WEBVTT - History's Lessons for Our Post-Virus Future 0:00:04.760 --> 0:00:09.280 Welcome to Prognosis. I'm Laura Carlson. It's day one hundred 0:00:09.320 --> 0:00:13.600 and three since coronavirus was declared a global pandemic our 0:00:13.640 --> 0:00:18.520 main story. People who warned we shouldn't become complacent often 0:00:18.600 --> 0:00:22.600 cite a familiar factoida the second wave of the Spanish 0:00:22.600 --> 0:00:26.920 flu pandemic of nineteen was worse than the first. But 0:00:27.040 --> 0:00:30.080 it turns out the Spanish flu and even the Black 0:00:30.120 --> 0:00:33.000 Death of the Middle Ages can teach us some lessons 0:00:33.000 --> 0:00:37.680 about our economy too. But first, here's what happened in 0:00:37.840 --> 0:00:48.000 virus news today. The United Kingdom reported fewer than one 0:00:48.080 --> 0:00:51.040 thousand new cases for the first time since it went 0:00:51.040 --> 0:00:55.800 into lockdown in late March. The government said there were 0:00:55.840 --> 0:01:02.080 fifteen deaths related to coronavirus, the lowest since March fifteen. However, 0:01:02.440 --> 0:01:06.279 in the US, cases continue to spike in a number 0:01:06.319 --> 0:01:10.800 of states. One of those states is Florida, where new 0:01:10.840 --> 0:01:15.399 infections rose again on Monday and deaths increased as well. 0:01:16.400 --> 0:01:20.440 On a rolling seven day basis, Florida's new cases reached 0:01:20.600 --> 0:01:27.240 nearly twenty three thousand, their highest level ever. China suspended 0:01:27.240 --> 0:01:30.920 poultry imports from a Tyson Foods plant where hundreds of 0:01:30.920 --> 0:01:37.400 employees tested positive for COVID. Nineteen. Chinese officials announced Sunday 0:01:37.440 --> 0:01:42.039 that customs will seize all products from Tyson's Springdale, Arkansas 0:01:42.040 --> 0:01:45.880 plant that arrive at the country's ports. The move is 0:01:45.880 --> 0:01:48.960 a potential new threat to meat plants across the world 0:01:49.320 --> 0:01:53.240 that have seen disruptions because of the virus. In the US, 0:01:53.720 --> 0:01:57.320 hundreds of meat packing plant workers have become ill and 0:01:57.480 --> 0:02:01.360 dozens have died. There's also been a recent uptake and 0:02:01.400 --> 0:02:07.920 infections at facilities in Brazil and Germany. Finally, news about 0:02:07.960 --> 0:02:12.359 two new drugs being developed to treat COVID nineteen. Indian 0:02:12.400 --> 0:02:16.360 company Glenmark Pharmaceutical was approved to manufacture and sell a 0:02:16.400 --> 0:02:21.760 coronavirus treatment called FabiFlu or favy peeravie for mild to 0:02:21.840 --> 0:02:25.480 moderate virus patients. The news sent the company's stock up 0:02:25.480 --> 0:02:30.440 as much as it's the highest single day rise ever, 0:02:31.560 --> 0:02:35.160 and drug maker Gilead is screening volunteers for phase one 0:02:35.240 --> 0:02:39.920 trials of an inhaled formulation of its remdsevere drug. The 0:02:39.960 --> 0:02:43.640 treatment would be administered via a nebulizer, which is potentially 0:02:43.680 --> 0:02:47.880 easier to use outside of the hospital. Ramdsevere has already 0:02:47.919 --> 0:02:50.960 been cleared by the US Food and Drug Administration for 0:02:51.000 --> 0:02:55.600 emergency use with COVID nineteen patients. The next wave of 0:02:55.639 --> 0:02:59.640 clinical development will study rem desevere for treatment earlier in 0:02:59.680 --> 0:03:10.680 the zas and now for today's main story. As soon 0:03:10.680 --> 0:03:15.160 as the coronavirus became a pandemic, people began making parallels 0:03:15.240 --> 0:03:19.760 to the Spanish flu outbreak of night and reaching even 0:03:19.800 --> 0:03:22.680 further back to the Black Death of the Middle Ages. 0:03:23.840 --> 0:03:27.760 It makes sense past pandemics maybe our only reference point 0:03:27.800 --> 0:03:32.679 for whole populations being stricken with illness, but they can 0:03:32.720 --> 0:03:36.760 also tell us a lot about how economies recover after pandemics. 0:03:37.480 --> 0:03:41.080 We may no longer be dealing with schillings or feudal lords, 0:03:41.080 --> 0:03:43.960 but a surprising number of things are similar about what 0:03:44.080 --> 0:03:49.440 happened to finances during and after those outbreaks. Here's a 0:03:49.480 --> 0:03:53.800 clip from Bloomberg's excellent Odd Lots podcast where hosts Tracy 0:03:53.840 --> 0:03:57.840 Allaway and Joe Wisenthal go deep on what makes markets 0:03:57.840 --> 0:04:02.440 and economies tick. They to Jamie Catherwood, an associate at 0:04:02.480 --> 0:04:07.880 O'Shaughnessy Asset Management. His expertise is in finance history, and 0:04:07.960 --> 0:04:10.240 he talked about what we can learn about our economic 0:04:10.280 --> 0:04:21.000 recovery from decades and even centuries old diseases. Is there 0:04:21.440 --> 0:04:25.599 one moment in history that is the most relevant to 0:04:25.760 --> 0:04:30.679 our current situation. There are some interesting trends in both 0:04:30.760 --> 0:04:34.599 today and the Spanish Flu that are similar, and one 0:04:34.680 --> 0:04:38.039 that I found really interesting was just there is a 0:04:38.080 --> 0:04:41.200 paper that talked about the Amazon effects that occurred in 0:04:41.520 --> 0:04:45.360 the Spanish Flu, which sounds crazy, but um, we've all 0:04:45.400 --> 0:04:49.200 talked about how kind of Sears was the original Amazon, 0:04:49.920 --> 0:04:52.640 and there was evidence, I think is in a Federal 0:04:52.720 --> 0:04:58.560 Reserve paper that showed on a monthly basis during the 0:04:58.600 --> 0:05:01.800 second wave that was in the fall, which is the 0:05:01.800 --> 0:05:05.760 worst of the three waves, that the sales and business 0:05:05.800 --> 0:05:09.320 activity first Year's Rowbook and Montgomer Reward, which had mail 0:05:09.400 --> 0:05:13.160 order catalogs increased in the worst months of the Spanish 0:05:13.160 --> 0:05:16.080 Flu when more places were shut and kind of lockdown 0:05:16.160 --> 0:05:18.880 was taking place. Just like today, everyone orders from Amazon 0:05:18.920 --> 0:05:21.520 while they're kind of hunkered down at home. But what 0:05:21.600 --> 0:05:24.720 was interesting is that then after the kind of reopening 0:05:24.760 --> 0:05:28.440 started to occur, some some retailers, not all obviously, reported 0:05:28.480 --> 0:05:32.840 that the kind of bounce back after the reopening made 0:05:32.920 --> 0:05:36.120 up for more than like the sales from when their 0:05:36.120 --> 0:05:38.040 business had to be shut down. So that was kind 0:05:38.040 --> 0:05:41.640 of interesting. We got the retail sales for May and 0:05:41.680 --> 0:05:44.720 they came in way better than expected. So as long 0:05:44.720 --> 0:05:48.040 as we're talking about the pent up demand equivalent of 0:05:48.080 --> 0:05:51.800 the Spanish flu, this month's retail sales report would bear 0:05:51.839 --> 0:05:55.919 out once again a sort of similarity. And it's interesting 0:05:56.000 --> 0:05:59.840 to see kind of today and in the Spanish flu, 0:06:00.520 --> 0:06:05.800 the different industries and types of retailers that did well 0:06:05.839 --> 0:06:10.039 and which ones didn't. Like today, Zoom and other companies 0:06:10.080 --> 0:06:12.760 like that, Clorox stock was rocketing for a while, but 0:06:13.120 --> 0:06:18.600 in Spanish flu, mattress sales actually increased something ridiculous like 0:06:19.600 --> 0:06:23.240 or something because bed rest was such a commonly prescribed 0:06:23.360 --> 0:06:27.520 like chair by doctors for people who had symptoms. So 0:06:28.640 --> 0:06:31.640 I'm curious, and you've touched on this already. But once 0:06:32.080 --> 0:06:35.880 the Spanish flu sort of fell away, once the pandemic ended, 0:06:36.600 --> 0:06:41.640 did we see the economy bounced back, corporate profits bounced 0:06:41.680 --> 0:06:46.240 back and make up the lost income that had occurred 0:06:46.440 --> 0:06:49.640 during the outbreak, or was there sort of a permanent 0:06:50.000 --> 0:06:54.600 hit two output. From what I've read, the effect of 0:06:54.640 --> 0:06:57.919 the Spanish flu was pronounced, but it was over the 0:06:57.960 --> 0:07:00.440 short term, and then there was a fairly quick back, 0:07:00.560 --> 0:07:02.640 but also you have to keep in mind of how 0:07:02.720 --> 0:07:05.640 much that was due to the Spanish flu and how 0:07:05.720 --> 0:07:09.160 much was due to the war ending. But bounce back 0:07:09.240 --> 0:07:12.920 was kind of short lived in itself because in you 0:07:13.040 --> 0:07:23.960 then had a recession. I do want to go slightly 0:07:24.080 --> 0:07:28.040 further back and talk about um, the Middle Ages, the 0:07:28.080 --> 0:07:32.160 Black Death aka the Great Plague. A lot of people 0:07:32.200 --> 0:07:34.920 have been looking at that one and talking about the 0:07:35.040 --> 0:07:39.720 labor market, what might happen to wages and inflation, And 0:07:39.760 --> 0:07:44.240 I've seen different theories on this. So one explanation says 0:07:44.360 --> 0:07:46.880 that after the Great Death, so many people died that 0:07:46.920 --> 0:07:50.560 there was a shortage of labor and wages eventually went up. 0:07:50.680 --> 0:07:53.080 But I've heard other people say that one of the 0:07:53.120 --> 0:07:56.200 reasons wages went up is basically a bunch of the 0:07:56.240 --> 0:08:02.960 peasants revolted and sort of violently forced better earnings for themselves. 0:08:03.680 --> 0:08:05.840 What have you learned so far, Jamie, Like, what do 0:08:05.880 --> 0:08:08.600 your readings tell you on that topic? And so if 0:08:08.640 --> 0:08:12.520 you survived, then in terms of the Black Death, everything 0:08:12.560 --> 0:08:14.200 came up peasants like it was a great time to 0:08:14.240 --> 0:08:17.400 be a peasant. And after the Black Death because like 0:08:17.520 --> 0:08:20.400 you mentioned, as you mentioned there there is a lot 0:08:20.400 --> 0:08:23.840 of disagreement, but from what I've read, there seems to 0:08:23.880 --> 0:08:28.080 be a agreement that there was a rise in wages 0:08:28.320 --> 0:08:30.960 after the Black Death because, as you mentioned, so many 0:08:31.000 --> 0:08:33.360 people died, and to put some numbers around it, the 0:08:33.520 --> 0:08:37.440 estimates are between seventeen and twenty eight million Europeans because 0:08:37.480 --> 0:08:42.400 so many people had died. What happened was that suddenly 0:08:42.440 --> 0:08:46.280 all these lords who had previously seen over these manner 0:08:46.320 --> 0:08:49.560 systems where the peasants were working the land and the 0:08:49.640 --> 0:08:53.600 lord would collect rent um views from the peasants, they 0:08:53.640 --> 0:08:57.240 suddenly faced this problem where they had all this land, 0:08:57.640 --> 0:09:00.920 but suddenly now there weren't as many peasants to work 0:09:01.000 --> 0:09:04.840 until the land. So the peasants were able to demand 0:09:04.960 --> 0:09:09.000 higher wages, and also they had the ability to kind 0:09:09.040 --> 0:09:12.320 of shop around their services to other lords, which previously 0:09:12.360 --> 0:09:15.040 wouldn't have been the case. But because every lord was 0:09:15.080 --> 0:09:18.320 so desperate to hire people to work their land that 0:09:18.600 --> 0:09:22.160 if the lord a peasant was currently working for it 0:09:22.760 --> 0:09:26.480 didn't offer them better working conditions, living conditions, and wages, 0:09:26.880 --> 0:09:29.400 then they could just go to another lord who would 0:09:29.440 --> 0:09:33.720 be willing to offer them those um conditions. But overall, 0:09:33.840 --> 0:09:38.559 the estimates are that wages rose between twenty and from 0:09:38.600 --> 0:09:42.040 the thirteen forties to the thirteen sixties, again pretty pronounced. 0:09:42.240 --> 0:09:45.559 But one thing that was a counter to this rise 0:09:45.640 --> 0:09:49.480 in nominal wages was there was a pretty substantial rise 0:09:49.480 --> 0:09:54.360 in inflation because the gold and silver supply remain constant, 0:09:54.360 --> 0:09:57.960 but the amount of people decimated, so there was just 0:09:58.040 --> 0:10:01.959 a higher ratio of gold and silver per capita, So 0:10:02.679 --> 0:10:06.520 much of those kind of nominal weekly wage gains were 0:10:06.559 --> 0:10:11.520 offset by this inflation. But there was obviously a lot 0:10:11.600 --> 0:10:14.960 of There are a lot of upset lords because they 0:10:14.960 --> 0:10:17.079 didn't want to deal with these peasants who were suddenly 0:10:17.160 --> 0:10:19.080 cocky and knew that they had kind of had leverage 0:10:19.120 --> 0:10:21.600 in this situation. And there are all of these lords 0:10:21.600 --> 0:10:25.120 who were complaining about peasants who would barely do any work, 0:10:25.280 --> 0:10:27.760 like they would make a huge fuss about being asked 0:10:27.800 --> 0:10:30.400 to do anything, and if they did do jobs that 0:10:30.440 --> 0:10:33.440 they were doing haphazardly because they just knew that the 0:10:33.520 --> 0:10:36.760 lord wouldn't be able to find a replacement for them. 0:10:36.800 --> 0:10:41.760 So the lords tried to lobby the UK authorities to 0:10:42.720 --> 0:10:47.439 do something about this problem, and what ended up happening 0:10:47.640 --> 0:10:51.840 was the government put out two statutes. Both were aimed 0:10:51.920 --> 0:10:56.880 at pertailing wages, and they both stipulated that wages for 0:10:57.080 --> 0:11:00.920 peasants had to be set at pre play levels. So 0:11:01.080 --> 0:11:03.920 there's no interest rate policy or anything, but there's definitely 0:11:04.559 --> 0:11:07.280 statutes put in place to try and prevent the wage 0:11:07.280 --> 0:11:10.440 growth from spiraling out of control. What type of things 0:11:10.880 --> 0:11:13.400 would you look forward from history or what kind of 0:11:13.480 --> 0:11:16.439 questions do you still have as a student of history 0:11:16.800 --> 0:11:21.200 in terms of how how the post coronavirus period will transplant. 0:11:22.080 --> 0:11:25.960 I think that like many of us, I am looking 0:11:26.000 --> 0:11:29.480 to see whether this kind of recent uptick in cases 0:11:29.480 --> 0:11:31.319 in some of the states that reopened is going to 0:11:31.400 --> 0:11:34.720 be something more lasting, or whether it's a brief uptick, 0:11:35.080 --> 0:11:38.600 because there are a lot of papers and examples from 0:11:38.640 --> 0:11:41.520 the Spanish flu that are very reminiscent of today where 0:11:41.520 --> 0:11:45.560 there was business owners protesting about not being able to 0:11:45.600 --> 0:11:49.800 operate their businesses and open up their shops. But also 0:11:49.840 --> 0:11:52.280 it'll be interesting to see what I think is in 0:11:52.320 --> 0:11:56.760 the next maybe crisis or crash, what people's expectations are 0:11:57.160 --> 0:12:01.040 in terms of monetary policy and the sill stimulus based 0:12:01.040 --> 0:12:04.520 on what's happened this time around, Because it's one of 0:12:04.559 --> 0:12:07.080 those things where now that the door has been opened. 0:12:07.480 --> 0:12:10.719 What it seems radical this time might become the expectation 0:12:10.880 --> 0:12:14.480 the next time around. You know, everyone is seeing these 0:12:14.600 --> 0:12:19.200 charts and stories of remember the second wave of the 0:12:19.240 --> 0:12:22.079 Spanish flu was worse than the first. But was there 0:12:22.120 --> 0:12:27.560 anybody in night saying, oh, remember, you know what happened 0:12:27.600 --> 0:12:30.440 the second wave of x or is the awareness of 0:12:30.480 --> 0:12:33.679 the concept, a sec of a second wave, something that 0:12:33.800 --> 0:12:37.760 makes this unique and thus maybe a reason to think 0:12:37.800 --> 0:12:41.080 that history won't play out because when you when you 0:12:41.080 --> 0:12:44.040 can observe something and when you can describe something, usually 0:12:44.080 --> 0:12:47.160 don't really get the same as last time. I think, 0:12:47.679 --> 0:12:49.680 well they might, it might not have been like the 0:12:49.800 --> 0:12:55.960 second wave, exact phrasing. They're definitely people who were advocating 0:12:56.320 --> 0:13:01.240 for continued to kind of lockdown in quarantine because they're 0:13:01.240 --> 0:13:05.800 aware that people continuing to go out and temblean crowds 0:13:05.800 --> 0:13:09.199 would only caused the blue to linger around longer. But 0:13:09.360 --> 0:13:11.760 it is interesting and related to your point is that 0:13:12.120 --> 0:13:14.880 one reason to be more optimistic for today is the 0:13:14.920 --> 0:13:18.040 media was not going to report on bad news like 0:13:18.080 --> 0:13:19.959 this like Spanish flow. I mean, World War one is 0:13:20.000 --> 0:13:23.000 going on. But back to your point is the fact 0:13:23.080 --> 0:13:25.959 that today is the opposite where literally all we read 0:13:26.000 --> 0:13:29.280 about is coronavirus, right, and so everyone is gonna be 0:13:29.280 --> 0:13:34.960 more cognizant of the risks involved in how and where 0:13:35.480 --> 0:13:39.319 we can do things to prevent the continued spread of 0:13:39.400 --> 0:13:42.079 the virus. So that is definitely one major reason to 0:13:42.120 --> 0:13:46.240 be optimistic is there's much broader knowledge of how to 0:13:47.000 --> 0:13:54.720 stop the spread. That was Joe Wisenthal and Tracy Allaway 0:13:54.960 --> 0:13:58.360 in conversation with Jamie Catherine Point. You can hear the 0:13:58.400 --> 0:14:02.440 full interview with Jamie this week's episode of Odd Lots 0:14:03.000 --> 0:14:05.400 and That's our show today. For coverage of the outbreak 0:14:05.400 --> 0:14:09.640 from one bureaus around the world, visit Bloomberg dot com 0:14:09.800 --> 0:14:14.000 slash coronavirus and if you like the show, please leave 0:14:14.080 --> 0:14:17.840 us a review and a rating on Apple Podcasts or Spotify. 0:14:18.080 --> 0:14:20.640 It's the best way to help more listeners find our 0:14:20.680 --> 0:14:25.080 global reporting. The Prognosis Daily edition is produced by top 0:14:25.240 --> 0:14:31.560 foreheads Jordan Gospore, Magnus Hendrickson and me Laura Carlson. Today's 0:14:31.600 --> 0:14:35.360 main story was reported by Joe Wisenthal and Tracy Galloway. 0:14:35.960 --> 0:14:40.040 Original music by Leo Sidrin. Our editors are Rick Shine 0:14:40.080 --> 0:14:44.920 and Francesca Levi. Francesco Levi is Bloomberg's head of podcasts. 0:14:45.600 --> 0:14:46.440 Thanks for listening.