1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,160 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We 5 00:00:27,240 --> 00:00:30,440 Speaker 1: begin the program with Alan Ruskin of Deutsche Bank. Here's 6 00:00:30,440 --> 00:00:33,200 Speaker 1: a line from Alan. Four you g ten central banks 7 00:00:33,240 --> 00:00:36,800 Speaker 1: have expanded their collective balance sheet by two point seven 8 00:00:36,920 --> 00:00:40,879 Speaker 1: trillion dollars, and two thirds of this comes from one 9 00:00:40,920 --> 00:00:44,760 Speaker 1: central bank alone, the Federal Reserve. Alan, fantastic to catch 10 00:00:44,840 --> 00:00:47,040 Speaker 1: up with you, and brilliant research as always with the 11 00:00:47,040 --> 00:00:49,680 Speaker 1: team over at Deutsche. Just run us through the compare 12 00:00:49,680 --> 00:00:55,400 Speaker 1: and contrast right now between Europe and the US. UM Well, John, 13 00:00:55,440 --> 00:00:58,800 Speaker 1: I think you're absolutely right, you know, to make a 14 00:00:58,840 --> 00:01:01,560 Speaker 1: distinction not only in terms of what's going on in 15 00:01:01,680 --> 00:01:03,960 Speaker 1: terms of monetary policy, but what's going on in the 16 00:01:04,000 --> 00:01:06,600 Speaker 1: fiscal policy. In fact, fiscal policy made it more important. 17 00:01:06,600 --> 00:01:09,240 Speaker 1: But on the monetary policy side, we all knew that 18 00:01:09,319 --> 00:01:12,280 Speaker 1: coming into a crisis, Europe starting off with negative rates 19 00:01:12,360 --> 00:01:13,839 Speaker 1: was not going to be able to do very much. 20 00:01:14,319 --> 00:01:16,360 Speaker 1: That there was a little bit more leeway from the 21 00:01:16,400 --> 00:01:20,000 Speaker 1: Federal Reserve. But it didn't just stop there. Really, we 22 00:01:20,120 --> 00:01:22,919 Speaker 1: also knew that both central banks would get pulled into 23 00:01:23,040 --> 00:01:27,320 Speaker 1: unorthodox policies, notably, you know, expanding their balance sheets, and 24 00:01:27,880 --> 00:01:30,280 Speaker 1: so far, you know, the action has all beyond the 25 00:01:30,319 --> 00:01:33,880 Speaker 1: Federal Reserve side. Perhaps Europe is you know, not really 26 00:01:34,080 --> 00:01:37,880 Speaker 1: come off the quee the way that's que after the 27 00:01:37,920 --> 00:01:40,400 Speaker 1: two thousand and eight crisis, the way the Federal reserved it. 28 00:01:40,560 --> 00:01:43,640 Speaker 1: So um, the Fed you know, was obviously shrinking as 29 00:01:43,640 --> 00:01:47,400 Speaker 1: balance sheet now massively re expanding its balance sheet. But 30 00:01:47,720 --> 00:01:50,720 Speaker 1: you know, it's it's tended to show a few limits. 31 00:01:50,880 --> 00:01:54,280 Speaker 1: It's uh, we know the detail in terms of willingness 32 00:01:54,360 --> 00:01:57,880 Speaker 1: to extend out the credit structures. So the Federal Reserve 33 00:01:58,000 --> 00:02:01,960 Speaker 1: as the world's most important bank, doing everything it can 34 00:02:02,360 --> 00:02:07,680 Speaker 1: to ameliorate what is really seen as the sharpest decline 35 00:02:07,840 --> 00:02:12,240 Speaker 1: in output in modern economic history. Pretty easy at this point, Alan, 36 00:02:12,280 --> 00:02:15,200 Speaker 1: I'm sure you'd agree to identify the differences between the 37 00:02:15,280 --> 00:02:17,640 Speaker 1: United States and Europe. Yet pushing that view through the 38 00:02:17,680 --> 00:02:21,280 Speaker 1: market is actually far more complex. Through the month of April, 39 00:02:21,440 --> 00:02:23,160 Speaker 1: over the last three or four weeks, we've had a 40 00:02:23,280 --> 00:02:26,240 Speaker 1: range on euro dollar of what one oh seven out 41 00:02:26,240 --> 00:02:29,680 Speaker 1: towards one ten one oh nine, pretty tight narrow trading 42 00:02:29,760 --> 00:02:33,080 Speaker 1: range in G ten Allen. Given the differences that you 43 00:02:33,160 --> 00:02:36,800 Speaker 1: see in Europe and the United States, Why yeah, I 44 00:02:36,800 --> 00:02:39,160 Speaker 1: think markets a little bit of fuddled in terms of 45 00:02:39,200 --> 00:02:43,840 Speaker 1: just trying to ascertain, you know, firstly, do you respond 46 00:02:44,120 --> 00:02:49,320 Speaker 1: to the fact that the US is policy measures have 47 00:02:49,800 --> 00:02:54,240 Speaker 1: inevitably expanded UH debt as far as I can see, 48 00:02:54,280 --> 00:02:57,280 Speaker 1: So I think there's a sort of a latent concern 49 00:02:57,320 --> 00:03:01,880 Speaker 1: there about the fiscal deficits and at um. And then 50 00:03:02,240 --> 00:03:04,480 Speaker 1: I think, you know, there are other elements there where 51 00:03:04,919 --> 00:03:07,720 Speaker 1: people are considering what is a labor market response going 52 00:03:07,760 --> 00:03:11,480 Speaker 1: to be like in the US versus Europe, your euros. 53 00:03:12,360 --> 00:03:15,480 Speaker 1: In the US, you're certainly seeing unemployment taking up very, 54 00:03:15,600 --> 00:03:17,440 Speaker 1: very sharply. In Europe, it perhaps is going to be 55 00:03:17,480 --> 00:03:20,240 Speaker 1: a little bit slower. Um. Is that flexibility a good 56 00:03:20,320 --> 00:03:22,519 Speaker 1: or bad thing? The market is confused on that issue. 57 00:03:22,720 --> 00:03:24,640 Speaker 1: And then I think the other element is just you know, 58 00:03:24,760 --> 00:03:28,040 Speaker 1: just the course of this virus. I think there's certainly 59 00:03:28,080 --> 00:03:31,720 Speaker 1: some concern that the US's response is going to be 60 00:03:32,440 --> 00:03:36,320 Speaker 1: trickier going forward, particularly when one state, you know, for example, 61 00:03:36,920 --> 00:03:41,600 Speaker 1: opens and shifts away from lockdowns, another state maybe doesn't, 62 00:03:41,600 --> 00:03:45,480 Speaker 1: but you still have travel between two states. That that 63 00:03:45,640 --> 00:03:47,920 Speaker 1: sort of problem that you have in the United States, 64 00:03:47,920 --> 00:03:50,440 Speaker 1: you're probably not going to have in Europe. So, um, 65 00:03:50,480 --> 00:03:52,800 Speaker 1: I think there's a multitude of different factors the markets 66 00:03:52,840 --> 00:03:55,800 Speaker 1: looking at and they've got bigger fish to fry, as 67 00:03:55,800 --> 00:03:58,040 Speaker 1: it were. I think, you know, particularly in the emerging 68 00:03:58,080 --> 00:04:00,920 Speaker 1: market world. Um, you know current the traders that's really 69 00:04:00,920 --> 00:04:03,840 Speaker 1: seizing on on on trading in that space. Well, that's 70 00:04:03,920 --> 00:04:05,480 Speaker 1: right where I wanted to go, just because the time, 71 00:04:05,760 --> 00:04:08,760 Speaker 1: Alan Ruskin, and to me, the single moment on this 72 00:04:08,920 --> 00:04:12,200 Speaker 1: Friday is Brazil. Brazil's basically got to get the Monday. 73 00:04:12,560 --> 00:04:15,360 Speaker 1: How urgent is it for Brazil to begin to solve 74 00:04:15,440 --> 00:04:20,320 Speaker 1: some of their problems? Um, well, it's been urgent for 75 00:04:20,360 --> 00:04:23,200 Speaker 1: a long time. I think the big issue you faced 76 00:04:23,200 --> 00:04:25,599 Speaker 1: with Brazil and a few other emerging market countries is 77 00:04:25,640 --> 00:04:30,760 Speaker 1: they came into this crisis with a fiscal problem to 78 00:04:30,800 --> 00:04:34,719 Speaker 1: begin with. And there's a long history of course going back, 79 00:04:34,800 --> 00:04:38,200 Speaker 1: you know, now, going back a long way where central 80 00:04:38,200 --> 00:04:42,600 Speaker 1: banks have been asked to effectively financed discore deficits. Um. 81 00:04:42,640 --> 00:04:46,200 Speaker 1: So deficits have not been nessy that easily financed. UM 82 00:04:46,240 --> 00:04:50,360 Speaker 1: And I think that, you know, the history with both 83 00:04:50,400 --> 00:04:52,400 Speaker 1: in terms of the long term and the short term 84 00:04:53,640 --> 00:04:57,400 Speaker 1: is deeply problematic, and usually it's going to resolve itself 85 00:04:57,440 --> 00:05:00,320 Speaker 1: partly in the safety development exists, which is the current arency. 86 00:05:00,360 --> 00:05:03,160 Speaker 1: And that's exactly what we're seeing. Well, that's exactly what 87 00:05:03,160 --> 00:05:06,159 Speaker 1: we're seeing, except that you would expect the dollar to 88 00:05:06,240 --> 00:05:09,160 Speaker 1: weaken then, I mean, you'd expect the dollar to eventually 89 00:05:09,160 --> 00:05:12,720 Speaker 1: weaken if the Federal Reserve is basically monetizing the debts 90 00:05:12,760 --> 00:05:15,320 Speaker 1: of the United States, and that seems by all means 91 00:05:15,360 --> 00:05:17,880 Speaker 1: what it's doing. As it's balance sheet expands by two 92 00:05:17,920 --> 00:05:21,080 Speaker 1: point four trillion dollars since the end of February, why 93 00:05:21,120 --> 00:05:24,680 Speaker 1: are we not seeing a week or dollar Lisa, So 94 00:05:24,760 --> 00:05:27,320 Speaker 1: let me just make a quick distinction between what I 95 00:05:27,400 --> 00:05:30,239 Speaker 1: was saying earlier, which was really related to brasil Um, 96 00:05:30,240 --> 00:05:34,000 Speaker 1: and why the Brazilian realizes, Actually, you know, weakening the 97 00:05:34,040 --> 00:05:36,640 Speaker 1: dollar is a bit of a special case. Um so 98 00:05:36,680 --> 00:05:41,240 Speaker 1: I think, you know, being the major global reserve currency, 99 00:05:41,360 --> 00:05:46,080 Speaker 1: there's some sense there that regardless of some of the 100 00:05:46,240 --> 00:05:48,760 Speaker 1: policies in the short term and perhaps even in the 101 00:05:48,800 --> 00:05:53,720 Speaker 1: longer term, numerous transactions have been done, and they have 102 00:05:53,839 --> 00:05:59,680 Speaker 1: been enormous balance sheet in balances effectively which have resulted 103 00:05:59,720 --> 00:06:03,560 Speaker 1: in liquidity related demand for the dollar. So I think 104 00:06:03,640 --> 00:06:07,360 Speaker 1: what you saw particularly you know three or four weeks back, 105 00:06:07,760 --> 00:06:11,159 Speaker 1: with the dollar had a natural bid because of what 106 00:06:11,279 --> 00:06:16,440 Speaker 1: effectively were bank related in balances. We saw it particularly 107 00:06:16,440 --> 00:06:20,280 Speaker 1: as it related to Japanese banks, to lesser degree European 108 00:06:20,320 --> 00:06:24,440 Speaker 1: banks as well, UM, whereby there was extraordinary demand for dollars. 109 00:06:24,600 --> 00:06:26,800 Speaker 1: And if you actually look at what the Central Bank 110 00:06:26,880 --> 00:06:29,480 Speaker 1: has done, um that you know, these swap lines to 111 00:06:29,600 --> 00:06:32,479 Speaker 1: the b o J, I think it's being utilized extent 112 00:06:32,600 --> 00:06:35,719 Speaker 1: about two billion Europe about a hundred and fifty billion, 113 00:06:36,080 --> 00:06:40,120 Speaker 1: So there has been a strong need for dollar liquidity 114 00:06:40,240 --> 00:06:43,480 Speaker 1: globally um. And without that liquidity, the dollar would have 115 00:06:43,520 --> 00:06:46,680 Speaker 1: been even stronger. Alan, always great to get your thoughts 116 00:06:46,680 --> 00:06:48,800 Speaker 1: on this program, Alan Ruskin, their touts your bank. Hope 117 00:06:48,800 --> 00:06:51,040 Speaker 1: you and yours are doing well. Alan, thank you very 118 00:06:51,120 --> 00:06:56,880 Speaker 1: much for joining us. Let's get a larger global view 119 00:06:56,920 --> 00:07:00,400 Speaker 1: on oil. He is a head of Commodities and Derivative Research, 120 00:07:00,480 --> 00:07:04,040 Speaker 1: Francisco Blanche for the Bank of America. Francisco, as you 121 00:07:04,120 --> 00:07:07,080 Speaker 1: write your research for the weekend, where's the most efficacious 122 00:07:07,120 --> 00:07:10,040 Speaker 1: price of oil right now, I've lost track. Where's the 123 00:07:10,840 --> 00:07:16,240 Speaker 1: good spot for Brent crude to be right now? Well, um, 124 00:07:16,280 --> 00:07:19,440 Speaker 1: I think I mean Thomas. As you pointed out, the 125 00:07:19,600 --> 00:07:25,640 Speaker 1: economic data is so diffical that UH commodities over to hide. 126 00:07:26,240 --> 00:07:30,920 Speaker 1: The commodity markets provide a completely unfiltered view of the 127 00:07:31,040 --> 00:07:35,920 Speaker 1: economic reality that we're facing today, which which is completely unprecedented. 128 00:07:36,000 --> 00:07:40,080 Speaker 1: We've never stopped the world for a few months, um 129 00:07:40,400 --> 00:07:43,400 Speaker 1: out of the seven and UH and and and the 130 00:07:43,680 --> 00:07:46,800 Speaker 1: problem in oil markets just keeps passing from country to country. 131 00:07:47,200 --> 00:07:51,840 Speaker 1: When OPEC decided to cut production a couple of weeks ago, 132 00:07:52,520 --> 00:07:57,760 Speaker 1: the price of the price of of of Dubai and 133 00:07:57,840 --> 00:08:01,480 Speaker 1: coment grades was lifted. I think previce a brand, but 134 00:08:01,560 --> 00:08:04,280 Speaker 1: it didn't do anything to prevent wt I from trading 135 00:08:04,440 --> 00:08:08,240 Speaker 1: negative at the beginning of the week. So remember that 136 00:08:08,240 --> 00:08:11,200 Speaker 1: that the more landlocked you are, the less access you 137 00:08:11,240 --> 00:08:14,920 Speaker 1: have to infrastructure, the more difficulties to place your crew today, 138 00:08:14,960 --> 00:08:16,520 Speaker 1: and the more likely you are to have to share 139 00:08:16,560 --> 00:08:18,480 Speaker 1: in your well. And that's what we're saying right now. 140 00:08:18,560 --> 00:08:22,160 Speaker 1: We're seeing strong signals to producers to essentially capt the 141 00:08:22,280 --> 00:08:25,520 Speaker 1: wells and stop flowing their rolls into the five points. 142 00:08:25,800 --> 00:08:28,080 Speaker 1: Are they responding to that, Francisco, as far as you 143 00:08:28,120 --> 00:08:33,760 Speaker 1: can say, well, uh, they usually as data, they are 144 00:08:33,800 --> 00:08:37,240 Speaker 1: not yet the only response that we've started to see 145 00:08:37,280 --> 00:08:40,800 Speaker 1: is opex, although the deal doesn't really come into play 146 00:08:40,960 --> 00:08:45,000 Speaker 1: until May, which of course is Friday next week. Um So, 147 00:08:45,040 --> 00:08:47,160 Speaker 1: so the issue we're facing here, going back to the 148 00:08:47,160 --> 00:08:48,880 Speaker 1: point that you guys were making, is you have a 149 00:08:48,960 --> 00:08:52,080 Speaker 1: thirty percent drop in US GDP, maybe more, you have 150 00:08:52,160 --> 00:08:55,719 Speaker 1: a twenty two drop in Japan GDP. What does that 151 00:08:55,800 --> 00:08:58,080 Speaker 1: mean for oil demand? Will in soil demand is gonna 152 00:08:58,120 --> 00:09:02,400 Speaker 1: fall by about the school And COVID nineteen is particularly 153 00:09:02,440 --> 00:09:05,120 Speaker 1: harsh on oil because COVID nineteen is a crisis of 154 00:09:05,280 --> 00:09:09,880 Speaker 1: mobility um and, and oil is the fuel of transportation, 155 00:09:10,040 --> 00:09:12,880 Speaker 1: so so we salt oil is the most impacted energy 156 00:09:12,920 --> 00:09:17,480 Speaker 1: commardity and probably just the most impactive commority period um so, 157 00:09:17,480 --> 00:09:20,679 Speaker 1: So we are saying we're seeing a very complicated situation 158 00:09:20,760 --> 00:09:23,000 Speaker 1: here because even the open deal, which is very large, 159 00:09:23,000 --> 00:09:25,719 Speaker 1: it's the largest ever, it's only ten million barrels a day, 160 00:09:25,720 --> 00:09:29,840 Speaker 1: which is about ten so you're you're still producing a 161 00:09:29,840 --> 00:09:32,040 Speaker 1: lot of excess oil while we're all sitting at home, 162 00:09:32,320 --> 00:09:34,840 Speaker 1: not driving and not flying and that's that's really the 163 00:09:34,840 --> 00:09:37,080 Speaker 1: main issue. We need to get back to work to 164 00:09:37,160 --> 00:09:41,280 Speaker 1: save the oil market here Francisco. Yesterday, Muhammadalarian was speaking 165 00:09:41,280 --> 00:09:44,280 Speaker 1: with John Faro, and he talked about a growing cognitive 166 00:09:44,320 --> 00:09:47,400 Speaker 1: dissonance in markets. I recommend you watch the interview. It 167 00:09:47,520 --> 00:09:51,160 Speaker 1: was really really interesting and and and stark, but it 168 00:09:51,240 --> 00:09:54,680 Speaker 1: highlights the cognitive dissonance perhaps is most prevalent in the 169 00:09:54,679 --> 00:09:57,480 Speaker 1: oil market. We've got theory kind of bumping up against 170 00:09:57,480 --> 00:09:59,760 Speaker 1: the physical reality where there are not enough places to 171 00:10:00,120 --> 00:10:02,600 Speaker 1: or oil. And I'm wondering the theory that demand will 172 00:10:02,640 --> 00:10:06,439 Speaker 1: pick up at some point, when does that fail? I mean, 173 00:10:06,480 --> 00:10:09,679 Speaker 1: how far out in the contract could we potentially see 174 00:10:10,080 --> 00:10:15,839 Speaker 1: zero or negative pricing as storage facilities fill up? Well, um, 175 00:10:15,920 --> 00:10:18,600 Speaker 1: we we got a glimpse of it this week. And uh, 176 00:10:18,920 --> 00:10:21,200 Speaker 1: and prices at the end of the day in commodity 177 00:10:21,200 --> 00:10:26,360 Speaker 1: markets or signals for either consumers or producers or infrastructure 178 00:10:26,360 --> 00:10:30,679 Speaker 1: operators like pipeline operators or storage owners to take action, 179 00:10:31,280 --> 00:10:33,719 Speaker 1: and and and and the signal right now that you 180 00:10:33,720 --> 00:10:36,319 Speaker 1: should be buying cheap oil in the front end of 181 00:10:36,360 --> 00:10:38,840 Speaker 1: the curve and storing it forward. So I don't think 182 00:10:38,880 --> 00:10:42,760 Speaker 1: that all prices are going to collapse, um into spots. 183 00:10:42,840 --> 00:10:44,960 Speaker 1: I mean, over time they may, and they they will, 184 00:10:45,080 --> 00:10:47,160 Speaker 1: right so that the curve rolls now. But it's not 185 00:10:47,200 --> 00:10:51,199 Speaker 1: like the entire curve comes comes down immediately because um uh, 186 00:10:51,720 --> 00:10:54,040 Speaker 1: there there is uh. There's first of all, the need 187 00:10:54,200 --> 00:10:57,120 Speaker 1: to to push oil into storage. And secondly, there is 188 00:10:57,160 --> 00:11:00,199 Speaker 1: going to be the expectation, naturally that the ecount is 189 00:11:00,200 --> 00:11:02,360 Speaker 1: going to get back to some kind of normal at 190 00:11:02,440 --> 00:11:05,040 Speaker 1: some point. And don't I don't know what that looks like. 191 00:11:05,200 --> 00:11:07,800 Speaker 1: But but when you look at the equity markets you 192 00:11:07,800 --> 00:11:10,040 Speaker 1: have at d s NP, at you at a fixing 193 00:11:10,080 --> 00:11:13,160 Speaker 1: cale markets trading frankly a lot better than they did 194 00:11:13,200 --> 00:11:16,800 Speaker 1: in March. Um, I guess, I guess we were all 195 00:11:16,920 --> 00:11:19,360 Speaker 1: under under the impression that things are back to robal. 196 00:11:19,400 --> 00:11:22,120 Speaker 1: That's what we're hearing from circutary Minucine as we're heating 197 00:11:22,120 --> 00:11:24,760 Speaker 1: from the White House, that we're hearing from our world leaders. 198 00:11:24,960 --> 00:11:28,360 Speaker 1: And uh, and maybe it doesn't happen. But but in 199 00:11:28,400 --> 00:11:31,720 Speaker 1: the meantime, the FED is doing an amazing job papering 200 00:11:31,800 --> 00:11:35,720 Speaker 1: things over, and the asport's keeping asset values what they 201 00:11:35,760 --> 00:11:39,000 Speaker 1: are and uh and and and and the governments are 202 00:11:38,840 --> 00:11:42,800 Speaker 1: are expanding. As you said, before their fiscal budgets to 203 00:11:42,880 --> 00:11:45,680 Speaker 1: essentially send people money. The real problem we have is 204 00:11:45,720 --> 00:11:48,640 Speaker 1: that we are not producing any outputs, so service on 205 00:11:49,360 --> 00:11:51,839 Speaker 1: how we are. We're sending people money at the time 206 00:11:51,840 --> 00:11:54,960 Speaker 1: when the account is not really what we're actual output 207 00:11:55,000 --> 00:11:58,120 Speaker 1: is down thir and I think that's going to be very, 208 00:11:58,200 --> 00:12:00,360 Speaker 1: very for gold. And that's what we made call. That 209 00:12:00,440 --> 00:12:02,320 Speaker 1: goal is going to go to three thousand over the 210 00:12:02,320 --> 00:12:04,640 Speaker 1: course of the next eighteen months because of what's going 211 00:12:04,640 --> 00:12:07,079 Speaker 1: on on the monetary front and then on the fiscal front. 212 00:12:07,400 --> 00:12:10,880 Speaker 1: Three thousand on gold Francisco. That's a huge call. When 213 00:12:10,880 --> 00:12:13,160 Speaker 1: you make that call on the phone to clients in 214 00:12:13,200 --> 00:12:17,240 Speaker 1: communication with them, what's the huge pushback right now? Well, 215 00:12:17,280 --> 00:12:20,840 Speaker 1: I think people are a little confused about what's happening. 216 00:12:20,840 --> 00:12:23,680 Speaker 1: On a micro basis, I'm not getting a lot of pushback. 217 00:12:23,720 --> 00:12:26,600 Speaker 1: I think people are just are realizing that this is 218 00:12:26,800 --> 00:12:29,720 Speaker 1: that this is a major major change in the Fed's 219 00:12:29,760 --> 00:12:31,760 Speaker 1: balance sheet. They're going to double the balance sheet, maybe 220 00:12:31,760 --> 00:12:34,120 Speaker 1: triple the balance sheet. The last time they said that 221 00:12:34,120 --> 00:12:38,599 Speaker 1: that gold basically doubled in value so um and that 222 00:12:38,720 --> 00:12:41,520 Speaker 1: was during the global financial crisis. Um So, so that's 223 00:12:41,520 --> 00:12:43,680 Speaker 1: what we're making this call. We think that that that 224 00:12:43,720 --> 00:12:47,200 Speaker 1: the expansional fifth balance sheet will will push the ultimate 225 00:12:47,240 --> 00:12:52,920 Speaker 1: safe haven up pretty dramatically. Here, Francisco, we've got to 226 00:12:52,960 --> 00:12:57,040 Speaker 1: continue this discussion on gold. We'll do that another time. 227 00:12:57,080 --> 00:13:00,120 Speaker 1: Francisco Bond, thank you so much, greatly, greatly appreciate here 228 00:13:00,360 --> 00:13:05,960 Speaker 1: with Bank of America, we need to frame up here 229 00:13:05,960 --> 00:13:08,240 Speaker 1: at the end of April this historic moment we're in 230 00:13:08,760 --> 00:13:11,280 Speaker 1: and trying to stagger into May, and of course with 231 00:13:11,320 --> 00:13:14,559 Speaker 1: the pandemic we go from May five to the middle 232 00:13:14,600 --> 00:13:17,280 Speaker 1: of May, and many people now even beginning to talk 233 00:13:17,360 --> 00:13:20,000 Speaker 1: into June. I know India is doing that as a nation, 234 00:13:20,120 --> 00:13:23,760 Speaker 1: David Kelly, is it JP Morgan asset management and really 235 00:13:23,840 --> 00:13:28,319 Speaker 1: quite good linking economics into the investment at world David, 236 00:13:28,360 --> 00:13:30,280 Speaker 1: what will you think about this weekend? What will you 237 00:13:30,320 --> 00:13:34,319 Speaker 1: write forward to Monday? I'm probably going to be writing 238 00:13:34,360 --> 00:13:37,280 Speaker 1: about you know, there's another physical package which has just 239 00:13:37,400 --> 00:13:40,319 Speaker 1: been passed by the House, and we're adding a no 240 00:13:40,559 --> 00:13:44,000 Speaker 1: flaw of government debt here, and you know, we're really 241 00:13:44,000 --> 00:13:46,280 Speaker 1: we've got packages that will take us through the middle 242 00:13:46,280 --> 00:13:48,800 Speaker 1: of the summer, but it looks to me like we 243 00:13:48,920 --> 00:13:52,559 Speaker 1: still won't have an economy that's really even on a 244 00:13:52,600 --> 00:13:56,520 Speaker 1: significant route recovery until the middle of next year, and 245 00:13:56,559 --> 00:13:58,720 Speaker 1: that's an awf lot of extra government debt, and the 246 00:13:58,840 --> 00:14:00,800 Speaker 1: central banks are just moneyed as in this debt. So 247 00:14:00,920 --> 00:14:03,559 Speaker 1: it's it's really, you know, what is a limit there 248 00:14:03,600 --> 00:14:07,760 Speaker 1: in terms of how much the government, how much debt 249 00:14:07,800 --> 00:14:11,120 Speaker 1: the government can issue, and how much debt central bank 250 00:14:11,160 --> 00:14:13,640 Speaker 1: will buy without actually setting up a real problem down 251 00:14:13,640 --> 00:14:16,280 Speaker 1: the road. David, there's a real willingness I think over 252 00:14:16,280 --> 00:14:18,840 Speaker 1: the last several weeks to just discount and ignore the 253 00:14:18,880 --> 00:14:21,000 Speaker 1: economic data that we've had. But the economic data that 254 00:14:21,040 --> 00:14:24,360 Speaker 1: we've had, even if it has been expected, does inform you, 255 00:14:24,480 --> 00:14:27,120 Speaker 1: does tell you something about how difficult the recovery will be. 256 00:14:27,680 --> 00:14:30,280 Speaker 1: If you've got twenty six million people applying for initial 257 00:14:30,360 --> 00:14:33,480 Speaker 1: jobless claims and they're sitting there waiting for a job, 258 00:14:33,520 --> 00:14:37,280 Speaker 1: how quickly did those jobs come back? Well, I think 259 00:14:37,920 --> 00:14:39,880 Speaker 1: we will get a lot of momentum in the second 260 00:14:39,880 --> 00:14:42,640 Speaker 1: half of next year once we have a vaccine. The 261 00:14:42,640 --> 00:14:45,040 Speaker 1: problem is just getting getting to that point. But once 262 00:14:45,080 --> 00:14:47,360 Speaker 1: you do have a vaccine, I mean, there are ways 263 00:14:47,360 --> 00:14:49,160 Speaker 1: you could do this more efficiently because there are a 264 00:14:49,200 --> 00:14:52,280 Speaker 1: lot of companies will will find hard to restart, but 265 00:14:52,320 --> 00:14:54,200 Speaker 1: there will be a huge demand for a lot of 266 00:14:54,200 --> 00:14:59,520 Speaker 1: the entertainment, leisure services, restaurants, retail that that people who 267 00:14:59,520 --> 00:15:01,000 Speaker 1: are missing out on. So you'll get a lot of 268 00:15:01,040 --> 00:15:03,480 Speaker 1: momentum going in the economy if you can finance the 269 00:15:03,520 --> 00:15:08,000 Speaker 1: new companies that will then employ people to do these things. Um, 270 00:15:08,440 --> 00:15:10,800 Speaker 1: you can re employ people pretty pretty quickly. So I 271 00:15:10,840 --> 00:15:14,560 Speaker 1: think the economy by two will be we'll have a 272 00:15:15,160 --> 00:15:17,280 Speaker 1: strong head of steam and the unemployment rate will be 273 00:15:17,280 --> 00:15:20,960 Speaker 1: coming down rapidly. But still, you know, we've got to 274 00:15:21,040 --> 00:15:23,080 Speaker 1: finance an awful lot of misery between now and then. 275 00:15:23,640 --> 00:15:25,880 Speaker 1: When you talk about financing the Missouri I want to 276 00:15:25,920 --> 00:15:28,760 Speaker 1: go to your point of debt monetization. Basically, this is 277 00:15:28,760 --> 00:15:31,800 Speaker 1: the idea that the US is selling trillions of dollars 278 00:15:31,800 --> 00:15:34,560 Speaker 1: of treasuries and the Federal Reserve is buying them all 279 00:15:34,640 --> 00:15:37,560 Speaker 1: up to suppress borrowing costs and create natural demand. That 280 00:15:37,640 --> 00:15:39,960 Speaker 1: the balance sheet of the Fed is increased by two 281 00:15:39,960 --> 00:15:43,600 Speaker 1: point four trillion dollars since the end of February. What 282 00:15:43,880 --> 00:15:46,640 Speaker 1: is the longer term consequence of this if it is 283 00:15:46,640 --> 00:15:50,760 Speaker 1: an inflation and it isn't a debasement of the dollar, well, 284 00:15:50,800 --> 00:15:53,320 Speaker 1: I mean, it's hard to debase the dollar against any 285 00:15:53,360 --> 00:15:55,960 Speaker 1: other currency. I think. I think that the US has 286 00:15:55,960 --> 00:15:59,240 Speaker 1: got a lot of advantages because other other countries doing 287 00:15:59,240 --> 00:16:00,760 Speaker 1: the same thing. Of the dollar has always been a 288 00:16:00,800 --> 00:16:04,520 Speaker 1: sort of first currency. But we we do we are 289 00:16:04,600 --> 00:16:06,160 Speaker 1: running a risk. I mean, I think that that the 290 00:16:06,240 --> 00:16:08,200 Speaker 1: key thing that has protected us all the way through 291 00:16:08,360 --> 00:16:11,320 Speaker 1: is actually income inequality, because the people who have all 292 00:16:11,320 --> 00:16:13,280 Speaker 1: these io us aren't using them, and so you don't 293 00:16:13,320 --> 00:16:15,880 Speaker 1: get aggregate demand in the economy picking up. But if 294 00:16:15,880 --> 00:16:18,680 Speaker 1: you the one thing that would cause the no Flader 295 00:16:18,720 --> 00:16:20,840 Speaker 1: problems is if we try to maintain some sort of 296 00:16:21,040 --> 00:16:23,360 Speaker 1: egalitarianism as we come out of this, that we try 297 00:16:23,400 --> 00:16:25,160 Speaker 1: to help people at the bottom of the middle, which 298 00:16:25,200 --> 00:16:27,640 Speaker 1: is a very good thing to do. But if you 299 00:16:27,760 --> 00:16:30,840 Speaker 1: do that, you createx extra demand and then inflation gets 300 00:16:30,880 --> 00:16:33,160 Speaker 1: going on. Once inflation gets going, people are going to 301 00:16:33,240 --> 00:16:36,040 Speaker 1: doubt the ability of the federal reserve to corral that inflation, 302 00:16:36,280 --> 00:16:39,200 Speaker 1: and doubt the ability of the federal government services debt. 303 00:16:39,240 --> 00:16:41,440 Speaker 1: And that's really the thing that I'm worried about. Okay, 304 00:16:41,440 --> 00:16:43,920 Speaker 1: this is the heart of the matter. David Kelly, do 305 00:16:43,960 --> 00:16:49,960 Speaker 1: we invest now over a responsible long term horizon for 306 00:16:50,280 --> 00:16:55,480 Speaker 1: disinflation or inflation? To me, that's a huge conundrum. Yeah, 307 00:16:55,720 --> 00:16:57,560 Speaker 1: I think, I think for the long one, you you 308 00:16:57,560 --> 00:17:01,160 Speaker 1: you bet on inflation. Um, you know we we First 309 00:17:01,200 --> 00:17:03,320 Speaker 1: of all, I'm not sure how much disinflation we're going 310 00:17:03,360 --> 00:17:05,719 Speaker 1: to get in this huge recession because there's so much, 311 00:17:05,800 --> 00:17:09,240 Speaker 1: so much constraint on supply also, and so it's you know, 312 00:17:09,359 --> 00:17:12,000 Speaker 1: usually when you have um, you know have in the 313 00:17:12,040 --> 00:17:14,400 Speaker 1: Great Depression, you had huge excess supply that all these 314 00:17:14,400 --> 00:17:16,120 Speaker 1: people who wanted to work, all the stuff that people 315 00:17:16,160 --> 00:17:17,920 Speaker 1: want to sell. But you know, now we don't. We've 316 00:17:17,920 --> 00:17:20,359 Speaker 1: got a supply shortage as well as a demand shortage. 317 00:17:20,440 --> 00:17:22,280 Speaker 1: But when we come out of this, we're gonna have 318 00:17:22,320 --> 00:17:25,520 Speaker 1: so much debt and so much demand pent up demand. 319 00:17:25,560 --> 00:17:27,600 Speaker 1: I mean, the savings rate is one of the things 320 00:17:27,600 --> 00:17:29,879 Speaker 1: going to see of the next few quarters is a 321 00:17:29,960 --> 00:17:32,399 Speaker 1: huge increase in the savings rate. Um, when did you 322 00:17:32,480 --> 00:17:35,440 Speaker 1: push that demand into an economy with a limited supply, 323 00:17:35,920 --> 00:17:38,840 Speaker 1: You could get inflation and the whole you know, everything 324 00:17:38,840 --> 00:17:41,359 Speaker 1: that we've done in terms of ballooning government deficits around 325 00:17:41,359 --> 00:17:45,120 Speaker 1: the world has all been possible only because of low 326 00:17:45,160 --> 00:17:47,840 Speaker 1: inflation and low interest rates. Yeah, okay, great, but that 327 00:17:47,880 --> 00:17:49,600 Speaker 1: tells me I want to buy stocks right now, we're 328 00:17:49,640 --> 00:17:53,120 Speaker 1: only buying eight stocks out there are John mentioned We've 329 00:17:53,160 --> 00:17:55,879 Speaker 1: got Amazon coming out next week on our knees, Microsoft 330 00:17:55,880 --> 00:17:59,280 Speaker 1: and the other glory stocks. What do you tell JP 331 00:17:59,400 --> 00:18:03,120 Speaker 1: Morgan to have management clients who go, I just want 332 00:18:03,119 --> 00:18:07,719 Speaker 1: to buy eight stocks, Well, no, don't. Don't you know, 333 00:18:07,920 --> 00:18:10,960 Speaker 1: be diverse, right, because because you don't know what the 334 00:18:11,000 --> 00:18:12,440 Speaker 1: next thing is going to get you is. I mean, 335 00:18:12,560 --> 00:18:14,600 Speaker 1: if we went, if we roll the tape back six 336 00:18:14,680 --> 00:18:17,119 Speaker 1: months ago and and you asked me as as you do, 337 00:18:17,240 --> 00:18:18,960 Speaker 1: you know one of the things that you're really worried 338 00:18:18,960 --> 00:18:21,560 Speaker 1: about next year, I wouldn't put pandemic down as my 339 00:18:21,680 --> 00:18:23,800 Speaker 1: number one risk. But that's the whole point. So you 340 00:18:23,840 --> 00:18:26,119 Speaker 1: don't own just eight stocks because you might be owning 341 00:18:26,160 --> 00:18:28,760 Speaker 1: stocks in the one sector is going to get whacked 342 00:18:28,800 --> 00:18:30,879 Speaker 1: by whatever it is. That's the next round the corner. 343 00:18:31,240 --> 00:18:33,919 Speaker 1: You diversified, And frankly, you know, most of the U 344 00:18:34,000 --> 00:18:36,360 Speaker 1: S stock market is not actually being impacted that much 345 00:18:36,400 --> 00:18:39,120 Speaker 1: by this. It's it's the U S economy that's being impacted. 346 00:18:39,160 --> 00:18:43,119 Speaker 1: But if you look broadly a technology, at healthcare, UM 347 00:18:43,160 --> 00:18:46,600 Speaker 1: and utilities, consumer stables, there are a lot of companies 348 00:18:46,600 --> 00:18:49,880 Speaker 1: that can actually write this one out pretty well. Um, 349 00:18:49,920 --> 00:18:51,840 Speaker 1: So I think there are plenty of opportunities out there. 350 00:18:51,840 --> 00:18:54,280 Speaker 1: And also international stocks, by the way, are cheaper than U. 351 00:18:54,280 --> 00:18:56,040 Speaker 1: S stocks, and East Asia is going to come out 352 00:18:56,080 --> 00:18:58,000 Speaker 1: of this thing faster than the United States. So I 353 00:18:58,040 --> 00:19:00,439 Speaker 1: think there's plenty of opportunities around the stock mark around 354 00:19:00,480 --> 00:19:02,480 Speaker 1: the world if you want to buy equity to protect 355 00:19:02,480 --> 00:19:05,560 Speaker 1: yourself against inflation in the long run. David, I'm struggling 356 00:19:05,560 --> 00:19:08,080 Speaker 1: to understand what you said, the idea that if the 357 00:19:08,080 --> 00:19:12,760 Speaker 1: middle class benefits from this package of of of fiscal support, 358 00:19:13,160 --> 00:19:16,120 Speaker 1: that that's going to create inflation that's going to somehow 359 00:19:16,160 --> 00:19:18,520 Speaker 1: be negative. Why isn't that a good thing in the 360 00:19:19,160 --> 00:19:20,960 Speaker 1: sense that we're going to end up being able to 361 00:19:20,960 --> 00:19:22,439 Speaker 1: sort of bail out some the debts and get the 362 00:19:22,480 --> 00:19:25,199 Speaker 1: economy kind of to reset a little bit before we 363 00:19:25,200 --> 00:19:27,720 Speaker 1: move forward. Well, first of all, I first of all, 364 00:19:27,720 --> 00:19:30,880 Speaker 1: the the the financial problem is only in the recovery 365 00:19:30,960 --> 00:19:33,200 Speaker 1: when we come roaring back in the second half of 366 00:19:33,280 --> 00:19:36,480 Speaker 1: twenty one. I want to make that clear. And also 367 00:19:36,520 --> 00:19:38,120 Speaker 1: it is a very good thing too. I mean, we've 368 00:19:38,119 --> 00:19:40,240 Speaker 1: got a very unequal society, had much rather than in 369 00:19:40,240 --> 00:19:43,440 Speaker 1: a society which was more equal. But the key thing 370 00:19:43,520 --> 00:19:45,840 Speaker 1: is that we have avoided inflation all the way to 371 00:19:45,920 --> 00:19:49,000 Speaker 1: this point here. Um, you know, through that long expansion 372 00:19:49,320 --> 00:19:52,160 Speaker 1: because the economy is actually getting less equal and more 373 00:19:52,160 --> 00:19:54,240 Speaker 1: and more money was going to people who are richer 374 00:19:54,280 --> 00:19:57,200 Speaker 1: who wouldn't spend it. Um. And the thing is that 375 00:19:57,200 --> 00:19:59,920 Speaker 1: if you finally give money to people who are low 376 00:20:00,000 --> 00:20:02,960 Speaker 1: were income people or middle income people who are really 377 00:20:03,000 --> 00:20:05,560 Speaker 1: want need the money, and we'll spend the money, then 378 00:20:05,600 --> 00:20:07,919 Speaker 1: you get that access demand. I'm not saying it's a 379 00:20:07,920 --> 00:20:09,679 Speaker 1: bad things associates, just if you if you're going to 380 00:20:10,040 --> 00:20:11,280 Speaker 1: if you're going to do that, you're going to have 381 00:20:11,320 --> 00:20:13,280 Speaker 1: to find some way of being disciplined enough to tax 382 00:20:13,400 --> 00:20:16,280 Speaker 1: money off of richer people to try to prevent demand 383 00:20:16,400 --> 00:20:19,720 Speaker 1: from soaring above available supply, because that's what gives you inflation. 384 00:20:19,920 --> 00:20:24,560 Speaker 1: And I said, this whole debt pyramid is you can 385 00:20:24,600 --> 00:20:27,639 Speaker 1: only be supported if we have low inflation. That's really 386 00:20:27,640 --> 00:20:31,360 Speaker 1: central to everything here. Okay, And basically this is sort 387 00:20:31,400 --> 00:20:33,120 Speaker 1: of borne out by the data. Michelle Meyer of Bank 388 00:20:33,160 --> 00:20:35,960 Speaker 1: of America saying the stimulus checks so far have gone 389 00:20:36,000 --> 00:20:39,800 Speaker 1: to buying more things, more consumption. I am curious though, 390 00:20:39,840 --> 00:20:42,840 Speaker 1: if you walk through what happens, why it becomes such 391 00:20:42,840 --> 00:20:46,080 Speaker 1: a problem to have the inflation that you're talking about. Well, 392 00:20:46,080 --> 00:20:48,920 Speaker 1: because because right now you know that we're going to 393 00:20:49,040 --> 00:20:50,440 Speaker 1: come out of this. We went into this with the 394 00:20:50,480 --> 00:20:52,960 Speaker 1: government debt at about eighty percent of GDP. We're gonna 395 00:20:52,960 --> 00:20:54,720 Speaker 1: come out of it with the debt and a hundred 396 00:20:54,720 --> 00:20:57,480 Speaker 1: percent of GDP, which is the highest just after World 397 00:20:57,520 --> 00:21:00,560 Speaker 1: War Two. That's not a problem if you're financing an 398 00:21:00,600 --> 00:21:03,080 Speaker 1: interest rate to one percent, but if you have higher inflation, 399 00:21:03,080 --> 00:21:06,560 Speaker 1: you could be financing at five So if you're five 400 00:21:06,560 --> 00:21:09,439 Speaker 1: percent on the debt, that's five cent of GDP just 401 00:21:09,520 --> 00:21:13,000 Speaker 1: going to interest payments. And our government spending is about GDPs. 402 00:21:13,040 --> 00:21:15,840 Speaker 1: You're using a quarter government spending just making interest payments 403 00:21:15,840 --> 00:21:18,680 Speaker 1: on the debt. That's going to squeeze everything else, um, 404 00:21:18,720 --> 00:21:21,400 Speaker 1: and people are gonna wonder, can you know is there 405 00:21:21,440 --> 00:21:23,080 Speaker 1: some some threat of the government won't be able to 406 00:21:23,119 --> 00:21:25,840 Speaker 1: make these payments at some stage? These are some huge 407 00:21:25,920 --> 00:21:29,720 Speaker 1: themes for the next year into even two years as well, folks, 408 00:21:29,800 --> 00:21:33,000 Speaker 1: David Kelly, thank you so much. With JP Morgan Asset 409 00:21:33,080 --> 00:21:39,520 Speaker 1: Management joining us right now. Leslie Vinjamuri of Chadow House 410 00:21:39,560 --> 00:21:44,600 Speaker 1: in London with a wonderful perspective on the American experiment, Leslie, I, 411 00:21:44,600 --> 00:21:47,160 Speaker 1: I look at what we're seeing, and I just take 412 00:21:47,200 --> 00:21:49,760 Speaker 1: the rules thum. You look at the drop of the 413 00:21:49,800 --> 00:21:52,919 Speaker 1: economy and maybe the expansion of the unemployment rate, You 414 00:21:52,960 --> 00:21:56,720 Speaker 1: do some fancy geometry and use some fancy words, and 415 00:21:56,760 --> 00:21:59,159 Speaker 1: you just port that right over to the size of 416 00:21:59,160 --> 00:22:03,040 Speaker 1: the stimulus. Am I right? That the size of stimulus 417 00:22:03,080 --> 00:22:06,639 Speaker 1: we're heading towards could be as much as five or 418 00:22:06,680 --> 00:22:12,119 Speaker 1: six trillion in a seventeen trillion dollar economy. It is 419 00:22:12,160 --> 00:22:15,159 Speaker 1: extraordinary time. And when we've already had what the fourth 420 00:22:15,560 --> 00:22:18,600 Speaker 1: stimulus package where at three trillion now, And you know, 421 00:22:18,680 --> 00:22:22,359 Speaker 1: the big question is how long does this economic crisis run? 422 00:22:22,359 --> 00:22:25,399 Speaker 1: And it has everything to do with our ability to 423 00:22:25,400 --> 00:22:28,159 Speaker 1: tackle the health crisis. So it's difficult to predict the 424 00:22:28,240 --> 00:22:30,760 Speaker 1: numbers until we know how we're going to do on 425 00:22:30,760 --> 00:22:33,000 Speaker 1: that front, how we're going to do on testing when 426 00:22:33,080 --> 00:22:36,560 Speaker 1: we can reopen the economy. Um. And that's really you know, 427 00:22:36,680 --> 00:22:39,280 Speaker 1: that is the key question that's going to drive the 428 00:22:39,359 --> 00:22:41,800 Speaker 1: size of that stimulus. But at the moment, it looks 429 00:22:41,840 --> 00:22:46,120 Speaker 1: like we are headed towards ongoing stimulus packages that are 430 00:22:46,160 --> 00:22:49,560 Speaker 1: just absolutely critical because the the economy has has been 431 00:22:49,600 --> 00:22:52,679 Speaker 1: shut down, let's say, so fast, so good. I've been 432 00:22:52,720 --> 00:22:54,920 Speaker 1: really impressed by how while sexual minutition appears to be 433 00:22:55,000 --> 00:22:57,680 Speaker 1: working with the Democrats to get things done, get things 434 00:22:57,680 --> 00:23:00,480 Speaker 1: done quickly as well over the last month sick sweeks 435 00:23:00,920 --> 00:23:04,520 Speaker 1: Nancy Pelosi, how speaker would like to lead the next effort. 436 00:23:05,000 --> 00:23:07,399 Speaker 1: And I just wonder if that's the moment where we 437 00:23:07,480 --> 00:23:10,240 Speaker 1: bump into a little bit of tention, some division between 438 00:23:10,240 --> 00:23:15,760 Speaker 1: Democrats and Republicans. Look, there's a lot of division already. Um, 439 00:23:15,800 --> 00:23:19,359 Speaker 1: it is, as you said, it's been remarkably bipartisan in 440 00:23:19,440 --> 00:23:22,200 Speaker 1: terms of the support the Democrats have had a number 441 00:23:22,240 --> 00:23:24,680 Speaker 1: of wins that they wanted in terms of oversight and 442 00:23:24,760 --> 00:23:29,000 Speaker 1: any number of things. Um. And as we get closer 443 00:23:29,119 --> 00:23:33,000 Speaker 1: to the election towards November, once we get to the summer, 444 00:23:33,440 --> 00:23:36,840 Speaker 1: that partisanship is going to really drive a number of things. 445 00:23:36,880 --> 00:23:39,840 Speaker 1: But I think the scale of the crisis has you know, 446 00:23:40,000 --> 00:23:43,080 Speaker 1: really been something that's um at least in terms of 447 00:23:43,080 --> 00:23:46,000 Speaker 1: the economic response, brought people together. Now we're seeing something 448 00:23:46,080 --> 00:23:48,480 Speaker 1: very very different when it comes to dealing with the 449 00:23:48,520 --> 00:23:52,320 Speaker 1: health crisis, where opinion varies, where the states are battling 450 00:23:52,359 --> 00:23:54,880 Speaker 1: it out with the with the with the with the government, 451 00:23:55,400 --> 00:23:58,720 Speaker 1: the federal government. Um, but I think you know, one 452 00:23:58,760 --> 00:24:01,200 Speaker 1: way or the other, we're gonna have to the Congress 453 00:24:01,240 --> 00:24:05,160 Speaker 1: pulling together with vedition and and and driving this response forward, 454 00:24:05,160 --> 00:24:08,280 Speaker 1: because as we've seen, we're looking at unappointment being possibly 455 00:24:08,320 --> 00:24:12,200 Speaker 1: as high as thirty percent by the summer. Leslie to 456 00:24:12,280 --> 00:24:14,280 Speaker 1: John's point as he set this segment up where he 457 00:24:14,320 --> 00:24:17,400 Speaker 1: was talking about how the fiscal response in the monetary 458 00:24:17,400 --> 00:24:20,800 Speaker 1: response set the decade for for since the two and 459 00:24:20,880 --> 00:24:24,800 Speaker 1: eight crisis in the US emerged more quickly, is the 460 00:24:24,880 --> 00:24:27,800 Speaker 1: size of the package appropriate that we have seen so 461 00:24:27,840 --> 00:24:30,720 Speaker 1: far out of the United States? How big would be 462 00:24:30,760 --> 00:24:37,440 Speaker 1: appropriate given the magnitude of the shock in the US? Yes, yeah, 463 00:24:37,480 --> 00:24:39,879 Speaker 1: I mean, again, to go back to my original point, 464 00:24:40,400 --> 00:24:43,119 Speaker 1: it's very hard to put a number on it until 465 00:24:43,280 --> 00:24:46,240 Speaker 1: we see how long we're going to have state after 466 00:24:46,280 --> 00:24:51,120 Speaker 1: state after state shuttered with the small businesses, closed, corporates, 467 00:24:51,160 --> 00:24:53,840 Speaker 1: you know, dialing back, they're working from home, things getting 468 00:24:53,840 --> 00:24:58,280 Speaker 1: slowed down. And until we know, until we see a 469 00:24:58,480 --> 00:25:01,840 Speaker 1: you know, the the the the curve of death coming down, 470 00:25:01,880 --> 00:25:06,240 Speaker 1: the hospital capacity being able to confront that health crisis, 471 00:25:06,800 --> 00:25:09,080 Speaker 1: until we know when states are going to realben when 472 00:25:09,080 --> 00:25:10,600 Speaker 1: the economy is going to be real, and we can't 473 00:25:10,600 --> 00:25:12,240 Speaker 1: put a number on it. We can't put it, we 474 00:25:12,240 --> 00:25:15,440 Speaker 1: can't put a ceiling on it. Leslie, I want to 475 00:25:15,480 --> 00:25:18,080 Speaker 1: switch gears here. Let's pretend there's no pandemic right now. 476 00:25:18,200 --> 00:25:21,399 Speaker 1: Buried in the Washington Post this morning is a tiny 477 00:25:21,440 --> 00:25:25,119 Speaker 1: little article a claiming that Vice President Biden is leading 478 00:25:25,160 --> 00:25:28,560 Speaker 1: the president and this poll or that, and then there's 479 00:25:28,560 --> 00:25:33,800 Speaker 1: a modest silence. But president of Secretary Clinton was doing 480 00:25:33,880 --> 00:25:37,199 Speaker 1: better at this time versus the president long ago and 481 00:25:37,280 --> 00:25:40,520 Speaker 1: far away. How is the vice president doing? How is 482 00:25:40,640 --> 00:25:44,680 Speaker 1: Vice President Biden doing well? You know, we are seeing 483 00:25:44,680 --> 00:25:49,240 Speaker 1: those numbers, and we're seeing, especially in American Americans age 484 00:25:49,280 --> 00:25:53,840 Speaker 1: fifty and over, that the preference for Biden is really 485 00:25:54,440 --> 00:25:58,000 Speaker 1: much stronger than that the preference for for President Trump. UM. 486 00:25:58,000 --> 00:26:00,760 Speaker 1: But it's a long time out, and as we know, 487 00:26:00,840 --> 00:26:05,080 Speaker 1: the Vice President Biden has is an incredibly difficult climate 488 00:26:05,119 --> 00:26:09,000 Speaker 1: that the President of the United States has a opportunity 489 00:26:09,040 --> 00:26:13,800 Speaker 1: every single night to demonstrate, you know, his leadership um 490 00:26:14,040 --> 00:26:18,119 Speaker 1: and have Americans to suss that on national television. Biden 491 00:26:18,240 --> 00:26:21,960 Speaker 1: is not getting that Erican He's having difficult getting into, 492 00:26:22,000 --> 00:26:24,479 Speaker 1: difficulty getting into the public debate so it's a very 493 00:26:24,600 --> 00:26:28,399 Speaker 1: it's an uphill battle, Leslie, Thank you so much, Leslie. 494 00:26:28,440 --> 00:26:35,080 Speaker 1: Vinjamuri with Chatham House in London greatly appreciate that this 495 00:26:35,160 --> 00:26:37,919 Speaker 1: is the interview of the day on the virology of 496 00:26:37,960 --> 00:26:42,240 Speaker 1: the moment. He is UH Andrew Pekosh of the Johns 497 00:26:42,240 --> 00:26:46,199 Speaker 1: Hopkins University. He's out of Pennsylvania and Rutgers, and he 498 00:26:46,359 --> 00:26:51,760 Speaker 1: is truly expert on the science that underpins this virus, 499 00:26:51,840 --> 00:26:56,679 Speaker 1: this horrible virus, and this pandemic. We talked today about 500 00:26:56,800 --> 00:27:01,320 Speaker 1: the last twenty four hour newsflow on virology. There's such 501 00:27:01,359 --> 00:27:04,960 Speaker 1: an important distinction here to make between things that are 502 00:27:05,200 --> 00:27:11,000 Speaker 1: used as disinfectants, right, that can work on surfaces UH 503 00:27:11,040 --> 00:27:14,760 Speaker 1: to kill viruses, things that work topically, which are things 504 00:27:14,760 --> 00:27:17,600 Speaker 1: that you can put on your skin which kill viruses, 505 00:27:18,280 --> 00:27:22,320 Speaker 1: versus things that you take as as a drug internally 506 00:27:22,359 --> 00:27:25,480 Speaker 1: in terms of what you can UH and and that 507 00:27:25,600 --> 00:27:29,080 Speaker 1: affects the virus and can limit the virus. UM. All 508 00:27:29,119 --> 00:27:34,480 Speaker 1: of these things UM can be toxic to people. UM. 509 00:27:34,520 --> 00:27:38,399 Speaker 1: It's the amount that we use, the dose, the the 510 00:27:38,400 --> 00:27:41,200 Speaker 1: dilution that we use that brings it down into a 511 00:27:41,320 --> 00:27:44,359 Speaker 1: level where it's less harmful for us and it's still 512 00:27:44,560 --> 00:27:47,840 Speaker 1: harmful to the to the virus um or or any 513 00:27:47,880 --> 00:27:51,280 Speaker 1: other pathogen. I thought that the medical officials are in 514 00:27:51,359 --> 00:27:55,880 Speaker 1: the press conference made clear their unhappiness over these comments. 515 00:27:55,920 --> 00:27:59,560 Speaker 1: And yet it speaks of the plague and Albert commune, 516 00:28:00,040 --> 00:28:05,520 Speaker 1: the desperation defined solutions. You're one of our great virological experts. 517 00:28:05,560 --> 00:28:09,360 Speaker 1: For you and Dr Fauci and Dr Burke's please tell 518 00:28:09,440 --> 00:28:13,360 Speaker 1: us how far out there is the solution to this virus. 519 00:28:14,119 --> 00:28:15,959 Speaker 1: So there are a number of clinical trials that are 520 00:28:16,000 --> 00:28:18,880 Speaker 1: going on right now, and you know, while well that's 521 00:28:18,920 --> 00:28:21,919 Speaker 1: not the popular thing to say, there will need some 522 00:28:22,040 --> 00:28:24,879 Speaker 1: time before we can test some of these treatments to 523 00:28:24,920 --> 00:28:27,920 Speaker 1: really be sure that they're number one, not causing any 524 00:28:27,960 --> 00:28:31,600 Speaker 1: extra harm and number two truly are effective. And I 525 00:28:31,600 --> 00:28:33,720 Speaker 1: think the other thing to pay attention to, though, is 526 00:28:34,160 --> 00:28:37,360 Speaker 1: you know, this virus induces a broad spectrum of disease. 527 00:28:37,920 --> 00:28:41,040 Speaker 1: Um drugs may be effective against the mild forms of 528 00:28:41,080 --> 00:28:44,440 Speaker 1: the disease, but perhaps not as effective against the severe 529 00:28:44,520 --> 00:28:47,840 Speaker 1: forms of the disease. So all these things have to 530 00:28:47,840 --> 00:28:51,960 Speaker 1: be investigated with clinical trials to make sure that the 531 00:28:52,000 --> 00:28:55,400 Speaker 1: treatments that we're that are being proposed are actually effective 532 00:28:55,440 --> 00:28:59,400 Speaker 1: for particular patient populations. But Andrew, how many you know, 533 00:28:59,400 --> 00:29:01,160 Speaker 1: how many drugs do we know of that could work? 534 00:29:01,240 --> 00:29:04,040 Speaker 1: Yesterday there was quite a lot of hope and then 535 00:29:04,200 --> 00:29:07,360 Speaker 1: a big setback when the scilat drug didn't really go 536 00:29:07,440 --> 00:29:10,160 Speaker 1: as planned. In terms of the Chinese trial. How many 537 00:29:10,240 --> 00:29:14,600 Speaker 1: more of these drugs will fail just like this one did? Yeah, 538 00:29:14,640 --> 00:29:16,720 Speaker 1: so I think them Desert trial is a great trial. 539 00:29:17,120 --> 00:29:19,320 Speaker 1: Some details are lacking, but it seems like that was 540 00:29:19,400 --> 00:29:25,720 Speaker 1: really targeting uh, severe cases of of COVID nineteen. Targeting 541 00:29:25,760 --> 00:29:29,560 Speaker 1: severe cases is very, very difficult because people suffering from 542 00:29:29,560 --> 00:29:33,520 Speaker 1: those severe cases have a combination of the virus causing 543 00:29:33,600 --> 00:29:38,040 Speaker 1: damage but also their immune system causing damage. So something. 544 00:29:38,080 --> 00:29:40,160 Speaker 1: So it may be that relying on just an anti 545 00:29:40,280 --> 00:29:46,400 Speaker 1: viral drug for severe disease isn't completely the right strategy. 546 00:29:46,560 --> 00:29:49,440 Speaker 1: We may need to find ways to also temper the 547 00:29:49,520 --> 00:29:52,000 Speaker 1: immune response that's being induced by the virus for those 548 00:29:52,000 --> 00:29:55,560 Speaker 1: severe diseases. The m Deservere drug may be able to 549 00:29:55,600 --> 00:29:58,920 Speaker 1: work in more mild situations or at early times post infection. 550 00:29:59,520 --> 00:30:02,320 Speaker 1: How far our way to to actually finding a vaccine? 551 00:30:02,360 --> 00:30:05,920 Speaker 1: Are we um a vaccine? We're you know, we're in 552 00:30:05,920 --> 00:30:09,080 Speaker 1: the middle of phase one clinical trials UM for a 553 00:30:09,200 --> 00:30:13,480 Speaker 1: number of different vaccine platforms. We would expect to hear 554 00:30:13,520 --> 00:30:15,440 Speaker 1: something in the next month or two about some of 555 00:30:15,440 --> 00:30:19,240 Speaker 1: the initial safety work that's going on with those drugs, 556 00:30:19,240 --> 00:30:22,880 Speaker 1: with those vaccines, and then UM the trials that are 557 00:30:22,880 --> 00:30:25,840 Speaker 1: going to be putting it into patients to look for efficacy. 558 00:30:26,160 --> 00:30:29,080 Speaker 1: UM are already being lined up under the assumption that 559 00:30:29,120 --> 00:30:31,240 Speaker 1: some of these drugs will be safe. O disease vaccines 560 00:30:31,240 --> 00:30:34,200 Speaker 1: will be safe. So we're still about a year away 561 00:30:34,240 --> 00:30:37,040 Speaker 1: from anything in terms of a practical rollout of a 562 00:30:37,120 --> 00:30:40,800 Speaker 1: vaccine if everything goes well interpecks. So the Johns Hopkins 563 00:30:40,920 --> 00:30:44,600 Speaker 1: University I thought that was exceptionally timely given the news 564 00:30:44,600 --> 00:30:48,000 Speaker 1: slow of the last forty eight hours. Thanks for listening 565 00:30:48,040 --> 00:30:52,600 Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews 566 00:30:52,600 --> 00:30:57,840 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 567 00:30:58,400 --> 00:31:01,760 Speaker 1: I'm on Twitter at tom Key before the podcast. You 568 00:31:01,760 --> 00:31:05,160 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.