Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Please
Speaker 1: to say that Johning us now Eric Robinson. It's not
Speaker 1: a chout at Bank Global Head of Research. Eric, fantastic
Speaker 1: to catch up with you, sir. Let's pick up well
Speaker 1: Lisa left off, shall we? If they can't surprise, how
Speaker 1: do they guide? Look? I think what the FED is
Speaker 1: going to tell us is that they remain ready, willing,
Speaker 1: able to do whatever they feel is necessary to continue
Speaker 1: to support the economy. Um They have shown over the
Speaker 1: last few weeks that they have probably moved away from
Speaker 1: trying to offer aid in a traditional meeting by meeting framework,
Speaker 1: and as their assessment of the economy, credit conditions and
Speaker 1: liquidity changes day to day, they reacts as they need to.
Speaker 1: So I agree with the assessment that we shouldn't be
Speaker 1: expecting any major surprises. I think we'll get some guidance
Speaker 1: on on asset purchases, but you know, look, the Fed's
Speaker 1: balance sheets gone from just over four billions six and
Speaker 1: a half billions in very short orders. So, um, I
Speaker 1: don't think they're going to be telling us that they're
Speaker 1: going to be stopping, but I think we may get
Speaker 1: some guidance on on what the magnitude of asset purchases
Speaker 1: looks like going forward. Let's talk about that, Eric, have
Speaker 1: you settled on a number, a monthly number for purchases. No,
Speaker 1: I haven't. I mean, look, you know, when the FED
Speaker 1: started this a few weeks ago, they were talking about
Speaker 1: daily numbers of asset purchases that you know, thirteen years ago,
Speaker 1: during the financial crisis, we would have assumed would have
Speaker 1: been a monthly number. Right. So the order of magnitude
Speaker 1: of what the FED is prepared to do uh today
Speaker 1: versus years past, it's just dramatically different. Um. I think
Speaker 1: the Fed's balance sheet is going to go, you know,
Speaker 1: quite a bit wider and larger. They're already at about
Speaker 1: to g d P as I said, six and a
Speaker 1: half trillium. I can easily imagine them getting to seven
Speaker 1: or eight trillion by the end of the year. Eric,
Speaker 1: Let's talk about guidance a little bit further and dig
Speaker 1: in there as far as what the central bank is
Speaker 1: actually looking for. Is it inflation? Is it unemployment rates?
Speaker 1: Are they focused at all on the increasing wealth gap
Speaker 1: that we saw increasingly in focus post two thousand and eight.
Speaker 1: Where how important is it to determine which of these
Speaker 1: factors that feeds really focused on. So I think, look,
Speaker 1: I think you can prioritize those um and I think
Speaker 1: this is how the FED is likely to be thinking
Speaker 1: about it. The first question point you made was inflation.
Speaker 1: Now we all know there's been a massive amount of demands,
Speaker 1: destruction and and a and a and a significant contraction
Speaker 1: in the economy in that environment, that that's not going
Speaker 1: to worry about inflation in the short term. If anything,
Speaker 1: that's probably more worried about deflation. And the other point
Speaker 1: that you mentioned and I think are are also important,
Speaker 1: but things like the wealth gap and the wealth divide.
Speaker 1: But there was a lot of pushback against the said
Speaker 1: acts financial crisis for contributing to the growing wealth gap.
Speaker 1: They can't worry about that right now. They have to
Speaker 1: worry about supporting the economy in the very short term,
Speaker 1: and then as the crisis, both the economic crisis and
Speaker 1: the health crisis subsides, then they can go to work
Speaker 1: and really dig into trying to look at some of
Speaker 1: those those issues that are more structural for the economy.
Speaker 1: But for the moment, they have to do everything they
Speaker 1: can to try and keep businesses and the consumer from imploding.
Speaker 1: Eric Powell does the press conference today is going to
Speaker 1: be a feeling of so many of our American listeners
Speaker 1: that he is the central banker to the world, whether
Speaker 1: it's Brazil or Ecuador or any of the other troubled nations.
Speaker 1: You've got a unique view on this. It's standard charter.
Speaker 1: What is the risk to the American major banks of
Speaker 1: an e M blowing up? I mean, as Chairman Powell
Speaker 1: during the press conference today, worried about the two big
Speaker 1: to fail American banks exposure to the e M world.
Speaker 1: And look, I would respond to that in a couple
Speaker 1: of ways. Tom. I mean, look, any time you have
Speaker 1: a global economic crisis, you're always going to be worried
Speaker 1: about the banks, not because you necessarily believe they have
Speaker 1: systemic risk, but because the banks are the facilitators of
Speaker 1: capital and liquidity. And you know, I think the big
Speaker 1: difference between today and thirteen years ago is that this
Speaker 1: crisis did not originate out of the financial system, and
Speaker 1: so as this economy starts to turn around went which
Speaker 1: it will at some point, and that's where the U
Speaker 1: S and global the FED and the other central banks
Speaker 1: around the world need the banking system to facilitate that recovery,
Speaker 1: to contribute to that recovery, and to make sure that
Speaker 1: monetary policy has distributed to the broader economy. So I
Speaker 1: think he will be worried in the sense that he
Speaker 1: wants to make sure the banking system, both domestically and
Speaker 1: internationally is working. But I think, you know, we have
Speaker 1: to recognize that the banks globally have raised a significant
Speaker 1: amount of excess capital and liquidity in reaction to what
Speaker 1: they experienced thirteen years ago. So will he be concerned, yes,
Speaker 1: but not because he thinks there's an imminent problem or
Speaker 1: crisis brewing. Let's turn to Europe. Eric, with regards to
Speaker 1: this conversation, what I'm hearing is we can grow away
Speaker 1: some of these problems. Europe has not been able to
Speaker 1: grow away the problems of the last ten years. As
Speaker 1: you look at Europe right now, to expect they can
Speaker 1: grow away the problems of the next five years. Look,
Speaker 1: it's a great point, it's a great challenge for Europe. Um,
Speaker 1: there's there's two problems there actually. I mean, when you
Speaker 1: take on a significant amount of debt, which which Europe
Speaker 1: did after the financial crisis, you hope that one of
Speaker 1: two things will happen. Either you grow your way out
Speaker 1: of it, as as you mentioned, or you can inflate
Speaker 1: your way out of it. And as we all know,
Speaker 1: Europe has has has lacked above trend growth for the
Speaker 1: same period of time, which also means they haven't been
Speaker 1: able to generate inflation. Um. So I think that will
Speaker 1: be something that is on people's minds because as we know,
Speaker 1: you know, the amount of debt being issued, the amount
Speaker 1: of debt being put onto the central bank and the
Speaker 1: national bank balance sheets is growing and and I think
Speaker 1: that raises some concerns about the lack of fiscal unity
Speaker 1: in Europe. We know we have a very competent central
Speaker 1: bank for at the ECB, but you don't have the
Speaker 1: equivalent fiscal authority in Europe that guides the broader EU economy.
Speaker 1: And I think that's still probably the biggest structural challenge
Speaker 1: that Europe is facing. So Eric does build on that.
Speaker 1: Do you have a sense that emerging from this crisis
Speaker 1: there'll be a stronger unity when it comes to the
Speaker 1: fiscal muscle of Europe. Or do you think that we're
Speaker 1: going to see an increased euro skepticism. I think it's
Speaker 1: I think we're already seeing the euro skepticism. Um. And
Speaker 1: in every time we have either an economic or political
Speaker 1: hiccup in the euro Area, you see the euro skepticism increase. UM.
Speaker 1: So this time is no different. UM. You know, Italy
Speaker 1: has its own both economic and health challenges. It looks
Speaker 1: like we're starting to see some improvement on the health side. UM.
Speaker 1: And it's no secret that, you know, Southern Europe is
Speaker 1: looking for a certain kind of fiscal support from the
Speaker 1: rest of Europe and their northern cousins are proposing or
Speaker 1: offering a different form of support. And this is where
Speaker 1: the lack of fiscal unity is. It's a real challenge
Speaker 1: and a real problem. UM. We would all like to
Speaker 1: believe that that a crisis brings them together, but I think,
Speaker 1: you know, I think the challenge is going to remain
Speaker 1: at the growth differentials, the intuation differentials, and the labor
Speaker 1: productivity differentials between the North and South remained very wide
Speaker 1: and challenge. And you think that we've got to leave
Speaker 1: it there. I apologize. I can hear you clearly at
Speaker 1: the end there. Eric Robertson stand a chan at Bank
Speaker 1: Global head of Research. Well, you need to know, folks.
Speaker 1: As I come out of my bedroom, there's a hallway
Speaker 1: with lots of economics books. If I don't trip over
Speaker 1: Vet Bill there. I am looking at Abel Berminanke, I'm
Speaker 1: looking at Michigan, I'm looking at ken Green and all
Speaker 1: the others thinking about the theories underlying economics. Randall Krosner
Speaker 1: is at Chicago in his expert on the foundations of
Speaker 1: our fellow Reserve System. Governor Crosster, thank you so much
Speaker 1: for joining us. What is the theory today the Chairman
Speaker 1: Powell's using at his press conference, is there is there
Speaker 1: a theory or a belief or a foundation given the
Speaker 1: size of this natural disaster. Well, I think he's going
Speaker 1: to be using the traditional tools, but obviously realizing that
Speaker 1: there's a lot of uncertainty and using and using those tools. Um.
Speaker 1: Clearly there's been a very negative demand shock as well
Speaker 1: as a negative supply shock, and both of those are
Speaker 1: going to mean that we're likely to see UM very
Speaker 1: low economic activity and UH and downward price pressure, and
Speaker 1: so he's going to be trying to use that framework
Speaker 1: for thinking about what tools have a disposal to set
Speaker 1: those Randy, when you left the FED coming out of
Speaker 1: the last financial crisis, did you ever think that this
Speaker 1: is where we would be ten years later, with the
Speaker 1: FED using all of the tools that is currently using
Speaker 1: all of the guidance the radical transparency. Did you ever
Speaker 1: see this Federal Reserve heading in that direction. Well, we'd
Speaker 1: set everything up so that it would make it easy
Speaker 1: to stand up some of those problems if they're a
Speaker 1: big shock to come. And although I'm generally an optimistic person,
Speaker 1: I'm also realist and realized that every once in a
Speaker 1: while there's going to be a big shock that comes.
Speaker 1: Did I anticipate this particularly shock, certainly, not um, But
Speaker 1: did I think that there would be shocked where the
Speaker 1: FID might have to stand up to these programs the
Speaker 1: last Yes, Randy. Given your position as a governor of
Speaker 1: the FED from two thousand six until two thousand and nine,
Speaker 1: you're uniquely positioned to be sort of a potential um
Speaker 1: fly on the wall in some of these discussions. And
Speaker 1: I have to wonder how much moral hazard is weighing
Speaker 1: on the minds of FED Chair J Powell and all
Speaker 1: of his peers. The idea that with their ongoing backstop
Speaker 1: of markets, they're encouraging investors to take more and more
Speaker 1: risk going into companies that perhaps shouldn't exist anymore. This
Speaker 1: is I think a very important part of the discussion,
Speaker 1: and I think you see the struggle with respect to
Speaker 1: the main street lending program for example. So this is
Speaker 1: a new area that the FED is going to get
Speaker 1: into financing small loans for for main street businesses or
Speaker 1: small and medium sized businesses. And what they want to
Speaker 1: do is have the banks retain five percent of the
Speaker 1: risk if something goes wrong, that they take the first
Speaker 1: five percent of loss. They try to minimize that moral
Speaker 1: hazard risk that someone just takes the money and run
Speaker 1: the challenges that they also want to get the money
Speaker 1: out really quickly. And if you want to get the
Speaker 1: money out quickly, um, that means you probably do less
Speaker 1: due diligence than you otherwise would. And that's why they're
Speaker 1: giving so much of a guarantee. And so the struggle
Speaker 1: there is do they go all the way. I'm speaking
Speaker 1: to you from from where I am in London, and
Speaker 1: they've had exactly this debate here whether they should have
Speaker 1: guarantee of these small business loans to get them out
Speaker 1: quickly or worry about the risks more and then they
Speaker 1: go out more slowly. Right, it was so important here.
Speaker 1: We talked to Rick Michigan, the former governor about this
Speaker 1: the other day as well. At some point the pandemic
Speaker 1: ends and then we have to reverse these processes. Can
Speaker 1: we do that with smooth glide pass? Very important question. Well,
Speaker 1: I don't think it's going to be just um a
Speaker 1: quick on and off. So I don't certainly think we've
Speaker 1: seen the V down, but I don't think we're just
Speaker 1: going to see a V back up. I think they're
Speaker 1: going to be fundamental changes to people's behavior, fundamental changes
Speaker 1: to supply changes, supplies um supply chains that are going
Speaker 1: to make it more difficult to have just a smooth recovery.
Speaker 1: That said, the FIT does have the tools at its
Speaker 1: disposal to withdraw some of the reserves and some liquidity
Speaker 1: that it puts in the system. Much like after the
Speaker 1: crisis a decade ago, people were very concerned that when
Speaker 1: fits balance sheet exploded to more than for trillion dollars
Speaker 1: for much less than a trillion before the crisis, that
Speaker 1: we'd have hyper inflation. Obviously we haven't over the last decade.
Speaker 1: If it has the tools to prevent that going forward, okay,
Speaker 1: they've got the tools going forward. But again, none of
Speaker 1: this at all is in the textbooks. You know, Steve
Speaker 1: Major today of HSBC model that we're going out to
Speaker 1: nine trillion in the seventeen trillion dollar economy. Do we
Speaker 1: just roll off the debt over the next twenty years
Speaker 1: or will there be an activists program to somehow bring
Speaker 1: down the depth bring down the balance sheet of the Fed. Well,
Speaker 1: that'll be very interesting to see. So obviously these questions
Speaker 1: arose when we went from eight billion dollars to more
Speaker 1: than four trillion dollars, and then the Fed was able
Speaker 1: to gradually reduce the size of the balance sheet. But
Speaker 1: then this other other shocks and tumults in the market
Speaker 1: that come along, and the balance sheet will grow um Obviously,
Speaker 1: when it starts to get to be or or or
Speaker 1: perhaps even of GDP, that may be more more challenging
Speaker 1: to coordinate. Bank of Japan has a balancing it's more
Speaker 1: than a hundred percent of GDP. Not that I think
Speaker 1: Bank of that Japan is the benchmark, but obviously they
Speaker 1: haven't had high inflation there. Does the deficit in America
Speaker 1: become a financial stability issue that the FET has to
Speaker 1: adapt and work around. It's certainly something that it thinks
Speaker 1: very carefully about because UM, interest rates obviously are low,
Speaker 1: and people are globally, both domestically and globally, are willing
Speaker 1: to to finance the very large expenditures that the US
Speaker 1: government is making right now. But of course that could
Speaker 1: change as the FT needs to take that into account,
Speaker 1: and does they take that into account and sort of
Speaker 1: it's longer run risk management planning. I think right now
Speaker 1: it's focused on making sure the economy, um, it doesn't
Speaker 1: contract more than it needs to, and um, we don't
Speaker 1: have a financial crisis that is on top of see
Speaker 1: the real shock that's come from this this health crisis. Randy,
Speaker 1: could you see a time when the FED buy stocks? Uh, Well,
Speaker 1: that would take an active Congress because they are not
Speaker 1: permitted to to do that. But I just mentioned the
Speaker 1: Bank of Japan, which is a very large purchaser of
Speaker 1: of equities. UM, I don't think. I think there are
Speaker 1: a lot of other assets that FIT can purchase, and
Speaker 1: I think it's wiser for the fit to stay out
Speaker 1: of the equity market. Not much left, Randy. Oh, there
Speaker 1: are a lot of assets that are out there. So
Speaker 1: what are we gonna do? Randy? I mean, you're the
Speaker 1: guy out and they're fine. You're the guy out of
Speaker 1: Brown University. Maybe we can corner the lobster market. Governor
Speaker 1: cross so much Randall crossing with us from London and
Speaker 1: of course always from the University Chicago, the wonderful mathematician,
Speaker 1: I should say, from Brown University. We said good morning
Speaker 1: to Rhode Island. This is gonna be sae as they
Speaker 1: stopped this recession. Absolutely, And of course you're folded over,
Speaker 1: folks into the classic equation. Why equals C plus I
Speaker 1: plus G plus all that trade noise and the preponderant
Speaker 1: weight is the consumer. He is expert it looking at
Speaker 1: the consumer of America. Stephen Stanley has won all sorts
Speaker 1: of forecasting awards and joins us from Amer's pier Pot. Stephen,
Speaker 1: it's awful early to gleam data. I know you're going
Speaker 1: to pounce through the data for Amer's pier pot. But
Speaker 1: what can we learn in this first quarter about the
Speaker 1: state of seventy of our g d P, the state
Speaker 1: of the American consumer. Yeah, well, obviously the consumer spending
Speaker 1: numbers are are the big source of the weakness in
Speaker 1: the in the data. UM. I think it's kind of
Speaker 1: incredible when you think about the fact that the economy
Speaker 1: was running pretty much on a normal footing for over
Speaker 1: of the first quarter, and it was really just around
Speaker 1: the middle of March when we UH initiated these lockdowns,
Speaker 1: and that was enough. That two week period was enough
Speaker 1: to drive consumer spending UH down over seven percent on
Speaker 1: the quarter and GDP down almost five I think it
Speaker 1: obviously tells you that Q two is going to be
Speaker 1: quite a bit worse because we're gonna have been locked
Speaker 1: down for much more than just two weeks. So, given
Speaker 1: that the personal consumption numbers came in so much worse
Speaker 1: than expected, more than twice as worse as expected, are
Speaker 1: you going to rethink some of the estimates that you
Speaker 1: have baked in for second quarter consumption and GDP expectations. Yeah,
Speaker 1: I think we'll have to take a look at that.
Speaker 1: We do get the March data tomorrow and and that
Speaker 1: will be helpful. Um. But yeah, I think you know
Speaker 1: there is a good chance that that will have to
Speaker 1: lower estimates for Q two as well, because if if
Speaker 1: marches down as much as it as it had to
Speaker 1: have been to get to that seven point six quarterly number,
Speaker 1: then presumably the April numbers are probably going to be
Speaker 1: that much weaker as well. We're all thinking about the recovery,
Speaker 1: the path of the recouver rate, the shape of that recovery.
Speaker 1: There's so much debate about a letter of the you
Speaker 1: w Stephen, how us understand that debate? Yeah? I mean,
Speaker 1: you know, it's it's just trying to get simple enough
Speaker 1: for for late people to understand. But I think that
Speaker 1: the trouble is that, uh, you know, we don't have
Speaker 1: enough letters or shapes in the alphabet to to get
Speaker 1: an accurate view of what we're really looking at. I mean,
Speaker 1: I think there really two two ways or two things
Speaker 1: to think about here. One is the timing of the
Speaker 1: recovery and how much do you initially get back so
Speaker 1: we're gonna have a bounce back when everything is open.
Speaker 1: Are we going to get back to where we were
Speaker 1: before the virus eight ninety? What is the number? Uh?
Speaker 1: And then the second question is what is the shape
Speaker 1: of the economy from there? Do we flatline once we
Speaker 1: get that initial rebound or do we continue to trend
Speaker 1: higher at a pace that would allow us to work
Speaker 1: down the unemployment rate and um and and get back
Speaker 1: closer to normal. The back end of the equation is
Speaker 1: n X. It's your export dynamics, folks, in your import dynamics.
Speaker 1: Steven Salley, do you have a clue what world trade
Speaker 1: is doing and how it rolls into the American economic experiment? Well,
Speaker 1: I mean the short answers, we know that trade is
Speaker 1: contracting along with everything else. Um. I think from from
Speaker 1: a GDP perspective, Um, the you know, the reality is
Speaker 1: that the US runs a big trade deficit. So our
Speaker 1: imports are much larger than our exports, so if they
Speaker 1: both fall by a similar amount, then the trade gat narrows.
Speaker 1: And that's what we saw in the first quarter, and
Speaker 1: we'll probably see it again in a second And then
Speaker 1: when the economy recovers, my guests is the trade GAPP
Speaker 1: will start to widen back out. But um, this is
Speaker 1: one of these big picture, longer term UH themes that
Speaker 1: we're going to be exploring for a long time. And
Speaker 1: it's not clear to me that that we're going to
Speaker 1: go back to the pre virus UH state of affairs
Speaker 1: in terms of global trade. I think, you know, countries
Speaker 1: are gonna want to keep things a little closer to
Speaker 1: home at the margin than before. But Steve, I want
Speaker 1: to go back to something that John was asking about,
Speaker 1: which is how we're going to emerge on the other side.
Speaker 1: And in this past economic expansion, the longest in US history,
Speaker 1: everyone was saying that the consumer really was holding up
Speaker 1: its back. Can we see a repeat of that given
Speaker 1: the demolition of household balance sheets that we're experiencing right now. Yeah,
Speaker 1: I mean, I think the big question here is really,
Speaker 1: you know, the government is going to extraordinary efforts to
Speaker 1: basically to fill in the loss of income for businesses
Speaker 1: and households that has accompanied this um set of shutdowns.
Speaker 1: And so we've got all these programs to put money
Speaker 1: in the pockets of households and all these programs to
Speaker 1: lend money to businesses. And the question is, when we
Speaker 1: get to the other side, have we effectively filled that hole?
Speaker 1: And if we have, then things can get back to
Speaker 1: something approaching a new normal. And if we haven't, then
Speaker 1: you start to see over time this morph into a
Speaker 1: more conventional recession where you've got high unemployed and people
Speaker 1: just don't have the wherewithal to spend, and I you know,
Speaker 1: I think the jury is still out on that at
Speaker 1: this point. Um, We've got a lot of stimulus in
Speaker 1: the system, or a lot of relief in the system, UM,
Speaker 1: but it's not clear just yet how effective it's all
Speaker 1: going to be. Stephen, let's turn to that stimulus and
Speaker 1: the feeder is of a little bit later. I caught
Speaker 1: up with Michael McKay earlier this morning and asked him
Speaker 1: what a virtual news conference will be like with chairm
Speaker 1: and Pal. Apparently you will be there on some kind
Speaker 1: of webcam asking questions of Chairman Pal a little bit
Speaker 1: late to this afternoon, if you have the opportunity to
Speaker 1: do so, what is the question you would like to
Speaker 1: ask today? Well, I think you know, the thing that
Speaker 1: everybody wants to know is the thing that the FED
Speaker 1: doesn't have an answer for, which is, you know, what
Speaker 1: does this thing look like a year from now, two
Speaker 1: years from now. I mean, everybody's kind of jumping the
Speaker 1: gun and they're talking about you know, forward guidance and
Speaker 1: your curve control and all these things that that would
Speaker 1: to do those sorts of things instead would have to
Speaker 1: know with a not certainty, but with a some of
Speaker 1: the grief confidence what this situation is going to look
Speaker 1: like in a year or two. So, I mean, I
Speaker 1: think we really have to limit our focus to the
Speaker 1: very short terms. I think that's where the feed is.
Speaker 1: They're just trying to get these programs up and running,
Speaker 1: and so you know, I mean, I I don't know
Speaker 1: that that he's going to talk a lot about this,
Speaker 1: but it would be interesting to know kind of what's
Speaker 1: holding up the you know, the opening up with some
Speaker 1: of these big facilities that they're working on, and and
Speaker 1: what are the problems that they're uh seeing and how
Speaker 1: that might you know, what implications that might have for
Speaker 1: whether those programs are ultimately going to be effective. CE
Speaker 1: sailing very quickly. Here is this a united fat I mean,
Speaker 1: I don't mean the the silliness of dissent votes and
Speaker 1: all that, but you know, they go into the equals
Speaker 1: building or the virtual equals building, that big virtual table
Speaker 1: they're going to virtually sit at. Great are they united?
Speaker 1: I think they are. I mean, you know, you've heard
Speaker 1: a pretty pretty united front in terms of the response
Speaker 1: so far from hawks and from doves. I think what
Speaker 1: sets this off from the financial crisis is that there
Speaker 1: are no bad guys here. Um. You know, in two
Speaker 1: thousand and eight, a lot of the bailouts and UM
Speaker 1: things were very controversial because you're creating moral hazard. You're
Speaker 1: you're helping out people who may be acted badly, and
Speaker 1: there is no one like that this time. And so
Speaker 1: you know, Chairman Powell has made the point, there's really
Speaker 1: not a moral hazard issue here because we're just trying
Speaker 1: to make everyone hold. No one is to blame, um,
Speaker 1: and you know, the hope is that these programs will
Speaker 1: kind of keep us back to where we were as
Speaker 1: which as possible before the virus terrific A real subtle update,
Speaker 1: Thank you so much, Stephen Stanley with AMers Pierre Punt.
Speaker 1: Over the last number of days, folks, we've talked with
Speaker 1: so many officials from Johns Hopkins Universities, those in different
Speaker 1: parts of j h U, those doing pure research, and
Speaker 1: those in the trenches. Lauren Simple is in the trenches.
Speaker 1: She is in emergency medicine, and that's of course a
Speaker 1: very important part of what j h YOU was doing
Speaker 1: right now, the challenges of Baltimore, Maryland, and of course
Speaker 1: the challenges of this virus. Our conversation earlier this morning
Speaker 1: with Lauren. Testings absolutely the underpinning of everything else that
Speaker 1: we need to do. So while we're getting better with testing,
Speaker 1: we still have a long way to go, and we
Speaker 1: we really need to keep laser focus on that. On
Speaker 1: the medications, we're seeing a lot of progress where UM
Speaker 1: seeing vaccine progress, which is great to hear because that
Speaker 1: is going to be a key to long term UM
Speaker 1: fighting of this disease. But again, a lot of a
Speaker 1: lot of ways to go. What do you find that
Speaker 1: you know the most reassuring and the most concerning about testing?
Speaker 1: How much more testing do we need in the US,
Speaker 1: And are the test reliable right now? The point of
Speaker 1: care diagnostics are getting better UM, and they're getting you
Speaker 1: picked up more broadly. UM. We still have major issue
Speaker 1: with the supply chain around testing, so we still need
Speaker 1: the reagents, the materials that we need to run the test.
Speaker 1: We still have issues with the swabs, and we still
Speaker 1: have to focus on making sure that we don't just
Speaker 1: have enough test but they're in the right place. Because
Speaker 1: the key to reopening and the key to getting back
Speaker 1: to work is making sure that the tests are distributed
Speaker 1: in a way that we can detect UM where clusters
Speaker 1: may pop up. More new outbreaks. Maker, Lord, let's go
Speaker 1: to your core competencies, which is emergency medicine. Okay, So
Speaker 1: we're gonna have emergency rooms in May, in August, in
Speaker 1: October across this nation where people are gonna walk in
Speaker 1: the door because you know, afterthoughts stubbed or tow or
Speaker 1: somebody broken arm, etcetera, etcetera. We're going to test all
Speaker 1: those people for the virus, aren't we. That's the hope, um,
Speaker 1: so that we can move them into the hospital and
Speaker 1: get them the care they need without putting them them
Speaker 1: at risk, putting our other healthcare workers at risk, and
Speaker 1: putting our other patients at risk. So the idea would
Speaker 1: be as as people who don't show symptoms of COVID
Speaker 1: nineteen come into the hospit, but we would put them
Speaker 1: in a different part of the hospital and still be
Speaker 1: able to safely care for them while we're caring for
Speaker 1: COVID nineteen and while we're still dealing with having COVID
Speaker 1: nineteen out in the community. Well, you know, I look,
Speaker 1: Lauren at this, and you know the huge challenges. I'm
Speaker 1: right here by Mount Sinai on the Upper East Side
Speaker 1: in New York, and you can just see it in
Speaker 1: the faces of the people. Are we going to end
Speaker 1: up with two emergency rooms to hospitals? UM? I hope
Speaker 1: that we aren't. I think we we can't distribute our
Speaker 1: clinicians like that, we can't distribute our resources like that.
Speaker 1: I think we hope that this will become a disease
Speaker 1: that we can manage with tools like we have for
Speaker 1: other diseases that UM that make people really sick, like flu,
Speaker 1: like HIV, like a bunch of different diseases. UM, where
Speaker 1: we can find people who have it early, UM, safely
Speaker 1: care for them without putting others at risk, and that
Speaker 1: our supply chain and our resources allow for that. Give
Speaker 1: us a scope and scale at the Johns Hopkins University
Speaker 1: right now, can we say that you look forward to
Speaker 1: a May that will be improved from April? I do
Speaker 1: hope so. UM. I think we're seeing a slowdown in
Speaker 1: our cases and UM, we're starting to feel that pressure
Speaker 1: release a little bit. But that's the time to be
Speaker 1: vigilant and not let our guard down, because we will
Speaker 1: see spikes in cases, especially as people relax their social
Speaker 1: distancing practices, as they try to go back to work,
Speaker 1: as they UM, you know, just get tired of being
Speaker 1: at home and make different choices. So we have to
Speaker 1: we have to remember that just because we're seeing that
Speaker 1: slow down in cases doesn't mean this is over and
Speaker 1: doesn't mean that we suddenly have a tool kit full
Speaker 1: of tools to fight this. So we have to be protective.
Speaker 1: We have to follow those social distancings still and it
Speaker 1: does get hard, and UM, I think we have to
Speaker 1: remind each other that it's still really important. Laurence so
Speaker 1: our experts on emergency medicine at the Johns Hopkins University.
Speaker 1: It is a hustle dame across the Midwest and particularly
Speaker 1: the northern Midwest. It is Cargill, and it is an
Speaker 1: exceptionally well timed conversation as David Rubinstein looks at the
Speaker 1: leadership capabilities of this absolutely giant private company. Maybe it's
Speaker 1: a name you don't know, it's an important name, Cargill.
Speaker 1: Here is Mr Ruben science conversation with David McLennan. John Tyson,
Speaker 1: who's ahead of Tyson Foods, a competitor reviewers, I assume
Speaker 1: in certain areas, said that the food chain was maybe
Speaker 1: breaking down in this country. We're gonna have to close facilities. Um,
Speaker 1: do you agree with that, and are you worried that
Speaker 1: the food chain is breaking down? I think I would
Speaker 1: characterize it that the food supply chain is understrain. But
Speaker 1: there's a lot of supply chains that are understrained due
Speaker 1: to what's happening. And certainly there have been food production
Speaker 1: facilities in various parts of the country that have had
Speaker 1: to close because of illness or because of supplied a struction.
Speaker 1: But I think basically the ability of us to produce
Speaker 1: food is still there, and there are going to be
Speaker 1: momentary closings momentaries in the right word. But we had
Speaker 1: a facility of be facility that was closed for seventeen days,
Speaker 1: but it's now back up and running and has been
Speaker 1: for the last week. So I think the food industry
Speaker 1: and the food supply chain is resilient. I think the
Speaker 1: people that work in it every day are resilient. So
Speaker 1: I think it's understrained, but I don't think it's it's broken.
Speaker 1: David mcclennan in conversation with David Rubinstein, and of course
Speaker 1: this is so important and part of leadership Live with
Speaker 1: David Rubinstein. Mr Rubenstein joins us this morning. David, you
Speaker 1: and Carlyle are intimately familiar with the peculiarities of how
Speaker 1: we make food in America. As you speak to David
Speaker 1: and as you as you work within all of your context,
Speaker 1: how at risk is our food supply right now? Well? Um,
Speaker 1: John Tyson a statement and issue and put a newspaper
Speaker 1: add out effect saying the food chain was breaking. Uh.
Speaker 1: In response to that, President Trump issued an executive order
Speaker 1: yesterday and effect using the Defense Production Act to say
Speaker 1: that food plants have to stay in business and have
Speaker 1: to keep producing food. Um, and he's going to provide
Speaker 1: equipment and other things to make sure their workers are safe.
Speaker 1: That's the issue that John Tyson was talking about. Many
Speaker 1: of the plants because people work so closely together. Employees
Speaker 1: have come down with COVID nineteen and they have had
Speaker 1: to close down, and therefore that's been a problem and
Speaker 1: getting food produced together. Problem is this that or so
Speaker 1: of the food that we produce is now really produced
Speaker 1: for restaurants or other kinds of things that are not
Speaker 1: at home. But now um, those restaurants are closed down,
Speaker 1: so that kind of food supply is not really available
Speaker 1: for those people, and so they have to re re
Speaker 1: uh position that kind of food. It takes time to
Speaker 1: do it. In other words, if you prepare food for
Speaker 1: for let's say McDonald's, and McDonald's isn't open, you can't
Speaker 1: all of a sudden take that food and and and
Speaker 1: put it in different kind of containers and send it
Speaker 1: a supermarket. And that's been a challenge as well. Historically,
Speaker 1: people eat about five to seven meals outside of their
Speaker 1: home a day a week, five or seven meals a
Speaker 1: week outside their home. Now it's down to maybe one.
Speaker 1: And so that food chains is different because of different
Speaker 1: kind of people providing different parts of the food chain. Unfortunately,
Speaker 1: we also have a problem that a lot of people
Speaker 1: can't afford food right now, and you see enormous amounts
Speaker 1: of food banks and going on in the United States. So, David,
Speaker 1: as you sat down with Mr mcclennan from Cargo, what
Speaker 1: were some of the key challenges they're trying to negotiate
Speaker 1: right now in the world of a pandemic. The key
Speaker 1: thing is making certain your employees are safe um in
Speaker 1: meat packing plants or other kinds of things where you're
Speaker 1: involved with an effects, slaughtering animals or things related to that.
Speaker 1: You have a lot of people closely working to each
Speaker 1: other and Historically they haven't had the kind of protections
Speaker 1: we now have, and getting the equipment for that has
Speaker 1: not been easy. Now they're getting that kind of equipment,
Speaker 1: it takes a while. So a lot of these plants
Speaker 1: have had people that have been um affected by COVID nineteen.
Speaker 1: Now they're going to come back, hopefully with better equipment
Speaker 1: so forth than and better safety. David, one final question
Speaker 1: if we would, and I must ask you about how
Speaker 1: you perceive American business and the animal spirit on this
Speaker 1: day of negative four eight percent g d P. What
Speaker 1: do you observe from all your contacts of how the
Speaker 1: American corporation fares. American corporate leaders have really been working
Speaker 1: around the clock to keep their businesses afloat in some
Speaker 1: cases and rereposition them. So, yes, the economy is down,
Speaker 1: and I suspect they'll be down for a little bit longer,
Speaker 1: but I do think it will will come back, because
Speaker 1: you know, we have some really good companies and we
Speaker 1: have good CEOs. But there's no doubt that's been a
Speaker 1: body blow for for at least a quarter or so,
Speaker 1: maybe maybe two quarters. David Reubinstein, thank you so much.
Speaker 1: Can't say enough about the time and this this PM
Speaker 1: on Friday, and of course this will be played across
Speaker 1: all of our digital operations as well. Mr Rubenstein was
Speaker 1: Mr mcclennan of car Carlyle on his leadership at series.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg
Speaker 1: Radio