1 00:00:05,120 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jai Ley. 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 --> 00:00:27,400 Speaker 1: Bloomberg dot Com and of course on the Bloomberg right 5 00:00:27,400 --> 00:00:29,840 Speaker 1: Now and rend to send joints this energy aspect, she's 6 00:00:29,920 --> 00:00:32,879 Speaker 1: wonderful on these dynamics and rita. If you were to 7 00:00:32,920 --> 00:00:36,240 Speaker 1: publish this morning, what would you publish on the dynamics 8 00:00:36,320 --> 00:00:40,040 Speaker 1: the micro theory of demand in oil? I think you 9 00:00:40,120 --> 00:00:43,200 Speaker 1: know demand is equally listening to be the worst month 10 00:00:43,280 --> 00:00:46,760 Speaker 1: for the month seen probably ever for the old market. 11 00:00:46,840 --> 00:00:48,479 Speaker 1: But the good news is that we are going to 12 00:00:48,520 --> 00:00:51,080 Speaker 1: come out of this. And you know you also aute 13 00:00:51,240 --> 00:00:55,600 Speaker 1: social distancing measures Europe and the US, so it should 14 00:00:55,640 --> 00:00:58,160 Speaker 1: get better from here. And say, can we just get 15 00:00:58,200 --> 00:01:00,320 Speaker 1: your thoughts on what is happening with some of the 16 00:01:00,320 --> 00:01:04,320 Speaker 1: indexing around the crude market and whether you think we've 17 00:01:04,360 --> 00:01:07,320 Speaker 1: seen a total failure of some of these products to 18 00:01:07,400 --> 00:01:10,120 Speaker 1: actually track your market, because what I'm saying on the 19 00:01:10,120 --> 00:01:13,920 Speaker 1: screens today, it's just a big distortion. It's because of 20 00:01:13,959 --> 00:01:18,959 Speaker 1: what's happening with single a t F. Yes, and you 21 00:01:19,000 --> 00:01:20,959 Speaker 1: know we've seen this in two thousand eight as well, 22 00:01:20,959 --> 00:01:23,200 Speaker 1: which is not the first time. And back then the 23 00:01:23,360 --> 00:01:25,520 Speaker 1: w t I can tangle wide and out to eight dollars, 24 00:01:25,560 --> 00:01:28,560 Speaker 1: which is actually why we had said for this year. UM. 25 00:01:28,600 --> 00:01:31,399 Speaker 1: As soon as you know, the demand had collapsed and 26 00:01:31,400 --> 00:01:33,600 Speaker 1: we could see these fund flows coming in because a 27 00:01:33,600 --> 00:01:36,039 Speaker 1: lot of retail investors think this is a good time 28 00:01:36,080 --> 00:01:38,800 Speaker 1: to go long oil because it's quote unquote cheap, but 29 00:01:38,840 --> 00:01:41,520 Speaker 1: then they don't realize they can tangle and the amount 30 00:01:41,560 --> 00:01:44,319 Speaker 1: of money they're losing holding every month. And of course 31 00:01:44,319 --> 00:01:48,560 Speaker 1: now everybody is aware of these ets and everything prepositions, UM, 32 00:01:48,680 --> 00:01:50,960 Speaker 1: and you know this is this is going to be 33 00:01:51,040 --> 00:01:53,440 Speaker 1: with us for a few more months. The good thing 34 00:01:53,520 --> 00:01:56,200 Speaker 1: is the US so for instance, came out yesterday said 35 00:01:56,200 --> 00:01:59,920 Speaker 1: that distributing the positions all the way through June one. 36 00:02:00,320 --> 00:02:03,720 Speaker 1: So they are taking some action. But there's just way 37 00:02:03,760 --> 00:02:07,160 Speaker 1: too much retail length at the funk Rida. I'm struggling 38 00:02:07,160 --> 00:02:11,200 Speaker 1: to understand why the July w t I contract is 39 00:02:11,320 --> 00:02:14,200 Speaker 1: more than eighteen dollars a barrel, even the fact that 40 00:02:14,280 --> 00:02:17,520 Speaker 1: we're going to face the same issue come next month. 41 00:02:18,000 --> 00:02:22,520 Speaker 1: What's going to change? First and foremost they are trying 42 00:02:22,560 --> 00:02:24,800 Speaker 1: to distribute it to you know, even for the main contract, 43 00:02:24,800 --> 00:02:28,720 Speaker 1: for instance, hundred percent of their positions were there in Maine, 44 00:02:28,760 --> 00:02:32,359 Speaker 1: whereas now they're distributing it. It's more like and then 45 00:02:32,360 --> 00:02:35,440 Speaker 1: they're distributing a further twenty percent down the curve and 46 00:02:35,520 --> 00:02:39,240 Speaker 1: all the way through to June. The pressure will be less, 47 00:02:39,280 --> 00:02:41,840 Speaker 1: even though there will be some pressure. Also, some of 48 00:02:41,840 --> 00:02:43,760 Speaker 1: the e t s has been forced to close out 49 00:02:43,840 --> 00:02:46,800 Speaker 1: a lot of the Bank of China products for instance, 50 00:02:47,080 --> 00:02:49,400 Speaker 1: that lost a billions of dollars because of the w 51 00:02:49,480 --> 00:02:51,960 Speaker 1: T I moved to negative curtory. They no longer allows 52 00:02:51,960 --> 00:02:54,720 Speaker 1: the trade, so I think that helps. But also buy July. 53 00:02:55,000 --> 00:02:59,079 Speaker 1: Physical fundamentals will be a lot better. Supply supplies have 54 00:02:59,200 --> 00:03:01,880 Speaker 1: started to turn lower, demand is starting to turn higher. 55 00:03:02,200 --> 00:03:04,959 Speaker 1: We should start to see drafts from Tune onwards. Of course, 56 00:03:05,000 --> 00:03:07,600 Speaker 1: it doesn't mean we are anywhere close to rebalancing. That's 57 00:03:07,600 --> 00:03:10,000 Speaker 1: going to take years, but at least we're moving in 58 00:03:10,040 --> 00:03:14,320 Speaker 1: the right direction. I guess I'm struggling to understand the 59 00:03:14,400 --> 00:03:18,079 Speaker 1: idea of hope that continues in the oil markets, sort 60 00:03:18,080 --> 00:03:20,799 Speaker 1: of idea, the hope that the supplied demand dynamic will 61 00:03:20,800 --> 00:03:24,240 Speaker 1: get better and the oil prices will stabilize higher. Fitch 62 00:03:24,320 --> 00:03:27,440 Speaker 1: Ratings put out a prediction yesterday saying that high yield 63 00:03:27,600 --> 00:03:31,600 Speaker 1: energy bond and loan defaults, that the rate will increase 64 00:03:31,639 --> 00:03:35,600 Speaker 1: to seventeen percent and eighteen percent respectively with respect to 65 00:03:35,680 --> 00:03:39,440 Speaker 1: bonds and loans, and this presumed nearly thirty dollars of 66 00:03:39,480 --> 00:03:43,200 Speaker 1: barrel type of pricing. Is this low balling the potential 67 00:03:43,240 --> 00:03:47,520 Speaker 1: defaults given where we are, I would agree, And I 68 00:03:47,560 --> 00:03:49,520 Speaker 1: think that's exactly why I don't think it's the hope 69 00:03:49,640 --> 00:03:52,040 Speaker 1: in terms of the rebalancing. I think you know, we've 70 00:03:52,040 --> 00:03:55,360 Speaker 1: been arter all the way through, even with the open puffcot. 71 00:03:55,480 --> 00:03:57,720 Speaker 1: We didn't think that would have been enough, But now 72 00:03:57,920 --> 00:04:01,880 Speaker 1: we do see supplies are finely turning and turning faster 73 00:04:02,080 --> 00:04:04,440 Speaker 1: just as demand is going to start to recover again. 74 00:04:04,720 --> 00:04:06,400 Speaker 1: No one is saying we're going to be in balanced 75 00:04:06,480 --> 00:04:09,360 Speaker 1: for a code eighteen months to two years, but we 76 00:04:09,440 --> 00:04:12,080 Speaker 1: are starting to see millions of barrels for their production 77 00:04:12,120 --> 00:04:15,200 Speaker 1: being shut in the US bankruptcy, as to your point, 78 00:04:15,480 --> 00:04:17,560 Speaker 1: will be a lot higher than some of these estimates, 79 00:04:17,600 --> 00:04:21,359 Speaker 1: because right now there's very few with any producers that 80 00:04:21,400 --> 00:04:23,920 Speaker 1: are making any money at each part and Rachel, let's 81 00:04:23,920 --> 00:04:28,120 Speaker 1: get out to talk to me about what that environment 82 00:04:28,160 --> 00:04:30,360 Speaker 1: looks like. Off the back of the price shark that 83 00:04:30,440 --> 00:04:34,800 Speaker 1: happened eighteen months ago. I think back end of twenty 84 00:04:34,800 --> 00:04:38,159 Speaker 1: one into twenty two gets very interesting because it's not 85 00:04:38,279 --> 00:04:40,599 Speaker 1: just a supply losses that we are finally starting to 86 00:04:40,640 --> 00:04:44,760 Speaker 1: see now, it's also the potentially semi permanent losses to 87 00:04:44,839 --> 00:04:47,560 Speaker 1: reservoirs that we see because of the shutdowns of the 88 00:04:47,600 --> 00:04:49,760 Speaker 1: scale that we are going to see in the coming week. 89 00:04:49,839 --> 00:04:52,600 Speaker 1: We've never seen this before. No country other than South 90 00:04:52,600 --> 00:04:55,320 Speaker 1: Arabia will probably come out of this unstage in the 91 00:04:55,320 --> 00:04:59,880 Speaker 1: sense that they will lose production on a permanent basis. Okay, 92 00:05:00,000 --> 00:05:01,640 Speaker 1: I want to know what the nations do, and really, 93 00:05:01,640 --> 00:05:03,240 Speaker 1: I mean, this is our great and you are so 94 00:05:03,360 --> 00:05:08,000 Speaker 1: expert at supply demand, etcetera, etcetera. They can't sustain Brent Coranny, 95 00:05:08,080 --> 00:05:12,680 Speaker 1: Brent Prenty for brententy eight whatever versus their structure of 96 00:05:12,760 --> 00:05:17,040 Speaker 1: fiscal and social demands. Which countries are you most following, 97 00:05:17,600 --> 00:05:20,039 Speaker 1: not for the drama of collapse, but they're just they're 98 00:05:20,040 --> 00:05:25,440 Speaker 1: gonna be hugely challenged. Nigeria Iraq would be the two 99 00:05:25,480 --> 00:05:28,120 Speaker 1: top onns for us UM and yes, you know there's 100 00:05:28,120 --> 00:05:30,520 Speaker 1: a lot of written interpreach about Albi Arabia and Russia. 101 00:05:30,600 --> 00:05:34,159 Speaker 1: But again they two have reserved, they can get out 102 00:05:34,200 --> 00:05:37,920 Speaker 1: and even raise capital if if they need. But they 103 00:05:37,920 --> 00:05:40,800 Speaker 1: are acts better for bed but for US Nigeria Russia 104 00:05:40,839 --> 00:05:43,280 Speaker 1: for sure, and then the story Nigeria and Iraq for sure. 105 00:05:43,920 --> 00:05:45,520 Speaker 1: And then of course there are a lot of the 106 00:05:45,600 --> 00:05:50,120 Speaker 1: Latin American countries which believe of very pot and read. 107 00:05:50,240 --> 00:05:52,039 Speaker 1: This has been wonderful. Thank you so much. I'm ready 108 00:05:52,040 --> 00:05:54,440 Speaker 1: to send with us and of course with the energy aspects, 109 00:05:54,520 --> 00:06:00,719 Speaker 1: just extraordinary. This morning news at a few are this 110 00:06:00,760 --> 00:06:04,200 Speaker 1: morning thanks getting a break on leverage limits. The so 111 00:06:04,279 --> 00:06:08,320 Speaker 1: called leverage ratio will be relaxed under an EU proposal 112 00:06:08,400 --> 00:06:10,920 Speaker 1: announced today. We are lucky on this program to have 113 00:06:10,960 --> 00:06:14,239 Speaker 1: an exclusive interview with the European Commission Vice President Varis 114 00:06:14,560 --> 00:06:17,240 Speaker 1: Dombrowski's that is always great to catch up with you, sir. 115 00:06:17,320 --> 00:06:19,479 Speaker 1: Let's talk about it. Why did you make this decision 116 00:06:19,480 --> 00:06:28,320 Speaker 1: this morning? Well, uh, indeed, European economy, as economies across 117 00:06:28,320 --> 00:06:33,240 Speaker 1: the world, are hit by the coronavirus crisis, and we 118 00:06:33,320 --> 00:06:37,560 Speaker 1: need to come with a also economic response to this crisis. 119 00:06:37,640 --> 00:06:42,200 Speaker 1: Because uh, last majority of not all EU member states 120 00:06:42,440 --> 00:06:47,760 Speaker 1: will experience severe recessions this year, so we need to 121 00:06:47,839 --> 00:06:53,000 Speaker 1: provide necessary stimulus to the economy. We are doing UH 122 00:06:53,240 --> 00:07:00,560 Speaker 1: this through major stimulus UH fiscal stimulus, relaxing our state rules, 123 00:07:01,320 --> 00:07:05,840 Speaker 1: monetary stimulus. But we are also looking at our banking 124 00:07:05,960 --> 00:07:14,200 Speaker 1: sector rules, so utilizing existing flexibility in our prudential rules 125 00:07:14,240 --> 00:07:18,360 Speaker 1: and also coming with a targeted amendments on the capital 126 00:07:18,400 --> 00:07:27,000 Speaker 1: requirements regulation to UH facilitate bank lending capacity to the 127 00:07:27,160 --> 00:07:30,160 Speaker 1: real economy. So basically, what we are doing to the 128 00:07:30,240 --> 00:07:34,560 Speaker 1: large extent, we are following the decision of the Buzzle 129 00:07:34,680 --> 00:07:40,680 Speaker 1: comedy to postpone implementation of so called Buzzles three rules. 130 00:07:40,800 --> 00:07:45,320 Speaker 1: But year, for example, you mentioned specifically a leverage ratio. 131 00:07:45,640 --> 00:07:49,760 Speaker 1: This is exactly one one of the decisions that are 132 00:07:49,760 --> 00:07:52,960 Speaker 1: following up Puzzles. We all want banks to be able 133 00:07:52,960 --> 00:07:55,679 Speaker 1: to finance the economy. We people listening to this program 134 00:07:55,760 --> 00:07:59,520 Speaker 1: right now they're wondering why we want risky European lenders 135 00:07:59,680 --> 00:08:05,240 Speaker 1: to be holding less capital. What's the answer to that. Well, 136 00:08:05,440 --> 00:08:09,440 Speaker 1: first of all, we are not proposing that banks are 137 00:08:09,520 --> 00:08:16,000 Speaker 1: holding less capital because when we discuss finalization of Basil three, 138 00:08:16,600 --> 00:08:21,400 Speaker 1: there were additional requirements which were agreed internationally which were 139 00:08:21,480 --> 00:08:25,600 Speaker 1: to gradually set in and what Basil Committee has decided 140 00:08:25,720 --> 00:08:34,040 Speaker 1: internationally is now to postpone the introduction of those additional requirements. 141 00:08:34,120 --> 00:08:38,440 Speaker 1: And by the way, United States are also taking advantage 142 00:08:38,440 --> 00:08:42,160 Speaker 1: of this Basil decision. From that point of view, it's 143 00:08:42,360 --> 00:08:47,000 Speaker 1: part of coordinated international response. Mr Dobrawski, were honored that 144 00:08:47,080 --> 00:08:48,880 Speaker 1: you with us today, John, and I love seeing you 145 00:08:48,960 --> 00:08:51,640 Speaker 1: and Davos and that I am meetings and such and 146 00:08:51,920 --> 00:08:57,120 Speaker 1: absolutely fascinated when you, with your heritage of leadership in Europe, 147 00:08:57,640 --> 00:09:02,640 Speaker 1: believe we will finally see bank consolidation. Your job is 148 00:09:02,679 --> 00:09:07,520 Speaker 1: extremely difficult, Madame Leguard's job is extremely difficult, and the 149 00:09:07,600 --> 00:09:13,719 Speaker 1: only solution is a consolidation within countries and a consolidation 150 00:09:13,840 --> 00:09:22,000 Speaker 1: across borders. When will we begin to see that? Well, actually, uh, 151 00:09:22,200 --> 00:09:26,320 Speaker 1: this is a process which we are already seeing that. 152 00:09:26,360 --> 00:09:30,920 Speaker 1: If you look across you Member States, we see this 153 00:09:31,120 --> 00:09:36,920 Speaker 1: process of banking sector consolidation gradually happening. Not that it's 154 00:09:37,000 --> 00:09:41,199 Speaker 1: some kind of you know, regulatory aim of the European 155 00:09:41,600 --> 00:09:46,920 Speaker 1: Commission to force bank mergers, but I would say also 156 00:09:47,040 --> 00:09:52,480 Speaker 1: the additional prudential rules which have been introduced internationally and 157 00:09:52,520 --> 00:09:56,520 Speaker 1: which you are implementing in Europe are facilitating this and 158 00:09:56,720 --> 00:09:59,880 Speaker 1: we are gradually seeing also this process of banks that 159 00:10:00,040 --> 00:10:07,000 Speaker 1: the consolidation. Unfortunately in Europe we saw also another process 160 00:10:07,120 --> 00:10:14,640 Speaker 1: of banking uh sector, banking, lending, banking activities becoming more national, 161 00:10:14,840 --> 00:10:18,600 Speaker 1: so less than European and there we want to under 162 00:10:18,720 --> 00:10:23,040 Speaker 1: the expendency. So we want to have a banking sector 163 00:10:23,160 --> 00:10:27,560 Speaker 1: which is across active across the EU, and the same 164 00:10:27,640 --> 00:10:31,960 Speaker 1: goals with a capital market sectors. That's, for example, why 165 00:10:32,000 --> 00:10:34,760 Speaker 1: we are now working on our next stage of our 166 00:10:34,800 --> 00:10:38,960 Speaker 1: capital markets junion projects. The answer is often more Europe. 167 00:10:39,440 --> 00:10:41,280 Speaker 1: Intriguing to me that when it comes to the debt, 168 00:10:41,559 --> 00:10:44,120 Speaker 1: the answer is never more Europe. The north of Europe, 169 00:10:44,120 --> 00:10:46,559 Speaker 1: the Netherlands and the like do not want their mutualization. 170 00:10:46,559 --> 00:10:50,040 Speaker 1: There are many people outside of Europe looking right now 171 00:10:50,160 --> 00:10:53,120 Speaker 1: at European officials getting together and trying to come up 172 00:10:53,160 --> 00:10:55,320 Speaker 1: with the plan to offset the pain in the European economy. 173 00:10:55,800 --> 00:10:58,000 Speaker 1: Has helped me understand that help our audience understand that 174 00:10:58,040 --> 00:11:02,240 Speaker 1: why we are still no closer to share debt in 175 00:11:02,280 --> 00:11:09,040 Speaker 1: the euro sign Well, first of all, it's worth nothing 176 00:11:09,360 --> 00:11:13,480 Speaker 1: that already was a measures which had been taken in Europe. 177 00:11:14,000 --> 00:11:18,680 Speaker 1: We already have provided a response fiscal response liquidity support 178 00:11:19,320 --> 00:11:23,960 Speaker 1: of the scale of three points for brillion euros. This 179 00:11:24,080 --> 00:11:28,800 Speaker 1: is uh the e USE largest ever response to the crisis. 180 00:11:28,960 --> 00:11:32,160 Speaker 1: So this is something which is already Yea, this is 181 00:11:32,200 --> 00:11:35,200 Speaker 1: so this is so important, lattis this is so so 182 00:11:35,640 --> 00:11:38,160 Speaker 1: important what John brings up and I know you've done 183 00:11:38,160 --> 00:11:41,920 Speaker 1: three trillions as well. Our American audience wants to know 184 00:11:42,960 --> 00:11:46,640 Speaker 1: what you in class regularly believe will be the mutualization 185 00:11:47,040 --> 00:11:49,920 Speaker 1: of debt in Europe. Do you have any optimism that 186 00:11:49,960 --> 00:11:56,080 Speaker 1: could occur? Well, actually, uh, what I was referring now 187 00:11:56,440 --> 00:12:01,800 Speaker 1: is immediate crisis response. Currently, we are working on the 188 00:12:01,800 --> 00:12:06,560 Speaker 1: EUSE recovery plan which will base will be based on 189 00:12:07,440 --> 00:12:12,560 Speaker 1: h ambitious EU budget for the next seven years, so 190 00:12:12,640 --> 00:12:16,600 Speaker 1: called multi annual financial framework, and we will come with 191 00:12:16,679 --> 00:12:21,200 Speaker 1: a sort to say classical U multi annual budget, and 192 00:12:21,360 --> 00:12:26,760 Speaker 1: there will be additional recovery fund which we propose, which 193 00:12:26,800 --> 00:12:31,600 Speaker 1: among other things, will be financed as a joint borrowing 194 00:12:32,400 --> 00:12:35,679 Speaker 1: through the European Commission in Financial Markets. So we'll be 195 00:12:36,520 --> 00:12:41,560 Speaker 1: UH raising financing jointly at the European level to finance 196 00:12:41,760 --> 00:12:47,520 Speaker 1: our European response to the crisis and to finance economic recovery. 197 00:12:47,720 --> 00:12:49,319 Speaker 1: But as we gotta leave it there, we wish you 198 00:12:49,360 --> 00:12:51,400 Speaker 1: the best. We wish you're the best, of course, Varriston 199 00:12:51,440 --> 00:12:59,199 Speaker 1: broad skates. European Commission Vice President David Harrold Harris Associates 200 00:12:59,520 --> 00:13:05,000 Speaker 1: what the World's great international and value investors. David, the 201 00:13:05,080 --> 00:13:09,120 Speaker 1: charts are measured by standard deviations. What that means, folks, 202 00:13:09,640 --> 00:13:13,240 Speaker 1: is one or two standard deviations is within the realm 203 00:13:13,280 --> 00:13:17,120 Speaker 1: of normal, and then you get outside that. And right now, 204 00:13:17,200 --> 00:13:22,680 Speaker 1: the differential between growthiness and value e nous has never 205 00:13:22,760 --> 00:13:26,000 Speaker 1: been more of a deviation. Have you ever seen it 206 00:13:26,080 --> 00:13:29,200 Speaker 1: like this, David? Have you ever seen the love of 207 00:13:29,280 --> 00:13:32,160 Speaker 1: growth in the lack of value? Have you ever seen 208 00:13:32,200 --> 00:13:36,400 Speaker 1: it like this? Now the closest beef come with late 209 00:13:36,480 --> 00:13:39,960 Speaker 1: oh eight, early oh nine, But other than this, I 210 00:13:40,000 --> 00:13:42,439 Speaker 1: haven't seen it. And to me, it actually is a 211 00:13:42,480 --> 00:13:46,680 Speaker 1: great cause for excitement because when you get such a 212 00:13:46,760 --> 00:13:51,040 Speaker 1: price anomaly, and the price anomaly is the ignorance of 213 00:13:51,200 --> 00:13:53,960 Speaker 1: value of businesses, the ignorance of what a business is 214 00:13:54,040 --> 00:13:57,480 Speaker 1: priced at. And we know fundamentally what makes a company 215 00:13:57,600 --> 00:14:01,040 Speaker 1: valuable is its cash flow stream, and so eventually this 216 00:14:01,120 --> 00:14:04,319 Speaker 1: will come back to us. So to me, the greater 217 00:14:04,520 --> 00:14:08,040 Speaker 1: the spread is, the better the future looks. There are 218 00:14:08,080 --> 00:14:10,640 Speaker 1: a set of there, David, this is important as a 219 00:14:10,880 --> 00:14:14,160 Speaker 1: beautifully answered by the way, there's a set of catalysts 220 00:14:14,160 --> 00:14:18,319 Speaker 1: that get you to that word eventually. Are they instigated 221 00:14:18,360 --> 00:14:23,000 Speaker 1: by investors or are they instigated by corporate action when 222 00:14:23,120 --> 00:14:26,120 Speaker 1: officers and board members say, wait a minute, why are 223 00:14:26,160 --> 00:14:30,120 Speaker 1: we so cheap? It's probably all of the above. And 224 00:14:30,160 --> 00:14:34,800 Speaker 1: what I think eventually happened is investors begin to see, say, 225 00:14:34,880 --> 00:14:37,240 Speaker 1: the light at some end of the tunnel, whatever is 226 00:14:37,280 --> 00:14:42,880 Speaker 1: the trauma that has caused the huge dichotomy between valuations 227 00:14:43,720 --> 00:14:45,920 Speaker 1: um In in O eight oh nine, it was the 228 00:14:45,960 --> 00:14:49,640 Speaker 1: Great Financial Crisis, and when people began to see a 229 00:14:49,760 --> 00:14:54,480 Speaker 1: stabilization of the global economy, you saw that spread between 230 00:14:54,520 --> 00:14:58,240 Speaker 1: growth and value narrow because people thought, well, okay, these 231 00:14:58,240 --> 00:15:00,360 Speaker 1: businesses are gonna be okay, they're going to get through 232 00:15:00,360 --> 00:15:04,320 Speaker 1: the cycle. Today we have the same type of price movement, 233 00:15:04,600 --> 00:15:07,880 Speaker 1: but amplified and with a different cause. And the different 234 00:15:07,920 --> 00:15:11,760 Speaker 1: cause was it was a medical affliction. Um And when 235 00:15:11,760 --> 00:15:14,320 Speaker 1: people begin to see the light of at the end 236 00:15:14,360 --> 00:15:17,240 Speaker 1: of the tunnel. For this, I also believe that you 237 00:15:17,240 --> 00:15:20,040 Speaker 1: will see that. And at the same time, companies also 238 00:15:20,160 --> 00:15:23,720 Speaker 1: become frustrated um and they begin to do things to 239 00:15:23,800 --> 00:15:27,520 Speaker 1: try to realize value, whether that means selling an asset 240 00:15:27,600 --> 00:15:31,400 Speaker 1: that isn't reflected in their valuation. We see this in 241 00:15:31,400 --> 00:15:35,240 Speaker 1: our own portfolio. Take a company like CNH is going 242 00:15:35,280 --> 00:15:38,120 Speaker 1: to separate into two businesses, off road and on road. 243 00:15:38,280 --> 00:15:41,160 Speaker 1: You know, off road being tractors and construction equipment, on 244 00:15:41,280 --> 00:15:44,840 Speaker 1: road being trucks and components. So we see companies when 245 00:15:44,880 --> 00:15:48,960 Speaker 1: they do become frustrated, they'll hate steps, and whether it's 246 00:15:49,120 --> 00:15:52,520 Speaker 1: to crystallize the value of a business, change in management, 247 00:15:53,160 --> 00:15:58,320 Speaker 1: stock repurchases, or dividend distributions, they will take steps. So 248 00:15:58,360 --> 00:16:01,520 Speaker 1: I think it's both those things. But the big move 249 00:16:01,560 --> 00:16:06,400 Speaker 1: will probably come when people realize they're under exposed and 250 00:16:06,480 --> 00:16:10,840 Speaker 1: the most undervalued assets. And as they're so undervalued, it 251 00:16:10,880 --> 00:16:13,200 Speaker 1: doesn't take much to get them up and going again, 252 00:16:13,440 --> 00:16:16,080 Speaker 1: it's a very small door to enter, and when a 253 00:16:16,080 --> 00:16:19,640 Speaker 1: lot of money begins to flow into that door, the 254 00:16:19,680 --> 00:16:23,200 Speaker 1: door the door size gets much bigger. So, David, given 255 00:16:23,240 --> 00:16:26,760 Speaker 1: the volatility that we've seen just in the last three months, 256 00:16:27,320 --> 00:16:30,960 Speaker 1: where are the sectors that you're seeing the most value 257 00:16:31,080 --> 00:16:35,360 Speaker 1: or the most mispriced assets. You know, the funny thing 258 00:16:35,560 --> 00:16:38,720 Speaker 1: is is that it's just a continuation to what we've seen, 259 00:16:39,480 --> 00:16:43,280 Speaker 1: uh in twenty eighteen in particular, twenty nineteen was kind 260 00:16:43,320 --> 00:16:47,800 Speaker 1: of a break here. Uh and then that same value 261 00:16:47,920 --> 00:16:54,320 Speaker 1: verse growth. Take consumer discretionary industrials, European financials, they're what 262 00:16:54,560 --> 00:16:59,880 Speaker 1: really got hot bard during this crisis, and safety eCOM 263 00:17:00,040 --> 00:17:04,160 Speaker 1: mers technology, this is what really really did well. So 264 00:17:04,560 --> 00:17:08,640 Speaker 1: only there wasn't really a change. There was just an 265 00:17:08,640 --> 00:17:12,280 Speaker 1: opening of the magnitude of the spread. And the volatility 266 00:17:12,280 --> 00:17:16,400 Speaker 1: on any given day was actually like something I've never seen. Um, 267 00:17:17,200 --> 00:17:20,800 Speaker 1: we had a stock in our portfolio, Ashtead. One day, 268 00:17:20,800 --> 00:17:24,160 Speaker 1: it opened up down, the day before it was down fifteen, 269 00:17:24,240 --> 00:17:26,920 Speaker 1: and it closed up over ten percent. I mean these 270 00:17:26,960 --> 00:17:30,000 Speaker 1: are just huge intra day forget about intra week in 271 00:17:30,080 --> 00:17:34,679 Speaker 1: tra mont intra day price movements. Now I will say 272 00:17:34,840 --> 00:17:36,880 Speaker 1: it's settled down. I mean you could see the vix 273 00:17:37,320 --> 00:17:39,840 Speaker 1: went from a high of eighty and now it's just 274 00:17:39,920 --> 00:17:43,679 Speaker 1: over thirty. So we are starting to see a little 275 00:17:43,720 --> 00:17:46,879 Speaker 1: bit of calm return to right. So what does that 276 00:17:46,920 --> 00:17:48,840 Speaker 1: mean for the banking and the financials. I mean, we've 277 00:17:48,840 --> 00:17:50,520 Speaker 1: got a number of people in a life somewhere. News 278 00:17:50,640 --> 00:17:54,760 Speaker 1: of Bloomberg opinion was on today basically saying, David, if 279 00:17:54,840 --> 00:17:57,760 Speaker 1: if Europe can't figure out how to consolidate banking now, 280 00:17:57,760 --> 00:17:59,919 Speaker 1: when are they going to do it? Are you just 281 00:18:00,080 --> 00:18:02,040 Speaker 1: check chopping at the bid over the next two years 282 00:18:02,040 --> 00:18:05,280 Speaker 1: of what financial will do well? I think the financials 283 00:18:05,280 --> 00:18:09,040 Speaker 1: in Europe will do well only because they've been beaten 284 00:18:09,119 --> 00:18:11,000 Speaker 1: up so bad. I mean, you were able to buy 285 00:18:11,080 --> 00:18:13,600 Speaker 1: the quality of the sector. Let's take a BNP perry 286 00:18:14,440 --> 00:18:18,119 Speaker 1: a week ago for just overt of book value. In 287 00:18:18,200 --> 00:18:21,520 Speaker 1: the last great financial crisis, it didn't trade that low, 288 00:18:21,920 --> 00:18:25,480 Speaker 1: and one would argue they're much safer investments today given 289 00:18:25,480 --> 00:18:29,200 Speaker 1: their capital positions. Uh in the financial crisis for four 290 00:18:29,280 --> 00:18:33,639 Speaker 1: or five to day or so, you have safer banks 291 00:18:33,640 --> 00:18:37,520 Speaker 1: trading at lower prices because I believe the big pockets 292 00:18:37,520 --> 00:18:40,160 Speaker 1: of money played you know, the same the same game plan, 293 00:18:40,280 --> 00:18:45,320 Speaker 1: the same pitch were instability were in fear short of 294 00:18:45,520 --> 00:18:48,800 Speaker 1: you know, European financials, and they moved as a bucket 295 00:18:49,760 --> 00:18:52,960 Speaker 1: and so to us as kind of marksmen were able 296 00:18:53,000 --> 00:18:56,439 Speaker 1: to pick and choose the quality and by those that 297 00:18:56,520 --> 00:19:00,000 Speaker 1: have really sold down, which we believe are and sustainable 298 00:19:00,160 --> 00:19:03,879 Speaker 1: levels The reason why I believe it's so unsustainable a 299 00:19:04,080 --> 00:19:06,360 Speaker 1: of the low price. You have the strong balance sheet, 300 00:19:06,520 --> 00:19:09,399 Speaker 1: and see believe it or not, even with the lower 301 00:19:09,560 --> 00:19:15,440 Speaker 1: negative race, you've seen resilient earnings. You've seen earnings behave 302 00:19:15,800 --> 00:19:18,479 Speaker 1: because there are other lovers that the managements have been 303 00:19:18,520 --> 00:19:21,920 Speaker 1: able to pull to protect their earnings. And so this 304 00:19:22,000 --> 00:19:25,640 Speaker 1: is why we've remained exposed in these areas and we're 305 00:19:25,720 --> 00:19:29,040 Speaker 1: very excited about the future prospects of our portfolios. It's 306 00:19:29,160 --> 00:19:32,240 Speaker 1: really really hurt us. We had a terrible first quarter. 307 00:19:37,600 --> 00:19:45,240 Speaker 1: The damn thing about the Packer draft radio would go 308 00:19:45,280 --> 00:19:49,320 Speaker 1: to the Packers, Why did you take your quarterback? That's 309 00:19:49,359 --> 00:19:51,480 Speaker 1: a really really why. I don't know. I kind of 310 00:19:51,560 --> 00:19:53,760 Speaker 1: understand why we took our quarterback. I'm not sure why 311 00:19:53,800 --> 00:20:00,159 Speaker 1: we took that quarterback. Okay, energy is you know, talk 312 00:20:00,200 --> 00:20:02,920 Speaker 1: about value, but boy, that's just you get it's so 313 00:20:03,000 --> 00:20:05,080 Speaker 1: much risk in that space. How are you viewing energy 314 00:20:05,160 --> 00:20:07,240 Speaker 1: right now? I mean, I think there is a lot 315 00:20:07,240 --> 00:20:09,439 Speaker 1: of risk and energy, but if you look at the 316 00:20:09,520 --> 00:20:13,560 Speaker 1: short term, it's hard to believe that the normalized price 317 00:20:13,600 --> 00:20:16,360 Speaker 1: of oil is twelve dollars and thirty one since that's 318 00:20:16,359 --> 00:20:19,760 Speaker 1: what it says on my screen right now. However, I 319 00:20:19,760 --> 00:20:21,920 Speaker 1: will say this, so I think in the near term 320 00:20:22,200 --> 00:20:27,080 Speaker 1: there is opportunities UM because oil is oversold. I think 321 00:20:27,119 --> 00:20:29,760 Speaker 1: oil is significantly oversold in the short term, but in 322 00:20:29,760 --> 00:20:33,159 Speaker 1: the medium and long term well, in particular to me, 323 00:20:33,240 --> 00:20:40,000 Speaker 1: it's hard to make a case given supplying demand. Uh. Now, gas, 324 00:20:40,040 --> 00:20:42,159 Speaker 1: of course, it is a little bit of a different story, 325 00:20:42,320 --> 00:20:45,080 Speaker 1: because gas I think has continued use. As long as 326 00:20:45,119 --> 00:20:47,680 Speaker 1: you could get guests to the market. You know, it's 327 00:20:47,720 --> 00:20:52,560 Speaker 1: it's relatively clean and transports clean and burns clean um, 328 00:20:52,600 --> 00:20:55,280 Speaker 1: and it's very low price. And as as long as 329 00:20:55,280 --> 00:20:59,040 Speaker 1: you could have access to pipelines and and l n 330 00:20:59,119 --> 00:21:01,840 Speaker 1: G and this type of thing, I think guess could 331 00:21:01,880 --> 00:21:05,119 Speaker 1: be a very good business. I worry about oil because 332 00:21:05,760 --> 00:21:09,119 Speaker 1: I think demand for refined products or the medium and 333 00:21:09,160 --> 00:21:12,200 Speaker 1: long term will continue to go down, and I think 334 00:21:12,240 --> 00:21:14,840 Speaker 1: that the supply, at least at this stage, there's just 335 00:21:14,920 --> 00:21:17,640 Speaker 1: so much of it UM. But I think at this 336 00:21:17,720 --> 00:21:20,240 Speaker 1: price you have an opportunity if you're a trader, but 337 00:21:20,320 --> 00:21:24,560 Speaker 1: that's not necessarily we are. We do have some exposure 338 00:21:25,440 --> 00:21:29,720 Speaker 1: in our international portfolios of the s novis UM, but 339 00:21:29,840 --> 00:21:32,879 Speaker 1: we we don't have a lot of energy at at Harrison, 340 00:21:33,040 --> 00:21:36,200 Speaker 1: there's some where where we believe there's a good management 341 00:21:36,240 --> 00:21:39,280 Speaker 1: teams and good production profile. It's good production costs and 342 00:21:39,320 --> 00:21:43,280 Speaker 1: good balance sheets. But you've got to be there. So 343 00:21:43,359 --> 00:21:46,320 Speaker 1: David's look at this market here. How concerned are you 344 00:21:46,400 --> 00:21:48,359 Speaker 1: that this time? And I've been talking about, you know, 345 00:21:48,440 --> 00:21:51,800 Speaker 1: for you know, the longest time. It's really centered on 346 00:21:51,880 --> 00:21:54,639 Speaker 1: a small number of names. I mean, I'll call it 347 00:21:54,720 --> 00:21:57,480 Speaker 1: fang plus or whatever other moniker you want to It 348 00:21:57,600 --> 00:22:00,359 Speaker 1: just doesn't seem healthy for the market for all. How 349 00:22:00,400 --> 00:22:03,040 Speaker 1: much of the concern is that for you? Well, it's 350 00:22:03,040 --> 00:22:06,200 Speaker 1: a very good point because and it hasn't been healthy 351 00:22:06,280 --> 00:22:09,600 Speaker 1: for us as long term value investors. It's been terrible 352 00:22:09,640 --> 00:22:14,040 Speaker 1: for us. And I think this actually gives pause us, 353 00:22:14,640 --> 00:22:18,760 Speaker 1: gives us a pause to be optimistic because eventually we 354 00:22:18,800 --> 00:22:22,760 Speaker 1: believe the market will spread out and those names which 355 00:22:23,160 --> 00:22:28,520 Speaker 1: do have a good fundamental value characteristics value by US 356 00:22:28,560 --> 00:22:32,719 Speaker 1: defined as low price, high quality, but are being ignored 357 00:22:32,880 --> 00:22:36,879 Speaker 1: just because they're not in that narrow sector which you describe. 358 00:22:37,480 --> 00:22:41,560 Speaker 1: So if you're an index holder, or a passive holder, 359 00:22:41,800 --> 00:22:46,560 Speaker 1: or a holder of these assets which have been loved 360 00:22:47,040 --> 00:22:49,760 Speaker 1: now for the better part of a decade, I would 361 00:22:49,760 --> 00:22:53,760 Speaker 1: be slightly worried if you're someone like ourselves, who are 362 00:22:53,800 --> 00:22:57,320 Speaker 1: positioned for when this love turns to like and at 363 00:22:57,359 --> 00:23:00,680 Speaker 1: some point maybe dislike. We believe we are very well 364 00:23:00,720 --> 00:23:04,240 Speaker 1: positioned and we'll be happy for when that day comes, 365 00:23:04,680 --> 00:23:10,200 Speaker 1: when we have a more dispersed, uh disbursement of valuation 366 00:23:10,280 --> 00:23:12,720 Speaker 1: within the market. David Harrold, thank you so much. With 367 00:23:12,760 --> 00:23:20,280 Speaker 1: Harris Associates greatly greatly appreciated. This morning. On the edge 368 00:23:20,840 --> 00:23:25,560 Speaker 1: of Exuberance, we welcome the Laureate of Yale University, Robert Schiller, 369 00:23:25,600 --> 00:23:29,240 Speaker 1: who we always talked to when we can. I want 370 00:23:29,240 --> 00:23:33,359 Speaker 1: to go more philosophical here, Professor Schiller, and that is 371 00:23:33,400 --> 00:23:36,199 Speaker 1: to speak of your quiet book that didn't make the 372 00:23:36,280 --> 00:23:38,800 Speaker 1: press of exuberance, and this, that and the other thing, 373 00:23:39,560 --> 00:23:44,200 Speaker 1: and that is finance and a good society. The clear 374 00:23:44,280 --> 00:23:48,160 Speaker 1: observation of Republicans and Democrats is Europe and the United 375 00:23:48,280 --> 00:23:51,520 Speaker 1: Kingdom are figuring out how to come to the aid 376 00:23:51,600 --> 00:23:56,080 Speaker 1: of their citizens in a less clumsy manner than America. 377 00:23:56,920 --> 00:24:00,200 Speaker 1: How do we get to that point in America or 378 00:24:00,240 --> 00:24:03,240 Speaker 1: do we even want to get to a European model 379 00:24:03,520 --> 00:24:07,000 Speaker 1: of a good society. I don't know if we want 380 00:24:07,000 --> 00:24:10,199 Speaker 1: to go ho hog into a European model. But I 381 00:24:10,240 --> 00:24:15,320 Speaker 1: think that it is true that our free market orientation 382 00:24:15,480 --> 00:24:22,000 Speaker 1: sometimes has us missed essential roles of the government. At 383 00:24:22,000 --> 00:24:26,440 Speaker 1: a time like this, people have contracts to pay money 384 00:24:27,200 --> 00:24:34,119 Speaker 1: like rent or or interests on corporate debt. Uh, that 385 00:24:34,359 --> 00:24:37,240 Speaker 1: there should have been something in those contracts that allowed 386 00:24:37,320 --> 00:24:41,640 Speaker 1: for a circumstance like this, but there isn't. The government 387 00:24:41,720 --> 00:24:44,720 Speaker 1: is a risk manager of last resort. It comes in 388 00:24:44,800 --> 00:24:50,240 Speaker 1: and does common sense things that uh, if the ideology 389 00:24:50,560 --> 00:24:55,240 Speaker 1: supports it. And I think that we could learn something 390 00:24:55,320 --> 00:25:00,879 Speaker 1: from Europeans, uh that there's you know, no no free 391 00:25:00,880 --> 00:25:05,719 Speaker 1: market contract and anticipate everything, and uh, we do have 392 00:25:05,800 --> 00:25:11,159 Speaker 1: to have some interposition of government authority. And this is 393 00:25:11,200 --> 00:25:15,120 Speaker 1: a time like that. So, professor, just in the last 394 00:25:15,119 --> 00:25:17,800 Speaker 1: ten eleven, twelve years, investors have had to deal with 395 00:25:17,960 --> 00:25:22,240 Speaker 1: two extraordinary shocks, first the financial crisis and now this pandemic. 396 00:25:22,240 --> 00:25:25,600 Speaker 1: Are you concerned that investors just when you think about 397 00:25:25,760 --> 00:25:31,040 Speaker 1: individual investors, that their psyches maybe permanently altered here as 398 00:25:31,080 --> 00:25:33,480 Speaker 1: they think about risk, as they think about, you know, 399 00:25:33,560 --> 00:25:38,439 Speaker 1: how to invest their capital longer term. I wouldn't use 400 00:25:38,480 --> 00:25:43,200 Speaker 1: the word permanently, but maybe for years. Yeah, the psychologists 401 00:25:43,200 --> 00:25:46,879 Speaker 1: talk about something about the aspect heuristic, and that is 402 00:25:46,920 --> 00:25:52,119 Speaker 1: a tendency for people when they're frightened by something. Uh 403 00:25:52,160 --> 00:25:56,399 Speaker 1: to to this here extends to many things in their lives, 404 00:25:56,440 --> 00:26:00,399 Speaker 1: even things that are unrelated to it. So this endemic 405 00:26:00,480 --> 00:26:05,080 Speaker 1: has scared us. It has us wondering whether we will 406 00:26:05,119 --> 00:26:09,520 Speaker 1: survive another couple of weeks. That's quite a scare. And 407 00:26:09,560 --> 00:26:12,480 Speaker 1: it's going to affect other other other things like the 408 00:26:12,520 --> 00:26:19,000 Speaker 1: stock market or the housing market. We'll see about these things, yeah, 409 00:26:19,240 --> 00:26:21,600 Speaker 1: Professor Schiller, one more question, if we could, and too 410 00:26:21,600 --> 00:26:26,160 Speaker 1: short a visit today, how does exuberance come back? There's 411 00:26:26,240 --> 00:26:29,399 Speaker 1: lots of people pushing against Robert Schiller right now saying 412 00:26:29,440 --> 00:26:33,000 Speaker 1: exuberance is gone. And yet you and I know your 413 00:26:33,040 --> 00:26:38,800 Speaker 1: study of history is always in every case exuberance returns. 414 00:26:39,680 --> 00:26:42,200 Speaker 1: How does it do that? How does it do that? 415 00:26:42,920 --> 00:26:45,960 Speaker 1: This is one of the mysteries of human psychology, that 416 00:26:46,640 --> 00:26:51,320 Speaker 1: that it's called the animal spirits. Uh you, there's a 417 00:26:51,359 --> 00:26:55,200 Speaker 1: desire for adventure and as a desire, an optimistic bias 418 00:26:55,240 --> 00:27:01,800 Speaker 1: that comes back eventually. Uh yeah. So, and after we 419 00:27:01,880 --> 00:27:05,399 Speaker 1: had the stock market coming really right back up and 420 00:27:06,000 --> 00:27:10,480 Speaker 1: like nineteen thirty six or so, almost all the way 421 00:27:10,560 --> 00:27:17,479 Speaker 1: up in real terms. Uh, it's it's thanks again. So uh, 422 00:27:18,080 --> 00:27:22,920 Speaker 1: these things are still not fully understood, but it does 423 00:27:23,000 --> 00:27:27,760 Speaker 1: have something with the human spirit. Robert Shuler, thank you 424 00:27:27,840 --> 00:27:31,720 Speaker 1: so much. He is the Nobel Laureate of Yale University. 425 00:27:34,600 --> 00:27:37,520 Speaker 1: We have done so many different stories of this great pandemic, 426 00:27:37,600 --> 00:27:40,280 Speaker 1: and we think all of the medical professionals we've dealt 427 00:27:40,320 --> 00:27:44,160 Speaker 1: with worldwide. At the Johns Hopkins University in at their 428 00:27:44,240 --> 00:27:47,919 Speaker 1: hospital is someone who is not so much expert on 429 00:27:48,040 --> 00:27:53,080 Speaker 1: infectious diseases or virology, but expert on the people that 430 00:27:53,400 --> 00:27:56,480 Speaker 1: do this every day, and that of course is the nurses. 431 00:27:56,960 --> 00:28:00,680 Speaker 1: Nisa Ernest is with Johns Hopkins and here's our conversation 432 00:28:01,280 --> 00:28:05,679 Speaker 1: with Miss Earnest on the state of nursing. There has 433 00:28:05,720 --> 00:28:09,720 Speaker 1: been a tremendous response throughout our health system as well 434 00:28:09,760 --> 00:28:12,760 Speaker 1: as many other health systems to really get out and 435 00:28:12,800 --> 00:28:18,560 Speaker 1: aggressively test the community and follows some of the ideas 436 00:28:18,600 --> 00:28:21,600 Speaker 1: that we've learned from the other errors of the world 437 00:28:21,960 --> 00:28:25,000 Speaker 1: that have been tackling coronavirus. And they said, there have 438 00:28:25,080 --> 00:28:27,640 Speaker 1: been a number of reports of you know about ventilators, 439 00:28:27,720 --> 00:28:30,640 Speaker 1: the use of ventilators, whether they're good or not, One 440 00:28:30,640 --> 00:28:32,800 Speaker 1: of the things that's also come in Europe is the 441 00:28:32,840 --> 00:28:36,879 Speaker 1: fact that actually, because there's a shortage frontline medical workers, 442 00:28:36,880 --> 00:28:40,120 Speaker 1: that you're retraining others to try and do these very 443 00:28:40,120 --> 00:28:43,640 Speaker 1: difficult procedures at times. How is that going? That is 444 00:28:43,920 --> 00:28:48,880 Speaker 1: very interesting? It's actually going very well. It was very 445 00:28:48,920 --> 00:28:52,400 Speaker 1: difficult in the beginning. You know, the profession of medicine 446 00:28:52,480 --> 00:28:58,120 Speaker 1: is very protocalized and it's not necessarily very agile, so 447 00:28:58,760 --> 00:29:01,560 Speaker 1: you would have to change not only your skill set 448 00:29:01,640 --> 00:29:05,800 Speaker 1: but your mindset in order to provide the safest, highest 449 00:29:05,840 --> 00:29:08,880 Speaker 1: quality patient care. You bring up a really good topic. 450 00:29:09,320 --> 00:29:13,360 Speaker 1: We have what we call proning team. We have found 451 00:29:13,560 --> 00:29:16,880 Speaker 1: that proning, which is a physical maneuver that's very common 452 00:29:17,440 --> 00:29:20,320 Speaker 1: in i'm an endoscopy. We do it all the time 453 00:29:20,320 --> 00:29:23,480 Speaker 1: with patients that are sedated in order to get them 454 00:29:23,520 --> 00:29:28,040 Speaker 1: more oxygenation. And we found that by proning patients early 455 00:29:28,160 --> 00:29:31,680 Speaker 1: and often, we reduced the use of ventilators in a 456 00:29:31,720 --> 00:29:34,120 Speaker 1: lot of our patient care areas. You're one of the 457 00:29:34,200 --> 00:29:36,200 Speaker 1: rarest things out there. You were out in the real 458 00:29:36,240 --> 00:29:38,840 Speaker 1: world doing terrible jobs, and then you finally got a 459 00:29:38,880 --> 00:29:42,760 Speaker 1: real job in nursing along in your Surrey Sheraiton Johnson 460 00:29:42,760 --> 00:29:46,320 Speaker 1: and Johnson and others. I want you to talk about 461 00:29:46,360 --> 00:29:50,720 Speaker 1: the nursing profession now, how our nurses is an industry 462 00:29:51,160 --> 00:29:54,600 Speaker 1: going to come out of this pandemic. They've got to 463 00:29:54,680 --> 00:29:58,040 Speaker 1: be changed after what we've all observed. Where will nursing 464 00:29:58,120 --> 00:30:01,720 Speaker 1: be in two years, in five years, in ten years. 465 00:30:02,080 --> 00:30:04,720 Speaker 1: That's a great question, and I was actually thinking about 466 00:30:04,760 --> 00:30:07,320 Speaker 1: that when I was driving in. You're right, I have 467 00:30:07,360 --> 00:30:10,160 Speaker 1: a business background. I came into nursing as a second career. 468 00:30:11,160 --> 00:30:13,479 Speaker 1: One of the things that this pandemic is showing us 469 00:30:13,640 --> 00:30:16,000 Speaker 1: is that nurses are going to take a very different 470 00:30:16,120 --> 00:30:20,080 Speaker 1: role two years, five years, ten years down. Nursing is 471 00:30:20,080 --> 00:30:22,520 Speaker 1: what I call very silent work. No one really knows 472 00:30:22,600 --> 00:30:25,680 Speaker 1: what we do, and I think this pandemic has shown 473 00:30:25,720 --> 00:30:28,320 Speaker 1: the world what we do and what we do well. 474 00:30:28,760 --> 00:30:34,200 Speaker 1: Nursing are incredibly innovative and creative, and they're also very 475 00:30:34,360 --> 00:30:38,120 Speaker 1: very good at maintaining high quality patient safety standards. Yeah, 476 00:30:38,160 --> 00:30:40,240 Speaker 1: but when did I get respected in the system. And 477 00:30:40,280 --> 00:30:42,760 Speaker 1: I'm not only talking about nursing folks, I'm talking about 478 00:30:42,800 --> 00:30:45,680 Speaker 1: the interns and residents, the people in the trenches of 479 00:30:45,720 --> 00:30:48,800 Speaker 1: these hospitals. It seems like, am I right? They're the 480 00:30:48,920 --> 00:30:52,720 Speaker 1: last ones to get paid. When does that change? You know, 481 00:30:52,760 --> 00:30:54,959 Speaker 1: I can't answer the pay question. I can tell you 482 00:30:55,000 --> 00:30:58,480 Speaker 1: what is interesting here, and I'm speaking specifically for Hopkins. 483 00:30:58,920 --> 00:31:02,200 Speaker 1: One of the things that Hopkins has done is recognize 484 00:31:02,240 --> 00:31:05,760 Speaker 1: an honor every employee in this organization who comes in 485 00:31:05,960 --> 00:31:10,400 Speaker 1: every day to provide some type of care, either direct 486 00:31:10,440 --> 00:31:13,440 Speaker 1: patient care or indirect patient care. One of the other 487 00:31:13,480 --> 00:31:16,800 Speaker 1: things that this pandemic has shown us is that, you know, 488 00:31:16,840 --> 00:31:19,320 Speaker 1: we're a big institution. We're no different than a lot 489 00:31:19,320 --> 00:31:21,959 Speaker 1: of other health care institutions were big. We're lumbering. It 490 00:31:22,000 --> 00:31:26,200 Speaker 1: takes years to make a decision. This pandemic has shown 491 00:31:26,320 --> 00:31:29,040 Speaker 1: us that you're right there are There are people right 492 00:31:29,080 --> 00:31:32,920 Speaker 1: at the front line who make excellent decisions in a 493 00:31:33,040 --> 00:31:35,880 Speaker 1: very short period of time that make a huge difference 494 00:31:36,000 --> 00:31:41,040 Speaker 1: in a patient outcome. Yes, Sir, Ernest the Johns Hopkins University. 495 00:31:41,120 --> 00:31:42,840 Speaker 1: That has been a joy to speak some of their 496 00:31:42,840 --> 00:31:48,120 Speaker 1: officials each and every day. I hope very much on 497 00:31:48,160 --> 00:31:51,320 Speaker 1: the reopening of the Economy Tomb Governor Andrew Cuomo, so 498 00:31:51,320 --> 00:31:53,520 Speaker 1: that it could be a case for reopening some regions 499 00:31:53,640 --> 00:31:56,560 Speaker 1: of New York, at least in May. It is the 500 00:31:56,640 --> 00:31:59,440 Speaker 1: Empire State folks, and we have been thrilled to speak 501 00:31:59,560 --> 00:32:04,200 Speaker 1: often on Bloomberg surveillance with a Lieutenant Governor of the Empire. 502 00:32:04,720 --> 00:32:07,000 Speaker 1: Kathy Hokel joins this. Kathy, I picked up the daily 503 00:32:07,040 --> 00:32:10,080 Speaker 1: news this morning and I just wanted to see it. There, 504 00:32:10,160 --> 00:32:12,880 Speaker 1: you know, New York dropped dead. I mean, that's again 505 00:32:13,000 --> 00:32:16,760 Speaker 1: the tone forty five years on in Lashington, the President 506 00:32:16,840 --> 00:32:20,520 Speaker 1: saying in New York dropped dead, explained to our audience 507 00:32:20,600 --> 00:32:24,920 Speaker 1: coast to coast, how New York contributes to the federal 508 00:32:25,880 --> 00:32:32,280 Speaker 1: uh pot of money. New York State, our residents contribute 509 00:32:32,320 --> 00:32:37,680 Speaker 1: times billion dollars more the settled government to fund their operations, 510 00:32:37,720 --> 00:32:41,320 Speaker 1: more than we get back in services. And I am 511 00:32:41,520 --> 00:32:44,120 Speaker 1: like an official now. I was formerly an attorney on 512 00:32:44,120 --> 00:32:47,560 Speaker 1: the staff of Daniel Pettrick Boyhan back in the and 513 00:32:47,640 --> 00:32:51,000 Speaker 1: he released this report every single year to show how 514 00:32:51,040 --> 00:32:54,760 Speaker 1: New Yorkers subsidized the rest of the nation and therefore 515 00:32:54,840 --> 00:32:56,960 Speaker 1: made an argument that we should be able to get 516 00:32:57,000 --> 00:32:59,760 Speaker 1: more money coming back to us. But now more than ever, 517 00:32:59,800 --> 00:33:01,880 Speaker 1: you think about the fact that we have been the 518 00:33:01,960 --> 00:33:05,400 Speaker 1: epicenter of this pandemic. We have had to incur cost 519 00:33:05,720 --> 00:33:08,880 Speaker 1: we've had, our businesses are hurting, and the federal government 520 00:33:09,040 --> 00:33:12,720 Speaker 1: should look at that record realize that states like Kentucky 521 00:33:12,920 --> 00:33:15,080 Speaker 1: take more money than they put in, and we give 522 00:33:15,160 --> 00:33:18,000 Speaker 1: more money. So why are we being having this conversation 523 00:33:18,320 --> 00:33:21,400 Speaker 1: give us money now, we need your help. Okay, that 524 00:33:21,560 --> 00:33:24,040 Speaker 1: John Farrell's a good question. They're on testing in where 525 00:33:24,080 --> 00:33:27,240 Speaker 1: we are where it's every state for himself. I'm looking out, 526 00:33:27,600 --> 00:33:31,720 Speaker 1: Lieutenant Governor on two of New York State people jogging 527 00:33:31,760 --> 00:33:36,080 Speaker 1: around Central Park. I mean two are going to get tested. 528 00:33:36,400 --> 00:33:41,280 Speaker 1: That seems absurd. Well, we want those testing rates being 529 00:33:41,400 --> 00:33:44,880 Speaker 1: much higher. And that's why when President Trump met with 530 00:33:45,360 --> 00:33:48,560 Speaker 1: Governor Como just succested we go today. Our governor made 531 00:33:48,560 --> 00:33:50,880 Speaker 1: a very contelling case to say, Okay, you say you 532 00:33:50,920 --> 00:33:53,040 Speaker 1: don't want to have anything to do with testing. How 533 00:33:53,040 --> 00:33:55,240 Speaker 1: about if we split it. New York State will run 534 00:33:55,280 --> 00:33:59,480 Speaker 1: the testing, will do the collection, sites, will gather the examples, 535 00:33:59,560 --> 00:34:02,200 Speaker 1: will get out the results. But we don't have the 536 00:34:02,240 --> 00:34:05,160 Speaker 1: components to do that testing. We don't have access to 537 00:34:05,200 --> 00:34:08,759 Speaker 1: the international supply chain where we agents and vials and 538 00:34:08,800 --> 00:34:12,400 Speaker 1: swabs are being manufactured in places like China. Can you 539 00:34:12,480 --> 00:34:16,560 Speaker 1: help us settled government at least have a supply chain 540 00:34:16,640 --> 00:34:19,080 Speaker 1: and a repository to send US states like New York 541 00:34:19,239 --> 00:34:22,240 Speaker 1: so we can ramp up from twenty thousand tests today 542 00:34:22,520 --> 00:34:25,200 Speaker 1: two over forty. And that's exactly what we're striving for, 543 00:34:25,280 --> 00:34:27,560 Speaker 1: so we can do better. We just don't have the 544 00:34:28,040 --> 00:34:30,080 Speaker 1: re agents and other components to be able to do it. 545 00:34:30,400 --> 00:34:32,480 Speaker 1: We want to do it absolutely. We think it's going 546 00:34:32,520 --> 00:34:35,400 Speaker 1: to make a huge difference in people's sense of security 547 00:34:35,440 --> 00:34:39,080 Speaker 1: as we start reopening the economy. Lieutendant Governor. Just fast 548 00:34:39,120 --> 00:34:43,520 Speaker 1: forwarding beyond the testing and reopening, I'm wondering about the 549 00:34:43,520 --> 00:34:47,080 Speaker 1: fate of New York City as a metropolitan center. I've 550 00:34:47,080 --> 00:34:50,240 Speaker 1: read an increasing number of stories about businesses rethinking plans 551 00:34:50,280 --> 00:34:53,880 Speaker 1: to open offices in the city and the possible exodus 552 00:34:54,000 --> 00:34:58,440 Speaker 1: of families moving to the suburbs, and beyond, how realistic 553 00:34:58,520 --> 00:35:00,319 Speaker 1: is that? How big of a threat? How do you 554 00:35:00,360 --> 00:35:04,280 Speaker 1: talk about that? We have been down and out before 555 00:35:04,400 --> 00:35:06,880 Speaker 1: in New York City. You think about nine eleven, and 556 00:35:06,960 --> 00:35:09,600 Speaker 1: at the time, people said, why would any tourists ever 557 00:35:09,680 --> 00:35:12,279 Speaker 1: come back here? Clearly we are a terrorist target. Why 558 00:35:12,320 --> 00:35:15,359 Speaker 1: would anyone anyone want to live in Manhattan. We came 559 00:35:15,400 --> 00:35:20,000 Speaker 1: back stronger, better, more vibrant than ever before. Hurricane Sandy 560 00:35:20,400 --> 00:35:23,120 Speaker 1: wipe how you flooded the New York City subway system. 561 00:35:23,360 --> 00:35:26,440 Speaker 1: You know, creating and you know breaking havocs throughout Long Island. 562 00:35:26,800 --> 00:35:30,000 Speaker 1: We know how to rebuild, built stronger, with more resiliencies. 563 00:35:30,239 --> 00:35:33,680 Speaker 1: So I believe that what we're tasks right now is 564 00:35:33,719 --> 00:35:36,160 Speaker 1: to reimagine a better New York, create a better New 565 00:35:36,239 --> 00:35:38,400 Speaker 1: York State. And I'm involved with that with the Governor 566 00:35:38,440 --> 00:35:41,200 Speaker 1: as we speak. And then look, the Governor John Farrell 567 00:35:41,239 --> 00:35:44,480 Speaker 1: moved to her top of the market. It's almost really 568 00:35:44,560 --> 00:35:48,800 Speaker 1: isn't this morning? After that, Sirius suggested from from Kathy. Kathy, 569 00:35:48,880 --> 00:35:51,600 Speaker 1: let me follow up on something important place, How do 570 00:35:51,640 --> 00:35:54,200 Speaker 1: you reopen in New York City if you're not aligned 571 00:35:54,239 --> 00:35:58,720 Speaker 1: with New Jersey and neighboring states. We will be aligned, 572 00:35:58,800 --> 00:36:01,239 Speaker 1: you know, absolutely. This is some in the governor initiated 573 00:36:01,280 --> 00:36:04,920 Speaker 1: with our neighboring governors over a month ago, this tri 574 00:36:05,120 --> 00:36:08,600 Speaker 1: state coalition that expanded to seven states, where we don't 575 00:36:08,600 --> 00:36:11,680 Speaker 1: want to do anything at odds with another neighboring state 576 00:36:11,760 --> 00:36:14,439 Speaker 1: because there's so much synergy in that tri state area. 577 00:36:14,440 --> 00:36:16,920 Speaker 1: In particular, people live in New Jersey, they work in 578 00:36:16,960 --> 00:36:19,880 Speaker 1: New York, and vice versas stained with Connecticut. So the 579 00:36:20,480 --> 00:36:23,120 Speaker 1: governors have really been enlightenment and this does not happened before, 580 00:36:23,160 --> 00:36:26,120 Speaker 1: but it has been this incredible collaboration. But we talked 581 00:36:26,160 --> 00:36:28,680 Speaker 1: about the fact that if each is open in one area, 582 00:36:28,680 --> 00:36:31,440 Speaker 1: should they be open elsewhere? What about schools, what about 583 00:36:31,640 --> 00:36:36,200 Speaker 1: transportation systems, what about opening up businesses? So I think 584 00:36:36,239 --> 00:36:39,160 Speaker 1: New Yorkers and people living in that region should feel 585 00:36:39,200 --> 00:36:43,120 Speaker 1: it's confidence that there will be intense coordination among our administrations. 586 00:36:43,520 --> 00:36:46,160 Speaker 1: Make sure that we're not working a cross purposes from 587 00:36:46,160 --> 00:36:49,080 Speaker 1: each other. That that doesn't accomplish anything. You open up 588 00:36:49,120 --> 00:36:51,400 Speaker 1: the bars in New York and not in New York City, 589 00:36:51,520 --> 00:36:53,040 Speaker 1: people are gonna go to New York and let's just 590 00:36:53,440 --> 00:36:56,000 Speaker 1: let's understand human nate here and that's then that just 591 00:36:56,120 --> 00:36:58,359 Speaker 1: expands the spread of New York City is not ready 592 00:36:58,400 --> 00:37:00,920 Speaker 1: to open. So that's why it's really important what they're doing, 593 00:37:01,000 --> 00:37:03,000 Speaker 1: and that will make the difference. Well, I'm listening to 594 00:37:03,040 --> 00:37:04,880 Speaker 1: what both states are saying at the moment, and Governor 595 00:37:04,920 --> 00:37:07,960 Speaker 1: Cuomo has been quite clear about slowly looking at reopening 596 00:37:08,239 --> 00:37:11,440 Speaker 1: some regions in New York. In May, Governor Murphy of 597 00:37:11,520 --> 00:37:14,440 Speaker 1: New Jersey essentially saying flat out to the stay at 598 00:37:14,440 --> 00:37:16,800 Speaker 1: home order will remain in effect and its entirety until 599 00:37:16,840 --> 00:37:19,000 Speaker 1: further notice. Are you saying there's no daylight between the 600 00:37:19,040 --> 00:37:22,720 Speaker 1: two governors at the moment, Cathy. I'm talking about regionally. 601 00:37:23,200 --> 00:37:25,879 Speaker 1: New Jersey is in close proximity to New York City, 602 00:37:25,920 --> 00:37:28,680 Speaker 1: the metropolitan area, which is not ready to open yet. 603 00:37:29,200 --> 00:37:32,560 Speaker 1: The governor talks about opening regionally, he's talking about something 604 00:37:32,600 --> 00:37:35,600 Speaker 1: like Erie County is very like Erie County, Western New York, 605 00:37:35,760 --> 00:37:38,560 Speaker 1: which is literally a seven hour drive from New York City. 606 00:37:38,640 --> 00:37:41,120 Speaker 1: So no one will you do, you know, one from 607 00:37:41,160 --> 00:37:43,920 Speaker 1: New York City is going to hop into a facility 608 00:37:43,960 --> 00:37:47,560 Speaker 1: and visit Erie County. It's just geography doesn't make sense. 609 00:37:47,560 --> 00:37:49,799 Speaker 1: But that's we're talking about the far reaches of the 610 00:37:49,840 --> 00:37:53,240 Speaker 1: states that really have a dramatically lower number of positive 611 00:37:53,280 --> 00:37:56,400 Speaker 1: cases hospitalizations and are more prepared to open up. And 612 00:37:56,400 --> 00:37:59,960 Speaker 1: that's what I'm focusing on now as you speak. My focus, 613 00:38:00,320 --> 00:38:02,680 Speaker 1: designated by the governor a week ago when he came 614 00:38:02,680 --> 00:38:07,359 Speaker 1: to Buffalo, was to charity the reopening plan for the 615 00:38:07,400 --> 00:38:10,799 Speaker 1: outside downstate areas right in New York and Central New 616 00:38:10,880 --> 00:38:14,640 Speaker 1: York on a different timetable altogether. It is the Empire 617 00:38:14,680 --> 00:38:17,960 Speaker 1: State Lieutenant Governor. Thank you so much for joining Bloomberg Surveillance. 618 00:38:17,960 --> 00:38:21,160 Speaker 1: This morning, John Greats catch up with the Lieutenant Governor 619 00:38:21,160 --> 00:38:23,120 Speaker 1: on a regular access to get the update on the 620 00:38:23,160 --> 00:38:26,719 Speaker 1: real connected. Thanks for listening to the Bloomberg Surveillance podcast. 621 00:38:27,080 --> 00:38:32,120 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 622 00:38:32,160 --> 00:38:36,480 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 623 00:38:36,600 --> 00:38:40,480 Speaker 1: Keane before the podcast. You can always catch us worldwide. 624 00:38:40,920 --> 00:38:42,000 Speaker 1: I'm Bloomberg Radio.