WEBVTT - Surveillance: Coronavirus Treatments With Sharfstein 0:00:06.360 --> 0:00:12.960 Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.480 Bloomberg dot Com, and of course, on the Bloomberg johnic 0:00:27.600 --> 0:00:30.320 is now pleased to say it's Charles Cantas, Celia, portfolio 0:00:30.400 --> 0:00:33.080 manager at New Burger Berman. Charles, Great to have you 0:00:33.120 --> 0:00:35.000 with us on the program. I know you've been thinking 0:00:35.000 --> 0:00:38.000 about the following and I've been thinking about it too. Privilege, 0:00:38.200 --> 0:00:40.880 the privileged companies that have the access to the liquidity 0:00:41.000 --> 0:00:44.080 to get through this particular crisis. Walk me through your 0:00:44.120 --> 0:00:48.360 thinking at the moment. Look, I think we're in unprecedented times. 0:00:48.560 --> 0:00:53.040 It's all about duration and when we restart the economy 0:00:53.560 --> 0:00:59.000 and the businesses that survived that lull in activity UM 0:00:59.040 --> 0:01:02.200 are going to end and benefit thereafter. So for us, privileged, 0:01:02.240 --> 0:01:05.720 our companies that you thrill to own UM when the 0:01:05.800 --> 0:01:09.720 markets going down, because you know that the strength of 0:01:09.720 --> 0:01:13.840 the business model, the brand, the distribution system, the technology, 0:01:13.880 --> 0:01:18.240 the customer engagement makes them a much stronger company over 0:01:18.319 --> 0:01:20.800 time and they'll end up with higher revenues and higher 0:01:20.800 --> 0:01:22.880 profits to do three years from now as you enter 0:01:22.959 --> 0:01:26.280 the negative of low activity. So you're excited to earn 0:01:26.319 --> 0:01:28.679 them on the way down, and you always want them 0:01:28.680 --> 0:01:32.480 in your portfolio when when when normalcy returns to the environment. 0:01:32.920 --> 0:01:36.640 These are businesses that have the duration, the balance shee 0:01:36.680 --> 0:01:41.679 flexibility UM to get us through this time UM. And 0:01:41.680 --> 0:01:43.520 and that's what's going to matter. We think it's going 0:01:43.560 --> 0:01:47.880 to be a really really difficult time for weak companies 0:01:47.880 --> 0:01:51.200 and for weak countries. And we think, UM, those that 0:01:51.240 --> 0:01:55.840 are privileged, those that have flexibility UM will end up stronger, 0:01:56.000 --> 0:01:59.000 bigger and better. I guess that defines JP morget in 0:01:59.080 --> 0:02:01.280 four other banks out there. I'll let you decide which 0:02:01.280 --> 0:02:04.520 ones they are. But are you predicting them bank consolidation 0:02:05.040 --> 0:02:09.520 because the smaller, the weaker can't survive. You know, bank 0:02:09.560 --> 0:02:13.320 consolidation hasn't really happened for for a for a very 0:02:13.320 --> 0:02:17.880 long time. The large banks themselves can't actually aggregate UM 0:02:17.919 --> 0:02:21.480 any longer. I just feel that it's an environment. You know, 0:02:21.560 --> 0:02:25.560 it's really hard UM to run a business with leverage 0:02:25.600 --> 0:02:28.640 if your revenues go to zero. And so this question 0:02:28.760 --> 0:02:32.040 or duration is fundamental to the help of our economy 0:02:32.360 --> 0:02:35.120 and fund it mental to to to to the nature 0:02:35.120 --> 0:02:38.960 of the recovery we see when when when at some 0:02:39.080 --> 0:02:43.720 point this nation is blessed with with with better help UM, 0:02:43.919 --> 0:02:47.040 and it's it's going to take a herculean effort UM 0:02:47.160 --> 0:02:51.000 to get this economy restarted. And so the risk of 0:02:51.000 --> 0:02:54.680 a policy mistake right now is large. But I would 0:02:54.680 --> 0:02:59.680 never bet against the innovation entrepreneurial spirit of this fine country. 0:02:59.680 --> 0:03:03.880 So ultimately, very polish on America, Charles, I want to 0:03:03.880 --> 0:03:07.480 go to that point, Thomas, referencing JP Morgan Jamie Diamond 0:03:07.520 --> 0:03:10.200 coming out in the shareholder letter saying that he's expecting 0:03:10.639 --> 0:03:14.040 a bad recession ahead with financial stress similar to the 0:03:14.080 --> 0:03:18.760 two thousand and eight crisis. Do you agree? Look, I 0:03:18.800 --> 0:03:24.040 think we're there right now. Economic activity UM has plummeted 0:03:24.160 --> 0:03:29.080 to two levels unimaginable UM a month ago at speeds 0:03:29.160 --> 0:03:33.880 that are unprecedented. Output across this economy for the vast 0:03:33.919 --> 0:03:39.840 majority of sectors, UM is down, you know, dramatically, first 0:03:40.040 --> 0:03:45.040 six and ultimately UM that stressfuls all the way back 0:03:45.640 --> 0:03:49.360 to the financial system. And the question is UM the 0:03:49.520 --> 0:03:52.400 time it takes for it to fall back, and so 0:03:52.680 --> 0:03:57.160 the longer UM the amount of time one ultimately waits. 0:03:57.680 --> 0:04:00.720 UM is not a linear function, it's an expert antial function. 0:04:00.800 --> 0:04:05.680 Meaning for every ten days we wait to restart the economy, UM, 0:04:05.720 --> 0:04:08.760 it will take fifty days or so to get us 0:04:09.000 --> 0:04:11.480 to to get us where we need to be. So 0:04:11.880 --> 0:04:15.560 the banks ultimately bear all the liabilities of those that 0:04:15.760 --> 0:04:18.760 don't get paid, whether you're not paying your commercial rant, 0:04:18.920 --> 0:04:22.680 whether you're not paying your supplies or your inventory providers UM. 0:04:22.839 --> 0:04:25.720 And it becomes amount of time. And so they're more 0:04:25.760 --> 0:04:29.320 than well capitalized. They've got more than enough UM federal 0:04:29.720 --> 0:04:33.680 federal stimulus UM and monetary support for now. But it 0:04:33.720 --> 0:04:37.919 becomes a question of of of of when UM, and 0:04:38.200 --> 0:04:40.599 the longer the when is, the harder it will be 0:04:40.720 --> 0:04:43.240 for our financial system. Well, chance, let's think about that 0:04:43.240 --> 0:04:45.160 a little bit further. Someone said to me recently, the 0:04:45.240 --> 0:04:47.400 unlike two thousand and eight, banks are being seen as 0:04:47.440 --> 0:04:49.839 part of the solution now, not part of the problem. 0:04:49.839 --> 0:04:53.160 Are you saying that's a mistake. No, I don't think so. 0:04:53.279 --> 0:04:56.080 The banks are lending right now. There was no real 0:04:56.400 --> 0:05:00.960 lending taking place post two thousand and eight. I don't 0:05:00.960 --> 0:05:03.400 think this is comparable to two thousand and eight. I 0:05:03.400 --> 0:05:06.320 think the volatility is I think, I think the range 0:05:06.320 --> 0:05:09.240 of outcomes possibly. But in two thousand and eight, when 0:05:09.240 --> 0:05:11.320 I was in the markets, we sat there and wondered 0:05:11.520 --> 0:05:14.400 whether the world, the economic system as we knew it 0:05:15.240 --> 0:05:17.760 was going to come to an end. Yeah, this is 0:05:17.760 --> 0:05:22.760 a question of of of innovation, entrepreneurial spirits, um and time. 0:05:23.200 --> 0:05:27.960 And so it's very very different, very very different. So, Charles, 0:05:28.080 --> 0:05:31.080 if there is financial stress equivalent to the two thousand 0:05:31.080 --> 0:05:33.920 and eight crisis, where do you expect to see it 0:05:34.120 --> 0:05:38.520 the most? Where it hasn't necessarily been reflected yet in pricing. Look, 0:05:38.680 --> 0:05:43.039 you always see financial stress UM in credit markets. That's 0:05:43.080 --> 0:05:46.800 where it shows up. That's our leading indicator, and and 0:05:46.800 --> 0:05:49.760 and and there was tremendous stress in the credit markets 0:05:50.120 --> 0:05:53.760 um regardless of acid class um over the last two 0:05:53.800 --> 0:05:56.320 two and a half weeks. But but what's the FED 0:05:56.560 --> 0:06:01.360 now done in terms of their purchases of investment grade credit? 0:06:01.960 --> 0:06:07.600 UM is unprecedented and massively helpful to stabilize in credit 0:06:07.680 --> 0:06:11.240 markets and ultimately stabilizing how yield market. So you would 0:06:11.240 --> 0:06:14.080 expect it to see it in credit spreads. Credit spreads 0:06:14.120 --> 0:06:17.680 blew out over a thousand basis points and have now 0:06:18.160 --> 0:06:22.200 slowly started to close that gap, but very slowly. Charles, 0:06:22.240 --> 0:06:26.160 you're involved in the Whole Foods Amazon transaction. Can you 0:06:26.200 --> 0:06:30.800 get the three of us deliveries from Whole Foods? Yes, 0:06:30.920 --> 0:06:35.320 but you're to thank you Tom. You're gonna need a 0:06:35.360 --> 0:06:40.400 little duration. H I was always great to catch up. 0:06:40.440 --> 0:06:43.279 You appreciate your time this morning, Charles Cancer, their senior 0:06:43.360 --> 0:06:50.000 portfolio manager at New Burger Berman. Let's bring a Joyce 0:06:50.080 --> 0:06:53.200 change share we Jake Morgan, Chair of Global Research Joyce. 0:06:53.240 --> 0:06:55.000 If we got our hands around just how much damage 0:06:55.000 --> 0:06:57.440 we're about to see the dividends worldwide, particularly in the 0:06:57.520 --> 0:07:00.599 United States. Well, I think you're going to continue to 0:07:00.640 --> 0:07:04.120 see revisions on dividends and on earnings, and I think 0:07:04.120 --> 0:07:06.480 the buy backs UM you are going to be off 0:07:06.600 --> 0:07:08.440 you know, considerably. So I don't think that this is 0:07:08.560 --> 0:07:11.320 over yet. I mean, we have the second quarter contracting 0:07:11.320 --> 0:07:15.280 in the US by and we're looking at initial claims 0:07:15.480 --> 0:07:18.680 for you know, to come out over seven million. So 0:07:19.000 --> 0:07:21.200 I think some of these revisions are going to continue. 0:07:21.240 --> 0:07:24.000 We've already done three you know, macro revisions over the 0:07:24.080 --> 0:07:26.960 last month. UM and even though you're seeing some tipid 0:07:27.000 --> 0:07:30.960 recovery UM in UM China, right now. We still think 0:07:30.960 --> 0:07:33.040 that you have worst numbers to come for the second 0:07:33.120 --> 0:07:35.640 quarter of the year. One thing that's been a question 0:07:35.680 --> 0:07:39.440 just going to the question of share buy backs, given 0:07:39.480 --> 0:07:42.000 the fact that share buy backs have been one of 0:07:42.160 --> 0:07:46.120 the only sources of net demand for US equities, Given 0:07:46.160 --> 0:07:48.560 the fact that they're off the table, how much of 0:07:48.560 --> 0:07:51.480 a technical is that that's going to push valuations lower? 0:07:51.640 --> 0:07:54.640 Has that already been priced in? Well, A lot of 0:07:54.640 --> 0:07:57.640 the technical mis sell off we think um you did occur. 0:07:57.800 --> 0:07:59.480 This is kind of why you had the bounce back 0:07:59.560 --> 0:08:02.200 off of the month and rebalancing at the end of 0:08:02.200 --> 0:08:04.600 the month. So our estimate is if you could take 0:08:04.600 --> 0:08:07.040 a look at aggregate at retail flows that could go 0:08:07.120 --> 0:08:09.560 into the bond and equity markets, you still have one 0:08:09.560 --> 0:08:11.760 and a half trillion that could go in over a 0:08:11.800 --> 0:08:14.239 period of time, but some of those sources of support 0:08:14.280 --> 0:08:16.680 like the buybacks will not be there. And you've got 0:08:16.680 --> 0:08:19.840 the earnings revisions downwards and you have the retail money 0:08:19.920 --> 0:08:22.800 is probably not going to come in as rapidly as 0:08:22.800 --> 0:08:25.400 some of these flows that we saw that stabilize the 0:08:25.440 --> 0:08:29.560 market at month. Then around the rebalancing, Joyce I read 0:08:29.680 --> 0:08:33.720 carefully this weekend not only your research, but the compendium 0:08:33.840 --> 0:08:38.040 that you write on international economics. What's the level of 0:08:38.080 --> 0:08:41.720 belief we have now, what's the level of conviction? And 0:08:41.800 --> 0:08:45.840 all the really hard thinking that's going on, like the 0:08:45.880 --> 0:08:49.480 situation and emerging markets is really dire. They have neither 0:08:49.640 --> 0:08:53.400 the health care systems or the resources or really some 0:08:53.480 --> 0:08:55.560 of the fall back that they've had is usually going 0:08:55.600 --> 0:08:58.560 to the developed markets countries for assistance. So it's really 0:08:58.600 --> 0:09:01.959 all on the International arry Fund. Now. The said came 0:09:02.000 --> 0:09:03.880 back with the swap lines, but that's where I think 0:09:03.880 --> 0:09:06.720 you see a lot of downside risk in many countries 0:09:06.800 --> 0:09:10.400 that have really under reported the figures. And even in China, 0:09:10.520 --> 0:09:13.520 you know, they changed the methodology here, um. And I 0:09:13.520 --> 0:09:16.000 think the real test in China is whether they reopen 0:09:16.040 --> 0:09:18.480 the schools at the end of May, UM and the 0:09:18.480 --> 0:09:21.679 beginning of June on whether they can contain a second wave. 0:09:22.000 --> 0:09:25.199 So this is all very fragile right now. With all 0:09:25.200 --> 0:09:28.000 of the support from the government. The government the said 0:09:28.160 --> 0:09:31.400 that you haven't seen, Um, You've seen some tipid stability 0:09:31.640 --> 0:09:34.720 in the financial markets from the very lows that we hit, 0:09:35.240 --> 0:09:37.559 but I think on the economic data you continue to 0:09:37.600 --> 0:09:41.199 see the revisions come downwards. Um. In particular, the labor 0:09:41.240 --> 0:09:44.280 markets have really been in free fall here Joyce less transition, 0:09:44.320 --> 0:09:47.600 just a little bit to a delicate conversation. You've touched 0:09:47.600 --> 0:09:49.839 on it. The under reporting. There have been accusations, in 0:09:49.920 --> 0:09:53.000 fact reports according to an Intel report to the to 0:09:53.080 --> 0:09:56.160 the White House, that China is still under reporting the 0:09:56.200 --> 0:09:58.280 amount of cases and the amount of deaths as well. 0:09:58.559 --> 0:10:00.160 And I wonder if we can fault that in what 0:10:00.240 --> 0:10:02.680 is happening with emerging markets at the moment. There are 0:10:02.679 --> 0:10:04.400 gonna be a lot of countries that can't deal with this, 0:10:04.800 --> 0:10:07.720 can't afford to deal with this, And I just wonder 0:10:07.800 --> 0:10:10.400 the tension that emerges on the other end of this 0:10:10.559 --> 0:10:13.240 between the countries that are drowning in debt and can't 0:10:13.240 --> 0:10:16.160 afford to pay it back and the accusations being thrown 0:10:16.160 --> 0:10:17.880 out at China that they covered it up and didn't 0:10:17.920 --> 0:10:20.640 deal with it well enough. Well, I mean, you have 0:10:20.800 --> 0:10:24.559 seen China change the methodology and they now are including 0:10:24.600 --> 0:10:28.559 the asymptomatic cases. That's raising questions on whether they are 0:10:28.600 --> 0:10:30.960 at the end of containing this curve. Why did they 0:10:31.040 --> 0:10:33.719 change the methodology right now? But you take a look 0:10:33.720 --> 0:10:36.040 at some other countries like India, which is going under 0:10:36.080 --> 0:10:38.440 containment right now, and there are estimates that there's only 0:10:38.679 --> 0:10:41.760 nineteen tests for every one million residents. So you have 0:10:41.800 --> 0:10:45.559 that many of these emerging markets countries are very densely populated, 0:10:45.559 --> 0:10:48.440 the containment measures are harder to enforce, and the health 0:10:48.480 --> 0:10:51.920 care systems are weaker. So we've seen the first statements 0:10:51.920 --> 0:10:54.520 from the I M S calling out for debt relief 0:10:54.880 --> 0:10:59.040 for the frontier emerging markets, um the poorest emerging markets countries. 0:10:59.240 --> 0:11:00.960 But I think this is the debate you're going to 0:11:01.000 --> 0:11:03.120 see from the fall out of this, whether it's the 0:11:03.160 --> 0:11:05.440 emerging markets or some of the debate that you're seeing 0:11:05.440 --> 0:11:08.320 in Europe, It's going to be about burden sharing and 0:11:08.440 --> 0:11:11.280 risk sharing and how this has really sort of changed 0:11:11.320 --> 0:11:14.160 the metric um you know, for the way we need 0:11:14.240 --> 0:11:17.199 to talk about, you know, the level of death that 0:11:17.280 --> 0:11:19.800 will be sustainable. Well, Joyce, let me follow up on 0:11:19.840 --> 0:11:21.400 that just a little bit and make it a little 0:11:21.400 --> 0:11:24.000 bit more pointed. Do you expect these emerging market countries, 0:11:24.160 --> 0:11:27.120 just as far as burden sharing is concerned, to put 0:11:27.360 --> 0:11:30.360 China on the spot to shoulder a lot of that burden. 0:11:31.360 --> 0:11:34.120 I think that you know, China is trying very hard 0:11:34.160 --> 0:11:37.199 to as the source of the contagion, and also as 0:11:37.240 --> 0:11:39.800 the country that has sort of a deeper understanding of 0:11:39.800 --> 0:11:42.120 this because they were the first in they are trying 0:11:42.160 --> 0:11:45.439 to provide some support. So if you look at fifty 0:11:45.440 --> 0:11:50.800 four countries in Africa, they've provided hundred testing kits apiece. UM. 0:11:50.880 --> 0:11:52.760 You know, we hear that they're also fast tracking them 0:11:53.000 --> 0:11:56.160 leaders to Mexico where there has been a real shortage. 0:11:56.400 --> 0:11:59.040 So I think China is trying to see which ways 0:11:59.160 --> 0:12:01.720 it can actually UM try to get out its medical 0:12:01.800 --> 0:12:05.480 expertise you as a first step in UM trying to 0:12:05.520 --> 0:12:07.960 assist other countries and book they've even been sending medical 0:12:08.000 --> 0:12:10.840 supplies to the United States. But I do think that 0:12:10.920 --> 0:12:14.120 you will have UM a discussion on which official debt 0:12:14.400 --> 0:12:17.719 China developed markets as well can be forgiven for these 0:12:17.760 --> 0:12:21.160 emerging markets countries that are the poorest emerging markets. Joyce 0:12:21.200 --> 0:12:23.719 appreciates on This Morning Joyce Change that JP Morgan Chant 0:12:23.840 --> 0:12:30.040 of Global Research better news on this pandemic. There's no 0:12:30.160 --> 0:12:34.000 question about that, but still very grim. The sirens here 0:12:34.480 --> 0:12:36.800 off of Central Park in New York City are really 0:12:37.480 --> 0:12:40.360 something to hear. It is persistent and just a drone 0:12:40.400 --> 0:12:43.480 that's out there is uh. The first responders do. What 0:12:43.600 --> 0:12:46.120 they do is many others try to go on with 0:12:46.160 --> 0:12:49.760 their lives. Some of the people looking at this are 0:12:49.800 --> 0:12:52.760 in public health. There's any number of great institutions around 0:12:52.760 --> 0:12:56.480 this nation, and one of them is that Johns Hopkins University, 0:12:56.559 --> 0:12:59.480 of course, with their engineering long ago and far away. 0:12:59.600 --> 0:13:03.400 Mr Oberg was an engineering student at Johns Hopkins and 0:13:03.440 --> 0:13:06.839 he's endowed their School of Public Health. Here is their 0:13:06.880 --> 0:13:12.360 weiss Stein. Mr Joshua Scharstein Dr Scharstein on the state 0:13:12.600 --> 0:13:16.040 the peak of this pandemic. I think that there's a 0:13:16.080 --> 0:13:19.800 little bit of a misunderstanding about this concept of the peak. 0:13:20.120 --> 0:13:24.040 And you know, I think people, um, I think you know, 0:13:24.280 --> 0:13:26.200 for where we are now, there will be a peak. 0:13:26.600 --> 0:13:28.920 But the only reason it's peaking is because we have 0:13:28.960 --> 0:13:31.880 shut everything now. So I think some people think when 0:13:31.880 --> 0:13:33.240 you're on the other side of the peak, it just 0:13:33.320 --> 0:13:35.520 goes down and we can open everything back up again. 0:13:35.800 --> 0:13:38.040 But if the reason it's peaking is because we've shut 0:13:38.040 --> 0:13:40.480 everything down, as soon as we'd open things up, it's 0:13:40.480 --> 0:13:43.880 going to go up. And so we have to use 0:13:43.960 --> 0:13:48.160 the time um that we have that we're buying to 0:13:48.280 --> 0:13:51.199 strengthen our healthcare system to get more protective equipment to 0:13:51.240 --> 0:13:54.920 healthcare workers, and to build a stronger public health response. 0:13:55.280 --> 0:13:58.439 So we have another set of tools besides just shutting 0:13:58.440 --> 0:14:02.360 everything down. Star to Charstein, we're flattening the curve. It's 0:14:02.400 --> 0:14:06.200 been successful in certain geographies. There's no question about that. 0:14:07.040 --> 0:14:10.520 I think of let's say the Baltimore Orioles. They're gonna 0:14:10.559 --> 0:14:13.360 have a big game here against the Boston Red Sox. 0:14:13.720 --> 0:14:17.760 They're gonna pack cal ripkin Field, no question about that. 0:14:18.520 --> 0:14:20.080 Is it going to be safe to go to a 0:14:20.120 --> 0:14:24.400 baseball game with all those people crammed in? Well, certainly 0:14:24.400 --> 0:14:28.320 it's not safe at the moment um. And uh, you know, 0:14:28.680 --> 0:14:31.240 Oil Park at Sandy Yards is a wonderful ballpark. But 0:14:31.400 --> 0:14:35.280 I think people realize that helps comes first, and you know, 0:14:35.480 --> 0:14:38.040 right now that's not possible. I think what's going to 0:14:38.160 --> 0:14:40.800 happen is we're gonna have to And I like the 0:14:40.800 --> 0:14:44.040 tonality that other people have made. Maybe we've flipped off 0:14:44.040 --> 0:14:46.840 the light on our kind of world very quickly, but 0:14:46.880 --> 0:14:48.480 when we turn it back on, it's going to be 0:14:48.520 --> 0:14:51.480 more like a dimmer switch, you know. I mean, absent 0:14:51.560 --> 0:14:54.520 a miraculous treatment or vaccine, we're gonna have to move 0:14:54.720 --> 0:14:57.440 very slowly. We're gonna have to make sure that we're 0:14:57.440 --> 0:15:00.720 not you know, having the cases searched so I that 0:15:00.840 --> 0:15:03.720 they put our healthcare system in jeopardy again. So I 0:15:03.760 --> 0:15:06.840 guarantee you it won't be baseball games or football matches 0:15:06.880 --> 0:15:10.520 that are going first. It's going to be um it 0:15:10.640 --> 0:15:13.920 send more more people going to work, you know, UM 0:15:13.960 --> 0:15:17.280 in particular industries, probably not bars in restaurants. So it's 0:15:17.280 --> 0:15:21.240 going to be you know, a slow increase and we 0:15:21.280 --> 0:15:23.000 may have to dial it back. If you look at 0:15:23.040 --> 0:15:26.520 what Singapore has been doing. Singapore has you know, kept 0:15:26.520 --> 0:15:30.040 the number of things open, They have encouraged social distancing. 0:15:30.080 --> 0:15:34.640 They do not have large gatherings like you know, sporting events, UM. 0:15:34.880 --> 0:15:37.720 And they've been using a very robots public health response 0:15:37.760 --> 0:15:41.680 to keep it in check, you know, isolation, contact tracing, quarantine. 0:15:42.200 --> 0:15:45.240 But they recently had an increase in cases, so they've 0:15:45.320 --> 0:15:48.120 dialed up in their social distancing. So I think it's 0:15:48.120 --> 0:15:50.840 going to be most likely a period where we're going 0:15:50.920 --> 0:15:52.920 it's like a dimmer switch until we can really get 0:15:52.960 --> 0:15:55.960 to light all the way on. Dr Charston and let 0:15:56.000 --> 0:15:59.720 us turn to JOHNS. Hopkins and public health. I look 0:15:59.760 --> 0:16:03.120 at it like infrastructure where the nation as a tradition 0:16:03.160 --> 0:16:07.000 of being grievously underfunded. There's no question we've been that way. 0:16:07.040 --> 0:16:10.400 When we look at this emergent moment is pandemic. What 0:16:10.560 --> 0:16:16.760 is the first order condition to better public health in America? Well, 0:16:16.920 --> 0:16:20.040 I'm first we need people. You know, public health and 0:16:20.120 --> 0:16:23.720 the United States is law within fifty thou workers. Over 0:16:23.760 --> 0:16:27.000 the last decade or so, um, it's it's very been 0:16:27.120 --> 0:16:30.720 very underfunded and neglected. It's very important that you know, 0:16:30.800 --> 0:16:33.960 particularly now urgently, there people to do some of the 0:16:34.000 --> 0:16:37.560 poor public health task. We're going to need partnerships because 0:16:37.600 --> 0:16:40.760 even with more people, we still won't have the reach. Um. 0:16:40.880 --> 0:16:42.800 So we're going to really have to have the private 0:16:42.840 --> 0:16:47.400 sector mobilized behind public health in different areas, provide resources 0:16:47.520 --> 0:16:51.080 like hotel space and dorms for people to stay when 0:16:51.080 --> 0:16:55.880 they're sick. Um And I think, you know, you know, 0:16:55.960 --> 0:16:59.760 for the future, we're gonna need to rethink our priorities. 0:16:59.840 --> 0:17:03.960 You know, we had so little attention paid to preventtion 0:17:04.000 --> 0:17:07.400 of different kinds, including preventing the harm that a pandemic 0:17:07.440 --> 0:17:11.720 and caught Joshua Sharfstein, he is at Johns Hopkins in 0:17:11.800 --> 0:17:14.800 the Bloomberg School of Public Health, that was just wonderful. 0:17:14.840 --> 0:17:17.760 He's Vice Deein and Paul. You know, everyone we talked 0:17:17.760 --> 0:17:21.760 to in the metal community. Medical community is so holistic. 0:17:21.800 --> 0:17:24.600 They all have specialties, and of course Dr Scheffstein working 0:17:24.600 --> 0:17:27.280 with FDA and working with the State of Maryland and 0:17:27.440 --> 0:17:31.640 public health. But it's amazing how they can span across 0:17:31.680 --> 0:17:36.120 this pandemic and and really inform about what's going on 0:17:36.119 --> 0:17:43.399 and what the trend is. Ted Alden joining us with 0:17:43.440 --> 0:17:47.400 the Council on Foreign Relations TED Foreign Affairs Magazine provided 0:17:47.480 --> 0:17:50.720 great leadership this weekend, clearly with my read of the 0:17:50.760 --> 0:17:55.080 week at a wonderful essay on China and on the 0:17:55.200 --> 0:18:00.240 path forward for the government, very controversial essay about the 0:18:00.240 --> 0:18:02.920 strength of the Communist Party, the future for Mr g 0:18:03.520 --> 0:18:08.080 as well. How fragile do you perceive trade is with 0:18:08.080 --> 0:18:11.720 with Mr? G? Well, I mean, I think I think 0:18:11.760 --> 0:18:15.879 trade is tremendously fragile. I mean already before the current crisis, 0:18:15.920 --> 0:18:17.880 obviously you have the trade war that you've been following 0:18:18.000 --> 0:18:21.160 very closely, So trade relations between the US and China 0:18:21.200 --> 0:18:24.560 we're pretty fragile going into this. Now. You've just got 0:18:24.640 --> 0:18:29.040 a lot of incentives for countries to pursue more nationalist 0:18:29.160 --> 0:18:32.439 policies of various sorts in terms of you know, export controls, 0:18:32.600 --> 0:18:38.320 hoarding medical supplies, bringing back home critical supply chains. So 0:18:38.640 --> 0:18:42.199 I mean, the you know, the current crisis and accelerating 0:18:42.240 --> 0:18:45.800 what we saw before, which was a migration of supply 0:18:45.880 --> 0:18:48.320 chains out of China to other places in Asia, even 0:18:48.359 --> 0:18:50.680 back to the United States to some extent. So trade 0:18:50.720 --> 0:18:53.120 is pretty fragile, but the Chinese have a big incentive 0:18:53.160 --> 0:18:56.000 to keep it, keep it flowing. So I think, you know, 0:18:56.000 --> 0:18:58.720 coming out of this crisis, they've been behaving pretty responsibly. 0:18:58.760 --> 0:19:02.560 So that's that's the positive in all of this. So 0:19:02.640 --> 0:19:05.120 ted since the end of World War two, globalism has 0:19:05.280 --> 0:19:08.359 generally been the theme of trade. How big of a 0:19:08.440 --> 0:19:12.359 blow as globalism taken just in the last several years 0:19:12.400 --> 0:19:15.920 and then punctuated by this virus, well, I mean, I 0:19:15.920 --> 0:19:18.160 think it's taken an enormous blow. You know, it's hard 0:19:18.200 --> 0:19:21.040 for us to remember where we were two or three 0:19:21.160 --> 0:19:25.400 years ago. With this you know, really sort of world 0:19:25.640 --> 0:19:28.320 system set up under the w t O and a 0:19:28.440 --> 0:19:32.359 variety of other regional trade agreements, companies very confident that 0:19:32.440 --> 0:19:35.359 they could locate portions of their production and wherever in 0:19:35.400 --> 0:19:37.680 the world. It made most economic sense to do so 0:19:38.520 --> 0:19:42.080 good services moving very freely. We're in a much more 0:19:42.160 --> 0:19:46.080 fragmented world already. The question really is how companies are 0:19:46.080 --> 0:19:48.600 going to adjust and how much of a hit that 0:19:48.760 --> 0:19:51.000 is on the cost side. And and you know, the 0:19:51.280 --> 0:19:54.600 good news again is that companies are extraordinarily adaptable. We 0:19:54.640 --> 0:19:57.879 won't have these very lean, long supply chains that we 0:19:57.960 --> 0:19:59.919 had a kind of the height of the of the 0:20:00.000 --> 0:20:03.400 of the globalism era. But but we may have more 0:20:03.440 --> 0:20:07.040 redundant systems that work almost as well. So it's a 0:20:07.119 --> 0:20:09.880 very different rule, but it may function quite well anyway. 0:20:10.320 --> 0:20:13.679 What what to multinationals? What a company seed? Frankly, what 0:20:13.760 --> 0:20:17.560 a mid size and small businesses need on trade? Right now? 0:20:17.920 --> 0:20:24.120 From the Trump administration, I think they need more predictability. 0:20:24.160 --> 0:20:28.880 I mean, they've gone through one shock after another in 0:20:29.000 --> 0:20:34.520 terms of the tariffs, in terms of various security related restrictions, 0:20:34.960 --> 0:20:38.800 now obviously the shock coming from the pandemic. I just 0:20:38.800 --> 0:20:43.320 think they need some predictability about you know, here's where 0:20:43.400 --> 0:20:45.800 the administration is going to keep the rules stable, here's 0:20:45.800 --> 0:20:47.239 where they're going to change. I mean, you look at 0:20:47.240 --> 0:20:50.439 the whole tariff process. It's become this free for all 0:20:50.720 --> 0:20:55.680 with certain companies like Apple getting exemptions, other companies not exemptions. 0:20:55.720 --> 0:20:59.200 That's really hard for smaller companies. They can't play that game. 0:20:59.400 --> 0:21:01.359 They know if the rules are gonna be I gotta 0:21:01.400 --> 0:21:03.639 rip up the script here, and it's just real simple, 0:21:03.720 --> 0:21:07.399 Ted Alden, have you been surprised that the President hasn't 0:21:07.400 --> 0:21:09.359 looked like a hero and just come out and said, 0:21:09.400 --> 0:21:12.800 effective pandemic, We're taking the tariffs off and we'll put 0:21:12.880 --> 0:21:16.040 them back on when the pandemic is over. I think 0:21:16.040 --> 0:21:18.000 that would have been a good call. I mean, you know, 0:21:18.160 --> 0:21:20.080 I've been urging that, a lot of other people have 0:21:20.320 --> 0:21:22.720 been urging that. But you know, the tariffs are so 0:21:22.800 --> 0:21:25.920 much a part of his political identity. Right again, it's 0:21:25.960 --> 0:21:27.600 hard to think in the middle of this crisis, but 0:21:27.720 --> 0:21:29.760 you go back even a few months, and he was 0:21:29.800 --> 0:21:31.960 talking every day about what a great thing that tariffs 0:21:31.960 --> 0:21:34.159 have been for the U. S. Economy, how much money 0:21:34.240 --> 0:21:36.320 is flowing into the United States as a result of 0:21:36.359 --> 0:21:39.199 the tariffs. So politically, that's a big U turn for 0:21:39.240 --> 0:21:41.359 the president, even though he's pretty good at making you 0:21:41.520 --> 0:21:43.720 turns Um. I think it would have been a good gesture. 0:21:43.760 --> 0:21:46.640 But you know, as you know, they flirted with with 0:21:46.760 --> 0:21:49.800 some reduction of tariffs on some products, and then backed 0:21:49.800 --> 0:21:53.199 away from that because they said it's too complicated. Manufacturers 0:21:53.240 --> 0:21:55.359 are getting a double whammy from the you know, the 0:21:55.680 --> 0:21:59.320 collapse and demand, the challenge in maintaining their supply chains 0:21:59.359 --> 0:22:01.640 and paying the harriss on top of that, they're still there. 0:22:02.160 --> 0:22:05.000 So ted could it be made that President Trump was 0:22:05.000 --> 0:22:08.040 ahead of the curve with the you know, America first 0:22:08.320 --> 0:22:13.160 and with unilateral trade agreements. You know, you you could 0:22:13.320 --> 0:22:15.639 make that argument. This will be an interesting one for 0:22:15.720 --> 0:22:19.040 the history books, right, you know, to what extent has 0:22:19.240 --> 0:22:23.080 American policy caused some of this retrenchment caused some of 0:22:23.080 --> 0:22:26.000 this pulling back caused some of the shortening of supply chains, 0:22:26.320 --> 0:22:28.480 or to what extent was it really inevitable? I mean 0:22:28.480 --> 0:22:31.240 you could argue, um, yeah, you look at a book 0:22:31.240 --> 0:22:34.280 like Barry Lynn's End of the Line almost fifteen years 0:22:34.280 --> 0:22:39.320