1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jai Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,320 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The 5 00:00:27,360 --> 00:00:30,040 Speaker 1: fancy phrase for this would be shocked HISTORIESUS, and I 6 00:00:30,160 --> 00:00:33,239 Speaker 1: say that in honor of Olivier Blanchard, who was with 7 00:00:33,400 --> 00:00:36,080 Speaker 1: us earlier at this week. He and Laurence Summer with 8 00:00:36,159 --> 00:00:40,800 Speaker 1: pathbreaking research on the effect of the duration of unemployment 9 00:00:40,840 --> 00:00:43,800 Speaker 1: over time. But nowhere in the research, at least have 10 00:00:43,880 --> 00:00:46,240 Speaker 1: I ever, would have could ever suggests that we've seen 11 00:00:46,240 --> 00:00:49,199 Speaker 1: the abruptness that we see now. The abruptness is seen 12 00:00:49,280 --> 00:00:51,760 Speaker 1: in the market. Await to the tape. The tape has 13 00:00:51,800 --> 00:00:54,000 Speaker 1: been green, red, green, right now some red on the 14 00:00:54,440 --> 00:00:57,440 Speaker 1: I scream with the vix forty nine point seven seven 15 00:00:57,440 --> 00:01:00,360 Speaker 1: and yields come in and the tenant thirty years space 16 00:01:00,920 --> 00:01:03,960 Speaker 1: with us that I really am pleased that Jeffrey Rosenberg 17 00:01:04,000 --> 00:01:06,000 Speaker 1: could find time to join us today. He is with 18 00:01:06,080 --> 00:01:08,959 Speaker 1: black Rock and he does a number of things over there, 19 00:01:09,000 --> 00:01:14,480 Speaker 1: but mostly he writes acute summaries of the fixed income space. 20 00:01:14,560 --> 00:01:16,839 Speaker 1: So we're gonna touch on jobs here a little bit, 21 00:01:17,319 --> 00:01:19,560 Speaker 1: but and I really want to get to a discussion 22 00:01:19,560 --> 00:01:21,760 Speaker 1: of what we've got and fixed income down we do this, 23 00:01:22,080 --> 00:01:24,560 Speaker 1: We're thrilled to tell you without commercial interruption, to the 24 00:01:24,600 --> 00:01:27,200 Speaker 1: top of the hour, Jeff, thank you so much for 25 00:01:27,280 --> 00:01:30,399 Speaker 1: being with us. We are seeing an economists pull out 26 00:01:30,440 --> 00:01:35,560 Speaker 1: their duration of this slowdown in the duration of slogging recovery. 27 00:01:36,200 --> 00:01:38,560 Speaker 1: The V shaped recovery seems to have disappeared in the 28 00:01:38,640 --> 00:01:41,280 Speaker 1: last forty eight hours. How do you fold that into 29 00:01:41,319 --> 00:01:43,640 Speaker 1: fixed incomes? What does it mean, for example, for the 30 00:01:43,680 --> 00:01:49,800 Speaker 1: benchmark tenure yield. Well, you know what we're debating is 31 00:01:49,800 --> 00:01:52,960 Speaker 1: is you know, what is the pace? What is the 32 00:01:53,080 --> 00:01:57,240 Speaker 1: shape of the recovery for the tenure yield? However, um 33 00:01:57,520 --> 00:02:00,360 Speaker 1: it may be less about that. And what we seen 34 00:02:00,480 --> 00:02:04,920 Speaker 1: here is just a historic structural change in the relationship 35 00:02:05,000 --> 00:02:08,760 Speaker 1: between the federal reserve and fiscal policy. We are now 36 00:02:08,880 --> 00:02:13,680 Speaker 1: operating in a different structural environment. Monetary policy is in 37 00:02:13,720 --> 00:02:17,440 Speaker 1: the control of the fiscal authority. This is akin to 38 00:02:17,639 --> 00:02:20,440 Speaker 1: wartime finance because we are fighting a war. We're fighting 39 00:02:20,440 --> 00:02:23,440 Speaker 1: a war against the pandemic. And so when you think 40 00:02:23,440 --> 00:02:27,000 Speaker 1: about how interest rates move, Um, you really have to 41 00:02:27,000 --> 00:02:29,720 Speaker 1: stop thinking about, well, what is the shape of the 42 00:02:29,760 --> 00:02:32,960 Speaker 1: economy and what is the outlook for inflation, because there's 43 00:02:33,000 --> 00:02:35,600 Speaker 1: something much much more important that a lot of these 44 00:02:35,600 --> 00:02:39,160 Speaker 1: headlines you've seen. The Fed, for example, this week, change 45 00:02:39,240 --> 00:02:43,880 Speaker 1: the regular regulations around the supplementary leverage ratio. This is 46 00:02:43,960 --> 00:02:48,200 Speaker 1: all about securing the interest rate that the government will 47 00:02:48,240 --> 00:02:53,040 Speaker 1: pay to fund the massive fiscal policy response that we've 48 00:02:53,080 --> 00:02:56,880 Speaker 1: seen to fight the pandemic. And so interest rates are 49 00:02:56,880 --> 00:02:59,280 Speaker 1: going to be much more about fiscal policy than they 50 00:02:59,320 --> 00:03:02,600 Speaker 1: are about monetary policy, the shape of the economic recovery, 51 00:03:02,600 --> 00:03:05,560 Speaker 1: and the said reacting to the shape of the economic recovery, 52 00:03:05,600 --> 00:03:08,200 Speaker 1: because it's gonna be a long time, as as Diane 53 00:03:08,240 --> 00:03:10,320 Speaker 1: was saying, it's gonna be a long time before, you know, 54 00:03:10,400 --> 00:03:13,320 Speaker 1: consumer behavior and confidence comes back. But it's also going 55 00:03:13,360 --> 00:03:16,200 Speaker 1: to be a long time before we get back to 56 00:03:16,520 --> 00:03:19,800 Speaker 1: the pre crisis setting a monetary policy and interest rate. 57 00:03:20,800 --> 00:03:25,680 Speaker 1: So let's talk about the monetary policy currently underway. It 58 00:03:25,919 --> 00:03:28,720 Speaker 1: is uh off the charts. I'm looking right now at 59 00:03:28,720 --> 00:03:32,639 Speaker 1: the balance sheet growth for the Federal Reserve and it 60 00:03:32,639 --> 00:03:35,440 Speaker 1: blows me away. I mean, in one week, six hundred 61 00:03:35,480 --> 00:03:38,000 Speaker 1: billion dollar expansion in the balance sheet. More than a 62 00:03:38,040 --> 00:03:41,880 Speaker 1: trillion dollars added to the Federal reserves holdings of assets 63 00:03:42,040 --> 00:03:44,400 Speaker 1: in two weeks, and I'm wondering, we're looking at a 64 00:03:44,400 --> 00:03:47,840 Speaker 1: five point eight trillion dollar balance sheet on the other 65 00:03:47,920 --> 00:03:50,920 Speaker 1: side of this, What will the Federal Reserve look like, 66 00:03:51,040 --> 00:03:54,320 Speaker 1: considering that it is expanding its power and its scope 67 00:03:54,400 --> 00:04:00,280 Speaker 1: well beyond its historical role into fiscal stimulus. Well, again, 68 00:04:00,360 --> 00:04:04,000 Speaker 1: I think we've got to be careful about history here 69 00:04:04,200 --> 00:04:08,960 Speaker 1: and which history we're comparing to, because the operative history 70 00:04:08,960 --> 00:04:12,320 Speaker 1: to compare is not the one we experienced. That's the 71 00:04:12,400 --> 00:04:18,479 Speaker 1: modern FED. The poste Fed Treasury Accord establishes the modern 72 00:04:18,560 --> 00:04:21,599 Speaker 1: said the independence of monetary policy. But again, if we 73 00:04:21,680 --> 00:04:25,600 Speaker 1: take the analogy two we're at war against the pandemic 74 00:04:25,640 --> 00:04:29,560 Speaker 1: and we've just shifted the structure into wartime finance, then 75 00:04:29,600 --> 00:04:32,760 Speaker 1: the better historical analog is what did the Fed, what 76 00:04:32,839 --> 00:04:35,560 Speaker 1: did its balance she'd look like during World War Two? 77 00:04:35,600 --> 00:04:38,960 Speaker 1: And what we saw during that time period was explicit 78 00:04:39,080 --> 00:04:42,280 Speaker 1: pegging of interest rates three eighths on the bills, two 79 00:04:42,320 --> 00:04:45,960 Speaker 1: and a half on the thirty year, and the subordination 80 00:04:46,160 --> 00:04:49,360 Speaker 1: of the Federal reserve institutions to the needs of the 81 00:04:49,360 --> 00:04:51,880 Speaker 1: fiscal policy in that case, of course, fighting the war 82 00:04:51,960 --> 00:04:55,160 Speaker 1: effort here very similar fighting the war effort in terms 83 00:04:55,160 --> 00:04:59,920 Speaker 1: of providing the funding for these massive amounts of stimul 84 00:05:00,320 --> 00:05:03,080 Speaker 1: and the Balance Street expansion that you're talking about, that 85 00:05:03,080 --> 00:05:05,919 Speaker 1: that that barely scratches the circles, because we have the 86 00:05:05,920 --> 00:05:09,799 Speaker 1: main street business lending facilities still to come. The funding 87 00:05:09,839 --> 00:05:12,040 Speaker 1: of it the four and fifty four billion, but you 88 00:05:12,120 --> 00:05:14,599 Speaker 1: leverage that up up to ten times, and you're talking 89 00:05:14,640 --> 00:05:18,120 Speaker 1: about nearly an additional expansion of five trillion, and the 90 00:05:18,120 --> 00:05:22,960 Speaker 1: Federal Reserve providing that funding into the real economy. Beautifully 91 00:05:22,960 --> 00:05:26,000 Speaker 1: explained Jeffrey Rosenberg with this black Rock, folks, And at 92 00:05:26,000 --> 00:05:28,040 Speaker 1: this time with the jobs report, we have to turn 93 00:05:28,080 --> 00:05:31,120 Speaker 1: a little bit too a discussion for Global Wall Street. 94 00:05:31,120 --> 00:05:33,320 Speaker 1: Will try to keep it in English for all of 95 00:05:33,360 --> 00:05:35,960 Speaker 1: you out there not familiar with some of these arcane phrases. 96 00:05:36,000 --> 00:05:40,120 Speaker 1: Jeff Rosenberg. I thought Ben Emmons was just brilliant yesterday 97 00:05:40,240 --> 00:05:44,800 Speaker 1: writing a note on CMBs, the idea that millions can't 98 00:05:44,800 --> 00:05:48,840 Speaker 1: pay their rent, landlords are left hanging, and all of 99 00:05:48,880 --> 00:05:52,800 Speaker 1: a sudden it redounds over into commercial real estate and 100 00:05:52,880 --> 00:05:58,000 Speaker 1: mortgage securitized ideas. Clos R and b s and stuff 101 00:05:58,040 --> 00:06:02,320 Speaker 1: like that. How urgent is this on a Friday morning 102 00:06:02,360 --> 00:06:06,039 Speaker 1: across America? Is there really going to be a collapsing 103 00:06:06,720 --> 00:06:10,840 Speaker 1: in securitized instruments like we saw in two thousand eight, 104 00:06:11,200 --> 00:06:15,520 Speaker 1: in two thousand nine. So so there's their differences in 105 00:06:15,680 --> 00:06:20,400 Speaker 1: kind and and what we saw already, what we saw 106 00:06:20,400 --> 00:06:23,440 Speaker 1: in the fixing markets in March is kind of the 107 00:06:23,480 --> 00:06:27,680 Speaker 1: first wave of the impact of the pandemic. That was 108 00:06:27,720 --> 00:06:33,359 Speaker 1: a liquidity orientation, that was a liquidity source of market 109 00:06:33,440 --> 00:06:36,840 Speaker 1: drops in prices, and very simply quickly what happened was 110 00:06:36,880 --> 00:06:40,080 Speaker 1: you had this massive demand for liquidity from the real 111 00:06:40,120 --> 00:06:43,440 Speaker 1: economy into the financial economy as a result of the 112 00:06:43,440 --> 00:06:46,719 Speaker 1: sudden stop in the economy at a size that the 113 00:06:46,720 --> 00:06:52,680 Speaker 1: financial economy was never equipped to ever fulfill. The squeezing 114 00:06:52,839 --> 00:06:55,080 Speaker 1: from the real economy of that liquidity out of the 115 00:06:55,080 --> 00:06:59,640 Speaker 1: financial economy. That pivoted back and squeezed financial market liquidity, 116 00:06:59,680 --> 00:07:02,840 Speaker 1: and you saw some large drops. Okay, So now the 117 00:07:02,880 --> 00:07:07,240 Speaker 1: Federal Reserve intervenes, it plugs the whole of that liquidity 118 00:07:07,240 --> 00:07:09,360 Speaker 1: with its balance sheet. That's where we are today. Your 119 00:07:09,400 --> 00:07:11,240 Speaker 1: question is now, well, where do we go from here? 120 00:07:11,240 --> 00:07:14,600 Speaker 1: When you look at the fundamentals of the daisy chain 121 00:07:15,320 --> 00:07:19,640 Speaker 1: of the furbearances. Where does it stop right and where 122 00:07:19,680 --> 00:07:23,440 Speaker 1: it stops is at the investor, at the holdings, at 123 00:07:23,440 --> 00:07:26,920 Speaker 1: the bond level of the securitizations. And so this is 124 00:07:27,640 --> 00:07:32,000 Speaker 1: now what we're considering. But it's about a temporary halt 125 00:07:32,680 --> 00:07:35,760 Speaker 1: to payments as a result of this sudden stop. And 126 00:07:35,800 --> 00:07:39,920 Speaker 1: so the difference in kind relative to nine is the 127 00:07:39,960 --> 00:07:44,160 Speaker 1: two nine was about a fundamental collapse in the value 128 00:07:44,160 --> 00:07:48,800 Speaker 1: of the underlying property. These properties might collapse fundamentally if 129 00:07:48,880 --> 00:07:53,920 Speaker 1: there's a permanence to the halting of those payments, and 130 00:07:54,040 --> 00:07:57,440 Speaker 1: certainly in some sectors of the economy, the structural changes 131 00:07:57,760 --> 00:08:01,200 Speaker 1: that the pandemic brings change ages and how we behave 132 00:08:01,480 --> 00:08:05,920 Speaker 1: may render some of those securities, valuations, and cash flows 133 00:08:05,960 --> 00:08:09,760 Speaker 1: permanently impaired. But the larger broader issue here is this 134 00:08:09,840 --> 00:08:13,040 Speaker 1: is a temporary stop at what we're trying to finance, 135 00:08:13,120 --> 00:08:16,480 Speaker 1: and that earlier program that I just highlighted up the 136 00:08:16,520 --> 00:08:19,600 Speaker 1: best four and a half five trillion dollars of lending 137 00:08:19,640 --> 00:08:22,920 Speaker 1: capacity from the federal Reserve maybe needed to call to 138 00:08:22,960 --> 00:08:26,880 Speaker 1: be called upon, or maybe even additional forms. There's legislation 139 00:08:26,920 --> 00:08:29,240 Speaker 1: and discussion about how do you handle other areas of 140 00:08:29,240 --> 00:08:32,600 Speaker 1: the securitization the mortgage market, How do we fund the 141 00:08:32,640 --> 00:08:37,000 Speaker 1: temporary stop of these forbearances. It all leads to back 142 00:08:37,040 --> 00:08:40,440 Speaker 1: on the federal fisk to provide that bridge. Jeff. Just 143 00:08:40,480 --> 00:08:42,520 Speaker 1: by everything that I've read, the mortgage market is in 144 00:08:42,679 --> 00:08:44,840 Speaker 1: much better shape heading into this, and it's not being 145 00:08:44,920 --> 00:08:47,480 Speaker 1: fundamentally threatened as you're saying, in the same kind of 146 00:08:47,520 --> 00:08:50,280 Speaker 1: way as it was in two thousand seven, two thousand eight, 147 00:08:50,320 --> 00:08:54,199 Speaker 1: and two thousand nine. The corporate debt market, however, is 148 00:08:54,360 --> 00:08:58,320 Speaker 1: and I would argue that the leverage ratios and companies 149 00:08:58,840 --> 00:09:02,520 Speaker 1: have reached level that do exceed historical precedents. And we 150 00:09:02,559 --> 00:09:05,959 Speaker 1: are currently seeing the fastest pace of downgrades by credit 151 00:09:06,040 --> 00:09:09,480 Speaker 1: rating agencies in records going back to two thousand and two, 152 00:09:09,880 --> 00:09:13,400 Speaker 1: and you're expecting default rates up to nine percent and beyond, 153 00:09:14,240 --> 00:09:17,880 Speaker 1: with rating agencies downgrading their expectations going forward on a 154 00:09:18,000 --> 00:09:21,000 Speaker 1: daily basis, how big of a hit is that going 155 00:09:21,040 --> 00:09:24,440 Speaker 1: to be to the corporate credit sector, regardless of any 156 00:09:24,440 --> 00:09:31,160 Speaker 1: fedback stop. Yeah, and and again let's a frame Mike answer. 157 00:09:31,320 --> 00:09:35,040 Speaker 1: In those two phases. The first phase of what we've 158 00:09:35,040 --> 00:09:38,160 Speaker 1: seen has been primarily liquidity phase. And you've seen the 159 00:09:39,160 --> 00:09:43,199 Speaker 1: primary market credit facility, the secondary market credit facility helped 160 00:09:43,240 --> 00:09:46,920 Speaker 1: to stabilize the market. But then you move from liquidity 161 00:09:46,960 --> 00:09:51,440 Speaker 1: to solvency, from liquidity concerns to fundamental credit concerns. And 162 00:09:51,480 --> 00:09:55,199 Speaker 1: so as we roll through to the earlier questions to Diane, 163 00:09:55,559 --> 00:09:57,880 Speaker 1: what is the recession look like? What is the depth 164 00:09:57,960 --> 00:10:00,280 Speaker 1: in the duration? Is it be? Is it you is 165 00:10:00,320 --> 00:10:04,080 Speaker 1: at flat bottom? Now you're talking about real fundamental economic 166 00:10:04,360 --> 00:10:09,400 Speaker 1: impact to which the Federal Reserve is not really designed 167 00:10:09,559 --> 00:10:13,040 Speaker 1: and intended to solve those issues. And you came in 168 00:10:13,520 --> 00:10:17,080 Speaker 1: as your highlighting. You came into this crisis with greater 169 00:10:17,160 --> 00:10:21,760 Speaker 1: vulnerability because the debt stocks not so much historically unprecedented, 170 00:10:21,800 --> 00:10:25,000 Speaker 1: but we're running at kind of very late cycle extended 171 00:10:25,080 --> 00:10:29,319 Speaker 1: level of indebtedness, primarily because the burden of that debt, 172 00:10:29,320 --> 00:10:32,080 Speaker 1: the interest rate burden was so low, but the interest 173 00:10:32,200 --> 00:10:34,480 Speaker 1: rate burden is high when you have an environment of 174 00:10:34,640 --> 00:10:37,800 Speaker 1: zero cash flow. So it's really about how quickly do 175 00:10:38,200 --> 00:10:42,360 Speaker 1: the cashless the economy come back online. And certainly there's 176 00:10:42,360 --> 00:10:46,440 Speaker 1: gonna be an elevated level where the most vulnerable, smaller 177 00:10:46,480 --> 00:10:50,560 Speaker 1: companies less financial flexibility or the areas in the sectors 178 00:10:50,559 --> 00:10:53,560 Speaker 1: of the market that are structurally impaired. Uh, see those 179 00:10:53,600 --> 00:10:57,079 Speaker 1: restructurings in default. Jeffrey Rosenberg, thank you so much to 180 00:10:57,160 --> 00:11:03,840 Speaker 1: black Reck. Greatly appreciate it today and fixed income Ellen 181 00:11:04,800 --> 00:11:08,120 Speaker 1: too was for Morgan Standard today. Ellen, what did you 182 00:11:08,160 --> 00:11:10,360 Speaker 1: glean from the report? The report is so much more 183 00:11:10,400 --> 00:11:13,320 Speaker 1: than five or six numbers. Clearly a shock with seven 184 00:11:13,360 --> 00:11:16,880 Speaker 1: hundred thousand uh non farm payroll loss. But what was 185 00:11:16,920 --> 00:11:21,000 Speaker 1: the other data but that you saw beneath the headline data? Yeah, 186 00:11:21,040 --> 00:11:23,920 Speaker 1: so I think, uh, you know, this is a time Tom, 187 00:11:23,920 --> 00:11:25,640 Speaker 1: when you get these numbers right, that you want a 188 00:11:25,640 --> 00:11:27,480 Speaker 1: grand stand and if ever there was a time that 189 00:11:27,559 --> 00:11:29,920 Speaker 1: it's inappropriate the grand standards. Now, so we had an 190 00:11:30,040 --> 00:11:33,840 Speaker 1: estimate of minus seven hundred thousand uh. And the underlying 191 00:11:33,960 --> 00:11:36,199 Speaker 1: details here that this this had I know, I was 192 00:11:36,240 --> 00:11:40,760 Speaker 1: one thousand off um Uh. The underlying details are that 193 00:11:40,840 --> 00:11:44,920 Speaker 1: this this does not even capture the jobless claims that 194 00:11:45,080 --> 00:11:48,120 Speaker 1: began jumping by the millions, right, that is for the 195 00:11:48,200 --> 00:11:51,560 Speaker 1: April survey periods for the April reports. So how did 196 00:11:51,600 --> 00:11:54,200 Speaker 1: we get this number right and and think that it 197 00:11:54,280 --> 00:11:57,720 Speaker 1: was still going to be so deeply negative? It's about hiring, 198 00:11:57,840 --> 00:12:01,600 Speaker 1: so we always uh we alluson forget the other side 199 00:12:01,720 --> 00:12:04,440 Speaker 1: of this. It's net job games. How many were separated 200 00:12:04,480 --> 00:12:08,000 Speaker 1: from employment? How many were hired? Uh, And it's the 201 00:12:08,120 --> 00:12:11,560 Speaker 1: drop in hiring that drove this number. So think about it. 202 00:12:11,760 --> 00:12:14,800 Speaker 1: March comes around, things are highly uncertain. You have a 203 00:12:14,840 --> 00:12:17,320 Speaker 1: hundred open positions at your company, and you say let's 204 00:12:17,320 --> 00:12:19,960 Speaker 1: hold off on filling those positions. That gets counted in 205 00:12:20,040 --> 00:12:23,199 Speaker 1: these numbers. And you can imagine that that no one 206 00:12:23,280 --> 00:12:26,959 Speaker 1: would have been hiring given the back drop in March 207 00:12:27,040 --> 00:12:30,000 Speaker 1: and how uncertain it was. So that's I think an 208 00:12:30,000 --> 00:12:33,080 Speaker 1: important point because it means in April we'll start drawing 209 00:12:33,080 --> 00:12:36,120 Speaker 1: in not just the drop and hiring, but the firings. 210 00:12:36,200 --> 00:12:38,640 Speaker 1: And so that's how you're going to get expectations for 211 00:12:39,000 --> 00:12:40,839 Speaker 1: the job lost to be in the millions. It will 212 00:12:40,840 --> 00:12:44,400 Speaker 1: make this minus seven hundred thousand look like small potatoes. 213 00:12:44,800 --> 00:12:48,120 Speaker 1: It's gonna be on average out go ahead. Well, it's 214 00:12:48,120 --> 00:12:50,120 Speaker 1: gonna be it's gonna be brutal going forward. And we 215 00:12:50,160 --> 00:12:52,640 Speaker 1: know this by all by all accounts, And I just 216 00:12:52,679 --> 00:12:54,440 Speaker 1: want to focus on the other side of this. And 217 00:12:54,480 --> 00:12:56,840 Speaker 1: you were saying you do expect the recovery to take 218 00:12:56,920 --> 00:12:59,839 Speaker 1: less time than back following the two thousand and eight 219 00:13:00,040 --> 00:13:04,640 Speaker 1: thousand and nine crisis. How how realistic is that given 220 00:13:04,679 --> 00:13:08,480 Speaker 1: the hit to this consumer psychology, to the idea of 221 00:13:08,600 --> 00:13:12,080 Speaker 1: feeling like your reality has been ripped out from under you. 222 00:13:12,720 --> 00:13:16,080 Speaker 1: I mean, could that prolonged things to the same type 223 00:13:16,120 --> 00:13:20,040 Speaker 1: of length that we saw heading out of the last crisis. Yeah, 224 00:13:20,120 --> 00:13:23,160 Speaker 1: So it's a it's a it's a really fair question. 225 00:13:23,400 --> 00:13:26,840 Speaker 1: And uh, the answer is that we really don't know. 226 00:13:27,120 --> 00:13:30,720 Speaker 1: And so from here the modeling takes over um and 227 00:13:30,760 --> 00:13:34,200 Speaker 1: tells you that that as the economy gets back on track, um, 228 00:13:34,280 --> 00:13:36,800 Speaker 1: we're gonna have millions in businesses that are just lost, 229 00:13:36,840 --> 00:13:39,600 Speaker 1: that go under. But to the extent that we do 230 00:13:39,760 --> 00:13:43,000 Speaker 1: start to poke our heads outdoors and activity does very 231 00:13:43,080 --> 00:13:45,360 Speaker 1: slowly begin to pick up, that we slowly start to 232 00:13:45,360 --> 00:13:49,160 Speaker 1: bring that unemployment rate down. How slowly it comes down 233 00:13:49,280 --> 00:13:52,240 Speaker 1: will be the question of how slowing has demand. So 234 00:13:52,440 --> 00:13:57,240 Speaker 1: one question is maybe households are out there spending again, Um, 235 00:13:57,320 --> 00:13:59,640 Speaker 1: but the patterns have shifted, and that's where I think 236 00:13:59,679 --> 00:14:03,040 Speaker 1: they're a significant amount of behavioral economics that will that 237 00:14:03,080 --> 00:14:06,120 Speaker 1: will go into the study of this. I totally get it, 238 00:14:06,120 --> 00:14:08,440 Speaker 1: and you know, I frankly I'm optimistic Ellen that we 239 00:14:08,480 --> 00:14:11,480 Speaker 1: could see a redounding rebound when we're done with this virus. 240 00:14:11,520 --> 00:14:14,320 Speaker 1: And let's be sure, folks, in the tragedy that we 241 00:14:14,360 --> 00:14:16,160 Speaker 1: see here in New York City, we're gonna be done 242 00:14:16,200 --> 00:14:19,240 Speaker 1: with this virus at some point. Ellen, you're completely wired 243 00:14:19,240 --> 00:14:22,720 Speaker 1: in um Morgan Stanley, including with James Gorman, on the 244 00:14:22,800 --> 00:14:26,360 Speaker 1: policy prescriptions right now. You know, John Farrell is going 245 00:14:26,400 --> 00:14:29,080 Speaker 1: to talk to Lawrence Cudlow here in thirty forty minutes 246 00:14:29,160 --> 00:14:32,000 Speaker 1: or whatever, and you know he's gonna say the usual drill. 247 00:14:32,520 --> 00:14:37,400 Speaker 1: How urgent is it for Washington to shift from the 248 00:14:37,600 --> 00:14:41,840 Speaker 1: institutionalized response to they get the money in their hands 249 00:14:42,080 --> 00:14:46,760 Speaker 1: now response? Or even say there's a national rent for 250 00:14:46,880 --> 00:14:50,520 Speaker 1: bearance mortgage for barns. Everybody's just gonna wait for X 251 00:14:50,640 --> 00:14:55,280 Speaker 1: number of weeks or months. So Tom, I think that's 252 00:14:55,280 --> 00:14:57,680 Speaker 1: where we're headed. I mean, I think those conversations are 253 00:14:57,720 --> 00:15:02,160 Speaker 1: already being had in terms of you know, monetary and 254 00:15:02,320 --> 00:15:06,080 Speaker 1: fiscal policy acting in concert. We've never seen this before, 255 00:15:06,520 --> 00:15:09,360 Speaker 1: so acting in tandem, supporting each other. You know, this 256 00:15:09,520 --> 00:15:12,080 Speaker 1: main street lending program from the said that we're waiting 257 00:15:12,120 --> 00:15:15,520 Speaker 1: for details from that has meant to complement the Small 258 00:15:15,560 --> 00:15:20,400 Speaker 1: Business Administration loan program. UH. You know, don't be surprised 259 00:15:20,520 --> 00:15:22,440 Speaker 1: if the said also goes for something like a loan 260 00:15:22,520 --> 00:15:25,440 Speaker 1: holiday program. You know, these are things that can be 261 00:15:25,560 --> 00:15:29,320 Speaker 1: broadly UH. Have brought buy in from small businesses and 262 00:15:29,360 --> 00:15:32,520 Speaker 1: from households in order to help be sure that when 263 00:15:32,520 --> 00:15:35,760 Speaker 1: we come out of this, that those that went into 264 00:15:35,800 --> 00:15:38,760 Speaker 1: this with good credit don't then have their credit ruined 265 00:15:38,840 --> 00:15:43,000 Speaker 1: during this time, which would then linked in the recovery 266 00:15:43,000 --> 00:15:44,840 Speaker 1: and it would start to look like something of a 267 00:15:44,880 --> 00:15:48,640 Speaker 1: de leveraging cycle. I do believe that in the future 268 00:15:48,800 --> 00:15:51,680 Speaker 1: that what we've learned from this is that in the future, 269 00:15:51,720 --> 00:15:54,960 Speaker 1: monetary policy and fiscal policy acting in concert will now 270 00:15:55,200 --> 00:15:58,400 Speaker 1: most likely be woven into the fabric of of response 271 00:15:58,600 --> 00:16:01,800 Speaker 1: crisis response. And so I do think that this does 272 00:16:01,840 --> 00:16:05,600 Speaker 1: set a precedent, uh for future downturn turns, and that's important. 273 00:16:06,080 --> 00:16:09,240 Speaker 1: We're speaking with Ellen Zentner, Managing Director, chief US Economist 274 00:16:09,320 --> 00:16:12,920 Speaker 1: and Morgan Stanley, who has nailed the jobless claims calls 275 00:16:13,000 --> 00:16:15,720 Speaker 1: and nailed what we were expecting to see today, one 276 00:16:15,720 --> 00:16:18,240 Speaker 1: of the very few who has consistently gotten it right. 277 00:16:18,280 --> 00:16:20,400 Speaker 1: And Ellen, I want to continue with the idea that 278 00:16:20,440 --> 00:16:23,480 Speaker 1: you were talking about that the economy coming out of 279 00:16:23,520 --> 00:16:26,280 Speaker 1: this will look different than the one coming in, and 280 00:16:26,360 --> 00:16:29,440 Speaker 1: that behavioral economics will play a role in this. Can 281 00:16:29,440 --> 00:16:32,080 Speaker 1: you just humor us and give us a sense of 282 00:16:32,120 --> 00:16:35,800 Speaker 1: how you expect certain industries to shift? What some of 283 00:16:35,840 --> 00:16:39,760 Speaker 1: the beneficiaries maybe of this? Well? I think some of 284 00:16:39,760 --> 00:16:42,760 Speaker 1: the things that we've been um thinking about is, you know, 285 00:16:42,800 --> 00:16:46,240 Speaker 1: work from home arrangements. So businesses are probably going to 286 00:16:46,280 --> 00:16:49,920 Speaker 1: have to revisit their business continuity plans and have some 287 00:16:50,000 --> 00:16:53,280 Speaker 1: sort of rolling work from home arrangements or will be 288 00:16:53,400 --> 00:16:56,640 Speaker 1: very slow to brain work work from home back into 289 00:16:56,680 --> 00:16:59,680 Speaker 1: the office and have a greater share of permanent work 290 00:16:59,680 --> 00:17:03,000 Speaker 1: from Now what does that mean for business centers? Uh? 291 00:17:03,120 --> 00:17:06,200 Speaker 1: Do we get uh you know, a glove of office 292 00:17:06,240 --> 00:17:10,600 Speaker 1: space uh in say a midtown Manhattan uh and other 293 00:17:11,040 --> 00:17:15,000 Speaker 1: business concentration centers? Will we have enough services in more 294 00:17:15,040 --> 00:17:18,720 Speaker 1: residential areas if more people are working from home going forward? 295 00:17:18,760 --> 00:17:20,600 Speaker 1: So I think those are just some of the just 296 00:17:20,680 --> 00:17:23,080 Speaker 1: a few of the ships that we're thinking about. What 297 00:17:23,200 --> 00:17:27,119 Speaker 1: happens when people that never ordered delivery services uh, and 298 00:17:27,160 --> 00:17:32,120 Speaker 1: particularly for food from full service restaurants before until now, uh, 299 00:17:32,160 --> 00:17:34,400 Speaker 1: and now that they've tried it, they want to keep 300 00:17:34,400 --> 00:17:37,720 Speaker 1: doing that or they used to go into the grocery store. 301 00:17:37,760 --> 00:17:40,119 Speaker 1: Now they're having their groceries delivered and decide that they 302 00:17:40,160 --> 00:17:42,720 Speaker 1: actually really like that. So in some ways it would 303 00:17:42,880 --> 00:17:46,919 Speaker 1: accelerate some of those trends that have already been in place. Ellen, 304 00:17:47,000 --> 00:17:50,240 Speaker 1: we look forward to your weekend report. Ellen Sentner with 305 00:17:50,280 --> 00:17:54,160 Speaker 1: Morgan Stanley just extraordinary. Erica can't convey folks how difficult 306 00:17:54,240 --> 00:18:01,840 Speaker 1: it is to game any non farm payroll statistic for 307 00:18:01,920 --> 00:18:03,879 Speaker 1: the White House? Is you on the jobs report? Were 308 00:18:03,960 --> 00:18:07,119 Speaker 1: joined live on bloom Blow TV and on Bloomberg Radio 309 00:18:07,240 --> 00:18:11,960 Speaker 1: from the White House. National Economic Counsel Director Larry Cuddlo Larry, 310 00:18:11,960 --> 00:18:13,760 Speaker 1: fantastic to have you with us. I just want to 311 00:18:13,760 --> 00:18:15,920 Speaker 1: set the stage for our audience so they and understand 312 00:18:15,920 --> 00:18:17,359 Speaker 1: where you and I are going in the next couple 313 00:18:17,400 --> 00:18:19,960 Speaker 1: of minutes. We do have some technical difficulties which means 314 00:18:20,000 --> 00:18:21,520 Speaker 1: there will be a little bit of a delay that 315 00:18:21,560 --> 00:18:22,760 Speaker 1: so that you and I need to be a little 316 00:18:22,760 --> 00:18:25,720 Speaker 1: bit careful about treading on each other. Let's start with 317 00:18:25,760 --> 00:18:29,119 Speaker 1: the payrolls report and reflect on the huge plan that 318 00:18:29,160 --> 00:18:32,680 Speaker 1: Washington pushed through last week. Larry, the numbers are dreadful, 319 00:18:32,880 --> 00:18:36,200 Speaker 1: but this is a mandated stay at home government push, 320 00:18:36,240 --> 00:18:39,400 Speaker 1: and we're trying to offset that with some big, big initiatives, 321 00:18:39,560 --> 00:18:41,760 Speaker 1: and one of them is some help for small businesses 322 00:18:41,760 --> 00:18:44,280 Speaker 1: with small business loans, and they're set to go forward 323 00:18:44,600 --> 00:18:48,480 Speaker 1: be activated today for our audience, Larry, some much needed 324 00:18:48,480 --> 00:18:51,840 Speaker 1: clarity is needed because it's unclear to us which banks 325 00:18:51,960 --> 00:18:55,520 Speaker 1: are ready to deliver those loans today. Larry, do you 326 00:18:55,600 --> 00:18:57,520 Speaker 1: have some clarity on that. Do you have a list 327 00:18:57,600 --> 00:18:59,600 Speaker 1: of banks that are ready to do those loans as 328 00:18:59,600 --> 00:19:02,800 Speaker 1: soon as a night? Well? I do my best, Jonathan, 329 00:19:02,880 --> 00:19:05,800 Speaker 1: thank you, by the way, Um, in terms of the banks, 330 00:19:05,800 --> 00:19:08,240 Speaker 1: I want to get to the broader subject also. But 331 00:19:08,440 --> 00:19:11,560 Speaker 1: on the bank point, uh, today is the first day 332 00:19:11,560 --> 00:19:18,160 Speaker 1: for applications, and any federally deposits, any federally insured depository 333 00:19:18,200 --> 00:19:21,800 Speaker 1: institution is eligible. Now there's also a whole group of 334 00:19:21,920 --> 00:19:25,960 Speaker 1: very significant group of s b A certified lenders. But 335 00:19:26,440 --> 00:19:31,000 Speaker 1: any f D I C bank, any federally insured credit union, 336 00:19:31,680 --> 00:19:37,760 Speaker 1: farm credit institution, all those are participating in this program, which, 337 00:19:37,840 --> 00:19:41,480 Speaker 1: as you know, our loans to keep payrolls all right, 338 00:19:41,960 --> 00:19:44,520 Speaker 1: payroll protection. I think this is one of the essential 339 00:19:44,560 --> 00:19:48,600 Speaker 1: points of the economic assistance plans so we can get 340 00:19:48,640 --> 00:19:52,199 Speaker 1: through this very difficult period. Regarding the impact of the 341 00:19:52,320 --> 00:19:56,199 Speaker 1: of the virus. So any bank and it will be guaranteed, 342 00:19:56,320 --> 00:19:58,160 Speaker 1: so the bank will have no problem. Is at one 343 00:19:58,200 --> 00:20:03,240 Speaker 1: percent interest rate, h it will be payable, um in 344 00:20:03,320 --> 00:20:06,000 Speaker 1: several months. Actually we've got quite a us at least 345 00:20:06,040 --> 00:20:09,520 Speaker 1: six months. Um. Yeah, six months. Loan payments will be 346 00:20:09,560 --> 00:20:15,160 Speaker 1: deferred for six months. No collateral or personal guarantees are required. Um. 347 00:20:15,240 --> 00:20:19,240 Speaker 1: It should be very effective. But the thrust of it, Jonathan, 348 00:20:19,359 --> 00:20:22,560 Speaker 1: is to deal with the issue of unemployment, which of 349 00:20:22,600 --> 00:20:27,359 Speaker 1: course the surfaced today as we all expected, and payroll protection. 350 00:20:27,520 --> 00:20:31,960 Speaker 1: Sev of the loan has to go to maintaining payrolls, 351 00:20:32,320 --> 00:20:34,800 Speaker 1: and then the remainder of the loan will go to 352 00:20:34,960 --> 00:20:40,160 Speaker 1: helping business meet their various expenses, rent leases, mortgage payments 353 00:20:40,200 --> 00:20:43,240 Speaker 1: and so forth. It's on Larry, you're talking about eligibility. 354 00:20:43,359 --> 00:20:45,359 Speaker 1: I'm talking about whether these banks are actually ready to 355 00:20:45,440 --> 00:20:47,800 Speaker 1: deploy the cash. Are they ready as soon as today, 356 00:20:47,800 --> 00:20:49,680 Speaker 1: because the reports that we're seeing is the money banks 357 00:20:49,680 --> 00:20:52,359 Speaker 1: are not and perhaps won't be for several weeks. Do 358 00:20:52,440 --> 00:20:54,399 Speaker 1: you have a list of banks that are ready to 359 00:20:54,480 --> 00:20:56,840 Speaker 1: lend out this money today? I know who's eligible to 360 00:20:56,880 --> 00:21:01,160 Speaker 1: do the work, but who's actually doing it today. Well, look, 361 00:21:01,359 --> 00:21:05,520 Speaker 1: uh we I guess we have a different perspective. I'm 362 00:21:05,520 --> 00:21:06,960 Speaker 1: not going to read you a list of banks. The 363 00:21:07,000 --> 00:21:10,959 Speaker 1: list is gigantic, but they're ready to go. U banks 364 00:21:10,960 --> 00:21:14,080 Speaker 1: have been talking to the Treasury Department, uh, the s 365 00:21:14,119 --> 00:21:17,480 Speaker 1: b A, and Congress as this program was rolled out. 366 00:21:17,560 --> 00:21:21,680 Speaker 1: So I I don't see any barriers and roadblocks, Jonathan. 367 00:21:21,720 --> 00:21:24,679 Speaker 1: There may be some you know, small glitches as this 368 00:21:24,760 --> 00:21:27,720 Speaker 1: thing goes out, but but they are ready. Secretary Manution, 369 00:21:27,920 --> 00:21:30,800 Speaker 1: you know, had a big presser yesterday on this very point. 370 00:21:31,200 --> 00:21:34,000 Speaker 1: So I don't think that's gonna be a problem. I mean, 371 00:21:34,040 --> 00:21:37,560 Speaker 1: what matters here is that we've set aside three hundred 372 00:21:37,640 --> 00:21:43,040 Speaker 1: and fifty billion dollars for paycheck protection. That's absolutely the 373 00:21:43,160 --> 00:21:47,480 Speaker 1: key point, and the hope is that most folks, or 374 00:21:47,520 --> 00:21:53,119 Speaker 1: at least many folks will stay affiliated, stay linked to 375 00:21:53,200 --> 00:21:58,280 Speaker 1: their businesses during this very very difficult business interruptions and 376 00:21:58,359 --> 00:22:02,040 Speaker 1: the economic contraction period and the virus. You want people now, 377 00:22:02,080 --> 00:22:04,600 Speaker 1: you can have a good job without a good business. 378 00:22:04,640 --> 00:22:08,040 Speaker 1: So we've also given a payroll tax holiday to the 379 00:22:08,080 --> 00:22:10,919 Speaker 1: business side, and a number of other assistance plans. But 380 00:22:11,040 --> 00:22:15,000 Speaker 1: on this one in particular, I think the key is 381 00:22:15,200 --> 00:22:18,200 Speaker 1: trying to keep the workforce connected to the small business 382 00:22:18,280 --> 00:22:21,440 Speaker 1: to the extent we can. And I think I think 383 00:22:21,480 --> 00:22:24,920 Speaker 1: the bankers just look leading bankers. I'm not going to 384 00:22:25,080 --> 00:22:29,600 Speaker 1: name names, but leading bankers. We're talking to Secretary Minution 385 00:22:29,760 --> 00:22:34,080 Speaker 1: and others of us right up to the deadline yesterday, 386 00:22:34,359 --> 00:22:37,200 Speaker 1: So I think they are ready to go. Larry, let's 387 00:22:37,200 --> 00:22:39,359 Speaker 1: talk about the poll of lines that's available three in 388 00:22:39,680 --> 00:22:42,880 Speaker 1: fifty billion dollars. I understand that it's first come, first served. 389 00:22:43,200 --> 00:22:45,960 Speaker 1: How easy will it be to go ahead and top 390 00:22:46,040 --> 00:22:48,560 Speaker 1: up that program if we drain the three inchin of 391 00:22:48,600 --> 00:22:51,000 Speaker 1: fifty billion really quite quickly. There's gonna be massive demand 392 00:22:51,040 --> 00:22:53,040 Speaker 1: for this. We know that people are gonna be working really, 393 00:22:53,080 --> 00:22:55,240 Speaker 1: really hard. We have to understand there's going to be 394 00:22:55,240 --> 00:22:57,639 Speaker 1: some technical difficulties along the way to deploy that cash. 395 00:22:57,880 --> 00:23:00,040 Speaker 1: But as it drops down, Larry, are you confidently and 396 00:23:00,119 --> 00:23:03,360 Speaker 1: pop it up very quickly? You know? I would say so, Jonathan, 397 00:23:03,400 --> 00:23:05,800 Speaker 1: I don't want to get ahead of the story. Uh, 398 00:23:05,840 --> 00:23:08,600 Speaker 1: I think there will be a very significant demand for it. 399 00:23:08,800 --> 00:23:13,160 Speaker 1: I agree with your point, Um, but right now the trick, 400 00:23:13,200 --> 00:23:15,919 Speaker 1: and this is true for all the assistance programs that 401 00:23:15,960 --> 00:23:19,439 Speaker 1: we've run through. Uh. Two point to trillion worth, plus 402 00:23:19,480 --> 00:23:23,000 Speaker 1: the said lending programs at least another four trillion. We're 403 00:23:23,040 --> 00:23:27,000 Speaker 1: assisting roughly one third of the entire economy right now. 404 00:23:27,040 --> 00:23:29,720 Speaker 1: But I don't want to get ahead of my reckoning. 405 00:23:29,880 --> 00:23:35,240 Speaker 1: Is if this program is filled quickly, uh, we could 406 00:23:35,280 --> 00:23:39,119 Speaker 1: probably get some kind of supplemental assistance here through the 407 00:23:39,200 --> 00:23:42,360 Speaker 1: Congress too to expand it, or we might find other 408 00:23:42,400 --> 00:23:45,919 Speaker 1: ways and means. But let's let's see how we do first. 409 00:23:45,960 --> 00:23:49,440 Speaker 1: That's the important thing. And again this is tied, as 410 00:23:49,520 --> 00:23:54,400 Speaker 1: you well know, this is tied to the coronavirus story. Um, 411 00:23:54,520 --> 00:23:57,919 Speaker 1: that story could be improving. I don't want to make 412 00:23:57,920 --> 00:24:01,080 Speaker 1: any forecasts. I just listened to our health specialists, are 413 00:24:01,119 --> 00:24:05,240 Speaker 1: health experts. That story may be improving, hopefully or prayerfully, 414 00:24:05,640 --> 00:24:09,680 Speaker 1: in the next four to eight weeks. That's a possibility, 415 00:24:09,880 --> 00:24:13,400 Speaker 1: and so perhaps we won't have to oversubscribe these programs. 416 00:24:13,480 --> 00:24:16,280 Speaker 1: Let's let's see what happens. It's a dated time week 417 00:24:16,320 --> 00:24:18,359 Speaker 1: at time, gentlethan well, Larry, I want to keep this 418 00:24:18,440 --> 00:24:20,879 Speaker 1: later focus on economic policy. The likes of Tiny Faucci 419 00:24:20,920 --> 00:24:22,879 Speaker 1: doing a great job. Let's leave the health issues to 420 00:24:22,920 --> 00:24:26,119 Speaker 1: them where it should be. For economic policy, You and 421 00:24:26,160 --> 00:24:28,560 Speaker 1: I had an honest and open, frank conversation a month ago. 422 00:24:29,080 --> 00:24:30,720 Speaker 1: And I recall that you said to me after the 423 00:24:30,760 --> 00:24:32,760 Speaker 1: payrolls report that we didn't want to be thrown around 424 00:24:32,800 --> 00:24:36,080 Speaker 1: three hundred and four hundred billion dollars Willy, nearly including 425 00:24:36,200 --> 00:24:38,880 Speaker 1: twelve hundred one thousand dollar checks. Now we're handing out 426 00:24:38,920 --> 00:24:41,960 Speaker 1: twelve hundred dollar checks. This is moved really quickly, and 427 00:24:42,000 --> 00:24:43,680 Speaker 1: this is not a got your moment, Larry. What I'm 428 00:24:43,680 --> 00:24:47,480 Speaker 1: trying to understand here is whether the administration now understands 429 00:24:47,520 --> 00:24:50,400 Speaker 1: that it's no longer about hoping for the best, it's 430 00:24:50,440 --> 00:24:53,040 Speaker 1: preparing for the worst, and we need to prepare to 431 00:24:53,040 --> 00:24:56,120 Speaker 1: do a whole lot more. Well, look, that's fair enough. 432 00:24:56,280 --> 00:25:02,399 Speaker 1: I mean, this story moved incredibly rapidly, um, beginning in March, 433 00:25:02,520 --> 00:25:07,159 Speaker 1: really and uh. What started out as something that you know, 434 00:25:07,200 --> 00:25:11,320 Speaker 1: we thought would be smaller, uh, And we put up 435 00:25:12,000 --> 00:25:15,280 Speaker 1: travel restrictions with China, and for a bit that looked okay, 436 00:25:15,320 --> 00:25:19,240 Speaker 1: and then it exploded. The virus exploded, so I and 437 00:25:19,280 --> 00:25:22,680 Speaker 1: others here Secretary Ammunition, we had to change our point 438 00:25:22,680 --> 00:25:26,359 Speaker 1: of view. And we realized as it rose exponentially, as 439 00:25:26,400 --> 00:25:31,000 Speaker 1: the virus and its consequences rose, exponentially, something frankly I 440 00:25:31,080 --> 00:25:34,640 Speaker 1: thought nobody could foresee. But nonetheless, then yes, we went 441 00:25:34,680 --> 00:25:38,800 Speaker 1: into full gear and move quickly through Congress as best 442 00:25:38,880 --> 00:25:42,440 Speaker 1: we could, and um, you know, starting with them, uh, 443 00:25:42,640 --> 00:25:45,240 Speaker 1: covering sickly for people who were hit by the virus 444 00:25:45,320 --> 00:25:49,000 Speaker 1: or family members, and then going through this economic assistance 445 00:25:49,040 --> 00:25:51,960 Speaker 1: package of two point two trillion to put as much 446 00:25:52,040 --> 00:25:55,920 Speaker 1: help into the economy as we possibly could. Events move rapidly, 447 00:25:56,280 --> 00:25:59,639 Speaker 1: and we moved rapidly. And I'll say in by bars 448 00:25:59,640 --> 00:26:02,760 Speaker 1: and send, Congress moved rapidly. They moved quickly. Maybe not 449 00:26:02,840 --> 00:26:04,760 Speaker 1: quickly enough. And you'll appreciate that this story has just 450 00:26:04,800 --> 00:26:07,800 Speaker 1: moved a whole lot faster. One thing the executive branch 451 00:26:07,880 --> 00:26:10,480 Speaker 1: can do on its own. The White House can get 452 00:26:10,520 --> 00:26:13,040 Speaker 1: together and do something about Harris. We understand there is 453 00:26:13,040 --> 00:26:18,320 Speaker 1: a consideration about announcing a ninety day deferral of tariff payments. Larry, 454 00:26:18,440 --> 00:26:21,879 Speaker 1: where are we on that decision? I don't think. I know, 455 00:26:21,920 --> 00:26:24,479 Speaker 1: I've read a lot about that. I don't expect that 456 00:26:24,560 --> 00:26:28,000 Speaker 1: to be the case. Actually, we we never looked, we 457 00:26:28,119 --> 00:26:31,280 Speaker 1: never looked in any serious way at rolling back caraps. 458 00:26:31,880 --> 00:26:35,040 Speaker 1: I mean, the deal with China is in place. Um, 459 00:26:35,119 --> 00:26:37,840 Speaker 1: that's going to be implemented U S m C as 460 00:26:37,880 --> 00:26:41,560 Speaker 1: in place. UM, we looked a little bit at some 461 00:26:43,160 --> 00:26:46,399 Speaker 1: most favorite nation custom duties and we decided it was 462 00:26:46,440 --> 00:26:51,120 Speaker 1: too complicated and it might give send the wrong signals. 463 00:26:51,400 --> 00:26:55,040 Speaker 1: So UM, I would not expect to see any movement 464 00:26:55,119 --> 00:26:58,719 Speaker 1: on paraps right now. I mean, the issue here is 465 00:26:58,800 --> 00:27:04,160 Speaker 1: besides the paycheck tection. You know, we've poured um six 466 00:27:04,240 --> 00:27:08,720 Speaker 1: hundred billion dollars apart from the business loans, six hundred 467 00:27:08,800 --> 00:27:14,200 Speaker 1: billion dollars to individuals, families, and that includes the unemployment 468 00:27:14,240 --> 00:27:18,359 Speaker 1: grows up. UM, We've we are giving checks to a 469 00:27:18,480 --> 00:27:22,520 Speaker 1: hundred and seventy five million Americans. Let me repeat that, 470 00:27:22,640 --> 00:27:26,960 Speaker 1: a hundred and seventy five million Americans. And on top 471 00:27:27,000 --> 00:27:31,119 Speaker 1: of that, leveraging from the Treasury's emergency fund. As you 472 00:27:31,160 --> 00:27:34,520 Speaker 1: well know, the Federal Reserve is embarked on a number 473 00:27:34,560 --> 00:27:41,320 Speaker 1: of lending programs, purchasing programs, and broad based industry assistance programs. 474 00:27:41,320 --> 00:27:44,359 Speaker 1: So you've got monetary and fiscal policy working. It is 475 00:27:44,400 --> 00:27:47,000 Speaker 1: the largest package in the history of the US. Is 476 00:27:47,040 --> 00:27:50,479 Speaker 1: principally a main main street package, middle class package. So 477 00:27:50,560 --> 00:27:52,520 Speaker 1: I don't think we're gonna We're not gonna change any 478 00:27:52,520 --> 00:27:55,680 Speaker 1: of the tariff policies right now. I mean, frankly, the 479 00:27:55,720 --> 00:27:59,359 Speaker 1: president cut from pretty good trade deals with China and U. S. 480 00:27:59,480 --> 00:28:03,480 Speaker 1: M c A. And when we return to prosperity, which 481 00:28:03,520 --> 00:28:06,200 Speaker 1: I think will occur before this year is out. When 482 00:28:06,240 --> 00:28:08,800 Speaker 1: we return, part of that return is going to be 483 00:28:08,800 --> 00:28:12,919 Speaker 1: an export boom in my judgment, from these good trade deals, 484 00:28:13,080 --> 00:28:15,639 Speaker 1: so that we knocked down onto A trading practices. But no, 485 00:28:15,800 --> 00:28:18,880 Speaker 1: not now, there's no tarra pullback right now. Well, Larry, 486 00:28:18,920 --> 00:28:20,800 Speaker 1: let's not get far too far down the road. Let's 487 00:28:20,800 --> 00:28:23,760 Speaker 1: focus on the right now. You say no tariff pullback 488 00:28:23,840 --> 00:28:27,120 Speaker 1: right now. As you know, Go Joe, which manufactures parl. 489 00:28:27,760 --> 00:28:31,399 Speaker 1: One of the inputs into the dispenses is an input 490 00:28:31,440 --> 00:28:35,959 Speaker 1: from China that subjects with tariff. They've requested an exemption. 491 00:28:36,520 --> 00:28:40,320 Speaker 1: U STR has declined. I'm trying to understand why. I 492 00:28:40,360 --> 00:28:42,960 Speaker 1: just can't get my hands around why the administration would 493 00:28:43,000 --> 00:28:46,360 Speaker 1: go forward and not exempt that request. You said it 494 00:28:46,360 --> 00:28:49,440 Speaker 1: would send the wrong signals, send the wrong signal to who. Well, 495 00:28:49,680 --> 00:28:52,320 Speaker 1: sending the wrong signal in terms of the president's trade 496 00:28:52,360 --> 00:28:56,640 Speaker 1: policy is what we're concerned about, Jonathan. On specific matters 497 00:28:56,720 --> 00:28:59,880 Speaker 1: like this, Uh, I don't want to rule anything in 498 00:29:00,000 --> 00:29:03,920 Speaker 1: are out. You have to talk to usdr and and 499 00:29:04,000 --> 00:29:07,720 Speaker 1: see on on that particular point. Okay, we're trying to 500 00:29:07,800 --> 00:29:12,160 Speaker 1: keep the flow going. You know, we've imported a lot 501 00:29:12,200 --> 00:29:15,320 Speaker 1: of healthcare products from China and the rest of Asia. 502 00:29:15,880 --> 00:29:19,400 Speaker 1: We also exported some assistance. We're trying to work together 503 00:29:19,680 --> 00:29:22,920 Speaker 1: in terms of the unity of the nations around the 504 00:29:22,960 --> 00:29:25,600 Speaker 1: world to fight this pandemic. So I don't want to 505 00:29:25,600 --> 00:29:28,640 Speaker 1: get into specifics. You know, your question was really a 506 00:29:28,680 --> 00:29:32,080 Speaker 1: broad based question about tariff reduction, and what I'm saying 507 00:29:32,160 --> 00:29:35,560 Speaker 1: is there's no change in those policies, whether it's three 508 00:29:35,560 --> 00:29:38,160 Speaker 1: oh ones or the two thirty twos on steel and 509 00:29:38,240 --> 00:29:42,560 Speaker 1: so forth. Um, individual cases can be examined, and I 510 00:29:42,680 --> 00:29:45,360 Speaker 1: have to find out more about the particular a matter 511 00:29:45,400 --> 00:29:47,720 Speaker 1: you just raise. I'm not up to speed on that. 512 00:29:48,000 --> 00:29:49,880 Speaker 1: I guess what I'm struggling with, Larry's that you and 513 00:29:49,920 --> 00:29:53,680 Speaker 1: I can identify areas where we can help American businesses 514 00:29:54,080 --> 00:29:57,000 Speaker 1: with tariffs exemptions. You're saying that you don't want to 515 00:29:57,000 --> 00:30:00,320 Speaker 1: send the wrong signal on trade policy, but simultane viously 516 00:30:00,440 --> 00:30:04,400 Speaker 1: saying that this health crisis is top of the priorities. 517 00:30:04,480 --> 00:30:07,240 Speaker 1: Nothing tops it. But at the moment. Aren't we putting 518 00:30:07,800 --> 00:30:11,520 Speaker 1: bad signals in your words, on trade ahead of alleviating 519 00:30:11,560 --> 00:30:14,520 Speaker 1: some of the pain on American businesses? No, I don't 520 00:30:14,520 --> 00:30:17,480 Speaker 1: think so. I mean, I'm not sure what you're thinking 521 00:30:17,480 --> 00:30:21,200 Speaker 1: about here. We have some very good trade deals that 522 00:30:21,360 --> 00:30:25,640 Speaker 1: the President completed before this pandemic broke out, and we 523 00:30:25,680 --> 00:30:30,400 Speaker 1: want to maintain those trade deals. And regarding assistance or 524 00:30:30,480 --> 00:30:35,080 Speaker 1: specific areas you know, for example, ventilators or masks, um 525 00:30:35,600 --> 00:30:38,520 Speaker 1: we're looking at that one step at a time, and 526 00:30:38,840 --> 00:30:43,280 Speaker 1: we have imported a huge amount. We've had planes from 527 00:30:43,480 --> 00:30:48,440 Speaker 1: Shanghai landing in the key US cities to provide relief 528 00:30:49,120 --> 00:30:51,400 Speaker 1: to the medical people in the hospitals and so forth. 529 00:30:51,600 --> 00:30:55,640 Speaker 1: So that's wide open. But that's a different matter than 530 00:30:55,760 --> 00:30:58,640 Speaker 1: generic trade policy. Well, hopefully we can get some more 531 00:30:58,640 --> 00:31:00,800 Speaker 1: clarity on that in the next several way. Some clarity 532 00:31:00,840 --> 00:31:03,600 Speaker 1: on Monday we've been needed as well. Opec cluss is 533 00:31:03,600 --> 00:31:06,760 Speaker 1: holding a meeting. Is the US providing a representative to 534 00:31:06,760 --> 00:31:09,240 Speaker 1: take place in that meeting? Would there be participating in 535 00:31:09,320 --> 00:31:13,040 Speaker 1: that meeting on Monday, Larry, we are not members of OPEC. 536 00:31:13,440 --> 00:31:16,440 Speaker 1: OPA plus is open and inviting people from outside of 537 00:31:16,480 --> 00:31:19,600 Speaker 1: the organization of OPEG for others to join. I'm wondering 538 00:31:19,640 --> 00:31:21,960 Speaker 1: if whether America will send a representative to have a 539 00:31:21,960 --> 00:31:26,600 Speaker 1: conversation with the Saudis with the other members of OPEC. Well, 540 00:31:26,720 --> 00:31:30,240 Speaker 1: let me, UH sort of pivot to what's actually happened. 541 00:31:30,720 --> 00:31:34,880 Speaker 1: That is, First of all, the President has been in 542 00:31:34,960 --> 00:31:39,720 Speaker 1: touch on the phone with the MBS in Saudi Arabia 543 00:31:39,840 --> 00:31:44,920 Speaker 1: and Putin in Russia. He's been on the phone several times. UM. 544 00:31:45,120 --> 00:31:48,200 Speaker 1: Other people in the administration have been talking to their 545 00:31:48,240 --> 00:31:52,040 Speaker 1: counterparts in both of those countries. So we do that 546 00:31:52,320 --> 00:31:55,480 Speaker 1: independently in America's interest, we don't have to go to 547 00:31:55,560 --> 00:31:59,280 Speaker 1: the OPEC meeting. UM. The President told me yesterday and 548 00:31:59,360 --> 00:32:02,680 Speaker 1: he did so presequently tweet this out, that he believes 549 00:32:03,160 --> 00:32:08,520 Speaker 1: that Russia and Saudi Arabia will move away from their 550 00:32:08,720 --> 00:32:12,920 Speaker 1: quibbling our argument and will allow market forces to dominate 551 00:32:13,280 --> 00:32:17,640 Speaker 1: and instead of loading up the markets that are already oversupplied, 552 00:32:18,240 --> 00:32:21,160 Speaker 1: that they will pull back. UM. We will see how 553 00:32:21,200 --> 00:32:24,680 Speaker 1: that turns out. Presidents said that oil prices have gone 554 00:32:24,760 --> 00:32:27,800 Speaker 1: up quite a bit seven or eight dollars since that statement. 555 00:32:28,880 --> 00:32:33,560 Speaker 1: I see no reason why these discussions with President Trump 556 00:32:34,040 --> 00:32:37,280 Speaker 1: UH and Prutent MBS will not bear fruit. I think 557 00:32:37,280 --> 00:32:41,080 Speaker 1: they will. I think flooding the market with oil on 558 00:32:41,200 --> 00:32:44,640 Speaker 1: top of the pandemic, which is crushed aggregate demand was 559 00:32:44,760 --> 00:32:47,560 Speaker 1: a very, very poor decision by both of those countries. 560 00:32:48,160 --> 00:32:51,400 Speaker 1: But I think the President's negotiations will bear fruit. Larry, 561 00:32:51,400 --> 00:32:55,240 Speaker 1: will the United States be part of those production cuts? Well, look, 562 00:32:55,360 --> 00:33:01,240 Speaker 1: our oil. We don't dictate oil policies. Are oil and 563 00:33:01,520 --> 00:33:05,640 Speaker 1: gas sectors, Uh, they're smart businesses. The US is still 564 00:33:05,680 --> 00:33:09,000 Speaker 1: the number one energy producer in the world, and we 565 00:33:09,120 --> 00:33:12,400 Speaker 1: expect to remain. So we've taken a number of policies 566 00:33:12,400 --> 00:33:15,200 Speaker 1: to to open the door and permit that to happen. 567 00:33:15,640 --> 00:33:18,840 Speaker 1: We don't dictate I think, as you would guess, oil 568 00:33:18,960 --> 00:33:22,720 Speaker 1: companies seeing a decline and price are going to pull 569 00:33:22,800 --> 00:33:26,000 Speaker 1: back in production. I think that's just common business sense. 570 00:33:26,200 --> 00:33:29,880 Speaker 1: But we don't dictate those decisions. The government doesn't dictate those. 571 00:33:30,240 --> 00:33:31,920 Speaker 1: Just to just to find a question for you, just 572 00:33:31,960 --> 00:33:33,400 Speaker 1: to jump in, I know you've got to run, you've 573 00:33:33,400 --> 00:33:35,480 Speaker 1: got a busy morning. I appreciate that. But as a 574 00:33:35,520 --> 00:33:38,800 Speaker 1: final question, on a day when these small business loans 575 00:33:38,800 --> 00:33:41,560 Speaker 1: are coming down, on a day where Americans are struggling 576 00:33:41,560 --> 00:33:44,160 Speaker 1: to pay the bills, can you communicate to a broader 577 00:33:44,200 --> 00:33:47,240 Speaker 1: audience as to why there is such a big focus 578 00:33:47,320 --> 00:33:51,400 Speaker 1: on the oil market and meeting with all process producers today. Well, look, 579 00:33:51,760 --> 00:33:55,560 Speaker 1: first of all, we have I'm looking forward to the 580 00:33:55,560 --> 00:33:59,080 Speaker 1: meetings today with our producers. I myself have done a 581 00:33:59,160 --> 00:34:04,480 Speaker 1: number of conference calls with the oil and overall energy sectors. 582 00:34:05,240 --> 00:34:07,880 Speaker 1: You know we have. Let me just put this, insert this. 583 00:34:09,000 --> 00:34:13,319 Speaker 1: The degree of public and private government and private partnership 584 00:34:13,360 --> 00:34:18,480 Speaker 1: here is unparalleled. We have worked with every industry, every industry, 585 00:34:18,560 --> 00:34:22,280 Speaker 1: and President has seen them in person or done conference 586 00:34:22,320 --> 00:34:24,879 Speaker 1: calls and so and the rest of us have done 587 00:34:24,920 --> 00:34:28,239 Speaker 1: conference calls. So that's point number one. Point number two. 588 00:34:29,000 --> 00:34:32,040 Speaker 1: Energy is obviously a key part of our economy. It 589 00:34:32,160 --> 00:34:35,680 Speaker 1: was a key part of the tremendous economic growth we 590 00:34:35,760 --> 00:34:39,960 Speaker 1: had in recent years before it was interrupted by this pandemic. 591 00:34:40,520 --> 00:34:44,440 Speaker 1: So it's important motorists, UH, people who get heating fuel, 592 00:34:44,840 --> 00:34:48,200 Speaker 1: on gasoline prices, all that is very key parts of 593 00:34:48,239 --> 00:34:51,440 Speaker 1: American life. So we always take an interest. But I 594 00:34:51,480 --> 00:34:57,720 Speaker 1: will say this regarding any collusion attempts UH by other 595 00:34:57,840 --> 00:35:01,960 Speaker 1: countries in and or out of OPEC that seemed to 596 00:35:02,040 --> 00:35:06,160 Speaker 1: be doing damage to American interest is something that President 597 00:35:06,160 --> 00:35:08,960 Speaker 1: Trump will get engaged with right away to protect the 598 00:35:09,000 --> 00:35:12,000 Speaker 1: American economy. That's what we're doing here. This is you 599 00:35:12,040 --> 00:35:16,000 Speaker 1: know we talked about paycheck protection for small businesses and 600 00:35:16,320 --> 00:35:20,440 Speaker 1: to avoid layoffs. Well, this is just general economic energy. 601 00:35:20,600 --> 00:35:23,320 Speaker 1: I mean, we we have to stand up for American interests. 602 00:35:23,360 --> 00:35:25,879 Speaker 1: That's what the President has done energy to keep part 603 00:35:25,880 --> 00:35:28,600 Speaker 1: of the economy. So to me, it's, um, you know, 604 00:35:28,600 --> 00:35:32,200 Speaker 1: an American operation. That's what we're concerned about. How you 605 00:35:32,239 --> 00:35:34,200 Speaker 1: say from well, it's good to hear from Larry Carlo, 606 00:35:34,239 --> 00:35:41,080 Speaker 1: their National Economic Council's director. There we are on oil 607 00:35:41,080 --> 00:35:43,640 Speaker 1: and gas, folks, and it's good. I think the terror 608 00:35:43,760 --> 00:35:48,000 Speaker 1: part the microeconomics. Edward Morrisset City Group wrote a skating 609 00:35:48,040 --> 00:35:52,520 Speaker 1: note this morning devolving down to teens oil and even 610 00:35:52,640 --> 00:35:57,360 Speaker 1: single digit oil. Joining us now is the acuity of emerita, 611 00:35:57,520 --> 00:36:02,120 Speaker 1: sin energy aspects and RITA. How do we get a 612 00:36:02,239 --> 00:36:07,000 Speaker 1: demand destruction that gets us to teens rent crude and 613 00:36:07,320 --> 00:36:10,640 Speaker 1: even a wipe out that clears the market in the 614 00:36:10,800 --> 00:36:15,279 Speaker 1: single digits? How do you even get there? We are 615 00:36:15,360 --> 00:36:19,760 Speaker 1: already there. We've got the bulk of global crude prices 616 00:36:19,760 --> 00:36:21,840 Speaker 1: in single digits, and you know we've been calling for 617 00:36:21,920 --> 00:36:26,319 Speaker 1: ten dollar brand for a while, and the issue has 618 00:36:26,320 --> 00:36:29,120 Speaker 1: been that future prices has kind of held around twenty 619 00:36:29,200 --> 00:36:31,920 Speaker 1: at the lows. But the differentials in the world. You know, 620 00:36:31,960 --> 00:36:34,040 Speaker 1: there are crudes in the Permian that are trading at 621 00:36:34,080 --> 00:36:37,719 Speaker 1: three dollars today. Um, the physical markets already think they're 622 00:36:37,760 --> 00:36:39,680 Speaker 1: going to be full. Inventories are going to be full, 623 00:36:39,760 --> 00:36:42,320 Speaker 1: so you have to scale back production right now or 624 00:36:42,320 --> 00:36:45,080 Speaker 1: at least from May onwards. The crude curve is just 625 00:36:45,120 --> 00:36:47,759 Speaker 1: fascinating to look at, and for our listeners worldwide, I'm ready, 626 00:36:47,800 --> 00:36:49,520 Speaker 1: I'll give you a little picture to put in your mind. 627 00:36:49,800 --> 00:36:52,600 Speaker 1: It is very, very depressed at the front end, just 628 00:36:52,719 --> 00:36:55,439 Speaker 1: north at twenty five dollars, and then it stapens quite 629 00:36:55,480 --> 00:37:00,719 Speaker 1: aggressively all the way out to thirty approaching fifth the dollars. 630 00:37:00,760 --> 00:37:02,759 Speaker 1: And I'm rate. So what's interesting about this curve is 631 00:37:02,760 --> 00:37:04,480 Speaker 1: that if you ask many people in the oil market 632 00:37:04,560 --> 00:37:07,600 Speaker 1: right now, why does it look like that? Give me 633 00:37:07,640 --> 00:37:11,000 Speaker 1: one answer? They say demand and not supply. And I'm 634 00:37:11,040 --> 00:37:12,600 Speaker 1: just want to get rate to how much would have 635 00:37:12,680 --> 00:37:15,319 Speaker 1: to be done on the supply side to account for 636 00:37:15,360 --> 00:37:19,359 Speaker 1: the collapse that we've got in demand worldwide. I think 637 00:37:19,360 --> 00:37:24,359 Speaker 1: no amount of supply huts which are organized or orchestrated 638 00:37:24,400 --> 00:37:27,480 Speaker 1: can actually take care of the demand losses. This is 639 00:37:27,480 --> 00:37:29,680 Speaker 1: why our view has been the market is going to 640 00:37:29,760 --> 00:37:34,280 Speaker 1: force shut ins, which means demand collapses at million barrels, 641 00:37:34,320 --> 00:37:37,279 Speaker 1: but in April you run out of storage. Sometime in May, 642 00:37:37,719 --> 00:37:40,600 Speaker 1: prices have to collapse to the point where you are 643 00:37:40,640 --> 00:37:44,239 Speaker 1: shutting in production of whatever that magnitude is, say ten 644 00:37:44,280 --> 00:37:47,520 Speaker 1: million barrels per day um. This has to be market driven. 645 00:37:47,560 --> 00:37:50,800 Speaker 1: And I know OPAC and OPEC pass rather than US 646 00:37:50,840 --> 00:37:55,160 Speaker 1: are talking about production curtailment. These curtailments would have happened 647 00:37:55,320 --> 00:38:00,239 Speaker 1: regardless because the market simply cannot absorb all this gud well. 648 00:38:00,280 --> 00:38:03,279 Speaker 1: And this goes to exactly the social media intervention the 649 00:38:03,320 --> 00:38:06,080 Speaker 1: President Trump staged yesterday, which seemed to be somewhat effective 650 00:38:06,080 --> 00:38:08,680 Speaker 1: in posting oil prices, at least temporarily. When he tweeted 651 00:38:08,680 --> 00:38:13,000 Speaker 1: out that there were discussions between Saudi Arabia and Russia 652 00:38:13,080 --> 00:38:15,799 Speaker 1: of cutting ten million barrels, he didn't specify a time frame. 653 00:38:15,840 --> 00:38:17,719 Speaker 1: People took it per day, which would agree, which would 654 00:38:17,719 --> 00:38:19,880 Speaker 1: amount to about ten percent of the world's oil production. 655 00:38:20,160 --> 00:38:23,120 Speaker 1: We are hearing about a virtual meeting on Monday with 656 00:38:23,239 --> 00:38:28,400 Speaker 1: Opeque plus and perhaps the United States. How likely is it, Amrita, 657 00:38:28,560 --> 00:38:30,800 Speaker 1: that the United States is going to also agree to 658 00:38:30,920 --> 00:38:36,600 Speaker 1: some production cuts, which I don't believe is precedented. Well, 659 00:38:36,640 --> 00:38:40,279 Speaker 1: I don't think the US can um join what it 660 00:38:40,400 --> 00:38:44,799 Speaker 1: calls a cartel. It just goes against everything the US 661 00:38:44,880 --> 00:38:48,560 Speaker 1: has said and stands for for the past decades about 662 00:38:48,719 --> 00:38:52,560 Speaker 1: oil market. The reality is that, of course there's a 663 00:38:52,600 --> 00:38:54,560 Speaker 1: lot of focus on texting jobs, and this is an 664 00:38:54,600 --> 00:38:58,480 Speaker 1: election year, and I think there is a realization that 665 00:38:58,520 --> 00:39:02,520 Speaker 1: actually no oil prices does hold the US economy. But 666 00:39:03,080 --> 00:39:06,440 Speaker 1: this is so messy. How can I mean? At best, 667 00:39:06,760 --> 00:39:09,880 Speaker 1: you're going to get some kind of um an agreement, 668 00:39:10,680 --> 00:39:13,640 Speaker 1: a gentleman's agreement, rather where there will be some form 669 00:39:13,640 --> 00:39:15,719 Speaker 1: of okay, Yes, Texas has said it's going to cut 670 00:39:15,760 --> 00:39:19,320 Speaker 1: by x, but again, how do you devise that mechanism 671 00:39:19,320 --> 00:39:21,799 Speaker 1: of Texas cuts? What? What about an Optakota? What about 672 00:39:21,800 --> 00:39:26,640 Speaker 1: Oklahoma and Russia hands Audireada, both particularly Russia has said 673 00:39:27,000 --> 00:39:30,879 Speaker 1: US has to join the cuts, we are to cut. Okay, Well, 674 00:39:30,920 --> 00:39:33,799 Speaker 1: that makes sense, I guess what's the likelihood of that? 675 00:39:34,400 --> 00:39:37,720 Speaker 1: What is the process for the United States to join 676 00:39:37,840 --> 00:39:42,640 Speaker 1: them in production cuts? Look, I think what we're going 677 00:39:42,680 --> 00:39:46,200 Speaker 1: to get lots of positive headlines because this is political now. 678 00:39:46,800 --> 00:39:48,799 Speaker 1: It's a lot of window dressing. That's the word I'm 679 00:39:48,800 --> 00:39:52,040 Speaker 1: going to use. Because US production is falling anyways because 680 00:39:52,040 --> 00:39:55,880 Speaker 1: of lower prices, and they will just quotify those losses 681 00:39:55,960 --> 00:39:59,480 Speaker 1: somehow two CAPEX carts and whatever else and say, oh, look, 682 00:39:59,520 --> 00:40:02,440 Speaker 1: you know action is following by X and that's how 683 00:40:02,480 --> 00:40:04,800 Speaker 1: they're going to massage these numbers to get to the 684 00:40:04,920 --> 00:40:07,840 Speaker 1: ten million dollars. But they they're talking about the reality 685 00:40:07,960 --> 00:40:10,840 Speaker 1: is this is exactly what the market isn't what was 686 00:40:10,880 --> 00:40:12,960 Speaker 1: going to force them to do anyway, So these aren't 687 00:40:13,360 --> 00:40:16,719 Speaker 1: real cuts to balance the month. I'm rached. Just a 688 00:40:16,800 --> 00:40:18,520 Speaker 1: quick final question for me, just to help us all 689 00:40:18,640 --> 00:40:23,360 Speaker 1: navigate this situation. We keep hearing from the Texas Railroad Commissioner, 690 00:40:24,000 --> 00:40:27,120 Speaker 1: and when people hear from him, they're wondering what this 691 00:40:27,200 --> 00:40:30,239 Speaker 1: means and what kind of power the Texas Railroad Commissioner 692 00:40:30,320 --> 00:40:33,400 Speaker 1: has on oil output in America. Can you give us 693 00:40:33,440 --> 00:40:37,320 Speaker 1: some clarity there? Well, I know he is quite through 694 00:40:37,360 --> 00:40:40,319 Speaker 1: these cuts, but there are plenty who are against it. 695 00:40:40,640 --> 00:40:44,080 Speaker 1: There were senior officials from the Trump administration who came 696 00:40:44,080 --> 00:40:46,520 Speaker 1: out yesterday. There was excell who came out yesterday and 697 00:40:46,520 --> 00:40:49,719 Speaker 1: said we don't want a government intervention. So by no 698 00:40:49,840 --> 00:40:51,759 Speaker 1: means this is a done deal. Yes, there are some 699 00:40:51,840 --> 00:40:54,960 Speaker 1: who are for rationing production and it's been done once 700 00:40:54,960 --> 00:41:00,480 Speaker 1: in Texas, but this isn't a coherent thought through process 701 00:41:00,560 --> 00:41:03,680 Speaker 1: at all. At the stitch and read descent of energy aspects, 702 00:41:03,680 --> 00:41:07,160 Speaker 1: the chief oil analyst langing on this the curious situation. 703 00:41:07,520 --> 00:41:11,759 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 704 00:41:11,800 --> 00:41:17,120 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 705 00:41:17,160 --> 00:41:21,400 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 706 00:41:21,440 --> 00:41:25,280 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 707 00:41:25,360 --> 00:41:25,600 Speaker 1: Radio