torsten. I was a little disappointed

400
00:21:30,520 --> 00:21:34,120
Speaker 1: that in his list of zombies he didn't list the

401
00:21:34,119 --> 00:21:38,760
Speaker 1: bond market, because that's where we're headed. Central banks are

402
00:21:38,800 --> 00:21:42,520
Speaker 1: going to control the level of funding across the system,

403
00:21:42,640 --> 00:21:46,040
Speaker 1: and it's not just front rates. With yeld curve control

404
00:21:46,320 --> 00:21:50,600
Speaker 1: and unlimited amounts of quantitative ease, they can go across

405
00:21:50,680 --> 00:21:54,520
Speaker 1: the curve and control the funding rate to their government,

406
00:21:54,720 --> 00:21:58,359
Speaker 1: and then with purchases of credit, UH, they're controlling the

407
00:21:58,440 --> 00:22:02,119
Speaker 1: funding rate UH to the corporate world as well. And

408
00:22:02,160 --> 00:22:05,639
Speaker 1: of course in the US you're also seeing it with

409
00:22:05,760 --> 00:22:10,080
Speaker 1: household through toalth programs and other things. So there is

410
00:22:10,119 --> 00:22:13,960
Speaker 1: a commitment to bring rates down ultra low across the

411
00:22:14,040 --> 00:22:18,800
Speaker 1: system until we close the output gap, and that's years away.

412
00:22:19,960 --> 00:22:22,960
Speaker 1: What's the playbook then for investment for investing in a

413
00:22:23,040 --> 00:22:26,239
Speaker 1: zombie world at a zombie market, both bonds as well

414
00:22:26,280 --> 00:22:29,719
Speaker 1: as households and companies. Well, I think last time I

415
00:22:29,760 --> 00:22:33,640
Speaker 1: was on, I said, I'm sure Tom has his Samuelson

416
00:22:33,800 --> 00:22:36,480
Speaker 1: lying around, and I'm sure one of the laws in

417
00:22:36,560 --> 00:22:39,800
Speaker 1: there was don't fight the Fed, and I'm not fighting

418
00:22:39,800 --> 00:22:43,919
Speaker 1: the central banks or policy makers in aggregate. So rates

419
00:22:44,000 --> 00:22:47,280
Speaker 1: are coming down, Uh, they've come down a lot. They're

420
00:22:47,320 --> 00:22:50,560
Speaker 1: going to stay low for a while. We are going

421
00:22:50,600 --> 00:22:54,040
Speaker 1: to see an acceleration and growth. But until that acceleration

422
00:22:54,520 --> 00:22:57,480
Speaker 1: materially closes the output gap and you start to see

423
00:22:57,560 --> 00:23:01,919
Speaker 1: any inflationary pressure, you're not going to see any talk

424
00:23:02,240 --> 00:23:05,800
Speaker 1: of of raising rates. UM. So I think what you

425
00:23:05,920 --> 00:23:09,320
Speaker 1: do is you can continue to extend out into credit

426
00:23:09,800 --> 00:23:13,560
Speaker 1: and you try to find UH companies and borrowers that

427
00:23:13,640 --> 00:23:17,880
Speaker 1: can operate UH in a world and an economy that's

428
00:23:17,880 --> 00:23:20,960
Speaker 1: that's running out a fraction of what it used to. Okay, Bob,

429
00:23:20,960 --> 00:23:24,240
Speaker 1: but this is critically important. And you mentioned Paul Samuels

430
00:23:24,280 --> 00:23:30,080
Speaker 1: in it was a different economy, it was a different America.

431
00:23:30,160 --> 00:23:34,280
Speaker 1: And the belief that's out there is your world is

432
00:23:34,440 --> 00:23:38,639
Speaker 1: gains to the elite. How do we have our finance

433
00:23:38,760 --> 00:23:43,359
Speaker 1: system give us gains that Paul Samuelson saw through the

434
00:23:43,480 --> 00:23:47,080
Speaker 1: nineteen fifties and into the nineteen sixties for the good

435
00:23:47,119 --> 00:23:51,480
Speaker 1: of society. Yeah, and and and this is one of

436
00:23:51,560 --> 00:23:56,800
Speaker 1: the the effects of the overwhelming monetary response. The initial

437
00:23:56,880 --> 00:24:01,520
Speaker 1: reaction is to inflate asset prices, and of course the

438
00:24:01,600 --> 00:24:06,040
Speaker 1: holders of assets are in the upper echelon of the economy,

439
00:24:06,320 --> 00:24:10,879
Speaker 1: and it could widen the gap between the halves and

440
00:24:10,920 --> 00:24:15,240
Speaker 1: the have not. I don't know that monetary officials could

441
00:24:15,240 --> 00:24:19,159
Speaker 1: have or should have done anything better. As I said

442
00:24:19,359 --> 00:24:22,480
Speaker 1: in the past, I think they should start shifting the narrative.

443
00:24:22,560 --> 00:24:25,800
Speaker 1: And you're seeing that out of Christine Legarde and the

444
00:24:25,880 --> 00:24:28,119
Speaker 1: e C. B which is what do you want us

445
00:24:28,119 --> 00:24:31,199
Speaker 1: to do? We're not the first policy response, we're the

446
00:24:31,359 --> 00:24:35,480
Speaker 1: second policy response. The first policy response was for government

447
00:24:35,480 --> 00:24:40,359
Speaker 1: officials to shut down their economy. Then we responded by

448
00:24:40,600 --> 00:24:45,560
Speaker 1: lowering rates and creating liquidity and funding for the system.

449
00:24:45,640 --> 00:24:48,159
Speaker 1: So we now have brought rates down to a level

450
00:24:48,640 --> 00:24:52,239
Speaker 1: where public and private borrowers can do something with it

451
00:24:52,320 --> 00:24:55,239
Speaker 1: as they recover. Let's see what they do with it.

452
00:24:55,400 --> 00:24:59,639
Speaker 1: Focus your attention. There are companies going to borrow and

453
00:24:59,720 --> 00:25:03,679
Speaker 1: buy dock shares and raise dividends and make acquisitions? Or

454
00:25:03,800 --> 00:25:06,800
Speaker 1: are they going to invest in cat bax? And how

455
00:25:06,840 --> 00:25:09,880
Speaker 1: about on the government side, what are we doing there?

456
00:25:09,880 --> 00:25:12,120
Speaker 1: Are we just going to pile up the deficit? Are

457
00:25:12,160 --> 00:25:16,119
Speaker 1: we going to actually invest in healthcare and infrastructure? So

458
00:25:16,200 --> 00:25:19,400
Speaker 1: I think the narrative needs to change a bit here, Bob.

459
00:25:19,400 --> 00:25:22,359
Speaker 1: Perhaps the narrative needs to also change around the expected

460
00:25:22,400 --> 00:25:24,639
Speaker 1: returns profile at a time when you've got a lot

461
00:25:24,680 --> 00:25:28,000
Speaker 1: of pensions still shooting for that seven percent bogie? What

462
00:25:28,240 --> 00:25:32,600
Speaker 1: is an appropriate bogey right now? Given the interest rate environment,

463
00:25:32,600 --> 00:25:35,240
Speaker 1: and given that strategy that you're just talking about investing

464
00:25:35,240 --> 00:25:40,000
Speaker 1: companies that that can maneuver in a low growth world. Well,

465
00:25:41,000 --> 00:25:43,520
Speaker 1: you're right that there are pension funds and their insurance

466
00:25:43,560 --> 00:25:46,639
Speaker 1: companies that have long dated liabilities they have to match.

467
00:25:47,080 --> 00:25:50,600
Speaker 1: And what's been interesting to me is the FED support

468
00:25:50,640 --> 00:25:52,760
Speaker 1: of the curve has been in the front end, somewhat

469
00:25:52,760 --> 00:25:55,320
Speaker 1: in the intermediate part of the curve, but they're dialing

470
00:25:55,359 --> 00:25:58,240
Speaker 1: down their purchases in the long end. So we're seeing

471
00:25:58,400 --> 00:26:01,359
Speaker 1: three curves of and the law and to me looks

472
00:26:01,359 --> 00:26:04,520
Speaker 1: as though it's being left to plan sponsors, so the

473
00:26:04,520 --> 00:26:09,040
Speaker 1: pension funds and insurance companies to negotiate an acceptable rate

474
00:26:09,520 --> 00:26:12,320
Speaker 1: with some of the borrowers in the market. So so

475
00:26:12,400 --> 00:26:16,680
Speaker 1: long credit, I don't know that you're going to get

476
00:26:16,680 --> 00:26:19,600
Speaker 1: seven and a half percent there. I think you're gonna

477
00:26:19,600 --> 00:26:22,760
Speaker 1: be lucky to be able to book in in the

478
00:26:22,840 --> 00:26:28,280
Speaker 1: three area for an ongoing period of time. And I

479
00:26:28,320 --> 00:26:32,360
Speaker 1: think that forces you to accept that everyone is committed

480
00:26:32,400 --> 00:26:37,200
Speaker 1: to a recovery. UH. Other markets will continue to appreciate

481
00:26:37,760 --> 00:26:41,720
Speaker 1: and this isn't the proper environment to de risk in

482
00:26:42,480 --> 00:26:46,520
Speaker 1: UM so continue to hold the things that have a

483
00:26:46,520 --> 00:26:50,960
Speaker 1: bit more upside, whether it's equities or privates or alternatives.

484
00:26:51,040 --> 00:26:54,720
Speaker 1: And and of course that means an implicit face that

485
00:26:54,880 --> 00:26:57,680
Speaker 1: policy makers will continue to get it right, Hey, Bob,

486
00:26:57,680 --> 00:26:59,680
Speaker 1: and let's send with the important stuff, shall we. Sixty

487
00:27:00,040 --> 00:27:01,560
Speaker 1: is left on the clock. Can we get a score

488
00:27:01,600 --> 00:27:04,520
Speaker 1: from you for this weekend for Liverpool Everton? Do you

489
00:27:04,560 --> 00:27:09,199
Speaker 1: realize that Premier League football has shut down but the

490
00:27:09,240 --> 00:27:14,160
Speaker 1: bond market has continued to operate. Now I'm a buyer

491
00:27:14,200 --> 00:27:18,840
Speaker 1: of both those markets, so the anticipation has been mouth

492
00:27:18,920 --> 00:27:23,400
Speaker 1: watering for me. I'm expecting three mail Liverpool. Bob Michael

493
00:27:23,560 --> 00:27:25,880
Speaker 1: always appreciate it. Tom. Do you see how that worked there?

494
00:27:26,160 --> 00:27:28,160
Speaker 1: When he switches away from the bond market he gets

495
00:27:28,240 --> 00:27:32,719
Speaker 1: to Liverpool, the energy just comes comes up a little bit. Yeah,

496
00:27:32,880 --> 00:27:36,720
Speaker 1: I got erry. Nil. Folks were jargon free. Nil means

497
00:27:36,840 --> 00:27:42,240
Speaker 1: zero like shut out. I think most people understand that. Tom.

498
00:27:42,280 --> 00:27:44,680
Speaker 1: To be honest with you, Bob Michael, JP Morgan, Bob

499
00:27:44,760 --> 00:27:48,040
Speaker 1: always fantastic to catch up with you. Lisa has got

500
00:27:48,040 --> 00:27:49,919
Speaker 1: to get used to this. This is going to go

501
00:27:49,960 --> 00:27:52,880
Speaker 1: on for the next couple of months. Thanks for listening

502
00:27:52,920 --> 00:27:57,480
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews

503
00:27:57,480 --> 00:28:03,480
Speaker 1: on Apple Podcasts, SoundCloud, whichever podcast platform you prefer. I'm

504
00:28:03,520 --> 00:28:06,800
Speaker 1: on Twitter at Tom Keane. Before the podcast, you can

505
00:28:06,880 --> 00:28:10,040
Speaker 1: always catch us worldwide. I'm Bloomberg Radio