WEBVTT - Bitcoin Heading to 11,000 As Adoption Picks Up: McGlone 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.360 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.600 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple Podcasts or wherever you listen to podcasts, 0:00:17.000 --> 0:00:22.000 and on Bloomberg dot com. I'm looking at bitcoin here, 0:00:22.040 --> 0:00:24.079 looking at the chart here. We haven't talked bitcoin in 0:00:24.120 --> 0:00:25.800 a while. I'm looking at the chart and it hit 0:00:25.880 --> 0:00:28.720 a low for this year back around mid March, just 0:00:28.880 --> 0:00:32.239 under five thousand dollars. Uh, look at it today it 0:00:32.360 --> 0:00:36.360 is more than doubled over eleven thousand dollars. So Bitcoin 0:00:36.520 --> 0:00:39.760 just really just rallying here once again. And I kind 0:00:39.760 --> 0:00:43.000 of in line with gold. We talk a lot about gold, um, 0:00:43.040 --> 0:00:45.559 but the bitcoin is just pen an extraordinary story. I'm 0:00:45.560 --> 0:00:47.920 gonna talk about both gold and bitcoin. We can do that, 0:00:48.040 --> 0:00:53.080 of course with one Michael mcglow, Bloomberg Intelligence Commodity strategists. 0:00:53.080 --> 0:00:56.400 So Mike, let's start with bitcoin, because anything I know 0:00:56.440 --> 0:00:59.600 about this commodity, and I admit it's limited, but whatever 0:00:59.600 --> 0:01:02.639 I do, it's from reading your research. What's been going 0:01:02.680 --> 0:01:05.959 on with bitcoin here, Hey, Paul, Well, the key thing 0:01:06.040 --> 0:01:08.840 was ten thousand resistance. It held for quite a while, 0:01:08.959 --> 0:01:11.399 basically almost a year, and market finally blew through that 0:01:12.120 --> 0:01:14.280 last weekend. And I think the key thing was it's 0:01:14.280 --> 0:01:17.080 following gold. And also there was notice from the o 0:01:17.200 --> 0:01:19.240 c C, the Officer of the Controller of the currency, 0:01:19.240 --> 0:01:21.800 that they're gonna allow banks to custody bitcoin. So bitcoins 0:01:21.800 --> 0:01:24.480 finally reached that hurdle. And bitcoin is a tendency to 0:01:24.560 --> 0:01:27.000 stagnate and and just drive people crazy forhil and then 0:01:27.080 --> 0:01:29.160 jump for big moves. So the next target I really 0:01:29.200 --> 0:01:31.840 see for bitcoin right now, it's around eleven thousand. I 0:01:31.840 --> 0:01:33.640 see it really is around four team thousands, which was 0:01:33.680 --> 0:01:37.600 last year's high. Interesting, all right, so how do you 0:01:37.720 --> 0:01:39.720 view I know you were the first one to introduced 0:01:39.760 --> 0:01:43.000 me to this concept as bitcoin, uh, similar to goal 0:01:43.240 --> 0:01:47.000 in a store of value. How's your thinking on that 0:01:47.080 --> 0:01:49.920 these days? The bottom line is the simple way to 0:01:49.920 --> 0:01:52.720 look at bitcoin is this supply is declining by code 0:01:52.880 --> 0:01:54.840 is going to be less than two percent next year 0:01:54.840 --> 0:01:56.600 and and go to near one percent in the next 0:01:56.680 --> 0:01:59.280 hundred years. And that's a big difference with gold. Gold 0:01:59.320 --> 0:02:01.880 is historically been around two percent, but prices go higher, 0:02:02.040 --> 0:02:04.520 more supply come on. Bigcoin won't do that. So the 0:02:04.600 --> 0:02:06.960 key thing matters is demand and adoption. Yes, it's a 0:02:06.960 --> 0:02:09.639 new technology, but all my indicators are for more adoption 0:02:10.160 --> 0:02:13.040 and more demand, and this little news last week from 0:02:13.040 --> 0:02:15.079 the occ really kind of picks it up. So that's 0:02:15.080 --> 0:02:18.000 at the bottom line. Remember, it's digital currency, and there's 0:02:18.040 --> 0:02:20.280 more demand for it and limit supply, and people are 0:02:20.280 --> 0:02:22.400 adopting it. Talk to me about that supply, so you 0:02:22.480 --> 0:02:24.600 can just explain that a little bit more to me 0:02:24.760 --> 0:02:28.320 and our listeners. Why there would not be more supply. 0:02:28.360 --> 0:02:31.240 Why can't I just go get a computer and create 0:02:31.280 --> 0:02:35.440 some more supply. Well that's the thing. Um. The total 0:02:35.480 --> 0:02:37.760 amount of bitcoins ever mind will be twenty one million. 0:02:37.840 --> 0:02:40.799 We're almost nineteen million mind already. So now why why 0:02:40.919 --> 0:02:43.760 is that? Where did that twenty one million number come from? 0:02:43.800 --> 0:02:45.880 It was it was set up by code, by our 0:02:45.880 --> 0:02:48.520 famous person, so Tosi Documoto. I think you might like 0:02:48.680 --> 0:02:51.920 that name, but um, you might respond to that one 0:02:51.960 --> 0:02:53.800 a little bit. But that was set up by code 0:02:53.800 --> 0:02:56.240 to have limited supply means, so it would be more 0:02:56.240 --> 0:02:58.400 of a store value. To me. I view it as 0:02:58.440 --> 0:03:01.840 a collectible, and that's why it's becoming. So that's never 0:03:01.840 --> 0:03:04.520 gonna go much above there. And it doesn't matter who 0:03:04.560 --> 0:03:06.520 minds are, how many people mind. There's no more than 0:03:06.600 --> 0:03:09.679 nine bitcoins created a day. Last year was eight d 0:03:10.120 --> 0:03:12.440 and that's it. That's all they can be created so 0:03:12.760 --> 0:03:16.400 via code unless something breaks down with something I can't predict, 0:03:16.760 --> 0:03:19.600 it's going that way. And again it's digital money. It's new, 0:03:19.680 --> 0:03:21.799 it's a new Internet money as people might call it, 0:03:21.919 --> 0:03:24.920 but supplies limited and demands picking up. Interesting. All right, 0:03:24.960 --> 0:03:28.239 let's go back to kind of older store of money, 0:03:28.400 --> 0:03:31.440 and that is gold. We briefly saw a touch two 0:03:31.440 --> 0:03:35.120 thousand dollars announced here. What are the drivers behind the 0:03:35.160 --> 0:03:38.320 moving gold? Mic um? I think we all kind of 0:03:38.320 --> 0:03:40.640 know the big picture ones. The bottom line is free money. 0:03:40.680 --> 0:03:43.480 It was a cover of Economist magazine just a week ago. 0:03:43.840 --> 0:03:47.000 And that is a concept that we can print as 0:03:47.080 --> 0:03:49.160 much money as we want, to create as much liquidity 0:03:49.200 --> 0:03:51.840 as we want by essential banks, and have as much 0:03:51.840 --> 0:03:54.440 fiscal stimus as we want, yet not have higher bondial 0:03:54.760 --> 0:03:57.480 And that to me is just a double bullmarket for 0:03:57.680 --> 0:03:59.920 you know, big big foreign foundation for gold to go 0:04:00.120 --> 0:04:02.880 higher when you don't have competition from higher yields. Gold 0:04:03.000 --> 0:04:04.920 must appreciate, and that's what it's doing right now. It's 0:04:04.920 --> 0:04:07.480 getting a little expensive around two thousand. I look at 0:04:07.480 --> 0:04:10.680 a little more technically now above the fifty week average 0:04:10.680 --> 0:04:12.600 is the most of the decade, so you want to 0:04:12.680 --> 0:04:15.480 lay low a little bit. But fundamentally it's quite bullish. 0:04:15.520 --> 0:04:18.920 And until we see something to limit people's ability to 0:04:18.960 --> 0:04:21.400 print money, which by human nature of the petitions will 0:04:21.440 --> 0:04:25.240 continue to do, golds to continue appreciate. And you know, 0:04:25.320 --> 0:04:28.480 I'm just looking at the chart of silver. There there's 0:04:28.520 --> 0:04:32.760 another commodity that from that same mid March period has 0:04:32.800 --> 0:04:36.719 effectively doubled. It is now the best performing commodity on 0:04:36.760 --> 0:04:40.080 the planet this year. Up about the thing is it's 0:04:40.080 --> 0:04:42.599 only really catching up to gold. Its cup around twenty 0:04:42.600 --> 0:04:44.680 five dollars is was really good. Resistance is the key 0:04:44.680 --> 0:04:47.039 thing to remember about silver. Well, I'll perform gold in 0:04:47.080 --> 0:04:48.839 a week dour environment, which you're getting a little bit 0:04:48.920 --> 0:04:51.840 right now, but you need a strong economy. Demand for 0:04:51.880 --> 0:04:56.039 silver is from industrial purposes, and right now that's probably 0:04:56.080 --> 0:04:59.200 not likely. So um I view silver is pretty much 0:04:59.200 --> 0:05:01.480 locked up in their good distance, probably not gonna get 0:05:01.520 --> 0:05:03.640 them up much above thirty. But gold can easily get 0:05:03.640 --> 0:05:07.000 to three thousand briefly in the next thirty seconds or so. Mike, 0:05:07.080 --> 0:05:10.200 what's the other commodity that maybe we're not focusing on 0:05:10.320 --> 0:05:14.600 and that we should be all precious metals pladium and platinum. 0:05:14.640 --> 0:05:16.760 To me, it's all precious medals, the top performers on 0:05:16.839 --> 0:05:20.960 the year, and I expect them to continue anything less 0:05:21.000 --> 0:05:23.520 like on the agricultural or front or I mean my favorite, 0:05:23.520 --> 0:05:25.880 you know, my favorite pork bellies, um, anything in the 0:05:25.920 --> 0:05:29.159 egg front. I'm just gonna be doing my outlook. And 0:05:29.200 --> 0:05:31.679 the problem with agg is just too much supplied. Weather 0:05:31.760 --> 0:05:34.560 is good, too much corn, and there's just not enough 0:05:34.600 --> 0:05:38.160 demand for it, most notally from slack demand for ethanal. Well, 0:05:38.200 --> 0:05:39.640 we need China to come in and buy, right. Is 0:05:39.680 --> 0:05:42.680 that does that move the market? Still? They're helping keep 0:05:42.680 --> 0:05:44.560 it a floor into the market, But the bottom line 0:05:44.600 --> 0:05:46.680 is there's just so much corn on the market. Because's 0:05:46.680 --> 0:05:49.080 so much corn coming, weather is good, that will keep 0:05:49.080 --> 0:05:52.280 a limit in prices. Appreciate so much, Mike McGlone, We 0:05:52.320 --> 0:05:56.760 really appreciate that commodity update. Mikes, commodity strategist for Bloomberg Intelligence, 0:05:56.760 --> 0:06:00.159 again giving us his thoughts on the just a commods 0:06:00.200 --> 0:06:02.120 have just had a great, great run. Here again you 0:06:02.160 --> 0:06:04.920 look up, pull up the chart for silver, for gold 0:06:04.960 --> 0:06:06.880 and as micro was saying, precious medals in general, and 0:06:06.920 --> 0:06:09.520 you to see uh, you know, this doubling off the 0:06:09.520 --> 0:06:11.760 March low ands and then some and then that includes 0:06:11.800 --> 0:06:14.680 bitcoin again more of a double in price off of 0:06:14.720 --> 0:06:17.520 the March lows. So again with these low UH interest 0:06:17.600 --> 0:06:21.120 rate environments, weaker dollars starting to see the commodities really 0:06:21.400 --> 0:06:24.520 trade well, although not so much on the agricultural fronts. 0:06:24.520 --> 0:06:26.880 Michael was just saying, just a supply and the demand 0:06:26.920 --> 0:06:31.440 story just not there for UH commodity agg prices right here, 0:06:31.560 --> 0:06:37.160 even if with China coming back into the market, well 0:06:37.200 --> 0:06:39.919 as more and more businesses try to reopen and raises 0:06:40.000 --> 0:06:43.800 the question if employees get sick with COVID nineteen when 0:06:43.800 --> 0:06:47.680 they return to work, are employers liable. To try to 0:06:47.720 --> 0:06:49.680 get the answer to that question, we welcome Ronnie has 0:06:49.720 --> 0:06:52.799 said Home, managing partner of the said Home Law group. Ronnie, 0:06:52.880 --> 0:06:55.560 thanks so much for joining us here. How does this 0:06:55.640 --> 0:06:59.440 play out? Are the employers loyal liable? What's the law currently? 0:07:00.800 --> 0:07:03.720 Thank you for having me, you know, I'm going to 0:07:03.800 --> 0:07:06.279 give you the answer that lawyers what to say, and 0:07:06.320 --> 0:07:12.720 that is, it depends yes, and it depends upon what 0:07:12.880 --> 0:07:16.880 measures the employer is taking in order to maintain a 0:07:16.960 --> 0:07:21.480 safe working environment. And as you know, it depends on 0:07:21.640 --> 0:07:25.280 which state you're in. The governors are providing employers with 0:07:25.480 --> 0:07:29.760 what they perceive as best practices. So let's take in 0:07:29.760 --> 0:07:33.280 New York, for example, one thing that Governor Cuomo tells 0:07:33.320 --> 0:07:36.560 us to do is take everybody's temperature every day recorded. 0:07:36.640 --> 0:07:40.080 If someone has a fever of two degrees or fahrenheit 0:07:40.160 --> 0:07:43.400 or higher, send them home, make them take the COVID 0:07:43.480 --> 0:07:46.840 nineteen tests, have themselves quarantine. If they just positive, they 0:07:46.920 --> 0:07:49.360 just negative, they can come back to work. And then 0:07:49.920 --> 0:07:52.440 you're supposed to ask a series of questions related to 0:07:52.520 --> 0:07:56.760 travel and interacting with individuals in general who may have 0:07:56.960 --> 0:08:02.160 exposure to the virus. It also includes make workplaces sanitary 0:08:02.200 --> 0:08:05.520 and maintaining social distance while working, and all of that 0:08:05.640 --> 0:08:08.160 is fine. The employer can only do so much. If 0:08:08.240 --> 0:08:13.520 I provide my employees with a questionnaire and they answer truthfully, 0:08:13.560 --> 0:08:15.680 that's fine. But I don't know if they're going to 0:08:15.680 --> 0:08:18.320 answer truthfully because I don't know what they're doing when 0:08:18.360 --> 0:08:20.160 they go home. I don't know what they're doing over 0:08:20.200 --> 0:08:24.200 the weekend, and I think it's there where the employer 0:08:24.240 --> 0:08:29.280 will not be liable due to someone else's fib Yeah, 0:08:29.360 --> 0:08:33.240 so it seems to me almost impossible for an employer 0:08:33.280 --> 0:08:36.760 to be held liable assuming they do the basic requirements, 0:08:36.760 --> 0:08:40.800 because you just don't know. You can't prove where I 0:08:40.840 --> 0:08:45.560 would think a person got the viber's that is exactly correct. 0:08:45.679 --> 0:08:48.480 And some people that I know personally have told me 0:08:48.559 --> 0:08:51.319 that they did test positive for the virus and they 0:08:51.400 --> 0:08:55.040 were effectively home most of this entire time since March 0:08:55.880 --> 0:08:58.240 h mid March, at least a New York City. They're 0:08:58.280 --> 0:09:00.439 all in New York City and they stay at home, 0:09:00.440 --> 0:09:04.120 and somehow they um to catch the virus. So you're right, 0:09:04.160 --> 0:09:07.240 it is impossible. And we're all still waiting for this, 0:09:07.320 --> 0:09:10.320 you know. I guess it's the fourth stimulus now for 0:09:11.000 --> 0:09:14.800 COVID nineteen from the government. But part of what everyone 0:09:14.880 --> 0:09:19.400 is discussing is a waiver of liability for employers because 0:09:19.400 --> 0:09:22.240 there's a there's a tug of war right now between 0:09:22.640 --> 0:09:26.560 coming back to work and refusing to come back to work, 0:09:26.640 --> 0:09:30.320 and some employers, uh, it's really impossible for them to 0:09:30.360 --> 0:09:35.120 function with percent workforce working remotely. So do you think 0:09:35.200 --> 0:09:39.280 that that virus relief proposal, where there is some liability 0:09:39.280 --> 0:09:42.040 protection from businesses and schools, is that is that a 0:09:42.040 --> 0:09:45.719 reasonable thing to have in federal legislation or can the 0:09:45.840 --> 0:09:47.480 courts kind of take care of it on its own? 0:09:49.440 --> 0:09:52.000 You know, it's uh, it's to me it's six of one, 0:09:52.040 --> 0:09:54.720 half dozen, dozen of another. A law is only as 0:09:54.720 --> 0:09:58.280 good as the individuals who follow it. So again, I 0:09:58.320 --> 0:10:03.200 think asking questions seems reasonable on the surface, but everybody 0:10:03.240 --> 0:10:06.640 knows their employees and they know who is going to 0:10:06.679 --> 0:10:08.560 give them a straight answer and who is not, and 0:10:08.600 --> 0:10:11.880 it's impossible to police it. I think as long as 0:10:11.880 --> 0:10:15.000 the employer is taking some kind of reasonable measure in 0:10:15.080 --> 0:10:18.880 terms of social distancing, cleanliness, things of that nature, then 0:10:18.920 --> 0:10:20.880 the employer should not be held liable. But if you 0:10:20.960 --> 0:10:23.800 walked into your office and there are a hundred people 0:10:24.080 --> 0:10:28.280 in an open architecture environment with no not even cubicles 0:10:28.400 --> 0:10:32.800 and no division and no space, that's that's that's a 0:10:32.840 --> 0:10:35.480 completely different issue. Do we have any precedent from a 0:10:35.559 --> 0:10:40.080 legal perspective about you know, employer liability for just having 0:10:40.160 --> 0:10:43.840 a I guess a clean workplace or one that's that's 0:10:43.880 --> 0:10:47.280 that's conducive to health, or one that certainly doesn't is 0:10:47.280 --> 0:10:51.000 not conducive to spreading disease. Generally speaking, I'm not an 0:10:51.000 --> 0:10:53.600 expert in this area, but we do have ocean laws 0:10:53.679 --> 0:10:58.280 occupational safety and health, and there's both federal and state legislation. 0:10:58.880 --> 0:11:03.160 Its normal is looked at from the perspective of manual labor, 0:11:03.240 --> 0:11:05.880 making sure individuals, for example, who are on a construction 0:11:05.960 --> 0:11:10.240 site have proper retires so if God forbid, something falls 0:11:10.280 --> 0:11:12.440 on their foot, they have steel toe shoes and they 0:11:12.520 --> 0:11:16.040 won't lose a toe. Um, but that those ocean laws 0:11:16.040 --> 0:11:19.080 do extend in general to health and safety, and so 0:11:19.360 --> 0:11:22.800 those laws have not changed. They're still in place. If anything, 0:11:22.960 --> 0:11:25.520 the c d C and the e E o C 0:11:25.760 --> 0:11:28.240 have joined on the ocean bandwagon and now we have 0:11:28.320 --> 0:11:33.080 specific COVID NINETEAM guideline do business. I wonder, you know, 0:11:33.120 --> 0:11:36.280 it's just the liability of the uncertainty of the liability. 0:11:36.520 --> 0:11:39.480 I wonder if that will you know, maybe prod certain 0:11:39.520 --> 0:11:42.160 employers to say, you know what, you can work from home. 0:11:42.360 --> 0:11:43.960 You know, I mean, if you heard any of that 0:11:44.040 --> 0:11:46.959 that that type of concern coming from employers and until 0:11:47.040 --> 0:11:49.240 there is a vaccine I'm not sure I want the 0:11:49.280 --> 0:11:53.000 liability of people coming back into my office. Yes, I 0:11:53.440 --> 0:11:56.760 have several clients and we've had that exact conversation, and 0:11:57.120 --> 0:12:01.480 you know, the advice there is really simple. You as 0:12:01.480 --> 0:12:03.360 a business owner need to do what you think is 0:12:03.440 --> 0:12:06.559 best for your business and your employees, and the employees 0:12:06.600 --> 0:12:10.520 also should play a role in that decision. So, and 0:12:10.720 --> 0:12:13.800 it also depends upon what it is you're doing, and again, 0:12:13.840 --> 0:12:16.920 how people are seated. So I'm the managing member of 0:12:16.960 --> 0:12:19.960 my law firm, but every one of my attorneys has 0:12:20.000 --> 0:12:23.640 their own office. Nobody shares offices because I know that 0:12:23.720 --> 0:12:26.240 I get distracted easily, and therefore I like to give 0:12:26.240 --> 0:12:29.959 everyone their own personal space. So for us, it's there's 0:12:30.040 --> 0:12:33.199 less danger right of coming to the office. But depending 0:12:33.240 --> 0:12:35.840 on how your office is designed, it may be perfectly 0:12:35.840 --> 0:12:38.840 reasonable for you to tell people to continue to work 0:12:38.880 --> 0:12:42.120 from home. But as you can imagine, there are some 0:12:42.200 --> 0:12:46.439 jobs which makes it almost impossible for people. Yeah, it's interesting. 0:12:46.880 --> 0:12:49.000 We had Google, I guess just announced today that you know, 0:12:49.160 --> 0:12:51.600 or yesterday, Uh, their folks can stay home till the 0:12:51.720 --> 0:12:55.520 end of the calendar year. So um really making Yeah, 0:12:55.600 --> 0:12:59.040 so that a lot of those opening open space architecture. 0:12:59.760 --> 0:13:01.720 But about the folks that are you don't have a choice, 0:13:01.760 --> 0:13:03.520 you're work in a paltry plan or you work in 0:13:03.559 --> 0:13:06.199 a meat fact, we've already seen issues there. Did those 0:13:06.240 --> 0:13:10.400 folks have rights? I mean, they do have rights to 0:13:10.480 --> 0:13:12.880 the extent that they have a valid reason to not 0:13:12.960 --> 0:13:16.160 come to the office because maybe they have an underlying 0:13:16.160 --> 0:13:19.960 health condition which makes it more unsafe for them than 0:13:20.000 --> 0:13:24.559 the average individual. They have rights. Uh. They also if 0:13:24.559 --> 0:13:27.920 they have other issues, for example, perhaps they live with 0:13:27.960 --> 0:13:31.400 someone with a compromised immune system, they have rights there too. 0:13:31.520 --> 0:13:35.880 There are emergency you know, sick time relief for those individuals, 0:13:35.920 --> 0:13:38.800 but there's a cap on how much they'll earn, and 0:13:39.160 --> 0:13:41.120 it may not be enough for some people to live 0:13:41.160 --> 0:13:44.200 off of because in some instances, I think the federal 0:13:44.200 --> 0:13:47.439 cap is two hundred dollars per day. So if you're 0:13:47.679 --> 0:13:50.280 executive and you're earning a hundred and fifty thousand a year, 0:13:50.320 --> 0:13:53.160 that's a pretty steep pay cut for you. It may 0:13:53.160 --> 0:13:56.880 not be sustainable. But for the individual working, yes, inside 0:13:57.280 --> 0:14:02.000 some kind of plant, perhaps that is in for them. Interesting. 0:14:02.200 --> 0:14:04.520 I think if we can have shifts, right, I think 0:14:04.559 --> 0:14:07.360 everyone is just so entrenched in nine five or eight 0:14:07.400 --> 0:14:10.320 to four or whatever. Everyone, I'm gonna have to have 0:14:10.360 --> 0:14:12.160 to call it there because we're just out of time. 0:14:12.160 --> 0:14:13.719 But thanks so much for joining us. Ronnie I set 0:14:13.760 --> 0:14:16.720 Home Managing Partners, set Home Law Group joining us about 0:14:16.720 --> 0:14:22.920 those back to work and protections for employers. Well, we 0:14:23.000 --> 0:14:26.320 have the FED meeting today tomorrow, the FED decision at 0:14:26.520 --> 0:14:28.920 two p m. Wall Street time tomorrow. To get a 0:14:28.920 --> 0:14:31.880 preview of what we might hear from the Fed, we 0:14:31.960 --> 0:14:35.960 welcome our favorite FED guests, Ira Jersey, chief US interest 0:14:36.040 --> 0:14:39.600 rate strategist for Bloomberg Intelligence. So, Ira, I'm guessing you're 0:14:39.640 --> 0:14:43.200 not expecting anything major to come out of the FED meeting, 0:14:43.240 --> 0:14:46.440 but give us your thoughts. Yeah, thanks, Paul. It's all 0:14:46.560 --> 0:14:48.880 going to be nuanced, I think. And you know, the 0:14:49.120 --> 0:14:51.680 big thing that we're gonna be looking for is what 0:14:51.920 --> 0:14:54.680 is the Federal Reserve thinking in terms of forward guidance, 0:14:54.720 --> 0:14:57.440 because they, you know, they hinted basically early in the 0:14:57.480 --> 0:15:00.960 crisis that they might try yield curve control, which is 0:15:01.080 --> 0:15:05.400 buying bonds at a certain yield in unlimited size to 0:15:05.520 --> 0:15:08.440 keep the long term interest rates low. But they kind 0:15:08.440 --> 0:15:11.920 of backtracked on that over the last six weeks or so, 0:15:12.280 --> 0:15:14.520 and in doing so. They they did say that they 0:15:14.560 --> 0:15:18.040 were looking for some kind of other enhanced forward guidance. 0:15:18.200 --> 0:15:21.080 So you know how that's going to work, how long 0:15:21.120 --> 0:15:23.280 that guidance is going to be for basically saying that 0:15:23.320 --> 0:15:26.280 we're gonna keep interest rates at zero for you know, 0:15:26.560 --> 0:15:30.080 at least three years now, but maybe it's a little longer. Um. 0:15:30.120 --> 0:15:32.200 You know that that's the type of guidance we're going 0:15:32.240 --> 0:15:34.680 to be looking for in in both the statement and 0:15:34.920 --> 0:15:37.120 more importantly in the press conference that starts at two 0:15:37.160 --> 0:15:42.160 thirty tomorrow. Right. So, I the Fed received some pushback 0:15:42.240 --> 0:15:44.760 I think on their plans over the last month or 0:15:44.800 --> 0:15:47.000 so to you know, go into the bond market start 0:15:47.000 --> 0:15:50.040 buying maybe even corporate bonds, buying even Apple bonds on 0:15:50.080 --> 0:15:53.560 their list. What actually has the Fed been doing in 0:15:53.760 --> 0:15:57.760 the open market. Yeah, so they have been buying corporate bonds, 0:15:57.800 --> 0:16:00.360 but in very small size I mean relative to the 0:16:00.400 --> 0:16:03.960 size of the market as well as the hum as 0:16:03.960 --> 0:16:06.440 well as how much is being issued in new issuance. 0:16:06.560 --> 0:16:09.400 But you know, basically they're doing it just a fulfill 0:16:09.440 --> 0:16:12.840 a promise that they made when the Cares Act was 0:16:12.840 --> 0:16:15.840 was first passed and Congress basically gave them the ability 0:16:15.880 --> 0:16:18.720 to do that with UH some money from the Treasury 0:16:18.720 --> 0:16:21.520 Department and taxpayer money UH in the event that they 0:16:21.560 --> 0:16:24.240 take any losses um. But but they're still buying a 0:16:24.240 --> 0:16:28.720 lot of treasury bonds and agency agency mortgage debt and 0:16:29.160 --> 0:16:32.840 that is likely to continue, especially given the size of 0:16:32.920 --> 0:16:35.200 the deficit and and a little bit of worry that 0:16:35.280 --> 0:16:38.000 the FED has. I think that the that the bond 0:16:38.040 --> 0:16:42.280 market might seize up at different times, especially if the 0:16:44.080 --> 0:16:47.600 especially in periods when they're issuing so much debt. So 0:16:47.680 --> 0:16:50.080 you know, we're we're talking about having a four and 0:16:50.120 --> 0:16:55.640 a half trillion dollar deficit for fiscal year which ends 0:16:55.640 --> 0:16:58.240 at the end of September UM and and you know, 0:16:58.320 --> 0:17:02.240 additional stimulus is only to push out how big deficits 0:17:02.280 --> 0:17:04.840 are going to be into. So so I think that 0:17:04.880 --> 0:17:07.359 the FED is worried about market liquidity and they will 0:17:07.400 --> 0:17:10.480 continue to buy corporate bonds and that means that you know, 0:17:10.520 --> 0:17:12.800 their balance sheet are just going to keep expanding at 0:17:12.880 --> 0:17:15.720 least for the time being. Do you expect tomorrow and 0:17:16.640 --> 0:17:18.359 his prepared to marks end or in a Q and 0:17:18.400 --> 0:17:21.480 A for FED Chairman pal To a Pine that more 0:17:21.520 --> 0:17:25.600 fiscal stimulus is needed. Is that what is his role 0:17:25.840 --> 0:17:28.840 in his commentary on that front. Yeah, so I think 0:17:28.880 --> 0:17:31.400 he he will mention that. I mean, he hinted at 0:17:31.440 --> 0:17:33.600 it in uh in the past. Actually, in at the 0:17:33.680 --> 0:17:36.040 June meeting, he basically said that you know, there is 0:17:36.080 --> 0:17:39.280 a there. It's he didn't come out and say it 0:17:39.320 --> 0:17:42.240 directly that there's a limit to monetary policy because I 0:17:42.280 --> 0:17:45.240 think that that they're scared that how the markets might 0:17:45.280 --> 0:17:49.359 react and how the economy economic actors might react if 0:17:49.359 --> 0:17:51.200 the Fed says that they don't have much more that 0:17:51.280 --> 0:17:53.960 they can do. But in reality that with the exception 0:17:54.000 --> 0:17:56.399 of increasing sizes, there's not a whole lot more that 0:17:56.480 --> 0:17:59.000 the Federal Reserve can do. So he will not and 0:17:59.080 --> 0:18:01.280 say that, you know, more school stimulus is needed. This 0:18:01.400 --> 0:18:04.960 is unprecedented times. The economy is still fragile. You've seen 0:18:05.000 --> 0:18:08.240 an uptick now in uh in in on insurance claims 0:18:08.280 --> 0:18:10.280 over the last couple of weeks. So I think that 0:18:10.320 --> 0:18:13.080 he'll point to some economic indicators to suggest that there 0:18:13.080 --> 0:18:15.959 should be additional stimulus, and then of course a reporter 0:18:16.000 --> 0:18:18.840 will ask him what should that stimulus include, and he'll 0:18:18.880 --> 0:18:20.720 just say that's not up to me to decide, that's 0:18:20.760 --> 0:18:23.399 up to Congress, and um, but you know, it should 0:18:23.400 --> 0:18:27.720 be broad and help all the economic actors across the economy. Right, 0:18:28.119 --> 0:18:31.600 what do you expect the ira UM in terms of 0:18:31.800 --> 0:18:34.879 what else the FED can do? I mean it seems 0:18:34.920 --> 0:18:37.000 like they've I mean, as as you look back on 0:18:37.040 --> 0:18:40.480 these past five six months, the FED was early, the 0:18:40.520 --> 0:18:43.919 FED was active, The Fed was I think transparent. The 0:18:43.920 --> 0:18:46.600 FED generally gets good remarks. I think for most market 0:18:46.600 --> 0:18:49.560 participants is its steady issue goes right here and it 0:18:49.680 --> 0:18:53.760 kind of the the balance point is gonna be fiscal stimulus. Yeah, 0:18:53.840 --> 0:18:56.000 So I think I think for the FED it's more 0:18:56.440 --> 0:18:59.119 you know, right sizing the tools that they currently have. 0:18:59.359 --> 0:19:02.800 So in the sense, for example, that there is another UM, 0:19:02.960 --> 0:19:06.439 the significant downturn in the economy, and that it becomes 0:19:06.440 --> 0:19:09.639 more difficult, for example, for credit to flow through UM, 0:19:09.680 --> 0:19:12.800 you know, changing things like the main Street program perhaps 0:19:12.840 --> 0:19:15.760 and and doing some tweaks into who's eligible to that. 0:19:15.760 --> 0:19:18.119 They've done a little bit of that. UM certainly helping 0:19:18.119 --> 0:19:22.119 the municipal bond market and and municipalities fund themselves given 0:19:22.640 --> 0:19:25.760 the lack of tax revenue is something else that I 0:19:25.800 --> 0:19:27.960 think can be tweaked a little bit here and there. 0:19:28.280 --> 0:19:30.800 But there's UM. But but it's probably more about the 0:19:30.880 --> 0:19:32.879 size that they might need to do in the future 0:19:32.880 --> 0:19:36.639 as opposed to creating a lot of new programs. Any 0:19:36.760 --> 0:19:39.280 surprises you're expecting in the Q and A tomorrow, what 0:19:39.280 --> 0:19:42.040 what would surprise you? I think what would surprise me 0:19:42.080 --> 0:19:45.080 is is is if they did announce some type of 0:19:45.160 --> 0:19:49.359 yield curve control or extent really enhanced forward guidance that 0:19:49.560 --> 0:19:54.240 was beyond the two time frame that they're currently talking about. 0:19:54.280 --> 0:19:57.080 That would certainly be a surprise to the market. Um. 0:19:57.200 --> 0:19:58.879 You know, what would the market reaction be? Well, with 0:19:58.920 --> 0:20:01.680 ten year yields at fIF the eight basis point here? Um, 0:20:01.760 --> 0:20:03.880 you know, it maybe goes back to the lows at 0:20:04.000 --> 0:20:07.720 fifty four or fifty fifty basis points perhaps, but um, 0:20:07.760 --> 0:20:10.560 but I don't see a significant market reaction even if 0:20:10.560 --> 0:20:14.080 they were to enhance that guidance tomorrow. IRA, thanks so much, 0:20:14.119 --> 0:20:17.439 as always, our Jersey chief US interest rate strategist for 0:20:17.480 --> 0:20:21.920 Bloomberg Intelligence. We'll be watching the FED today and tomorrow again. UH. 0:20:21.960 --> 0:20:25.639 Statement at two pm Wall Street time tomorrow, UH, And 0:20:25.680 --> 0:20:29.240 as I ever mentioned, the press conference with FED Chairman 0:20:29.280 --> 0:20:33.040 pal to thirty pm Wall Street time tomorrow, Bloomberg will 0:20:33.080 --> 0:20:35.760 be covering that clearly will bring that all the important 0:20:35.760 --> 0:20:40.720 information coming from that meeting, as we always do. Well, 0:20:40.720 --> 0:20:44.840 we had some numbers Adam McDonald's really weak same store 0:20:44.880 --> 0:20:47.880 sales that' stock trading off today. We've got Starbucks tomorrow. 0:20:48.000 --> 0:20:51.000 Good opportunity to get a sense at how restaurants are 0:20:51.160 --> 0:20:53.240 dealing in this pandemic right here as we enter into 0:20:53.280 --> 0:20:55.399 the fifth or six month here, so the way to 0:20:55.640 --> 0:20:58.119 really get close to the restaurant business. We're pleased to 0:20:58.119 --> 0:21:00.359 be able to chat with Michael Halen. He covers Stronts 0:21:00.400 --> 0:21:03.480 for Bluemberg Intelligence. He's a senior analysts there. Mike, let's 0:21:03.480 --> 0:21:06.400