1 00:00:06,360 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,480 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg johnic 5 00:00:27,600 --> 00:00:30,320 Speaker 1: is now pleased to say it's Charles Cantas, Celia, portfolio 6 00:00:30,400 --> 00:00:33,080 Speaker 1: manager at New Burger Berman. Charles, Great to have you 7 00:00:33,120 --> 00:00:35,000 Speaker 1: with us on the program. I know you've been thinking 8 00:00:35,000 --> 00:00:38,000 Speaker 1: about the following and I've been thinking about it too. Privilege, 9 00:00:38,200 --> 00:00:40,880 Speaker 1: the privileged companies that have the access to the liquidity 10 00:00:41,000 --> 00:00:44,080 Speaker 1: to get through this particular crisis. Walk me through your 11 00:00:44,120 --> 00:00:48,360 Speaker 1: thinking at the moment. Look, I think we're in unprecedented times. 12 00:00:48,560 --> 00:00:53,040 Speaker 1: It's all about duration and when we restart the economy 13 00:00:53,560 --> 00:00:59,000 Speaker 1: and the businesses that survived that lull in activity UM 14 00:00:59,040 --> 00:01:02,200 Speaker 1: are going to end and benefit thereafter. So for us, privileged, 15 00:01:02,240 --> 00:01:05,720 Speaker 1: our companies that you thrill to own UM when the 16 00:01:05,800 --> 00:01:09,720 Speaker 1: markets going down, because you know that the strength of 17 00:01:09,720 --> 00:01:13,840 Speaker 1: the business model, the brand, the distribution system, the technology, 18 00:01:13,880 --> 00:01:18,240 Speaker 1: the customer engagement makes them a much stronger company over 19 00:01:18,319 --> 00:01:20,800 Speaker 1: time and they'll end up with higher revenues and higher 20 00:01:20,800 --> 00:01:22,880 Speaker 1: profits to do three years from now as you enter 21 00:01:22,959 --> 00:01:26,280 Speaker 1: the negative of low activity. So you're excited to earn 22 00:01:26,319 --> 00:01:28,679 Speaker 1: them on the way down, and you always want them 23 00:01:28,680 --> 00:01:32,480 Speaker 1: in your portfolio when when when normalcy returns to the environment. 24 00:01:32,920 --> 00:01:36,640 Speaker 1: These are businesses that have the duration, the balance shee 25 00:01:36,680 --> 00:01:41,679 Speaker 1: flexibility UM to get us through this time UM. And 26 00:01:41,680 --> 00:01:43,520 Speaker 1: and that's what's going to matter. We think it's going 27 00:01:43,560 --> 00:01:47,880 Speaker 1: to be a really really difficult time for weak companies 28 00:01:47,880 --> 00:01:51,200 Speaker 1: and for weak countries. And we think, UM, those that 29 00:01:51,240 --> 00:01:55,840 Speaker 1: are privileged, those that have flexibility UM will end up stronger, 30 00:01:56,000 --> 00:01:59,000 Speaker 1: bigger and better. I guess that defines JP morget in 31 00:01:59,080 --> 00:02:01,280 Speaker 1: four other banks out there. I'll let you decide which 32 00:02:01,280 --> 00:02:04,520 Speaker 1: ones they are. But are you predicting them bank consolidation 33 00:02:05,040 --> 00:02:09,520 Speaker 1: because the smaller, the weaker can't survive. You know, bank 34 00:02:09,560 --> 00:02:13,320 Speaker 1: consolidation hasn't really happened for for a for a very 35 00:02:13,320 --> 00:02:17,880 Speaker 1: long time. The large banks themselves can't actually aggregate UM 36 00:02:17,919 --> 00:02:21,480 Speaker 1: any longer. I just feel that it's an environment. You know, 37 00:02:21,560 --> 00:02:25,560 Speaker 1: it's really hard UM to run a business with leverage 38 00:02:25,600 --> 00:02:28,640 Speaker 1: if your revenues go to zero. And so this question 39 00:02:28,760 --> 00:02:32,040 Speaker 1: or duration is fundamental to the help of our economy 40 00:02:32,360 --> 00:02:35,120 Speaker 1: and fund it mental to to to to the nature 41 00:02:35,120 --> 00:02:38,960 Speaker 1: of the recovery we see when when when at some 42 00:02:39,080 --> 00:02:43,720 Speaker 1: point this nation is blessed with with with better help UM, 43 00:02:43,919 --> 00:02:47,040 Speaker 1: and it's it's going to take a herculean effort UM 44 00:02:47,160 --> 00:02:51,000 Speaker 1: to get this economy restarted. And so the risk of 45 00:02:51,000 --> 00:02:54,680 Speaker 1: a policy mistake right now is large. But I would 46 00:02:54,680 --> 00:02:59,680 Speaker 1: never bet against the innovation entrepreneurial spirit of this fine country. 47 00:02:59,680 --> 00:03:03,880 Speaker 1: So ultimately, very polish on America, Charles, I want to 48 00:03:03,880 --> 00:03:07,480 Speaker 1: go to that point, Thomas, referencing JP Morgan Jamie Diamond 49 00:03:07,520 --> 00:03:10,200 Speaker 1: coming out in the shareholder letter saying that he's expecting 50 00:03:10,639 --> 00:03:14,040 Speaker 1: a bad recession ahead with financial stress similar to the 51 00:03:14,080 --> 00:03:18,760 Speaker 1: two thousand and eight crisis. Do you agree? Look, I 52 00:03:18,800 --> 00:03:24,040 Speaker 1: think we're there right now. Economic activity UM has plummeted 53 00:03:24,160 --> 00:03:29,080 Speaker 1: to two levels unimaginable UM a month ago at speeds 54 00:03:29,160 --> 00:03:33,880 Speaker 1: that are unprecedented. Output across this economy for the vast 55 00:03:33,919 --> 00:03:39,840 Speaker 1: majority of sectors, UM is down, you know, dramatically, first 56 00:03:40,040 --> 00:03:45,040 Speaker 1: six and ultimately UM that stressfuls all the way back 57 00:03:45,640 --> 00:03:49,360 Speaker 1: to the financial system. And the question is UM the 58 00:03:49,520 --> 00:03:52,400 Speaker 1: time it takes for it to fall back, and so 59 00:03:52,680 --> 00:03:57,160 Speaker 1: the longer UM the amount of time one ultimately waits. 60 00:03:57,680 --> 00:04:00,720 Speaker 1: UM is not a linear function, it's an expert antial function. 61 00:04:00,800 --> 00:04:05,680 Speaker 1: Meaning for every ten days we wait to restart the economy, UM, 62 00:04:05,720 --> 00:04:08,760 Speaker 1: it will take fifty days or so to get us 63 00:04:09,000 --> 00:04:11,480 Speaker 1: to to get us where we need to be. So 64 00:04:11,880 --> 00:04:15,560 Speaker 1: the banks ultimately bear all the liabilities of those that 65 00:04:15,760 --> 00:04:18,760 Speaker 1: don't get paid, whether you're not paying your commercial rant, 66 00:04:18,920 --> 00:04:22,680 Speaker 1: whether you're not paying your supplies or your inventory providers UM. 67 00:04:22,839 --> 00:04:25,720 Speaker 1: And it becomes amount of time. And so they're more 68 00:04:25,760 --> 00:04:29,320 Speaker 1: than well capitalized. They've got more than enough UM federal 69 00:04:29,720 --> 00:04:33,680 Speaker 1: federal stimulus UM and monetary support for now. But it 70 00:04:33,720 --> 00:04:37,919 Speaker 1: becomes a question of of of of when UM, and 71 00:04:38,200 --> 00:04:40,599 Speaker 1: the longer the when is, the harder it will be 72 00:04:40,720 --> 00:04:43,240 Speaker 1: for our financial system. Well, chance, let's think about that 73 00:04:43,240 --> 00:04:45,160 Speaker 1: a little bit further. Someone said to me recently, the 74 00:04:45,240 --> 00:04:47,400 Speaker 1: unlike two thousand and eight, banks are being seen as 75 00:04:47,440 --> 00:04:49,839 Speaker 1: part of the solution now, not part of the problem. 76 00:04:49,839 --> 00:04:53,160 Speaker 1: Are you saying that's a mistake. No, I don't think so. 77 00:04:53,279 --> 00:04:56,080 Speaker 1: The banks are lending right now. There was no real 78 00:04:56,400 --> 00:05:00,960 Speaker 1: lending taking place post two thousand and eight. I don't 79 00:05:00,960 --> 00:05:03,400 Speaker 1: think this is comparable to two thousand and eight. I 80 00:05:03,400 --> 00:05:06,320 Speaker 1: think the volatility is I think, I think the range 81 00:05:06,320 --> 00:05:09,240 Speaker 1: of outcomes possibly. But in two thousand and eight, when 82 00:05:09,240 --> 00:05:11,320 Speaker 1: I was in the markets, we sat there and wondered 83 00:05:11,520 --> 00:05:14,400 Speaker 1: whether the world, the economic system as we knew it 84 00:05:15,240 --> 00:05:17,760 Speaker 1: was going to come to an end. Yeah, this is 85 00:05:17,760 --> 00:05:22,760 Speaker 1: a question of of of innovation, entrepreneurial spirits, um and time. 86 00:05:23,200 --> 00:05:27,960 Speaker 1: And so it's very very different, very very different. So, Charles, 87 00:05:28,080 --> 00:05:31,080 Speaker 1: if there is financial stress equivalent to the two thousand 88 00:05:31,080 --> 00:05:33,920 Speaker 1: and eight crisis, where do you expect to see it 89 00:05:34,120 --> 00:05:38,520 Speaker 1: the most? Where it hasn't necessarily been reflected yet in pricing. Look, 90 00:05:38,680 --> 00:05:43,039 Speaker 1: you always see financial stress UM in credit markets. That's 91 00:05:43,080 --> 00:05:46,800 Speaker 1: where it shows up. That's our leading indicator, and and 92 00:05:46,800 --> 00:05:49,760 Speaker 1: and and there was tremendous stress in the credit markets 93 00:05:50,120 --> 00:05:53,760 Speaker 1: um regardless of acid class um over the last two 94 00:05:53,800 --> 00:05:56,320 Speaker 1: two and a half weeks. But but what's the FED 95 00:05:56,560 --> 00:06:01,360 Speaker 1: now done in terms of their purchases of investment grade credit? 96 00:06:01,960 --> 00:06:07,600 Speaker 1: UM is unprecedented and massively helpful to stabilize in credit 97 00:06:07,680 --> 00:06:11,240 Speaker 1: markets and ultimately stabilizing how yield market. So you would 98 00:06:11,240 --> 00:06:14,080 Speaker 1: expect it to see it in credit spreads. Credit spreads 99 00:06:14,120 --> 00:06:17,680 Speaker 1: blew out over a thousand basis points and have now 100 00:06:18,160 --> 00:06:22,200 Speaker 1: slowly started to close that gap, but very slowly. Charles, 101 00:06:22,240 --> 00:06:26,160 Speaker 1: you're involved in the Whole Foods Amazon transaction. Can you 102 00:06:26,200 --> 00:06:30,800 Speaker 1: get the three of us deliveries from Whole Foods? Yes, 103 00:06:30,920 --> 00:06:35,320 Speaker 1: but you're to thank you Tom. You're gonna need a 104 00:06:35,360 --> 00:06:40,400 Speaker 1: little duration. H I was always great to catch up. 105 00:06:40,440 --> 00:06:43,279 Speaker 1: You appreciate your time this morning, Charles Cancer, their senior 106 00:06:43,360 --> 00:06:50,000 Speaker 1: portfolio manager at New Burger Berman. Let's bring a Joyce 107 00:06:50,080 --> 00:06:53,200 Speaker 1: change share we Jake Morgan, Chair of Global Research Joyce. 108 00:06:53,240 --> 00:06:55,000 Speaker 1: If we got our hands around just how much damage 109 00:06:55,000 --> 00:06:57,440 Speaker 1: we're about to see the dividends worldwide, particularly in the 110 00:06:57,520 --> 00:07:00,599 Speaker 1: United States. Well, I think you're going to continue to 111 00:07:00,640 --> 00:07:04,120 Speaker 1: see revisions on dividends and on earnings, and I think 112 00:07:04,120 --> 00:07:06,480 Speaker 1: the buy backs UM you are going to be off 113 00:07:06,600 --> 00:07:08,440 Speaker 1: you know, considerably. So I don't think that this is 114 00:07:08,560 --> 00:07:11,320 Speaker 1: over yet. I mean, we have the second quarter contracting 115 00:07:11,320 --> 00:07:15,280 Speaker 1: in the US by and we're looking at initial claims 116 00:07:15,480 --> 00:07:18,680 Speaker 1: for you know, to come out over seven million. So 117 00:07:19,000 --> 00:07:21,200 Speaker 1: I think some of these revisions are going to continue. 118 00:07:21,240 --> 00:07:24,000 Speaker 1: We've already done three you know, macro revisions over the 119 00:07:24,080 --> 00:07:26,960 Speaker 1: last month. UM and even though you're seeing some tipid 120 00:07:27,000 --> 00:07:30,960 Speaker 1: recovery UM in UM China, right now. We still think 121 00:07:30,960 --> 00:07:33,040 Speaker 1: that you have worst numbers to come for the second 122 00:07:33,120 --> 00:07:35,640 Speaker 1: quarter of the year. One thing that's been a question 123 00:07:35,680 --> 00:07:39,440 Speaker 1: just going to the question of share buy backs, given 124 00:07:39,480 --> 00:07:42,000 Speaker 1: the fact that share buy backs have been one of 125 00:07:42,160 --> 00:07:46,120 Speaker 1: the only sources of net demand for US equities, Given 126 00:07:46,160 --> 00:07:48,560 Speaker 1: the fact that they're off the table, how much of 127 00:07:48,560 --> 00:07:51,480 Speaker 1: a technical is that that's going to push valuations lower? 128 00:07:51,640 --> 00:07:54,640 Speaker 1: Has that already been priced in? Well, A lot of 129 00:07:54,640 --> 00:07:57,640 Speaker 1: the technical mis sell off we think um you did occur. 130 00:07:57,800 --> 00:07:59,480 Speaker 1: This is kind of why you had the bounce back 131 00:07:59,560 --> 00:08:02,200 Speaker 1: off of the month and rebalancing at the end of 132 00:08:02,200 --> 00:08:04,600 Speaker 1: the month. So our estimate is if you could take 133 00:08:04,600 --> 00:08:07,040 Speaker 1: a look at aggregate at retail flows that could go 134 00:08:07,120 --> 00:08:09,560 Speaker 1: into the bond and equity markets, you still have one 135 00:08:09,560 --> 00:08:11,760 Speaker 1: and a half trillion that could go in over a 136 00:08:11,800 --> 00:08:14,239 Speaker 1: period of time, but some of those sources of support 137 00:08:14,280 --> 00:08:16,680 Speaker 1: like the buybacks will not be there. And you've got 138 00:08:16,680 --> 00:08:19,840 Speaker 1: the earnings revisions downwards and you have the retail money 139 00:08:19,920 --> 00:08:22,800 Speaker 1: is probably not going to come in as rapidly as 140 00:08:22,800 --> 00:08:25,400 Speaker 1: some of these flows that we saw that stabilize the 141 00:08:25,440 --> 00:08:29,560 Speaker 1: market at month. Then around the rebalancing, Joyce I read 142 00:08:29,680 --> 00:08:33,720 Speaker 1: carefully this weekend not only your research, but the compendium 143 00:08:33,840 --> 00:08:38,040 Speaker 1: that you write on international economics. What's the level of 144 00:08:38,080 --> 00:08:41,720 Speaker 1: belief we have now, what's the level of conviction? And 145 00:08:41,800 --> 00:08:45,840 Speaker 1: all the really hard thinking that's going on, like the 146 00:08:45,880 --> 00:08:49,480 Speaker 1: situation and emerging markets is really dire. They have neither 147 00:08:49,640 --> 00:08:53,400 Speaker 1: the health care systems or the resources or really some 148 00:08:53,480 --> 00:08:55,560 Speaker 1: of the fall back that they've had is usually going 149 00:08:55,600 --> 00:08:58,560 Speaker 1: to the developed markets countries for assistance. So it's really 150 00:08:58,600 --> 00:09:01,959 Speaker 1: all on the International arry Fund. Now. The said came 151 00:09:02,000 --> 00:09:03,880 Speaker 1: back with the swap lines, but that's where I think 152 00:09:03,880 --> 00:09:06,720 Speaker 1: you see a lot of downside risk in many countries 153 00:09:06,800 --> 00:09:10,400 Speaker 1: that have really under reported the figures. And even in China, 154 00:09:10,520 --> 00:09:13,520 Speaker 1: you know, they changed the methodology here, um. And I 155 00:09:13,520 --> 00:09:16,000 Speaker 1: think the real test in China is whether they reopen 156 00:09:16,040 --> 00:09:18,480 Speaker 1: the schools at the end of May, UM and the 157 00:09:18,480 --> 00:09:21,679 Speaker 1: beginning of June on whether they can contain a second wave. 158 00:09:22,000 --> 00:09:25,199 Speaker 1: So this is all very fragile right now. With all 159 00:09:25,200 --> 00:09:28,000 Speaker 1: of the support from the government. The government the said 160 00:09:28,160 --> 00:09:31,400 Speaker 1: that you haven't seen, Um, You've seen some tipid stability 161 00:09:31,640 --> 00:09:34,720 Speaker 1: in the financial markets from the very lows that we hit, 162 00:09:35,240 --> 00:09:37,559 Speaker 1: but I think on the economic data you continue to 163 00:09:37,600 --> 00:09:41,199 Speaker 1: see the revisions come downwards. Um. In particular, the labor 164 00:09:41,240 --> 00:09:44,280 Speaker 1: markets have really been in free fall here Joyce less transition, 165 00:09:44,320 --> 00:09:47,600 Speaker 1: just a little bit to a delicate conversation. You've touched 166 00:09:47,600 --> 00:09:49,839 Speaker 1: on it. The under reporting. There have been accusations, in 167 00:09:49,920 --> 00:09:53,000 Speaker 1: fact reports according to an Intel report to the to 168 00:09:53,080 --> 00:09:56,160 Speaker 1: the White House, that China is still under reporting the 169 00:09:56,200 --> 00:09:58,280 Speaker 1: amount of cases and the amount of deaths as well. 170 00:09:58,559 --> 00:10:00,160 Speaker 1: And I wonder if we can fault that in what 171 00:10:00,240 --> 00:10:02,680 Speaker 1: is happening with emerging markets at the moment. There are 172 00:10:02,679 --> 00:10:04,400 Speaker 1: gonna be a lot of countries that can't deal with this, 173 00:10:04,800 --> 00:10:07,720 Speaker 1: can't afford to deal with this, And I just wonder 174 00:10:07,800 --> 00:10:10,400 Speaker 1: the tension that emerges on the other end of this 175 00:10:10,559 --> 00:10:13,240 Speaker 1: between the countries that are drowning in debt and can't 176 00:10:13,240 --> 00:10:16,160 Speaker 1: afford to pay it back and the accusations being thrown 177 00:10:16,160 --> 00:10:17,880 Speaker 1: out at China that they covered it up and didn't 178 00:10:17,920 --> 00:10:20,640 Speaker 1: deal with it well enough. Well, I mean, you have 179 00:10:20,800 --> 00:10:24,559 Speaker 1: seen China change the methodology and they now are including 180 00:10:24,600 --> 00:10:28,559 Speaker 1: the asymptomatic cases. That's raising questions on whether they are 181 00:10:28,600 --> 00:10:30,960 Speaker 1: at the end of containing this curve. Why did they 182 00:10:31,040 --> 00:10:33,719 Speaker 1: change the methodology right now? But you take a look 183 00:10:33,720 --> 00:10:36,040 Speaker 1: at some other countries like India, which is going under 184 00:10:36,080 --> 00:10:38,440 Speaker 1: containment right now, and there are estimates that there's only 185 00:10:38,679 --> 00:10:41,760 Speaker 1: nineteen tests for every one million residents. So you have 186 00:10:41,800 --> 00:10:45,559 Speaker 1: that many of these emerging markets countries are very densely populated, 187 00:10:45,559 --> 00:10:48,440 Speaker 1: the containment measures are harder to enforce, and the health 188 00:10:48,480 --> 00:10:51,920 Speaker 1: care systems are weaker. So we've seen the first statements 189 00:10:51,920 --> 00:10:54,520 Speaker 1: from the I M S calling out for debt relief 190 00:10:54,880 --> 00:10:59,040 Speaker 1: for the frontier emerging markets, um the poorest emerging markets countries. 191 00:10:59,240 --> 00:11:00,960 Speaker 1: But I think this is the debate you're going to 192 00:11:01,000 --> 00:11:03,120 Speaker 1: see from the fall out of this, whether it's the 193 00:11:03,160 --> 00:11:05,440 Speaker 1: emerging markets or some of the debate that you're seeing 194 00:11:05,440 --> 00:11:08,320 Speaker 1: in Europe, It's going to be about burden sharing and 195 00:11:08,440 --> 00:11:11,280 Speaker 1: risk sharing and how this has really sort of changed 196 00:11:11,320 --> 00:11:14,160 Speaker 1: the metric um you know, for the way we need 197 00:11:14,240 --> 00:11:17,199 Speaker 1: to talk about, you know, the level of death that 198 00:11:17,280 --> 00:11:19,800 Speaker 1: will be sustainable. Well, Joyce, let me follow up on 199 00:11:19,840 --> 00:11:21,400 Speaker 1: that just a little bit and make it a little 200 00:11:21,400 --> 00:11:24,000 Speaker 1: bit more pointed. Do you expect these emerging market countries, 201 00:11:24,160 --> 00:11:27,120 Speaker 1: just as far as burden sharing is concerned, to put 202 00:11:27,360 --> 00:11:30,360 Speaker 1: China on the spot to shoulder a lot of that burden. 203 00:11:31,360 --> 00:11:34,120 Speaker 1: I think that you know, China is trying very hard 204 00:11:34,160 --> 00:11:37,199 Speaker 1: to as the source of the contagion, and also as 205 00:11:37,240 --> 00:11:39,800 Speaker 1: the country that has sort of a deeper understanding of 206 00:11:39,800 --> 00:11:42,120 Speaker 1: this because they were the first in they are trying 207 00:11:42,160 --> 00:11:45,439 Speaker 1: to provide some support. So if you look at fifty 208 00:11:45,440 --> 00:11:50,800 Speaker 1: four countries in Africa, they've provided hundred testing kits apiece. UM. 209 00:11:50,880 --> 00:11:52,760 Speaker 1: You know, we hear that they're also fast tracking them 210 00:11:53,000 --> 00:11:56,160 Speaker 1: leaders to Mexico where there has been a real shortage. 211 00:11:56,400 --> 00:11:59,040 Speaker 1: So I think China is trying to see which ways 212 00:11:59,160 --> 00:12:01,720 Speaker 1: it can actually UM try to get out its medical 213 00:12:01,800 --> 00:12:05,480 Speaker 1: expertise you as a first step in UM trying to 214 00:12:05,520 --> 00:12:07,960 Speaker 1: assist other countries and book they've even been sending medical 215 00:12:08,000 --> 00:12:10,840 Speaker 1: supplies to the United States. But I do think that 216 00:12:10,920 --> 00:12:14,120 Speaker 1: you will have UM a discussion on which official debt 217 00:12:14,400 --> 00:12:17,719 Speaker 1: China developed markets as well can be forgiven for these 218 00:12:17,760 --> 00:12:21,160 Speaker 1: emerging markets countries that are the poorest emerging markets. Joyce 219 00:12:21,200 --> 00:12:23,719 Speaker 1: appreciates on This Morning Joyce Change that JP Morgan Chant 220 00:12:23,840 --> 00:12:30,040 Speaker 1: of Global Research better news on this pandemic. There's no 221 00:12:30,160 --> 00:12:34,000 Speaker 1: question about that, but still very grim. The sirens here 222 00:12:34,480 --> 00:12:36,800 Speaker 1: off of Central Park in New York City are really 223 00:12:37,480 --> 00:12:40,360 Speaker 1: something to hear. It is persistent and just a drone 224 00:12:40,400 --> 00:12:43,480 Speaker 1: that's out there is uh. The first responders do. What 225 00:12:43,600 --> 00:12:46,120 Speaker 1: they do is many others try to go on with 226 00:12:46,160 --> 00:12:49,760 Speaker 1: their lives. Some of the people looking at this are 227 00:12:49,800 --> 00:12:52,760 Speaker 1: in public health. There's any number of great institutions around 228 00:12:52,760 --> 00:12:56,480 Speaker 1: this nation, and one of them is that Johns Hopkins University, 229 00:12:56,559 --> 00:12:59,480 Speaker 1: of course, with their engineering long ago and far away. 230 00:12:59,600 --> 00:13:03,400 Speaker 1: Mr Oberg was an engineering student at Johns Hopkins and 231 00:13:03,440 --> 00:13:06,839 Speaker 1: he's endowed their School of Public Health. Here is their 232 00:13:06,880 --> 00:13:12,360 Speaker 1: weiss Stein. Mr Joshua Scharstein Dr Scharstein on the state 233 00:13:12,600 --> 00:13:16,040 Speaker 1: the peak of this pandemic. I think that there's a 234 00:13:16,080 --> 00:13:19,800 Speaker 1: little bit of a misunderstanding about this concept of the peak. 235 00:13:20,120 --> 00:13:24,040 Speaker 1: And you know, I think people, um, I think you know, 236 00:13:24,280 --> 00:13:26,200 Speaker 1: for where we are now, there will be a peak. 237 00:13:26,600 --> 00:13:28,920 Speaker 1: But the only reason it's peaking is because we have 238 00:13:28,960 --> 00:13:31,880 Speaker 1: shut everything now. So I think some people think when 239 00:13:31,880 --> 00:13:33,240 Speaker 1: you're on the other side of the peak, it just 240 00:13:33,320 --> 00:13:35,520 Speaker 1: goes down and we can open everything back up again. 241 00:13:35,800 --> 00:13:38,040 Speaker 1: But if the reason it's peaking is because we've shut 242 00:13:38,040 --> 00:13:40,480 Speaker 1: everything down, as soon as we'd open things up, it's 243 00:13:40,480 --> 00:13:43,880 Speaker 1: going to go up. And so we have to use 244 00:13:43,960 --> 00:13:48,160 Speaker 1: the time um that we have that we're buying to 245 00:13:48,280 --> 00:13:51,199 Speaker 1: strengthen our healthcare system to get more protective equipment to 246 00:13:51,240 --> 00:13:54,920 Speaker 1: healthcare workers, and to build a stronger public health response. 247 00:13:55,280 --> 00:13:58,439 Speaker 1: So we have another set of tools besides just shutting 248 00:13:58,440 --> 00:14:02,360 Speaker 1: everything down. Star to Charstein, we're flattening the curve. It's 249 00:14:02,400 --> 00:14:06,200 Speaker 1: been successful in certain geographies. There's no question about that. 250 00:14:07,040 --> 00:14:10,520 Speaker 1: I think of let's say the Baltimore Orioles. They're gonna 251 00:14:10,559 --> 00:14:13,360 Speaker 1: have a big game here against the Boston Red Sox. 252 00:14:13,720 --> 00:14:17,760 Speaker 1: They're gonna pack cal ripkin Field, no question about that. 253 00:14:18,520 --> 00:14:20,080 Speaker 1: Is it going to be safe to go to a 254 00:14:20,120 --> 00:14:24,400 Speaker 1: baseball game with all those people crammed in? Well, certainly 255 00:14:24,400 --> 00:14:28,320 Speaker 1: it's not safe at the moment um. And uh, you know, 256 00:14:28,680 --> 00:14:31,240 Speaker 1: Oil Park at Sandy Yards is a wonderful ballpark. But 257 00:14:31,400 --> 00:14:35,280 Speaker 1: I think people realize that helps comes first, and you know, 258 00:14:35,480 --> 00:14:38,040 Speaker 1: right now that's not possible. I think what's going to 259 00:14:38,160 --> 00:14:40,800 Speaker 1: happen is we're gonna have to And I like the 260 00:14:40,800 --> 00:14:44,040 Speaker 1: tonality that other people have made. Maybe we've flipped off 261 00:14:44,040 --> 00:14:46,840 Speaker 1: the light on our kind of world very quickly, but 262 00:14:46,880 --> 00:14:48,480 Speaker 1: when we turn it back on, it's going to be 263 00:14:48,520 --> 00:14:51,480 Speaker 1: more like a dimmer switch, you know. I mean, absent 264 00:14:51,560 --> 00:14:54,520 Speaker 1: a miraculous treatment or vaccine, we're gonna have to move 265 00:14:54,720 --> 00:14:57,440 Speaker 1: very slowly. We're gonna have to make sure that we're 266 00:14:57,440 --> 00:15:00,720 Speaker 1: not you know, having the cases searched so I that 267 00:15:00,840 --> 00:15:03,720 Speaker 1: they put our healthcare system in jeopardy again. So I 268 00:15:03,760 --> 00:15:06,840 Speaker 1: guarantee you it won't be baseball games or football matches 269 00:15:06,880 --> 00:15:10,520 Speaker 1: that are going first. It's going to be um it 270 00:15:10,640 --> 00:15:13,920 Speaker 1: send more more people going to work, you know, UM 271 00:15:13,960 --> 00:15:17,280 Speaker 1: in particular industries, probably not bars in restaurants. So it's 272 00:15:17,280 --> 00:15:21,240 Speaker 1: going to be you know, a slow increase and we 273 00:15:21,280 --> 00:15:23,000 Speaker 1: may have to dial it back. If you look at 274 00:15:23,040 --> 00:15:26,520 Speaker 1: what Singapore has been doing. Singapore has you know, kept 275 00:15:26,520 --> 00:15:30,040 Speaker 1: the number of things open, They have encouraged social distancing. 276 00:15:30,080 --> 00:15:34,640 Speaker 1: They do not have large gatherings like you know, sporting events, UM. 277 00:15:34,880 --> 00:15:37,720 Speaker 1: And they've been using a very robots public health response 278 00:15:37,760 --> 00:15:41,680 Speaker 1: to keep it in check, you know, isolation, contact tracing, quarantine. 279 00:15:42,200 --> 00:15:45,240 Speaker 1: But they recently had an increase in cases, so they've 280 00:15:45,320 --> 00:15:48,120 Speaker 1: dialed up in their social distancing. So I think it's 281 00:15:48,120 --> 00:15:50,840 Speaker 1: going to be most likely a period where we're going 282 00:15:50,920 --> 00:15:52,920 Speaker 1: it's like a dimmer switch until we can really get 283 00:15:52,960 --> 00:15:55,960 Speaker 1: to light all the way on. Dr Charston and let 284 00:15:56,000 --> 00:15:59,720 Speaker 1: us turn to JOHNS. Hopkins and public health. I look 285 00:15:59,760 --> 00:16:03,120 Speaker 1: at it like infrastructure where the nation as a tradition 286 00:16:03,160 --> 00:16:07,000 Speaker 1: of being grievously underfunded. There's no question we've been that way. 287 00:16:07,040 --> 00:16:10,400 Speaker 1: When we look at this emergent moment is pandemic. What 288 00:16:10,560 --> 00:16:16,760 Speaker 1: is the first order condition to better public health in America? Well, 289 00:16:16,920 --> 00:16:20,040 Speaker 1: I'm first we need people. You know, public health and 290 00:16:20,120 --> 00:16:23,720 Speaker 1: the United States is law within fifty thou workers. Over 291 00:16:23,760 --> 00:16:27,000 Speaker 1: the last decade or so, um, it's it's very been 292 00:16:27,120 --> 00:16:30,720 Speaker 1: very underfunded and neglected. It's very important that you know, 293 00:16:30,800 --> 00:16:33,960 Speaker 1: particularly now urgently, there people to do some of the 294 00:16:34,000 --> 00:16:37,560 Speaker 1: poor public health task. We're going to need partnerships because 295 00:16:37,600 --> 00:16:40,760 Speaker 1: even with more people, we still won't have the reach. Um. 296 00:16:40,880 --> 00:16:42,800 Speaker 1: So we're going to really have to have the private 297 00:16:42,840 --> 00:16:47,400 Speaker 1: sector mobilized behind public health in different areas, provide resources 298 00:16:47,520 --> 00:16:51,080 Speaker 1: like hotel space and dorms for people to stay when 299 00:16:51,080 --> 00:16:55,880 Speaker 1: they're sick. Um And I think, you know, you know, 300 00:16:55,960 --> 00:16:59,760 Speaker 1: for the future, we're gonna need to rethink our priorities. 301 00:16:59,840 --> 00:17:03,960 Speaker 1: You know, we had so little attention paid to preventtion 302 00:17:04,000 --> 00:17:07,400 Speaker 1: of different kinds, including preventing the harm that a pandemic 303 00:17:07,440 --> 00:17:11,720 Speaker 1: and caught Joshua Sharfstein, he is at Johns Hopkins in 304 00:17:11,800 --> 00:17:14,800 Speaker 1: the Bloomberg School of Public Health, that was just wonderful. 305 00:17:14,840 --> 00:17:17,760 Speaker 1: He's Vice Deein and Paul. You know, everyone we talked 306 00:17:17,760 --> 00:17:21,760 Speaker 1: to in the metal community. Medical community is so holistic. 307 00:17:21,800 --> 00:17:24,600 Speaker 1: They all have specialties, and of course Dr Scheffstein working 308 00:17:24,600 --> 00:17:27,280 Speaker 1: with FDA and working with the State of Maryland and 309 00:17:27,440 --> 00:17:31,640 Speaker 1: public health. But it's amazing how they can span across 310 00:17:31,680 --> 00:17:36,120 Speaker 1: this pandemic and and really inform about what's going on 311 00:17:36,119 --> 00:17:43,399 Speaker 1: and what the trend is. Ted Alden joining us with 312 00:17:43,440 --> 00:17:47,400 Speaker 1: the Council on Foreign Relations TED Foreign Affairs Magazine provided 313 00:17:47,480 --> 00:17:50,720 Speaker 1: great leadership this weekend, clearly with my read of the 314 00:17:50,760 --> 00:17:55,080 Speaker 1: week at a wonderful essay on China and on the 315 00:17:55,200 --> 00:18:00,240 Speaker 1: path forward for the government, very controversial essay about the 316 00:18:00,240 --> 00:18:02,920 Speaker 1: strength of the Communist Party, the future for Mr g 317 00:18:03,520 --> 00:18:08,080 Speaker 1: as well. How fragile do you perceive trade is with 318 00:18:08,080 --> 00:18:11,720 Speaker 1: with Mr? G? Well, I mean, I think I think 319 00:18:11,760 --> 00:18:15,879 Speaker 1: trade is tremendously fragile. I mean already before the current crisis, 320 00:18:15,920 --> 00:18:17,880 Speaker 1: obviously you have the trade war that you've been following 321 00:18:18,000 --> 00:18:21,160 Speaker 1: very closely, So trade relations between the US and China 322 00:18:21,200 --> 00:18:24,560 Speaker 1: we're pretty fragile going into this. Now. You've just got 323 00:18:24,640 --> 00:18:29,040 Speaker 1: a lot of incentives for countries to pursue more nationalist 324 00:18:29,160 --> 00:18:32,439 Speaker 1: policies of various sorts in terms of you know, export controls, 325 00:18:32,600 --> 00:18:38,320 Speaker 1: hoarding medical supplies, bringing back home critical supply chains. So 326 00:18:38,640 --> 00:18:42,199 Speaker 1: I mean, the you know, the current crisis and accelerating 327 00:18:42,240 --> 00:18:45,800 Speaker 1: what we saw before, which was a migration of supply 328 00:18:45,880 --> 00:18:48,320 Speaker 1: chains out of China to other places in Asia, even 329 00:18:48,359 --> 00:18:50,680 Speaker 1: back to the United States to some extent. So trade 330 00:18:50,720 --> 00:18:53,120 Speaker 1: is pretty fragile, but the Chinese have a big incentive 331 00:18:53,160 --> 00:18:56,000 Speaker 1: to keep it, keep it flowing. So I think, you know, 332 00:18:56,000 --> 00:18:58,720 Speaker 1: coming out of this crisis, they've been behaving pretty responsibly. 333 00:18:58,760 --> 00:19:02,560 Speaker 1: So that's that's the positive in all of this. So 334 00:19:02,640 --> 00:19:05,120 Speaker 1: ted since the end of World War two, globalism has 335 00:19:05,280 --> 00:19:08,359 Speaker 1: generally been the theme of trade. How big of a 336 00:19:08,440 --> 00:19:12,359 Speaker 1: blow as globalism taken just in the last several years 337 00:19:12,400 --> 00:19:15,920 Speaker 1: and then punctuated by this virus, well, I mean, I 338 00:19:15,920 --> 00:19:18,160 Speaker 1: think it's taken an enormous blow. You know, it's hard 339 00:19:18,200 --> 00:19:21,040 Speaker 1: for us to remember where we were two or three 340 00:19:21,160 --> 00:19:25,400 Speaker 1: years ago. With this you know, really sort of world 341 00:19:25,640 --> 00:19:28,320 Speaker 1: system set up under the w t O and a 342 00:19:28,440 --> 00:19:32,359 Speaker 1: variety of other regional trade agreements, companies very confident that 343 00:19:32,440 --> 00:19:35,359 Speaker 1: they could locate portions of their production and wherever in 344 00:19:35,400 --> 00:19:37,680 Speaker 1: the world. It made most economic sense to do so 345 00:19:38,520 --> 00:19:42,080 Speaker 1: good services moving very freely. We're in a much more 346 00:19:42,160 --> 00:19:46,080 Speaker 1: fragmented world already. The question really is how companies are 347 00:19:46,080 --> 00:19:48,600 Speaker 1: going to adjust and how much of a hit that 348 00:19:48,760 --> 00:19:51,000 Speaker 1: is on the cost side. And and you know, the 349 00:19:51,280 --> 00:19:54,600 Speaker 1: good news again is that companies are extraordinarily adaptable. We 350 00:19:54,640 --> 00:19:57,879 Speaker 1: won't have these very lean, long supply chains that we 351 00:19:57,960 --> 00:19:59,919 Speaker 1: had a kind of the height of the of the 352 00:20:00,000 --> 00:20:03,400 Speaker 1: of the globalism era. But but we may have more 353 00:20:03,440 --> 00:20:07,040 Speaker 1: redundant systems that work almost as well. So it's a 354 00:20:07,119 --> 00:20:09,880 Speaker 1: very different rule, but it may function quite well anyway. 355 00:20:10,320 --> 00:20:13,679 Speaker 1: What what to multinationals? What a company seed? Frankly, what 356 00:20:13,760 --> 00:20:17,560 Speaker 1: a mid size and small businesses need on trade? Right now? 357 00:20:17,920 --> 00:20:24,120 Speaker 1: From the Trump administration, I think they need more predictability. 358 00:20:24,160 --> 00:20:28,880 Speaker 1: I mean, they've gone through one shock after another in 359 00:20:29,000 --> 00:20:34,520 Speaker 1: terms of the tariffs, in terms of various security related restrictions, 360 00:20:34,960 --> 00:20:38,800 Speaker 1: now obviously the shock coming from the pandemic. I just 361 00:20:38,800 --> 00:20:43,320 Speaker 1: think they need some predictability about you know, here's where 362 00:20:43,400 --> 00:20:45,800 Speaker 1: the administration is going to keep the rules stable, here's 363 00:20:45,800 --> 00:20:47,239 Speaker 1: where they're going to change. I mean, you look at 364 00:20:47,240 --> 00:20:50,439 Speaker 1: the whole tariff process. It's become this free for all 365 00:20:50,720 --> 00:20:55,680 Speaker 1: with certain companies like Apple getting exemptions, other companies not exemptions. 366 00:20:55,720 --> 00:20:59,200 Speaker 1: That's really hard for smaller companies. They can't play that game. 367 00:20:59,400 --> 00:21:01,359 Speaker 1: They know if the rules are gonna be I gotta 368 00:21:01,400 --> 00:21:03,639 Speaker 1: rip up the script here, and it's just real simple, 369 00:21:03,720 --> 00:21:07,399 Speaker 1: Ted Alden, have you been surprised that the President hasn't 370 00:21:07,400 --> 00:21:09,359 Speaker 1: looked like a hero and just come out and said, 371 00:21:09,400 --> 00:21:12,800 Speaker 1: effective pandemic, We're taking the tariffs off and we'll put 372 00:21:12,880 --> 00:21:16,040 Speaker 1: them back on when the pandemic is over. I think 373 00:21:16,040 --> 00:21:18,000 Speaker 1: that would have been a good call. I mean, you know, 374 00:21:18,160 --> 00:21:20,080 Speaker 1: I've been urging that, a lot of other people have 375 00:21:20,320 --> 00:21:22,720 Speaker 1: been urging that. But you know, the tariffs are so 376 00:21:22,800 --> 00:21:25,920 Speaker 1: much a part of his political identity. Right again, it's 377 00:21:25,960 --> 00:21:27,600 Speaker 1: hard to think in the middle of this crisis, but 378 00:21:27,720 --> 00:21:29,760 Speaker 1: you go back even a few months, and he was 379 00:21:29,800 --> 00:21:31,960 Speaker 1: talking every day about what a great thing that tariffs 380 00:21:31,960 --> 00:21:34,159 Speaker 1: have been for the U. S. Economy, how much money 381 00:21:34,240 --> 00:21:36,320 Speaker 1: is flowing into the United States as a result of 382 00:21:36,359 --> 00:21:39,199 Speaker 1: the tariffs. So politically, that's a big U turn for 383 00:21:39,240 --> 00:21:41,359 Speaker 1: the president, even though he's pretty good at making you 384 00:21:41,520 --> 00:21:43,720 Speaker 1: turns Um. I think it would have been a good gesture. 385 00:21:43,760 --> 00:21:46,640 Speaker 1: But you know, as you know, they flirted with with 386 00:21:46,760 --> 00:21:49,800 Speaker 1: some reduction of tariffs on some products, and then backed 387 00:21:49,800 --> 00:21:53,199 Speaker 1: away from that because they said it's too complicated. Manufacturers 388 00:21:53,240 --> 00:21:55,359 Speaker 1: are getting a double whammy from the you know, the 389 00:21:55,680 --> 00:21:59,320 Speaker 1: collapse and demand, the challenge in maintaining their supply chains 390 00:21:59,359 --> 00:22:01,640 Speaker 1: and paying the harriss on top of that, they're still there. 391 00:22:02,160 --> 00:22:05,000 Speaker 1: So ted could it be made that President Trump was 392 00:22:05,000 --> 00:22:08,040 Speaker 1: ahead of the curve with the you know, America first 393 00:22:08,320 --> 00:22:13,160 Speaker 1: and with unilateral trade agreements. You know, you you could 394 00:22:13,320 --> 00:22:15,639 Speaker 1: make that argument. This will be an interesting one for 395 00:22:15,720 --> 00:22:19,040 Speaker 1: the history books, right, you know, to what extent has 396 00:22:19,240 --> 00:22:23,080 Speaker 1: American policy caused some of this retrenchment caused some of 397 00:22:23,080 --> 00:22:26,000 Speaker 1: this pulling back caused some of the shortening of supply chains, 398 00:22:26,320 --> 00:22:28,480 Speaker 1: or to what extent was it really inevitable? I mean 399 00:22:28,480 --> 00:22:31,240 Speaker 1: you could argue, um, yeah, you look at a book 400 00:22:31,240 --> 00:22:34,280 Speaker 1: like Barry Lynn's End of the Line almost fifteen years 401 00:22:34,280 --> 00:22:39,320 Speaker 1: ago saying companies are very vulnerable by the extent of 402 00:22:39,359 --> 00:22:42,080 Speaker 1: these supply chains, by the heavy reliance. Kind of you 403 00:22:42,119 --> 00:22:44,400 Speaker 1: can make it argument and stuff, what's going to happen anyway? 404 00:22:44,760 --> 00:22:47,240 Speaker 1: And then that's been the President Trump really was a 405 00:22:47,240 --> 00:22:50,880 Speaker 1: bit out of the curve. It'll be interesting. Yeah, he's 406 00:22:50,880 --> 00:22:53,560 Speaker 1: obviously observated it with his policies, but I'm not sure 407 00:22:54,000 --> 00:22:55,880 Speaker 1: caused that he may have seen it come and actually 408 00:22:56,880 --> 00:22:59,679 Speaker 1: really impression and a shout out to Kenneth Rogoff of 409 00:22:59,720 --> 00:23:02,720 Speaker 1: Harvard University is a way out front on the fragility 410 00:23:02,760 --> 00:23:05,800 Speaker 1: of those lines as well. It sounds like Napoleon on 411 00:23:05,880 --> 00:23:08,160 Speaker 1: his way to Moscow. Ted Alden, thank you so much. 412 00:23:08,400 --> 00:23:12,840 Speaker 1: I can't say enough, folks about Mr Alden's failure to adjust. 413 00:23:12,920 --> 00:23:17,159 Speaker 1: It is a dense book, but hugely readable on trade. 414 00:23:17,200 --> 00:23:20,800 Speaker 1: It's just a really extraordinary effort from the Council on 415 00:23:20,920 --> 00:23:28,040 Speaker 1: Foreign Relationship. Martin Ratz Morgan Stanley joins as their globile 416 00:23:28,040 --> 00:23:32,439 Speaker 1: oil strategist. Martin, what is Mr Putin's play here? I 417 00:23:32,520 --> 00:23:36,480 Speaker 1: was confused by his headline where I think basically he 418 00:23:36,560 --> 00:23:39,240 Speaker 1: doesn't want to talk to anyone. Am I wrong on 419 00:23:39,320 --> 00:23:44,320 Speaker 1: that welcome? I think we are all a little into 420 00:23:44,400 --> 00:23:47,399 Speaker 1: dark on what executive is going on here. I have 421 00:23:47,560 --> 00:23:50,760 Speaker 1: to say we are now discussing production cuffs that could 422 00:23:50,760 --> 00:23:52,880 Speaker 1: be as much as ten to fifty million barrels a day. 423 00:23:53,440 --> 00:23:56,280 Speaker 1: That has taken us well outside of the range of 424 00:23:56,320 --> 00:23:59,080 Speaker 1: anything that has happened in the bost So we're truly 425 00:23:59,080 --> 00:24:03,040 Speaker 1: an uncharged care story. UM. Given the demands instruction that 426 00:24:03,080 --> 00:24:05,600 Speaker 1: has taken place, it will be inevitable that there will 427 00:24:05,640 --> 00:24:08,680 Speaker 1: be some supply culture curtailment. But whether that will be 428 00:24:09,320 --> 00:24:13,119 Speaker 1: through um, just market prices doing its work and falling 429 00:24:13,119 --> 00:24:14,760 Speaker 1: two levels which are so low that it that it 430 00:24:14,840 --> 00:24:18,040 Speaker 1: forces some shut ins, or whether that will happen almo 431 00:24:18,119 --> 00:24:22,679 Speaker 1: somewhat negotiated basis with all the main producers in one room, 432 00:24:22,480 --> 00:24:27,199 Speaker 1: UM remains remains to be seen. UM. It is definitely 433 00:24:27,520 --> 00:24:29,920 Speaker 1: the case though that if you listen to the rhetoric 434 00:24:30,119 --> 00:24:34,080 Speaker 1: of the US administration, the Russian administration to a certain extent, 435 00:24:34,119 --> 00:24:37,040 Speaker 1: all this also the Southeast, you're starting to see that 436 00:24:37,240 --> 00:24:40,520 Speaker 1: the that this level of oil price is creating real, 437 00:24:40,720 --> 00:24:44,600 Speaker 1: real challenges to domestic oil industries, the government budgets and 438 00:24:44,720 --> 00:24:48,000 Speaker 1: so from the prospective Yeah, it comments like the ones 439 00:24:48,040 --> 00:24:52,120 Speaker 1: that we've seen also from Mr. Putting perhaps are enterprising 440 00:24:52,160 --> 00:24:54,320 Speaker 1: distress in the oil industry is is very, very real. 441 00:24:54,359 --> 00:24:57,560 Speaker 1: At the stage, I'm struggling to understand the optimism that 442 00:24:57,600 --> 00:25:00,760 Speaker 1: we saw in markets and oil markets on Friday from 443 00:25:00,760 --> 00:25:03,760 Speaker 1: the prospect of Russia and Saudi Arabia getting together to 444 00:25:03,800 --> 00:25:07,600 Speaker 1: possibly agree on a ten percent output cut, especially when 445 00:25:07,600 --> 00:25:10,600 Speaker 1: the I e. A says a much bigger cut needs 446 00:25:10,640 --> 00:25:13,239 Speaker 1: to happen in order to stabilize markets. Can you give 447 00:25:13,320 --> 00:25:19,600 Speaker 1: us some light around that? Yeah? Sure, Um, you're not 448 00:25:19,760 --> 00:25:22,800 Speaker 1: alone struggling with this. I think many of us also 449 00:25:22,920 --> 00:25:27,920 Speaker 1: kind of stretching their heads. So from reprospective, Um, you're yea, 450 00:25:28,000 --> 00:25:29,919 Speaker 1: as I said, you're You're not alone there. There's a 451 00:25:29,960 --> 00:25:34,400 Speaker 1: really interesting divergence at the moment between the painful oil 452 00:25:34,440 --> 00:25:36,879 Speaker 1: market the futures market, which is with most people trade 453 00:25:37,280 --> 00:25:40,680 Speaker 1: for the physical markets the market or you know, oil 454 00:25:40,680 --> 00:25:44,520 Speaker 1: companies selling cargoes to each other, and the paper oil 455 00:25:44,560 --> 00:25:48,239 Speaker 1: market is now on brent um in the in the 456 00:25:48,280 --> 00:25:52,440 Speaker 1: low thirties, about thirty four dollars about, but the physical 457 00:25:52,480 --> 00:25:56,159 Speaker 1: oil market is still trading at an unusually deep discounts 458 00:25:56,640 --> 00:26:01,800 Speaker 1: to this. So on Friday, for example, physically delivered brands 459 00:26:01,920 --> 00:26:04,960 Speaker 1: as a daily price assessment, which was sussessed that just 460 00:26:04,960 --> 00:26:06,840 Speaker 1: twenty three dollars a barrel. So you're seeing a near 461 00:26:07,320 --> 00:26:10,159 Speaker 1: near pendle or gap between where the paper market is 462 00:26:10,200 --> 00:26:13,080 Speaker 1: for the physical market is. And I think this placed 463 00:26:13,119 --> 00:26:15,280 Speaker 1: to your confusion that we're all kind of struggling with, 464 00:26:15,800 --> 00:26:18,240 Speaker 1: you know, us on the barrel counting side of the market, 465 00:26:18,320 --> 00:26:21,479 Speaker 1: just adding barrels to supply and demands. We're looking at 466 00:26:21,480 --> 00:26:24,280 Speaker 1: the market meaning, well, piece, there's still an awful of 467 00:26:24,280 --> 00:26:26,840 Speaker 1: oil inventories are going to fill. I is there reason 468 00:26:26,920 --> 00:26:28,879 Speaker 1: to be so oplimistic? And there are little signals in 469 00:26:28,880 --> 00:26:32,080 Speaker 1: the physical markets that we shouldn't be But what you're 470 00:26:32,160 --> 00:26:35,360 Speaker 1: seeing in the paper market is then positioning go very 471 00:26:35,480 --> 00:26:38,919 Speaker 1: very one sided. We all drew the same conclusions that 472 00:26:38,960 --> 00:26:41,280 Speaker 1: there will be huge oversupply in the physical and the 473 00:26:41,280 --> 00:26:44,439 Speaker 1: paper market. People goes very very short. And when you 474 00:26:44,560 --> 00:26:48,840 Speaker 1: have these these these tweets and other things where you 475 00:26:48,920 --> 00:26:52,479 Speaker 1: send like jeez, maybe things are moving, then the paper 476 00:26:52,480 --> 00:26:55,440 Speaker 1: market can move very very quickly. Nobody wants to be 477 00:26:55,600 --> 00:26:58,080 Speaker 1: called short. And then you get these wild moves. But 478 00:26:58,600 --> 00:27:01,520 Speaker 1: they've moved to such an extended now the they've overdone 479 00:27:01,560 --> 00:27:03,280 Speaker 1: it a little bit. Well, let's keep it focused on 480 00:27:03,320 --> 00:27:05,760 Speaker 1: the physical market, Martin, because I think this is important 481 00:27:05,800 --> 00:27:08,159 Speaker 1: and I come up this from just the perspective of 482 00:27:08,200 --> 00:27:11,080 Speaker 1: just the alignment. So forgive me. But if we're very 483 00:27:11,080 --> 00:27:14,320 Speaker 1: close to breaching storage capacity, it doesn't really matter what 484 00:27:14,320 --> 00:27:16,000 Speaker 1: they do on the supply side, because it's not gonna 485 00:27:16,000 --> 00:27:18,720 Speaker 1: be enough to offset the amount of demand that has collapsed. 486 00:27:18,880 --> 00:27:21,800 Speaker 1: And if we are that close to breaching storage capacity, 487 00:27:22,440 --> 00:27:25,320 Speaker 1: then is inevitable that we actually do breach it Martin, 488 00:27:25,400 --> 00:27:27,520 Speaker 1: And I'm thinking about crude at least on the physical side, 489 00:27:27,640 --> 00:27:32,760 Speaker 1: and aggressively lower from here. Look, this is well possible 490 00:27:33,080 --> 00:27:35,600 Speaker 1: at a global level. We're probably not yet at the 491 00:27:35,680 --> 00:27:38,960 Speaker 1: level of what in the industry is often called tank tops, 492 00:27:39,040 --> 00:27:42,320 Speaker 1: at the point where we reach maximum storage spacity. But regionally, 493 00:27:42,560 --> 00:27:46,440 Speaker 1: I've already seeing anecdotal evidence suggest investigations Soldan a big, 494 00:27:46,560 --> 00:27:50,919 Speaker 1: big storage facility in South Africa allegedly close to being fooled, 495 00:27:51,040 --> 00:27:55,160 Speaker 1: the Gyra big storage facility in the UEI allegedly close 496 00:27:55,200 --> 00:27:58,160 Speaker 1: to being foolish, and high some facility single word facility 497 00:27:58,200 --> 00:28:02,000 Speaker 1: to operators saying we're getting very full levels. You're seeing 498 00:28:02,080 --> 00:28:06,200 Speaker 1: floating storage on tankers rising quite strongly. Um, that's typically 499 00:28:06,800 --> 00:28:09,679 Speaker 1: um that's expensive storage. Or if floating storage goes up, 500 00:28:09,760 --> 00:28:12,880 Speaker 1: that's indicating that on shore storage is is getting close 501 00:28:12,960 --> 00:28:17,840 Speaker 1: to being full. And yeah, the amount of total storage 502 00:28:17,880 --> 00:28:20,359 Speaker 1: capacity in the world is not entirely known. It's a 503 00:28:20,400 --> 00:28:24,119 Speaker 1: little bit of a moving target. UM, but it's broadly 504 00:28:24,200 --> 00:28:26,560 Speaker 1: thought to be in the order of a billion barrels 505 00:28:26,720 --> 00:28:30,000 Speaker 1: um that can be stored from here on. We could 506 00:28:30,000 --> 00:28:32,600 Speaker 1: well reach that by the end of April or sometime 507 00:28:32,680 --> 00:28:35,159 Speaker 1: during eight that type of time frame. And what happens 508 00:28:35,160 --> 00:28:40,440 Speaker 1: to all prices then, yeah, is um is untested, but 509 00:28:41,280 --> 00:28:44,240 Speaker 1: theoretically you will oil prices should fall to levels where 510 00:28:44,280 --> 00:28:48,560 Speaker 1: it backs out supply already producing fields too short of 511 00:28:48,640 --> 00:28:50,560 Speaker 1: visit Martin Ross, thank you so much. He's with Morgan 512 00:28:50,640 --> 00:28:54,720 Speaker 1: Stanley their global oil strategy. Thanks for listening to the 513 00:28:54,720 --> 00:28:59,520 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple 514 00:28:59,560 --> 00:29:05,080 Speaker 1: podcast US, SoundCloud, or whichever podcast platform you prefer. I'm 515 00:29:05,080 --> 00:29:08,400 Speaker 1: on Twitter at Tom Keene before the podcast. You can 516 00:29:08,440 --> 00:29:11,640 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.