WEBVTT - Surveillance: Virus Impact on Americans With Gallup's Younis 0:00:09.840 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.440 Bloomberg dot Com, and of course on the Bloomberg with Us. 0:00:27.440 --> 0:00:30.960 Now with a broader picture all the emerging markets is 0:00:31.040 --> 0:00:35.520 Carmen Grenhardt. She is at Harvard Kennedy School, but far 0:00:35.600 --> 0:00:39.320 more than that, has been our most astute academic on 0:00:39.400 --> 0:00:43.400 the linkages of the developed world to emerging markets. Carmen, 0:00:43.479 --> 0:00:46.159 John and Lisa really want to dive into emerging markets. 0:00:46.159 --> 0:00:49.000 I totally agree with them. But I've got to ask 0:00:49.080 --> 0:00:54.120 you in your magisterial effort with Ken Rogoff back to 0:00:54.200 --> 0:00:58.680 the Spanish Armada. I remember reading your chapter on this 0:00:58.760 --> 0:01:02.360 time is different in the Spanish Armada. What does your 0:01:02.440 --> 0:01:06.720 tone say about pandemics? What in your study of eight 0:01:06.840 --> 0:01:14.040 hundred years with Ken, what did you learn about pandemics? Uh? Tom, 0:01:14.080 --> 0:01:17.960 I recently wrote a piece for it for Projects Syndicates, 0:01:18.040 --> 0:01:23.559 basically saying, this time it's truly different because we haven't 0:01:23.680 --> 0:01:30.360 lacked pandemics. Uh. But in history, but the kind of 0:01:31.120 --> 0:01:36.240 policy reactions to try to save lives by basically shutting 0:01:36.280 --> 0:01:40.360 down economy. Is this is this is this time is different, 0:01:40.520 --> 0:01:46.640 it's new. So the idea of using path pandemics to 0:01:46.800 --> 0:01:50.080 throw light on what's going on, I don't think it 0:01:50.120 --> 0:01:54.240 will work. The major one that influenza of nineteen eighteen 0:01:54.320 --> 0:01:57.600 was during World War One. We had nine real GDP 0:01:57.760 --> 0:02:01.160 growth in nineteen eighteen because is of the war effort, 0:02:01.280 --> 0:02:04.840 not because you know, there were measures like what we're 0:02:04.840 --> 0:02:09.160 seeing taken today. So it's limited, very limited what we 0:02:09.280 --> 0:02:13.520 can draw. Professor Einhardt Adam Two's a Columbia professor, wrote 0:02:13.560 --> 0:02:16.080 a piece for Foreign Policy that was pretty stark, and 0:02:16.120 --> 0:02:18.880 it said the coronavirus is the biggest emerging markets crisis ever, 0:02:19.000 --> 0:02:21.720 saying that the pandemic is starting to topple one of 0:02:21.720 --> 0:02:25.480 the pillars of the globalization era. His argument was that 0:02:25.639 --> 0:02:28.239 this time is different, as you say, in part because 0:02:28.280 --> 0:02:32.320 the developed market, the developed world cannot assist the emerging 0:02:32.360 --> 0:02:35.240 markets right now, given what we're seeing. Do you agree 0:02:35.240 --> 0:02:37.680 with him that this is the biggest crisis ever facing 0:02:37.720 --> 0:02:43.720 that that sector, Well, it's certainly as big as the nineties, 0:02:43.880 --> 0:02:47.680 which was very big. Uh, and it has the added 0:02:47.720 --> 0:02:53.400 dimensions that it goes well beyond its origins are not 0:02:53.800 --> 0:02:57.079 in the economy, but its origins already helped. So yes, 0:02:57.240 --> 0:03:03.600 it's it's it's a stark start situation. Professor Jonathan here, 0:03:03.600 --> 0:03:05.560 we've talked many times, just to jump in if I 0:03:05.600 --> 0:03:09.280 can forgive me, I've talked many times about dollar denominated 0:03:09.360 --> 0:03:12.680 debt building up in emerging markets over the last ten 0:03:12.760 --> 0:03:15.600 years or so. Are you starting to see those problems 0:03:15.960 --> 0:03:18.360 materialized now in the face of a strong good dollar, 0:03:18.760 --> 0:03:22.640 a shutdown in various economies, and a collapse for the 0:03:22.639 --> 0:03:28.600 backdrop going forward from here? Uh. Look, it's the the 0:03:28.880 --> 0:03:32.680 overused term perfect storm does apply because don't forget that 0:03:32.800 --> 0:03:37.880 underlying as the coronavirus wasn't big enough. We also have 0:03:38.160 --> 0:03:43.600 the Saudi Russia War. Many of these countries are commodity producers, 0:03:43.640 --> 0:03:47.200 oil producers and commodity producers. So they have, going to 0:03:47.280 --> 0:03:51.520 your question, a massive shortage of dollars because their exports. 0:03:51.800 --> 0:03:56.440 The export values are way down, export volumes are down, 0:03:56.480 --> 0:04:00.040 and they do have dollar debt. So the expectation and 0:04:00.160 --> 0:04:05.240 that debt servicing, uh, and that and defaults and restructurings 0:04:05.440 --> 0:04:08.560 are going to be on the rise. Is something to 0:04:09.480 --> 0:04:14.240 you know be expected. We thought many people, not including myself, 0:04:14.280 --> 0:04:16.880 and many people would come on this program, Professor and 0:04:17.000 --> 0:04:21.240 question dollar privacy, dollar hegemony in the next economic downturn. 0:04:21.560 --> 0:04:24.120 We finding out that the dollar is the place to 0:04:24.200 --> 0:04:28.920 be once again, even in this downturn. Well, Uh, it's 0:04:28.920 --> 0:04:32.160 funny you should mention that Ethan el Setki, a former student, 0:04:32.279 --> 0:04:36.200 Ken Roboff, and I have had several recent pieces on 0:04:36.240 --> 0:04:39.520 this very issue. And indeed, what we find is that 0:04:39.600 --> 0:04:42.719 in the ten years after the two thousand eight two 0:04:42.720 --> 0:04:48.240 thou nine UH financial meltdown, UH, the dollar gained a 0:04:48.279 --> 0:04:52.560 lot of ground internationally as the reserve currency. For two reasons. 0:04:52.640 --> 0:04:58.200 One is UH, the euro UH fell back UH concerns 0:04:58.240 --> 0:05:03.560 about its sustainability. It fell back it. And the second 0:05:03.720 --> 0:05:08.800 is Chinese lending, which was has been massive while over 0:05:08.839 --> 0:05:13.599 the world is dollar denominated. So it's Chinese, but it's 0:05:13.640 --> 0:05:16.279 not in Remember, for the most parties in dollars. So 0:05:16.720 --> 0:05:21.240 the dollar, Yes, it's the dominant currency and no evidence 0:05:21.240 --> 0:05:25.120 to the contrary at this stage, so, professor. But tiling 0:05:25.160 --> 0:05:28.799 this forward from a market's perspective, dollar denominated emerging market 0:05:28.839 --> 0:05:33.000 stat just had its worst quarter since nineteen Are we 0:05:33.000 --> 0:05:35.080 going to see more of the same and a rash 0:05:35.120 --> 0:05:37.640 of defaults that rivals what we saw during the nineteen 0:05:37.680 --> 0:05:45.080 eighties and Latin America. It's very possible. It's very possible now. UH. 0:05:45.240 --> 0:05:51.880 I have been hoping that the international community, the multilaterals, 0:05:51.960 --> 0:05:58.599 with the major government moved towards a uh A death 0:05:58.640 --> 0:06:04.040 stand still, you know, a moratorium. Before that the false 0:06:04.120 --> 0:06:08.520 materialized because after all the everybody's incomes. This is that 0:06:08.600 --> 0:06:11.479 the household at the firm level, at the country level 0:06:11.839 --> 0:06:16.760 has been paralyzed. So debt payments should also likewise be 0:06:16.920 --> 0:06:22.800 temporarily UH suspended. But absence that, it's already it's already happening. 0:06:22.839 --> 0:06:28.640 You're seeing the down the downgrades in the credit rating agencies, 0:06:28.839 --> 0:06:36.880 with countries moving into junk and near junk UH status coming. 0:06:36.920 --> 0:06:38.599 Always great to get your thoughts on this program. We 0:06:38.600 --> 0:06:41.760 appreciate time this morning, our thoughts with you and yours. 0:06:41.800 --> 0:06:48.720 Come and run. How there Harvard Kennedy School Professor Cricket 0:06:48.680 --> 0:06:52.080 introduction to our steam guest. He has is the view 0:06:52.160 --> 0:06:54.880 of America more than anyone I know. Mohammed units with 0:06:55.000 --> 0:06:59.360 us of the acclaimed Gallop polling organization. Mohammed, you don't 0:06:59.400 --> 0:07:00.880 look at the horse race. As you look at the 0:07:00.880 --> 0:07:04.040 fabric of the country, it's a country flat on its back. 0:07:04.480 --> 0:07:08.800 What portion of America can't get to the next rent payment? 0:07:10.160 --> 0:07:13.280 According to our estimates and based on the polans we 0:07:13.360 --> 0:07:17.280 were doing last week, percent of employ of those employees 0:07:17.320 --> 0:07:21.960 say that their employers cut jobs, reduced hours, throsen hirings. 0:07:21.960 --> 0:07:25.440 Sixty two percent say that the their financial situation has 0:07:25.480 --> 0:07:28.840 already been affected by it. A third the one and 0:07:28.880 --> 0:07:32.840 seventies million workers in the US cannot get to the 0:07:32.920 --> 0:07:37.080 next paycheck. They're living literally page xcupation. That sixty to 0:07:37.160 --> 0:07:40.120 forty million Americans, UM. And that's just the workers, so 0:07:40.200 --> 0:07:44.360 you can imagine their families. U. At this point, I 0:07:44.400 --> 0:07:47.600 think even with reporting just this morning out of Italy 0:07:48.080 --> 0:07:51.240 on some of the social unrest that now is becoming 0:07:51.280 --> 0:07:54.640 a concerned UM. I think after we all think through 0:07:54.760 --> 0:07:57.360 the public health issues, what we're trying to do at 0:07:57.360 --> 0:08:00.520 Gallup is also attacked. How Americans are feeling UM and 0:08:00.560 --> 0:08:05.200 the impact this will have on social just disintegration. Unfortunately 0:08:05.240 --> 0:08:09.040 in some situation. I'm coming to you, Mohammad from uh 0:08:09.240 --> 0:08:12.840 Central work in New York. It is an island of prosperity. 0:08:12.880 --> 0:08:17.360 I'm looking down at billionaires Row seven skyscrapers. This is 0:08:17.440 --> 0:08:22.160 not America. What is the distance of Governor Culomo's New 0:08:22.240 --> 0:08:26.920 York State or Washington, or even the burgeoning crisis in 0:08:26.960 --> 0:08:31.160 Atlanta or Miami in Boston. What's the distance of those 0:08:31.320 --> 0:08:34.520 urban areas in this pandemic from the rest of a 0:08:34.559 --> 0:08:39.480 more rural, more suburban America. UM. We always see very 0:08:39.600 --> 0:08:42.720 dramatic differences. UM. Once seemed to point out you mentioned 0:08:42.800 --> 0:08:45.760 Governor Clomo. UM. And a lot has been made about 0:08:46.559 --> 0:08:49.640 leadership and how leadership is doing in this crisis. We 0:08:49.679 --> 0:08:52.960 consistently find the Americans are much more positive on than 0:08:52.960 --> 0:08:56.360 a local government at any level compared to the federal government. 0:08:56.920 --> 0:09:01.400 Americans are now most an approval of health care workers 0:09:01.400 --> 0:09:05.600 and their local hospitals in this crisis. UM. How Americans 0:09:05.640 --> 0:09:09.320 react to the situation, of course, depends on what's happening locally. 0:09:09.320 --> 0:09:12.640 It's interesting that the federal government apparently today is going 0:09:12.679 --> 0:09:17.600 to roll out UM guidelines on how local government can 0:09:17.640 --> 0:09:20.920 also react based on their local reality. This is a 0:09:21.000 --> 0:09:24.320 huge country. UM. When we talk about the United States 0:09:24.320 --> 0:09:28.400 to ultimately talking about you know, fifty different countries with 0:09:28.440 --> 0:09:33.800 different realities. The economics that hurt that's happening across the country. 0:09:33.800 --> 0:09:37.400 And now you know, even with the social distancing, uh 0:09:37.440 --> 0:09:40.120 you know, seven to eight out of Pan Americans on 0:09:40.160 --> 0:09:43.439 pretty much every metric now are basically social distance. And 0:09:43.480 --> 0:09:46.679 when we started tracking this, there was only about people 0:09:46.720 --> 0:09:49.400 that said they were going to be changing their lives. 0:09:49.559 --> 0:09:54.720 At this point, everything is uh so the reality of 0:09:55.120 --> 0:09:57.760 not being able to make that paycheck. These is the 0:09:57.920 --> 0:10:01.360 the public health concerns, even just locally, I think are 0:10:01.360 --> 0:10:04.240 going to become the crux of the issue for leadership 0:10:04.679 --> 0:10:06.680 um and it's what we're going to try very closely. 0:10:06.760 --> 0:10:09.120 Is the other thing is just a well being. I 0:10:09.200 --> 0:10:13.600 mean people we've seen now reports of domestic violence uh 0:10:13.880 --> 0:10:18.120 increasing in some localities. How people are managing the stress 0:10:18.280 --> 0:10:22.000 of not only the economic challenges, but also trying to 0:10:22.080 --> 0:10:26.240 jump work if you can, virtually having children at home, 0:10:26.679 --> 0:10:30.760 not having educational institutions operating. All of these things we 0:10:30.840 --> 0:10:35.720 know from our research from other crises over the past 0:10:35.720 --> 0:10:40.160 few decades have a real impact on how society. Paul, 0:10:40.240 --> 0:10:43.520 let me report here on online learning at the Keen Household. 0:10:43.559 --> 0:10:47.120 We're in a free period and Minecraft is being play, 0:10:47.400 --> 0:10:49.920 and Minecraft is being played. I'm sure it is Mohammed 0:10:49.960 --> 0:10:52.280 give us a sense of you know, how much longer 0:10:52.360 --> 0:10:55.640 does he? The most Americans feel like this, we'll go 0:10:55.720 --> 0:10:59.640 on this coronavirus disruption at this point to see one 0:10:59.720 --> 0:11:02.520 for scent of Americans thinks that this will go on 0:11:02.800 --> 0:11:06.240 for a few months. Actually, excuse me, fifty The numbers 0:11:06.240 --> 0:11:10.559 are coming in daily. We started off with about half 0:11:10.559 --> 0:11:12.800 of Americans. It's expecting it to go on for a 0:11:12.840 --> 0:11:18.040 few months. These numbers actually predate President Trump's UM change 0:11:18.040 --> 0:11:22.440 of course, if you will, in expending UH the isolation guidelines, 0:11:22.480 --> 0:11:25.679 so we probably would expect that number to go up. 0:11:26.080 --> 0:11:29.360 That being said, Americans are also overwhelmingly in support of 0:11:29.400 --> 0:11:33.719 the rescue package compared to other UH stimulus packages like 0:11:33.880 --> 0:11:37.720 harpings and then other situations of crisis. Today there be 0:11:37.720 --> 0:11:40.120 seven percent of Americans to prove of it, it's by 0:11:40.200 --> 0:11:44.800 partisan of who will actually Democrats to present one are 0:11:44.920 --> 0:11:49.560 mostly are more likely to support it than than Republicans. UM. 0:11:50.080 --> 0:11:54.000 But this again it gets back to UM what the 0:11:54.120 --> 0:11:58.160 larger picture means. I think for people's pocketbooks of Americans 0:11:58.280 --> 0:12:01.360 right now, think it's very likely that the United States 0:12:01.480 --> 0:12:04.320 that this will send the United States into our procession. 0:12:04.440 --> 0:12:06.960 If you will so people are really planning for the 0:12:07.040 --> 0:12:11.200 worst or expecting the worst, whether they have the wherewithall 0:12:11.280 --> 0:12:13.720 to really get through it. I think it's really up 0:12:13.720 --> 0:12:17.320 for graphs um. I mean in terms of the local 0:12:17.400 --> 0:12:20.320 learning or talent learning. Actually just came up in my 0:12:20.360 --> 0:12:23.000 four year old. He's on a ZOW meeting with his 0:12:23.240 --> 0:12:27.800 other students, uh and teachers and even just for education. 0:12:28.040 --> 0:12:33.240 It's amazing how a lot of this was possible before technologically. 0:12:33.920 --> 0:12:37.120 But again, see a situation where the crisis pushes us 0:12:37.160 --> 0:12:43.480 over the edge, right right, it's been hugely valuable. Mohammed units, 0:12:43.480 --> 0:12:49.240 thank you so much for your good work at Gallup Today. However, 0:12:50.520 --> 0:12:53.840 is in the securities analyst business one of those wonderful 0:12:53.880 --> 0:12:57.320 people that not only writes the reports that actually goes 0:12:57.400 --> 0:12:59.959 in the stores. He can't go in the stores now 0:13:00.480 --> 0:13:04.400 they're all closed. He is with Cowen and joins us today, Oliver, 0:13:04.520 --> 0:13:08.520 there's an American Eagle two blocks down from our world headquarters. 0:13:09.000 --> 0:13:12.800 It's closed. How critical is that they open as soon 0:13:12.880 --> 0:13:16.600 as possible. It's really critical just because the majority of 0:13:16.640 --> 0:13:19.760 sales still happen in store. So for all these retailers, 0:13:20.000 --> 0:13:23.200 they're in survival mode because they're their number one source 0:13:23.240 --> 0:13:27.319 of revenue is is at risk and for the foreseeable future, 0:13:27.360 --> 0:13:30.720 there's so much uncertainty. I mean, the employees are load 0:13:30.720 --> 0:13:35.080 across Macy's gap and polls um it's it's uncertain wind 0:13:35.120 --> 0:13:37.680 stores will open as we pull executives. It could be 0:13:37.760 --> 0:13:42.400 four or more months, and our analysis indicates that liquidity 0:13:42.400 --> 0:13:45.520 is at risk after five So one in four Americans 0:13:45.559 --> 0:13:48.800 work in retail, and retail really played the important art 0:13:48.840 --> 0:13:51.880 in the consumer, so that this is something we're watching. 0:13:51.960 --> 0:13:55.640 And we continue to see a bifurcation where people who 0:13:55.679 --> 0:13:59.680 need household essentials and food and beverages that's really obviously 0:13:59.679 --> 0:14:04.120 worked ing, discretionary purchases are are less important, and at 0:14:04.160 --> 0:14:07.440 home fitness is working too. Oliver. There's a huge amount 0:14:07.440 --> 0:14:10.839 of confusied confusion at the moment over whether Sames who 0:14:10.840 --> 0:14:14.520 decided to follow employees before the aid became available from 0:14:14.600 --> 0:14:18.120 Washington d C, whether they're eligible for any of those loans, 0:14:18.200 --> 0:14:21.520 any of those grants um from the fiscal aid package 0:14:21.520 --> 0:14:24.520 that went through over last week, are they If you 0:14:24.600 --> 0:14:28.240 got any clarity on that whatsoever. Yeah, I think as 0:14:28.280 --> 0:14:31.800 I talked to CEOs and um my contacts on the 0:14:31.800 --> 0:14:35.680 business everybody's analyzing it closely and logging on and looking 0:14:36.240 --> 0:14:39.520 um with with no specific conclusions. So I think it's 0:14:39.520 --> 0:14:42.520 a it's a point of transition where where people are 0:14:42.520 --> 0:14:46.360 really seeking out what what what's available. Also, when you 0:14:46.440 --> 0:14:50.640 furlow a worker, there's different standards by state regarding unemployment, 0:14:51.040 --> 0:14:55.320 So I don't think there's a blanket answer regarding allocating 0:14:55.320 --> 0:14:58.680 these resources to where they're needed most um to be 0:14:58.800 --> 0:15:01.400 frank and we're just seeing all kinds of different efforts 0:15:01.440 --> 0:15:04.760 to support workers and in places of business in the 0:15:04.920 --> 0:15:07.880 time of need. More than five hundred thousands that is 0:15:07.920 --> 0:15:11.520 the number of furloughed or laid off retail employees in 0:15:11.520 --> 0:15:15.280 the United States, Big retailers across the board closing down. 0:15:15.560 --> 0:15:18.120 And I'm looking right now at some of the names 0:15:18.200 --> 0:15:23.440 Victoria's Secret, I'm looking at gap Nemon, Marcus. I'm struggling 0:15:23.440 --> 0:15:27.080 to understand how much this entire episode is going to 0:15:27.200 --> 0:15:29.680 force companies that were already struggling to the break. I mean, 0:15:29.680 --> 0:15:32.600 how much is just just accelerating a process that would 0:15:32.600 --> 0:15:35.560 have been underway already with some of these struggling retailers, 0:15:35.640 --> 0:15:41.600 versus actually killing really viable and strong and Frankly, thriving businesses. Yeah, 0:15:41.600 --> 0:15:44.960 I agree with you regarding what's happening next. It's the 0:15:44.960 --> 0:15:49.720 big getting bigger. So we're moving towards the world of Walmart, Target, Amazon, 0:15:50.200 --> 0:15:53.920 and then mega players like LVMH. So consolidation is one 0:15:54.000 --> 0:15:56.880 key theme with with related m and a of some 0:15:56.960 --> 0:16:01.200 good brands that aren't necessarily as profitable are good valuations. 0:16:01.480 --> 0:16:05.440 UM too, I think we'll see store closures and permanent 0:16:05.520 --> 0:16:11.200 changes in malls. We already had struggling malls about more 0:16:11.240 --> 0:16:14.120 of malls UM are B in C class and that's 0:16:14.120 --> 0:16:17.640 a big issue. And then rethinking rent um the rent 0:16:17.720 --> 0:16:20.920 expenses will need to come down UM and this will 0:16:21.040 --> 0:16:25.480 a lot depend on the pace of recovery. So going forward, UM, 0:16:25.560 --> 0:16:28.440 we believe stores will be closed until May at least, 0:16:28.480 --> 0:16:32.080 if not longer UM. And the pace of the consumer 0:16:32.120 --> 0:16:34.200 coming back will be a big question mark is it 0:16:34.480 --> 0:16:38.800 VU or L And that will matter for long term viability. 0:16:38.800 --> 0:16:42.760 But department stores were already struggling. The big theme I 0:16:42.800 --> 0:16:46.440 also want to mention is this curbside pickup and rethinking 0:16:46.560 --> 0:16:49.800 retail in terms of contact lists and what does experiential 0:16:49.880 --> 0:16:53.080 mean in a contactless world. So we've already been seeing 0:16:53.080 --> 0:16:56.360 the digital innovation with zero check out and curbside pickup 0:16:56.720 --> 0:17:00.360 that's accelerating by a couple of years now, Oliver, I 0:17:00.400 --> 0:17:02.320 want to pick up on the consolidation theme that you 0:17:02.400 --> 0:17:06.800 talked about. Gap, for example, offered information to employees about 0:17:06.800 --> 0:17:09.920 getting jobs at Walmart. I'm wondering, I mean, what kind 0:17:09.960 --> 0:17:12.119 of consolidation. What are some names that you see? I mean, 0:17:12.240 --> 0:17:15.680 is Walmart going to go buy Gap? Anything can happen. 0:17:15.760 --> 0:17:17.920 I think we're we're seeing is um. You know, Walmart 0:17:18.040 --> 0:17:21.040 is the biggest grocer and it also sells lots of 0:17:21.080 --> 0:17:25.639 soft goods and essential the businesses grocery and Amazon grocery 0:17:25.720 --> 0:17:29.440 and apparel um and and rethinking, and Amazon is even 0:17:29.440 --> 0:17:34.400 interested in luxury good So retail has really been fueled 0:17:34.400 --> 0:17:39.199 by scale because even before this, the digital investments, the 0:17:39.240 --> 0:17:43.000 supply chain investments, the need for speed um has really 0:17:43.000 --> 0:17:47.600 been the domain and easier for larger players. The artificial 0:17:47.640 --> 0:17:52.840 intelligence data rethinking data scale matters for the training models 0:17:52.840 --> 0:17:55.760 and the algorithms. So that's something to think of and 0:17:55.760 --> 0:17:58.880 and anything can happen. I think every retailer is working together, 0:17:58.920 --> 0:18:00.960 and this is also a time for the industry to 0:18:01.000 --> 0:18:06.200 come together to reallocate resources where they're needed. And clearly, um, 0:18:06.280 --> 0:18:09.639 there's so many stockouts and labor is necessary as the 0:18:09.680 --> 0:18:12.720 whole country gets ready olive right now, John wants to 0:18:12.760 --> 0:18:14.639 take us in a different direction. You know, as you 0:18:14.760 --> 0:18:18.720 look at retail across America. We had a listener our 0:18:18.800 --> 0:18:21.920 call in vet Bille was barking earlier and Vet Bill 0:18:21.960 --> 0:18:24.199 wants to know. Our dog wants to know what are 0:18:24.240 --> 0:18:27.240 we gonna do with Chewi? I mean, Chewie is hugely successful. 0:18:27.640 --> 0:18:31.040 Is Chewy a no brainer for Amazon? Well, I think 0:18:31.400 --> 0:18:34.280 the reality is this at home experience and taking care 0:18:34.320 --> 0:18:37.320 of your dogs. And also health and wellness is a 0:18:37.400 --> 0:18:40.800 huge theme and rethinking wellness. Um, you know stock we 0:18:40.880 --> 0:18:42.800 like is peloton. I was just on the bike. And 0:18:42.880 --> 0:18:46.280 also we're seeing concepts like Neo Yeah, I was on 0:18:46.320 --> 0:18:52.280 the bike. You know, you know life will be about 0:18:52.680 --> 0:18:57.520 self care as well. Listen to you, Okay, okay, folks, 0:18:57.560 --> 0:18:59.639 I just got We're gonna stop the show here. We 0:18:59.720 --> 0:19:02.880 got aim to do this. John. The number one argument 0:19:03.000 --> 0:19:07.040 of the last three days in our isolation, our kingdom 0:19:07.119 --> 0:19:10.840 of isolation is someone in the house is demanded we 0:19:10.920 --> 0:19:14.280 get a peloton. What happens when the gym reopens again. 0:19:14.760 --> 0:19:18.199 That's what I said, thank you, thank you. I think 0:19:18.240 --> 0:19:20.040 a lot of people thinking in the same way. One 0:19:20.080 --> 0:19:22.159 thing that I think might change, though, Oliver, and it 0:19:22.200 --> 0:19:24.919 came up in conversations that I was having recently as well, 0:19:25.400 --> 0:19:28.360 the rush to go to services like rent the Runway 0:19:28.520 --> 0:19:33.600 through where you're essentially a sharing clothes with a monthly subscription. 0:19:33.640 --> 0:19:36.920 Of course those clothes are cleaned, Oliver. Many companies were 0:19:36.920 --> 0:19:39.919 looking at following Rent the Runways practice through last year 0:19:39.960 --> 0:19:41.960 and the great success it had. Are we going to 0:19:42.040 --> 0:19:44.560 start to question that in a massive way as we 0:19:44.640 --> 0:19:46.960 come through this and come out of it. Well, as 0:19:46.960 --> 0:19:48.919 we come out of it, I think what will happen 0:19:49.000 --> 0:19:51.639 is we have a consumer that's going to be laser 0:19:51.760 --> 0:19:55.320 focused on value. So as you think about rental and 0:19:55.520 --> 0:19:58.240 um and what it can do as well as a 0:19:58.280 --> 0:20:01.800 re commerce it's forty tw eight percent off. So we 0:20:01.840 --> 0:20:04.600 already had the t J Max's of the world be 0:20:04.680 --> 0:20:08.080 really successful in taking share from Macy's and full price 0:20:08.160 --> 0:20:11.800 department stores, but you know, repricing these goods and offering value. 0:20:11.960 --> 0:20:14.800 Of course, the Rent the Runway has a very sophisticated 0:20:14.840 --> 0:20:18.520 cleaning facility, and I think people will want less stuff. 0:20:18.680 --> 0:20:22.160 I think people will care about sustainability and environment and 0:20:22.440 --> 0:20:26.840 everybody's rethought um what experiential means in terms of staying 0:20:26.840 --> 0:20:30.560 home and spending time with with loved ones and others. 0:20:31.960 --> 0:20:33.600 We have a chance, always great, get your thoughts on 0:20:33.600 --> 0:20:36.399 the show. Come and see your equity research analysts on 0:20:36.440 --> 0:20:43.320 the retail outlook and on social distancing. Let's get to 0:20:43.359 --> 0:20:45.240 the first conversation of the morning. Shall we please to 0:20:45.240 --> 0:20:47.760 say that Jaha Chanleus joins us now Credit Sweets head 0:20:47.920 --> 0:20:50.840 of f FX and macro trading strategy. You have always 0:20:50.880 --> 0:20:53.280 great to get you on the program. Let's talk about it, 0:20:53.320 --> 0:20:56.400 shall we? Shahab dollar strength back on the table. Last 0:20:56.440 --> 0:20:58.720 week we thought there was some science of success from 0:20:58.720 --> 0:21:02.520 the Federal Reserve. We're saying signs of stress once again. 0:21:03.680 --> 0:21:05.679 I don't think so. I think what we're seeing right 0:21:05.720 --> 0:21:09.600 now is a much anticipated month end flow linked to 0:21:10.200 --> 0:21:13.520 changing hedge ratios, which this might happen to mean that 0:21:14.080 --> 0:21:17.080 dollar buying is in order. There's there's an anticipation that 0:21:17.160 --> 0:21:19.920 once this is outsd the way, the market will start 0:21:19.960 --> 0:21:23.680 to look again at the underlying drivers at a dollar 0:21:23.720 --> 0:21:26.560 at this point, and that for now more broadly seems 0:21:26.600 --> 0:21:30.600 to be the capacity of FED in particular to to 0:21:30.720 --> 0:21:34.040 provide dollars to the market via its various facilities, but 0:21:34.119 --> 0:21:37.720 also hopes for more US fiscal stimulus, which historically would 0:21:37.720 --> 0:21:39.240 have been seen as a dollar positive, but at the 0:21:39.280 --> 0:21:42.280 moment um this is seen as something that again helps 0:21:42.280 --> 0:21:44.760 put more dollars into the system. So as long as 0:21:44.800 --> 0:21:48.040 these factors are driving the market, I would imagine dollar 0:21:48.080 --> 0:21:53.360 strength to be relatively short term, and then after that 0:21:53.680 --> 0:21:55.480 for the dollar to again start to trade in line 0:21:55.520 --> 0:21:59.159 with markets. More broadly, if we're settling for the end 0:21:59.200 --> 0:22:02.719 of the first quarter, what is your positioning for the 0:22:02.760 --> 0:22:07.000 beginning of the second quarter? What is the Jalones strategy? 0:22:07.400 --> 0:22:11.640 Given the total chaos we're living in It's it's obviously 0:22:11.680 --> 0:22:15.240 a very tactical market. Do we can't pretend to try 0:22:15.280 --> 0:22:19.920 to have a fully strategic position for an entire quarter 0:22:20.280 --> 0:22:23.560 when realized volatility is as as as high as it is. 0:22:23.600 --> 0:22:26.560 We're taking each week as it comes. At this point, 0:22:26.920 --> 0:22:29.920 what I would say, though, is that the market is 0:22:29.960 --> 0:22:33.960 already a pricing and fairly negative outcomes for the second 0:22:34.040 --> 0:22:37.960 quarter in terms of data, So to undershoot these negative 0:22:37.960 --> 0:22:41.159 outcomes in terms of actual outcomes is actually going to 0:22:41.200 --> 0:22:43.359 be quite a tall order now at this point, um, 0:22:43.400 --> 0:22:45.040 And I do believe that there's still more of a 0:22:45.080 --> 0:22:49.399 focus at this point on the possibility of more stimulus measures. 0:22:49.400 --> 0:22:52.280 For example, Japan has just announced or is looking at 0:22:52.320 --> 0:22:55.840 announcing a very large package of its own as well. 0:22:55.960 --> 0:22:59.760 So as these come through, I believe that these still help, 0:23:00.520 --> 0:23:03.800 at least within the g tent space. The pro risk currencies, 0:23:03.840 --> 0:23:07.119 the likes of Australian dollar the Canadian dollar in the 0:23:07.200 --> 0:23:10.320 very years term, UM, But I think in the in 0:23:10.359 --> 0:23:13.640 the medium terms, to see a real turnaround in these 0:23:13.640 --> 0:23:16.080 types of currencies, we do need to see other factors 0:23:16.119 --> 0:23:17.680 comes through. So for example, we do need to see 0:23:17.680 --> 0:23:21.919 oil prices base. We do need to see virus infection 0:23:22.320 --> 0:23:26.400 growth rates come down so that markets can believe transport 0:23:26.560 --> 0:23:28.800 around the world can resume again. These are the types 0:23:28.840 --> 0:23:30.520 of things that they are still the big unknowns from 0:23:30.520 --> 0:23:34.119 medium some perspectives. So those helicopters that Tom Keaton seeks 0:23:34.119 --> 0:23:36.879 to talks about all week and has been talking about 0:23:37.320 --> 0:23:40.320 for the past few weeks dropping money into his triple 0:23:40.400 --> 0:23:43.760 triple leverage cash fund, they're going to continue and in 0:23:43.800 --> 0:23:47.119 the short term maybe that won't necessarily debase the dollar 0:23:47.240 --> 0:23:50.160 over the long term, though, how does the US get 0:23:50.160 --> 0:23:52.280 out of this other than just printing money and leading 0:23:52.280 --> 0:23:55.440 to inflation and in the basement of the dollar, well, look, 0:23:55.600 --> 0:23:57.800 I think the key here is effect at the end 0:23:57.800 --> 0:24:00.760 of the day is a relative price um. And the 0:24:00.800 --> 0:24:03.040 truth of the matter is all the other central banks 0:24:03.040 --> 0:24:04.960 are doing the same thing in one form of another, 0:24:05.000 --> 0:24:07.560 exactive in what you know would have been seen as 0:24:07.880 --> 0:24:10.560 very difficult a few years ago, which is emerging markets 0:24:11.119 --> 0:24:15.359 doing qunstantiveas ing um without necessarily seeing their currency is 0:24:15.359 --> 0:24:18.040 getting crushed. You know, that's also happening right now, so 0:24:19.000 --> 0:24:21.520 across the broad range of emerging markets. So the truth 0:24:21.560 --> 0:24:23.280 of the matter is it's it's very difficult to look 0:24:23.280 --> 0:24:26.399 at the dollar in isolation from that perspective, given that 0:24:26.400 --> 0:24:28.560 everyone else is doing the same thing. So when we 0:24:28.600 --> 0:24:30.720 talk about debasement, it could be the case that we 0:24:30.800 --> 0:24:34.560 see down the line a general rise in price levels 0:24:34.600 --> 0:24:38.680 around the world. Basis, that's not necessarily going to mean 0:24:38.720 --> 0:24:42.359 that the dollar falls against other currencies in a in 0:24:42.400 --> 0:24:45.520 a material way. Um. Given that it's a very common 0:24:45.520 --> 0:24:48.000 policy at this point in time. If someone comes to 0:24:48.000 --> 0:24:51.120 you shab and says, I have a belief oil will 0:24:51.200 --> 0:24:54.399 recover in some way or form. What is the best 0:24:54.440 --> 0:24:59.520 way to express strong oil. Yes, that's a good question. 0:25:00.119 --> 0:25:01.520