Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
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Speaker 1: begin the program with Alan Ruskin of Deutsche Bank. Here's
Speaker 1: a line from Alan. Four you g ten central banks
Speaker 1: have expanded their collective balance sheet by two point seven
Speaker 1: trillion dollars, and two thirds of this comes from one
Speaker 1: central bank alone, the Federal Reserve. Alan, fantastic to catch
Speaker 1: up with you, and brilliant research as always with the
Speaker 1: team over at Deutsche. Just run us through the compare
Speaker 1: and contrast right now between Europe and the US. UM Well, John,
Speaker 1: I think you're absolutely right, you know, to make a
Speaker 1: distinction not only in terms of what's going on in
Speaker 1: terms of monetary policy, but what's going on in the
Speaker 1: fiscal policy. In fact, fiscal policy made it more important.
Speaker 1: But on the monetary policy side, we all knew that
Speaker 1: coming into a crisis, Europe starting off with negative rates
Speaker 1: was not going to be able to do very much.
Speaker 1: That there was a little bit more leeway from the
Speaker 1: Federal Reserve. But it didn't just stop there. Really, we
Speaker 1: also knew that both central banks would get pulled into
Speaker 1: unorthodox policies, notably, you know, expanding their balance sheets, and
Speaker 1: so far, you know, the action has all beyond the
Speaker 1: Federal Reserve side. Perhaps Europe is you know, not really
Speaker 1: come off the quee the way that's que after the
Speaker 1: two thousand and eight crisis, the way the Federal reserved it.
Speaker 1: So um, the Fed you know, was obviously shrinking as
Speaker 1: balance sheet now massively re expanding its balance sheet. But
Speaker 1: you know, it's it's tended to show a few limits.
Speaker 1: It's uh, we know the detail in terms of willingness
Speaker 1: to extend out the credit structures. So the Federal Reserve
Speaker 1: as the world's most important bank, doing everything it can
Speaker 1: to ameliorate what is really seen as the sharpest decline
Speaker 1: in output in modern economic history. Pretty easy at this point, Alan,
Speaker 1: I'm sure you'd agree to identify the differences between the
Speaker 1: United States and Europe. Yet pushing that view through the
Speaker 1: market is actually far more complex. Through the month of April,
Speaker 1: over the last three or four weeks, we've had a
Speaker 1: range on euro dollar of what one oh seven out
Speaker 1: towards one ten one oh nine, pretty tight narrow trading
Speaker 1: range in G ten Allen. Given the differences that you
Speaker 1: see in Europe and the United States, Why yeah, I
Speaker 1: think markets a little bit of fuddled in terms of
Speaker 1: just trying to ascertain, you know, firstly, do you respond
Speaker 1: to the fact that the US is policy measures have
Speaker 1: inevitably expanded UH debt as far as I can see,
Speaker 1: So I think there's a sort of a latent concern
Speaker 1: there about the fiscal deficits and at um. And then
Speaker 1: I think, you know, there are other elements there where
Speaker 1: people are considering what is a labor market response going
Speaker 1: to be like in the US versus Europe, your euros.
Speaker 1: In the US, you're certainly seeing unemployment taking up very,
Speaker 1: very sharply. In Europe, it perhaps is going to be
Speaker 1: a little bit slower. Um. Is that flexibility a good
Speaker 1: or bad thing? The market is confused on that issue.
Speaker 1: And then I think the other element is just you know,
Speaker 1: just the course of this virus. I think there's certainly
Speaker 1: some concern that the US's response is going to be
Speaker 1: trickier going forward, particularly when one state, you know, for example,
Speaker 1: opens and shifts away from lockdowns, another state maybe doesn't,
Speaker 1: but you still have travel between two states. That that
Speaker 1: sort of problem that you have in the United States,
Speaker 1: you're probably not going to have in Europe. So, um,
Speaker 1: I think there's a multitude of different factors the markets
Speaker 1: looking at and they've got bigger fish to fry, as
Speaker 1: it were. I think, you know, particularly in the emerging
Speaker 1: market world. Um, you know current the traders that's really
Speaker 1: seizing on on on trading in that space. Well, that's
Speaker 1: right where I wanted to go, just because the time,
Speaker 1: Alan Ruskin, and to me, the single moment on this
Speaker 1: Friday is Brazil. Brazil's basically got to get the Monday.
Speaker 1: How urgent is it for Brazil to begin to solve
Speaker 1: some of their problems? Um, well, it's been urgent for
Speaker 1: a long time. I think the big issue you faced
Speaker 1: with Brazil and a few other emerging market countries is
Speaker 1: they came into this crisis with a fiscal problem to
Speaker 1: begin with. And there's a long history of course going back,
Speaker 1: you know, now, going back a long way where central
Speaker 1: banks have been asked to effectively financed discore deficits. Um.
Speaker 1: So deficits have not been nessy that easily financed. UM
Speaker 1: And I think that, you know, the history with both
Speaker 1: in terms of the long term and the short term
Speaker 1: is deeply problematic, and usually it's going to resolve itself
Speaker 1: partly in the safety development exists, which is the current arency.
Speaker 1: And that's exactly what we're seeing. Well, that's exactly what
Speaker 1: we're seeing, except that you would expect the dollar to
Speaker 1: weaken then, I mean, you'd expect the dollar to eventually
Speaker 1: weaken if the Federal Reserve is basically monetizing the debts
Speaker 1: of the United States, and that seems by all means
Speaker 1: what it's doing. As it's balance sheet expands by two
Speaker 1: point four trillion dollars since the end of February, why
Speaker 1: are we not seeing a week or dollar Lisa, So
Speaker 1: let me just make a quick distinction between what I
Speaker 1: was saying earlier, which was really related to brasil Um,
Speaker 1: and why the Brazilian realizes, Actually, you know, weakening the
Speaker 1: dollar is a bit of a special case. Um so
Speaker 1: I think, you know, being the major global reserve currency,
Speaker 1: there's some sense there that regardless of some of the
Speaker 1: policies in the short term and perhaps even in the
Speaker 1: longer term, numerous transactions have been done, and they have
Speaker 1: been enormous balance sheet in balances effectively which have resulted
Speaker 1: in liquidity related demand for the dollar. So I think
Speaker 1: what you saw particularly you know three or four weeks back,
Speaker 1: with the dollar had a natural bid because of what
Speaker 1: effectively were bank related in balances. We saw it particularly
Speaker 1: as it related to Japanese banks, to lesser degree European
Speaker 1: banks as well, UM, whereby there was extraordinary demand for dollars.
Speaker 1: And if you actually look at what the Central Bank
Speaker 1: has done, um that you know, these swap lines to
Speaker 1: the b o J, I think it's being utilized extent
Speaker 1: about two billion Europe about a hundred and fifty billion,
Speaker 1: So there has been a strong need for dollar liquidity
Speaker 1: globally um. And without that liquidity, the dollar would have
Speaker 1: been even stronger. Alan, always great to get your thoughts
Speaker 1: on this program, Alan Ruskin, their touts your bank. Hope
Speaker 1: you and yours are doing well. Alan, thank you very
Speaker 1: much for joining us. Let's get a larger global view
Speaker 1: on oil. He is a head of Commodities and Derivative Research,
Speaker 1: Francisco Blanche for the Bank of America. Francisco, as you
Speaker 1: write your research for the weekend, where's the most efficacious
Speaker 1: price of oil right now, I've lost track. Where's the
Speaker 1: good spot for Brent crude to be right now? Well, um,
Speaker 1: I think I mean Thomas. As you pointed out, the
Speaker 1: economic data is so diffical that UH commodities over to hide.
Speaker 1: The commodity markets provide a completely unfiltered view of the
Speaker 1: economic reality that we're facing today, which which is completely unprecedented.
Speaker 1: We've never stopped the world for a few months, um
Speaker 1: out of the seven and UH and and and the
Speaker 1: problem in oil markets just keeps passing from country to country.
Speaker 1: When OPEC decided to cut production a couple of weeks ago,
Speaker 1: the price of the price of of of Dubai and
Speaker 1: coment grades was lifted. I think previce a brand, but
Speaker 1: it didn't do anything to prevent wt I from trading
Speaker 1: negative at the beginning of the week. So remember that
Speaker 1: that the more landlocked you are, the less access you
Speaker 1: have to infrastructure, the more difficulties to place your crew today,
Speaker 1: and the more likely you are to have to share
Speaker 1: in your well. And that's what we're saying right now.
Speaker 1: We're seeing strong signals to producers to essentially capt the
Speaker 1: wells and stop flowing their rolls into the five points.
Speaker 1: Are they responding to that, Francisco, as far as you
Speaker 1: can say, well, uh, they usually as data, they are
Speaker 1: not yet the only response that we've started to see
Speaker 1: is opex, although the deal doesn't really come into play
Speaker 1: until May, which of course is Friday next week. Um So,
Speaker 1: so the issue we're facing here, going back to the
Speaker 1: point that you guys were making, is you have a
Speaker 1: thirty percent drop in US GDP, maybe more, you have
Speaker 1: a twenty two drop in Japan GDP. What does that
Speaker 1: mean for oil demand? Will in soil demand is gonna
Speaker 1: fall by about the school And COVID nineteen is particularly
Speaker 1: harsh on oil because COVID nineteen is a crisis of
Speaker 1: mobility um and, and oil is the fuel of transportation,
Speaker 1: so so we salt oil is the most impacted energy
Speaker 1: commardity and probably just the most impactive commority period um so,
Speaker 1: So we are saying we're seeing a very complicated situation
Speaker 1: here because even the open deal, which is very large,
Speaker 1: it's the largest ever, it's only ten million barrels a day,
Speaker 1: which is about ten so you're you're still producing a
Speaker 1: lot of excess oil while we're all sitting at home,
Speaker 1: not driving and not flying and that's that's really the
Speaker 1: main issue. We need to get back to work to
Speaker 1: save the oil market here Francisco. Yesterday, Muhammadalarian was speaking
Speaker 1: with John Faro, and he talked about a growing cognitive
Speaker 1: dissonance in markets. I recommend you watch the interview. It
Speaker 1: was really really interesting and and and stark, but it
Speaker 1: highlights the cognitive dissonance perhaps is most prevalent in the
Speaker 1: oil market. We've got theory kind of bumping up against
Speaker 1: the physical reality where there are not enough places to
Speaker 1: or oil. And I'm wondering the theory that demand will
Speaker 1: pick up at some point, when does that fail? I mean,
Speaker 1: how far out in the contract could we potentially see
Speaker 1: zero or negative pricing as storage facilities fill up? Well, um,
Speaker 1: we we got a glimpse of it this week. And uh,
Speaker 1: and prices at the end of the day in commodity
Speaker 1: markets or signals for either consumers or producers or infrastructure
Speaker 1: operators like pipeline operators or storage owners to take action,
Speaker 1: and and and and the signal right now that you
Speaker 1: should be buying cheap oil in the front end of
Speaker 1: the curve and storing it forward. So I don't think
Speaker 1: that all prices are going to collapse, um into spots.
Speaker 1: I mean, over time they may, and they they will,
Speaker 1: right so that the curve rolls now. But it's not
Speaker 1: like the entire curve comes comes down immediately because um uh,
Speaker 1: there there is uh. There's first of all, the need
Speaker 1: to to push oil into storage. And secondly, there is
Speaker 1: going to be the expectation, naturally that the ecount is
Speaker 1: going to get back to some kind of normal at
Speaker 1: some point. And don't I don't know what that looks like.
Speaker 1: But but when you look at the equity markets you
Speaker 1: have at d s NP, at you at a fixing
Speaker 1: cale markets trading frankly a lot better than they did
Speaker 1: in March. Um, I guess, I guess we were all
Speaker 1: under under the impression that things are back to robal.
Speaker 1: That's what we're hearing from circutary Minucine as we're heating
Speaker 1: from the White House, that we're hearing from our world leaders.
Speaker 1: And uh, and maybe it doesn't happen. But but in
Speaker 1: the meantime, the FED is doing an amazing job papering
Speaker 1: things over, and the asport's keeping asset values what they
Speaker 1: are and uh and and and and the governments are
Speaker 1: are expanding. As you said, before their fiscal budgets to
Speaker 1: essentially send people money. The real problem we have is
Speaker 1: that we are not producing any outputs, so service on
Speaker 1: how we are. We're sending people money at the time
Speaker 1: when the account is not really what we're actual output
Speaker 1: is down thir and I think that's going to be very,
Speaker 1: very for gold. And that's what we made call. That
Speaker 1: goal is going to go to three thousand over the
Speaker 1: course of the next eighteen months because of what's going
Speaker 1: on on the monetary front and then on the fiscal front.
Speaker 1: Three thousand on gold Francisco. That's a huge call. When
Speaker 1: you make that call on the phone to clients in
Speaker 1: communication with them, what's the huge pushback right now? Well,
Speaker 1: I think people are a little confused about what's happening.
Speaker 1: On a micro basis, I'm not getting a lot of pushback.
Speaker 1: I think people are just are realizing that this is
Speaker 1: that this is a major major change in the Fed's
Speaker 1: balance sheet. They're going to double the balance sheet, maybe
Speaker 1: triple the balance sheet. The last time they said that
Speaker 1: that gold basically doubled in value so um and that
Speaker 1: was during the global financial crisis. Um So, so that's
Speaker 1: what we're making this call. We think that that that
Speaker 1: the expansional fifth balance sheet will will push the ultimate
Speaker 1: safe haven up pretty dramatically. Here, Francisco, we've got to
Speaker 1: continue this discussion on gold. We'll do that another time.
Speaker 1: Francisco Bond, thank you so much, greatly, greatly appreciate here
Speaker 1: with Bank of America, we need to frame up here
Speaker 1: at the end of April this historic moment we're in
Speaker 1: and trying to stagger into May, and of course with
Speaker 1: the pandemic we go from May five to the middle
Speaker 1: of May, and many people now even beginning to talk
Speaker 1: into June. I know India is doing that as a nation,
Speaker 1: David Kelly, is it JP Morgan asset management and really
Speaker 1: quite good linking economics into the investment at world David,
Speaker 1: what will you think about this weekend? What will you
Speaker 1: write forward to Monday? I'm probably going to be writing
Speaker 1: about you know, there's another physical package which has just
Speaker 1: been passed by the House, and we're adding a no
Speaker 1: flaw of government debt here, and you know, we're really
Speaker 1: we've got packages that will take us through the middle
Speaker 1: of the summer, but it looks to me like we
Speaker 1: still won't have an economy that's really even on a
Speaker 1: significant route recovery until the middle of next year, and
Speaker 1: that's an awf lot of extra government debt, and the
Speaker 1: central banks are just moneyed as in this debt. So
Speaker 1: it's it's really, you know, what is a limit there
Speaker 1: in terms of how much the government, how much debt
Speaker 1: the government can issue, and how much debt central bank
Speaker 1: will buy without actually setting up a real problem down
Speaker 1: the road. David, there's a real willingness I think over
Speaker 1: the last several weeks to just discount and ignore the
Speaker 1: economic data that we've had. But the economic data that
Speaker 1: we've had, even if it has been expected, does inform you,
Speaker 1: does tell you something about how difficult the recovery will be.
Speaker 1: If you've got twenty six million people applying for initial
Speaker 1: jobless claims and they're sitting there waiting for a job,
Speaker 1: how quickly did those jobs come back? Well, I think
Speaker 1: we will get a lot of momentum in the second
Speaker 1: half of next year once we have a vaccine. The
Speaker 1: problem is just getting getting to that point. But once
Speaker 1: you do have a vaccine, I mean, there are ways
Speaker 1: you could do this more efficiently because there are a
Speaker 1: lot of companies will will find hard to restart, but
Speaker 1: there will be a huge demand for a lot of
Speaker 1: the entertainment, leisure services, restaurants, retail that that people who
Speaker 1: are missing out on. So you'll get a lot of
Speaker 1: momentum going in the economy if you can finance the
Speaker 1: new companies that will then employ people to do these things. Um,
Speaker 1: you can re employ people pretty pretty quickly. So I
Speaker 1: think the economy by two will be we'll have a
Speaker 1: strong head of steam and the unemployment rate will be
Speaker 1: coming down rapidly. But still, you know, we've got to
Speaker 1: finance an awful lot of misery between now and then.
Speaker 1: When you talk about financing the Missouri I want to
Speaker 1: go to your point of debt monetization. Basically, this is
Speaker 1: the idea that the US is selling trillions of dollars
Speaker 1: of treasuries and the Federal Reserve is buying them all
Speaker 1: up to suppress borrowing costs and create natural demand. That
Speaker 1: the balance sheet of the Fed is increased by two
Speaker 1: point four trillion dollars since the end of February. What
Speaker 1: is the longer term consequence of this if it is
Speaker 1: an inflation and it isn't a debasement of the dollar, well,
Speaker 1: I mean, it's hard to debase the dollar against any
Speaker 1: other currency. I think. I think that the US has
Speaker 1: got a lot of advantages because other other countries doing
Speaker 1: the same thing. Of the dollar has always been a
Speaker 1: sort of first currency. But we we do we are
Speaker 1: running a risk. I mean, I think that that the
Speaker 1: key thing that has protected us all the way through
Speaker 1: is actually income inequality, because the people who have all
Speaker 1: these io us aren't using them, and so you don't
Speaker 1: get aggregate demand in the economy picking up. But if
Speaker 1: you the one thing that would cause the no Flader
Speaker 1: problems is if we try to maintain some sort of
Speaker 1: egalitarianism as we come out of this, that we try
Speaker 1: to help people at the bottom of the middle, which
Speaker 1: is a very good thing to do. But if you
Speaker 1: do that, you createx extra demand and then inflation gets
Speaker 1: going on. Once inflation gets going, people are going to
Speaker 1: doubt the ability of the federal reserve to corral that inflation,
Speaker 1: and doubt the ability of the federal government services debt.
Speaker 1: And that's really the thing that I'm worried about. Okay,
Speaker 1: this is the heart of the matter. David Kelly, do
Speaker 1: we invest now over a responsible long term horizon for
Speaker 1: disinflation or inflation? To me, that's a huge conundrum. Yeah,
Speaker 1: I think, I think for the long one, you you
Speaker 1: you bet on inflation. Um, you know we we First
Speaker 1: of all, I'm not sure how much disinflation we're going
Speaker 1: to get in this huge recession because there's so much,
Speaker 1: so much constraint on supply also, and so it's you know,
Speaker 1: usually when you have um, you know have in the
Speaker 1: Great Depression, you had huge excess supply that all these
Speaker 1: people who wanted to work, all the stuff that people
Speaker 1: want to sell. But you know, now we don't. We've
Speaker 1: got a supply shortage as well as a demand shortage.
Speaker 1: But when we come out of this, we're gonna have
Speaker 1: so much debt and so much demand pent up demand.
Speaker 1: I mean, the savings rate is one of the things
Speaker 1: going to see of the next few quarters is a
Speaker 1: huge increase in the savings rate. Um, when did you
Speaker 1: push that demand into an economy with a limited supply,
Speaker 1: You could get inflation and the whole you know, everything
Speaker 1: that we've done in terms of ballooning government deficits around
Speaker 1: the world has all been possible only because of low
Speaker 1: inflation and low interest rates. Yeah, okay, great, but that
Speaker 1: tells me I want to buy stocks right now, we're
Speaker 1: only buying eight stocks out there are John mentioned We've
Speaker 1: got Amazon coming out next week on our knees, Microsoft
Speaker 1: and the other glory stocks. What do you tell JP
Speaker 1: Morgan to have management clients who go, I just want
Speaker 1: to buy eight stocks, Well, no, don't. Don't you know,
Speaker 1: be diverse, right, because because you don't know what the
Speaker 1: next thing is going to get you is. I mean,
Speaker 1: if we went, if we roll the tape back six
Speaker 1: months ago and and you asked me as as you do,
Speaker 1: you know one of the things that you're really worried
Speaker 1: about next year, I wouldn't put pandemic down as my
Speaker 1: number one risk. But that's the whole point. So you
Speaker 1: don't own just eight stocks because you might be owning
Speaker 1: stocks in the one sector is going to get whacked
Speaker 1: by whatever it is. That's the next round the corner.
Speaker 1: You diversified, And frankly, you know, most of the U
Speaker 1: S stock market is not actually being impacted that much
Speaker 1: by this. It's it's the U S economy that's being impacted.
Speaker 1: But if you look broadly a technology, at healthcare, UM
Speaker 1: and utilities, consumer stables, there are a lot of companies
Speaker 1: that can actually write this one out pretty well. Um,
Speaker 1: So I think there are plenty of opportunities out there.
Speaker 1: And also international stocks, by the way, are cheaper than U.
Speaker 1: S stocks, and East Asia is going to come out
Speaker 1: of this thing faster than the United States. So I
Speaker 1: think there's plenty of opportunities around the stock mark around
Speaker 1: the world if you want to buy equity to protect
Speaker 1: yourself against inflation in the long run. David, I'm struggling
Speaker 1: to understand what you said, the idea that if the
Speaker 1: middle class benefits from this package of of of fiscal support,
Speaker 1: that that's going to create inflation that's going to somehow
Speaker 1: be negative. Why isn't that a good thing in the
Speaker 1: sense that we're going to end up being able to
Speaker 1: sort of bail out some the debts and get the
Speaker 1: economy kind of to reset a little bit before we
Speaker 1: move forward. Well, first of all, I first of all,
Speaker 1: the the the financial problem is only in the recovery
Speaker 1: when we come roaring back in the second half of
Speaker 1: twenty one. I want to make that clear. And also
Speaker 1: it is a very good thing too. I mean, we've
Speaker 1: got a very unequal society, had much rather than in
Speaker 1: a society which was more equal. But the key thing
Speaker 1: is that we have avoided inflation all the way to
Speaker 1: this point here. Um, you know, through that long expansion
Speaker 1: because the economy is actually getting less equal and more
Speaker 1: and more money was going to people who are richer
Speaker 1: who wouldn't spend it. Um. And the thing is that
Speaker 1: if you finally give money to people who are low
Speaker 1: were income people or middle income people who are really
Speaker 1: want need the money, and we'll spend the money, then
Speaker 1: you get that access demand. I'm not saying it's a
Speaker 1: bad things associates, just if you if you're going to
Speaker 1: if you're going to do that, you're going to have
Speaker 1: to find some way of being disciplined enough to tax
Speaker 1: money off of richer people to try to prevent demand
Speaker 1: from soaring above available supply, because that's what gives you inflation.
Speaker 1: And I said, this whole debt pyramid is you can
Speaker 1: only be supported if we have low inflation. That's really
Speaker 1: central to everything here. Okay, And basically this is sort
Speaker 1: of borne out by the data. Michelle Meyer of Bank
Speaker 1: of America saying the stimulus checks so far have gone
Speaker 1: to buying more things, more consumption. I am curious though,
Speaker 1: if you walk through what happens, why it becomes such
Speaker 1: a problem to have the inflation that you're talking about. Well,
Speaker 1: because because right now you know that we're going to
Speaker 1: come out of this. We went into this with the
Speaker 1: government debt at about eighty percent of GDP. We're gonna
Speaker 1: come out of it with the debt and a hundred
Speaker 1: percent of GDP, which is the highest just after World
Speaker 1: War Two. That's not a problem if you're financing an
Speaker 1: interest rate to one percent, but if you have higher inflation,
Speaker 1: you could be financing at five So if you're five
Speaker 1: percent on the debt, that's five cent of GDP just
Speaker 1: going to interest payments. And our government spending is about GDPs.
Speaker 1: You're using a quarter government spending just making interest payments
Speaker 1: on the debt. That's going to squeeze everything else, um,
Speaker 1: and people are gonna wonder, can you know is there
Speaker 1: some some threat of the government won't be able to
Speaker 1: make these payments at some stage? These are some huge
Speaker 1: themes for the next year into even two years as well, folks,
Speaker 1: David Kelly, thank you so much. With JP Morgan Asset
Speaker 1: Management joining us right now. Leslie Vinjamuri of Chadow House
Speaker 1: in London with a wonderful perspective on the American experiment, Leslie, I,
Speaker 1: I look at what we're seeing, and I just take
Speaker 1: the rules thum. You look at the drop of the
Speaker 1: economy and maybe the expansion of the unemployment rate, You
Speaker 1: do some fancy geometry and use some fancy words, and
Speaker 1: you just port that right over to the size of
Speaker 1: the stimulus. Am I right? That the size of stimulus
Speaker 1: we're heading towards could be as much as five or
Speaker 1: six trillion in a seventeen trillion dollar economy. It is
Speaker 1: extraordinary time. And when we've already had what the fourth
Speaker 1: stimulus package where at three trillion now, And you know,
Speaker 1: the big question is how long does this economic crisis run?
Speaker 1: And it has everything to do with our ability to
Speaker 1: tackle the health crisis. So it's difficult to predict the
Speaker 1: numbers until we know how we're going to do on
Speaker 1: that front, how we're going to do on testing when
Speaker 1: we can reopen the economy. Um. And that's really you know,
Speaker 1: that is the key question that's going to drive the
Speaker 1: size of that stimulus. But at the moment, it looks
Speaker 1: like we are headed towards ongoing stimulus packages that are
Speaker 1: just absolutely critical because the the economy has has been
Speaker 1: shut down, let's say, so fast, so good. I've been
Speaker 1: really impressed by how while sexual minutition appears to be
Speaker 1: working with the Democrats to get things done, get things
Speaker 1: done quickly as well over the last month sick sweeks
Speaker 1: Nancy Pelosi, how speaker would like to lead the next effort.
Speaker 1: And I just wonder if that's the moment where we
Speaker 1: bump into a little bit of tention, some division between
Speaker 1: Democrats and Republicans. Look, there's a lot of division already. Um,
Speaker 1: it is, as you said, it's been remarkably bipartisan in
Speaker 1: terms of the support the Democrats have had a number
Speaker 1: of wins that they wanted in terms of oversight and
Speaker 1: any number of things. Um. And as we get closer
Speaker 1: to the election towards November, once we get to the summer,
Speaker 1: that partisanship is going to really drive a number of things.
Speaker 1: But I think the scale of the crisis has you know,
Speaker 1: really been something that's um at least in terms of
Speaker 1: the economic response, brought people together. Now we're seeing something
Speaker 1: very very different when it comes to dealing with the
Speaker 1: health crisis, where opinion varies, where the states are battling
Speaker 1: it out with the with the with the with the government,
Speaker 1: the federal government. Um, but I think you know, one
Speaker 1: way or the other, we're gonna have to the Congress
Speaker 1: pulling together with vedition and and and driving this response forward,
Speaker 1: because as we've seen, we're looking at unappointment being possibly
Speaker 1: as high as thirty percent by the summer. Leslie to
Speaker 1: John's point as he set this segment up where he
Speaker 1: was talking about how the fiscal response in the monetary
Speaker 1: response set the decade for for since the two and
Speaker 1: eight crisis in the US emerged more quickly, is the
Speaker 1: size of the package appropriate that we have seen so
Speaker 1: far out of the United States? How big would be
Speaker 1: appropriate given the magnitude of the shock in the US? Yes, yeah,
Speaker 1: I mean, again, to go back to my original point,
Speaker 1: it's very hard to put a number on it until
Speaker 1: we see how long we're going to have state after
Speaker 1: state after state shuttered with the small businesses, closed, corporates,
Speaker 1: you know, dialing back, they're working from home, things getting
Speaker 1: slowed down. And until we know, until we see a
Speaker 1: you know, the the the the curve of death coming down,
Speaker 1: the hospital capacity being able to confront that health crisis,
Speaker 1: until we know when states are going to realben when
Speaker 1: the economy is going to be real, and we can't
Speaker 1: put a number on it. We can't put it, we
Speaker 1: can't put a ceiling on it. Leslie, I want to
Speaker 1: switch gears here. Let's pretend there's no pandemic right now.
Speaker 1: Buried in the Washington Post this morning is a tiny
Speaker 1: little article a claiming that Vice President Biden is leading
Speaker 1: the president and this poll or that, and then there's
Speaker 1: a modest silence. But president of Secretary Clinton was doing
Speaker 1: better at this time versus the president long ago and
Speaker 1: far away. How is the vice president doing? How is
Speaker 1: Vice President Biden doing well? You know, we are seeing
Speaker 1: those numbers, and we're seeing, especially in American Americans age
Speaker 1: fifty and over, that the preference for Biden is really
Speaker 1: much stronger than that the preference for for President Trump. UM.
Speaker 1: But it's a long time out, and as we know,
Speaker 1: the Vice President Biden has is an incredibly difficult climate
Speaker 1: that the President of the United States has a opportunity
Speaker 1: every single night to demonstrate, you know, his leadership um
Speaker 1: and have Americans to suss that on national television. Biden
Speaker 1: is not getting that Erican He's having difficult getting into,
Speaker 1: difficulty getting into the public debate so it's a very
Speaker 1: it's an uphill battle, Leslie, Thank you so much, Leslie.
Speaker 1: Vinjamuri with Chatham House in London greatly appreciate that this
Speaker 1: is the interview of the day on the virology of
Speaker 1: the moment. He is UH Andrew Pekosh of the Johns
Speaker 1: Hopkins University. He's out of Pennsylvania and Rutgers, and he
Speaker 1: is truly expert on the science that underpins this virus,
Speaker 1: this horrible virus, and this pandemic. We talked today about
Speaker 1: the last twenty four hour newsflow on virology. There's such
Speaker 1: an important distinction here to make between things that are
Speaker 1: used as disinfectants, right, that can work on surfaces UH
Speaker 1: to kill viruses, things that work topically, which are things
Speaker 1: that you can put on your skin which kill viruses,
Speaker 1: versus things that you take as as a drug internally
Speaker 1: in terms of what you can UH and and that
Speaker 1: affects the virus and can limit the virus. UM. All
Speaker 1: of these things UM can be toxic to people. UM.
Speaker 1: It's the amount that we use, the dose, the the
Speaker 1: dilution that we use that brings it down into a
Speaker 1: level where it's less harmful for us and it's still
Speaker 1: harmful to the to the virus um or or any
Speaker 1: other pathogen. I thought that the medical officials are in
Speaker 1: the press conference made clear their unhappiness over these comments.
Speaker 1: And yet it speaks of the plague and Albert commune,
Speaker 1: the desperation defined solutions. You're one of our great virological experts.
Speaker 1: For you and Dr Fauci and Dr Burke's please tell
Speaker 1: us how far out there is the solution to this virus.
Speaker 1: So there are a number of clinical trials that are
Speaker 1: going on right now, and you know, while well that's
Speaker 1: not the popular thing to say, there will need some
Speaker 1: time before we can test some of these treatments to
Speaker 1: really be sure that they're number one, not causing any
Speaker 1: extra harm and number two truly are effective. And I
Speaker 1: think the other thing to pay attention to, though, is
Speaker 1: you know, this virus induces a broad spectrum of disease.
Speaker 1: Um drugs may be effective against the mild forms of
Speaker 1: the disease, but perhaps not as effective against the severe
Speaker 1: forms of the disease. So all these things have to
Speaker 1: be investigated with clinical trials to make sure that the
Speaker 1: treatments that we're that are being proposed are actually effective
Speaker 1: for particular patient populations. But Andrew, how many you know,
Speaker 1: how many drugs do we know of that could work?
Speaker 1: Yesterday there was quite a lot of hope and then
Speaker 1: a big setback when the scilat drug didn't really go
Speaker 1: as planned. In terms of the Chinese trial. How many
Speaker 1: more of these drugs will fail just like this one did? Yeah,
Speaker 1: so I think them Desert trial is a great trial.
Speaker 1: Some details are lacking, but it seems like that was
Speaker 1: really targeting uh, severe cases of of COVID nineteen. Targeting
Speaker 1: severe cases is very, very difficult because people suffering from
Speaker 1: those severe cases have a combination of the virus causing
Speaker 1: damage but also their immune system causing damage. So something.
Speaker 1: So it may be that relying on just an anti
Speaker 1: viral drug for severe disease isn't completely the right strategy.
Speaker 1: We may need to find ways to also temper the
Speaker 1: immune response that's being induced by the virus for those
Speaker 1: severe diseases. The m Deservere drug may be able to
Speaker 1: work in more mild situations or at early times post infection.
Speaker 1: How far our way to to actually finding a vaccine?
Speaker 1: Are we um a vaccine? We're you know, we're in
Speaker 1: the middle of phase one clinical trials UM for a
Speaker 1: number of different vaccine platforms. We would expect to hear
Speaker 1: something in the next month or two about some of
Speaker 1: the initial safety work that's going on with those drugs,
Speaker 1: with those vaccines, and then UM the trials that are
Speaker 1: going to be putting it into patients to look for efficacy.
Speaker 1: UM are already being lined up under the assumption that
Speaker 1: some of these drugs will be safe. O disease vaccines
Speaker 1: will be safe. So we're still about a year away
Speaker 1: from anything in terms of a practical rollout of a
Speaker 1: vaccine if everything goes well interpecks. So the Johns Hopkins
Speaker 1: University I thought that was exceptionally timely given the news
Speaker 1: slow of the last forty eight hours. Thanks for listening
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at tom Key before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.