Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's day one hundred
Speaker 1: and three since coronavirus was declared a global pandemic our
Speaker 1: main story. People who warned we shouldn't become complacent often
Speaker 1: cite a familiar factoida the second wave of the Spanish
Speaker 1: flu pandemic of nineteen was worse than the first. But
Speaker 1: it turns out the Spanish flu and even the Black
Speaker 1: Death of the Middle Ages can teach us some lessons
Speaker 1: about our economy too. But first, here's what happened in
Speaker 1: virus news today. The United Kingdom reported fewer than one
Speaker 1: thousand new cases for the first time since it went
Speaker 1: into lockdown in late March. The government said there were
Speaker 1: fifteen deaths related to coronavirus, the lowest since March fifteen. However,
Speaker 1: in the US, cases continue to spike in a number
Speaker 1: of states. One of those states is Florida, where new
Speaker 1: infections rose again on Monday and deaths increased as well.
Speaker 1: On a rolling seven day basis, Florida's new cases reached
Speaker 1: nearly twenty three thousand, their highest level ever. China suspended
Speaker 1: poultry imports from a Tyson Foods plant where hundreds of
Speaker 1: employees tested positive for COVID. Nineteen. Chinese officials announced Sunday
Speaker 1: that customs will seize all products from Tyson's Springdale, Arkansas
Speaker 1: plant that arrive at the country's ports. The move is
Speaker 1: a potential new threat to meat plants across the world
Speaker 1: that have seen disruptions because of the virus. In the US,
Speaker 1: hundreds of meat packing plant workers have become ill and
Speaker 1: dozens have died. There's also been a recent uptake and
Speaker 1: infections at facilities in Brazil and Germany. Finally, news about
Speaker 1: two new drugs being developed to treat COVID nineteen. Indian
Speaker 1: company Glenmark Pharmaceutical was approved to manufacture and sell a
Speaker 1: coronavirus treatment called FabiFlu or favy peeravie for mild to
Speaker 1: moderate virus patients. The news sent the company's stock up
Speaker 1: as much as it's the highest single day rise ever,
Speaker 1: and drug maker Gilead is screening volunteers for phase one
Speaker 1: trials of an inhaled formulation of its remdsevere drug. The
Speaker 1: treatment would be administered via a nebulizer, which is potentially
Speaker 1: easier to use outside of the hospital. Ramdsevere has already
Speaker 1: been cleared by the US Food and Drug Administration for
Speaker 1: emergency use with COVID nineteen patients. The next wave of
Speaker 1: clinical development will study rem desevere for treatment earlier in
Speaker 1: the zas and now for today's main story. As soon
Speaker 1: as the coronavirus became a pandemic, people began making parallels
Speaker 1: to the Spanish flu outbreak of night and reaching even
Speaker 1: further back to the Black Death of the Middle Ages.
Speaker 1: It makes sense past pandemics maybe our only reference point
Speaker 1: for whole populations being stricken with illness, but they can
Speaker 1: also tell us a lot about how economies recover after pandemics.
Speaker 1: We may no longer be dealing with schillings or feudal lords,
Speaker 1: but a surprising number of things are similar about what
Speaker 1: happened to finances during and after those outbreaks. Here's a
Speaker 1: clip from Bloomberg's excellent Odd Lots podcast where hosts Tracy
Speaker 1: Allaway and Joe Wisenthal go deep on what makes markets
Speaker 1: and economies tick. They to Jamie Catherwood, an associate at
Speaker 1: O'Shaughnessy Asset Management. His expertise is in finance history, and
Speaker 1: he talked about what we can learn about our economic
Speaker 1: recovery from decades and even centuries old diseases. Is there
Speaker 1: one moment in history that is the most relevant to
Speaker 1: our current situation. There are some interesting trends in both
Speaker 1: today and the Spanish Flu that are similar, and one
Speaker 1: that I found really interesting was just there is a
Speaker 1: paper that talked about the Amazon effects that occurred in
Speaker 1: the Spanish Flu, which sounds crazy, but um, we've all
Speaker 1: talked about how kind of Sears was the original Amazon,
Speaker 1: and there was evidence, I think is in a Federal
Speaker 1: Reserve paper that showed on a monthly basis during the
Speaker 1: second wave that was in the fall, which is the
Speaker 1: worst of the three waves, that the sales and business
Speaker 1: activity first Year's Rowbook and Montgomer Reward, which had mail
Speaker 1: order catalogs increased in the worst months of the Spanish
Speaker 1: Flu when more places were shut and kind of lockdown
Speaker 1: was taking place. Just like today, everyone orders from Amazon
Speaker 1: while they're kind of hunkered down at home. But what
Speaker 1: was interesting is that then after the kind of reopening
Speaker 1: started to occur, some some retailers, not all obviously, reported
Speaker 1: that the kind of bounce back after the reopening made
Speaker 1: up for more than like the sales from when their
Speaker 1: business had to be shut down. So that was kind
Speaker 1: of interesting. We got the retail sales for May and
Speaker 1: they came in way better than expected. So as long
Speaker 1: as we're talking about the pent up demand equivalent of
Speaker 1: the Spanish flu, this month's retail sales report would bear
Speaker 1: out once again a sort of similarity. And it's interesting
Speaker 1: to see kind of today and in the Spanish flu,
Speaker 1: the different industries and types of retailers that did well
Speaker 1: and which ones didn't. Like today, Zoom and other companies
Speaker 1: like that, Clorox stock was rocketing for a while, but
Speaker 1: in Spanish flu, mattress sales actually increased something ridiculous like
Speaker 1: or something because bed rest was such a commonly prescribed
Speaker 1: like chair by doctors for people who had symptoms. So
Speaker 1: I'm curious, and you've touched on this already. But once
Speaker 1: the Spanish flu sort of fell away, once the pandemic ended,
Speaker 1: did we see the economy bounced back, corporate profits bounced
Speaker 1: back and make up the lost income that had occurred
Speaker 1: during the outbreak, or was there sort of a permanent
Speaker 1: hit two output. From what I've read, the effect of
Speaker 1: the Spanish flu was pronounced, but it was over the
Speaker 1: short term, and then there was a fairly quick back,
Speaker 1: but also you have to keep in mind of how
Speaker 1: much that was due to the Spanish flu and how
Speaker 1: much was due to the war ending. But bounce back
Speaker 1: was kind of short lived in itself because in you
Speaker 1: then had a recession. I do want to go slightly
Speaker 1: further back and talk about um, the Middle Ages, the
Speaker 1: Black Death aka the Great Plague. A lot of people
Speaker 1: have been looking at that one and talking about the
Speaker 1: labor market, what might happen to wages and inflation, And
Speaker 1: I've seen different theories on this. So one explanation says
Speaker 1: that after the Great Death, so many people died that
Speaker 1: there was a shortage of labor and wages eventually went up.
Speaker 1: But I've heard other people say that one of the
Speaker 1: reasons wages went up is basically a bunch of the
Speaker 1: peasants revolted and sort of violently forced better earnings for themselves.
Speaker 1: What have you learned so far, Jamie, Like, what do
Speaker 1: your readings tell you on that topic? And so if
Speaker 1: you survived, then in terms of the Black Death, everything
Speaker 1: came up peasants like it was a great time to
Speaker 1: be a peasant. And after the Black Death because like
Speaker 1: you mentioned, as you mentioned there there is a lot
Speaker 1: of disagreement, but from what I've read, there seems to
Speaker 1: be a agreement that there was a rise in wages
Speaker 1: after the Black Death because, as you mentioned, so many
Speaker 1: people died, and to put some numbers around it, the
Speaker 1: estimates are between seventeen and twenty eight million Europeans because
Speaker 1: so many people had died. What happened was that suddenly
Speaker 1: all these lords who had previously seen over these manner
Speaker 1: systems where the peasants were working the land and the
Speaker 1: lord would collect rent um views from the peasants, they
Speaker 1: suddenly faced this problem where they had all this land,
Speaker 1: but suddenly now there weren't as many peasants to work
Speaker 1: until the land. So the peasants were able to demand
Speaker 1: higher wages, and also they had the ability to kind
Speaker 1: of shop around their services to other lords, which previously
Speaker 1: wouldn't have been the case. But because every lord was
Speaker 1: so desperate to hire people to work their land that
Speaker 1: if the lord a peasant was currently working for it
Speaker 1: didn't offer them better working conditions, living conditions, and wages,
Speaker 1: then they could just go to another lord who would
Speaker 1: be willing to offer them those um conditions. But overall,
Speaker 1: the estimates are that wages rose between twenty and from
Speaker 1: the thirteen forties to the thirteen sixties, again pretty pronounced.
Speaker 1: But one thing that was a counter to this rise
Speaker 1: in nominal wages was there was a pretty substantial rise
Speaker 1: in inflation because the gold and silver supply remain constant,
Speaker 1: but the amount of people decimated, so there was just
Speaker 1: a higher ratio of gold and silver per capita, So
Speaker 1: much of those kind of nominal weekly wage gains were
Speaker 1: offset by this inflation. But there was obviously a lot
Speaker 1: of There are a lot of upset lords because they
Speaker 1: didn't want to deal with these peasants who were suddenly
Speaker 1: cocky and knew that they had kind of had leverage
Speaker 1: in this situation. And there are all of these lords
Speaker 1: who were complaining about peasants who would barely do any work,
Speaker 1: like they would make a huge fuss about being asked
Speaker 1: to do anything, and if they did do jobs that
Speaker 1: they were doing haphazardly because they just knew that the
Speaker 1: lord wouldn't be able to find a replacement for them.
Speaker 1: So the lords tried to lobby the UK authorities to
Speaker 1: do something about this problem, and what ended up happening
Speaker 1: was the government put out two statutes. Both were aimed
Speaker 1: at pertailing wages, and they both stipulated that wages for
Speaker 1: peasants had to be set at pre play levels. So
Speaker 1: there's no interest rate policy or anything, but there's definitely
Speaker 1: statutes put in place to try and prevent the wage
Speaker 1: growth from spiraling out of control. What type of things
Speaker 1: would you look forward from history or what kind of
Speaker 1: questions do you still have as a student of history
Speaker 1: in terms of how how the post coronavirus period will transplant.
Speaker 1: I think that like many of us, I am looking
Speaker 1: to see whether this kind of recent uptick in cases
Speaker 1: in some of the states that reopened is going to
Speaker 1: be something more lasting, or whether it's a brief uptick,
Speaker 1: because there are a lot of papers and examples from
Speaker 1: the Spanish flu that are very reminiscent of today where
Speaker 1: there was business owners protesting about not being able to
Speaker 1: operate their businesses and open up their shops. But also
Speaker 1: it'll be interesting to see what I think is in
Speaker 1: the next maybe crisis or crash, what people's expectations are
Speaker 1: in terms of monetary policy and the sill stimulus based
Speaker 1: on what's happened this time around, Because it's one of
Speaker 1: those things where now that the door has been opened.
Speaker 1: What it seems radical this time might become the expectation
Speaker 1: the next time around. You know, everyone is seeing these
Speaker 1: charts and stories of remember the second wave of the
Speaker 1: Spanish flu was worse than the first. But was there
Speaker 1: anybody in night saying, oh, remember, you know what happened
Speaker 1: the second wave of x or is the awareness of
Speaker 1: the concept, a sec of a second wave, something that
Speaker 1: makes this unique and thus maybe a reason to think
Speaker 1: that history won't play out because when you when you
Speaker 1: can observe something and when you can describe something, usually
Speaker 1: don't really get the same as last time. I think,
Speaker 1: well they might, it might not have been like the
Speaker 1: second wave, exact phrasing. They're definitely people who were advocating
Speaker 1: for continued to kind of lockdown in quarantine because they're
Speaker 1: aware that people continuing to go out and temblean crowds
Speaker 1: would only caused the blue to linger around longer. But
Speaker 1: it is interesting and related to your point is that
Speaker 1: one reason to be more optimistic for today is the
Speaker 1: media was not going to report on bad news like
Speaker 1: this like Spanish flow. I mean, World War one is
Speaker 1: going on. But back to your point is the fact
Speaker 1: that today is the opposite where literally all we read
Speaker 1: about is coronavirus, right, and so everyone is gonna be
Speaker 1: more cognizant of the risks involved in how and where
Speaker 1: we can do things to prevent the continued spread of
Speaker 1: the virus. So that is definitely one major reason to
Speaker 1: be optimistic is there's much broader knowledge of how to
Speaker 1: stop the spread. That was Joe Wisenthal and Tracy Allaway
Speaker 1: in conversation with Jamie Catherine Point. You can hear the
Speaker 1: full interview with Jamie this week's episode of Odd Lots
Speaker 1: and That's our show today. For coverage of the outbreak
Speaker 1: from one bureaus around the world, visit Bloomberg dot com
Speaker 1: slash coronavirus and if you like the show, please leave
Speaker 1: us a review and a rating on Apple Podcasts or Spotify.
Speaker 1: It's the best way to help more listeners find our
Speaker 1: global reporting. The Prognosis Daily edition is produced by top
Speaker 1: foreheads Jordan Gospore, Magnus Hendrickson and me Laura Carlson. Today's
Speaker 1: main story was reported by Joe Wisenthal and Tracy Galloway.
Speaker 1: Original music by Leo Sidrin. Our editors are Rick Shine
Speaker 1: and Francesca Levi. Francesco Levi is Bloomberg's head of podcasts.
Speaker 1: Thanks for listening.