Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. Jason, I run to this
Speaker 1: next guest. We do it every week. Do um? I
Speaker 1: do want to just put out there as we get
Speaker 1: ready to talk with Dr Ian lous bader Um a
Speaker 1: stunning and disturbing statistic and you can read about it
Speaker 1: uh in depth on the Bloomberg But the US will
Speaker 1: top two hundred thousand deaths from the novel coronavirus in
Speaker 1: coming days, so talk about a milestone. So let's talk
Speaker 1: about that and talk about where we are the virus
Speaker 1: and in the race for a vaccine. Dr In Lusbader
Speaker 1: is back with US clinical Associate Professor of Medicine at
Speaker 1: n y U Landgown Medical Center on the phone in
Speaker 1: New York City. UM. Dr LUs Bader, truly, Jason, I
Speaker 1: look forward to these weekly conversations. How are you? My
Speaker 1: pleasure always always great to be with you guys. And
Speaker 1: I hope you have a healthy week is safe weekend,
Speaker 1: and uh, definitely it's a it's a challenge with all
Speaker 1: the data coming in. It's hard to coordinate it all,
Speaker 1: but we'll try and make sense of it. So you know, Ian,
Speaker 1: I wanted to ask you about something because there's a
Speaker 1: great article. I'm gonna put it on Twitter, and there's
Speaker 1: a full personal disclosure here. Uh great piece in Time
Speaker 1: magazine that was fluttered among my family because my aunt
Speaker 1: in Atlanta, who is a nutritionist at emery UM, she
Speaker 1: is part of a vaccine triallenge. She's interviewed in this
Speaker 1: story and it's the Maderna vaccine and it gave me,
Speaker 1: you know, some measure of hope in terms of her
Speaker 1: being interviewed and one of the and what they're talking
Speaker 1: about in terms of all these vaccines moving forward. Now
Speaker 1: there are a lot of cautions in this piece as well,
Speaker 1: and it talks about, you know, the need for two
Speaker 1: shots and the fact that you know, there's all these
Speaker 1: different things going on. We don't know exactly what is
Speaker 1: going to work, what combination of things are going to work,
Speaker 1: the efficacy and the safety. What's the thing that you've
Speaker 1: heard of late that's the most important when it comes
Speaker 1: to vaccines in you know, this is really uncharted territory.
Speaker 1: We we haven't dealt with the pandemic of this size
Speaker 1: really since you know, the so called Spanish flew, and
Speaker 1: we've had the swine flew another epidemics and pandemics. But
Speaker 1: this is really uncharted territory, and we're learning as we
Speaker 1: go in terms of the different manifestations and the diffused
Speaker 1: clotting and and so forth, and how some people have
Speaker 1: a very mild case and other people succumb. So I
Speaker 1: think we're learning a number of things. One is that
Speaker 1: even people who have the disease and who develop antibodies
Speaker 1: do have lower antibody levels along the way. And I've
Speaker 1: had a number of patients with very high antibody levels
Speaker 1: who who do relatively well with the with the infection
Speaker 1: and over time we've we've checked their antibodies and the
Speaker 1: levels definitely seem to drop. Now we don't know how
Speaker 1: far down there will go, and we don't know if
Speaker 1: they have a cellular a T cell response that will
Speaker 1: protect them. But this really does argue for everyone getting
Speaker 1: a vaccine. We also don't know which is really going
Speaker 1: to be the most effective vaccine. Is it a messenger
Speaker 1: or in a you know, is it a different technique
Speaker 1: that we're really going to have to see. We're just
Speaker 1: starting to get the data from the phase three trials
Speaker 1: with um you know, tens of thousands of patients getting
Speaker 1: getting tested, and overall looks like at this point that
Speaker 1: that it does seem fairly safe. There was that one
Speaker 1: case with astras eneka, and there may be other cases
Speaker 1: that will learn about, but overall it appears the vaccines
Speaker 1: are fairly safe and from what I'm hearing, fairly effective.
Speaker 1: Now how long that will be or will people need
Speaker 1: a booster shot, which they probably will, I think we're
Speaker 1: going to have to kind of see how that goes.
Speaker 1: But of course, in the interim, you know, the cases
Speaker 1: are in you know, have continue and of course, unfortunately
Speaker 1: the depths now up to you know, over two D thousand.
Speaker 1: We did anticipate these numbers. These numbers were just based
Speaker 1: on the trajectory. They shouldn't be you know, of course
Speaker 1: they're upsetting, but they shouldn't be shocking because we these
Speaker 1: numbers were all really guestimated along the way. So I
Speaker 1: think we're making some progress. So I do want to
Speaker 1: ask you about a vaccine that because I'm thinking, Okay,
Speaker 1: I'm at some point I'm gonna be taking a vaccine.
Speaker 1: Should we wait for the one that is the most effective?
Speaker 1: Is their complications with taking multiple vaccines? Like I want
Speaker 1: to understand this as an individual, I think that great questions,
Speaker 1: Carol is as always, I don't think we have those answers.
Speaker 1: And and is it possible that people may need two
Speaker 1: different kinds of the vaccines in other words, of a
Speaker 1: messenger RNA and perhaps another one. I think it's way
Speaker 1: too early to determine that. And I think the first priority,
Speaker 1: you know, will be those frontline workers and healthcare workers
Speaker 1: who who need some protection when they're encountering patients. UM
Speaker 1: and I do suspect that eventually is more and where
Speaker 1: people get vaccinated, it will be clear, you know, whether
Speaker 1: combinations of vaccines work or whether you'll be protected. And
Speaker 1: I think we'll be able to check antibody levels along
Speaker 1: the way, and I think that will give us a
Speaker 1: bit of a clue. But I think the feeling is
Speaker 1: even if you have some exposure with a vaccine, even
Speaker 1: if you have some antibody response, that should help in
Speaker 1: reducing the severity of the effects of the virus. And again,
Speaker 1: we we don't know whether this will come back as
Speaker 1: a seasonal coronavirus, which other coronaviruses you know are common
Speaker 1: cold viruses or seasonal flu viruses. But vaccinating everyone, just
Speaker 1: like we vaccinate everyone for the flu, should give some
Speaker 1: degree of protection. Do we ultimately, and we're gonna come
Speaker 1: back and talk, but just thirty seconds, do we ultimately
Speaker 1: as a population, as a country, build up an immunity
Speaker 1: that we don't need vaccines in the future. No, you
Speaker 1: just said we're gonna probably have to be taking these. Yeah,
Speaker 1: that's my sense. For people who have the disease, they
Speaker 1: may be better protected. But we don't even know that.
Speaker 1: Because we do see antibodies that are high and do
Speaker 1: begin to drop down over time, we don't will they
Speaker 1: go to zero. We don't know. When you read the
Speaker 1: headlines about bank saying coming in and then got to
Speaker 1: go home, or the Blasio, the mayor of New York
Speaker 1: City saying, yeah, we're gonna hold off for a couple
Speaker 1: of weeks. What do you make of it? Where are
Speaker 1: we at this point? It's definitely again uncharted territory. But
Speaker 1: I think everyone agrees it's important to get back to work,
Speaker 1: both for or economic health and psychological health. Although we
Speaker 1: do have a lot of patients who are very worried,
Speaker 1: teachers and professors who are very worried about being in
Speaker 1: close proximity to UH kids who, as we know, can
Speaker 1: harbor the virus with minimal symptoms, And so I think
Speaker 1: developing a good strategy to allow people to get back
Speaker 1: safely is important. And part of that, some of the
Speaker 1: data has come out that everyone wearing masks actually seems
Speaker 1: to be reducing the incidents of influenza as well as coronavirus,
Speaker 1: which makes sense right because obviously flu I mean, they're
Speaker 1: both viruses, and they both are respiratory viruses, and both coughing,
Speaker 1: sneezing and and so forth. So I think the whole
Speaker 1: mass concept is going to be with us for for
Speaker 1: a while, even during flu season. That being said, you
Speaker 1: need a strategy to bring people back. What some colleges
Speaker 1: are doing, um, you know, is the spit testing, the
Speaker 1: antigen tests, which can be helpful before people come back
Speaker 1: to school. Some of them are getting nasal swabs, which
Speaker 1: can be helpful, you know. In New York City it's uh,
Speaker 1: not everyone has access to that, but I do think
Speaker 1: the schools can certainly do UM these pods where you
Speaker 1: rotate kids who come in and group so smaller groups
Speaker 1: because if one of those kids happens to get sick,
Speaker 1: then you isolate that group, but you don't affect the
Speaker 1: whole class. So there are a lot of strategies, and
Speaker 1: even the CDC is a little unclear perhaps as to
Speaker 1: the best strategy. There's not unlimited testing, and they recently
Speaker 1: as of today, actually just reverse course on whether or
Speaker 1: not you should test asymptomatic people. And I think certainly,
Speaker 1: if um, someone feels fine and they're going to visit
Speaker 1: someone at risk, an elderly parent or relative, uh, it
Speaker 1: does make sense to get a nasal swab, and if
Speaker 1: that's negative, you can feel really pretty reassured that even
Speaker 1: if you do masks or social distancing that your risk
Speaker 1: of injuring your your relative is very low, whether or
Speaker 1: not a random encounter in an elevator or you hear
Speaker 1: someone in the office had COVID. Do you really need
Speaker 1: to be tested? I think that's individual and if someone
Speaker 1: feels completely fine, sure, in the vest of all worlds,
Speaker 1: it's probably not a bad idea to be tested. But
Speaker 1: I don't think people should panicked about that because casual
Speaker 1: contact is certainly outside if you're passing people and so forth,
Speaker 1: that's really a very low risk. I feel like in
Speaker 1: an ideal world, I mean, we've kind of gotten used
Speaker 1: to so for most of us wearing masks, like Jason,
Speaker 1: I were kind of kidding, you know that when I
Speaker 1: leave the house, I kind of you know, if I forget,
Speaker 1: I'm like, oh my god, It's like I'm not putting
Speaker 1: a seatbelt on in a car. It just has become
Speaker 1: such a part of our process. I do feel like,
Speaker 1: do we get to a point in our world, especially
Speaker 1: if these viruses are going to stick around in that
Speaker 1: you know, taking a COVID test is going to be
Speaker 1: as routine is brushing our teeth every morning. Uh well,
Speaker 1: you know, perhaps for the time being, until we do
Speaker 1: get a vaccine, and just like people do not get
Speaker 1: routine flu shots, are routine flu testing UM or nasal
Speaker 1: swabs which we can do for influence. If people come
Speaker 1: into the you're very sick, I see, ever, you know,
Speaker 1: you do a nasal swab and you can determine if
Speaker 1: they have the flu, or coronavirus or or a variety
Speaker 1: of other respiratory pathogens. So I think when people get vaccinated,
Speaker 1: and I understand the anti vax you know fears, but
Speaker 1: when these are really safe and tested um, I think
Speaker 1: that will significantly reduce the need for everyone to be
Speaker 1: tested on a very frequent basis unless there's something that's
Speaker 1: really suspicious. In the meantime, wear a mask right in
Speaker 1: the means time, wear a mask, use your head, do
Speaker 1: social distancing, and the and the number of cases, certainly
Speaker 1: in the Northeast and in an area's pockets that are
Speaker 1: careful that the number of cases does seem to be
Speaker 1: going down, and hopefully that second wave will not be
Speaker 1: as bad as we think, right right, Yeah, I mean
Speaker 1: it does feel like and our things, Dr Ian les Bader,
Speaker 1: I mean it does feel like the science, even that
Speaker 1: sort of retroactive science basically says, had we been wearing
Speaker 1: masks in much greater numbers back in the spring, those
Speaker 1: numbers don't hit where they hit when it comes to
Speaker 1: sickness and death. The science is pretty clear on this
Speaker 1: from the CDC, Tom Johns, Hopkins and elsewhere. Uh listen,
Speaker 1: Morgan Freeman, he's saying where I'm asks, Keep Morgan safe,
Speaker 1: Keep all of us safe. Listen. I now know that
Speaker 1: if we get viruses like this in the future, like
Speaker 1: right away, I bet most of us will put on
Speaker 1: a mask. Its little mask I was wearing in the
Speaker 1: office yesterday. It's like a It's like a festive Darth
Speaker 1: Vader mask. You're so cool, Jason Killen. Thank LUs Bader
Speaker 1: over at n y u Lando Medical Center. Really a
Speaker 1: great go to voice for us who are listening to
Speaker 1: Bloomberg Business Week. Well, I love this pairing Max Chafkin
Speaker 1: and Joel Webber. Doesn't get much better than that on
Speaker 1: a Friday. Plus Palintier it is a nutty company. And
Speaker 1: to use a term of art, as it were, Max
Speaker 1: Chaffkin wrote the story Palenteer bad mouthing big tech while
Speaker 1: taking its tech public checks out. We are talking about
Speaker 1: Peter Till after all he joins us on the phone
Speaker 1: from Queen Joe Weber. He joins us from Massachusetts. All right,
Speaker 1: JW set this up for us. So, so, I think
Speaker 1: Max has been um really uh just one of these
Speaker 1: watchers of Silicon Valley for years, and he spoke up
Speaker 1: about this one because Palenteer has been really interesting company
Speaker 1: in one that Business Week has covered uh more than once. Um.
Speaker 1: And you know, he reminded us that there's a direct
Speaker 1: listing coming because this has been a company that's been
Speaker 1: privately held, uh, and now it will become public just
Speaker 1: around the corner. But in the process of sort of
Speaker 1: you know, it's walk up to its direct listing. It's
Speaker 1: opting to go public via direct listing rather than an
Speaker 1: I p O. It's also a little ironic because of
Speaker 1: the company's um uh sort of anti Silicon Valleys stance
Speaker 1: that it's also taken uh and that kind of also
Speaker 1: speak to U. Uh. You know, the company's a little
Speaker 1: bit of its heritage because obviously it's um, you know,
Speaker 1: Peter Teel backed. So so Max talked to us about
Speaker 1: what Palanteer uh it's business looks like and why it's
Speaker 1: so relevant in this moment. Yeah, I mean, so so
Speaker 1: it's really interesting. It's been, as you say, it's been
Speaker 1: around for a long time, seventeen years. The company UM
Speaker 1: most people probably don't know much about it. If they
Speaker 1: do know about it, they know it's vaguely controversial, it's
Speaker 1: vaguely sort of wrapped up with UM intelligence work. Uh.
Speaker 1: The company was founded by Peter Teel, the the venture
Speaker 1: capitalist founder PayPal after UM after nine eleven, and and
Speaker 1: and and was famously used by the c I A. Uh,
Speaker 1: you know during that period. I mean, what's What's what's
Speaker 1: pretty interesting here, besides all the all the sort of
Speaker 1: hot button issues, is you have this company that when
Speaker 1: you look at its finance chills look not especially great.
Speaker 1: I mean, you know, it's it's it's it's losing hundreds
Speaker 1: of millions of dollars and it's been around for seventeen years.
Speaker 1: That's kind of the skeptical case. The more positive case
Speaker 1: that you hear from investors from the company UM is
Speaker 1: that COVID and and kind of the the way that
Speaker 1: COVID has shifted the economy has been you know, a
Speaker 1: really big boon to palent here in a couple of
Speaker 1: different ways, it's led to new contracts. Obviously, Talent Here
Speaker 1: has all these relationship relationships and governments. So they have
Speaker 1: a contract with the h h S, the US Departments
Speaker 1: Health and Human Services. It's worth like twenty one million bucks.
Speaker 1: They've been doing a lot of sort of government work,
Speaker 1: and it's dramatically changed, um the numbers. I mean, in
Speaker 1: other words, that they're their cost structure because in the
Speaker 1: past Talent Here, the big knock on this company is that, hey,
Speaker 1: it's not a tech company. Is actually a sort of
Speaker 1: a consulting company. They're flying people all over the world
Speaker 1: to sell their products and to set up these sort
Speaker 1: of software Uh, these are big expensive software engagements, and
Speaker 1: that's super expensive. And you've seen there they're sort of
Speaker 1: costs go way down over the line, um six months
Speaker 1: or so. You know what's interesting, Max, There's a couple
Speaker 1: of things that really jump out for me. First of all,
Speaker 1: I mean, this is a company that has thrived, as
Speaker 1: you say your words, under President Trump. It's also a
Speaker 1: company though, and we get critical of companies and tech
Speaker 1: companies in particular, that's controlled by a trifecta. Yeah, this
Speaker 1: is another one of these kind of uh, you know,
Speaker 1: founder controlled arrangements and It shouldn't be surprising because you know,
Speaker 1: Peter Thiel was involved in the original kind of founder
Speaker 1: controlled ring, which is the is the one that Mark
Speaker 1: Zuckerberg enjoys and which is really the model for all
Speaker 1: this stuff. I mean, he started a venture capital firm
Speaker 1: called Founders Funds that's basically all about this um. So
Speaker 1: no surprise, but the structure is is pretty weird. I mean,
Speaker 1: you have the three co founders there, they own a
Speaker 1: special classes of share it in a trust that trust control.
Speaker 1: There's some probably some additional stocks owned by Peel and
Speaker 1: these guys on top of that, plus a board that
Speaker 1: is you know, it's I'm not sure what the legal
Speaker 1: um sort of definition of independences, but these are a
Speaker 1: lot of people with close relationships with the with Peel
Speaker 1: and the founding team, so there's sort of a lot
Speaker 1: of questions on independence. Anyone who's buying into this company
Speaker 1: is not going to expect to have a huge amount
Speaker 1: of of input and volunteers. Sort of being straight up
Speaker 1: with that and saying, you know, this is you know,
Speaker 1: this is a situation you know, taking or leave it,
Speaker 1: which we've seen from Silicon Valley. You know, a lot
Speaker 1: over the last fifteen years and um, it's mostly worked out,
Speaker 1: and sometimes it doesn't work out, so you know, well,
Speaker 1: we'll see once the once the listing happens. I think
Speaker 1: that that's a really important and fascinating element of this.
Speaker 1: It's that, you know, the way that this company is
Speaker 1: going public is untraditional. It's opting for a direct listing
Speaker 1: over the I p O. But then on top of it,
Speaker 1: it's like there's this wedge that the company is opting
Speaker 1: to put between itself and its potential shareholders and the
Speaker 1: shareholders share you get shares in the company and like,
Speaker 1: you know things to Max's earlier point, like on paper,
Speaker 1: this company has been around for a while, but also
Speaker 1: hasn't had great financials, so you know what what is
Speaker 1: in it for investors? Uh? Kind of maybe remains to
Speaker 1: be determined here, um, since there there could be very
Speaker 1: little oversight. But Max, that brings me to the other
Speaker 1: thing I want to say, which is, you know, while
Speaker 1: other tech companies in particular have used similar kind of
Speaker 1: share class arrangements, one thing that's interesting about Palenteer is
Speaker 1: back to the headline, the bad mouthing of Silicon Valley.
Speaker 1: What's that about? Yeah, I mean, I think You're seeing
Speaker 1: this a lot in you know, just across the economy honestly.
Speaker 1: But but where there's a lot uncertainty right now and
Speaker 1: around the around the election and Palenteer um obviously that
Speaker 1: is a huge bearing on Palenteer's future because Palenteer has
Speaker 1: has these gigantic contracts with the U. S government. US
Speaker 1: government is currently can role by President Trump, who has
Speaker 1: close relationships with Teal and you know, and and and
Speaker 1: other members of the sort of Talenteer team. And and
Speaker 1: so what's happening is Palenteer about a year ago um
Speaker 1: was was getting hit really hard by protests of where
Speaker 1: work it was doing for um ice basically, uh, you know,
Speaker 1: providing software systems for you know, for for for the
Speaker 1: US immigration authorities that lead to protests and and and
Speaker 1: this is kind of the way they've decided to play it.
Speaker 1: Whereas a lot of these other companies have tried to
Speaker 1: sort of you know, work with their employees or you
Speaker 1: know like basically you know, bend to their employees, uh,
Speaker 1: you know wishes. Palenteer is taking a different road, which
Speaker 1: is much more like NOE. This is what we're doing.
Speaker 1: You can you can take it or leave it. You
Speaker 1: can have a good faith disagreement, but we do business
Speaker 1: with the US government, and this is the US government
Speaker 1: right now, which is you know, obviously a position that's
Speaker 1: probably you know, more popular with conservative than than with
Speaker 1: liberals and Silicon Values a liberal. So so I think
Speaker 1: we're served seeing a bit of a political play right
Speaker 1: where they declaring themselves allied in some sense with you know,
Speaker 1: with with moderates and conservatives, you know, at the expensive
Speaker 1: of goal. Fascinating and all eyes will be on Palanteer
Speaker 1: next week with that direct listing. Thank you so much,
Speaker 1: Max Chafkin, You're the best. Great hear your voice, features
Speaker 1: editor for Bloomberg Business Week, joining us from Queen's. Joe Webber,
Speaker 1: the editor of the magazine. He joined us from Massachusetts.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. All right, talk to you a
Speaker 1: little business week economics, and you just heard a little
Speaker 1: bit of the big interview this morning that are on
Speaker 1: Michael McKee. You frequently hear the dulcet sounds of his
Speaker 1: voice on this radio program. He did catch up with
Speaker 1: Atlanta President Raphael Bostick down in the A T. L. Earlier.
Speaker 1: Michael mckeugh is in New York, of course because it's
Speaker 1: a remote world. But Raphael Bostick, of course runs the
Speaker 1: Federal Reserve Bank down there, and he said US needs
Speaker 1: to provide additional fiscal support for the US economy. That
Speaker 1: economy obviously has lost momentum. Let's take a listen to
Speaker 1: what he has to say before we get into a
Speaker 1: conversation with our in house expert. Check it out. What
Speaker 1: I would tell a policymaker is, look, there are lots
Speaker 1: of sectors where there's still a lot of pain and
Speaker 1: disruption that's going on. There are a lot of families
Speaker 1: who have a significant amount of uncertainty, and those things
Speaker 1: will wear on our psyche and our ability to grow.
Speaker 1: So I would encourage them to think about ways that
Speaker 1: they might provide support to help those who are in
Speaker 1: more precarious positions, Uh, not have to struggle and worry, right,
Speaker 1: provide some more aid for those who really needed. Of course,
Speaker 1: that's Mike McKee a Bloomberg his interview with Atlanta Fed
Speaker 1: President at Raphael Bostik. Let's get into this, uh, and
Speaker 1: what are Yelena Shiltieva has to say Senior US economist
Speaker 1: at Bloomberg Economics joining us on the phone from Long Island. Uh.
Speaker 1: This for our segment of Business Economics Business Week in
Speaker 1: Mix on this Friday. So, Elena, I mean, man, I
Speaker 1: feel like everybody agrees we need some more aid, We
Speaker 1: need some more federal assistance because of the impact of
Speaker 1: the virus. Um Your thoughts on what Pasta had to
Speaker 1: say and how you see it. I know we've talked
Speaker 1: about this before, sure, but basically he is, uh um
Speaker 1: saying the same thing a lot of Federal Reserve members
Speaker 1: to have already told us, including Chair powow Is that Uh. Well,
Speaker 1: it has to do with the exploration of the six
Speaker 1: hundred dollar ad on two benefits to claims to job
Speaker 1: with claim benefits that expired at the end of July,
Speaker 1: and the three hundred dollar add on um that was
Speaker 1: a result of the executive borders signed by President Trump
Speaker 1: in the beginning of August. They have also expired. So
Speaker 1: now the most vulnerable layoff the population, uh does not
Speaker 1: get those extra benefits. And these are the people who
Speaker 1: actually spend more of their income than the rest of
Speaker 1: the population. So what happened is that people who have
Speaker 1: higher propensity to consume UH in a much worse position
Speaker 1: right now, and we will see the impact of this
Speaker 1: um UH you know, exploration of extra income on consumer spending.
Speaker 1: It just we will not see that in the third quarter.
Speaker 1: We will see it in the fourth quarter and going
Speaker 1: into next year. And that's why we need this extra
Speaker 1: support from physical authorities. And yet, what if we don't
Speaker 1: get it, what's the what's the worst case scenario that
Speaker 1: we're facing or likely scenario if we don't get it.
Speaker 1: It's a great question, Jay, excellent question. Indeed. So our
Speaker 1: estimates indicate that the impact of that would be in
Speaker 1: the order of several percentage points of GDP. So if
Speaker 1: you think about it in the car fixt of the
Speaker 1: twenty eight percent rebound in the third quarter that we
Speaker 1: are projecting, well, that's not a big deal. But if
Speaker 1: you think about it in terms of potential growth or
Speaker 1: average growth over the last several years of roughly tore,
Speaker 1: if you subtract five percent from growth in the fourth quarter,
Speaker 1: you may end up with negative growth. So our projection
Speaker 1: is for a very slow growth in the fourth quarter,
Speaker 1: and we'll see what happens in the first quarter if
Speaker 1: things get worse and they see negative growth again. St.
Speaker 1: Louis said. President Jim Bullard also making some comments he
Speaker 1: is quote optimistic that the US can get growth all
Speaker 1: the way back. Are you as optimistic? I mean, I
Speaker 1: guess yeah, anything can happen. It just depends how long
Speaker 1: it takes to get there, right, Elena, absolutely agree with you, Carol.
Speaker 1: Where will get there? The question is when? And uh,
Speaker 1: you know, the physical physical packages just needed because uh
Speaker 1: that will help us to get there faster. So the
Speaker 1: longer we wait, the more permanent these lasses in economic
Speaker 1: momentum will become. So it's not going to be just
Speaker 1: about the pandemic, but it will be more of uh
Speaker 1: lasses in income, in in growth overall. Just think of
Speaker 1: because this is a recession. And so what's the next
Speaker 1: sort of most important data point that we're going to get?
Speaker 1: Obviously the higher frequency data we've come to rely on,
Speaker 1: Lena when it comes to jobless claims, and we heard
Speaker 1: retail sales earlier this week. I believe, like what else
Speaker 1: are you guys looking for that will help you start
Speaker 1: to synthesize this latest picture? So you you name those,
Speaker 1: uh the next basels reports we'll see if we get
Speaker 1: if we still continue to get positive employment reading. So
Speaker 1: what happens with the data, and that's a very important
Speaker 1: into to remember, is that we are answering the season
Speaker 1: when seasonal factors will become unfavorable to economic growth. So,
Speaker 1: in other words, UH, seasonal factors would expect pick up
Speaker 1: in personal consumption because we're approaching the holiday season, uh so,
Speaker 1: as well as seasonal factors will expect more hiring because
Speaker 1: of this holiday season. So it will be much harder
Speaker 1: to overcome these expectations for raw economic data to pick
Speaker 1: up as strongly as UH needed. So what that means
Speaker 1: is that we may start getting negative surprises in terms
Speaker 1: of the data, just simply because this whole thing disrupted
Speaker 1: seasonal factors to secual degree that it was supporting growth earlier,
Speaker 1: and now as we end in the final stages of
Speaker 1: the year, that may start to wait on economic growth.
Speaker 1: All right, Elena SELETI have a thank you so much,
Speaker 1: really good to catch up with you. Great context, especially
Speaker 1: given what we've been hearing from the FED. Was it
Speaker 1: really just two days ago that we were I know.
Speaker 1: That's why there's one day this week where I'm like,
Speaker 1: it is welcome to Bloomberg Business Week. It is really
Speaker 1: it is next Thursday. Yeah, I mean it's just it's bananas,
Speaker 1: all right, have a great weekend. Elana Sletti of a
Speaker 1: senior US economist for Bloomberg Economics. This on the phone
Speaker 1: from Long Island. Think about how much we talk about
Speaker 1: the wealth gap, right and trying to fix it especially.
Speaker 1: This is something that has been such an important topic
Speaker 1: that we understand. You know, it is such a big
Speaker 1: part of our society, is such a big problem. You know,
Speaker 1: we're just gonna forget about fixing that. We're just gonna
Speaker 1: try and make sure people can put food on their table. Uh,
Speaker 1: if we don't kind of get this one right. Yeah,
Speaker 1: looking forward to speaking of economics, this is a deep
Speaker 1: tease or forward tease. We are going to catch up,
Speaker 1: i believe, next week with Peter Atwater right from William
Speaker 1: and Mary. And you know, he is the economist, very
Speaker 1: smart who has put forth this notion of the K
Speaker 1: shape recovery. I feel like I talked about the K
Speaker 1: shape recovery just about every day now. I mean I
Speaker 1: find ways to enter it into the conversation, even from
Speaker 1: a personal perspective, in terms of like understanding our own
Speaker 1: consumption patterns versus other people's and you know, and and
Speaker 1: candidly like seeing it as lens for different companies and
Speaker 1: different activities and different regions and all these different things
Speaker 1: that it's really critical. Well, isn't it crazy? Because for
Speaker 1: so long we were like, is it the Nike Swush?
Speaker 1: Is it you? Is it a V? Is it a W?
Speaker 1: Is it a what? And then when Peter came out
Speaker 1: and you talked about the K shape recovery, it was like, snap,
Speaker 1: that explains so much because we agreed. We know people,
Speaker 1: We have been very lucky that our lives have not
Speaker 1: changed too much. There are others who their lives I've
Speaker 1: been turned completely upside down and they don't know what
Speaker 1: their future looks like a journal. Yeah, but you let
Speaker 1: me drive? No, no, please, I'll do the right vel me.
Speaker 1: I want to drive, Just drive, baby question trying. This
Speaker 1: is the Drive to the Globe Commune. Thanks, we'll drying
Speaker 1: us down on Bloomberg Radio, all right, every one time
Speaker 1: for the Drive to the Closed. George Schelty is with
Speaker 1: US founder Schelty Acid Management, based in Rye Brook, New York,
Speaker 1: and that's where we find him on this Friday. George,
Speaker 1: nice to have you here with Jason and myself. Happy Friday.
Speaker 1: How are you well? Thanks? Good to be back Carol.
Speaker 1: How are you doing okay? It was kind of a
Speaker 1: hefty lift this week between M and A activity, some
Speaker 1: market pull back, um, just a lot going on FED meeting.
Speaker 1: So tell us about you know, kind of how you
Speaker 1: see the outlook. I mean you specialize in distressed an
Speaker 1: event driven to situation. So how does the distressed world
Speaker 1: first of all, um look to you? And when it
Speaker 1: comes to a venture of into situation to have a
Speaker 1: lot with all that M and A this week, Yeah,
Speaker 1: the distressed world has been pretty busy. There's been a
Speaker 1: lot of activity, especially in the energy space, and you know,
Speaker 1: there's just been so much leverage out there that's now
Speaker 1: getting restructured. A big catalyst, of course has been COVID
Speaker 1: and the slow down in the economy due to all
Speaker 1: the quarantines. So there's been a lot of activity, but
Speaker 1: I would say energy is sort of ground zero for
Speaker 1: distressed land these days. And what is the M and
Speaker 1: A activity Because we had sort of a merger Monday
Speaker 1: like we haven't had in quite some time, uh, this week?
Speaker 1: What does it tell you? And is it representative? I
Speaker 1: guess of what you're seeing out there. In terms of
Speaker 1: the broader deal landscape. I think the deal landscape Jason
Speaker 1: is very good right now. Um, you know, the outlook
Speaker 1: is for a continuing recovery from the COVID pandemic days
Speaker 1: and crisis. Um. You know, Power this week said he's
Speaker 1: going to you know, basically hold interest rates down, you know,
Speaker 1: at super low levels for possibly two to three years.
Speaker 1: So companies have access to capital and there's an opportunity
Speaker 1: for them to merge. There's a lot of stuff going
Speaker 1: on in different industries. There's a lot of reasons for merging,
Speaker 1: you know, whether it's cost savings or growth. Um. But
Speaker 1: but you know, we would certainly expect that to continue. Well,
Speaker 1: it's interesting you said, so energy is ground zero for
Speaker 1: distress today. What kind of energy are you looking at
Speaker 1: and want to be investing in? So there's a lot
Speaker 1: of that opportunity, I would say in the oil patch
Speaker 1: as well as a natural gas patch. Um. In terms
Speaker 1: of energy, both of those sectors had really sold off.
Speaker 1: And you know, the overall energy space just has sort
Speaker 1: of a disproportionate amount of high yield and junk rated
Speaker 1: debt and so now you're seeing a mad dash to
Speaker 1: the courthouse for all sorts of restructurings, and I think
Speaker 1: it coming out of that, there'll be a lot of
Speaker 1: interesting opportunities with companies are extremely low evaluations. So you
Speaker 1: are in the midst of participating in one of our
Speaker 1: favorite things about here in blank chat companies got a spack.
Speaker 1: You're one of the cool kids, uh doing this, UM,
Speaker 1: tell us about it. Tell us about your acquisition in particular.
Speaker 1: I love the name clever Leaves. Yeah, clever Leaves is
Speaker 1: a is a disruptive business. UM. We like it a lot.
Speaker 1: And it's it's, uh, you know, our our selected spack target. UM.
Speaker 1: We looked at dozens of different companies and we found
Speaker 1: this one to be the best one for our spac. UM.
Speaker 1: It's it's got a great management team, and its business
Speaker 1: plan is really to disrupt the whole cannabis industry with
Speaker 1: super low cost production, global footprint. UM. It's really exciting,
Speaker 1: you know, and and we're looking forward to seeing this
Speaker 1: merger closed into the fourth quarter of this year. The
Speaker 1: company will be listed on NASDAC and uh, you know,
Speaker 1: I think the outlook for it in terms of market share,
Speaker 1: you know, penetration with you know, exceedingly low costs is excellent,
Speaker 1: and so why are SPACs so hot? I mean it literally,
Speaker 1: I mean and then and not taking anything away from you,
Speaker 1: but it's like we have joked, like, dude, everybody's got
Speaker 1: us back. I mean Baron Davis, the two time NBA
Speaker 1: All Star. We have news on him doing us back today,
Speaker 1: Billy Bean for Moneyball fame. Like what is it about
Speaker 1: this particular um method and methodology I guess of getting
Speaker 1: something public or making an acquisition more to the point,
Speaker 1: is so attractive right now? Yeah, SPACs fit a void, Jason.
Speaker 1: I mean they really offer investors a combination of equity
Speaker 1: upside potential if the right deal is found the right
Speaker 1: company like Clever Leaves, as well as downside protection for
Speaker 1: an investor who wants liquidity and it's frustrated with you know,
Speaker 1: exceedingly low interest rates which have been low for so long.
Speaker 1: That's why SPACs are popular. It hits both of those
Speaker 1: requirements downside protection that you get in the fixed income market.
Speaker 1: UM SPAC trust. You know the cash and the SPAC
Speaker 1: trust sits in a in a trust and you know
Speaker 1: it is invested in treasuries, and you know there's your
Speaker 1: downside protection. Then when and if a good deal is found,
Speaker 1: you can vote on it and get equity upside like
Speaker 1: we're looking to get and deliver to our shareholders with
Speaker 1: with clever Leaves. If the if the sponsor or management
Speaker 1: team fails, the good news for the investors that they
Speaker 1: can still walk away and and get power plus accrude interest,
Speaker 1: you know, even though it's a low rate of interest.
Speaker 1: So that's why they're popular and we think they'll continue
Speaker 1: to be popular. The proof though, is you know how
Speaker 1: good the acquisitions are and how good the management teams
Speaker 1: are and the companies that you bring to market because
Speaker 1: basically you're bringing you know, private company to market. Well
Speaker 1: we're found here with clever Leaves. Is just you know,
Speaker 1: it's phenomenal. Well why is it phenomenal? Because forgive me
Speaker 1: and my skepticism, but you know, in terms of the
Speaker 1: cannabis market, we've seen the boom, we've seen the bust.
Speaker 1: Trying to figure out where we are. You have had
Speaker 1: a fair amount of CEOs on and some certainly seem
Speaker 1: to be stronger players, no doubt about it getting bigger
Speaker 1: in the marketplace, and some of the smaller players, especially
Speaker 1: in the consumer side, consumer product side. UM we see
Speaker 1: some come out strong and then they fold. So I'm
Speaker 1: just curious, what is it about you know this one
Speaker 1: that you said, Okay, it's a go. It's a go
Speaker 1: again because of the management team, but but really because
Speaker 1: of the business plan behind it as well. It's exceedingly
Speaker 1: low cost production model. They produce at about twenty gram
Speaker 1: by the way they're they're they're just a legal cannabis producers,
Speaker 1: so they they sell uh, cannabis only for the medicinal
Speaker 1: market in market where it's legal. Um, so they actually
Speaker 1: don't sell in the US, but you have the optionality
Speaker 1: for you know, expansion into the US when and if
Speaker 1: that market opens as well. But the I think the
Speaker 1: lower cost production element of it is so important because
Speaker 1: it's disruptive and because of that they're taking away market
Speaker 1: share and even getting some of their competitors to give
Speaker 1: them significant business, like Canopy Growth recently did. Right, is
Speaker 1: it though your expectation this is a takeout play once
Speaker 1: it goes public? Just got about forty seconds here. Yeah,
Speaker 1: I'm not projecting that just as of yet, Carol. I
Speaker 1: think I think once who goes public it's an execution story,
Speaker 1: and you know, the the projections are conservative, but you know, outstanding.
Speaker 1: So so we're gonna let this management team do their work,
Speaker 1: and you know, potentially there'll be some M and A
Speaker 1: activity in the future, we don't know, but for now
Speaker 1: they're going to keep growing this business and and you know,
Speaker 1: really proving themselves as public company operators. Yeah, it's interesting.
Speaker 1: We never know sort of what side a company might
Speaker 1: be on, especially in this business, this cannabis business, that's
Speaker 1: for sure. Will congrats on that. Really good to catch
Speaker 1: up to you. George Schiltzy is the founder of Shalty
Speaker 1: Asset Management, also a part of the special purpose acquisition
Speaker 1: company Cleverly's. Love the name, well, very cool name. And
Speaker 1: I just think about seven cents Botanical therapy with CDB
Speaker 1: Body and Skincare. We've had their CEO on, I've tried
Speaker 1: their products, loved it. They shut down during the virus
Speaker 1: and now I don't know if they're I don't know
Speaker 1: that they're bankrupt, but they're not operating UM and so
Speaker 1: I'm just saying it's it can be a tough go.
Speaker 1: But again he's in the medicinal so um and where
Speaker 1: it's legal, and that's certainly different business model. Thanks so
Speaker 1: much for listening. To Bloomberg Business Week, download the podcast
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