Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelley. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors.
Speaker 1: And of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts more than a hundred
Speaker 1: and twenty countries and Jason. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, bl Bloomberg dot com. You can
Speaker 1: also listen to our radio show at two pm Eastern
Speaker 1: on Bloomberg Radio every weekday, or watch us on YouTube
Speaker 1: by searching Bloomberg Global News. And many of us are
Speaker 1: talking about the US healthcare system, how it was in
Speaker 1: many ways, I'm prepared for the virus and really how
Speaker 1: society was, of course, and how it may change the
Speaker 1: health care system that is as a result of COVID nineteam,
Speaker 1: Let's get to someone who's got some thoughts on that.
Speaker 1: Dr Vivian Lee is President of Health Platforms at Verily
Speaker 1: Life Sciences, former CEO of the three and a half
Speaker 1: billion dollar healthcare system University of Utah Health She's got
Speaker 1: a new book out today. It's entitled The Long Fixed,
Speaker 1: Solving America's Healthcare Crisis with Strategies that Work for Everyone.
Speaker 1: She joins us on the phone in New York City.
Speaker 1: Dr Lee, nice to have you here with Jason and myself. Um,
Speaker 1: tell us a little bit about this book. First of all,
Speaker 1: I'm curious when you started writing it and how you're
Speaker 1: thinking about it now in the context of COVID nineteen. Well,
Speaker 1: thanks for having me. It's really great to be here.
Speaker 1: You know, when I started writing this book, I really
Speaker 1: wanted to write about the solutions. You know, we all know,
Speaker 1: or many of us know, that our health care system
Speaker 1: has not really been functioning all that well even before COVID,
Speaker 1: and I wanted to write about the bright spots, some
Speaker 1: of the great work that people are doing across the
Speaker 1: country that are really solving the healthcare crisis locally, and
Speaker 1: then weave together those stories for a national vision and
Speaker 1: national narrative for how we could actually make our health
Speaker 1: care system better. I called it The Long Fixed because
Speaker 1: I thought it was going to take us a long time.
Speaker 1: I mean, I think there's a way there, but it's
Speaker 1: going to take us a long time. Now with the
Speaker 1: COVID crisis, I'm really hoping it's going to be a
Speaker 1: lot shorter fix because I think if if COVID has
Speaker 1: taught us anything, there's just an incredible urgency to really
Speaker 1: fixing our health care system. And so give us one
Speaker 1: of those fixes, because we're all looking for them right now,
Speaker 1: and especially things that we can do pretty immediately. Dr
Speaker 1: Link Well, the underlying problem in our health care system
Speaker 1: is that we really run a fee for service healthcare system,
Speaker 1: meaning that our hospitals and doctors live and to mount
Speaker 1: and so we are designed to do things that generate fees,
Speaker 1: like run operating rooms and imaging centers. And when we
Speaker 1: stopped doing that, as we have in the last few months,
Speaker 1: except for our frontline providers managing COVID, then we actually
Speaker 1: start to we start to run the risk of bankruptcy.
Speaker 1: In fact, we laid off one and a half million
Speaker 1: doctors and nurses in the last month in April, and
Speaker 1: we know that there's going to be a rebound in
Speaker 1: need of care, and who knows what's going to happen
Speaker 1: with COVID. So we need to create a much more
Speaker 1: resilient healthcare system. And we have some terrific examples around
Speaker 1: the country. We have medical groups that are functioning in
Speaker 1: a completely different way, getting paid totally differently by Medicare
Speaker 1: groups like chen Med and Iora Health and Care more
Speaker 1: and all across the country, and those healthcare systems are
Speaker 1: able to care for their patients, their Medicare patients in
Speaker 1: a way that is really focused on prevention, really stable
Speaker 1: and resilient now in the face of COVID and just
Speaker 1: keeping him healthier, healthier and out of the hospital. And
Speaker 1: so doctor Lee flip it around for us and help
Speaker 1: us understand how we as patients might need to think
Speaker 1: about healthcare differently, because I feel like we've all been
Speaker 1: either experiencing or at least hearing about things like telehealth
Speaker 1: going forward. What are we doing wrong or what can
Speaker 1: we do better in thinking about delivery of our own
Speaker 1: healthcare that can sort of help the system fix itself
Speaker 1: a bit. Well, that's such a great question, and we
Speaker 1: have a lot of time to reflect about that right now,
Speaker 1: as we're all staying at home and thinking about various
Speaker 1: conditions that we're worried about. What we don't want to
Speaker 1: go into the clinic or to the emergency room about.
Speaker 1: Right So, one of the one of the products that
Speaker 1: our company actually has made over the years is a
Speaker 1: exactly what you're talking about. It's for people who have
Speaker 1: type two diabetes, and the lessons that that we learned
Speaker 1: from it apply to other other conditions that people might have,
Speaker 1: but in this case, for people with type two diabetes
Speaker 1: very common. The main issue is we've got to keep
Speaker 1: our blood sugars under control. And typically, you know, you
Speaker 1: have to prick your finger a few times a day
Speaker 1: to check your blood sugars. You might to go in
Speaker 1: and get blood tests in the hospital or in the clinic.
Speaker 1: But the new technologies there are continuous coast monitors. These
Speaker 1: are these are little devices that are like the size
Speaker 1: of your key fob, and you put it on your
Speaker 1: arm or your abdomen. They have a little bluetooth chip
Speaker 1: in them and they measure your blood sugar sends the
Speaker 1: tracing to your phone. You can actually look at how
Speaker 1: your blood traces on your own phone, and then instead
Speaker 1: of keeping a food log, you take pictures of your
Speaker 1: meals and snacks, and then you as a diabetic patient,
Speaker 1: you can actually look and see, oh, you know, Vivian,
Speaker 1: that second splash of a conpipe wasn't so good for you.
Speaker 1: Look at what it did to your bloodshers. And then
Speaker 1: you can text with your coach, and you can video
Speaker 1: chat with your doctors, all from your phone, all at
Speaker 1: your convenience. That's the kind of health care that we
Speaker 1: need to be embracing now. Many of us wanted to
Speaker 1: do before, but our health insurers didn't necessarily reimburse the good.
Speaker 1: The silver lining with COVID is actually now they are
Speaker 1: reversing reimbursing for that. They're actually now starting to cover
Speaker 1: this kind of care. And we need to be demanding that.
Speaker 1: We need to say, hey, you know what, I can
Speaker 1: care for my own health better with my own devices,
Speaker 1: at my own convenience. It understands me. It's not trying
Speaker 1: to pretend that I'm some other kind of patient and
Speaker 1: doing a one size of its all. This is care
Speaker 1: for me, and this really needs to be covered by
Speaker 1: my health Let's get back to our conversation with Vivian Lee,
Speaker 1: president of Health Platforms over at Verily Life Sciences, joining
Speaker 1: us on the phone. She's also got a new book out.
Speaker 1: It's out today, The Long Fix, Solving America's healthcare crisis
Speaker 1: with strategies that work for everyone. So Dr Lee, I mean,
Speaker 1: I guess on the topic of the day, and you know,
Speaker 1: this pandemic, what are you seeing right now from the
Speaker 1: medical side, and how does it jive with the enthusiasm
Speaker 1: that we're seeing from a market perspective and maybe some
Speaker 1: optimism for the economy. What's the medical lens that we
Speaker 1: should be looking at this throat. That's a really, really
Speaker 1: great question. It's also a really difficult question because what
Speaker 1: we're seeing in terms of the landscape of COVID really
Speaker 1: varies so much by region to region, locality and locality,
Speaker 1: and how people are responding to the crisis in terms
Speaker 1: of whether they're able to maintain the social distancing and
Speaker 1: the precautions and the masks versus not. As the economy
Speaker 1: starts to reopen, is going to be the big differentiator.
Speaker 1: You know. One of the things that I've been thinking
Speaker 1: a lot about as um as my book has been
Speaker 1: coming out, is just what is going to happen in
Speaker 1: the longer term, let's say, just even around the corner
Speaker 1: to next year. We have all these employers who have
Speaker 1: been facing big economic challenges of the last couple of
Speaker 1: months really hoping, hoping to reopen as employees definitely hoping
Speaker 1: that the economy gets started again. But one of the
Speaker 1: biggest challenges and one of the biggest certainties that we
Speaker 1: have for next year in the midst of all this uncertainty,
Speaker 1: is that healthcare premiums are going to go up next year.
Speaker 1: So how can we how can we help as employees
Speaker 1: really in the interest of our employers, prepare them and
Speaker 1: really start to change that narrative and actually start to
Speaker 1: push back against those rising healthcare costs and get us
Speaker 1: into a much better place for the next year. You know,
Speaker 1: I'm listening to us talk, and I'm thinking about people
Speaker 1: who may be listening, and I feel like the three
Speaker 1: of us are certainly among the very lucky of probably
Speaker 1: having really good health care, whether it's by our employer
Speaker 1: or what have you. There are so many people out
Speaker 1: there that still don't have health care, and I feel like,
Speaker 1: that's got it. We've got to figure that one out, right,
Speaker 1: We've got to figure out a system that makes sure
Speaker 1: everybody's part of this system of staying healthier before we
Speaker 1: can even tackle the rest. That's so true. And you
Speaker 1: know what, today we waste five to thirty cents on
Speaker 1: every dollar in healthcare so when people say, you know,
Speaker 1: there's not enough money to cover the people who are uninsured,
Speaker 1: I say that is hogwash. There is plenty of money
Speaker 1: our health care system. We just need to be able
Speaker 1: to recover that waste and be able to spend that
Speaker 1: money more wisely. Because we actually know all politics aside,
Speaker 1: we know that people who have access to health care,
Speaker 1: they do better, They are healthier, and they have more
Speaker 1: um more satisfying lives when they have access to healthcare.
Speaker 1: So it's really important that we do that. But I
Speaker 1: do wonder what's happened and maybe you know, with health
Speaker 1: care becoming such a business, it's interesting to see ads
Speaker 1: by health care systems, you know, whether it's on TV
Speaker 1: or cable, And I do wonder does that make the
Speaker 1: system better or worse? You know, the fact that healthcare
Speaker 1: is a business should be or could be in our
Speaker 1: favor if it were structured right. Uh. The metaphor I
Speaker 1: like to use is healthcare flies into the headwinds of
Speaker 1: capitalism unlike almost any other industry in this country. And
Speaker 1: what I mean by that is in our fee for
Speaker 1: service model care, we're we're simply paid for everything we
Speaker 1: do to people. We as healthcare leaders as as somebody
Speaker 1: who used to lead a healthcare system invest our resources
Speaker 1: in things that generate fees, so we don't invest in
Speaker 1: primary care, and we don't invest invest in prevention. And
Speaker 1: what we need is to embrace those models of healthcare,
Speaker 1: which there are some really great examples of right here
Speaker 1: in our own country that actually used the capitalism as
Speaker 1: tailwinds driving innovation for better care. Medicare advantage as an example,
Speaker 1: the way in which our military pays for military health
Speaker 1: as an example, the way in which our v A
Speaker 1: system pays for v A health another example. We have
Speaker 1: actually successful examples in this country and we just need
Speaker 1: to apply those more broadly well as you as you
Speaker 1: know better than most. This is not something that we
Speaker 1: can we can solve in seven eight minutes, but we
Speaker 1: do appreciate your time today and I hope we can
Speaker 1: get some more time in the future because it's it's
Speaker 1: a really important subject and I'm glad you've written the
Speaker 1: book that you have. The book that is just at
Speaker 1: the long fix, Solving America's healthcare crisis with strategies that
Speaker 1: work for everyone, written by Dr Vivian Lee. She's the
Speaker 1: president of Health Platforms at Verily. Life Science is joining
Speaker 1: us on this Tuesday on the phone from New York.
Speaker 1: It's an important one, Jason, and it's not going to
Speaker 1: be an easy one. But with all the money that spent,
Speaker 1: we've got to be able to do it better. Certainly
Speaker 1: here in the United States, healthcare flies into the headwinds
Speaker 1: of capitalism. That's quite a quote. This is Bloomberg Business
Speaker 1: Week with Carol Masser and Jason Kelly on Bloomberg Radio.
Speaker 1: In the magazine, there's a great story about the Jersey Shore,
Speaker 1: and yes it does reference the TV show that Carol
Speaker 1: Masser thought was just a documentary about her life, but
Speaker 1: it actually wasn't. I kid, I kid, because she is
Speaker 1: the furthest thing from Just watch It, Kelly, I know
Speaker 1: where you live? Who was the who was the star?
Speaker 1: Oh God, I forget all their names, right, Mike, the
Speaker 1: situation snooky who was now a mother with several kids? Yeah,
Speaker 1: there you go. Anyway, Devin Leonard went there. Uh. He's
Speaker 1: one of our favorite writers at Bloomberg this Week, always
Speaker 1: right on the news and telling a great tale about
Speaker 1: the Jersey Shore, but also a cautionary one when it
Speaker 1: comes to the economy. The beaches are open sort of
Speaker 1: Devin Leonard joins us on the phone to give us
Speaker 1: the breakdown of what he saw and coming out of
Speaker 1: this Memorial Day what we may see for the rest
Speaker 1: of the summer. So, Devin, what's going on on the shore? Well,
Speaker 1: I mean, you know, it's sort of a sort of
Speaker 1: the reopening of America in a microcosm. I guess, I
Speaker 1: guess these towns are are beginning to open up, you know,
Speaker 1: up and down the you know, the East Coast. But
Speaker 1: they're full of businesses that are you know, basically need
Speaker 1: to make or basically they make all their money. And
Speaker 1: you know, six months really just four months of the
Speaker 1: year beginning with Memorial Day. In a lot of cases,
Speaker 1: they couldn't even reopen for Memorial Days. So so a
Speaker 1: lot of folks are are, you know, wondering whether or
Speaker 1: not they're gonna able to survive. But at the same time,
Speaker 1: you have the mayors and all these sounds have to
Speaker 1: worry about. All these people are worried about, uh, you know,
Speaker 1: being inundated with people from you know, other parts of
Speaker 1: the country and bringing COVID Night Team with them. So
Speaker 1: it's you know, it's a really difficult situation. Yeah, I
Speaker 1: don't know how they're going to make it work. I
Speaker 1: was thinking about this, devon. You know, my family and I,
Speaker 1: UM and extended family members often you know, rent a
Speaker 1: house down in the Jersey Shore in Ocean City, New Jersey.
Speaker 1: The boardwalk is part of the life, um, you know.
Speaker 1: And I don't know how you do that. You can't
Speaker 1: do that. But I do wonder about these businesses who
Speaker 1: write the bulk of their business happens in these summer
Speaker 1: months and it's not going to be business as usual, no,
Speaker 1: I mean, you know, I went to Seaside Heights you
Speaker 1: know again, you know the you know the place where
Speaker 1: the MTV show, you know, Jersey Shore with films, and
Speaker 1: I walked around to the boardwalk with Anthony of Oz
Speaker 1: who's the who's the mayor, and uh, you know, basically
Speaker 1: he just wanted me. He just wanted me to go here.
Speaker 1: From the from the local business owners, whether they owned bars,
Speaker 1: you know, well most of them were, you know, own
Speaker 1: bars and restaurants because the the you know, the the
Speaker 1: arcade folks you know can't can't reopen. And you know
Speaker 1: you have the the whole casedo Piers which has you know,
Speaker 1: all the attractions you know that's closed, but he wanted
Speaker 1: to hear from me. He wanted me to hear from them.
Speaker 1: You know, you know the situation that that they're in,
Speaker 1: and you know, most of the people were saying, you know,
Speaker 1: we can't survive. You know, the restaurants are just doing
Speaker 1: take out. They were saying, it's five percent of there.
Speaker 1: You know, you know the revenue, and you know they
Speaker 1: can't make it. I guess unless they can open up more,
Speaker 1: and they can't because Governor Phil Murphy and New Jersey
Speaker 1: won't let them yet. And is there a sense that
Speaker 1: this could evolve to a more open situation like what's
Speaker 1: the either the timeline or what's the most optimistic case here? Devon? Well, Jason,
Speaker 1: I mean that's it's it's really interesting. I didn't really
Speaker 1: understand this, but this is happening all over the country too.
Speaker 1: All of these states, uh you know are sort of
Speaker 1: reopening in phases. You know in some cases that did
Speaker 1: the town's control certain things about how they reopened too.
Speaker 1: But so what we're going to see is is um
Speaker 1: and you basically see it in Myrtle Beach. Right, didn't
Speaker 1: go to Myrtle Beach, but I talked to some people
Speaker 1: down there, and you know they're they're in the South.
Speaker 1: They you know, they have less uh you know, less
Speaker 1: COVID nineteen there. But so they've reopened, they've allowed the
Speaker 1: states allowed restaurants to uh off you know, for indoor seating,
Speaker 1: but only only of their capacity. But they had to
Speaker 1: do tons and tons of cleaning. A woman told me,
Speaker 1: you know, literally it takes ten minutes to you know,
Speaker 1: to flip a table, you know, because you have to
Speaker 1: you have to disinfect it, wipe it down, you know,
Speaker 1: you know, I mean there's for those four steps. She
Speaker 1: sounded tired just talking about it, um and uh and
Speaker 1: you know she was she was only using of her
Speaker 1: capacity because fifty you know, it was too much. So
Speaker 1: but but really, to you know, to directly answer your question,
Speaker 1: even that's not going to be enough for you know,
Speaker 1: for a lot of businesses, particularly restaurants, and you know that.
Speaker 1: And if you're a boutique, you you know, you know
Speaker 1: you're gonna have to limit the number of people people
Speaker 1: inside in the The president of the Marble Beach Area
Speaker 1: Chamber of Commerce told me that she expected members, you know,
Speaker 1: to you know, not to make it, you know, and
Speaker 1: that's out of members, which I thought was an amazing
Speaker 1: thing for somebody for the Chamber of Commerce. There's supposed
Speaker 1: to be positive and she couldn't do it. Yeah, well,
Speaker 1: right exactly. I mean, the business formula, the business equation
Speaker 1: right for profitability is just kind of so fragile just
Speaker 1: when everything goes goes right that if you throw anything,
Speaker 1: and especially at something on this level, Um, you really
Speaker 1: do have to wonder about the amount of businesses that
Speaker 1: can survive. On the other side, I do think, you know,
Speaker 1: devon a lot about the conflict between officials at a
Speaker 1: higher level versus the local level. You know, there really
Speaker 1: is and there's a lot of we're talking about that
Speaker 1: there's just kind of no clear consensus about what to do,
Speaker 1: but there's a lot of conflict right about how to
Speaker 1: move forward. Well, I think I think Mayor of oz
Speaker 1: he would probably like things to move a little quicker. Uh,
Speaker 1: but he he doesn't still restaurants at the same time
Speaker 1: he does the town does control the hotels and motels
Speaker 1: and in June they're gonna be they're gonna be allowed
Speaker 1: to open up of their unions. So so so you
Speaker 1: know that's a little quicker, but uh, you know, that's
Speaker 1: he still has to. You know, this is a town
Speaker 1: where you know there's residents, but on a on a
Speaker 1: hot summer day, you know, the number of people swells
Speaker 1: to thirty thousands. So yeah, I know, it's just it's
Speaker 1: just it's just incredible when when you think about it.
Speaker 1: So he's trying to and he needs to do something
Speaker 1: to limit the number of people who are coming. He's
Speaker 1: hoping for, which I guess is and it still sounds
Speaker 1: like a lot, but it just sounds incredibly tricky. And
Speaker 1: I do wonder about as law enforcement or enforcement tries to,
Speaker 1: you know, prevent the crowds from coming, what kind of
Speaker 1: conflicts we're going to see. I mean it kind of
Speaker 1: scares me a little bit because you know people are
Speaker 1: anti to get out. Well, I did talk to some
Speaker 1: of the epidemiologists who's who who said, you know, summers coming,
Speaker 1: people are gonna need need to get out there. You
Speaker 1: know there is a way to do it that they
Speaker 1: weren't saying, no, no way, don't do it. It's it's
Speaker 1: too dangerous. But but there have to be some some
Speaker 1: sort of limits. And you know that to your point,
Speaker 1: I mean, how do you set that? How do you
Speaker 1: how do you enforce that, especially in the talic Seatside Heights,
Speaker 1: which is really you know, a fun town, a party town,
Speaker 1: and um you know people people don't people go there
Speaker 1: to let loose and and uh so, um so I
Speaker 1: think just that in them itself makes it diff difficulty.
Speaker 1: It definitely does. All Right, Well, it's a really nice
Speaker 1: read and a good reality check. Devin Leonard always get
Speaker 1: to catch up with you projects and investigations reporter. His
Speaker 1: project this week was figuring out the Jersey Shore and
Speaker 1: it's a really nice piece. You should check it out
Speaker 1: on the Bloomberg and on Bloomberg dot com. And it's
Speaker 1: going to be something we're gonna keep watching for sure.
Speaker 1: I have to say. One of the first beaches I
Speaker 1: went to was my older sisters took me to Seaside
Speaker 1: Heights specifically, and it's it's it is it's like where
Speaker 1: your help with college kids go. I know, I know,
Speaker 1: I know, but I mean it's just they were quite,
Speaker 1: you know, so much of their livelihood is what happens
Speaker 1: in the summer season of all those people coming in.
Speaker 1: And I was a funnel. I was a really little kid.
Speaker 1: I was you're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Jason Kelly on Bloomberg Radio. So as recent
Speaker 1: tweet show President Trump continuing to point the finger out
Speaker 1: China when it comes to the pandemic, this too, as
Speaker 1: US China attentions, as we know, and as we've been
Speaker 1: reporting over the last week or so, have once again increased.
Speaker 1: In today's version of Business Week, Economic someone we often
Speaker 1: turned to when we want you talk about what's going
Speaker 1: on in China, how the US is approaching the nation.
Speaker 1: David Retal is president and founder of Real Research Group.
Speaker 1: He rejoins us on the phone from San Francisco. Hey,
Speaker 1: David's so nice to have you back with us. How
Speaker 1: are you. How's your life? Very well, it's sheltering in
Speaker 1: place like everyone else, but watching things from around the
Speaker 1: world from from from here in the Bay Area. Yeah,
Speaker 1: I'm curious about the conversations too. As the world reopens.
Speaker 1: What are you guys discussing and the impact it's having. Well,
Speaker 1: you're starting to see a lot of Asia emerge from this,
Speaker 1: of course, with South South Korea and China emerged sort
Speaker 1: of first. You're seeing some of Southeast Asia come out
Speaker 1: of this. Now Unfortunately, a lot of the concern has
Speaker 1: now shifted to Latin America, where you've got some of
Speaker 1: the largest growing cases down there, and and and countries
Speaker 1: really taking a different view. But in the emerging markets world,
Speaker 1: Asia is the place to look first. I think Latin
Speaker 1: America is a place to be a little cautious, and
Speaker 1: we're still looking for opportunities in Europe, but it's hard
Speaker 1: to tell what direction some of those economies are going
Speaker 1: right now. David, I want to ask you about Hong
Speaker 1: Kong because I feel like that's a situation where, you know,
Speaker 1: we were very focused on it last fall, and I
Speaker 1: was reminded by some colleagues here at Bloomberg of how focused,
Speaker 1: uh we were on that as a news room, and
Speaker 1: then obviously the pandemic sort of overtook everything in many ways.
Speaker 1: Now Hong Kong is back front and center. Help us
Speaker 1: sort of remind everyone sort of what's going on there
Speaker 1: and what the implications are, especially at this increasingly fragile moment. Absolutely,
Speaker 1: it is a really really important topic for people to
Speaker 1: say on on on top of and also it remind
Speaker 1: us that despite the pandemic, other things are happening around
Speaker 1: the world as well. Your listeners will remember that China.
Speaker 1: Beijing tried to impose a change in the judicial law
Speaker 1: the extradition from Hong Kong, so making it easier for
Speaker 1: Hong Kong citizens to be brought into the mainland justice system,
Speaker 1: and this sparked a huge rally of a number of
Speaker 1: rallies and protests over months and months. Uh they eventually
Speaker 1: pulled back from that threat of implementing that law, but
Speaker 1: still the protests remained, and as you'll remember, we were
Speaker 1: having daily, almost hourly updates on how those those protests
Speaker 1: were going. And so now we everyone had forgot about
Speaker 1: Hong Kong for a long time, except for of course Beijing.
Speaker 1: Now Beijing realized last week that they've given Hong Kong
Speaker 1: fourteen years to write a national security law in Hong
Speaker 1: Kong really hasn't made any good progress, so they said, okay,
Speaker 1: we'll write it. And that really is the crux of
Speaker 1: the of the issue here. This is another attempt by
Speaker 1: Beijing to um change the the semi autonomous nature of
Speaker 1: Hong Kong uh and and really start to increase Beijing's
Speaker 1: grip on the city. So where do you think china
Speaker 1: It's it's goal or intent is longer term here well,
Speaker 1: longer term, it's clear that they intend for Hong Kong
Speaker 1: to be yet another Chinese city. Uh there they certainly
Speaker 1: they've agreed to the one country, two systems agreement until
Speaker 1: I but that's that's that's where we're headed. So I
Speaker 1: think this is an inexorable move towards increasing integration of
Speaker 1: Hong Kong into China, and unfortunately the world and certainly
Speaker 1: the world of investors loses um in that situation. What
Speaker 1: they had really considered their best way to get access
Speaker 1: to Chinese names. Hong Kong was always respected as a
Speaker 1: market with great liquidity, very good and skilled regulators, good
Speaker 1: rule of law, and the ability to get access to
Speaker 1: the growth in China just next door. And that really
Speaker 1: gets called into question with some of these steps. And
Speaker 1: so frame that for us within the broader context of
Speaker 1: US China tensions, which again have have escalated on the
Speaker 1: trade front as well. What do we need to be
Speaker 1: most worried about, sort of from a self interested perspective
Speaker 1: and maybe from a self interested perspective in terms of
Speaker 1: the global economy, How did these escalating tensions ultimately play
Speaker 1: through in your best estimation, Well, we'll start with the
Speaker 1: premise that It's never good when too largest economies in
Speaker 1: the world are are having conflict and having having disputes UM.
Speaker 1: So that's never good for for the global economy, especially
Speaker 1: when the global economy doesn't need any more headwinds. They
Speaker 1: really need an opportunity to heal and to grow, like
Speaker 1: we saw coming out of the Great Recession. So it
Speaker 1: is a big issue now that we've got trade back
Speaker 1: on the on the um uh table. Uh. There is
Speaker 1: no way that China is going to be able to
Speaker 1: achieve their commitments of increased purchases from the US in
Speaker 1: the next eighteen months. UH. If they were going to
Speaker 1: do that, they'd have to buy every drop of energy
Speaker 1: produced in the US period in order to achieve that
Speaker 1: two billion dollar goal that they'd agreed to in the past.
Speaker 1: So I think you're going to hear more about out
Speaker 1: of the Republican administration about how China's sailed on this
Speaker 1: this trade the deal. I wish they wouldn't go down
Speaker 1: that path. I wish that they would realize that this
Speaker 1: is a new situation. UH and and cooler heads do
Speaker 1: need to prevail, But unfortunately I don't see that happening
Speaker 1: on either side in this case. David, you know, do
Speaker 1: you think this inflict or this renewed conflict between the
Speaker 1: US and China is real or is it just a
Speaker 1: case of President Trump just you know, counting down to
Speaker 1: the election and kind of saying what he thinks his
Speaker 1: base wants to hear. And secondly, when China does go
Speaker 1: along with something the US wants to do, is it
Speaker 1: just because China's marking time until it's develops its own
Speaker 1: industries domestically And just got about a minute here. Sure,
Speaker 1: I think that you're right that there is a political
Speaker 1: element to this. I hope that there is also some
Speaker 1: longer term thought about how both economies and societies are
Speaker 1: better positioned as a result of this. But Beijing plays
Speaker 1: to their base, as does Washington d C. So I
Speaker 1: hope that cooler heads will prevail. I hope it doesn't
Speaker 1: lead to any sort of mistaken conflicts in the South
Speaker 1: China see or anything like that. But we need to uh,
Speaker 1: sort of calm nerves a little bit, calm down the
Speaker 1: rhetoric a little bit, stop pointing fingers, and get back
Speaker 1: to the work of repairing this global economy. Yeah, it's
Speaker 1: really interesting to to get your perspective, David Reda. We
Speaker 1: we really appreciated president and founder a retal research group,
Speaker 1: joining us on the phone from the Bay Area. As
Speaker 1: he said, you know, a really good vantage point, and
Speaker 1: he's been looking after this for quite some time, Carol,
Speaker 1: And it echoes some of what we heard last week
Speaker 1: from our own Andy Brown, who's been watching this very closely,
Speaker 1: and a reminder that the Hong Kong issue is not
Speaker 1: a domestic one ultimately for China and the city that
Speaker 1: it's trying to in its estimation bring onside. This has
Speaker 1: massive implications, especially candidly thinking sort of parochially for our
Speaker 1: Wall Street community because this has been the outpost in
Speaker 1: many ways in Asia and as David rightly said, a
Speaker 1: way to to really play into the Asian market that
Speaker 1: didn't exist anywhere else. Yeah, absolutely have an impact on
Speaker 1: global financial markets, right and and in terms of various markets,
Speaker 1: in terms of access or where you thought things were
Speaker 1: moving Alright, great conversation always is with David understands those
Speaker 1: emerging markets and in particular what's happening in emerging Asia.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: on Bloomberg Radio this weekend. Our Bloomberg Business Week Small
Speaker 1: Business Survival Guide. Finding a fresh start in bankruptcy court
Speaker 1: makes sense, and I guess we should get ready for
Speaker 1: more of this and we'll see this certainly gives a
Speaker 1: leg up, in particular to some of those small businesses. Jason,
Speaker 1: we just talked about the hard time that that small
Speaker 1: business world is having. Bloomberg News editor Demitra Cassadis joins
Speaker 1: us on the phone from New Jersey. So Demitra talked
Speaker 1: to us a little bit about the approach because Jason
Speaker 1: and I were just talking about, you know, it feels
Speaker 1: like a lot of the large businesses certainly have had
Speaker 1: a lot of lifelines to reach out to, but the
Speaker 1: small businesses, they are really getting caught. So talk to
Speaker 1: us about bankruptcy and how that might give them an option,
Speaker 1: a viable opure. Yeah, I mean, it's it's not necessarily
Speaker 1: a pleasant reality to confronts, but sometimes, um, you know,
Speaker 1: after going through stages of looking for lifelines, bankruptcy might
Speaker 1: feel like a reasonable option. And it could be especially
Speaker 1: if small businesses consider Chapter eleven, because Chapter eleven is
Speaker 1: really an opportunity to reorganize and that might be just
Speaker 1: what they need. They might have a little more flexibility
Speaker 1: to be able to handle some of the depths, uh,
Speaker 1: to really rethink about what what they're going to do
Speaker 1: with the business, and so you know, if not the
Speaker 1: first thing that comes to mind, especially for small businesses,
Speaker 1: Chapter seven sometimes is more typically something that they look
Speaker 1: at in terms of liquidation and having to pay off
Speaker 1: all their deaths and not really reorganized. So we walk
Speaker 1: through some steps um for small businesses to consider this
Speaker 1: as as we call it, a fresh start. You know,
Speaker 1: it can it can seem like it's anything but, but
Speaker 1: you know, if you start to talk to your creditors,
Speaker 1: talk to your lawyers, and really put a plan in place,
Speaker 1: it might be that what you're going to see emerging
Speaker 1: as a plan that will actually enable you to come
Speaker 1: back even stronger. Well and Demitri, it's also interesting to
Speaker 1: think about this right now at a time where I
Speaker 1: feel like people and companies to some extent or being
Speaker 1: given maybe a little more latitude given the expanse of this,
Speaker 1: the severity of it, that maybe it gets uh, maybe
Speaker 1: there's less of a stigma at this point if you
Speaker 1: have to go through this. This is a time where
Speaker 1: people say, well, yeah, I mean some was a time
Speaker 1: where the world was just turned upside down. Sure exactly.
Speaker 1: I mean, I think that the stigma question is definitely
Speaker 1: a big one. It most certainly affects your credit. You know,
Speaker 1: it's not as though this is not a process that
Speaker 1: is serious. It's a serious process. It will affect things
Speaker 1: going forward. But you know, really key to something like
Speaker 1: considering chapter eleven is, you know, do you have something
Speaker 1: at the heart of your business that is worth preserving
Speaker 1: that you want to restructure and that you want to
Speaker 1: see keep going. And if that's the case, there are
Speaker 1: measures that you can take. And in fact, there's even
Speaker 1: a very recent provision that was added to chapter eleven
Speaker 1: just as we were getting into this very challenging period
Speaker 1: in February. It's a sub chapter five. It's a little technical,
Speaker 1: but it essentially has made reorganization a little easier and
Speaker 1: a little cheaper, and it's lowered let's call it the
Speaker 1: threshold for the time being, for this year and in one.
Speaker 1: And so it is really something that a lot of
Speaker 1: small businesses might not be aware of, but they should
Speaker 1: be aware of it, and they should really see this
Speaker 1: as a solution, not as something that is going to
Speaker 1: you know, sort of be stuck to them as a
Speaker 1: label and really drag them down. Yeah, and it's interesting
Speaker 1: and you know, listen, uh, you know, none of us
Speaker 1: are lawyers here, but you know, in a bankruptcy court,
Speaker 1: lawyer will tell you because there's so many nuances to
Speaker 1: all of this, right, because there's instances where you know,
Speaker 1: you gotta remember it's gonna cost you money to do this.
Speaker 1: And you know it's interesting in this story too, you
Speaker 1: talk about some people have to give up some equity
Speaker 1: in that reorganized, you know company, So you know, it's
Speaker 1: not like you come out with your company and everything's
Speaker 1: hunky dory, like you might have to give up a
Speaker 1: lot in order to do this correct. That's absolutely and um,
Speaker 1: that's the one thing I wanted to make sure I
Speaker 1: wasn't sort of downplaying was that it's as a big decision,
Speaker 1: an important, a serious one, and a tough one. But
Speaker 1: when you're looking out of the world right now and
Speaker 1: really considering is this a business that's going to carry on?
Speaker 1: Should it carry on? Is there a service that we're
Speaker 1: delivering that really is worthwhile? But because of the pandemic,
Speaker 1: you know, we've been challenged like so many others. It
Speaker 1: is certainly in the category of possibilities to raise with
Speaker 1: the professionals that are advising you, and you know, and
Speaker 1: to turn to those people and to really examine everything carefully. So,
Speaker 1: you know, I think that that is something that we
Speaker 1: just felt like we wanted to get that message out there.
Speaker 1: We were not hearing that a lot from small businesses.
Speaker 1: We hear about Chapter eleven practically daily now, right when
Speaker 1: it comes to very big businesses, whether it's J. J.
Speaker 1: Honey or Hurt was a lea Um. So you know,
Speaker 1: I think that when you hear those headlines and you're
Speaker 1: a small business owner, you know, you might not even
Speaker 1: consider that this is a viable option for you. And
Speaker 1: it is and it could be, and it could be
Speaker 1: the fresh start and just a new path that you're
Speaker 1: going to go down where your business is going to
Speaker 1: be a little different because everybody is having to reconsider
Speaker 1: their businesses right now. That is that is so true,
Speaker 1: and it's interesting. I think we've heard I can't remember
Speaker 1: who was who said that, you know, get ready for
Speaker 1: the lawyers, because whether it's divorce lawyers or bankruptcy lawyers,
Speaker 1: like they are going to be busy. On the other side,
Speaker 1: the lawyers are going to be very busy, and maybe
Speaker 1: the divorce lawyers and the and the people handling you know,
Speaker 1: leases and things like that. But it is unfortunately the
Speaker 1: way these things go. All right, Sure, always nice to
Speaker 1: check in with you, take care of yourself, to meet
Speaker 1: your Kessaiti. She's Bloomberg News editor joining us on the
Speaker 1: phone from New Jersey. I'm just I'm just saying, I'm
Speaker 1: just repeating what we are hearing. No, it's true, it's true. Um,
Speaker 1: and we know that in any crisis. I mean, that
Speaker 1: tends to be something. But it is really good advice.
Speaker 1: I really like this Small Business Survival Guide because, as
Speaker 1: we've been talking about, and I think we've been spending
Speaker 1: an appropriate amount of time on it, this is an economy.
Speaker 1: It's ultimately driven by small businesses. I live in a
Speaker 1: small town. You lived sort of in a small town,
Speaker 1: very very close to a very big but we do
Speaker 1: a lot to support small businesses, to avoid some of
Speaker 1: the bigger names coming in, to just kind of support
Speaker 1: that that network. We think it's important to the community. Yeah. Absolutely,
Speaker 1: I bro a journal. Yeah, but you let me drive
Speaker 1: Oh no, no, no no, no, home honey, please, I'll do
Speaker 1: the riding drivel. I want to drive, Just drive, baby,
Speaker 1: the questions keep trying. This is the Drive to the Globe.
Speaker 1: Com Thanks, we'll drying us down on Bloomberg Radio. Yes, indeed,
Speaker 1: it is time for the Drive to the close was
Speaker 1: Alan's afron is back with us, founding partner and co
Speaker 1: CEO at I e Q Capital. He joins us once
Speaker 1: again on the phone from Foster City, California. We were
Speaker 1: so eager both of us to get to you, and
Speaker 1: we started the introduction together. Hey, Alan, how's it going.
Speaker 1: It's going great. We've got a little heat wave out
Speaker 1: here and it couldn't be more beautiful, lack of smog,
Speaker 1: and because no one's been on the roads for a
Speaker 1: couple of months, it is a picture perfect day here
Speaker 1: in California. It is sort of amazing. And I know
Speaker 1: we talked a lot about this when we last had
Speaker 1: you wanted probably a month or so ago. Alan, you
Speaker 1: know how much it has changed, both you know, literally
Speaker 1: and figuratively the scene out there. I did want to
Speaker 1: ask you, you know what you have encountered of late,
Speaker 1: because I know you're very involved in the Silicon Valley
Speaker 1: community in terms of folks there are thinking about kind
Speaker 1: of the future of Silicon Valley in many ways both
Speaker 1: sort of helping in the short term, but also you know,
Speaker 1: some of the implications ends for a more virtual Silicon
Speaker 1: valley in some ways, maybe folks fleeing the high real
Speaker 1: estate prices, Like what's the net effect here? You think, uh,
Speaker 1: there's winners and losers, and as usual, it's a pragmatic optimism.
Speaker 1: So the key term pragmatic because if you're a startup,
Speaker 1: you've you've gotten down the hatches here, You've absolutely tried
Speaker 1: to create as much runway. Possibly it's possible two years time,
Speaker 1: with enough cash to weather, we could still be a
Speaker 1: pretty difficult economic environment despite the stock market going up.
Speaker 1: But again, in the midst of chaos, there's always opportunities.
Speaker 1: So you're seeing that with the zoom videos and the
Speaker 1: Teledoc healthcares, there are new cottage industries being that come
Speaker 1: up immediately. When people have to work from home, there's
Speaker 1: all kinds of applications they have to think about how
Speaker 1: to get their office at home to work more effectively.
Speaker 1: All kinds of gadgets are now being creative to think
Speaker 1: about ways to operate when the confines of allowed family
Speaker 1: try to operate around you. At the same time, it's fascinating.
Speaker 1: It's this is destructive capitalism and destructive creation all at
Speaker 1: the same time. So, um, you know, sadly, it's very
Speaker 1: difficult if unfortunately this we all as we all know,
Speaker 1: those that can least afford are the ones that are
Speaker 1: most adversely hit by this economic downturner are gonna be
Speaker 1: the ones that take the longest to come back. But
Speaker 1: this also breeds American entrepreneurialism. And this is from the
Speaker 1: ashes rises a new bowl market and a new growth
Speaker 1: engine of America going forward. Yeah, I do hope we
Speaker 1: figure out some better ways to cover. Uh, certainly those
Speaker 1: that have, you know, the less fortunate, the more vulnerable,
Speaker 1: because they have really been exposed and in many ways
Speaker 1: they're still struggling. I do wonder, Alan, what's the R
Speaker 1: word that you use more often right now? Is it
Speaker 1: recovery or recession? It's both. We're in a recession, but
Speaker 1: we may end up being in the world's The US
Speaker 1: is shortest recession of all time. I mean, most recessions
Speaker 1: last at least a year. Um. This has been anything
Speaker 1: but average. Um, this is absolute recovery. When you see
Speaker 1: stock markets already up to thirty seven from a peak.
Speaker 1: It's telling you that the likelihood that you're going to
Speaker 1: go back down and retest the lows um, it's pretty small. Um.
Speaker 1: What's what's interesting also is to take an account that
Speaker 1: you are witnessing, at least recently, a broadening of a
Speaker 1: stock market activity. You're finally seeing small caps and value
Speaker 1: stocks beginning to pick up and do a little better here.
Speaker 1: And we're right at a critical point here. You know,
Speaker 1: we're right at the two adre DAID moving average on
Speaker 1: the SMP five dred um and if we break through
Speaker 1: this three thousand level one hold, you're gonna see capitulation
Speaker 1: because as you know, this is probably the most despised,
Speaker 1: hated bowl market we've seen yet, meaning there's been very
Speaker 1: little participation. There are number of investors that are short
Speaker 1: or in cash, and there's going to be the fear
Speaker 1: of missing out. If they're particularly institutional investors, if they're
Speaker 1: benchmarked to an index, they're gonna have to compitch late
Speaker 1: with prices go higher. Even if we're still in an
Speaker 1: environment where there's a twenty unemployment rate and millions upon
Speaker 1: billions of people unemployed whose jobs won't come back for
Speaker 1: several years, and that's what I'm just having such a
Speaker 1: hard time getting my head around Alan, is this notion
Speaker 1: of where this optimism is coming from. And I fully
Speaker 1: concede that we view this or I shouldn't say we
Speaker 1: I I definitely view this from a different lens, sitting
Speaker 1: here in the Tri State area and seeing the devastation
Speaker 1: that this has wrought on New York City. You know,
Speaker 1: a city that is still under complete lockdown in many ways, um.
Speaker 1: And you know companies not talking about going back to
Speaker 1: work even in any sort of reasonable measure until the fall.
Speaker 1: And and I also understand intellectually that the rest of
Speaker 1: the country is not the same. But we also talked
Speaker 1: to doctors on this show every day who warned us
Speaker 1: about a second wave and all of those different things.
Speaker 1: Is the market just being rational about this or is
Speaker 1: it being overly optimistic? Um? We don't know if it's
Speaker 1: being overly optimistic, because neither you or I can predict
Speaker 1: with a second wave will be coming and how bad
Speaker 1: it will be, given how devastated the economic downturn has
Speaker 1: been to so many. It'll take a lot to shut
Speaker 1: down the economy again. But but I underserved the stock
Speaker 1: market is in some ways of bifurcated from the general economy.
Speaker 1: And there's two ways to think about it. One is,
Speaker 1: the kinds of businesses that are represented in the stock
Speaker 1: market index you'll look at are not barber shops and
Speaker 1: hair salons and small something very different. The other thing
Speaker 1: is think of it this way. The federal government federal
Speaker 1: reserved in the US government have printed or will print
Speaker 1: something together on the on the order of ten trillion
Speaker 1: dollars of spending power and two trillion dollar economy. The
Speaker 1: money has to go somewhere. And if cash is paying
Speaker 1: zero and a tender church upond pays less than one percent,
Speaker 1: I nottainly is going to go into a stock where
Speaker 1: I can get a two percent dividend. You allows us
Speaker 1: hold it for ten years, and my odds are eventually
Speaker 1: the economy will get better. So that money is finding
Speaker 1: its way into equities partly because there is no alternative,
Speaker 1: and that's what pumping money into that closed system does.
Speaker 1: It has to get back into the fat that's like
Speaker 1: stocks and cash pays nothing. Well, I saw this movie before,
Speaker 1: Allen z Afron. I thought that was the story coming
Speaker 1: off of the financial crisis. That's pretty much the same
Speaker 1: story that the thing about this event, there's a lot
Speaker 1: to be said. They learned from the two thousand and
Speaker 1: eight crisis, and the FED played played its playbook, as
Speaker 1: did the federal government, much more quickly and with much
Speaker 1: bigger firepower. And that's why you speed. At least at
Speaker 1: least the financial markets have recognized that and assumed things
Speaker 1: look better more quickly than they were bouncing out of
Speaker 1: bowid No. Nine. Yeah, really interesting, alright, great comparisons. Great
Speaker 1: Insights has always really appreciated Allen Zaffron, founding partner co
Speaker 1: CEO of I e Q Capital, on the phone from
Speaker 1: False your City, California. He's got a long history working
Speaker 1: for Goldman. Uh. You know a lot of well to
Speaker 1: do clients who trust him with their money candidly, and
Speaker 1: he sees a lot and it's good to get his
Speaker 1: perspective also from Silicon Valley versus New York City in
Speaker 1: some ways, because they tend to see things a little
Speaker 1: bit differently. I think back to our conversation with Tom Sewel. Yeah, totally.
Speaker 1: It's good for us to get all of these perspectives.
Speaker 1: It's just much smarter. Thanks so much for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, South Cloud,
Speaker 1: Bloomberg dot com, or wherever you get your podcasts, And
Speaker 1: of course you can always listen to our radio show
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