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Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you.

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Speaker 1: Along with my co host Lisa Brahmas. Each day we

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Speaker 1: bring you the most noteworthy and useful interviews for you

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Speaker 1: and your money, whether at the grocery store or the

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Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast

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Speaker 1: or wherever you listen to podcasts, as well as at

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Speaker 1: Bloomberg dot com. We continue to dig into the economic

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Speaker 1: ramifications of some of the closures, and we've seen a

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Speaker 1: number of retailers furlow or layoff whole hosts of workers,

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Speaker 1: the latest being Macy's today saying that it was going

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Speaker 1: to close after closing all of its stores in March eighteenth.

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Speaker 1: Now it's going to furlow most of it's a hundred

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Speaker 1: and thirty thousand workers. This has led a lot of

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Speaker 1: led to a lot of questions about commercial real estate values,

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Speaker 1: rent payments and the like. Joining us to say I'm

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Speaker 1: really pleased to say is Hassam no G He's president,

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Speaker 1: chief executive officer of a major commercial real estate from

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Speaker 1: Marcus and Millichap based in Calabas's, California, and Hassam, I'd

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Speaker 1: love to get your take first of all, given the

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Speaker 1: Macy's news, given the fact that we've seen retailers across

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Speaker 1: the board just closed down stores in mass will this

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Speaker 1: have a permanent effect on commercial real estate values that

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Speaker 1: have not even yet been priced in? Good morning. Thank

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Speaker 1: you for having me on the program. First of all,

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Speaker 1: this is unlike anything we've all experienced, and at the

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Speaker 1: risk of sitting the obvious and that it's really a

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Speaker 1: health crisis, and most of our clients and everybody participating

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Speaker 1: our industries first and foremost concerned about the health of

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Speaker 1: their their employees, and their and their families. So it's

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Speaker 1: very difficult to separate the emotional component of that with

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Speaker 1: the business component at this minute, which is unusual, uh,

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Speaker 1: from anything we've seen in the past. But to answer

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Speaker 1: to your question, what's happening around us right now is

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Speaker 1: hastening the trend that was already playing out for retail.

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Speaker 1: As you know, e commerce has really profoundly changed brick

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Speaker 1: and mortar retailing, and a lot of the obsolete older

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Speaker 1: shopping centers and a lot of shopping centers that relied

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Speaker 1: on department stores have been heard badly by what was

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Speaker 1: already happening. This is just speeding that up. I think

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Speaker 1: there's going to be more short term pain because of it.

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Speaker 1: Clearly there is no way around that. But I also

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Speaker 1: want to point out the rebirth of retail, where we've

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Speaker 1: seen so many examples of renovations, repositioning, and re tenanting

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Speaker 1: of retail that has been widely successful and has become

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Speaker 1: a great investment vehicle. And there are components of retail

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Speaker 1: like the stable grocery anchored type of retail that is

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Speaker 1: of course doing very well right right now, but was

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Speaker 1: doing well even before the health crisis began, and fast

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Speaker 1: food restaurant, drug store, single tenant retail where you have

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Speaker 1: one tenant on a long term lease and is much

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Speaker 1: less risky. Those are doing very well and in great

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Speaker 1: demand by investors. Some taking a look at the two

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Speaker 1: trillion dollar fiscal stimulus package, what was in there for

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Speaker 1: real estate? From your perspective, I think the most important

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Speaker 1: part of the package is the fact that there's three

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Speaker 1: d and fifty billion dollars allocated for small business forgivable

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Speaker 1: loans and five billion for a large companies. As as

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Speaker 1: much help as can be delivered to companies to stay

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Speaker 1: afloat during the worst of this health crisis in order

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Speaker 1: to limit employee layoffs is the most important component because

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Speaker 1: that has to do with tenants, and tenants have to

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Speaker 1: do with the octancies of commercial real estate. In addition

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Speaker 1: to that, the way that the BED has stepped in

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Speaker 1: at an unprecedented speed and scale very different from two

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Speaker 1: thousand and eight two thousand nine. While we absorb, you know,

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Speaker 1: the lack of a playbook, taking months to come up

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Speaker 1: with solutions, has now resulted in their ability to be

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Speaker 1: much more nimble and much more bold in the ways

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Speaker 1: that come in to basically backstop liquidity and assure the

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Speaker 1: functioning of the of the credit markets. That's a a

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Speaker 1: found help for not just commercial real estate, but but

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Speaker 1: all businesses. And I think it really lays the groundwork

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Speaker 1: for a rapid recovery. Just as much as this is

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Speaker 1: going to be a very deep, painful downturn and hopefully

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Speaker 1: a short term one, the recovery because of the action

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Speaker 1: that's being taken, should therefore be just as just as profound.

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Speaker 1: Because some there's some talk about the defreezing of corporate

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Speaker 1: credit markets as the FED steps in and uh says

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Speaker 1: it's going to buy certain securities. They're given the fact

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Speaker 1: that you're one of the largest commercial real estate financing

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Speaker 1: companies close a lot of transaction. What's your sense of

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Speaker 1: how much we are looking at possibility for just a

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Speaker 1: complete shutdown or freeze in the commercial transactions going forward. Well,

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Speaker 1: we're seeing deals continue forward. We're seeing deals closed in

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Speaker 1: the last two weeks, in the last few days because

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Speaker 1: they still make sense and the buyers and sellers are

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Speaker 1: comfortable with the execution, and lenders are still coming through.

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Speaker 1: Many deals are not moving forward. Uh. Some lenders have

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Speaker 1: stepped out of the market. There are a wide variety

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Speaker 1: of reasons for that and the locations for that. It

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Speaker 1: isn't one or two trends. But the most important thing

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Speaker 1: to remember is there will be a short time window

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Speaker 1: where pricing will be difficult and being able to kind

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Speaker 1: of read the market will be very difficult. But we

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Speaker 1: expect as soon as the market kind of gets this

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Speaker 1: putting on evaluation and begins to see the bottoming of

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Speaker 1: the health crisis first and foremost, and then secondly the uh,

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Speaker 1: you know, the beginnings of some kind of an economic normalization.

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Speaker 1: I think the market is going to move very fast

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Speaker 1: with a significant amount of pen of demand and transactional activity.

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Speaker 1: I think the FEDS backstop is critical during this uncertainty

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Speaker 1: window of uncertainty because it's kind of prevents, uh, you know,

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Speaker 1: a lot of loan defaults and a lot of if

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Speaker 1: you will, fire sale expectations that really aren't justified. You know,

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Speaker 1: we have to remember, prior to this crisis, commercial real

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Speaker 1: estate was in great shape. We hadn't over build it,

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Speaker 1: we hadn't over leveraged it. The economy was in great shape.

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Speaker 1: That added added to the all the actions that are

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Speaker 1: being taken by the FRET and the government really spells

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Speaker 1: it pretty uh, you know, pretty good shape. Samnogi, thanks

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Speaker 1: so much for joining us to snog is the CEO

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Speaker 1: of Marcus and Millichap talking to us about the commercial

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Speaker 1: real estate business and clearly some tough times coming up

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Speaker 1: for that business. At Lisa and again we just saw

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Speaker 1: some you know, it's gonna be really really difficult on

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Speaker 1: a lot of you know, small and mid sized businesses,

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Speaker 1: and obviously that'll be that'll trickle down to the real

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Speaker 1: estate as well. Looking at w T I crewed twenty

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Speaker 1: twenty cents a barrel just extraordinary here. So when we

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Speaker 1: talk about commodities like oil, we talked about supply and demand,

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Speaker 1: and it doesn't look good on either side for oil

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Speaker 1: right now. That's why we're fortunate to have our next guest,

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Speaker 1: Ellen Wald. She's a president of Transversal Consulting and a

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Speaker 1: Bloomberg Opinion contributor. Ellen, thanks so much for joining us.

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Speaker 1: So we know the demand picture is bad and seemingly

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Speaker 1: getting worse by the day. But let's start with supply.

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Speaker 1: What are the Russians and the Saudis thinking about today? Well, exactly, Well,

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Speaker 1: the Russians are probably thinking about the phone call that

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Speaker 1: President Trump says he's going to have with President Putin

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Speaker 1: later today, during which he plans to discuss oil. But

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Speaker 1: the interesting thing is that the real problem is actually

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Speaker 1: Saudi Arabia. In fact, there's been indications that Russia is

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Speaker 1: at the very least not increasing production and possibly interested

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Speaker 1: in cutting it. We heard some indications of this from

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Speaker 1: some of the Russian oil companies last week. Meanwhile, Saudi

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Speaker 1: Arabia is coming out and saying not only are they

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Speaker 1: increasing their production to twelve million barrels per day, uh,

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Speaker 1: it's starting April one, but they're also planning, starting in May,

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Speaker 1: of making ten point six million barrels per day of

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Speaker 1: oil available for export, So essentially they're taking their drop

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Speaker 1: in domestic demand and they want to put that on

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Speaker 1: the market to Alright, this has been leading to fears

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Speaker 1: and the reality of storage space being filled up. Literally

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Speaker 1: there is nowhere to put all of this oil. And

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Speaker 1: we saw in the US here a driller actually paying

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Speaker 1: someone at one point to just take their oil because

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Speaker 1: they had too much of it and needed a place

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Speaker 1: to put it. What's the end game here? The end

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Speaker 1: game is that production is going to have to decline.

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Speaker 1: That's that's really the only option here. Dwellers are going

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Speaker 1: to have to start plugging wells. Uh, they're going to

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Speaker 1: have to start reducing recounts. We've already seen recounts going

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Speaker 1: down in the Permian. But the reality is unless they

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Speaker 1: want to fill every ship on the sea with crude

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Speaker 1: oil and products and every idle jet with jet fuel, Uh,

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Speaker 1: they're going to have to calm down with this production because, Uh,

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Speaker 1: the demand problem isn't going to be resolved immediately. Demand

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Speaker 1: is going to take some time to come back. Gasolene

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Speaker 1: demand could come back pretty quickly once social distancing and

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Speaker 1: lockdown restrictions are eased, But it doesn't seem like we're

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Speaker 1: going to be getting that anytime soon. Alright, So give

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Speaker 1: us a sense ellen of what the Saudis are thinking

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Speaker 1: about here. What do you think is their mindset? Here?

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Speaker 1: They can see where global demand is and is not

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Speaker 1: h and they can look ahead and just see where

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Speaker 1: the storage capacity issues are. What are they really thinking here? Yeah,

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Speaker 1: this is this is the big question. When when this

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Speaker 1: whole issue got got started in the beginning of March

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Speaker 1: this nowady has actually had a pretty good plan before

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Speaker 1: UH the coronavirus lockdowns started across the US and then

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Speaker 1: in UH, in Europe and now in India, demand was down,

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Speaker 1: and particularly from China, but it wasn't bad, and so

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Speaker 1: their plan to increase production was actually had some merit.

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Speaker 1: The idea would be increased production, you'll increase revenue even

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Speaker 1: if you send oil prices down by a bit. The

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Speaker 1: problem happened when, first of all, they got into this

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Speaker 1: price more kind of narrative, and that sent prices down

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Speaker 1: further than they probably would have liked. And then on

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Speaker 1: top of that you add in the coronavirus lockdowns which

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Speaker 1: were just killed demand almost immediately, and that sent prices

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Speaker 1: down further. So now even if they're producing and selling

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Speaker 1: a lot of oil. If they're only selling it at

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Speaker 1: you know, dollars a barrel, they're not making more revenue.

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Speaker 1: And sooner or later they're going to have to realize

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Speaker 1: that this is a serious problem. And I think we're

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Speaker 1: going to start to see that in April as we

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Speaker 1: see the big question is Ken Saudi MAYBEA actually sell

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Speaker 1: all of this oil that have buyers? They say they do.

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Speaker 1: Anecdotal evidence suggests that maybe they don't, but we're going

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Speaker 1: to have to watch this play out basically in the

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Speaker 1: tanker space. Are we going to see these tankers filling

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Speaker 1: with oil leaving Saudi Arabia and then unloading it? And

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Speaker 1: if we don't, then that's going to expose Saudi Arabia's problem?

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Speaker 1: And what does this mean for the shail patch when

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Speaker 1: we see pipeline operators actually saying to drillers just stop,

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Speaker 1: just keep it in the ground guys, because we don't

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Speaker 1: have any space. Are they all going to go bankrupt?

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Speaker 1: It's likely that a lot of them will go bankrupt,

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Speaker 1: They'll be bought by others. There are going to be

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Speaker 1: a lot of consolidations. It's not going to be pleasant.

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Speaker 1: We're going to see production slow down, in the United States,

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Speaker 1: and we were already looking at somewhat of a production

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Speaker 1: slow down coming on by maybe this is going to

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Speaker 1: be a much more dramatic drop. The good story in

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Speaker 1: all of this is that the oil is still there

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Speaker 1: and when this is all over, when demand picks up,

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Speaker 1: which it will then, and that oil is still going

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Speaker 1: to be there. And even if the same companies aren't there,

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Speaker 1: new ones will likely form or the few that kind

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Speaker 1: of brought up the assets of the others will start

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Speaker 1: producing again. So the Americus future as an oil producer

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Speaker 1: is not over. This is not the end of that story.

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Speaker 1: Ellen Wald, thank you so much for being with us.

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Speaker 1: Ellen Wald, president of Transversal Consulting, and a Bloomberg Opinion

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Speaker 1: Calumness joining us. I gotta say, Paul, my favorite quote

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Speaker 1: that I've read over the past few weeks has been

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Speaker 1: rocks don't go bankrupt. That that's one of the silver

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Speaker 1: that's the silver lining for the show patch right now. Yeah,

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Speaker 1: there's still oil in the ground, and as ellen said,

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Speaker 1: when the market comes back, there will be some some

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Speaker 1: oil people out there drilling and bringing it out for Yeah,

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Speaker 1: although I do have to think, what does it say

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Speaker 1: if you have pipeline operators literally saying just keep it

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Speaker 1: in the ground. It's not going anywhere good right now,

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Speaker 1: guys looking right now at Brent Crew, that's really what's

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Speaker 1: taken on the chin this morning. It's down to two

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Speaker 1: dollars and sixty a barrel, the lowest in seventeen years.

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Speaker 1: Interesting to see what's going on right now in credit

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Speaker 1: in the meantime, because you have sort of dual forces,

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Speaker 1: given the fact that oil prices are falling to the

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Speaker 1: lowest and seventeen years, and then you also have concerns

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Speaker 1: about growth, and then you have the FED trying to

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Speaker 1: backstop the whole thing, which is leading to this jumble

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Speaker 1: with a lot of dire predictions, and yet people still

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Speaker 1: saying it's time to buy Paul. Sort of this odd

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Speaker 1: moment where there seems to be an opportunity here, but

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Speaker 1: people aren't sure whether they're going to get just to

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Speaker 1: quote to quote, walls speak, their faces ripped off in

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Speaker 1: the process. Um And someone who's been attracting this really

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Speaker 1: well and which has been frankly on the ball every

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Speaker 1: time we speak to him is Greg Hahn, who wasn't

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Speaker 1: necessarily as enthusiastic earlier about the enthusiasm we were seeing

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Speaker 1: in the markets and now joins us chief investment officer

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Speaker 1: for Winthrop Capital Management. Greg I'm curious from your perspective,

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Speaker 1: is this a time of opportunity in the high yield

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Speaker 1: space or is this a time of growing risk. So

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Speaker 1: so in the high yield space, we have to separate

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Speaker 1: it from the high the high yield basis. In the end,

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Speaker 1: we take the energy sector out because of what's going

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Speaker 1: on with oil prices. We think the energy sector is

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Speaker 1: going to go through some turmoil. Um and it's a

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Speaker 1: it's uh. I think at the end of the day,

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Speaker 1: it's a buyer's market. But you've got to do your

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Speaker 1: homework and you've got to be selective. But there's some

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Speaker 1: good companies out there that are on sale. So what

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Speaker 1: are some of the sectors? Are the companies that are

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Speaker 1: on your screen at the moment. So we've been focused, candidly,

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Speaker 1: we've been focused on the up and quality trade. So

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Speaker 1: in away from high yield and the investment grade sector.

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Speaker 1: The new issue market has been extremely active and where

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Speaker 1: we can buy in the short end. The short end

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Speaker 1: has had some serious dislocations. So we were buying two

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Speaker 1: in three year paper that had yields of six percent,

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Speaker 1: which was just from force selling. We're also seeing opportunities

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Speaker 1: in the CMBs market, and that's where the problems are

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Speaker 1: gonna or is is we see you know, we expect

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Speaker 1: um rent payments on the corporate side. We're gonna miss

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Speaker 1: rent payments for April, We're gonna probably miss them for

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Speaker 1: May um and so we're going to see some deterioration

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Speaker 1: in some increase in delinquencies and CMBs, so that there's

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Speaker 1: force selling of the CNBS sector. That's put a lot

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Speaker 1: of paper out on the street and that's kind of yields.

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Speaker 1: What are your baked in assumptions, Greg, I'd love your

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Speaker 1: sense as you extrapolate out of how deep and long

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Speaker 1: the recession will be and whether that even matters in

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Speaker 1: terms of where things are being valued in the opportunity therein. Yeah,

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Speaker 1: So for us to make sense of this, we have

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Speaker 1: to separate what's going on the economy and what's going

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Speaker 1: on in the financial system with what's going on in

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Speaker 1: the capital markets. So we put those into it all

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Speaker 1: gets pushed together. But if we if we focus on

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Speaker 1: on the capital markets piece of it, Um, just specifically

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Speaker 1: to your question, we think the ret the re sector

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Speaker 1: right now is going to be challenged, but the way

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Speaker 1: that it flows through in the commercial mortgage loan space, Uh,

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Speaker 1: what we expect businesses to miss their April first you know,

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Speaker 1: we're gonna see, you know, a decline in April first

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Speaker 1: rent payments. We're going to see a decline in May

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Speaker 1: first rent payments, and then we'll start to see some

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Speaker 1: um improvement after that as businesses just get back to

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Speaker 1: up and running. And that particularly isn't that strip mall

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Speaker 1: space where you see restaurants, mail salons, barbershops, that kind

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Speaker 1: of service stuff that's effectively shut down for this period

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Speaker 1: of time. So, Greg, what kind of economic assumption are

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Speaker 1: you guys kind of working on. We had a bunch

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Speaker 1: of Wall Street investment banks over the last week coming

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Speaker 1: out with GDP forecast quarterly for twenty twenty, and most

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Speaker 1: had I would characterize as kind of a V type

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Speaker 1: of recovery with a sharp, sharp contraction in Q two,

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Speaker 1: but then it rebound in Q three and four. Is

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Speaker 1: that what you're modeling in Yeah? So we I can't

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Speaker 1: put numbers to it, but we if we look at

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Speaker 1: shapes of letters, um, we're not looking at a V

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Speaker 1: shape recovery right now, this one's gonna be it's gonna

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Speaker 1: be shorter than the financial crisis of two thousand and eight,

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Speaker 1: but this is going to be extended. Um, this is

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Speaker 1: gonna go on for two quarters. Greg, I want to

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Speaker 1: talk more about speculative grade credit in general, and you're

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Speaker 1: talking about the opportunities in higher rated junk bonds. I'm

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Speaker 1: just wondering about investment grade down grades, the fallen Angel

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Speaker 1: kind of syndrome. We've seen an escalating number of down grades.

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Speaker 1: I'm just wondering at what point that's going to cause

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Speaker 1: forced selling that bleeds out into the top tier of

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Speaker 1: high yield. How worried are you about that? Well, it

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Speaker 1: absolutely will the I mean, we saw Ford get downgraded

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Speaker 1: last week, I think it was last week or two

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Speaker 1: weeks ago. Um, we're going to see it. This happened

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Speaker 1: in the late nineties early two thousands, where we saw

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Speaker 1: Georgia Pacific Board GM a number of investment grade companies

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Speaker 1: get down graded. With with low interest rate and tight

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Speaker 1: credit spreads, it's not going to have a fundamental impact

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Speaker 1: on the company that doesn't it's not going to increase

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Speaker 1: their bowering costs as long as they can access the markets.

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Speaker 1: It's going to have a bigger effect in the capital

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Speaker 1: markets for those of us who navigate where we want

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Speaker 1: to allocate dollars. So a big, big amount of a

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Speaker 1: large amount of credit coming from investment grade into high yield,

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Speaker 1: we're gonna have to digest that into the high yield space. Yes,

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Speaker 1: it's a great challenge. Yeah, what's your sense of the

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Speaker 1: financial system, the health of the financial system, maybe say

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Speaker 1: now versus two thousand two nine. Right, So in two

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Speaker 1: thousand and eight, two thousand nine, we were dealing with

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Speaker 1: UH growth in the subprime loan space that worked its

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Speaker 1: way into UH structured product different types of product. We

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Speaker 1: don't have from our view, we don't have those kinds

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Speaker 1: of accesses UH in UM, the residential space. UM. We

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Speaker 1: thought the commercial mortgage loan space was a little bit extended. UM.

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Speaker 1: And so there's been a lot of development over the

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Speaker 1: last eight years. The but the financial system is significantly

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Speaker 1: stronger than it was twelve years ago, because we're talking

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Speaker 1: about banks now that have capital levels and excessive eight percent.

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Speaker 1: And a context for that is back in the financial crisis,

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Speaker 1: I think the banking sector was close at four So

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Speaker 1: I think the banks have enough of a shock absorber

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Speaker 1: to to absorb this much better than they had. And

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Speaker 1: part of this is the FED has responded so quickly

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Speaker 1: to put programs in place to help support commercial paper

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Speaker 1: and repurchase agreements, and it really does support the financial system.

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Speaker 1: So it's got the shock absorbers it needs to help

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Speaker 1: absorb these um this this crisis. So one thing I've

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Speaker 1: been struggling with just taking a step back the entire

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Speaker 1: there's a theory out there anyway that there's a big

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Speaker 1: shift going on that's getting accelerated by the coronavirus to

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Speaker 1: a digital economy. You're seeing slack, you're seeing zoom all surge,

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Speaker 1: you're seeing sort of anything having to do with online

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Speaker 1: delivery do well. And a lot of the high old

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Speaker 1: market is tied to the old economy and industrial companies

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Speaker 1: that are struggling arguably the most. What do you say

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Speaker 1: to people who just argue that you have all these

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Speaker 1: over leveraged companies that are going to not be able

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Speaker 1: to grow into their capital structures. It's going to lead

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Speaker 1: to a whole host of defaults with bigger loan losses

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Speaker 1: on them, with loan loss recoveries than during the two

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Speaker 1: thousand and eight crisis. I keep hearing more about that.

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Speaker 1: Is that a real worry? Um? Yeah, the difference between

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Speaker 1: the new economy and the old economy. The old economy,

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Speaker 1: if if there are assets tied to those businesses, there's value.

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Speaker 1: In the new economy where you've got technology based businesses,

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Speaker 1: there's there's just from a credit standpoint, there's fewer assets,

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Speaker 1: so that your your asset is actually your client base.

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Speaker 1: It's not necessarily your website the technology to support it. Um.

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Speaker 1: But it's a it's a valid point. I mean, it's

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Speaker 1: we've got this whole shift. Every industry is going through

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Speaker 1: some tectonic shift right now. And I always joke, we

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Speaker 1: never saw we never got a memo when the typewriter

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Speaker 1: left the office back in seven or whenever it left.

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Speaker 1: You know, it's like it just starts to happen and

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Speaker 1: then the typewriter repair shop goes out. So some of

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Speaker 1: this is going to have an impact on literally how

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Speaker 1: we do business. Greg Han, thank you so much for

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Speaker 1: joining us and hanging on there. Greg Han, chief investment

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Speaker 1: Officer for Winthrop Capital Management. Well, there's been a lot

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Speaker 1: of back and forth between President Trump and General Motors

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Speaker 1: about ventilators. Are they making them, are they being are

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Speaker 1: they charging too much? Let's get the latest with David Walsh,

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Speaker 1: Bloomberg Detroit Bureau chief. So David, give us the latest

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Speaker 1: on what's going on with General Motors and switch pivoting

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Speaker 1: into the manufacturing of ventilators. Yeah. So they've actually started

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Speaker 1: tearing down the original machine at Ventech, which is GM's partner,

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Speaker 1: turning the machine down at an auto parts plane Cocomo

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Speaker 1: and rebuilding it and really kind of perfecting the called

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Speaker 1: it an assembly line, but it's really a roomful of

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Speaker 1: people assembling these things, uh, the factory that will make

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Speaker 1: these things. So they're they're getting to the final throws

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Speaker 1: of really setting up the whole process to make thousands

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Speaker 1: of ventilators. And this is important because a vent check

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Speaker 1: which which makes this critical care event or later that

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Speaker 1: can be used for COVID nineteen patients. They were used

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Speaker 1: to making a hundred and fifty maybe a good month

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Speaker 1: two hundred and fifty units, and working with GM, they're

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Speaker 1: going to try to get to ten thousand a month.

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Speaker 1: So this is a huge leap for a company that

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Speaker 1: makes something that, while important, was not here to before

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Speaker 1: in such great demand. There was some controversy David over

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Speaker 1: General Motors and how much they were charging for some

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Speaker 1: of these Venti leaders, President Trump singling them out and

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Speaker 1: talking about this, where are we on that? So Tom

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Speaker 1: kind of the complete about faith in his press briefing

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Speaker 1: yesterday and said GM is doing a fantastic job. But

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Speaker 1: the written initial controversy was Trump just came out Friday

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Speaker 1: and said they weren't moving fast enough, they were gouging uh.

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Speaker 1: To be blunt, these are both kind of dodgy claims.

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Speaker 1: UMS were in General Electric are trying to make these

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Speaker 1: and they were saying they help me ready until June,

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Speaker 1: and GM was looked at the start production in mid April.

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Speaker 1: So they're ahead of every other venture out there that

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Speaker 1: that at least has been discussed publicly. GM is actually

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Speaker 1: not really even negotiated with vent Tech negotiates. In terms

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Speaker 1: of the deal, GM is a contract manufacture that could

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Speaker 1: be paid by Vente. GM is doing the work had cost,

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Speaker 1: and Ventech is charging which they told me the same

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Speaker 1: eighteen thousand dollars a unit that they've been charging all along.

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Speaker 1: What may not be totally appreciated, Your in vent Tech

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Speaker 1: unit is one of the cheaper critical care units out there. Uh,

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Speaker 1: it's actually a five and one unit. It handles four

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Speaker 1: other respiratory therapies that you need for these patients when

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Speaker 1: the other ventilators are just that that are on the

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Speaker 1: market are just ventilators, and you have to buy the

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Speaker 1: other four pieces of equipment separately. So there's some talk

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Speaker 1: that maybe that wasn't totally appreciated by the President when

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Speaker 1: when he started compointing about price, but he seems to

432
00:23:57,320 --> 00:23:59,880
Speaker 1: be happy with everything now because two days after his ranch,

433
00:24:00,040 --> 00:24:05,080
Speaker 1: the kind of events, So David, just you mentioned mid April,

434
00:24:05,080 --> 00:24:07,200
Speaker 1: give us a sense of kind of the ramp up

435
00:24:07,200 --> 00:24:10,600
Speaker 1: here in terms of timing number of units of production.

436
00:24:11,119 --> 00:24:14,560
Speaker 1: What's the best guess at this point. I think when

437
00:24:14,560 --> 00:24:16,280
Speaker 1: they start producing in mid April, it's going to be

438
00:24:16,359 --> 00:24:20,000
Speaker 1: pretty small numbers. Right now, GM has three people working

439
00:24:20,000 --> 00:24:22,400
Speaker 1: on that plant and they need to over time get

440
00:24:22,480 --> 00:24:26,400
Speaker 1: up to a thousands. So they're looking for volunteers who've

441
00:24:26,400 --> 00:24:29,560
Speaker 1: been laid off with their current plant in Cocomom, Indiana,

442
00:24:29,680 --> 00:24:33,360
Speaker 1: open for volunteers from the metal stamping plant in nearby Marrying, Indiana,

443
00:24:33,400 --> 00:24:35,520
Speaker 1: and they're gonna have to do some new hires. They're

444
00:24:35,520 --> 00:24:38,160
Speaker 1: gonna have to they're still kind of finishing the process

445
00:24:38,200 --> 00:24:40,440
Speaker 1: that they used to make these. And keep in mind

446
00:24:40,440 --> 00:24:43,200
Speaker 1: when engines or cars are assembled, they go along a

447
00:24:43,280 --> 00:24:45,720
Speaker 1: rolling assembly line and work a sort of you know,

448
00:24:46,160 --> 00:24:49,440
Speaker 1: they do certain tasks with robotic arms as the car

449
00:24:49,560 --> 00:24:52,680
Speaker 1: goes by, making ventilators. There's a lot more like making

450
00:24:52,720 --> 00:24:55,040
Speaker 1: watches and assembling cars. You have a lot of people

451
00:24:55,080 --> 00:24:58,119
Speaker 1: sitting at tables with small tools, looking row lens and

452
00:24:58,240 --> 00:25:01,280
Speaker 1: screwing small electronic components to That's why GM chose this

453
00:25:01,359 --> 00:25:05,199
Speaker 1: planet's and trying components plant. Yeah, that's what it did before,

454
00:25:05,680 --> 00:25:08,920
Speaker 1: but it's still a different process GM has never done before.

455
00:25:08,960 --> 00:25:12,240
Speaker 1: Their parts suppliers. These are all automotive parts suppliers that

456
00:25:12,280 --> 00:25:15,920
Speaker 1: are doing kind of work with new parts for them,

457
00:25:16,600 --> 00:25:18,800
Speaker 1: and they're not to validate, just make sure all works.

458
00:25:18,800 --> 00:25:20,600
Speaker 1: We'll got starts in mid April. You're going to see

459
00:25:20,640 --> 00:25:24,080
Speaker 1: pretty small amounts. Maybe by the end of April, you know,

460
00:25:24,080 --> 00:25:26,800
Speaker 1: you'll be up to hundreds or you know, they're they're

461
00:25:26,960 --> 00:25:30,480
Speaker 1: really good over a thousand months. So yeah, well so

462
00:25:30,520 --> 00:25:33,239
Speaker 1: we're not going to see we we were not going

463
00:25:33,280 --> 00:25:35,080
Speaker 1: to see huge numbers there. The other place we're not

464
00:25:35,080 --> 00:25:37,560
Speaker 1: going to see huge numbers is just the auto manufacturing

465
00:25:37,640 --> 00:25:39,960
Speaker 1: in general, how low our auto sales going to be.

466
00:25:40,040 --> 00:25:43,399
Speaker 1: What are some of the predictions at this point, So

467
00:25:44,000 --> 00:25:46,960
Speaker 1: we're probably looking at a March that was pretty well

468
00:25:47,000 --> 00:25:49,560
Speaker 1: decimated by this. Everybody was saying that first week was

469
00:25:49,600 --> 00:25:53,400
Speaker 1: pretty good, and then all the shutdowns started hitting. People

470
00:25:53,440 --> 00:25:58,960
Speaker 1: were avoiding dealerships. Uh, you know that there were towns

471
00:25:59,000 --> 00:26:03,560
Speaker 1: and states basically keeping people inside except for essential industries

472
00:26:03,600 --> 00:26:05,280
Speaker 1: and so forth. You know about all of that. So

473
00:26:05,720 --> 00:26:08,000
Speaker 1: that's really hammered sales. So it's it's going to be

474
00:26:08,080 --> 00:26:10,440
Speaker 1: a rough corder when we see see the numbers on

475
00:26:10,560 --> 00:26:14,360
Speaker 1: Wednesday and going into April, I expect the same thing

476
00:26:14,400 --> 00:26:17,560
Speaker 1: because you're probably still going to have a lot of

477
00:26:17,600 --> 00:26:20,200
Speaker 1: people staying home, even if they're allowed to go out

478
00:26:20,280 --> 00:26:23,960
Speaker 1: in their states, just to avoid contact with others. David Wals,

479
00:26:24,000 --> 00:26:25,600
Speaker 1: thank you so much for being with us, and all

480
00:26:25,600 --> 00:26:27,840
Speaker 1: the best to you and your family. David Welch, Bloomer,

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00:26:27,840 --> 00:26:31,680
Speaker 1: Detroit Bureau Chief. Thanks for listening to the Bloomberg P

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00:26:31,760 --> 00:26:34,320
Speaker 1: and L podcast. You can subscribe and listen to interviews

483
00:26:34,359 --> 00:26:37,479
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. I'm

484
00:26:37,520 --> 00:26:40,320
Speaker 1: Paul Sweeney. I'm on Twitter at pt Sweeney. I'm Lisa A.

485
00:26:40,400 --> 00:26:42,719
Speaker 1: Bram Woyds. I'm on Twitter at Lisa A. Bram Woit's

486
00:26:42,800 --> 00:26:45,680
Speaker 1: one before the podcast. You can always catch us worldwide

487
00:26:45,680 --> 00:26:46,639
Speaker 1: on Bloomberg Radio