Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: by searching Bloomberg Global News. Jason Kelly and Alex Steel
Speaker 1: here with you on a Friday. Delighted to have back
Speaker 1: with us our reality check, our human gut check, which
Speaker 1: actually is a little bit of a pun since you're
Speaker 1: a gastrointurologist. Dr Ian les Vader. I had never really
Speaker 1: thought about that. Jason, You are always funny, but especially today.
Speaker 1: How are you doing very well? Uh? And I'm happy
Speaker 1: to introduce you if you haven't met her before, to
Speaker 1: Alex Steele, our colleague from Blomberg Television and Bloomberg Radio
Speaker 1: joining me and Carol's absence. Uh, doctor less fair of course,
Speaker 1: his clinical associate professor of medicine at n y U
Speaker 1: s Land Gun Medical Center. So give us that reality check, Ian.
Speaker 1: You know, I feel like the news has been slightly better,
Speaker 1: maybe a little this week as we look across the country.
Speaker 1: Certainly things feel stable in New York. What do you
Speaker 1: see from your perspective? Definitely good news and bad news.
Speaker 1: By the way, I too, am a native New Yorker
Speaker 1: born and raised on the Upper West Side, so there
Speaker 1: are not a lot of us that we have to
Speaker 1: stick together, but I'm a little more than sixteen years.
Speaker 1: In terms of the virus, there was a recent article
Speaker 1: of the New England Journal and ME correspondence that was
Speaker 1: a little disconsorting. It showed patients with mild UH disease
Speaker 1: that that were treated with oxygen, you know, not totally
Speaker 1: asymptomatications how to drop over the course of approximately a
Speaker 1: hundred twenty days in their antibodies. So uh, it is
Speaker 1: more clear that the antibodies that are forming are maybe
Speaker 1: transient uh finite, and that raises questions about vaccines. How
Speaker 1: much of an antibody response they elicit, and certainly for
Speaker 1: patients who say I don't want a vaccine, I don't
Speaker 1: need a vaccine, I had it, there really is a
Speaker 1: question even if you do have anibodies, how long they
Speaker 1: will last? Laugh. So I think that that was an
Speaker 1: interesting new bit of data, not to mention, of course,
Speaker 1: the increased cases that we're seeing. Always good to meet
Speaker 1: another fellow New Yorker. Uh, where do you grow up?
Speaker 1: By the way, uh, nineties between Columbus and Amsterdam, and
Speaker 1: they moved over to the East Side. So I went
Speaker 1: to school and medical school here. So I'm a longtime
Speaker 1: New Yorker, but I love the whole country. Thank Yeah, yeah,
Speaker 1: you have to say that. Eighty seventh and West End,
Speaker 1: so we were in the hood. Okay. So um, the
Speaker 1: antibody research was a little confusing this week. But also
Speaker 1: confusing to me was then the positive T cell research.
Speaker 1: Can you walk me through sort of what the differences are? Well, Uh,
Speaker 1: the immune response really is composed of two arms. Typically
Speaker 1: we think of the cells which form antibodies, and they
Speaker 1: work both in a short term called I G M
Speaker 1: anti bodies, and that I G G which tend to
Speaker 1: be longer lasting, but all of those can vary. Typically,
Speaker 1: if you have certain viruses like measles, if you actually
Speaker 1: get the disease as opposed to the vaccine, those are
Speaker 1: lifetime antibodies small pox or variety. But then there are
Speaker 1: also diseases like hid or hepatitis C, where you get
Speaker 1: antibodies and they do not kill the virus. People have
Speaker 1: chronic hid or chronic hepatitis C. You need anti viral treatments.
Speaker 1: But there are also cellular immunity typically we call the
Speaker 1: key cell related immunity, which also helps kill a variety
Speaker 1: of pathogens from bacteria also the viruses, and that we
Speaker 1: feel maybe longer lasting. We're just really beginning to see
Speaker 1: with these vaccines, we need to study what is the
Speaker 1: nature of the response. Ideally you get both and ideally
Speaker 1: that will give you a longer pertition. Again, assuming the
Speaker 1: virus does that, you take so ian as you look
Speaker 1: at the look ahead to the vaccine. I wanted to
Speaker 1: ask you a question that came up in a conversation
Speaker 1: we had yesterday with the new president of the a
Speaker 1: m A. And it largely is about actually I'm checking myself.
Speaker 1: A conversation we had with a doctor from Johns Hopkins,
Speaker 1: who I believe is actually a sociologist, and talking about
Speaker 1: the culture of vaccination and how she and her colleagues
Speaker 1: are actually worried about when the vaccine is available, essentially
Speaker 1: convincing people that they should get it. How much do
Speaker 1: you worry about that? You are exactly right, and that
Speaker 1: really is a concern. I've spoken to my own patients,
Speaker 1: and I've also looked at studies, and really we're talking
Speaker 1: about perhaps fifty people who would be hesitant, and it's unclear,
Speaker 1: you know what this is, what kind of beliefs are
Speaker 1: going on their fear. And certainly some of these vaccines
Speaker 1: are new message or a name Maderna, the astra zanca,
Speaker 1: a variety of new approaches which we think are more effective,
Speaker 1: but they are untested, meaning they haven't been used for decades.
Speaker 1: So vac scenes are essentially useless unless you get people
Speaker 1: to take them. Well, what percentage of the population would
Speaker 1: have to We really are worried about at least a
Speaker 1: fifty herd immunity, So we're talking about of the population
Speaker 1: fifty or sixty maybe even more than that. They either
Speaker 1: have the disease with long lasting antibodies, So we just said,
Speaker 1: many of the cases do not have long lasting antibodies
Speaker 1: and or getting a vaccine. So even people who have
Speaker 1: had the disease, be it mild, if they do not
Speaker 1: have antibodies or antibody tigers, even if they were proven
Speaker 1: to have it, we're going to have to convince them
Speaker 1: to take the vaccine. In addition to people who have
Speaker 1: never had the sellon people is a lot, and so
Speaker 1: you're talking potentially, you know, a hundred million people who
Speaker 1: will made a vaccine, maybe more, and that is a
Speaker 1: serious concern. If if the majority or even a large
Speaker 1: percent don't want to take a vaccine, that would be
Speaker 1: a problem. Right all right, in less Pader, dr Ian
Speaker 1: les Pader, hang with us for a minute. We're gonna
Speaker 1: do some news and uh, some other business and come
Speaker 1: back to you. We're gonna talk about reopening what you're
Speaker 1: seeing here in New York because it is very different,
Speaker 1: I think from what's going to the rest of the country.
Speaker 1: One headline, Alex Crossing that you are nice enough to
Speaker 1: just share with the group here. Trump says China trade
Speaker 1: deal means less to him now after the virus. This
Speaker 1: is based on an interview I believe he's giving with
Speaker 1: barstool sports, barstools, Florts, bog Man. I'm pretty sure that's
Speaker 1: David Portnoy's. Uh, yeah, it is. He was the guy
Speaker 1: who sort of incited all the robin Hood traders, right,
Speaker 1: He would take scrabble letters out of a scrabble bag
Speaker 1: and then decide that's where he was going to invest.
Speaker 1: So it's really interesting to me that Trump is giving
Speaker 1: an interview to him specifically. But beside that point, you know,
Speaker 1: the trade deal. Going after the trade deal, that's the
Speaker 1: nuclear option in the market. So if he does that,
Speaker 1: all bets off. Yeah. Absolutely, And we saw a lot
Speaker 1: of evidence this week that even with consulate closures and
Speaker 1: all the back and forth, as long as the trade
Speaker 1: deal is intact, are exactly right investors like, all right,
Speaker 1: we're gonna exactly all right. Much more ahead, including more
Speaker 1: with Dr les Vader MS Boomberg. All right, so talk
Speaker 1: to us about schools. Dr Ian les Pader, what's your
Speaker 1: latest thinking as you talk to your colleagues on the
Speaker 1: medical side, because everybody's got to take here, well, I've
Speaker 1: got a number of teachers who are a little afraid
Speaker 1: to go back. I think has been has been stated,
Speaker 1: you know, young kids generally do very well. Also, they
Speaker 1: carried the virus, but they tend not to be very sick,
Speaker 1: so they're sort of acient tramatic carriers. So I think
Speaker 1: students will be fairly safe, really even up through high
Speaker 1: school without a problem. I probably through college as well.
Speaker 1: Their teachers may have a little bit more risk, but
Speaker 1: I believe nothing is risk free. Everything you do has
Speaker 1: some risk, and I would say if you're not in
Speaker 1: a high risk group high blood pressure, diabetes, obesity, many
Speaker 1: of our teachers do have some of those problems. And
Speaker 1: I think if you're wearing a mask and you're teaching,
Speaker 1: I think you're you're relatively safe. And I think we
Speaker 1: have to try school openings um because I think we
Speaker 1: can't get the economy back until basically kids are safe
Speaker 1: in schools. So I think it is reasonable to do
Speaker 1: certainly in certain states like New York where the case
Speaker 1: rate is way down, I think it's very reasonable and
Speaker 1: appropriate to do that. And I think as we do
Speaker 1: it and it works, people will feel more confident about it.
Speaker 1: Other businesses may have a challenge. I see people sitting
Speaker 1: in outdoor restaurants. It's definitely a smaller volume, and that
Speaker 1: may be an economic risk, but I think people eating outside, uh,
Speaker 1: if they're not shouting or speaking loudly and spreading virus,
Speaker 1: I think that's also reasonably safe. And obviously with a
Speaker 1: vaccine and with more herd immunity, it will over time
Speaker 1: become more safe. Well, it seems like the two issues
Speaker 1: tied together, and that like, once it gets cold, New
Speaker 1: Yorkers don't like to be cold, so we're not going
Speaker 1: to go out and sit outside in the restaurant, which
Speaker 1: brings people back inside. You can't eat inside a restaurant
Speaker 1: until least October one. It's the same thing for schools.
Speaker 1: If it's crowded, what kind of indoor systems can you
Speaker 1: have to make the ventilation better? So it's kind of
Speaker 1: like being outside. You're exactly right. So I was recently
Speaker 1: at the dentist and they have not only air cleaners
Speaker 1: that exchange air in the roofs frequently, but UV lights
Speaker 1: and so they've already adopted a series to make that
Speaker 1: time in the chair a safer experience, and I think
Speaker 1: we're going to really have to do that. It would
Speaker 1: be smart to get a jump on this, and certainly
Speaker 1: the New York City school system and really in other classrooms.
Speaker 1: The most you can do is reduced risk. You can
Speaker 1: ever eliminate risk. People may have asymptomatic carriage of the virus,
Speaker 1: certain kids. But I think if we can do better
Speaker 1: air exchange filters, ultra violet light, we can I think
Speaker 1: at least reduce the risk to everyone in the classroom.
Speaker 1: So Ian I asked this of almost everyone when we
Speaker 1: talk about the virus or the markets right now, as
Speaker 1: you think about it from a physician's perspective, what worries
Speaker 1: you the most about the virus at this point? Well,
Speaker 1: exactly as Alex said, you know, we're going into the
Speaker 1: UH fall and winter where it will be difficult to
Speaker 1: be outside where we will by definition of closer contact,
Speaker 1: you can't entertain outside. And I don't think we're going
Speaker 1: to have a vaccine until early that's what's for a
Speaker 1: January or February. And exactly as you said that everyone
Speaker 1: is willing to take it. So I think we may
Speaker 1: reach a crunch not only in the number of cases,
Speaker 1: but in the the exposure as the weather gets colder,
Speaker 1: as we move indoors UH and as we perhaps get
Speaker 1: a second a wave. So away think, no matter how
Speaker 1: we slice it, We're going to see more and more
Speaker 1: cases and unfortunately, more and more hospitalizations in depths. And
Speaker 1: we're seeing that in the South and the next area
Speaker 1: to rule maybe other parts of the country that have
Speaker 1: been spared so far. Right, all right, well, we will
Speaker 1: keep in touch with you. You You are always great at
Speaker 1: giving us the latest, and we really really appreciate it.
Speaker 1: Have a great weekend. Dr Ian less Paid, our clinical
Speaker 1: Associate Professor of Medicine n y US Langon Medical Center,
Speaker 1: joining us on the phone. And Alex, you nailed it.
Speaker 1: I mean schools, schools, school schools. I feel like ones
Speaker 1: in college are going to college, both both both finish it.
Speaker 1: One finishing high school next year and one going to
Speaker 1: be a junior. Yeah, senior, one junior. But they're going back, right,
Speaker 1: they're going back as it right now? Yeah, yeah, here
Speaker 1: in Westchester, part of New York State. But we are thinking,
Speaker 1: we're still waiting to hear on the what the what
Speaker 1: Governor Cuoma has to say because he is going region
Speaker 1: by regions, so we'll see where all that ends up.
Speaker 1: You know, I feel like Alex, coming out of that
Speaker 1: conversation with Dr Ian les Bader, it is fair and
Speaker 1: right to remind people that this virus is still ravaging
Speaker 1: this country. It's easy, maybe a little easier to lose
Speaker 1: sight of that here in the Greater New York area,
Speaker 1: the Tri State area, because the numbers are way down.
Speaker 1: California reporting the biggest one day record of a hundred
Speaker 1: and fifty nine COVID nineteen deaths uh in California. I
Speaker 1: don't know how you feel about this, but it felt
Speaker 1: like at the beginning, California was on it. I totally agree,
Speaker 1: and then all of a sudden, and I don't know
Speaker 1: the intricacies of which regions opened up faster and than
Speaker 1: how it spread, to be honest, but you're right and
Speaker 1: that they had it together and the cases were down,
Speaker 1: and then look what happened. And I think the reason
Speaker 1: why this matters to investors is the difference in asset allocations.
Speaker 1: So if you owned US assets because of the safety
Speaker 1: trade and because the US government has a lot room
Speaker 1: to move and because of the FED, and then you
Speaker 1: see the case is just not under control, and you
Speaker 1: see much more activity in Germany if you just take
Speaker 1: a look at restaurants activity, for example, it's exploding in
Speaker 1: Germany versus here. Um, where do you put your money.
Speaker 1: Then yeah, I think it's a it's a really good
Speaker 1: point because we are trying to to get a handle
Speaker 1: in this. I mean to go back to something you
Speaker 1: said before. Increasingly the reporting that I'm seeing indicates that
Speaker 1: you really have a tale of two states in California.
Speaker 1: That Northern California which did lock down a little bit sooner,
Speaker 1: led by San Francisco, the mayor of San Francisco, and
Speaker 1: really that whole Bay area all the way down through
Speaker 1: Silicon Valley to San Jose they locked down very early,
Speaker 1: stayed lockdown. Southern California was just enough behind. And I
Speaker 1: think especially as you go south, just south of Los
Speaker 1: Angeles into Orange County and maybe down to San Diego.
Speaker 1: You know, you you go back, you think about those
Speaker 1: pictures from the beaches a few weeks ago, um or
Speaker 1: maybe now a couple of months ago. Time sort of
Speaker 1: is melting together. Here is no there is no irrelevant,
Speaker 1: but you know it is. Those are two very different things.
Speaker 1: And I talked with a few people this week who
Speaker 1: basically said, listen, I'm in northern California, and that's a
Speaker 1: big distinction. But listen, I mean you look at Texas
Speaker 1: and and also Texas I was talking to somebody this
Speaker 1: morning about this sort of depends on where you are
Speaker 1: in Texas as well. Florida is a little bit similar
Speaker 1: to so UM. But what we do know is exactly
Speaker 1: what you said a few minutes ago or a minute ago,
Speaker 1: which is it's not under control. No, it's not UM.
Speaker 1: And I think what's also interesting is if we do
Speaker 1: get under control in that maybe the cases that we're
Speaker 1: recording our younger people, so hospitalizations eventually will take lower,
Speaker 1: and we do get stimulus out of d c UM. Well,
Speaker 1: how does that set up the US economy then? I mean,
Speaker 1: I don't I don't know how much we're priced for
Speaker 1: that particular scenario either. And I just wonder how you
Speaker 1: look at that, m Maybe you look at us really
Speaker 1: yields and the inflation expectations, and that's kind of what
Speaker 1: we're looking at. But I think that's an interesting part
Speaker 1: uh A situation too, if we actually get it under control, right,
Speaker 1: and so much of it You're exactly right, so much
Speaker 1: of it keep saying that I'm exactly right. I'll come
Speaker 1: back anytime. I know, I know, I really, I'm I
Speaker 1: know as I get that at home. I'm a president
Speaker 1: of the Alex Steel Fan Club. Um. But you know,
Speaker 1: a lot of this is on the minds of legislators
Speaker 1: clearly as they try and figure out what happens with
Speaker 1: this next round. And someone who's watching this really really
Speaker 1: closely is Derek Johnson. He is the president and chief
Speaker 1: executive officer of the Double A cp Joints. Is on
Speaker 1: the phone from Baltimore. Derek, really nice to have you
Speaker 1: with Alex and myself. Thank you for our opportunity. So
Speaker 1: let's talk about what's going on just down the road
Speaker 1: from you in Washington as Congress in the administration try
Speaker 1: and figure out what this next round should look like.
Speaker 1: What is your key piece of advice, your key piece
Speaker 1: of input to them, I will hope consider everyday working people, UH,
Speaker 1: consider our economy, and to make sure our elections are safe.
Speaker 1: Those are the key things that are on the table now,
Speaker 1: both BLOT and MA up provision making sure that elected
Speaker 1: administrations in place so we can carry it out election
Speaker 1: in November. They can ensure that there are some extensions
Speaker 1: of things like the undemployment benefits and a few other
Speaker 1: things that are fingering because of the current health crisis
Speaker 1: that we're in. Making sure that their their resources for
Speaker 1: municipal and state governments because they are they're about to
Speaker 1: hear the financial law, which will be devastating across the country.
Speaker 1: And in terms of action, UM, no matter what the
Speaker 1: government does, what kind of steps do you see companies making?
Speaker 1: It are real? We see a lot of numbers being
Speaker 1: thrown out X amount of money to black pecs, X
Speaker 1: amount of money for equality, etcetera. What's real? What is
Speaker 1: real is true systemic approaches to address that the cays
Speaker 1: A loan problems that have built up around inequity. Uh.
Speaker 1: Some companies are are season punting the moment to give
Speaker 1: the rosy statements and then uh, in a few months
Speaker 1: from now, when all of the attention has died down,
Speaker 1: whether or not they're going to go back to business
Speaker 1: as usual. UH. I think Ropert Smith had put forth
Speaker 1: a really good uh and a smart plan. UH. Let's
Speaker 1: talk about the super cent solution. We have twenty one
Speaker 1: African American banks across the country. How can they get
Speaker 1: more capital to lend out to build a stronger entrepreneur
Speaker 1: class within the black community. The number one problem with
Speaker 1: entrepreneurs and small business of the black community has access
Speaker 1: to capital, and it with more capital, you see more
Speaker 1: growth is UH. It's it's a great opportunity that has
Speaker 1: been untapped in our realized well. And it's interesting. I
Speaker 1: did want to talk to you if we could, Derek
Speaker 1: briefly about a deal that you did with Viacom CBS,
Speaker 1: because you know so much of this really is it's
Speaker 1: an economic piece that you just discussed it. There's also
Speaker 1: a representation piece that ties right into that. UH into
Speaker 1: that economic piece of it. Tell us about this deal
Speaker 1: with CBS, but we begin to have a conversation with
Speaker 1: CBS Studios UH with the goal in mind of n
Speaker 1: Double ACP partnering to build and developed content how people
Speaker 1: see African Americans on the screen, whether big screen or television,
Speaker 1: oftentimes the perception of how we are treated out in public.
Speaker 1: For the INN Double A c P, we have always
Speaker 1: advocated around the images that are projected. At a hundred
Speaker 1: and eleven year old organization, our second major advocacy fight
Speaker 1: was around the release of a movie call Birth of
Speaker 1: a Nation, because we knew the impact of that movie
Speaker 1: would have a devastating impact on African Americans UH in
Speaker 1: nineteen and which came which came to be true. As
Speaker 1: a result of that movie, UH clan membership UH was
Speaker 1: greater in states like Indiana and Michigan UH in the
Speaker 1: nineteen thirties than it was membership in states of Georgia, Alabama,
Speaker 1: and Mississippi. UH. That projection from that movie spurred a
Speaker 1: whole new unfortunate reality for African Americans and how we
Speaker 1: were treated. So this deal is leading on that. On
Speaker 1: that reality, we have a president in Hollywood. We do
Speaker 1: an annual show called The Image a Wars. But it
Speaker 1: is our goal to expand our footprints so that more
Speaker 1: positive images will be projective of African Americans because there
Speaker 1: are so many rich stories around how we have America
Speaker 1: be America. We know, alright, we're gonna leave it there.
Speaker 1: Thank you so much for your time. We really appreciate.
Speaker 1: Dereck Johnson, President and CEO of the Double A CP
Speaker 1: will hope you'll come back. He joined us on the
Speaker 1: phone from Baltimore and Alex such an important point there
Speaker 1: at the end, and you know, takes me back not
Speaker 1: a little quick flex here, you know, to the story
Speaker 1: that I was working on for a long time about
Speaker 1: Lebron James and Maverickrtter what they're doing with spring Hill.
Speaker 1: You know they did a documentary about the first female
Speaker 1: millionaire in the United States, African American woman just down
Speaker 1: the road from me in Irvington, New York, Madam C. J. Walker,
Speaker 1: Which that's Westchester, but still New York, but still New York.
Speaker 1: But it's important to remember that. It is important to
Speaker 1: remember that, and I'm glad you made that distinction. It
Speaker 1: means a lot to me, you know, it means a
Speaker 1: lot that you're listening to me, and and that I
Speaker 1: just we're not married. I'll listen to you all the time.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Jason Kelly on Bloomberg Radio. All right, let's talk a
Speaker 1: little Business Week economics. Now, this is the guy we
Speaker 1: need to hear from as everything is going on between
Speaker 1: the US and China. Alex, we're talking about Tom or Like,
Speaker 1: chief economists for Bloomberg Economicsly joins us on the phone
Speaker 1: from Washington. All right, Tom, I feel like this is
Speaker 1: a little bit of a reality check Friday. So many headlines,
Speaker 1: so much rhetoric, but even beyond that, some actual action
Speaker 1: being taken with consulates closing here in the United States
Speaker 1: and then of course over in Chung do. What do
Speaker 1: you make of this? Great to be on Jason Um, So,
Speaker 1: I think the latest developments are a little bit alarming. Um.
Speaker 1: If we think about the last four years of US
Speaker 1: China relations under the Trump administration, UM, clearly it's not
Speaker 1: been super friendly. Right. We've had a trade war, we've
Speaker 1: had sanctions on Huawei. UM. But all of it was
Speaker 1: within the framework of engagement. Right. There was a recognition
Speaker 1: that there were benefits to the relationship. Yes, the US
Speaker 1: said China was behaving badly on intellectual property, on market access,
Speaker 1: and we needed to take steps to address that. But
Speaker 1: if we could address those problems, then we could have
Speaker 1: a mutually beneficial trading relationship. If you read the latest
Speaker 1: speeches by senior officials, the Pompeo speech, a bar speech,
Speaker 1: the O'Brien's speech, there's just a completely different tone. Um.
Speaker 1: It's no longer talking about some problems that we need
Speaker 1: to fix so we can move forward. UM. It's talking
Speaker 1: really in terms of a sort of an existential conflict
Speaker 1: between two mutually incompatible systems. And if that's the approach
Speaker 1: which DC is now taking, then the question is, well,
Speaker 1: what can the US and China work together on in
Speaker 1: a constructive way. What is interesting to me is the
Speaker 1: last two days President Trump and some capacity said that
Speaker 1: he no longer loved the trade deal, that he likes
Speaker 1: it less because of COVID. What does that mean? What
Speaker 1: does that signify to you? Yeah, I think that's a
Speaker 1: really that was a striking quote from President Trump. Aallex
Speaker 1: um And I think that the trade deal, Um, it's
Speaker 1: sort of it's funny to think about it in this
Speaker 1: way in some ways, because of course the trade negotiations
Speaker 1: and the tariffs at the time, we're sort of an
Speaker 1: enormous source of conflict between China and the US. But
Speaker 1: in retrospect, it now seems that actually that was what
Speaker 1: was keeping things on the rails right. It was the
Speaker 1: desire to get a trade deal done, which was preventing
Speaker 1: these sort of more hawkish voices from from from increasing
Speaker 1: the volume and adding tension to the relationship. And now
Speaker 1: we have the COVID crisis, the trade hill just seems
Speaker 1: much less important. So we're seeing these much more hawkish
Speaker 1: voices from Pompeo, from bar from o'bien, from O'Brien starting
Speaker 1: to reshape the debate. So tom uh I neglected to mention,
Speaker 1: and I should always mention when someone has a new
Speaker 1: book out. You have a great new book out, it's
Speaker 1: called China, the Bubble that Never pops. I do wonder
Speaker 1: through that lens, through the economic lens that you view
Speaker 1: the entire world, but especially China, what are the economic ramifications?
Speaker 1: And as Alex just Alex just nicely tied up, you know,
Speaker 1: trade is clearly a part of this. And as you're
Speaker 1: looking at China and its economic might or it's economic fragility,
Speaker 1: what do political moves like this ultimately potentially mean. So
Speaker 1: I think about this in two steps, Jason. So the
Speaker 1: first question is, well, what if the US just goes
Speaker 1: down this path on its own, What if the US
Speaker 1: unilaterally attempts to kind of freeze China out. Well, if
Speaker 1: that happens, I'd actually be more worried about costs to
Speaker 1: the US, because if that happens, China can continue to
Speaker 1: do technology transfer, do trade with the European Union, with Japan,
Speaker 1: with Korea, with all the other emerging markets in the world.
Speaker 1: Um second step is or the second question is, well,
Speaker 1: what if the US starts to build a kind of
Speaker 1: multilateral alliance around this new view on China? Right, What
Speaker 1: if the S convinces Europe, Japan, Career and other countries
Speaker 1: that there is this existential threat um. And it's not
Speaker 1: just the US, but it's all these other countries saying
Speaker 1: we need to change the trade relationship. We can't cooperate
Speaker 1: with you on research, we can't share our technology. Um.
Speaker 1: If that happens, UM, I think we're going to have
Speaker 1: to start getting a little bit more pessimistic on China's
Speaker 1: medium term growth prospect. Haven't we started to see that? Uh?
Speaker 1: And the recent moves by the UK, for example, UM.
Speaker 1: France though sticking with Huawei for now. But aren't we
Speaker 1: starting to see this? Yeah? So I think that's another
Speaker 1: good point, Alex um So. Three years ago, it really
Speaker 1: seemed like the US was out on its own on
Speaker 1: this and indeed doing a bunch of things which weren't
Speaker 1: that constructive. Right. So, the US was trying to have
Speaker 1: a trade war with China, Mexico, Canada, and Europe all
Speaker 1: at the same time. And when you do that, you
Speaker 1: can't bring your allies with you if your main objective
Speaker 1: is changed during the relationship with China. UM. So what's
Speaker 1: changed clearly in the last few months is that We've
Speaker 1: seen some other voices the UK, Australia and really start
Speaker 1: to change their tone on China, the UK for example,
Speaker 1: saying they're going to pull Hua away out of their
Speaker 1: telecom system. Um. The question I have, and it's sort
Speaker 1: of it's a difficult one to answer, is well, what
Speaker 1: happens in November? Um is the is it if we
Speaker 1: get the Trump administration coming back, then clearly it would
Speaker 1: be sort of on the same course if we get
Speaker 1: a Biden administration. How much would they be locked into
Speaker 1: this new sort of adversarial relationship with China and how
Speaker 1: much would they try and sort of pull back and say, yes,
Speaker 1: there's areas where we disagree and we need to be
Speaker 1: tough here, but there's also areas where we can work together.
Speaker 1: Tom Or, like you always make a smarter We really
Speaker 1: appreciate it. Thank you so much for joining us. Tom
Speaker 1: Or like of course, as chief economists for Bloomberg Economics,
Speaker 1: joining us on the phone from DC and check out
Speaker 1: his very timely book, China The Bubble That Never Pops.
Speaker 1: It's a terrific read. Uh, and you should read it
Speaker 1: during quarantine. You've got time, right, Yeah, we have time?
Speaker 1: What's time anyway? But we are seeing China get more
Speaker 1: aggressive in other areas, like with India, for example. I'll China,
Speaker 1: see so I wonder how offensive or defensive that actually
Speaker 1: is right now in this environment. And I really liked
Speaker 1: Tom's point to about you know what November brings and
Speaker 1: really I guess more pointedly what a new administration brings
Speaker 1: versus a maybe uh slightly more aggressive Trump administration when
Speaker 1: it comes to China. Because this certainly has been a
Speaker 1: story that we've been following very closely and will continue to.
Speaker 1: You are listening to Bloomberg Business Week, Jason Kelly and
Speaker 1: Alex Steel here with you on a Friday, So let's
Speaker 1: turn to the magazine. A great story by William Turton.
Speaker 1: He is cybersecurity reporter for Bluemberg, joining us on the
Speaker 1: phone from New York along with Joel Webber, edit or
Speaker 1: a Bloomberg Business Week. He joins us from Massachusetts. I
Speaker 1: love this story, Joel, in part because I read it
Speaker 1: and said, wait, did that's a facts Missip? What what
Speaker 1: this is a story tell us about? We brought it,
Speaker 1: We brought William here to tell us all about facts machines.
Speaker 1: Um No, but for really this, uh, it's sort of
Speaker 1: this incredible story. UM, a company called North Hydro, big
Speaker 1: player in the aluminum world. Uh, with the victim of
Speaker 1: a ransomware attack. And usually that does not end well
Speaker 1: for companies. And there's a whole cottage industry of of
Speaker 1: consultants who who comes to your assistance to help you
Speaker 1: get yourself out of a bind and maybe you to
Speaker 1: negotiate um and pay the bitcoin and UH, this company,
Speaker 1: North Hydro said we're not going to do that and
Speaker 1: they would totally analog for as an answer. UH. And
Speaker 1: William was the one who sort of unearthed this story
Speaker 1: for us. Um, William, how did how did you on
Speaker 1: the story and how did this drama unfold their at
Speaker 1: the company? So thanks for having me by the way.
Speaker 1: You know, something that's really interesting is that companies are
Speaker 1: very often hit by these kind of ransomware attacks. But
Speaker 1: you know, what they decided to do is to um
Speaker 1: keep it quiet. You know, they don't want people to
Speaker 1: know that they've been hit by a ransomware attack. And
Speaker 1: you know that's kind of understandable. You have these concerns
Speaker 1: about customer data and the reputation of your of your company.
Speaker 1: But North guastally did something really different here. UM. You know,
Speaker 1: most companies keep this all wrapped up under attorney client
Speaker 1: privilege when they bring in these consultants to to fix
Speaker 1: the attack. But North decided that they would talk about
Speaker 1: it and they would talk about their response. Though. I
Speaker 1: was really grateful to them for kind of letting me
Speaker 1: inside and seeing how it all worked. And you know,
Speaker 1: the story is pretty incredible. They their entire network was
Speaker 1: taken down and suddenly at all their plants and all
Speaker 1: their offices around the world had to kind of scramble
Speaker 1: to keep the company running, to keep everything afloat, and
Speaker 1: to figure out, you know, how do you pay employees,
Speaker 1: how do you process orders when you literally don't have
Speaker 1: access to your corporate network anymore? How did you find
Speaker 1: this story? Uh So, a lot of the word kind
Speaker 1: of got out that North could have been hit by ransomware,
Speaker 1: right they had posted publicly that their network was down.
Speaker 1: And also, you know, something really interesting happens often when
Speaker 1: UM companies are hit by ransomware. You know, you'll have
Speaker 1: the kind of smart computer people come in and a
Speaker 1: lot of times they'll upload, uh, you know, the malware
Speaker 1: that the company got hit with to a portal called
Speaker 1: virus Total So suddenly, on the same day that there was, um,
Speaker 1: you know, a ransomware event announced it north there was
Speaker 1: an upload from Norway to virus total of this this
Speaker 1: ransomware called locker goga UM. So you know you could
Speaker 1: kind of put the pieces together that they had been
Speaker 1: hit by locker goga UM. So from there I kind
Speaker 1: of reached out to the company and they were gracious
Speaker 1: enough to let me come inside and see what it was. Like.
Speaker 1: I mean, William, it is sort of amazing how reliant
Speaker 1: we are on technology. I mean, I'm sure everyone on
Speaker 1: this interview has had that experience of you know, the
Speaker 1: power goes out of the WiFi goes out, and you're like,
Speaker 1: what am I support? Like everything I need and do
Speaker 1: and one relies on this and I'm just a dude,
Speaker 1: like I'm not running a company here. It's got to
Speaker 1: be a really sort of disturbing thing machine, right. You know.
Speaker 1: There's there's this kind of great character in the story,
Speaker 1: this guy Michael Hammer, who runs the plant in in Crosona, Pennsylvania.
Speaker 1: He's been running this aluminum plant for twenty five years.
Speaker 1: You know, I walked around with him. He could tell
Speaker 1: you every single little detail of how the plant works
Speaker 1: and who works there. But he has this great quote
Speaker 1: this in the story. He said, you know, I didn't
Speaker 1: know what the hell a bitcoin was um when they
Speaker 1: got packed. So you know a lot of people were
Speaker 1: scandling and figuring out what to do, and they and
Speaker 1: they seriously were just you know, they had an incident
Speaker 1: response plan, they had planned you know, business continuity plans,
Speaker 1: but at some level you kind of have to wing
Speaker 1: it right. So you know, they were setting up group
Speaker 1: chats on text messages on their own personal phones. They
Speaker 1: were placing signs on the door. Um. You know, bank
Speaker 1: would not communicate with Norse electronically because the banks were
Speaker 1: afraid that, you know, somehow maybe the malware might jump
Speaker 1: from the North network to their network, so they had
Speaker 1: to find ways to issue payment and invoices and that
Speaker 1: involved you know, facting back and forth. So a great
Speaker 1: part of the story becomes this analog solution um that
Speaker 1: the company ends up doing. And could you walk us
Speaker 1: through that process, William, And then also I'm curious, you
Speaker 1: know what for brother companies out there, like if if
Speaker 1: this drid forbid ever happens to them, like what's the
Speaker 1: end game? Ultimately looked like and you have one minute
Speaker 1: to do that, William. Sure. So you know, they brought
Speaker 1: employees in and a lot of employees were concerned about
Speaker 1: their data being missing, and they brought in Microsoft, they
Speaker 1: brought another teams and they what they did is they
Speaker 1: rebuilt their entire network from scratch. Um. They had backups
Speaker 1: to rebuild the network. But the key for you know,
Speaker 1: for other businesses you'll hear this from cybersecurity companies, is
Speaker 1: that you need to make sure that your corporate data
Speaker 1: is backed up and that you test those backups so
Speaker 1: that it works. Because these criminal ransomware groups are constantly
Speaker 1: on the hunt for vulnerable companies and they'll attack you
Speaker 1: whether you know your your secure insecure there. You know,
Speaker 1: they'll spend a lot of time researching your company and
Speaker 1: trying to you know, infect it with malware and then
Speaker 1: hold you for millions of dollars of ransom in some cases. Um,
Speaker 1: so you need to be like vigilant and and not
Speaker 1: think that it won't happen to you, because you know
Speaker 1: eventually it might. Yeah. Absolutely, Well, it's a great story.
Speaker 1: Next weekend. Read William Turton's cybersecurity reporter for Bloomberg. Join
Speaker 1: us on the film from New York City. Joel Webber,
Speaker 1: the editor of the magazine, joined us from Massachusetts, crippled
Speaker 1: by ransomware an aluminum giant when analog to survive facts
Speaker 1: posts in old PCs to beat those bad cyber criminals.
Speaker 1: Alex Steel, I mean I still use post its ps.
Speaker 1: You should look at my computer. It's like littered impost its.
Speaker 1: Oh yeah, no, my my regular broadcast white has that
Speaker 1: same problem, brother, journal. But you let me drive? Oh no,
Speaker 1: no, no no, no, drive home, honey, please, I'll do the
Speaker 1: riding drivel Let me. I want to drive, Just drive, baby,
Speaker 1: good questions trying. This is the Drive to the Globe
Speaker 1: Funk community. Thanks, We'll dry dawn on Bloomberg Radio. It
Speaker 1: is time for the Drive to the close. Delighted to
Speaker 1: have it back with us. Randy Watt's chief investment Strategies
Speaker 1: for O'Neil Global Advisors. Johnny's on the phone from what
Speaker 1: I'm guessing is very steamy Iami. He joins Alex Steel
Speaker 1: and me on this Friday afternoon. All right, Randy, First
Speaker 1: of all, how are you? How are things down in Florida?
Speaker 1: Things in Florida are a little messy. Obviously, the number
Speaker 1: of cases has been rising pretty pretty rapidly, and and
Speaker 1: some of the hospitals are starting to see a real
Speaker 1: increase in the I c U utilization. Hopefully that is
Speaker 1: gonna peek out soon, but obviously it's you know, like
Speaker 1: in many parts of the country, having an impact on
Speaker 1: the local economy. Yeah. I love that you ask people that,
Speaker 1: by the way, on this show, I think that's awesome.
Speaker 1: Side note, you're welcome, um, Randy. When you take a
Speaker 1: look at say, so, it's messy down there, and there's
Speaker 1: some messy things happening in the market. And I did
Speaker 1: want to start with gold because it seems to want
Speaker 1: to break out, but it's been like a melt up
Speaker 1: rather than a breakout in the last kind of a
Speaker 1: few days. What do you see on the charts for this?
Speaker 1: I think, first of all, gold does look good technically.
Speaker 1: We've been positive on it for I think over a
Speaker 1: year now, and I think what it's really reacting to
Speaker 1: is first that money supply in the US is up
Speaker 1: very strongly. It's up about a year to year. That's
Speaker 1: been driven partially by the FED balance sheet expansion. The
Speaker 1: FED balance sheet at the low last September was about
Speaker 1: three point eight trillion it's now risen to close to
Speaker 1: seven trillion, and I think gold is reacting to that.
Speaker 1: I also think it continues to be a historical store
Speaker 1: of value and a defensive play. And I think people
Speaker 1: are very uncertain about both the economy and financial markets,
Speaker 1: and that's a logical place for them to go to. Randy,
Speaker 1: I do want to ask you about this rally that
Speaker 1: you know, this past couple of days, notwithstanding we've been
Speaker 1: seeing and it does seem to be driven by a
Speaker 1: pretty small number of stocks in a pretty narrow set
Speaker 1: of sectors. I mean, we do have these days where
Speaker 1: everything seems to be up, but ultimately if you sort
Speaker 1: of strip out some of those specific names, maybe it's
Speaker 1: not so great. How do you analyze that? So a
Speaker 1: couple of things. The first is that there's two sectors
Speaker 1: that are up double digit year to date. That's Tech
Speaker 1: and consumer discretionary combined. Those are about thirty cent or
Speaker 1: so of the market, so they've really been driving driving
Speaker 1: the tape. The top five stocks of the SMP right
Speaker 1: now are about of the index, and clearly they have
Speaker 1: been driving it. What's been driving that is really they've
Speaker 1: had pretty good earnings and revenue growth and the market
Speaker 1: is gravitated to where growth is. I do think for
Speaker 1: the market to move higher right now, we really need
Speaker 1: to see a broadening into some other sectors and hopefully
Speaker 1: have some of these beaten up sectors like financials, which
Speaker 1: are down year to date, start to do better. So
Speaker 1: I think the technical look for the market is the
Speaker 1: markets likely to kind of stall out or go sideways
Speaker 1: here unless we can see that broadening. And I think
Speaker 1: that broadening has got to be driven by a better
Speaker 1: outlook on the economy. How do you feel about next
Speaker 1: week going into big tech earnings like Facebook, Amazon, Google, Apple?
Speaker 1: I mean, are we set up for disappointment all of
Speaker 1: the Microsoft situation? And I wonder if that sort of
Speaker 1: triggers that reversal into value that you're talking about. I
Speaker 1: think there's there's a few things going on first off
Speaker 1: earning season. So far, about twenty five of the SEPs
Speaker 1: reported of those companies that have reported, have reported positive surprises.
Speaker 1: So I think what's going on with regards to earnings
Speaker 1: is that the bar is very low and a lot
Speaker 1: of companies are kind of stepping over that. Though we
Speaker 1: should note that if you look on a year to
Speaker 1: year basis for the market. Earnings are right now running
Speaker 1: down about and sales are running down about ten and
Speaker 1: a half percent, So the absolute numbers aren't that great.
Speaker 1: What's been troubling the market recently, and you kind of
Speaker 1: saw it with the Microsoft quarter, was that forward guidance
Speaker 1: is actually coming down right now. So if you look
Speaker 1: at where we were for earnings entering earning season and
Speaker 1: where we are now, that forward one number is falling
Speaker 1: right now. It's about a hundred and dollars for the
Speaker 1: SMP five hundred. That's about a twenty five game. The
Speaker 1: market is projecting for next year and earnings, and I
Speaker 1: think that's optimistic, and I think those earnings are gonna
Speaker 1: have to come down. So I think the market is
Speaker 1: focused not on this quarter. Again. I think for big
Speaker 1: tech earnings next quarter, a lot of them are gonna
Speaker 1: be pretty good, but it's really what what do it
Speaker 1: look like for the future, And I think there is
Speaker 1: risk at disappointment because I think those numbers still have
Speaker 1: to come down. Randy in a typical year, I shall
Speaker 1: I say, if twenty where typically you're in any former fashion,
Speaker 1: we would be talking a lot already and certainly a
Speaker 1: lot over the next month or so. Through November. About
Speaker 1: the presidential election. I know you've done some analysis historically
Speaker 1: about this, how much does what we're living through right now?
Speaker 1: If I hear the word unprecedented one more time from
Speaker 1: anyone about anything, I don't know, Like I it's it's
Speaker 1: a little frustrating, even though it's true it will be unprecedented.
Speaker 1: My reaction. Um but what how do you sort of
Speaker 1: think technically about a presidential election in a year that's
Speaker 1: as topsy turvy as this. I like how you made
Speaker 1: that pun there in an election year unprecedented. Um, So
Speaker 1: a couple of things I think. I think the election
Speaker 1: is on investors minds, but I think right now it's
Speaker 1: actually third on the list. So I think the first
Speaker 1: thing investors are concerned about is this this stimulus bill
Speaker 1: going to happen and what's in it? So that's that's
Speaker 1: the most immediate data point. I think the next data
Speaker 1: point is are we amping up again a trade war
Speaker 1: with China? The SMP five gets about ten percent of
Speaker 1: its sales in Asia, the majority of that in China,
Speaker 1: So I think if we're going to amp that up again,
Speaker 1: that's another negative for one earnings. And then finally the election.
Speaker 1: I think investors are going to start to focus on
Speaker 1: the election more, but I think that's a late more
Speaker 1: of a late summer type event. I think these first
Speaker 1: couple of data points initially are going to matter more. Normally,
Speaker 1: what happens is the market technical usually has a stalling
Speaker 1: out period in the summer and then kind of rallies
Speaker 1: after the election. I'm not sure if we're going to
Speaker 1: see that again, but I think given how far the
Speaker 1: market has moved, and given the fact that we are
Speaker 1: in the summer, I would not surprise me to see
Speaker 1: the marketing leader sideways or pull back right here. Interesting.
Speaker 1: All right, great to catch up with you as always,
Speaker 1: Randy Watts. One of our phase Carol will be sad
Speaker 1: she missed you. She sends her records seeing having seen
Speaker 1: you on the rundown, she said to make sure and
Speaker 1: tell you Hello. Chief Investment Strategies for O'Neil Global Advisors,
Speaker 1: Johnny is on the phone from Miami. Thanks so much
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes,
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