1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,440 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Please 5 00:00:27,480 --> 00:00:29,840 Speaker 1: to say that Johning us now Eric Robinson. It's not 6 00:00:29,960 --> 00:00:32,680 Speaker 1: a chout at Bank Global Head of Research. Eric, fantastic 7 00:00:32,720 --> 00:00:35,000 Speaker 1: to catch up with you, sir. Let's pick up well 8 00:00:35,040 --> 00:00:38,120 Speaker 1: Lisa left off, shall we? If they can't surprise, how 9 00:00:38,120 --> 00:00:42,559 Speaker 1: do they guide? Look? I think what the FED is 10 00:00:42,560 --> 00:00:47,720 Speaker 1: going to tell us is that they remain ready, willing, 11 00:00:47,960 --> 00:00:51,720 Speaker 1: able to do whatever they feel is necessary to continue 12 00:00:51,760 --> 00:00:55,800 Speaker 1: to support the economy. Um They have shown over the 13 00:00:55,880 --> 00:00:59,120 Speaker 1: last few weeks that they have probably moved away from 14 00:00:59,160 --> 00:01:02,400 Speaker 1: trying to offer aid in a traditional meeting by meeting framework, 15 00:01:02,440 --> 00:01:06,080 Speaker 1: and as their assessment of the economy, credit conditions and 16 00:01:06,080 --> 00:01:09,200 Speaker 1: liquidity changes day to day, they reacts as they need to. 17 00:01:09,319 --> 00:01:12,280 Speaker 1: So I agree with the assessment that we shouldn't be 18 00:01:12,319 --> 00:01:15,880 Speaker 1: expecting any major surprises. I think we'll get some guidance 19 00:01:15,920 --> 00:01:19,479 Speaker 1: on on asset purchases, but you know, look, the Fed's 20 00:01:19,480 --> 00:01:22,039 Speaker 1: balance sheets gone from just over four billions six and 21 00:01:22,040 --> 00:01:25,320 Speaker 1: a half billions in very short orders. So, um, I 22 00:01:25,360 --> 00:01:26,960 Speaker 1: don't think they're going to be telling us that they're 23 00:01:26,959 --> 00:01:28,880 Speaker 1: going to be stopping, but I think we may get 24 00:01:28,920 --> 00:01:32,560 Speaker 1: some guidance on on what the magnitude of asset purchases 25 00:01:32,600 --> 00:01:35,080 Speaker 1: looks like going forward. Let's talk about that, Eric, have 26 00:01:35,120 --> 00:01:40,240 Speaker 1: you settled on a number, a monthly number for purchases. No, 27 00:01:40,440 --> 00:01:43,120 Speaker 1: I haven't. I mean, look, you know, when the FED 28 00:01:43,240 --> 00:01:47,720 Speaker 1: started this a few weeks ago, they were talking about 29 00:01:47,800 --> 00:01:51,720 Speaker 1: daily numbers of asset purchases that you know, thirteen years ago, 30 00:01:51,800 --> 00:01:54,640 Speaker 1: during the financial crisis, we would have assumed would have 31 00:01:54,640 --> 00:01:57,720 Speaker 1: been a monthly number. Right. So the order of magnitude 32 00:01:57,760 --> 00:02:01,080 Speaker 1: of what the FED is prepared to do uh today 33 00:02:01,600 --> 00:02:06,080 Speaker 1: versus years past, it's just dramatically different. Um. I think 34 00:02:06,120 --> 00:02:08,640 Speaker 1: the Fed's balance sheet is going to go, you know, 35 00:02:08,880 --> 00:02:12,000 Speaker 1: quite a bit wider and larger. They're already at about 36 00:02:12,800 --> 00:02:14,400 Speaker 1: to g d P as I said, six and a 37 00:02:14,440 --> 00:02:17,960 Speaker 1: half trillium. I can easily imagine them getting to seven 38 00:02:18,040 --> 00:02:20,480 Speaker 1: or eight trillion by the end of the year. Eric, 39 00:02:20,560 --> 00:02:23,040 Speaker 1: Let's talk about guidance a little bit further and dig 40 00:02:23,080 --> 00:02:25,400 Speaker 1: in there as far as what the central bank is 41 00:02:25,400 --> 00:02:29,120 Speaker 1: actually looking for. Is it inflation? Is it unemployment rates? 42 00:02:29,160 --> 00:02:32,720 Speaker 1: Are they focused at all on the increasing wealth gap 43 00:02:32,800 --> 00:02:36,160 Speaker 1: that we saw increasingly in focus post two thousand and eight. 44 00:02:36,600 --> 00:02:39,680 Speaker 1: Where how important is it to determine which of these 45 00:02:39,720 --> 00:02:44,480 Speaker 1: factors that feeds really focused on. So I think, look, 46 00:02:44,560 --> 00:02:48,280 Speaker 1: I think you can prioritize those um and I think 47 00:02:48,280 --> 00:02:50,799 Speaker 1: this is how the FED is likely to be thinking 48 00:02:50,800 --> 00:02:54,280 Speaker 1: about it. The first question point you made was inflation. 49 00:02:54,400 --> 00:02:58,240 Speaker 1: Now we all know there's been a massive amount of demands, 50 00:02:58,360 --> 00:03:02,040 Speaker 1: destruction and and a and a and a significant contraction 51 00:03:02,080 --> 00:03:04,720 Speaker 1: in the economy in that environment, that that's not going 52 00:03:04,800 --> 00:03:07,200 Speaker 1: to worry about inflation in the short term. If anything, 53 00:03:07,200 --> 00:03:11,120 Speaker 1: that's probably more worried about deflation. And the other point 54 00:03:11,200 --> 00:03:16,160 Speaker 1: that you mentioned and I think are are also important, 55 00:03:16,600 --> 00:03:20,320 Speaker 1: but things like the wealth gap and the wealth divide. 56 00:03:20,440 --> 00:03:23,000 Speaker 1: But there was a lot of pushback against the said 57 00:03:23,080 --> 00:03:27,080 Speaker 1: acts financial crisis for contributing to the growing wealth gap. 58 00:03:27,360 --> 00:03:29,280 Speaker 1: They can't worry about that right now. They have to 59 00:03:29,320 --> 00:03:32,799 Speaker 1: worry about supporting the economy in the very short term, 60 00:03:32,880 --> 00:03:36,160 Speaker 1: and then as the crisis, both the economic crisis and 61 00:03:36,200 --> 00:03:39,760 Speaker 1: the health crisis subsides, then they can go to work 62 00:03:39,800 --> 00:03:42,320 Speaker 1: and really dig into trying to look at some of 63 00:03:42,360 --> 00:03:45,720 Speaker 1: those those issues that are more structural for the economy. 64 00:03:45,760 --> 00:03:47,720 Speaker 1: But for the moment, they have to do everything they 65 00:03:47,720 --> 00:03:51,400 Speaker 1: can to try and keep businesses and the consumer from imploding. 66 00:03:52,080 --> 00:03:55,560 Speaker 1: Eric Powell does the press conference today is going to 67 00:03:55,600 --> 00:03:58,040 Speaker 1: be a feeling of so many of our American listeners 68 00:03:58,480 --> 00:04:00,880 Speaker 1: that he is the central banker to the world, whether 69 00:04:00,880 --> 00:04:04,560 Speaker 1: it's Brazil or Ecuador or any of the other troubled nations. 70 00:04:04,600 --> 00:04:07,240 Speaker 1: You've got a unique view on this. It's standard charter. 71 00:04:07,920 --> 00:04:12,280 Speaker 1: What is the risk to the American major banks of 72 00:04:12,320 --> 00:04:15,080 Speaker 1: an e M blowing up? I mean, as Chairman Powell 73 00:04:15,160 --> 00:04:18,520 Speaker 1: during the press conference today, worried about the two big 74 00:04:18,560 --> 00:04:23,039 Speaker 1: to fail American banks exposure to the e M world. 75 00:04:25,760 --> 00:04:28,680 Speaker 1: And look, I would respond to that in a couple 76 00:04:28,720 --> 00:04:30,880 Speaker 1: of ways. Tom. I mean, look, any time you have 77 00:04:31,480 --> 00:04:34,760 Speaker 1: a global economic crisis, you're always going to be worried 78 00:04:34,800 --> 00:04:38,240 Speaker 1: about the banks, not because you necessarily believe they have 79 00:04:38,400 --> 00:04:41,480 Speaker 1: systemic risk, but because the banks are the facilitators of 80 00:04:41,600 --> 00:04:45,320 Speaker 1: capital and liquidity. And you know, I think the big 81 00:04:45,360 --> 00:04:49,360 Speaker 1: difference between today and thirteen years ago is that this 82 00:04:49,440 --> 00:04:53,480 Speaker 1: crisis did not originate out of the financial system, and 83 00:04:53,560 --> 00:04:56,920 Speaker 1: so as this economy starts to turn around went which 84 00:04:56,920 --> 00:04:59,080 Speaker 1: it will at some point, and that's where the U 85 00:04:59,240 --> 00:05:02,480 Speaker 1: S and global the FED and the other central banks 86 00:05:02,520 --> 00:05:06,640 Speaker 1: around the world need the banking system to facilitate that recovery, 87 00:05:06,880 --> 00:05:09,240 Speaker 1: to contribute to that recovery, and to make sure that 88 00:05:09,279 --> 00:05:13,840 Speaker 1: monetary policy has distributed to the broader economy. So I 89 00:05:13,880 --> 00:05:16,080 Speaker 1: think he will be worried in the sense that he 90 00:05:16,160 --> 00:05:19,159 Speaker 1: wants to make sure the banking system, both domestically and 91 00:05:19,200 --> 00:05:22,640 Speaker 1: internationally is working. But I think, you know, we have 92 00:05:22,760 --> 00:05:26,680 Speaker 1: to recognize that the banks globally have raised a significant 93 00:05:26,680 --> 00:05:30,240 Speaker 1: amount of excess capital and liquidity in reaction to what 94 00:05:30,360 --> 00:05:34,360 Speaker 1: they experienced thirteen years ago. So will he be concerned, yes, 95 00:05:34,400 --> 00:05:37,240 Speaker 1: but not because he thinks there's an imminent problem or 96 00:05:37,240 --> 00:05:40,240 Speaker 1: crisis brewing. Let's turn to Europe. Eric, with regards to 97 00:05:40,279 --> 00:05:42,760 Speaker 1: this conversation, what I'm hearing is we can grow away 98 00:05:43,080 --> 00:05:45,200 Speaker 1: some of these problems. Europe has not been able to 99 00:05:45,240 --> 00:05:48,040 Speaker 1: grow away the problems of the last ten years. As 100 00:05:48,080 --> 00:05:50,400 Speaker 1: you look at Europe right now, to expect they can 101 00:05:50,440 --> 00:05:55,760 Speaker 1: grow away the problems of the next five years. Look, 102 00:05:55,960 --> 00:06:00,000 Speaker 1: it's a great point, it's a great challenge for Europe. Um, 103 00:06:00,160 --> 00:06:02,599 Speaker 1: there's there's two problems there actually. I mean, when you 104 00:06:02,640 --> 00:06:07,599 Speaker 1: take on a significant amount of debt, which which Europe 105 00:06:07,640 --> 00:06:10,040 Speaker 1: did after the financial crisis, you hope that one of 106 00:06:10,080 --> 00:06:12,200 Speaker 1: two things will happen. Either you grow your way out 107 00:06:12,200 --> 00:06:14,839 Speaker 1: of it, as as you mentioned, or you can inflate 108 00:06:14,960 --> 00:06:16,720 Speaker 1: your way out of it. And as we all know, 109 00:06:16,800 --> 00:06:21,000 Speaker 1: Europe has has has lacked above trend growth for the 110 00:06:21,200 --> 00:06:23,640 Speaker 1: same period of time, which also means they haven't been 111 00:06:23,680 --> 00:06:27,440 Speaker 1: able to generate inflation. Um. So I think that will 112 00:06:27,480 --> 00:06:30,680 Speaker 1: be something that is on people's minds because as we know, 113 00:06:31,480 --> 00:06:33,960 Speaker 1: you know, the amount of debt being issued, the amount 114 00:06:34,000 --> 00:06:36,200 Speaker 1: of debt being put onto the central bank and the 115 00:06:36,320 --> 00:06:40,240 Speaker 1: national bank balance sheets is growing and and I think 116 00:06:40,240 --> 00:06:43,360 Speaker 1: that raises some concerns about the lack of fiscal unity 117 00:06:43,400 --> 00:06:46,440 Speaker 1: in Europe. We know we have a very competent central 118 00:06:46,440 --> 00:06:49,400 Speaker 1: bank for at the ECB, but you don't have the 119 00:06:49,480 --> 00:06:53,839 Speaker 1: equivalent fiscal authority in Europe that guides the broader EU economy. 120 00:06:53,880 --> 00:06:56,560 Speaker 1: And I think that's still probably the biggest structural challenge 121 00:06:56,800 --> 00:06:59,880 Speaker 1: that Europe is facing. So Eric does build on that. 122 00:07:00,320 --> 00:07:02,520 Speaker 1: Do you have a sense that emerging from this crisis 123 00:07:02,520 --> 00:07:05,560 Speaker 1: there'll be a stronger unity when it comes to the 124 00:07:05,600 --> 00:07:08,120 Speaker 1: fiscal muscle of Europe. Or do you think that we're 125 00:07:08,120 --> 00:07:13,400 Speaker 1: going to see an increased euro skepticism. I think it's 126 00:07:13,480 --> 00:07:17,200 Speaker 1: I think we're already seeing the euro skepticism. Um. And 127 00:07:17,200 --> 00:07:22,240 Speaker 1: in every time we have either an economic or political 128 00:07:22,320 --> 00:07:28,600 Speaker 1: hiccup in the euro Area, you see the euro skepticism increase. UM. 129 00:07:28,640 --> 00:07:32,400 Speaker 1: So this time is no different. UM. You know, Italy 130 00:07:33,160 --> 00:07:37,600 Speaker 1: has its own both economic and health challenges. It looks 131 00:07:37,640 --> 00:07:41,080 Speaker 1: like we're starting to see some improvement on the health side. UM. 132 00:07:41,120 --> 00:07:43,600 Speaker 1: And it's no secret that, you know, Southern Europe is 133 00:07:44,080 --> 00:07:48,200 Speaker 1: looking for a certain kind of fiscal support from the 134 00:07:48,240 --> 00:07:52,560 Speaker 1: rest of Europe and their northern cousins are proposing or 135 00:07:52,640 --> 00:07:55,800 Speaker 1: offering a different form of support. And this is where 136 00:07:55,800 --> 00:07:59,040 Speaker 1: the lack of fiscal unity is. It's a real challenge 137 00:07:59,040 --> 00:08:01,520 Speaker 1: and a real problem. UM. We would all like to 138 00:08:01,560 --> 00:08:05,320 Speaker 1: believe that that a crisis brings them together, but I think, 139 00:08:05,680 --> 00:08:07,520 Speaker 1: you know, I think the challenge is going to remain 140 00:08:07,560 --> 00:08:11,239 Speaker 1: at the growth differentials, the intuation differentials, and the labor 141 00:08:11,280 --> 00:08:15,360 Speaker 1: productivity differentials between the North and South remained very wide 142 00:08:15,000 --> 00:08:18,720 Speaker 1: and challenge. And you think that we've got to leave 143 00:08:18,760 --> 00:08:21,000 Speaker 1: it there. I apologize. I can hear you clearly at 144 00:08:21,000 --> 00:08:23,400 Speaker 1: the end there. Eric Robertson stand a chan at Bank 145 00:08:23,520 --> 00:08:29,480 Speaker 1: Global head of Research. Well, you need to know, folks. 146 00:08:29,520 --> 00:08:31,480 Speaker 1: As I come out of my bedroom, there's a hallway 147 00:08:31,520 --> 00:08:34,079 Speaker 1: with lots of economics books. If I don't trip over 148 00:08:34,160 --> 00:08:37,280 Speaker 1: Vet Bill there. I am looking at Abel Berminanke, I'm 149 00:08:37,280 --> 00:08:40,000 Speaker 1: looking at Michigan, I'm looking at ken Green and all 150 00:08:40,040 --> 00:08:45,120 Speaker 1: the others thinking about the theories underlying economics. Randall Krosner 151 00:08:45,480 --> 00:08:49,760 Speaker 1: is at Chicago in his expert on the foundations of 152 00:08:49,800 --> 00:08:53,160 Speaker 1: our fellow Reserve System. Governor Crosster, thank you so much 153 00:08:53,200 --> 00:08:57,080 Speaker 1: for joining us. What is the theory today the Chairman 154 00:08:57,200 --> 00:09:01,760 Speaker 1: Powell's using at his press conference, is there is there 155 00:09:01,800 --> 00:09:05,360 Speaker 1: a theory or a belief or a foundation given the 156 00:09:05,480 --> 00:09:11,120 Speaker 1: size of this natural disaster. Well, I think he's going 157 00:09:11,160 --> 00:09:15,480 Speaker 1: to be using the traditional tools, but obviously realizing that 158 00:09:15,520 --> 00:09:19,440 Speaker 1: there's a lot of uncertainty and using and using those tools. Um. 159 00:09:19,440 --> 00:09:22,200 Speaker 1: Clearly there's been a very negative demand shock as well 160 00:09:22,200 --> 00:09:26,720 Speaker 1: as a negative supply shock, and both of those are 161 00:09:27,120 --> 00:09:31,400 Speaker 1: going to mean that we're likely to see UM very 162 00:09:31,440 --> 00:09:37,600 Speaker 1: low economic activity and UH and downward price pressure, and 163 00:09:37,640 --> 00:09:40,000 Speaker 1: so he's going to be trying to use that framework 164 00:09:40,040 --> 00:09:44,040 Speaker 1: for thinking about what tools have a disposal to set 165 00:09:44,080 --> 00:09:46,600 Speaker 1: those Randy, when you left the FED coming out of 166 00:09:46,600 --> 00:09:49,679 Speaker 1: the last financial crisis, did you ever think that this 167 00:09:49,760 --> 00:09:52,520 Speaker 1: is where we would be ten years later, with the 168 00:09:52,520 --> 00:09:55,400 Speaker 1: FED using all of the tools that is currently using 169 00:09:55,559 --> 00:09:58,360 Speaker 1: all of the guidance the radical transparency. Did you ever 170 00:09:58,400 --> 00:10:03,680 Speaker 1: see this Federal Reserve heading in that direction. Well, we'd 171 00:10:03,679 --> 00:10:06,160 Speaker 1: set everything up so that it would make it easy 172 00:10:06,280 --> 00:10:08,320 Speaker 1: to stand up some of those problems if they're a 173 00:10:08,360 --> 00:10:11,920 Speaker 1: big shock to come. And although I'm generally an optimistic person, 174 00:10:11,960 --> 00:10:15,559 Speaker 1: I'm also realist and realized that every once in a 175 00:10:15,559 --> 00:10:17,720 Speaker 1: while there's going to be a big shock that comes. 176 00:10:18,040 --> 00:10:21,600 Speaker 1: Did I anticipate this particularly shock, certainly, not um, But 177 00:10:21,760 --> 00:10:23,280 Speaker 1: did I think that there would be shocked where the 178 00:10:23,320 --> 00:10:25,599 Speaker 1: FID might have to stand up to these programs the 179 00:10:25,720 --> 00:10:29,560 Speaker 1: last Yes, Randy. Given your position as a governor of 180 00:10:29,559 --> 00:10:32,600 Speaker 1: the FED from two thousand six until two thousand and nine, 181 00:10:32,600 --> 00:10:37,080 Speaker 1: you're uniquely positioned to be sort of a potential um 182 00:10:37,200 --> 00:10:39,360 Speaker 1: fly on the wall in some of these discussions. And 183 00:10:39,360 --> 00:10:42,480 Speaker 1: I have to wonder how much moral hazard is weighing 184 00:10:42,559 --> 00:10:44,719 Speaker 1: on the minds of FED Chair J Powell and all 185 00:10:44,760 --> 00:10:48,599 Speaker 1: of his peers. The idea that with their ongoing backstop 186 00:10:48,679 --> 00:10:51,880 Speaker 1: of markets, they're encouraging investors to take more and more 187 00:10:52,000 --> 00:10:57,440 Speaker 1: risk going into companies that perhaps shouldn't exist anymore. This 188 00:10:57,559 --> 00:10:59,800 Speaker 1: is I think a very important part of the discussion, 189 00:10:59,840 --> 00:11:02,000 Speaker 1: and I think you see the struggle with respect to 190 00:11:02,200 --> 00:11:05,320 Speaker 1: the main street lending program for example. So this is 191 00:11:05,360 --> 00:11:07,160 Speaker 1: a new area that the FED is going to get 192 00:11:07,240 --> 00:11:13,199 Speaker 1: into financing small loans for for main street businesses or 193 00:11:13,280 --> 00:11:17,160 Speaker 1: small and medium sized businesses. And what they want to 194 00:11:17,200 --> 00:11:20,040 Speaker 1: do is have the banks retain five percent of the 195 00:11:20,160 --> 00:11:22,800 Speaker 1: risk if something goes wrong, that they take the first 196 00:11:22,880 --> 00:11:25,760 Speaker 1: five percent of loss. They try to minimize that moral 197 00:11:25,840 --> 00:11:28,280 Speaker 1: hazard risk that someone just takes the money and run 198 00:11:29,040 --> 00:11:31,240 Speaker 1: the challenges that they also want to get the money 199 00:11:31,240 --> 00:11:33,280 Speaker 1: out really quickly. And if you want to get the 200 00:11:33,320 --> 00:11:36,560 Speaker 1: money out quickly, um, that means you probably do less 201 00:11:36,600 --> 00:11:39,520 Speaker 1: due diligence than you otherwise would. And that's why they're 202 00:11:39,520 --> 00:11:42,920 Speaker 1: giving so much of a guarantee. And so the struggle 203 00:11:43,000 --> 00:11:45,360 Speaker 1: there is do they go all the way. I'm speaking 204 00:11:45,400 --> 00:11:47,920 Speaker 1: to you from from where I am in London, and 205 00:11:48,000 --> 00:11:50,960 Speaker 1: they've had exactly this debate here whether they should have 206 00:11:51,760 --> 00:11:54,800 Speaker 1: guarantee of these small business loans to get them out 207 00:11:54,880 --> 00:11:58,200 Speaker 1: quickly or worry about the risks more and then they 208 00:11:58,240 --> 00:12:00,920 Speaker 1: go out more slowly. Right, it was so important here. 209 00:12:00,960 --> 00:12:03,080 Speaker 1: We talked to Rick Michigan, the former governor about this 210 00:12:03,120 --> 00:12:07,160 Speaker 1: the other day as well. At some point the pandemic 211 00:12:07,400 --> 00:12:12,080 Speaker 1: ends and then we have to reverse these processes. Can 212 00:12:12,120 --> 00:12:18,679 Speaker 1: we do that with smooth glide pass? Very important question. Well, 213 00:12:18,720 --> 00:12:21,400 Speaker 1: I don't think it's going to be just um a 214 00:12:21,520 --> 00:12:24,120 Speaker 1: quick on and off. So I don't certainly think we've 215 00:12:24,160 --> 00:12:26,440 Speaker 1: seen the V down, but I don't think we're just 216 00:12:26,480 --> 00:12:29,000 Speaker 1: going to see a V back up. I think they're 217 00:12:29,040 --> 00:12:32,280 Speaker 1: going to be fundamental changes to people's behavior, fundamental changes 218 00:12:32,320 --> 00:12:37,120 Speaker 1: to supply changes, supplies um supply chains that are going 219 00:12:37,160 --> 00:12:40,720 Speaker 1: to make it more difficult to have just a smooth recovery. 220 00:12:41,160 --> 00:12:43,360 Speaker 1: That said, the FIT does have the tools at its 221 00:12:43,440 --> 00:12:47,600 Speaker 1: disposal to withdraw some of the reserves and some liquidity 222 00:12:47,720 --> 00:12:50,240 Speaker 1: that it puts in the system. Much like after the 223 00:12:50,640 --> 00:12:53,240 Speaker 1: crisis a decade ago, people were very concerned that when 224 00:12:53,400 --> 00:12:57,000 Speaker 1: fits balance sheet exploded to more than for trillion dollars 225 00:12:57,000 --> 00:13:00,079 Speaker 1: for much less than a trillion before the crisis, that 226 00:13:00,120 --> 00:13:03,520 Speaker 1: we'd have hyper inflation. Obviously we haven't over the last decade. 227 00:13:03,800 --> 00:13:06,760 Speaker 1: If it has the tools to prevent that going forward, okay, 228 00:13:06,760 --> 00:13:10,120 Speaker 1: they've got the tools going forward. But again, none of 229 00:13:10,200 --> 00:13:13,679 Speaker 1: this at all is in the textbooks. You know, Steve 230 00:13:13,720 --> 00:13:16,360 Speaker 1: Major today of HSBC model that we're going out to 231 00:13:16,480 --> 00:13:20,480 Speaker 1: nine trillion in the seventeen trillion dollar economy. Do we 232 00:13:20,559 --> 00:13:23,600 Speaker 1: just roll off the debt over the next twenty years 233 00:13:23,760 --> 00:13:28,440 Speaker 1: or will there be an activists program to somehow bring 234 00:13:28,480 --> 00:13:33,080 Speaker 1: down the depth bring down the balance sheet of the Fed. Well, 235 00:13:33,160 --> 00:13:36,520 Speaker 1: that'll be very interesting to see. So obviously these questions 236 00:13:36,520 --> 00:13:40,679 Speaker 1: arose when we went from eight billion dollars to more 237 00:13:40,720 --> 00:13:43,560 Speaker 1: than four trillion dollars, and then the Fed was able 238 00:13:43,640 --> 00:13:46,480 Speaker 1: to gradually reduce the size of the balance sheet. But 239 00:13:46,559 --> 00:13:49,720 Speaker 1: then this other other shocks and tumults in the market 240 00:13:49,760 --> 00:13:53,679 Speaker 1: that come along, and the balance sheet will grow um Obviously, 241 00:13:53,920 --> 00:13:58,120 Speaker 1: when it starts to get to be or or or 242 00:13:58,200 --> 00:14:04,160 Speaker 1: perhaps even of GDP, that may be more more challenging 243 00:14:04,240 --> 00:14:08,000 Speaker 1: to coordinate. Bank of Japan has a balancing it's more 244 00:14:08,000 --> 00:14:09,920 Speaker 1: than a hundred percent of GDP. Not that I think 245 00:14:09,960 --> 00:14:13,600 Speaker 1: Bank of that Japan is the benchmark, but obviously they 246 00:14:13,640 --> 00:14:17,000 Speaker 1: haven't had high inflation there. Does the deficit in America 247 00:14:17,080 --> 00:14:19,240 Speaker 1: become a financial stability issue that the FET has to 248 00:14:19,840 --> 00:14:24,840 Speaker 1: adapt and work around. It's certainly something that it thinks 249 00:14:24,920 --> 00:14:28,760 Speaker 1: very carefully about because UM, interest rates obviously are low, 250 00:14:29,000 --> 00:14:33,480 Speaker 1: and people are globally, both domestically and globally, are willing 251 00:14:33,560 --> 00:14:38,240 Speaker 1: to to finance the very large expenditures that the US 252 00:14:38,280 --> 00:14:40,840 Speaker 1: government is making right now. But of course that could 253 00:14:40,880 --> 00:14:43,480 Speaker 1: change as the FT needs to take that into account, 254 00:14:43,480 --> 00:14:45,360 Speaker 1: and does they take that into account and sort of 255 00:14:45,360 --> 00:14:48,280 Speaker 1: it's longer run risk management planning. I think right now 256 00:14:48,280 --> 00:14:52,160 Speaker 1: it's focused on making sure the economy, um, it doesn't 257 00:14:52,520 --> 00:14:56,960 Speaker 1: contract more than it needs to, and um, we don't 258 00:14:57,000 --> 00:15:00,160 Speaker 1: have a financial crisis that is on top of see 259 00:15:00,440 --> 00:15:03,840 Speaker 1: the real shock that's come from this this health crisis. Randy, 260 00:15:03,840 --> 00:15:10,480 Speaker 1: could you see a time when the FED buy stocks? Uh, Well, 261 00:15:10,520 --> 00:15:12,600 Speaker 1: that would take an active Congress because they are not 262 00:15:12,600 --> 00:15:15,200 Speaker 1: permitted to to do that. But I just mentioned the 263 00:15:15,200 --> 00:15:17,760 Speaker 1: Bank of Japan, which is a very large purchaser of 264 00:15:17,760 --> 00:15:21,320 Speaker 1: of equities. UM, I don't think. I think there are 265 00:15:21,320 --> 00:15:24,280 Speaker 1: a lot of other assets that FIT can purchase, and 266 00:15:24,400 --> 00:15:26,480 Speaker 1: I think it's wiser for the fit to stay out 267 00:15:26,480 --> 00:15:31,640 Speaker 1: of the equity market. Not much left, Randy. Oh, there 268 00:15:31,640 --> 00:15:37,120 Speaker 1: are a lot of assets that are out there. So 269 00:15:37,880 --> 00:15:39,400 Speaker 1: what are we gonna do? Randy? I mean, you're the 270 00:15:39,400 --> 00:15:41,840 Speaker 1: guy out and they're fine. You're the guy out of 271 00:15:41,840 --> 00:15:45,480 Speaker 1: Brown University. Maybe we can corner the lobster market. Governor 272 00:15:45,520 --> 00:15:49,360 Speaker 1: cross so much Randall crossing with us from London and 273 00:15:49,360 --> 00:15:53,600 Speaker 1: of course always from the University Chicago, the wonderful mathematician, 274 00:15:53,640 --> 00:15:56,120 Speaker 1: I should say, from Brown University. We said good morning 275 00:15:56,640 --> 00:16:02,560 Speaker 1: to Rhode Island. This is gonna be sae as they 276 00:16:02,560 --> 00:16:06,760 Speaker 1: stopped this recession. Absolutely, And of course you're folded over, 277 00:16:06,840 --> 00:16:10,320 Speaker 1: folks into the classic equation. Why equals C plus I 278 00:16:10,560 --> 00:16:14,400 Speaker 1: plus G plus all that trade noise and the preponderant 279 00:16:14,440 --> 00:16:18,000 Speaker 1: weight is the consumer. He is expert it looking at 280 00:16:18,040 --> 00:16:21,640 Speaker 1: the consumer of America. Stephen Stanley has won all sorts 281 00:16:21,640 --> 00:16:25,800 Speaker 1: of forecasting awards and joins us from Amer's pier Pot. Stephen, 282 00:16:25,800 --> 00:16:28,080 Speaker 1: it's awful early to gleam data. I know you're going 283 00:16:28,120 --> 00:16:30,800 Speaker 1: to pounce through the data for Amer's pier pot. But 284 00:16:30,960 --> 00:16:34,560 Speaker 1: what can we learn in this first quarter about the 285 00:16:34,680 --> 00:16:37,680 Speaker 1: state of seventy of our g d P, the state 286 00:16:38,040 --> 00:16:42,240 Speaker 1: of the American consumer. Yeah, well, obviously the consumer spending 287 00:16:42,280 --> 00:16:44,800 Speaker 1: numbers are are the big source of the weakness in 288 00:16:44,880 --> 00:16:48,200 Speaker 1: the in the data. UM. I think it's kind of 289 00:16:48,240 --> 00:16:50,840 Speaker 1: incredible when you think about the fact that the economy 290 00:16:50,920 --> 00:16:54,800 Speaker 1: was running pretty much on a normal footing for over 291 00:16:55,680 --> 00:16:58,040 Speaker 1: of the first quarter, and it was really just around 292 00:16:58,040 --> 00:17:01,680 Speaker 1: the middle of March when we UH initiated these lockdowns, 293 00:17:02,280 --> 00:17:04,640 Speaker 1: and that was enough. That two week period was enough 294 00:17:04,680 --> 00:17:09,320 Speaker 1: to drive consumer spending UH down over seven percent on 295 00:17:09,400 --> 00:17:12,639 Speaker 1: the quarter and GDP down almost five I think it 296 00:17:12,840 --> 00:17:14,920 Speaker 1: obviously tells you that Q two is going to be 297 00:17:15,240 --> 00:17:17,360 Speaker 1: quite a bit worse because we're gonna have been locked 298 00:17:17,400 --> 00:17:20,200 Speaker 1: down for much more than just two weeks. So, given 299 00:17:20,200 --> 00:17:23,320 Speaker 1: that the personal consumption numbers came in so much worse 300 00:17:23,400 --> 00:17:27,560 Speaker 1: than expected, more than twice as worse as expected, are 301 00:17:27,640 --> 00:17:30,560 Speaker 1: you going to rethink some of the estimates that you 302 00:17:30,640 --> 00:17:35,120 Speaker 1: have baked in for second quarter consumption and GDP expectations. Yeah, 303 00:17:35,160 --> 00:17:36,560 Speaker 1: I think we'll have to take a look at that. 304 00:17:36,600 --> 00:17:39,119 Speaker 1: We do get the March data tomorrow and and that 305 00:17:39,160 --> 00:17:42,399 Speaker 1: will be helpful. Um. But yeah, I think you know 306 00:17:42,480 --> 00:17:44,720 Speaker 1: there is a good chance that that will have to 307 00:17:44,800 --> 00:17:47,919 Speaker 1: lower estimates for Q two as well, because if if 308 00:17:48,000 --> 00:17:50,119 Speaker 1: marches down as much as it as it had to 309 00:17:50,160 --> 00:17:52,720 Speaker 1: have been to get to that seven point six quarterly number, 310 00:17:53,040 --> 00:17:55,359 Speaker 1: then presumably the April numbers are probably going to be 311 00:17:55,400 --> 00:17:59,000 Speaker 1: that much weaker as well. We're all thinking about the recovery, 312 00:17:59,119 --> 00:18:01,920 Speaker 1: the path of the recouver rate, the shape of that recovery. 313 00:18:02,000 --> 00:18:05,080 Speaker 1: There's so much debate about a letter of the you 314 00:18:05,960 --> 00:18:10,200 Speaker 1: w Stephen, how us understand that debate? Yeah? I mean, 315 00:18:10,400 --> 00:18:13,080 Speaker 1: you know, it's it's just trying to get simple enough 316 00:18:13,200 --> 00:18:15,560 Speaker 1: for for late people to understand. But I think that 317 00:18:15,680 --> 00:18:17,960 Speaker 1: the trouble is that, uh, you know, we don't have 318 00:18:18,080 --> 00:18:21,400 Speaker 1: enough letters or shapes in the alphabet to to get 319 00:18:21,440 --> 00:18:24,119 Speaker 1: an accurate view of what we're really looking at. I mean, 320 00:18:24,160 --> 00:18:27,000 Speaker 1: I think there really two two ways or two things 321 00:18:27,040 --> 00:18:29,720 Speaker 1: to think about here. One is the timing of the 322 00:18:29,800 --> 00:18:33,560 Speaker 1: recovery and how much do you initially get back so 323 00:18:33,960 --> 00:18:36,160 Speaker 1: we're gonna have a bounce back when everything is open. 324 00:18:36,480 --> 00:18:38,959 Speaker 1: Are we going to get back to where we were 325 00:18:39,000 --> 00:18:42,360 Speaker 1: before the virus eight ninety? What is the number? Uh? 326 00:18:42,359 --> 00:18:44,560 Speaker 1: And then the second question is what is the shape 327 00:18:44,560 --> 00:18:47,040 Speaker 1: of the economy from there? Do we flatline once we 328 00:18:47,080 --> 00:18:50,480 Speaker 1: get that initial rebound or do we continue to trend 329 00:18:50,560 --> 00:18:53,520 Speaker 1: higher at a pace that would allow us to work 330 00:18:53,560 --> 00:18:56,520 Speaker 1: down the unemployment rate and um and and get back 331 00:18:56,560 --> 00:18:59,399 Speaker 1: closer to normal. The back end of the equation is 332 00:18:59,600 --> 00:19:02,960 Speaker 1: n X. It's your export dynamics, folks, in your import dynamics. 333 00:19:02,960 --> 00:19:05,399 Speaker 1: Steven Salley, do you have a clue what world trade 334 00:19:05,440 --> 00:19:10,480 Speaker 1: is doing and how it rolls into the American economic experiment? Well, 335 00:19:10,520 --> 00:19:13,560 Speaker 1: I mean the short answers, we know that trade is 336 00:19:13,960 --> 00:19:17,640 Speaker 1: contracting along with everything else. Um. I think from from 337 00:19:17,640 --> 00:19:21,639 Speaker 1: a GDP perspective, Um, the you know, the reality is 338 00:19:21,680 --> 00:19:24,080 Speaker 1: that the US runs a big trade deficit. So our 339 00:19:24,119 --> 00:19:26,600 Speaker 1: imports are much larger than our exports, so if they 340 00:19:26,640 --> 00:19:30,800 Speaker 1: both fall by a similar amount, then the trade gat narrows. 341 00:19:30,920 --> 00:19:32,720 Speaker 1: And that's what we saw in the first quarter, and 342 00:19:32,720 --> 00:19:35,040 Speaker 1: we'll probably see it again in a second And then 343 00:19:35,040 --> 00:19:38,040 Speaker 1: when the economy recovers, my guests is the trade GAPP 344 00:19:38,040 --> 00:19:41,320 Speaker 1: will start to widen back out. But um, this is 345 00:19:41,359 --> 00:19:45,080 Speaker 1: one of these big picture, longer term UH themes that 346 00:19:45,119 --> 00:19:46,879 Speaker 1: we're going to be exploring for a long time. And 347 00:19:47,040 --> 00:19:48,720 Speaker 1: it's not clear to me that that we're going to 348 00:19:48,840 --> 00:19:53,040 Speaker 1: go back to the pre virus UH state of affairs 349 00:19:53,040 --> 00:19:55,240 Speaker 1: in terms of global trade. I think, you know, countries 350 00:19:55,240 --> 00:19:57,119 Speaker 1: are gonna want to keep things a little closer to 351 00:19:57,160 --> 00:20:00,480 Speaker 1: home at the margin than before. But Steve, I want 352 00:20:00,480 --> 00:20:02,200 Speaker 1: to go back to something that John was asking about, 353 00:20:02,240 --> 00:20:05,119 Speaker 1: which is how we're going to emerge on the other side. 354 00:20:05,320 --> 00:20:09,359 Speaker 1: And in this past economic expansion, the longest in US history, 355 00:20:09,440 --> 00:20:12,200 Speaker 1: everyone was saying that the consumer really was holding up 356 00:20:12,240 --> 00:20:15,520 Speaker 1: its back. Can we see a repeat of that given 357 00:20:15,560 --> 00:20:20,240 Speaker 1: the demolition of household balance sheets that we're experiencing right now. Yeah, 358 00:20:20,280 --> 00:20:22,439 Speaker 1: I mean, I think the big question here is really, 359 00:20:22,720 --> 00:20:26,040 Speaker 1: you know, the government is going to extraordinary efforts to 360 00:20:26,200 --> 00:20:30,480 Speaker 1: basically to fill in the loss of income for businesses 361 00:20:30,480 --> 00:20:36,200 Speaker 1: and households that has accompanied this um set of shutdowns. 362 00:20:36,320 --> 00:20:38,520 Speaker 1: And so we've got all these programs to put money 363 00:20:38,520 --> 00:20:41,240 Speaker 1: in the pockets of households and all these programs to 364 00:20:41,320 --> 00:20:43,800 Speaker 1: lend money to businesses. And the question is, when we 365 00:20:43,840 --> 00:20:46,920 Speaker 1: get to the other side, have we effectively filled that hole? 366 00:20:47,560 --> 00:20:50,280 Speaker 1: And if we have, then things can get back to 367 00:20:50,440 --> 00:20:53,680 Speaker 1: something approaching a new normal. And if we haven't, then 368 00:20:53,720 --> 00:20:57,000 Speaker 1: you start to see over time this morph into a 369 00:20:57,080 --> 00:21:00,480 Speaker 1: more conventional recession where you've got high unemployed and people 370 00:21:00,520 --> 00:21:03,879 Speaker 1: just don't have the wherewithal to spend, and I you know, 371 00:21:03,960 --> 00:21:05,680 Speaker 1: I think the jury is still out on that at 372 00:21:05,680 --> 00:21:08,520 Speaker 1: this point. Um, We've got a lot of stimulus in 373 00:21:08,560 --> 00:21:11,200 Speaker 1: the system, or a lot of relief in the system, UM, 374 00:21:11,240 --> 00:21:13,919 Speaker 1: but it's not clear just yet how effective it's all 375 00:21:13,920 --> 00:21:16,080 Speaker 1: going to be. Stephen, let's turn to that stimulus and 376 00:21:16,119 --> 00:21:17,560 Speaker 1: the feeder is of a little bit later. I caught 377 00:21:17,600 --> 00:21:19,960 Speaker 1: up with Michael McKay earlier this morning and asked him 378 00:21:19,960 --> 00:21:22,160 Speaker 1: what a virtual news conference will be like with chairm 379 00:21:22,240 --> 00:21:24,960 Speaker 1: and Pal. Apparently you will be there on some kind 380 00:21:24,960 --> 00:21:28,159 Speaker 1: of webcam asking questions of Chairman Pal a little bit 381 00:21:28,240 --> 00:21:30,600 Speaker 1: late to this afternoon, if you have the opportunity to 382 00:21:30,600 --> 00:21:32,840 Speaker 1: do so, what is the question you would like to 383 00:21:32,880 --> 00:21:36,600 Speaker 1: ask today? Well, I think you know, the thing that 384 00:21:36,680 --> 00:21:39,360 Speaker 1: everybody wants to know is the thing that the FED 385 00:21:39,400 --> 00:21:41,719 Speaker 1: doesn't have an answer for, which is, you know, what 386 00:21:41,760 --> 00:21:43,639 Speaker 1: does this thing look like a year from now, two 387 00:21:43,760 --> 00:21:46,040 Speaker 1: years from now. I mean, everybody's kind of jumping the 388 00:21:46,080 --> 00:21:49,240 Speaker 1: gun and they're talking about you know, forward guidance and 389 00:21:49,320 --> 00:21:52,800 Speaker 1: your curve control and all these things that that would 390 00:21:53,119 --> 00:21:55,560 Speaker 1: to do those sorts of things instead would have to 391 00:21:56,119 --> 00:21:59,800 Speaker 1: know with a not certainty, but with a some of 392 00:21:59,800 --> 00:22:02,440 Speaker 1: the grief confidence what this situation is going to look 393 00:22:02,480 --> 00:22:04,679 Speaker 1: like in a year or two. So, I mean, I 394 00:22:04,720 --> 00:22:06,760 Speaker 1: think we really have to limit our focus to the 395 00:22:06,880 --> 00:22:08,760 Speaker 1: very short terms. I think that's where the feed is. 396 00:22:08,760 --> 00:22:10,919 Speaker 1: They're just trying to get these programs up and running, 397 00:22:11,359 --> 00:22:13,719 Speaker 1: and so you know, I mean, I I don't know 398 00:22:13,760 --> 00:22:15,479 Speaker 1: that that he's going to talk a lot about this, 399 00:22:15,560 --> 00:22:17,800 Speaker 1: but it would be interesting to know kind of what's 400 00:22:17,840 --> 00:22:22,439 Speaker 1: holding up the you know, the opening up with some 401 00:22:22,560 --> 00:22:25,320 Speaker 1: of these big facilities that they're working on, and and 402 00:22:25,359 --> 00:22:28,200 Speaker 1: what are the problems that they're uh seeing and how 403 00:22:28,240 --> 00:22:30,960 Speaker 1: that might you know, what implications that might have for 404 00:22:31,400 --> 00:22:34,119 Speaker 1: whether those programs are ultimately going to be effective. CE 405 00:22:34,280 --> 00:22:37,280 Speaker 1: sailing very quickly. Here is this a united fat I mean, 406 00:22:37,320 --> 00:22:39,720 Speaker 1: I don't mean the the silliness of dissent votes and 407 00:22:39,800 --> 00:22:42,159 Speaker 1: all that, but you know, they go into the equals 408 00:22:42,160 --> 00:22:45,240 Speaker 1: building or the virtual equals building, that big virtual table 409 00:22:45,560 --> 00:22:48,280 Speaker 1: they're going to virtually sit at. Great are they united? 410 00:22:49,200 --> 00:22:51,480 Speaker 1: I think they are. I mean, you know, you've heard 411 00:22:51,480 --> 00:22:55,360 Speaker 1: a pretty pretty united front in terms of the response 412 00:22:55,400 --> 00:22:58,080 Speaker 1: so far from hawks and from doves. I think what 413 00:22:58,600 --> 00:23:01,760 Speaker 1: sets this off from the financial crisis is that there 414 00:23:01,800 --> 00:23:04,800 Speaker 1: are no bad guys here. Um. You know, in two 415 00:23:04,800 --> 00:23:08,760 Speaker 1: thousand and eight, a lot of the bailouts and UM 416 00:23:08,920 --> 00:23:12,200 Speaker 1: things were very controversial because you're creating moral hazard. You're 417 00:23:12,359 --> 00:23:16,440 Speaker 1: you're helping out people who may be acted badly, and 418 00:23:16,480 --> 00:23:18,640 Speaker 1: there is no one like that this time. And so 419 00:23:18,840 --> 00:23:21,520 Speaker 1: you know, Chairman Powell has made the point, there's really 420 00:23:21,560 --> 00:23:24,720 Speaker 1: not a moral hazard issue here because we're just trying 421 00:23:24,760 --> 00:23:28,200 Speaker 1: to make everyone hold. No one is to blame, um, 422 00:23:28,280 --> 00:23:30,520 Speaker 1: and you know, the hope is that these programs will 423 00:23:30,560 --> 00:23:33,320 Speaker 1: kind of keep us back to where we were as 424 00:23:33,520 --> 00:23:37,359 Speaker 1: which as possible before the virus terrific A real subtle update, 425 00:23:37,400 --> 00:23:40,480 Speaker 1: Thank you so much, Stephen Stanley with AMers Pierre Punt. 426 00:23:44,640 --> 00:23:47,480 Speaker 1: Over the last number of days, folks, we've talked with 427 00:23:47,600 --> 00:23:51,119 Speaker 1: so many officials from Johns Hopkins Universities, those in different 428 00:23:51,160 --> 00:23:54,879 Speaker 1: parts of j h U, those doing pure research, and 429 00:23:54,920 --> 00:23:59,000 Speaker 1: those in the trenches. Lauren Simple is in the trenches. 430 00:23:59,080 --> 00:24:02,679 Speaker 1: She is in emergency medicine, and that's of course a 431 00:24:02,800 --> 00:24:05,840 Speaker 1: very important part of what j h YOU was doing 432 00:24:05,960 --> 00:24:09,439 Speaker 1: right now, the challenges of Baltimore, Maryland, and of course 433 00:24:09,520 --> 00:24:14,679 Speaker 1: the challenges of this virus. Our conversation earlier this morning 434 00:24:15,320 --> 00:24:20,200 Speaker 1: with Lauren. Testings absolutely the underpinning of everything else that 435 00:24:20,240 --> 00:24:23,080 Speaker 1: we need to do. So while we're getting better with testing, 436 00:24:23,119 --> 00:24:25,000 Speaker 1: we still have a long way to go, and we 437 00:24:25,240 --> 00:24:28,320 Speaker 1: we really need to keep laser focus on that. On 438 00:24:28,359 --> 00:24:31,680 Speaker 1: the medications, we're seeing a lot of progress where UM 439 00:24:31,800 --> 00:24:34,480 Speaker 1: seeing vaccine progress, which is great to hear because that 440 00:24:34,600 --> 00:24:37,040 Speaker 1: is going to be a key to long term UM 441 00:24:37,040 --> 00:24:39,760 Speaker 1: fighting of this disease. But again, a lot of a 442 00:24:39,800 --> 00:24:43,520 Speaker 1: lot of ways to go. What do you find that 443 00:24:43,640 --> 00:24:47,160 Speaker 1: you know the most reassuring and the most concerning about testing? 444 00:24:47,720 --> 00:24:50,560 Speaker 1: How much more testing do we need in the US, 445 00:24:50,600 --> 00:24:53,879 Speaker 1: And are the test reliable right now? The point of 446 00:24:53,920 --> 00:24:56,800 Speaker 1: care diagnostics are getting better UM, and they're getting you 447 00:24:57,160 --> 00:25:00,000 Speaker 1: picked up more broadly. UM. We still have major issue 448 00:25:00,200 --> 00:25:02,680 Speaker 1: with the supply chain around testing, so we still need 449 00:25:02,760 --> 00:25:06,080 Speaker 1: the reagents, the materials that we need to run the test. 450 00:25:06,160 --> 00:25:08,640 Speaker 1: We still have issues with the swabs, and we still 451 00:25:08,680 --> 00:25:10,960 Speaker 1: have to focus on making sure that we don't just 452 00:25:11,000 --> 00:25:13,280 Speaker 1: have enough test but they're in the right place. Because 453 00:25:13,280 --> 00:25:15,600 Speaker 1: the key to reopening and the key to getting back 454 00:25:15,640 --> 00:25:18,199 Speaker 1: to work is making sure that the tests are distributed 455 00:25:18,200 --> 00:25:20,880 Speaker 1: in a way that we can detect UM where clusters 456 00:25:20,920 --> 00:25:24,080 Speaker 1: may pop up. More new outbreaks. Maker, Lord, let's go 457 00:25:24,119 --> 00:25:27,399 Speaker 1: to your core competencies, which is emergency medicine. Okay, So 458 00:25:27,400 --> 00:25:30,960 Speaker 1: we're gonna have emergency rooms in May, in August, in 459 00:25:31,200 --> 00:25:35,000 Speaker 1: October across this nation where people are gonna walk in 460 00:25:35,040 --> 00:25:38,960 Speaker 1: the door because you know, afterthoughts stubbed or tow or 461 00:25:39,040 --> 00:25:42,640 Speaker 1: somebody broken arm, etcetera, etcetera. We're going to test all 462 00:25:42,680 --> 00:25:46,440 Speaker 1: those people for the virus, aren't we. That's the hope, um, 463 00:25:46,560 --> 00:25:48,399 Speaker 1: so that we can move them into the hospital and 464 00:25:48,440 --> 00:25:51,000 Speaker 1: get them the care they need without putting them them 465 00:25:51,040 --> 00:25:53,320 Speaker 1: at risk, putting our other healthcare workers at risk, and 466 00:25:53,359 --> 00:25:56,080 Speaker 1: putting our other patients at risk. So the idea would 467 00:25:56,080 --> 00:25:58,800 Speaker 1: be as as people who don't show symptoms of COVID 468 00:25:58,880 --> 00:26:01,320 Speaker 1: nineteen come into the hospit, but we would put them 469 00:26:01,320 --> 00:26:03,000 Speaker 1: in a different part of the hospital and still be 470 00:26:03,040 --> 00:26:05,960 Speaker 1: able to safely care for them while we're caring for 471 00:26:06,000 --> 00:26:08,400 Speaker 1: COVID nineteen and while we're still dealing with having COVID 472 00:26:08,480 --> 00:26:11,120 Speaker 1: nineteen out in the community. Well, you know, I look, 473 00:26:11,200 --> 00:26:13,680 Speaker 1: Lauren at this, and you know the huge challenges. I'm 474 00:26:13,760 --> 00:26:16,800 Speaker 1: right here by Mount Sinai on the Upper East Side 475 00:26:16,800 --> 00:26:18,320 Speaker 1: in New York, and you can just see it in 476 00:26:18,320 --> 00:26:20,800 Speaker 1: the faces of the people. Are we going to end 477 00:26:20,920 --> 00:26:26,080 Speaker 1: up with two emergency rooms to hospitals? UM? I hope 478 00:26:26,080 --> 00:26:28,840 Speaker 1: that we aren't. I think we we can't distribute our 479 00:26:28,840 --> 00:26:32,560 Speaker 1: clinicians like that, we can't distribute our resources like that. 480 00:26:32,920 --> 00:26:35,640 Speaker 1: I think we hope that this will become a disease 481 00:26:35,680 --> 00:26:38,760 Speaker 1: that we can manage with tools like we have for 482 00:26:38,880 --> 00:26:42,440 Speaker 1: other diseases that UM that make people really sick, like flu, 483 00:26:42,640 --> 00:26:46,080 Speaker 1: like HIV, like a bunch of different diseases. UM, where 484 00:26:46,160 --> 00:26:49,920 Speaker 1: we can find people who have it early, UM, safely 485 00:26:49,960 --> 00:26:53,000 Speaker 1: care for them without putting others at risk, and that 486 00:26:53,040 --> 00:26:56,600 Speaker 1: our supply chain and our resources allow for that. Give 487 00:26:56,680 --> 00:26:59,840 Speaker 1: us a scope and scale at the Johns Hopkins University 488 00:27:00,080 --> 00:27:02,800 Speaker 1: right now, can we say that you look forward to 489 00:27:02,920 --> 00:27:06,760 Speaker 1: a May that will be improved from April? I do 490 00:27:06,840 --> 00:27:09,320 Speaker 1: hope so. UM. I think we're seeing a slowdown in 491 00:27:09,359 --> 00:27:12,920 Speaker 1: our cases and UM, we're starting to feel that pressure 492 00:27:12,960 --> 00:27:15,639 Speaker 1: release a little bit. But that's the time to be 493 00:27:15,760 --> 00:27:19,119 Speaker 1: vigilant and not let our guard down, because we will 494 00:27:19,160 --> 00:27:23,040 Speaker 1: see spikes in cases, especially as people relax their social 495 00:27:23,080 --> 00:27:26,080 Speaker 1: distancing practices, as they try to go back to work, 496 00:27:26,160 --> 00:27:28,560 Speaker 1: as they UM, you know, just get tired of being 497 00:27:28,600 --> 00:27:31,040 Speaker 1: at home and make different choices. So we have to 498 00:27:31,880 --> 00:27:34,280 Speaker 1: we have to remember that just because we're seeing that 499 00:27:34,320 --> 00:27:36,399 Speaker 1: slow down in cases doesn't mean this is over and 500 00:27:36,440 --> 00:27:38,720 Speaker 1: doesn't mean that we suddenly have a tool kit full 501 00:27:38,760 --> 00:27:41,600 Speaker 1: of tools to fight this. So we have to be protective. 502 00:27:41,760 --> 00:27:44,960 Speaker 1: We have to follow those social distancings still and it 503 00:27:45,040 --> 00:27:48,399 Speaker 1: does get hard, and UM, I think we have to 504 00:27:48,440 --> 00:27:52,159 Speaker 1: remind each other that it's still really important. Laurence so 505 00:27:52,280 --> 00:27:58,399 Speaker 1: our experts on emergency medicine at the Johns Hopkins University. 506 00:28:00,640 --> 00:28:03,640 Speaker 1: It is a hustle dame across the Midwest and particularly 507 00:28:03,680 --> 00:28:07,440 Speaker 1: the northern Midwest. It is Cargill, and it is an 508 00:28:07,440 --> 00:28:11,760 Speaker 1: exceptionally well timed conversation as David Rubinstein looks at the 509 00:28:11,880 --> 00:28:18,000 Speaker 1: leadership capabilities of this absolutely giant private company. Maybe it's 510 00:28:18,000 --> 00:28:21,560 Speaker 1: a name you don't know, it's an important name, Cargill. 511 00:28:21,920 --> 00:28:27,600 Speaker 1: Here is Mr Ruben science conversation with David McLennan. John Tyson, 512 00:28:27,640 --> 00:28:30,480 Speaker 1: who's ahead of Tyson Foods, a competitor reviewers, I assume 513 00:28:30,520 --> 00:28:33,600 Speaker 1: in certain areas, said that the food chain was maybe 514 00:28:33,600 --> 00:28:37,320 Speaker 1: breaking down in this country. We're gonna have to close facilities. Um, 515 00:28:37,480 --> 00:28:39,200 Speaker 1: do you agree with that, and are you worried that 516 00:28:39,240 --> 00:28:43,280 Speaker 1: the food chain is breaking down? I think I would 517 00:28:43,400 --> 00:28:47,200 Speaker 1: characterize it that the food supply chain is understrain. But 518 00:28:47,280 --> 00:28:49,880 Speaker 1: there's a lot of supply chains that are understrained due 519 00:28:49,920 --> 00:28:53,160 Speaker 1: to what's happening. And certainly there have been food production 520 00:28:53,240 --> 00:28:56,360 Speaker 1: facilities in various parts of the country that have had 521 00:28:56,400 --> 00:29:00,400 Speaker 1: to close because of illness or because of supplied a struction. 522 00:29:00,480 --> 00:29:03,160 Speaker 1: But I think basically the ability of us to produce 523 00:29:03,240 --> 00:29:06,560 Speaker 1: food is still there, and there are going to be 524 00:29:06,960 --> 00:29:10,320 Speaker 1: momentary closings momentaries in the right word. But we had 525 00:29:10,320 --> 00:29:14,280 Speaker 1: a facility of be facility that was closed for seventeen days, 526 00:29:14,320 --> 00:29:16,760 Speaker 1: but it's now back up and running and has been 527 00:29:16,800 --> 00:29:20,000 Speaker 1: for the last week. So I think the food industry 528 00:29:20,000 --> 00:29:22,160 Speaker 1: and the food supply chain is resilient. I think the 529 00:29:22,200 --> 00:29:24,840 Speaker 1: people that work in it every day are resilient. So 530 00:29:25,120 --> 00:29:28,160 Speaker 1: I think it's understrained, but I don't think it's it's broken. 531 00:29:29,080 --> 00:29:32,520 Speaker 1: David mcclennan in conversation with David Rubinstein, and of course 532 00:29:32,600 --> 00:29:35,160 Speaker 1: this is so important and part of leadership Live with 533 00:29:35,240 --> 00:29:39,560 Speaker 1: David Rubinstein. Mr Rubenstein joins us this morning. David, you 534 00:29:39,720 --> 00:29:46,360 Speaker 1: and Carlyle are intimately familiar with the peculiarities of how 535 00:29:46,440 --> 00:29:50,719 Speaker 1: we make food in America. As you speak to David 536 00:29:50,760 --> 00:29:53,400 Speaker 1: and as you as you work within all of your context, 537 00:29:53,880 --> 00:29:59,000 Speaker 1: how at risk is our food supply right now? Well? Um, 538 00:29:59,080 --> 00:30:02,400 Speaker 1: John Tyson a statement and issue and put a newspaper 539 00:30:02,400 --> 00:30:05,760 Speaker 1: add out effect saying the food chain was breaking. Uh. 540 00:30:05,800 --> 00:30:09,000 Speaker 1: In response to that, President Trump issued an executive order 541 00:30:09,080 --> 00:30:12,400 Speaker 1: yesterday and effect using the Defense Production Act to say 542 00:30:12,440 --> 00:30:15,280 Speaker 1: that food plants have to stay in business and have 543 00:30:15,400 --> 00:30:18,400 Speaker 1: to keep producing food. Um, and he's going to provide 544 00:30:18,560 --> 00:30:21,280 Speaker 1: equipment and other things to make sure their workers are safe. 545 00:30:21,440 --> 00:30:24,080 Speaker 1: That's the issue that John Tyson was talking about. Many 546 00:30:24,080 --> 00:30:27,520 Speaker 1: of the plants because people work so closely together. Employees 547 00:30:27,560 --> 00:30:29,880 Speaker 1: have come down with COVID nineteen and they have had 548 00:30:29,920 --> 00:30:33,200 Speaker 1: to close down, and therefore that's been a problem and 549 00:30:33,200 --> 00:30:37,920 Speaker 1: getting food produced together. Problem is this that or so 550 00:30:38,160 --> 00:30:41,120 Speaker 1: of the food that we produce is now really produced 551 00:30:41,200 --> 00:30:44,440 Speaker 1: for restaurants or other kinds of things that are not 552 00:30:44,520 --> 00:30:48,040 Speaker 1: at home. But now um, those restaurants are closed down, 553 00:30:48,160 --> 00:30:50,920 Speaker 1: so that kind of food supply is not really available 554 00:30:50,960 --> 00:30:52,800 Speaker 1: for those people, and so they have to re re 555 00:30:53,240 --> 00:30:55,360 Speaker 1: uh position that kind of food. It takes time to 556 00:30:55,400 --> 00:30:57,960 Speaker 1: do it. In other words, if you prepare food for 557 00:30:57,960 --> 00:31:00,840 Speaker 1: for let's say McDonald's, and McDonald's isn't open, you can't 558 00:31:00,880 --> 00:31:02,880 Speaker 1: all of a sudden take that food and and and 559 00:31:02,880 --> 00:31:05,080 Speaker 1: put it in different kind of containers and send it 560 00:31:05,120 --> 00:31:08,880 Speaker 1: a supermarket. And that's been a challenge as well. Historically, 561 00:31:09,120 --> 00:31:11,960 Speaker 1: people eat about five to seven meals outside of their 562 00:31:12,000 --> 00:31:15,000 Speaker 1: home a day a week, five or seven meals a 563 00:31:15,040 --> 00:31:17,360 Speaker 1: week outside their home. Now it's down to maybe one. 564 00:31:17,760 --> 00:31:20,960 Speaker 1: And so that food chains is different because of different 565 00:31:21,000 --> 00:31:24,360 Speaker 1: kind of people providing different parts of the food chain. Unfortunately, 566 00:31:24,400 --> 00:31:26,200 Speaker 1: we also have a problem that a lot of people 567 00:31:26,240 --> 00:31:29,520 Speaker 1: can't afford food right now, and you see enormous amounts 568 00:31:29,560 --> 00:31:32,720 Speaker 1: of food banks and going on in the United States. So, David, 569 00:31:32,760 --> 00:31:35,280 Speaker 1: as you sat down with Mr mcclennan from Cargo, what 570 00:31:35,360 --> 00:31:38,360 Speaker 1: were some of the key challenges they're trying to negotiate 571 00:31:38,520 --> 00:31:41,760 Speaker 1: right now in the world of a pandemic. The key 572 00:31:41,800 --> 00:31:44,680 Speaker 1: thing is making certain your employees are safe um in 573 00:31:44,880 --> 00:31:47,400 Speaker 1: meat packing plants or other kinds of things where you're 574 00:31:47,440 --> 00:31:51,200 Speaker 1: involved with an effects, slaughtering animals or things related to that. 575 00:31:51,640 --> 00:31:54,080 Speaker 1: You have a lot of people closely working to each 576 00:31:54,080 --> 00:31:56,680 Speaker 1: other and Historically they haven't had the kind of protections 577 00:31:56,680 --> 00:31:58,800 Speaker 1: we now have, and getting the equipment for that has 578 00:31:58,840 --> 00:32:01,120 Speaker 1: not been easy. Now they're getting that kind of equipment, 579 00:32:01,120 --> 00:32:03,200 Speaker 1: it takes a while. So a lot of these plants 580 00:32:03,200 --> 00:32:06,280 Speaker 1: have had people that have been um affected by COVID nineteen. 581 00:32:06,280 --> 00:32:08,880 Speaker 1: Now they're going to come back, hopefully with better equipment 582 00:32:08,920 --> 00:32:12,440 Speaker 1: so forth than and better safety. David, one final question 583 00:32:12,520 --> 00:32:14,440 Speaker 1: if we would, and I must ask you about how 584 00:32:14,480 --> 00:32:17,480 Speaker 1: you perceive American business and the animal spirit on this 585 00:32:17,560 --> 00:32:21,400 Speaker 1: day of negative four eight percent g d P. What 586 00:32:21,440 --> 00:32:24,200 Speaker 1: do you observe from all your contacts of how the 587 00:32:24,240 --> 00:32:29,440 Speaker 1: American corporation fares. American corporate leaders have really been working 588 00:32:29,440 --> 00:32:32,000 Speaker 1: around the clock to keep their businesses afloat in some 589 00:32:32,080 --> 00:32:36,680 Speaker 1: cases and rereposition them. So, yes, the economy is down, 590 00:32:36,800 --> 00:32:39,200 Speaker 1: and I suspect they'll be down for a little bit longer, 591 00:32:39,440 --> 00:32:41,640 Speaker 1: but I do think it will will come back, because 592 00:32:42,240 --> 00:32:43,760 Speaker 1: you know, we have some really good companies and we 593 00:32:43,760 --> 00:32:45,960 Speaker 1: have good CEOs. But there's no doubt that's been a 594 00:32:46,000 --> 00:32:47,920 Speaker 1: body blow for for at least a quarter or so, 595 00:32:48,000 --> 00:32:51,080 Speaker 1: maybe maybe two quarters. David Reubinstein, thank you so much. 596 00:32:51,160 --> 00:32:54,280 Speaker 1: Can't say enough about the time and this this PM 597 00:32:54,360 --> 00:32:57,080 Speaker 1: on Friday, and of course this will be played across 598 00:32:57,160 --> 00:33:00,720 Speaker 1: all of our digital operations as well. Mr Rubenstein was 599 00:33:00,840 --> 00:33:05,520 Speaker 1: Mr mcclennan of car Carlyle on his leadership at series. 600 00:33:05,760 --> 00:33:10,000 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 601 00:33:10,040 --> 00:33:15,360 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 602 00:33:15,400 --> 00:33:19,640 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 603 00:33:19,680 --> 00:33:23,520 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 604 00:33:23,600 --> 00:33:23,880 Speaker 1: Radio