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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg We

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Speaker 1: tend the attention now unlock those debates to policy tomp

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Speaker 1: Kate and we sent to Bloomberg's Malcolm McKay for more

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Speaker 1: him Mike. Good morning, John, and we are joined this

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Speaker 1: morning by Thomas Barkin. He is the President of the

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Speaker 1: Federal Reserve Bank of Richmond. And we welcome you to

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Speaker 1: Bloomberg Radio and Television worldwide. And I will tell you

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Speaker 1: that I will not talk over you or or insult

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Speaker 1: you this morning. But one of them, one of the

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Speaker 1: questions that is um well sometimes asking Washington these days,

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Speaker 1: but always on Wall Street, is has the economy started

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Speaker 1: to slow in the latter half of the summer going

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Speaker 1: into the fall. From your perch in Richmond, what do

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Speaker 1: you see? Well, the economy took a deep dive, as

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Speaker 1: you know, and it did come back quickly when we

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Speaker 1: open things up, but naturally you would expect to see

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Speaker 1: that recovery be a little more gradual. Where I see

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Speaker 1: the real challenge now is getting the last five of

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Speaker 1: Americans back into the workforce, and that's where I've got

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Speaker 1: my focus. Well, is that going to happen? What are

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Speaker 1: ceo s business leaders telling you about their plans to

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Speaker 1: hire and to invest, to spend more money. Well, there's

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Speaker 1: a lot of uncertainties, starting of course with the virus,

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Speaker 1: but also what the demand picture is going to look

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Speaker 1: like next year. And in that context, I do think

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Speaker 1: companies are streamlining um taking the last five or in

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Speaker 1: finding those efficiencies. I am starting to hear them in

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Speaker 1: the last month or so some amount of pivoting to tomorrow.

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Speaker 1: And what I mean by that is, Okay, we're going

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Speaker 1: to get this behind us. Let's now talk about where

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Speaker 1: we go from here. So I do think they've streamlined,

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Speaker 1: but I'm at least hopeful that as we get it

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Speaker 1: in next year, you're going to see them starting to

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Speaker 1: grow again. Do we see growth, uh, significant growth in

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Speaker 1: the coming year? Do you think, oh? Sure? I mean,

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Speaker 1: first of all, you've got a significant drop, and so

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Speaker 1: we're going to grow out of that significant drop. I

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Speaker 1: think you'll see a very strong third core for example,

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Speaker 1: But even going into next year. I think part of

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Speaker 1: the legacy of rounding over the comps we have from

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Speaker 1: this year is you'll you'll see growth numbers that look

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Speaker 1: that look strong. Um, I look at more level than

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Speaker 1: growth rates, and so I do think then the question

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Speaker 1: is going to be what do we look like year

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Speaker 1: every year? And I still think, you know, by the

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Speaker 1: end of the fourth quarter this year will still be

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Speaker 1: down year every year, and it'll be hard to get

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Speaker 1: back to where we were until sometime around the end

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Speaker 1: of next year. Well is your forecast assuming we get

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Speaker 1: a fiscal stimulus package, what happens if we don't. Well,

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Speaker 1: I don't try to assume anything in terms of what

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Speaker 1: happens in Washington one way or the other. So, um,

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Speaker 1: you know they're talking and think we'll let them figure

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Speaker 1: out whether it's going to be a stimulus package if

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Speaker 1: there isn't one. In the short term, obviously there's some

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Speaker 1: people down on their luck who are going to get

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Speaker 1: less support then they otherwise need. I'm more focused on

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Speaker 1: some of the long term issues, or maybe even medium

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Speaker 1: term issues. We have a lot of people who used

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Speaker 1: to be you know, waiters or working amusement park who

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Speaker 1: now need new jobs, and their classic next job would

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Speaker 1: have been working you know, at a retailer or maybe

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Speaker 1: working uh at another restaurant. If those places aren't hiring,

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Speaker 1: how do we get them redeployed? And issues of job retraining,

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Speaker 1: issues of getting pell grants and getting them funded. Those

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Speaker 1: are the kinds of things I think that are important

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Speaker 1: if we're gonna bring the economy all the way back. Well,

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Speaker 1: another major issue, and you have one of America's biggest

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Speaker 1: banks in your district, that is whether or not the

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Speaker 1: economy can withstand as forbearance comes to an end, and

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Speaker 1: we see rising business debts and increased default, particularly for

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Speaker 1: commercial real estate. How do you see that playing out? Well?

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Speaker 1: I do think this fiscal stimulus that we've done has

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Speaker 1: been quite helpful to the financial industry. We ah, there

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Speaker 1: are people who have been down in their luck who

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Speaker 1: have gotten stimulus payments, and you actually see credit card

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Speaker 1: outstandings down. You have some small businesses that would have

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Speaker 1: gone under they got PPP money. You've got bigger industries

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Speaker 1: like airlines that might have been much more significantly challenged

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Speaker 1: if they hadn't gotten the money they've gotten. And I

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Speaker 1: think so far, knock on wood, Uh, what at least

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Speaker 1: I'm seeing from the banks is still pretty healthy. What

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Speaker 1: about in terms of their loans and lending, though there

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Speaker 1: have been concerns expressed that, particularly in commercial real estate,

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Speaker 1: you're going to have a wave of default. I think

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Speaker 1: there will be challenges in commercial real estate, particularly on

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Speaker 1: the retail side, as you could imagine um. But then

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Speaker 1: the question is just are those defaults going to overwhelm

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Speaker 1: the capital of the system. And my senses there's been

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Speaker 1: a lot of capital building in the last ten years,

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Speaker 1: and the exposures they're compared to the capital in the

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Speaker 1: system don't seem to compare. If the economy is slowing,

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Speaker 1: if things do turn south, is there anything more the

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Speaker 1: FED can do? Or is it pretty much up to

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Speaker 1: the folks in Washington. Now, Well, we have done a lot,

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Speaker 1: and I like to think, as I learned in college,

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Speaker 1: that there's fiscal and there's monetary, and you want to

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Speaker 1: pull both of them as strongly as you can. Um

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Speaker 1: I'd say, in this particular crisis, you could put public

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Speaker 1: health on that list, and I think all three of

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Speaker 1: those are levers. Will want to pull as hard as

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Speaker 1: we can, and the FED has done a lot. There's,

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Speaker 1: of course still more we could either do additionally or

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Speaker 1: continue to do. But I'm actually more hopeful on where

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Speaker 1: we're headed next year, and I'm hopeful that what we've done,

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Speaker 1: and also fiscal and the public health authorities will put

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Speaker 1: us in a much better place. Well, are you seeing

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Speaker 1: demand for credit out there? There is some demand for credit, Certainly,

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Speaker 1: auto credit has been very strong. Mortgage credit has been

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Speaker 1: very strong. On the business side. I do think people

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Speaker 1: took down their lines in March and April. They've you know,

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Speaker 1: now repaid those and I'm not seeing quite as much

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Speaker 1: demand on the business side, in part because they spend

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Speaker 1: most of the year pretty with pretty strong cash positions.

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Speaker 1: One of the big questions about lending is over the

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Speaker 1: main Street Learning program that the FED runs. The issued

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Speaker 1: a special senior loan officers survey last night that's had

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Speaker 1: banks saying overly restrictive terms for borrowers are discouraging them

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Speaker 1: from approving more loans, and others cited the unattractive terms

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Speaker 1: for lenders for not even making loans at all, not

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Speaker 1: offering them. What do you do about that? Well, I

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Speaker 1: haven't seen that survey, but we designed the main Street

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Speaker 1: Learning facility to play a particular role. Um it maybe

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Speaker 1: it'll be a bigger role if you know, bad news

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Speaker 1: happens in the economy goes south. But if their loans

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Speaker 1: coming into banks, um, they get the option of whether

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Speaker 1: to keep them or whether to sell off into our

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Speaker 1: main street facility. Um. And I'm not sure it's bad

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Speaker 1: news if they're making those loans and keeping them right. Uh.

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Speaker 1: The Fed in June banned buy backs by banks and

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Speaker 1: cap their dividends into the third quarter. Should that ban

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Speaker 1: and cap be extended? Big debate right now? Well, I

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Speaker 1: think we've put in place a protocol that allows us

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Speaker 1: to have a deep investigation into the quality of the

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Speaker 1: capital levels of the various banks. And and my view

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Speaker 1: is we ought to do whatever we do want a

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Speaker 1: bank by bank basis, and those banks that need to

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Speaker 1: conserve capital ought to be conserving capital, and those banks

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Speaker 1: that have sufficient capital ought to be free to distribute it.

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Speaker 1: And I gotta ask you about the new framework and

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Speaker 1: your view that things are going to pick up in

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Speaker 1: the economy going forward, does that mean inflation is going

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Speaker 1: to pick up as well? Well? There may well be

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Speaker 1: some inflation, particularly in the near term, if demand comes

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Speaker 1: back stronger than people think at a time where supply

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Speaker 1: chains are stretched. But you know, our framework is not

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Speaker 1: a round any particular month or quarters inflation. It's much

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Speaker 1: more around where we headed in long term inflation expectations,

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Speaker 1: and my hope is that those will start to creep

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Speaker 1: up back toward our two percent target. Well, the new

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Speaker 1: policy is that, of course, appropriate monetary policy, in your words,

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Speaker 1: will likely aim to achieve inflation moderately above two percent

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Speaker 1: for some time. For Tom Barkin, what does moderately mean

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Speaker 1: and how far above two percent? Well, let's see when

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Speaker 1: we get there. But I think I gave a speech, Mike,

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Speaker 1: you were there in Idaho a year ago where I said,

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Speaker 1: I'm very supportive of a range around two percent, in

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Speaker 1: a moderate range around two percent, whether that's one and

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Speaker 1: a half to two and a half or one to three.

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Speaker 1: I think I said, is I'm not that focused on

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Speaker 1: the difference between them, but that's something close to or

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Speaker 1: is somebody put I think recently the word moderate means moderate. Yeah,

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Speaker 1: that somebody was the chairman who also took pains to

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Speaker 1: say over and over in his news conference that the

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Speaker 1: new guidance is strong and powerful, which does not seem

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Speaker 1: to be the read on Wall Street Why do you

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Speaker 1: think there's a disconnect there. Oh, I don't know if

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Speaker 1: there is a disconnect. The the analysis on Wall Street

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Speaker 1: basically is that you can move interest rates, but you're

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Speaker 1: not going to have much impact on the economy unless

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Speaker 1: demand for credit picks up, unless something is done out

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Speaker 1: of Capitol Hill. Well, I just say there's a difference

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Speaker 1: between looking backwards and looking forwards. I think for the

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Speaker 1: last six months, uh, we've gone pretty strong in terms

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Speaker 1: of what we can do to support the economy, and

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Speaker 1: now we're looking forward over the next year or two. UM.

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Speaker 1: I think the four guidances particularly powerful as the economy

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Speaker 1: comes back as I think it's going to. And so

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Speaker 1: if you do see a strength and economy, if you

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Speaker 1: do see modest overshoots of inflation, I think we're gonna

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Speaker 1: be having a different conversation. One of the other things

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Speaker 1: that people are watching in terms of overshoots is the

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Speaker 1: equity markets lower for longer, raising financial stability concerns, particularly

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Speaker 1: with pe ratios getting to where they are. Are you

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Speaker 1: worried at all that your money that you're putting into

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Speaker 1: the economy maybe ending up in the wrong place. Stimulating

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Speaker 1: equity acquisition and share buy backs and things like that

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Speaker 1: instead of stimulating growth. Well, I'm not a believer that, uh,

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Speaker 1: you know, lower for longer means zero forever. I do think, um,

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Speaker 1: I want to normalize at some point, and I want

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Speaker 1: to normalize in part as a response to a healthy economy.

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Speaker 1: So I watched I don't really watch the equity markets

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Speaker 1: as much as I watched leverage levels. And the thing

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Speaker 1: I would be nervous about is if you start seeing

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Speaker 1: leverage in particular sectors that may be concerned. I don't

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Speaker 1: think that's where we are. Yet you're not seeing dangerous

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Speaker 1: changes in borrowing patterns, and well, actually credit card outstandings

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Speaker 1: are down, um uh. And you know, as I said before,

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Speaker 1: the pipelines on the business side aren't overwhelming the bank.

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Speaker 1: So I don't think at this moment in time, and

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Speaker 1: that's what you're saying. But of course, when you do

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Speaker 1: have low rates, that's one of the things you want

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Speaker 1: to watch. Um. But again, I think at this point

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Speaker 1: the banks are tightening standards, not the other way around,

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Speaker 1: and so I don't really see that as today's issue.

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Speaker 1: Before I let you go, I gotta ask you, because

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Speaker 1: I know this is an area of interest for you.

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Speaker 1: Has the financial crisis we're undergoing now changed the dynamic

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Speaker 1: for the economy in terms of inequality. A lot of

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Speaker 1: talk these days about a K shaped recovery. Well, if

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Speaker 1: you look at the last thirty or forty years, the

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Speaker 1: mega story has been the decline in middle income jobs

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Speaker 1: and the growth of both the high end jobs and

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Speaker 1: those at the low end. And the sad part about

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Speaker 1: this crisis is those low end jobs which are disproportionately

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Speaker 1: UM low income. Personal service, personal contact workers UM, you know, uh, waiters,

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Speaker 1: amusement parks, um, you know, pete, retail folks. Uh. Those

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Speaker 1: are the jobs that have been hit the hardest. And

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Speaker 1: I do worry that that group of people who have

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Speaker 1: been brought in off the sidelines over the last five

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Speaker 1: or ten years of a healthy economy are now displaced

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Speaker 1: and their next best job is also displaced. And so

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Speaker 1: this question of you know, what are the things we

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Speaker 1: can do to help those people re engage in the

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Speaker 1: workforce and rebuild their careers UM into some of the

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Speaker 1: places perhaps that are you know, hotter, whether they be

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Speaker 1: healthcare or manufacturing, or or construction or whatever. That's a

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Speaker 1: pretty important thing for us to work on. And if

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Speaker 1: we don't do that. I do worry about what that's

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Speaker 1: gonna do for inequality. Tom Barkin, Richmond, Fed President, thank

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Speaker 1: you very much for joining us this morning here on

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Speaker 1: Bloomberg on Place to site. Joining us now, Lisa Shallott

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Speaker 1: markin Stanley, se Lisa griants to catch up with you.

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Speaker 1: You're calling this a policy micas correction. What is a

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Speaker 1: policy micas correction? Well, look, I mean I think that

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Speaker 1: as we know, it's really been the policymakers herculean efforts

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Speaker 1: over the last six months that are unprecedented that have

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Speaker 1: allowed us to rebound and retrace and and even uh,

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Speaker 1: you know, by September two hit new fresh all time

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Speaker 1: highs in the spire. But I think that they also

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Speaker 1: you know, set the bar very very high, and uh

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Speaker 1: many investors expected them to continue to follow through. And

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Speaker 1: I think as uh, you know, the days of September

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Speaker 1: war on, it became very clear that some of the

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Speaker 1: gifts that we were given in March, April and May

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Speaker 1: were perhaps gonna going to be a little bit tougher

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Speaker 1: to procure. And that's really around the certainty of what

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Speaker 1: policy is. And so you know, we've talked about kind

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Speaker 1: of three things. Um, you know, We've talked about the

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Speaker 1: fact that that we're quite frankly shocked at that that

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Speaker 1: the market isn't more tumultuous given what looks like could

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Speaker 1: potentially not just be a delay in the Cares acts,

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Speaker 1: but but in um, you know, uh, a materially reduced

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Speaker 1: and watered down version of it, when so many people

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Speaker 1: in the June and July timeframe we're saying, oh, yeah,

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Speaker 1: we're definitely going to get another trillion trillion and a

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Speaker 1: half dollars UM and that's not forthcoming. And at your

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Speaker 1: point that that you all were talking about for unemployed,

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Speaker 1: for states, municipalities who've dealt with COVID, for uh, you know,

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Speaker 1: many of the small businesses that are now beginning to

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Speaker 1: to have to, uh, you know, make decisions about shuttering. Um.

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Speaker 1: This stimulus matters, and it matters a lot um and

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Speaker 1: it was in most people's forecasts. Lisa, push this forward.

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Speaker 1: Does this mean in your view the market needs to

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Speaker 1: sell off further in order to adequately reflect the lack

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Speaker 1: of additional fiscal support from Washington. Yeah. So, so look,

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Speaker 1: we've we've had this pull back from you know, seven

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Speaker 1: eight percent from extraordinary which on September two, UM you know,

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Speaker 1: our thought was that you know, you could get up

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Speaker 1: something you know, much closer to a ten to fifteent

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Speaker 1: zip code from those levels you know potentially you know,

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Speaker 1: with being more um uh So, so yes, we do

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Speaker 1: see that that there's downside to this market. So Carris

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Speaker 1: was one of the disappointment on on the timing of

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Speaker 1: cares and potentially the size of Carros. Uh is the

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Speaker 1: first thing. The second thing is we know um has

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Speaker 1: been you know, kind of where the FED is and

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Speaker 1: and some of the ambiguity in their in their guidance. UM.

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Speaker 1: I think you know clearly at Jackson Hole. Uh. You know,

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Speaker 1: Chairman Powell fired a big bazooken and you know you

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Speaker 1: all have been been talking about that very thoroughly over

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Speaker 1: the last monta. This is you know, the end of

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Speaker 1: forty years of of bucer ideology and and you know

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Speaker 1: we're we're no longer going to fight to keep inflation

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Speaker 1: below two percent. Was going to somehow aim for some

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Speaker 1: thing that average inflation targeting, but the FED is not

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Speaker 1: yet really specified how we're going to measure that over

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Speaker 1: what time period, using what metrics. I think the market

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Speaker 1: is frustrated about that, because how do you really try

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Speaker 1: to guess at what inflation or inflation expectations are going

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Speaker 1: to do and therefore what might trigger a height. Lisa,

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Speaker 1: you got one excuse me, Lisa, just this is a

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Speaker 1: good morning and I'm just fired up about this. Look, Lisa,

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Speaker 1: you've got the best bio on Wall Street. You start

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Speaker 1: off with your protest leftist burning of buildings at Brown

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Speaker 1: University a million years ago, and how you're working for

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Speaker 1: James Gorman on Wall Street. Lisa, it really works. That

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Speaker 1: emotion is out there right now. We certainly saw that

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Speaker 1: emotion last night. How will the sea officers of all

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Speaker 1: our corporations and adapt and adjust to what they witnessed

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Speaker 1: last night? Do they make plans? Did they sit back?

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Speaker 1: Do they cut CAPEX by half? Or do they go

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Speaker 1: out and say, hey there's optimism here, let's go Well,

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Speaker 1: I don't know that they that that there was any

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Speaker 1: optimism to be seen. Look, you know, without getting into

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Speaker 1: the politics of it, you know, my observation is, and

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Speaker 1: I think you know, some of the folks said it

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Speaker 1: this morning on some of the other you know news

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Speaker 1: out with you know that the dignity and democracy are

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Speaker 1: the things that took a big hit m night right.

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Speaker 1: And so I think from that perspective, you know, if

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Speaker 1: I'm sitting in the c suite uh and and talking

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Speaker 1: about what does this all mean? You know, I think

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Speaker 1: it's it's preparing uh your teams for the fact that

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Speaker 1: there could be material uncertainty uh, you know between November

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Speaker 1: and January. UM, and that's volatility in markets. And it's

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Speaker 1: potentially you know, in decision by your clients, customers, um uh,

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Speaker 1: partners in in in in the economy and so um

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Speaker 1: That's what I've been talking about. Leaks always guite to

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Speaker 1: cash out with you Entertainment, Morgan Stanley, at least shout that.

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Speaker 1: Morgan Stanley. See, we are privileged at Bloomberg Surveillance for radio,

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Speaker 1: for television worldwide to bring you a lot of fancy people.

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Speaker 1: I don't mean fancy meals, fancy dinners. I'm talking fancy economics,

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Speaker 1: fancy politics, lots of fancy degrees. None of that matters.

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Speaker 1: If you're a kid out of Leon and you're a

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Speaker 1: chef and you build a food restaurant empire in this pandemic,

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Speaker 1: what you're observing really really matters. This is without question,

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Speaker 1: our most important interview of the day for small business

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Speaker 1: America and those trying to survive this pandemic. He is

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Speaker 1: Daniel Bellud. You know him from his restaurants, UH, and

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Speaker 1: he joins us this morning, what are you gonna do, sir?

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Speaker 1: And then the good morning wonderful to have you with us,

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Speaker 1: what are you gonna do? And the next thirty days

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Speaker 1: to keep your team employed, to keep going forward and

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Speaker 1: to avoid the reality of this pandemic in New York City.

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Speaker 1: We are getting ready for tonight for the opening inside.

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Speaker 1: For of course that occupancy is unsustainable when it comes

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Speaker 1: to the economic it's unsustainable for any business, and some

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Speaker 1: of them not They are not able to reopen period,

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Speaker 1: but we are. I decided to transform the restaurant into

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Speaker 1: sort of a UH. I missed going in the South

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Speaker 1: of France this summer, and I go every year, and

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Speaker 1: I said, well, maybe I should bring a glimpse of

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Speaker 1: the South of France. So, of course it's always starts

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Speaker 1: with the food, but we also put out the decore.

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Speaker 1: Young architect and artist stephaniely got to help me set

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Speaker 1: up a decore. I raised a little bit of money

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Speaker 1: with sponsors to make sure that you know, my priority

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Speaker 1: was to protect my staff and to be able to

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Speaker 1: bring back more stuff. From a business standpoint, is it

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Speaker 1: more efficacious to receive assistance from the government and wait

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Speaker 1: for the VACS scene or is it better to struggle

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Speaker 1: forward with this limited occupancy. It didn't really think of

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Speaker 1: the first. I went for the second, and we have

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Speaker 1: been struggling. It has not been easy. We lost a

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Speaker 1: lot of stuff and we are we but I'm very

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Speaker 1: positive in a sense that having started early by doing

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Speaker 1: a lot of initiatives, from doing charity meals with Food

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Speaker 1: First Foundation and uh SL Green, to opening two of

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Speaker 1: our restaurants in New York, to take one of our restaurant,

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Speaker 1: Cafe Blue, to the countryside, I have brought almost certified

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Speaker 1: for the certified percent of my staff, and I think

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Speaker 1: I am I'm very proud of that. And that's not

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Speaker 1: mean the economic and beautiful, but at least we are

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Speaker 1: protecting the business and the jobs. Yes, so Chef Blued.

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Speaker 1: As you reopen a capacity, there's a lot of discussion

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Speaker 1: about the state of New York City, people moving out,

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Speaker 1: clients not taking their business members out for dinner, or

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Speaker 1: the clients still there for you to eventually reopen to

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Speaker 1: the same degree that you once were. One we have

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Speaker 1: so many regular customers who say, please let me know

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Speaker 1: when we open inside. What we want is our customer

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Speaker 1: to be very disciplined, very careful, and we want ourselves.

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Speaker 1: I mean, of course, we train our staff, our staff

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Speaker 1: and our team to be also very careful and very

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Speaker 1: discipline with the process. We have also made alteration to

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Speaker 1: our h v a C. We have done, of course,

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Speaker 1: many different steps to ensure that safety come first, of course,

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Speaker 1: and also for our staff as well. We have a

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Speaker 1: regular checkup all the time with our staff. We want

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Speaker 1: to make sure and guests and cause guests an employees

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Speaker 1: feel very safe to be inside. And I think that's

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Speaker 1: the case of every restaurate today. They try to really

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Speaker 1: be on par with their responsibility of opening inside. Daniel,

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Speaker 1: before we let you go. Forgive me for getting a

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Speaker 1: little bit sentimental, but I grew up in this industry.

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Speaker 1: I watched my father run several restaurants and how tough

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Speaker 1: it is. But I also know what it means to

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Speaker 1: people who work in this industry as well. It's a

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Speaker 1: sanctuary for people down on their luck. It's where people

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Speaker 1: go when they've lost the job. It's where people go

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Speaker 1: to get the first job, and for young aspiring chefs

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Speaker 1: in their teenage years right now, Chef, I'm just wondering

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Speaker 1: what's the message for them as they want to get

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Speaker 1: on the chef's side of the past. What do you

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Speaker 1: say to them right now as they look around and

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Speaker 1: see our world being decimated now, people who love the hospitality,

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Speaker 1: the restaurant business, cooking and service, I think they should

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Speaker 1: try to find a job at any level. You don't

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Speaker 1: matter what type of restaurant it is or what type

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Speaker 1: of business. I think it's important to have experienced right

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Speaker 1: now and to be offul and positive because I think

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Speaker 1: we get out of this dynamic and we will be stronger,

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Speaker 1: and we certainly will have learned a lot through it.

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Speaker 1: But I am my my My message is to stay

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Speaker 1: positive and try to keep learning in any which way

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Speaker 1: they can about their profession they're cooking. I mean, choosing

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Speaker 1: to be a chef is it shouldn't be a very

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Speaker 1: expensive proposition to go to always to go to school.

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Speaker 1: You can directly apply into a restaurant and start cooking

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Speaker 1: as well. Chef fantastic to catch up with you today,

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Speaker 1: Come back soon. Chef Daniel followed that on the situation

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Speaker 1: in New York City, and beyond. This is so so

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Speaker 1: tough for so many people in this industry right now,

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Speaker 1: and I think we always forget the other side of

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Speaker 1: the industry. For many people, this is where they turn

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Speaker 1: to get a job when they're really desperate for a job.

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Speaker 1: And this time around, when you hear about those layoffs,

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Speaker 1: the likes of the Walt Disney Company, some those jobs

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Speaker 1: won't be there to fall back on in the way

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Speaker 1: that they used to pay Right now, Noria will being

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Speaker 1: here with us joining from Israel today, with New York

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Speaker 1: University of course, no real today, dot com neural. Every

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Speaker 1: administration has its own character. Indeed, i'll use the word

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Speaker 1: respectfully dysfunctions as well. You observe the debate last night,

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Speaker 1: how do we get forward on policy whomever wins this

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Speaker 1: November election? But the major problem is I'm not gonna

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Speaker 1: know November third one because the markets are done in

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Speaker 1: Europe and the US future down because people are realizing

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Speaker 1: that the election night is going to become election weeks

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00:24:42,920 --> 00:24:45,679
Speaker 1: or weeks or maybe months if it's up to Trump.

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00:24:46,320 --> 00:24:50,320
Speaker 1: Last night was the guest debate ever and the President

436
00:24:50,359 --> 00:24:53,800
Speaker 1: behaved like a bully, interrupting and attacking, but by them

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00:24:53,840 --> 00:24:57,200
Speaker 1: in the moderator. I mean from the point of the markets,

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00:24:57,440 --> 00:24:59,880
Speaker 1: and that's why they're gonna go further down. The uys

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00:25:00,000 --> 00:25:02,919
Speaker 1: not right now, looks like a public is run by

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00:25:02,960 --> 00:25:06,600
Speaker 1: I wanna be caw deal or dictator. Is literally planning

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00:25:07,040 --> 00:25:10,840
Speaker 1: an institutional coup. He said that mail in ballots are

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00:25:10,880 --> 00:25:14,520
Speaker 1: gonna be and through them he's gonna claim against them.

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00:25:14,680 --> 00:25:17,359
Speaker 1: He said, it's not gonna have an orderly transition. He

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00:25:17,480 --> 00:25:21,120
Speaker 1: told these militia white supremacist that well, all right, stand by.

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Speaker 1: He's gonna start the Supreme Court. He's gonna use the

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Speaker 1: Insurrection Act. And it's telling the bunch of the city

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00:25:27,640 --> 00:25:32,400
Speaker 1: is already anarchies. This is the beginning of civil unrest, violence,

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00:25:32,640 --> 00:25:35,280
Speaker 1: if not civil war. This is gonna be the earliest

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00:25:35,359 --> 00:25:38,600
Speaker 1: election ever. We're not gonna know we won an election night.

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00:25:38,680 --> 00:25:41,280
Speaker 1: That's why the markets are down. In the case of

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00:25:41,400 --> 00:25:45,120
Speaker 1: God versus Bush, the market was done percent. This timarund

452
00:25:45,160 --> 00:25:48,159
Speaker 1: is gonna be much worse. Snoil, your heritage here is

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00:25:48,280 --> 00:25:52,200
Speaker 1: Jeff Sex at Harvard, working with Secretary Gutner, working with

454
00:25:52,359 --> 00:25:56,560
Speaker 1: Lawrence Somers as well, and then time in the Clinton administration.

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00:25:56,680 --> 00:25:59,960
Speaker 1: I think we understand where you fit into the political landscape.

456
00:26:00,440 --> 00:26:03,719
Speaker 1: The fact is a president of the United States represents

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00:26:03,760 --> 00:26:08,520
Speaker 1: a large body of America who is not seeing economic growth.

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00:26:09,040 --> 00:26:13,520
Speaker 1: Do you detect a Democratic Party plan, whether the middle

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00:26:13,640 --> 00:26:17,920
Speaker 1: ground is espoused by Vice President Biden last night or

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00:26:18,040 --> 00:26:21,119
Speaker 1: by as Mr Trump calls them, the radical left. I

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00:26:21,240 --> 00:26:23,760
Speaker 1: think that the plans are Biden are gonna be quite

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00:26:23,920 --> 00:26:27,639
Speaker 1: moderate and centric. I progressive. First of all, he is

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00:26:27,680 --> 00:26:32,359
Speaker 1: a centrist. Secondly, has chosen another centrist as a running mate.

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00:26:32,800 --> 00:26:37,240
Speaker 1: Third of all, the median senator Democrat if the Democrats

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Speaker 1: win the Senate is more moderate than the left of

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00:26:40,080 --> 00:26:43,879
Speaker 1: the party. So radical things like Medicare for all and

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00:26:43,960 --> 00:26:46,760
Speaker 1: no private plans and the Green New Deal are not

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00:26:46,920 --> 00:26:49,400
Speaker 1: gonna pass. And he has a plan. He's a plan

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00:26:49,520 --> 00:26:52,760
Speaker 1: for a massive physical steamers that we need to pay

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00:26:52,960 --> 00:26:57,359
Speaker 1: for it by raising moderately taxes on corporates from twenty

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00:26:57,400 --> 00:27:00,800
Speaker 1: one to twenty percent, reducing loop so we're not gonna

472
00:27:01,119 --> 00:27:06,920
Speaker 1: runaway budget deficits, investing infrastructure, investing in renewables, investing into

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00:27:07,000 --> 00:27:10,920
Speaker 1: increasing minimum wages and incomes for workers so there is

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00:27:10,960 --> 00:27:15,680
Speaker 1: more consumptual growth and the markets. Until August when by

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00:27:15,760 --> 00:27:18,280
Speaker 1: there was a the pak of his poles were actually

476
00:27:18,359 --> 00:27:21,880
Speaker 1: going higher. The needs that markets do realize that actually

477
00:27:22,240 --> 00:27:25,240
Speaker 1: is politic goal to lead to stronger economic growth, and

478
00:27:25,480 --> 00:27:29,200
Speaker 1: any hits on profits and earnings coming from slightly higher

479
00:27:29,800 --> 00:27:33,040
Speaker 1: taxes on the corporate sector are going to be counterbalanced

480
00:27:33,080 --> 00:27:36,600
Speaker 1: by a stimulus gonna lead to stronger economic growth. So on.

481
00:27:36,720 --> 00:27:39,680
Speaker 1: Net I think the markets are quite calm about the

482
00:27:39,800 --> 00:27:43,879
Speaker 1: prospects or Biden winning or even a switch, but nereal

483
00:27:43,960 --> 00:27:46,560
Speaker 1: what priced in the markets right now? How close will

484
00:27:46,640 --> 00:27:49,480
Speaker 1: the selection be? Well, first of all, as I pointed out,

485
00:27:49,560 --> 00:27:52,280
Speaker 1: the correction occurred in September, it's not just the US

486
00:27:52,560 --> 00:27:55,960
Speaker 1: election risk, but what's happening with the new cases, with

487
00:27:56,119 --> 00:27:58,359
Speaker 1: the worry about the third wave, with the risk of

488
00:27:58,400 --> 00:28:01,920
Speaker 1: a fiscal cliff, with the on me nowtstalling and so

489
00:28:02,040 --> 00:28:04,640
Speaker 1: on and so on. But now in the last few

490
00:28:04,760 --> 00:28:07,320
Speaker 1: days and what has happened overnight, I think that people

491
00:28:07,440 --> 00:28:10,680
Speaker 1: are gonna start realizing the the US electoral list or

492
00:28:10,760 --> 00:28:13,320
Speaker 1: severe If you look at the VIGs, the VIGs for

493
00:28:13,480 --> 00:28:17,159
Speaker 1: November and December, the future one is much higher than

494
00:28:17,240 --> 00:28:20,760
Speaker 1: this right now, options on very types of effects trading

495
00:28:21,000 --> 00:28:24,359
Speaker 1: as suggesting people trying to adge those things going into

496
00:28:24,680 --> 00:28:29,200
Speaker 1: November and December. So certain investors are signaling that are

497
00:28:29,280 --> 00:28:33,639
Speaker 1: worried about a long, ugly contested election and they've started

498
00:28:33,640 --> 00:28:37,360
Speaker 1: to take protection against it. What's the number one risk

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00:28:37,480 --> 00:28:39,640
Speaker 1: in real in the next five to six months. Is

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00:28:39,680 --> 00:28:42,080
Speaker 1: it a posy mistake, is it a stimulus, Is it

501
00:28:42,160 --> 00:28:44,760
Speaker 1: the U S elections, or is it Brexit? Well, in

502
00:28:44,840 --> 00:28:47,840
Speaker 1: my view, is going to be initially the US election

503
00:28:48,040 --> 00:28:51,000
Speaker 1: because most likely we're not gonna know who's the winner,

504
00:28:51,320 --> 00:28:53,760
Speaker 1: is going to be contested for weeks, if not for months.

505
00:28:53,960 --> 00:28:56,920
Speaker 1: You could have a ten percent correction just because of that.

506
00:28:57,440 --> 00:28:59,840
Speaker 1: If you have a very severe, protracted, ugly and con

507
00:29:00,000 --> 00:29:03,520
Speaker 1: as that situation, I think the braxing matters for the

508
00:29:03,680 --> 00:29:07,320
Speaker 1: UK and for Europe. That's another risk. But the other

509
00:29:07,520 --> 00:29:11,600
Speaker 1: risk is that unfortunately the second wave is not stopping

510
00:29:11,720 --> 00:29:14,239
Speaker 1: and we're going into fall and winter where everything knows

511
00:29:14,280 --> 00:29:16,840
Speaker 1: it's gonna be a third wave and the scientist I

512
00:29:16,960 --> 00:29:20,200
Speaker 1: saying we're not gonna get safe and effective vaccine by

513
00:29:20,280 --> 00:29:23,120
Speaker 1: the spring of next year. That's is to the economy

514
00:29:23,280 --> 00:29:25,800
Speaker 1: and to the market as well. Nora Beanie, thank you

515
00:29:25,880 --> 00:29:28,560
Speaker 1: so much for New York University and noral Today dot Com.

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00:29:29,320 --> 00:29:33,400
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

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00:29:33,600 --> 00:29:38,840
Speaker 1: listen to interviews on Apple podcast, SoundCloud, or whichever podcast

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00:29:38,960 --> 00:29:43,160
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before

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00:29:43,200 --> 00:29:47,040
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

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00:29:47,160 --> 00:29:47,400
Speaker 1: Radio