1 00:00:04,760 --> 00:00:09,280 Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's day one hundred 2 00:00:09,320 --> 00:00:13,600 Speaker 1: and three since coronavirus was declared a global pandemic our 3 00:00:13,640 --> 00:00:18,520 Speaker 1: main story. People who warned we shouldn't become complacent often 4 00:00:18,600 --> 00:00:22,600 Speaker 1: cite a familiar factoida the second wave of the Spanish 5 00:00:22,600 --> 00:00:26,920 Speaker 1: flu pandemic of nineteen was worse than the first. But 6 00:00:27,040 --> 00:00:30,080 Speaker 1: it turns out the Spanish flu and even the Black 7 00:00:30,120 --> 00:00:33,000 Speaker 1: Death of the Middle Ages can teach us some lessons 8 00:00:33,000 --> 00:00:37,680 Speaker 1: about our economy too. But first, here's what happened in 9 00:00:37,840 --> 00:00:48,000 Speaker 1: virus news today. The United Kingdom reported fewer than one 10 00:00:48,080 --> 00:00:51,040 Speaker 1: thousand new cases for the first time since it went 11 00:00:51,040 --> 00:00:55,800 Speaker 1: into lockdown in late March. The government said there were 12 00:00:55,840 --> 00:01:02,080 Speaker 1: fifteen deaths related to coronavirus, the lowest since March fifteen. However, 13 00:01:02,440 --> 00:01:06,279 Speaker 1: in the US, cases continue to spike in a number 14 00:01:06,319 --> 00:01:10,800 Speaker 1: of states. One of those states is Florida, where new 15 00:01:10,840 --> 00:01:15,399 Speaker 1: infections rose again on Monday and deaths increased as well. 16 00:01:16,400 --> 00:01:20,440 Speaker 1: On a rolling seven day basis, Florida's new cases reached 17 00:01:20,600 --> 00:01:27,240 Speaker 1: nearly twenty three thousand, their highest level ever. China suspended 18 00:01:27,240 --> 00:01:30,920 Speaker 1: poultry imports from a Tyson Foods plant where hundreds of 19 00:01:30,920 --> 00:01:37,400 Speaker 1: employees tested positive for COVID. Nineteen. Chinese officials announced Sunday 20 00:01:37,440 --> 00:01:42,039 Speaker 1: that customs will seize all products from Tyson's Springdale, Arkansas 21 00:01:42,040 --> 00:01:45,880 Speaker 1: plant that arrive at the country's ports. The move is 22 00:01:45,880 --> 00:01:48,960 Speaker 1: a potential new threat to meat plants across the world 23 00:01:49,320 --> 00:01:53,240 Speaker 1: that have seen disruptions because of the virus. In the US, 24 00:01:53,720 --> 00:01:57,320 Speaker 1: hundreds of meat packing plant workers have become ill and 25 00:01:57,480 --> 00:02:01,360 Speaker 1: dozens have died. There's also been a recent uptake and 26 00:02:01,400 --> 00:02:07,920 Speaker 1: infections at facilities in Brazil and Germany. Finally, news about 27 00:02:07,960 --> 00:02:12,359 Speaker 1: two new drugs being developed to treat COVID nineteen. Indian 28 00:02:12,400 --> 00:02:16,360 Speaker 1: company Glenmark Pharmaceutical was approved to manufacture and sell a 29 00:02:16,400 --> 00:02:21,760 Speaker 1: coronavirus treatment called FabiFlu or favy peeravie for mild to 30 00:02:21,840 --> 00:02:25,480 Speaker 1: moderate virus patients. The news sent the company's stock up 31 00:02:25,480 --> 00:02:30,440 Speaker 1: as much as it's the highest single day rise ever, 32 00:02:31,560 --> 00:02:35,160 Speaker 1: and drug maker Gilead is screening volunteers for phase one 33 00:02:35,240 --> 00:02:39,920 Speaker 1: trials of an inhaled formulation of its remdsevere drug. The 34 00:02:39,960 --> 00:02:43,640 Speaker 1: treatment would be administered via a nebulizer, which is potentially 35 00:02:43,680 --> 00:02:47,880 Speaker 1: easier to use outside of the hospital. Ramdsevere has already 36 00:02:47,919 --> 00:02:50,960 Speaker 1: been cleared by the US Food and Drug Administration for 37 00:02:51,000 --> 00:02:55,600 Speaker 1: emergency use with COVID nineteen patients. The next wave of 38 00:02:55,639 --> 00:02:59,640 Speaker 1: clinical development will study rem desevere for treatment earlier in 39 00:02:59,680 --> 00:03:10,680 Speaker 1: the zas and now for today's main story. As soon 40 00:03:10,680 --> 00:03:15,160 Speaker 1: as the coronavirus became a pandemic, people began making parallels 41 00:03:15,240 --> 00:03:19,760 Speaker 1: to the Spanish flu outbreak of night and reaching even 42 00:03:19,800 --> 00:03:22,680 Speaker 1: further back to the Black Death of the Middle Ages. 43 00:03:23,840 --> 00:03:27,760 Speaker 1: It makes sense past pandemics maybe our only reference point 44 00:03:27,800 --> 00:03:32,679 Speaker 1: for whole populations being stricken with illness, but they can 45 00:03:32,720 --> 00:03:36,760 Speaker 1: also tell us a lot about how economies recover after pandemics. 46 00:03:37,480 --> 00:03:41,080 Speaker 1: We may no longer be dealing with schillings or feudal lords, 47 00:03:41,080 --> 00:03:43,960 Speaker 1: but a surprising number of things are similar about what 48 00:03:44,080 --> 00:03:49,440 Speaker 1: happened to finances during and after those outbreaks. Here's a 49 00:03:49,480 --> 00:03:53,800 Speaker 1: clip from Bloomberg's excellent Odd Lots podcast where hosts Tracy 50 00:03:53,840 --> 00:03:57,840 Speaker 1: Allaway and Joe Wisenthal go deep on what makes markets 51 00:03:57,840 --> 00:04:02,440 Speaker 1: and economies tick. They to Jamie Catherwood, an associate at 52 00:04:02,480 --> 00:04:07,880 Speaker 1: O'Shaughnessy Asset Management. His expertise is in finance history, and 53 00:04:07,960 --> 00:04:10,240 Speaker 1: he talked about what we can learn about our economic 54 00:04:10,280 --> 00:04:21,000 Speaker 1: recovery from decades and even centuries old diseases. Is there 55 00:04:21,440 --> 00:04:25,599 Speaker 1: one moment in history that is the most relevant to 56 00:04:25,760 --> 00:04:30,679 Speaker 1: our current situation. There are some interesting trends in both 57 00:04:30,760 --> 00:04:34,599 Speaker 1: today and the Spanish Flu that are similar, and one 58 00:04:34,680 --> 00:04:38,039 Speaker 1: that I found really interesting was just there is a 59 00:04:38,080 --> 00:04:41,200 Speaker 1: paper that talked about the Amazon effects that occurred in 60 00:04:41,520 --> 00:04:45,360 Speaker 1: the Spanish Flu, which sounds crazy, but um, we've all 61 00:04:45,400 --> 00:04:49,200 Speaker 1: talked about how kind of Sears was the original Amazon, 62 00:04:49,920 --> 00:04:52,640 Speaker 1: and there was evidence, I think is in a Federal 63 00:04:52,720 --> 00:04:58,560 Speaker 1: Reserve paper that showed on a monthly basis during the 64 00:04:58,600 --> 00:05:01,800 Speaker 1: second wave that was in the fall, which is the 65 00:05:01,800 --> 00:05:05,760 Speaker 1: worst of the three waves, that the sales and business 66 00:05:05,800 --> 00:05:09,320 Speaker 1: activity first Year's Rowbook and Montgomer Reward, which had mail 67 00:05:09,400 --> 00:05:13,160 Speaker 1: order catalogs increased in the worst months of the Spanish 68 00:05:13,160 --> 00:05:16,080 Speaker 1: Flu when more places were shut and kind of lockdown 69 00:05:16,160 --> 00:05:18,880 Speaker 1: was taking place. Just like today, everyone orders from Amazon 70 00:05:18,920 --> 00:05:21,520 Speaker 1: while they're kind of hunkered down at home. But what 71 00:05:21,600 --> 00:05:24,720 Speaker 1: was interesting is that then after the kind of reopening 72 00:05:24,760 --> 00:05:28,440 Speaker 1: started to occur, some some retailers, not all obviously, reported 73 00:05:28,480 --> 00:05:32,840 Speaker 1: that the kind of bounce back after the reopening made 74 00:05:32,920 --> 00:05:36,120 Speaker 1: up for more than like the sales from when their 75 00:05:36,120 --> 00:05:38,040 Speaker 1: business had to be shut down. So that was kind 76 00:05:38,040 --> 00:05:41,640 Speaker 1: of interesting. We got the retail sales for May and 77 00:05:41,680 --> 00:05:44,720 Speaker 1: they came in way better than expected. So as long 78 00:05:44,720 --> 00:05:48,040 Speaker 1: as we're talking about the pent up demand equivalent of 79 00:05:48,080 --> 00:05:51,800 Speaker 1: the Spanish flu, this month's retail sales report would bear 80 00:05:51,839 --> 00:05:55,919 Speaker 1: out once again a sort of similarity. And it's interesting 81 00:05:56,000 --> 00:05:59,840 Speaker 1: to see kind of today and in the Spanish flu, 82 00:06:00,520 --> 00:06:05,800 Speaker 1: the different industries and types of retailers that did well 83 00:06:05,839 --> 00:06:10,039 Speaker 1: and which ones didn't. Like today, Zoom and other companies 84 00:06:10,080 --> 00:06:12,760 Speaker 1: like that, Clorox stock was rocketing for a while, but 85 00:06:13,120 --> 00:06:18,600 Speaker 1: in Spanish flu, mattress sales actually increased something ridiculous like 86 00:06:19,600 --> 00:06:23,240 Speaker 1: or something because bed rest was such a commonly prescribed 87 00:06:23,360 --> 00:06:27,520 Speaker 1: like chair by doctors for people who had symptoms. So 88 00:06:28,640 --> 00:06:31,640 Speaker 1: I'm curious, and you've touched on this already. But once 89 00:06:32,080 --> 00:06:35,880 Speaker 1: the Spanish flu sort of fell away, once the pandemic ended, 90 00:06:36,600 --> 00:06:41,640 Speaker 1: did we see the economy bounced back, corporate profits bounced 91 00:06:41,680 --> 00:06:46,240 Speaker 1: back and make up the lost income that had occurred 92 00:06:46,440 --> 00:06:49,640 Speaker 1: during the outbreak, or was there sort of a permanent 93 00:06:50,000 --> 00:06:54,600 Speaker 1: hit two output. From what I've read, the effect of 94 00:06:54,640 --> 00:06:57,919 Speaker 1: the Spanish flu was pronounced, but it was over the 95 00:06:57,960 --> 00:07:00,440 Speaker 1: short term, and then there was a fairly quick back, 96 00:07:00,560 --> 00:07:02,640 Speaker 1: but also you have to keep in mind of how 97 00:07:02,720 --> 00:07:05,640 Speaker 1: much that was due to the Spanish flu and how 98 00:07:05,720 --> 00:07:09,160 Speaker 1: much was due to the war ending. But bounce back 99 00:07:09,240 --> 00:07:12,920 Speaker 1: was kind of short lived in itself because in you 100 00:07:13,040 --> 00:07:23,960 Speaker 1: then had a recession. I do want to go slightly 101 00:07:24,080 --> 00:07:28,040 Speaker 1: further back and talk about um, the Middle Ages, the 102 00:07:28,080 --> 00:07:32,160 Speaker 1: Black Death aka the Great Plague. A lot of people 103 00:07:32,200 --> 00:07:34,920 Speaker 1: have been looking at that one and talking about the 104 00:07:35,040 --> 00:07:39,720 Speaker 1: labor market, what might happen to wages and inflation, And 105 00:07:39,760 --> 00:07:44,240 Speaker 1: I've seen different theories on this. So one explanation says 106 00:07:44,360 --> 00:07:46,880 Speaker 1: that after the Great Death, so many people died that 107 00:07:46,920 --> 00:07:50,560 Speaker 1: there was a shortage of labor and wages eventually went up. 108 00:07:50,680 --> 00:07:53,080 Speaker 1: But I've heard other people say that one of the 109 00:07:53,120 --> 00:07:56,200 Speaker 1: reasons wages went up is basically a bunch of the 110 00:07:56,240 --> 00:08:02,960 Speaker 1: peasants revolted and sort of violently forced better earnings for themselves. 111 00:08:03,680 --> 00:08:05,840 Speaker 1: What have you learned so far, Jamie, Like, what do 112 00:08:05,880 --> 00:08:08,600 Speaker 1: your readings tell you on that topic? And so if 113 00:08:08,640 --> 00:08:12,520 Speaker 1: you survived, then in terms of the Black Death, everything 114 00:08:12,560 --> 00:08:14,200 Speaker 1: came up peasants like it was a great time to 115 00:08:14,240 --> 00:08:17,400 Speaker 1: be a peasant. And after the Black Death because like 116 00:08:17,520 --> 00:08:20,400 Speaker 1: you mentioned, as you mentioned there there is a lot 117 00:08:20,400 --> 00:08:23,840 Speaker 1: of disagreement, but from what I've read, there seems to 118 00:08:23,880 --> 00:08:28,080 Speaker 1: be a agreement that there was a rise in wages 119 00:08:28,320 --> 00:08:30,960 Speaker 1: after the Black Death because, as you mentioned, so many 120 00:08:31,000 --> 00:08:33,360 Speaker 1: people died, and to put some numbers around it, the 121 00:08:33,520 --> 00:08:37,440 Speaker 1: estimates are between seventeen and twenty eight million Europeans because 122 00:08:37,480 --> 00:08:42,400 Speaker 1: so many people had died. What happened was that suddenly 123 00:08:42,440 --> 00:08:46,280 Speaker 1: all these lords who had previously seen over these manner 124 00:08:46,320 --> 00:08:49,560 Speaker 1: systems where the peasants were working the land and the 125 00:08:49,640 --> 00:08:53,600 Speaker 1: lord would collect rent um views from the peasants, they 126 00:08:53,640 --> 00:08:57,240 Speaker 1: suddenly faced this problem where they had all this land, 127 00:08:57,640 --> 00:09:00,920 Speaker 1: but suddenly now there weren't as many peasants to work 128 00:09:01,000 --> 00:09:04,840 Speaker 1: until the land. So the peasants were able to demand 129 00:09:04,960 --> 00:09:09,000 Speaker 1: higher wages, and also they had the ability to kind 130 00:09:09,040 --> 00:09:12,320 Speaker 1: of shop around their services to other lords, which previously 131 00:09:12,360 --> 00:09:15,040 Speaker 1: wouldn't have been the case. But because every lord was 132 00:09:15,080 --> 00:09:18,320 Speaker 1: so desperate to hire people to work their land that 133 00:09:18,600 --> 00:09:22,160 Speaker 1: if the lord a peasant was currently working for it 134 00:09:22,760 --> 00:09:26,480 Speaker 1: didn't offer them better working conditions, living conditions, and wages, 135 00:09:26,880 --> 00:09:29,400 Speaker 1: then they could just go to another lord who would 136 00:09:29,440 --> 00:09:33,720 Speaker 1: be willing to offer them those um conditions. But overall, 137 00:09:33,840 --> 00:09:38,559 Speaker 1: the estimates are that wages rose between twenty and from 138 00:09:38,600 --> 00:09:42,040 Speaker 1: the thirteen forties to the thirteen sixties, again pretty pronounced. 139 00:09:42,240 --> 00:09:45,559 Speaker 1: But one thing that was a counter to this rise 140 00:09:45,640 --> 00:09:49,480 Speaker 1: in nominal wages was there was a pretty substantial rise 141 00:09:49,480 --> 00:09:54,360 Speaker 1: in inflation because the gold and silver supply remain constant, 142 00:09:54,360 --> 00:09:57,960 Speaker 1: but the amount of people decimated, so there was just 143 00:09:58,040 --> 00:10:01,959 Speaker 1: a higher ratio of gold and silver per capita, So 144 00:10:02,679 --> 00:10:06,520 Speaker 1: much of those kind of nominal weekly wage gains were 145 00:10:06,559 --> 00:10:11,520 Speaker 1: offset by this inflation. But there was obviously a lot 146 00:10:11,600 --> 00:10:14,960 Speaker 1: of There are a lot of upset lords because they 147 00:10:14,960 --> 00:10:17,079 Speaker 1: didn't want to deal with these peasants who were suddenly 148 00:10:17,160 --> 00:10:19,080 Speaker 1: cocky and knew that they had kind of had leverage 149 00:10:19,120 --> 00:10:21,600 Speaker 1: in this situation. And there are all of these lords 150 00:10:21,600 --> 00:10:25,120 Speaker 1: who were complaining about peasants who would barely do any work, 151 00:10:25,280 --> 00:10:27,760 Speaker 1: like they would make a huge fuss about being asked 152 00:10:27,800 --> 00:10:30,400 Speaker 1: to do anything, and if they did do jobs that 153 00:10:30,440 --> 00:10:33,440 Speaker 1: they were doing haphazardly because they just knew that the 154 00:10:33,520 --> 00:10:36,760 Speaker 1: lord wouldn't be able to find a replacement for them. 155 00:10:36,800 --> 00:10:41,760 Speaker 1: So the lords tried to lobby the UK authorities to 156 00:10:42,720 --> 00:10:47,439 Speaker 1: do something about this problem, and what ended up happening 157 00:10:47,640 --> 00:10:51,840 Speaker 1: was the government put out two statutes. Both were aimed 158 00:10:51,920 --> 00:10:56,880 Speaker 1: at pertailing wages, and they both stipulated that wages for 159 00:10:57,080 --> 00:11:00,920 Speaker 1: peasants had to be set at pre play levels. So 160 00:11:01,080 --> 00:11:03,920 Speaker 1: there's no interest rate policy or anything, but there's definitely 161 00:11:04,559 --> 00:11:07,280 Speaker 1: statutes put in place to try and prevent the wage 162 00:11:07,280 --> 00:11:10,440 Speaker 1: growth from spiraling out of control. What type of things 163 00:11:10,880 --> 00:11:13,400 Speaker 1: would you look forward from history or what kind of 164 00:11:13,480 --> 00:11:16,439 Speaker 1: questions do you still have as a student of history 165 00:11:16,800 --> 00:11:21,200 Speaker 1: in terms of how how the post coronavirus period will transplant. 166 00:11:22,080 --> 00:11:25,960 Speaker 1: I think that like many of us, I am looking 167 00:11:26,000 --> 00:11:29,480 Speaker 1: to see whether this kind of recent uptick in cases 168 00:11:29,480 --> 00:11:31,319 Speaker 1: in some of the states that reopened is going to 169 00:11:31,400 --> 00:11:34,720 Speaker 1: be something more lasting, or whether it's a brief uptick, 170 00:11:35,080 --> 00:11:38,600 Speaker 1: because there are a lot of papers and examples from 171 00:11:38,640 --> 00:11:41,520 Speaker 1: the Spanish flu that are very reminiscent of today where 172 00:11:41,520 --> 00:11:45,560 Speaker 1: there was business owners protesting about not being able to 173 00:11:45,600 --> 00:11:49,800 Speaker 1: operate their businesses and open up their shops. But also 174 00:11:49,840 --> 00:11:52,280 Speaker 1: it'll be interesting to see what I think is in 175 00:11:52,320 --> 00:11:56,760 Speaker 1: the next maybe crisis or crash, what people's expectations are 176 00:11:57,160 --> 00:12:01,040 Speaker 1: in terms of monetary policy and the sill stimulus based 177 00:12:01,040 --> 00:12:04,520 Speaker 1: on what's happened this time around, Because it's one of 178 00:12:04,559 --> 00:12:07,080 Speaker 1: those things where now that the door has been opened. 179 00:12:07,480 --> 00:12:10,719 Speaker 1: What it seems radical this time might become the expectation 180 00:12:10,880 --> 00:12:14,480 Speaker 1: the next time around. You know, everyone is seeing these 181 00:12:14,600 --> 00:12:19,200 Speaker 1: charts and stories of remember the second wave of the 182 00:12:19,240 --> 00:12:22,079 Speaker 1: Spanish flu was worse than the first. But was there 183 00:12:22,120 --> 00:12:27,560 Speaker 1: anybody in night saying, oh, remember, you know what happened 184 00:12:27,600 --> 00:12:30,440 Speaker 1: the second wave of x or is the awareness of 185 00:12:30,480 --> 00:12:33,679 Speaker 1: the concept, a sec of a second wave, something that 186 00:12:33,800 --> 00:12:37,760 Speaker 1: makes this unique and thus maybe a reason to think 187 00:12:37,800 --> 00:12:41,080 Speaker 1: that history won't play out because when you when you 188 00:12:41,080 --> 00:12:44,040 Speaker 1: can observe something and when you can describe something, usually 189 00:12:44,080 --> 00:12:47,160 Speaker 1: don't really get the same as last time. I think, 190 00:12:47,679 --> 00:12:49,680 Speaker 1: well they might, it might not have been like the 191 00:12:49,800 --> 00:12:55,960 Speaker 1: second wave, exact phrasing. They're definitely people who were advocating 192 00:12:56,320 --> 00:13:01,240 Speaker 1: for continued to kind of lockdown in quarantine because they're 193 00:13:01,240 --> 00:13:05,800 Speaker 1: aware that people continuing to go out and temblean crowds 194 00:13:05,800 --> 00:13:09,199 Speaker 1: would only caused the blue to linger around longer. But 195 00:13:09,360 --> 00:13:11,760 Speaker 1: it is interesting and related to your point is that 196 00:13:12,120 --> 00:13:14,880 Speaker 1: one reason to be more optimistic for today is the 197 00:13:14,920 --> 00:13:18,040 Speaker 1: media was not going to report on bad news like 198 00:13:18,080 --> 00:13:19,959 Speaker 1: this like Spanish flow. I mean, World War one is 199 00:13:20,000 --> 00:13:23,000 Speaker 1: going on. But back to your point is the fact 200 00:13:23,080 --> 00:13:25,959 Speaker 1: that today is the opposite where literally all we read 201 00:13:26,000 --> 00:13:29,280 Speaker 1: about is coronavirus, right, and so everyone is gonna be 202 00:13:29,280 --> 00:13:34,960 Speaker 1: more cognizant of the risks involved in how and where 203 00:13:35,480 --> 00:13:39,319 Speaker 1: we can do things to prevent the continued spread of 204 00:13:39,400 --> 00:13:42,079 Speaker 1: the virus. So that is definitely one major reason to 205 00:13:42,120 --> 00:13:46,240 Speaker 1: be optimistic is there's much broader knowledge of how to 206 00:13:47,000 --> 00:13:54,720 Speaker 1: stop the spread. That was Joe Wisenthal and Tracy Allaway 207 00:13:54,960 --> 00:13:58,360 Speaker 1: in conversation with Jamie Catherine Point. You can hear the 208 00:13:58,400 --> 00:14:02,440 Speaker 1: full interview with Jamie this week's episode of Odd Lots 209 00:14:03,000 --> 00:14:05,400 Speaker 1: and That's our show today. For coverage of the outbreak 210 00:14:05,400 --> 00:14:09,640 Speaker 1: from one bureaus around the world, visit Bloomberg dot com 211 00:14:09,800 --> 00:14:14,000 Speaker 1: slash coronavirus and if you like the show, please leave 212 00:14:14,080 --> 00:14:17,840 Speaker 1: us a review and a rating on Apple Podcasts or Spotify. 213 00:14:18,080 --> 00:14:20,640 Speaker 1: It's the best way to help more listeners find our 214 00:14:20,680 --> 00:14:25,080 Speaker 1: global reporting. The Prognosis Daily edition is produced by top 215 00:14:25,240 --> 00:14:31,560 Speaker 1: foreheads Jordan Gospore, Magnus Hendrickson and me Laura Carlson. Today's 216 00:14:31,600 --> 00:14:35,360 Speaker 1: main story was reported by Joe Wisenthal and Tracy Galloway. 217 00:14:35,960 --> 00:14:40,040 Speaker 1: Original music by Leo Sidrin. Our editors are Rick Shine 218 00:14:40,080 --> 00:14:44,920 Speaker 1: and Francesca Levi. Francesco Levi is Bloomberg's head of podcasts. 219 00:14:45,600 --> 00:14:46,440 Speaker 1: Thanks for listening.