Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors,
Speaker 1: not to mention our hundred journalists and analysts more than
Speaker 1: a hundred and twenty countries. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot Com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Crude oil certainly and the
Speaker 1: energy market is Charlie just mentioned one of our big stories,
Speaker 1: oil slam by a price for both Russia and Saudi
Speaker 1: Arabia uh stood poised to flood the market with chiep
Speaker 1: crude oil. It comes at a rough time because you've
Speaker 1: got the coronavirus spurring the first contraction in demand since
Speaker 1: two thousand nine. So we are getting squeeze certainly on
Speaker 1: the energy markets and really the overall market universe from
Speaker 1: all angles. Ellen Wald is the perfect person to talk
Speaker 1: to about the energy markets. President of Transversal Consulting, senior
Speaker 1: fellow at the Atlantic Council's Global Energy Center. She's also
Speaker 1: a Bloomberg Opinion contributor. She joins us on the phone
Speaker 1: from Jacksonville, Florida. She's also author of the book Saudi inc.
Speaker 1: On the history of a Ramco and Saudi Arabia Ellen.
Speaker 1: What happened this weekend. What happened this weekend is that
Speaker 1: Saudi Arabia and Russia finally um caved to their differences
Speaker 1: and parted ways. This was a rift that had been
Speaker 1: growing for some time, and you could see it in
Speaker 1: the way that Russia was never really adhering to the
Speaker 1: production cuts that it had agreed to, and then at
Speaker 1: the last OPEC meeting in December, Saudi Arabia had to
Speaker 1: promise to make It did make some really significant production
Speaker 1: cuts when Russia was essentially a great agreed to not
Speaker 1: cut its own production, and then everything could have continued
Speaker 1: to limp along, except coronavirus came and Saudi Arabia and
Speaker 1: OPEC wanted a significant response, particularly because Saudi Arabia was
Speaker 1: feeling the pinch. In fact, it's um, it's the oil
Speaker 1: that China was buying from. It was cut by about
Speaker 1: thirty percent, and the problem was that when they went
Speaker 1: into these negotiations, Russia knew the Saudi Abby was getting hit,
Speaker 1: and its position was basically, if you're the one that's
Speaker 1: getting hit from falling Chinese demand, then you take the
Speaker 1: brunt of these cuts, and we're not going to And
Speaker 1: Saudi Arabia has finally stood up and said no, and
Speaker 1: then they each walked out and the world is paying
Speaker 1: quite a price for this today, and certainly the global markets.
Speaker 1: Why is that, I mean, remind us is a very
Speaker 1: basic question, but remind us why the world cares so
Speaker 1: much about the price of oil. Well, the world has
Speaker 1: to care a lot about the price of oil because
Speaker 1: the world still runs on oil. Oil production is about
Speaker 1: a hundred million barrels per day. China is a pretty
Speaker 1: big portion of that. It imports about ten million barrels
Speaker 1: of oil per day. That's about ten percent of global production.
Speaker 1: And in the United States, we like to think about
Speaker 1: it from the perspective of where the world's largest consumer,
Speaker 1: but we're also now the world's largest user, and so
Speaker 1: we need to be thinking about this drop in oil
Speaker 1: prices is for more than just hey, low gas leam prices,
Speaker 1: but oil production is a significant component of our economy,
Speaker 1: and this is really going to hit hard in areas
Speaker 1: that we're fracking is a big part of the economy,
Speaker 1: right I do wonder what kind of shake up you know,
Speaker 1: this will have among the US shale players or the
Speaker 1: global economy of roll. I'm assuming that some of those
Speaker 1: weaker players, they just won't be able to exist. Yeah,
Speaker 1: and that this is a particularly difficult time to have
Speaker 1: a price and production war going on between Russia and
Speaker 1: Saudi Arabia. UM, it's not unexpected. Times of high tensions
Speaker 1: can certainly lead to this. But there are players in
Speaker 1: this shale area where they were really on the margin,
Speaker 1: have a lot of debt. We're doing through great in
Speaker 1: terms of financing, and this is going to push them
Speaker 1: over the edge right now. The upside is that if
Speaker 1: you're on the hunt to acquire so some assets, you
Speaker 1: may find a very good deal out there. The assets
Speaker 1: aren't going away. The oil is still there. Uh. The
Speaker 1: oil will still be needed, it just might not be
Speaker 1: needed in the near future. We're talking about a year
Speaker 1: where global demand for oil may actually decline. We were
Speaker 1: already looking at basically no demand growth, but now we're
Speaker 1: looking at at an actual situation where we may see
Speaker 1: a decline, but that doesn't mean that that will continue
Speaker 1: for and so on. Ellen, how much of this is
Speaker 1: just about the oil and energy markets, and how much
Speaker 1: of this is about geopolitical relationships? And I do think
Speaker 1: about alliances either China has with the Middle East or
Speaker 1: China has with Russia. Because China gets a boost, as
Speaker 1: you wrote in your column for Bloomberg Opinion, from these
Speaker 1: low oil prices, right, they've got to import their oil exactly.
Speaker 1: This is basically like a stimulus plan for China. Um.
Speaker 1: China is looking at a situation where, um, you know,
Speaker 1: it's it's going to have some economic problems getting getting
Speaker 1: things back going after the coronavirus stops to be a
Speaker 1: significant drain on its economy, and essentially Russia's Saudi Arabia
Speaker 1: have handed it a stimulus plan. They said, well, you
Speaker 1: know that ten million barrels of oil you need to
Speaker 1: import every day. Um, you know, now it's going to
Speaker 1: be a lot, lot cheaper. And because before this happened,
Speaker 1: you know, we could have been in a situation where
Speaker 1: China you know, has to import a lot of food,
Speaker 1: they have to import a lot of energy. And if
Speaker 1: they were in a very bad economic situation because of
Speaker 1: the drop in trade. What were they going to choose
Speaker 1: Now they've basically made oil a non issue. They can
Speaker 1: get their oil, and they can get it cheaply, and
Speaker 1: Saudi Arabia and Russia are going to fight over who
Speaker 1: can sellve China more oil and at cheaper prices. Ellen
Speaker 1: thirty seconds left, just debunk the hey oil is cheap,
Speaker 1: gas is cheap good for consumers argument, Well, it is
Speaker 1: good for consumers, but only if you want to go
Speaker 1: somewhere right now, and there are a lot of people
Speaker 1: who don't want to go anywhere right now, So it
Speaker 1: is it is essentially good for consumers. But for producers
Speaker 1: this is really really bad and at a certain point,
Speaker 1: um it's being bad for producers can also make it
Speaker 1: bad for consumers. Crude oil futures right now down well,
Speaker 1: and your five worst performers in the SMP are all
Speaker 1: in the energy patch. Uh marathon down more than fifty
Speaker 1: ellen Wald, fantastic, Thank you so much for that. Context,
Speaker 1: Really the perfect way to start our show. She is
Speaker 1: the president of Transversal Consulting and also a contributor to
Speaker 1: Bloomberg Opinion. If you want to understand this, check out
Speaker 1: her column on the Bloomberg to Day. She joined us
Speaker 1: on the phone from Jacksonville, Florida. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Jason Kelly on Bloomberg Radio.
Speaker 1: All right, so we do want to talk a little
Speaker 1: bit more about what's going on in the bond market.
Speaker 1: As if we've been talking about the entire yield curve
Speaker 1: for US bonds falling below one percent for the first
Speaker 1: time in history. This is after an all out price
Speaker 1: war between the world's biggest oil exporters triggered an unpressed
Speaker 1: sedented global bond rolling. Meantime, the fedlifted the amount of
Speaker 1: temporary cash it's willing to provide markets as pressure intensifies
Speaker 1: for the US Central Bank to tackle the risk of
Speaker 1: a worldwide credit crunch. There is so much to talk
Speaker 1: about with Lindsay Pegs a chief economy is It's Devil
Speaker 1: Financial on the phone Inch in Chicago. So Lindsay, nice
Speaker 1: to check in with you. Recession Are we in one? Well,
Speaker 1: I don't know if we're in recession at this point,
Speaker 1: but we certainly see some of the downside risk that
Speaker 1: could potentially tip the US economy into recession. Now, remember
Speaker 1: some of the data that we're still seeing suggests that
Speaker 1: we were on relatively moderate footing, at least in hindsight
Speaker 1: coming into the new year. The brunt of the pain, however,
Speaker 1: from the impact of the coronavirus from the abruptions to
Speaker 1: the global supply chain aren't likely to hit the data
Speaker 1: until the second quarter, so it's unlikely that we really
Speaker 1: have a true sense of what's happening to the US
Speaker 1: economy until the April or even the May data come
Speaker 1: to ruition. So it's going to be quite some time
Speaker 1: right now. It's a lot of guessing, it's a lot
Speaker 1: of estimating, but we do see a significant slowdown in
Speaker 1: some of the key parts of the economy, which if continued,
Speaker 1: if the depth and duration of this impact extends, we
Speaker 1: very much could see a recession. Our base case scenario
Speaker 1: is one quarter of negative growth, so enough to push
Speaker 1: us in below zero percent GDP, but not enough for
Speaker 1: that technical recession. So lindsay, talk to us about the
Speaker 1: Fed's role here. The Federal Reserve obviously not dealing with
Speaker 1: a lot of AMMO, not coming to this fight with
Speaker 1: a lot of AMMO, to say the least, What are
Speaker 1: what are they thinking about? What are they sort of
Speaker 1: turning over in their meetings. In your estimation, well, I
Speaker 1: think it is a little frustrating because when we look
Speaker 1: back going into the Great Recession, when we look back
Speaker 1: going into the two thousand and one downturn, the FED
Speaker 1: came to the table with four five d basis points
Speaker 1: of potential support for the economy. This time around, as
Speaker 1: you mentioned, we were talking about a hundred and fifty
Speaker 1: basis points, so the FED was already providing extremely accommodative conditions.
Speaker 1: Now with the emergency move, the FED set in part
Speaker 1: that was to ensure further accommodation, but also to help
Speaker 1: boost confidence. Now, it's unlikely that with rates already so low,
Speaker 1: in additional fifty basis points is going to have a
Speaker 1: meaningful impact on boosting investment and consumption as it typically
Speaker 1: would when the economy begins to slow. But we do
Speaker 1: think that this increased preparedness, increased commitment to UH further
Speaker 1: support the economy could help boost confidence on the margin,
Speaker 1: or at least that's the intention, helping to sort of
Speaker 1: slow these knee jerk reactions on a day to day
Speaker 1: basis to incoming data of the coronavirus. Now, obviously today
Speaker 1: buck to that trend, but the FED is hoping that
Speaker 1: increased assistance to the marketplace will help provide a calm
Speaker 1: and help provide a floor if, however, we get to
Speaker 1: the March meeting and the FED decides to lower rates further, However,
Speaker 1: growth continues to deteriorate as we go into the second quarter.
Speaker 1: The question is what additional stimulus does the FED have left.
Speaker 1: They can They can provide explicit forward guidance, We can
Speaker 1: move into some sort of Operation Twist program or large
Speaker 1: scale asset purchases. We also have negative interest rates which
Speaker 1: are on the table, but the FED has most often
Speaker 1: moved away from those. So we were certainly will be
Speaker 1: talking about non traditional metrics given that the FED has
Speaker 1: such very little wiggle room before we hit that lower
Speaker 1: zero bound. How do you see the virus, lindsay, Is
Speaker 1: it is something that once we have the parameters around
Speaker 1: it and understand you know that we start to see
Speaker 1: some containment kind of get on the other side of it.
Speaker 1: When we get to that point, can we assume that
Speaker 1: we'll get a v shaped recovery or not necessarily not
Speaker 1: necessarily even if we start to have control of the virus,
Speaker 1: depending on how widespread the impact is, and how many
Speaker 1: cases we're talking about. It may take us some time
Speaker 1: before confident comes back to the market, before people feel
Speaker 1: comfortable traveling, before people return to offices and factories. So
Speaker 1: I do think that depending on the duration on the
Speaker 1: front end, that will very much impact the recovery on
Speaker 1: the back end. The faster we can get this contained,
Speaker 1: the more likely we will see a V or even
Speaker 1: a short U shaped recovery. But the longer this takes,
Speaker 1: the more likely it is that the extended recovery period
Speaker 1: is quite a bit longer. Alright, Lindsay pex, oh, thank
Speaker 1: you so much. Chief economists for Stephile Financial, joinius on
Speaker 1: the phone from Chicago. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Jason Kelly on Bloomberg Radio. So it
Speaker 1: is the worst day since Lehman for emerging market credit spreads. Meantime,
Speaker 1: the usc'll curve inside one percent, sounding the alarm for
Speaker 1: global bond markets. UH And according to our Peter Coy,
Speaker 1: the U S may already be in a recession. That
Speaker 1: was a story out on Friday. We talked to him
Speaker 1: about it. It was out over the weekend as well.
Speaker 1: Peter Koy Economics Center Business Week Key is on the
Speaker 1: phone in New Jersey. Mike Reagan is senior editor and
Speaker 1: lead blogger at the Bloomberg Markets Live blog in our
Speaker 1: interactive Broker studio along with Chill Weber, Editor Bloomberg Business Week. Micha,
Speaker 1: let's start with you. It's bad. Yeah, it's very bad.
Speaker 1: I mean, looking at an almost eight percent drop in
Speaker 1: the SP five hundred right now, about seven point seven,
Speaker 1: and the energy energy industry complex just absolutely destroyed SP
Speaker 1: energy companies as a group today alone or down. That's
Speaker 1: the biggest drop for them in history. Obviously, it's all
Speaker 1: a result of what appears to be a price war
Speaker 1: going on in in the global energy industry world, with
Speaker 1: Saudi Arabia slashing prices dramatically over the weekend um and
Speaker 1: really no bright spots in the equity market. Pretty much
Speaker 1: every industry group is down. It's it's just triggered massive
Speaker 1: risk off moves throughout the Market's really a historic day
Speaker 1: in the stock market. And and Peter, you were kind
Speaker 1: of all over this on Friday when you wrote you're
Speaker 1: calling about how the US may already be in recession.
Speaker 1: Can you bring it up to speed today? And so
Speaker 1: you feel about it today? Is it no longer may right? Well,
Speaker 1: it's looking more and more likely. Yeah. I mean, if
Speaker 1: the chain of events is, you have markets price for
Speaker 1: perfection at the beginning of the year, and the coronavirus
Speaker 1: hits and it takes a while for people to wrap
Speaker 1: their minds around it. But one thing it does do
Speaker 1: is start to make people think that oil demand is
Speaker 1: going to be lower. So oil prices come under pressure.
Speaker 1: Russia re chooses to go along with Saudi Arabia's requests
Speaker 1: to pull back on production. So what happened now that
Speaker 1: this is the trigger for today's carnage. The Saudi said, look,
Speaker 1: we're gonna call your bluff and we have lower production
Speaker 1: prices than you do. We're gonna step up our production,
Speaker 1: crash the price of oil, and that will force you
Speaker 1: Russia back to the table. And what's happening now is
Speaker 1: that there's enormous collateral damage from this, because first of all,
Speaker 1: it's wiping out the shale sector in the US, which
Speaker 1: cannot tolerate these low prices. A lot of these shale
Speaker 1: companies are highly leveraged. They shouldn't be, but they are,
Speaker 1: and so they're going to be going into defaults, any
Speaker 1: any any energy credit that was a triple be minus
Speaker 1: or something you know, barely investment grade. It's going to
Speaker 1: fall out of investment grade, no longer be eligible to
Speaker 1: be owned by the uh, the firm, the funds that
Speaker 1: own only investment grade stuff. And yet there's no junk
Speaker 1: bond buyers are willing up to step up and buy.
Speaker 1: So that's that's where the cards is coming from. All right,
Speaker 1: So Mike Reagan, uh, what are you hearing from investors?
Speaker 1: Is their real fear? Is it uncertainty? Is it all
Speaker 1: of the above? Like what are people saying as you
Speaker 1: talk to them on the street with the uncertainty? Is
Speaker 1: just overwhelming. I mean when you see so many companies
Speaker 1: simply withdraw their earnings guidance, Uh, not reduce it or
Speaker 1: say you know, we're gonna make tem percent less than
Speaker 1: we thought, but simply say we don' know which draw completely.
Speaker 1: It's just a very unnerving thing. Uh. Liz Ane Saunders
Speaker 1: was on TV earlier saying, you know, both the p
Speaker 1: and the ear in freefall right now. So it's just
Speaker 1: a you know, very unique and disturbing situation. I think
Speaker 1: right now, the big expectation is that the government Congress
Speaker 1: will get together and come up with some sort of
Speaker 1: massive spending package to try to stop the bleeding. That's
Speaker 1: the hope anyway. That said, you know, there's a big
Speaker 1: question of what, you know, what exactly can they do,
Speaker 1: how quickly can they get it done, Will it be
Speaker 1: enough to sort of stop this snowball from rolling down
Speaker 1: the hill that's happening in markets right now? And what's
Speaker 1: the help that companies need? Because I feel like you've
Speaker 1: got small business which aren't in the market but maybe
Speaker 1: there were supplier to a big publicly held company. You know,
Speaker 1: you've got consumers trying to figure out, some of them
Speaker 1: who have no safety nets if they can't go to work.
Speaker 1: So I do wonder, like, what what is the right
Speaker 1: panacea from Washington that makes a difference. Well, that's the thing.
Speaker 1: I don't think there is one. I don't think there's
Speaker 1: a pantasy. I think it's just how can you sort
Speaker 1: of stem the damage as best you can? And you're right,
Speaker 1: there's you know, it's whether it being the corporate bond
Speaker 1: market's gonna need propping up the consumer if there are
Speaker 1: sort of a lot of furloughs all of a sudden,
Speaker 1: you know, at the same time, the government has to
Speaker 1: try to stop the spread of this thing. So it's
Speaker 1: fighting sort of a war on two or three different
Speaker 1: fronts right here. Um. And you know, the market is
Speaker 1: expecting something, even if it's not enough to really stop
Speaker 1: what we're seeing, at least to slow it down. Uh,
Speaker 1: you know, sort of get a floor under this market.
Speaker 1: But UM, well, it's just a way to see game
Speaker 1: at the moment. Do you think Pal wishes he could
Speaker 1: walk back last week's cut. I doubt it. Um. You know,
Speaker 1: I think he's going to be doing another one soon
Speaker 1: by by the next meeting, if not before. So um.
Speaker 1: I you know, there's a lot of money morning quarterback
Speaker 1: and going on about whether they should have waited. I
Speaker 1: don't think it certainly would have helped if he had
Speaker 1: waited on that cut. Peter, that's your world economics. What
Speaker 1: are you seeing in terms of FED and FED policy? No,
Speaker 1: I I think that it was the right thing to
Speaker 1: cut then. And unfortunately, that's when you're that close to
Speaker 1: zero lower bound, you just don't have that much ammunition left.
Speaker 1: That's uh, just a feature of the economy right now,
Speaker 1: not the fault of J. Powell. Um. I would think
Speaker 1: that the FED is going to do more than just cut.
Speaker 1: It's gonna probably do a lot more forward guidance, maybe
Speaker 1: new rounds of quantitative easing. I mean, it's gonna basically
Speaker 1: people are saying, this is not the time to keep
Speaker 1: your powder dry. This is the time to come in
Speaker 1: and and and put put all your firepower at work
Speaker 1: to help us economy. So, Joe Weber, as you put
Speaker 1: together this week's magazine, what are you seeing come in
Speaker 1: that gives you sort of a broader sense of this story.
Speaker 1: I mean, we've been pretty proactive in trying to own
Speaker 1: as many different angles at the coronavirus story as we can.
Speaker 1: But then this weekend, I mean the thing that I think,
Speaker 1: you know, everyone was like, oh my goodness, was the
Speaker 1: oil knife fight. Effectively, I think it's a knife fight
Speaker 1: if you look at it through that lens. It's like
Speaker 1: everyone wants to get back at Texas in the US
Speaker 1: and Shale for up ending everything. But even to the
Speaker 1: point that OPEC plus unravels and you've got Russia and
Speaker 1: NBS and a knife fight now, so it just feels
Speaker 1: like full on knife fight. And these are not people
Speaker 1: that I really want to get knife fights with, right
Speaker 1: and I think it does raise the spectr of this
Speaker 1: being a bigger geopolitical issue than just who's pumping how
Speaker 1: much oil? I mean, I think it just feels like
Speaker 1: a very tense geopolitical moment, that relationships could start to
Speaker 1: sour over this, and and we all might just be
Speaker 1: the start of our worries. Well, and we talked at
Speaker 1: the top of how China benefits by these lower oil prices,
Speaker 1: and we do know, you know, China has certainly in
Speaker 1: terms of its alliances, We've seen it. We've been closer
Speaker 1: to the Middle East and Russia as well well. And
Speaker 1: Peter Coy at a time, just thirty seconds left, when
Speaker 1: you've got a lot of people, big voices calling for
Speaker 1: global coordination, how likely does that? See? Uh? Central banks
Speaker 1: can coordinate for one thing. Uh If if one bank
Speaker 1: huts another dozen, than the bank in the country that
Speaker 1: doesn't cut is at a serious disadvantage because their currency
Speaker 1: starts to appreciate, their their current account evins at widens
Speaker 1: and there in their economy weekends. So for no other
Speaker 1: reason than self preservation, I think you're gonna see coordinated
Speaker 1: central bank rate cuts all right. A lot of phone
Speaker 1: calls happening around the world for sure. Thank you all
Speaker 1: so much. Peter Koy, Economic Center for Business Week joining
Speaker 1: us on the phone. Mike Reagan from Bloomberg Markets Here
Speaker 1: in our studio alongside Joel Webber, the editor of the magazine.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Jason
Speaker 1: Kelly on Bloomberg Radio. Jason, last night, when I was
Speaker 1: watching what was going on the markets, I did a
Speaker 1: shortlist of people I wanted to talk to, and this
Speaker 1: next guest was on that list. Dr Robert Schiller is
Speaker 1: Sterling Professor of Economics at Yale University. We've been talking
Speaker 1: a lot about his recent book that was published last year,
Speaker 1: Narrative Economics, How Stories go viral and drive major economic events.
Speaker 1: He enjoins us right now on the phone. Professor Schiller,
Speaker 1: it is great to have you here. How do you
Speaker 1: see what's going on in the markets right now? Carol?
Speaker 1: I think that what's going on has an obvious connection
Speaker 1: to certain facts that have come up. One of them, notably,
Speaker 1: is that we have a new virus that is contagious
Speaker 1: early before before it's detectable or diagnosable. So it's hard
Speaker 1: to quarantine people if you don't even know they have
Speaker 1: the disease, so it's a new problem. How do we
Speaker 1: contain this kind of epidemic. The other thing is that
Speaker 1: people are seeing how much international travel dominates uh these days.
Speaker 1: So the epidemic has You've seen these maps showing where
Speaker 1: where it's hit, what countries it's hit. It's practically everywhere,
Speaker 1: So we have a pandemic. Those facts have sunk in
Speaker 1: and have been augmented by people's experiences of going to
Speaker 1: a grocery store and finding that all of various products
Speaker 1: are completely sold out. Uh, So they know that something
Speaker 1: is big is going on, and it's scary. It's also
Speaker 1: a situation in which people think I might even die.
Speaker 1: This is rare that it gets that bad, and so
Speaker 1: Dr Schiller. You know, when we speak of narratives, the
Speaker 1: narrative the market today seems to be partially about the coronavirus,
Speaker 1: of course, but also about the oil market. How do
Speaker 1: you synthesize those two things into one story. How connected
Speaker 1: are they or are there just two things that are
Speaker 1: really weighing on this market? I think they're connected. People
Speaker 1: are traveling less, they're canceling international flights, so that obviously
Speaker 1: reduces the demand for oil. The oil futures market is
Speaker 1: really related to the pipeline. We've got a lot of
Speaker 1: oil in the pipeline, so it's a relative to demand.
Speaker 1: So it's a natural connection to see that. Uh, it's
Speaker 1: maybe in a sense it's reassuring low oil prices benefit consumers. Uh,
Speaker 1: that's the plus side of this. But I don't think
Speaker 1: it cannot weigh the the panics from the from the
Speaker 1: COVID nineteen epidemic. So I think about your most recent
Speaker 1: book and Bloomberg business Week magazine has made reference to
Speaker 1: it over the last couple of weeks. As we try
Speaker 1: to assess what's going on in this market environment, how
Speaker 1: can that potentially help us and kind of figuring out
Speaker 1: what this means for the economy going forward. We were
Speaker 1: talking about Peter Core has a story that says, well,
Speaker 1: the US may already be in a in a recession.
Speaker 1: How can that kind of help us figure out where
Speaker 1: do we go from here and how quickly we can
Speaker 1: recover from it? Yeah, you have to. My book Narrative
Speaker 1: Economics was about the power of narratives, which are contagious
Speaker 1: like diseases. You know, I had no idea that, Uh,
Speaker 1: the coronavirus was coming when I wrote the book, but
Speaker 1: here it is, and it shows the power of contagion.
Speaker 1: Often of crises appear seemingly out of nowhere. Disease crisis,
Speaker 1: right because somebody killed a bat in China, okay ate
Speaker 1: it or something like that, because some very modest beginning
Speaker 1: explodes into a worldwide catastrophe because of contagion. And that's
Speaker 1: that's what people are rediscovering right now. I like to
Speaker 1: talk about it in my book because we have not
Speaker 1: just disease contagion, but we have idea contagion or spread
Speaker 1: by narratives, by talk. Most people don't talk about economics
Speaker 1: except indirectly through stories, and this the story of this
Speaker 1: epidemic and its effect on business is extremely powerful well,
Speaker 1: and it also feels like the story is so powerful
Speaker 1: in part because of the lack of information, or lack
Speaker 1: of trustworthy information. I believe this is something you've talked about.
Speaker 1: I mean that that affects the narrative ultimately, right, the
Speaker 1: the notion that we're having a hard time finding things
Speaker 1: to really hang onto to create a cohesive narrative. The
Speaker 1: problem with the narrative is that you have to develop
Speaker 1: it's a damaging narrative like this one, you have to
Speaker 1: develop a counter narrative, something else that has to be contagious.
Speaker 1: And uh, right now we see uh contagious stories about
Speaker 1: President Trump's tweets, and that doesn't help, right. I think
Speaker 1: we need we need narratives about heroic efforts to uh
Speaker 1: control the epidemic. So if I can just quickly ask you,
Speaker 1: just got about a minute and a half left here, recession?
Speaker 1: Are we in one? Are we headed for one? Well,
Speaker 1: we'll find out from the nd R National Duo of
Speaker 1: Economic Research and the Reset. They're slow too to announce that,
Speaker 1: but I would guess that we're about in one. Uh.
Speaker 1: People are really pulling back. Yeah. You know, remember Roosevelt
Speaker 1: in three said the only thing we have to fear
Speaker 1: is fear itself. We're seeing a lot of fear right now.
Speaker 1: And just have about a minute left here, because the
Speaker 1: cover of Business Week magazine last week was Larry Cutlow,
Speaker 1: the you know, ultimate optimist within the White House and
Speaker 1: questioning whether or not the administration will come up with
Speaker 1: the right economic policies that are needed in this crisis.
Speaker 1: Just got about fifty seconds here. What are the right
Speaker 1: economic policies in your view, Are you concerned that Washington
Speaker 1: misses it just quickly? Well, first of all, we need
Speaker 1: a serious response to things like the shortage of testing
Speaker 1: kits or plans for how we're going to quarantine a
Speaker 1: large number of people, right, So we need that kind
Speaker 1: of leadership rather intensely right now. On top of that,
Speaker 1: there's also opportunities for fiscal and monetary policy. Obviously, those
Speaker 1: are things that have helped in the past and they
Speaker 1: can help again. All Right, we're gonna leave it there.
Speaker 1: Thank you so much. We really appreciate it. As Carol said,
Speaker 1: one of the voices that we really needed and wanted
Speaker 1: to hear from on a day like this. Dr Robert
Speaker 1: Schiller is the Sterling Professor of Economics at Yale University,
Speaker 1: a Nobel laureate, of course, the author of many books,
Speaker 1: most pointedly and most recently, Narrative Economics. We want to
Speaker 1: appreciate his time spot on and as he said, couldn't
Speaker 1: be more timely. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Jason Kelly on Bloomberg Radio. One of the
Speaker 1: people we've been talking a lot about this, like who
Speaker 1: do we want to talk to that can make us
Speaker 1: smarter about everything that's happening in the world. This guy
Speaker 1: is on that list for sure. He has been our
Speaker 1: sharp of sorts through us trying to trade and now
Speaker 1: certainly an understanding coronavirus it's impact so many things. Andy
Speaker 1: Brown back with this editorial director for Bloomberg New Economy
Speaker 1: here in our Blooberg Interactor Berker Studio. So here we are.
Speaker 1: We are weeks now, a few months into this coronavirus crisis.
Speaker 1: In many ways, what have we learned? What can we
Speaker 1: learn from China? Well, first of all, thank you for
Speaker 1: that or a generous wind up. Um, Yeah, so so
Speaker 1: the lessons. I mean, this is the ultimate test of
Speaker 1: political systems, and we've all been waiting to see which
Speaker 1: system is going to perform the best. Is it the
Speaker 1: Chinese authoritarian top down model or is it the Western
Speaker 1: liberal democratic model. And on the available evidence, it is
Speaker 1: not a toll clear that the Western democratic model has
Speaker 1: been superior in dealing with this crisis. In fact, there's
Speaker 1: quite a lot of evidence to support that the Chinese
Speaker 1: outcomes may be better. She wrote in your column this
Speaker 1: week that the Chinese have bought the rest of the
Speaker 1: world some time because of some of the steps that
Speaker 1: they took correct. So there was a lot of skepticism,
Speaker 1: as you recall, right at the beginning of the Chinese overreacting,
Speaker 1: locking down sixty million people and then it was several
Speaker 1: hundred million people who couldn't move around the country. It
Speaker 1: turns out, actually that that measure may well have bought
Speaker 1: two to three weeks of precious time for the rest
Speaker 1: of the world to get their act together. Time I
Speaker 1: might say that in some countries has been completely squandered.
Speaker 1: And so I want to ask you before we get
Speaker 1: too far about Taiwan, because you mentioned that when you
Speaker 1: first came into the studio, a country, a place that
Speaker 1: may have done better than expected. Right, this is a
Speaker 1: very underreported story. I mean, Taiwan was probably more at
Speaker 1: risk from the coronavirus coming out of China than any
Speaker 1: other economy in the world, and has probably start there. Okay,
Speaker 1: Number one, eight fifty thousand Taiwanese people live on the
Speaker 1: main land. Four hundred thousand Taiwanese people work on the
Speaker 1: main land. Last year there were two point seven million
Speaker 1: Chinese visitors came over to Taiwan, I mean criss crossing
Speaker 1: kind of, right, And so you would have thought that that,
Speaker 1: you know, if any country was gonna really was going
Speaker 1: to really suffer, it would be tied. It would be Taiwan,
Speaker 1: twenty three million people. In fact, it has been least
Speaker 1: scathed of any of Chinese neighbors. I mean, they've only
Speaker 1: had a few of Chinese neighbors, only had a few
Speaker 1: dozen cases. One combination, combination of factors. The first thing
Speaker 1: is really really key is they understood the risk. Okay,
Speaker 1: so you know, I mean this may may seem intuitive,
Speaker 1: but but when one looks at what's been happening in
Speaker 1: the United States, is clearly not intuitive. The reason that
Speaker 1: they are not just Taiwan, but also Hong Kong and
Speaker 1: Singapore and a few other places in East Asia were
Speaker 1: able to understand the risk is because of the experience
Speaker 1: they had in the early two thousands with SAS. So
Speaker 1: they saw this right train, you know, coming towards them
Speaker 1: and jumped out of the way. The government in Taiwan
Speaker 1: reactivated the command center that they had used in insars.
Speaker 1: They used in technology and big data very intelligently. They
Speaker 1: linked their healthcare system with their immigration databases so that
Speaker 1: they were able to screen and monitor, you know, potential
Speaker 1: carriers and you know, look, make sure that they were
Speaker 1: following quarantine directions and so on. But I think, I think,
Speaker 1: really really really important politicians and social groups set aside
Speaker 1: their differences and worked together. And this may be the
Speaker 1: biggest lesson from Taiwan, which is that you can't tackle
Speaker 1: this coronavirus without a healthy society. Well, is there's something
Speaker 1: to be said for those nations that had to deal
Speaker 1: with stars in the past. They understand what can happen
Speaker 1: very quickly, and maybe that's where we're a little bit
Speaker 1: of a disadvantage. Right, So, so they'd seen this before
Speaker 1: and they didn't panic, right, So, you know what you've
Speaker 1: had um out of the Trump administration has been you know,
Speaker 1: Trump is not wanting to spread panic. That's good. I mean,
Speaker 1: you don't want panic, but you have to combine that
Speaker 1: with decisive government action. And the public has to also know.
Speaker 1: And this is the other thing in Taiwan. You know,
Speaker 1: individuals need to take responsibility for their own actions in
Speaker 1: order to promote public welfare and the common good. And
Speaker 1: that has occurred more readily in societies that had been
Speaker 1: through the trauma of sards. Well, it's interesting, I just
Speaker 1: because Bob Shiller was just on with us, and he said,
Speaker 1: you know, what's going on right now? We talked about
Speaker 1: kind of the narrative or narrative economics that you know,
Speaker 1: people know something big is going on, and there's also
Speaker 1: this fear that people understand that they can die, and
Speaker 1: so there's we're not kind of managing that well right exactly.
Speaker 1: And you see from from the Taiwan case, where you
Speaker 1: had early intervention, smart government, decisive political action, and society
Speaker 1: that works together, you've only had I think one death
Speaker 1: and and and a few dozen infections where you might
Speaker 1: have expected literally hundreds of thousands or a substantial portion
Speaker 1: of the population. So in a sense, the Taiwan example
Speaker 1: gives us all hope. All right, So this is a
Speaker 1: very difficult question to answer in thirty seconds, but I'm
Speaker 1: gonna ask you anyway, because you know, I guess he
Speaker 1: was like one of our great experts. What does this
Speaker 1: tell us about the New economy? You know, it tells
Speaker 1: us that, um, we often assume that our political models,
Speaker 1: are social models, are technologies are the best, and in fact,
Speaker 1: there is an awful lot that we can learn from
Speaker 1: the New Economy's ideology. Actually wasn't important necess particularly in
Speaker 1: in the response to coronavirus. What Matt it was political
Speaker 1: decisiveness and technology. New economies are very very quick, uh,
Speaker 1: to embrace technologies and to put it good to good use.
Speaker 1: And we've seen that vividly in the coronavirus case. All right,
Speaker 1: I think he proved my point. He proved my point
Speaker 1: as amazing. All right, he's our sure. But Andy Brown,
Speaker 1: editorial director for Bloomberg New Economy here in our Bloomberg
Speaker 1: Interactive broker's studio the Journal. Yeah, but you let me drive.
Speaker 1: Oh no, no, no, no no, honey, please, I'll do the
Speaker 1: revel I want to dry ball. Just drive baby, good
Speaker 1: question trying. This is the drive to the Globe Commune. Thanks,
Speaker 1: we'll dry us to Dawn on Bloomberg Radio. All right.
Speaker 1: We've been talking throughout the show and had tip to
Speaker 1: our producer Paul Brennan for lining this all up that
Speaker 1: these are the days where we just want to talk
Speaker 1: to the smartest people we know. It's certainly our next
Speaker 1: guest fits that. Bill. She is Hillary Cramer, President, chief
Speaker 1: investment Officer of Angie Capital Research, also the author of
Speaker 1: Game Changer Investing, How to Profit from Tomorrow's billion dollar trends.
Speaker 1: I have a copy. It's inscribed it's lovely. She's seen
Speaker 1: our Blooberg in reactor worker studio. Hi. Hi. Alright, So
Speaker 1: here we are, as Carol Masters fund of saying, whoa,
Speaker 1: this has been quite a couple of weeks. Certainly quite
Speaker 1: a day today. Put today in context for us, this
Speaker 1: is the day that it unwinds because you have all
Speaker 1: of these large funds that that hit that number and
Speaker 1: had to start selling. You have so many mandates out there,
Speaker 1: you have to be ten percent down down. And then
Speaker 1: on top of that, obviously there's something going on in
Speaker 1: the credit markets. When we know that for sure, um,
Speaker 1: we've seen what we call the spreads blowing out between
Speaker 1: the treasuries and especially the junk bonds. Corporate bonds have
Speaker 1: actually held in there pretty well. The bottom line is this, uh,
Speaker 1: there's real damage being done to the economy. Okay, this
Speaker 1: is that's the that's my concern by this coronavirus. My
Speaker 1: concern are these big capital intensive projects. Is Royal Caribbean
Speaker 1: canceling two new ships that they're building, you know, is
Speaker 1: Bowing just free falling. One of my favorite companies, by
Speaker 1: the way, is Bowing free falling because they are like
Speaker 1: desperately trying to keep UM airlines from canceling. Probably wouldn't
Speaker 1: be the military as much, but uh so that's where
Speaker 1: it's an issue. Are there going to be restaurants that
Speaker 1: are going to they are going to go into bankrupt
Speaker 1: so real damage or big damage being done to the
Speaker 1: economy are both real, but like i'd say, real damage
Speaker 1: where it might be harder to come back. That's the problem.
Speaker 1: That's what I think is an interesting like the thing
Speaker 1: that we should be discussing, right because do we kind
Speaker 1: of get through this and hopefully sooner rather than later,
Speaker 1: and then we're like, okay, we can we can put
Speaker 1: an end to it. We understand there's less cases and
Speaker 1: so on and so forth, and then we can think
Speaker 1: about getting back to our daily lives, right and things
Speaker 1: bounce back quickly. But I do wonder what's the point
Speaker 1: where it's not so easy to come back from exactly,
Speaker 1: that's Carol, That's exactly what I'm saying, right, So, so
Speaker 1: where do these projects get canceled? Where do companies that
Speaker 1: were on the verge of an I p O they
Speaker 1: just never get to that window again to jump through
Speaker 1: and go public? Uh? Companies that needed to do another
Speaker 1: round of financing. The the other The other kind of
Speaker 1: interesting point though, is when it comes to the staples,
Speaker 1: the staples that I always talk about, Hormel, hr L,
Speaker 1: that spam and uh and and Skippy peanut butter. You know,
Speaker 1: I talk General Mills. You know, these are three percent
Speaker 1: plus dividend yielding companies. You know, people are still going
Speaker 1: to have their cheerios and right, and their gold medal
Speaker 1: flower and their Hamburger helper. So we still have those
Speaker 1: companies that are going to do fine, and they're gonna
Speaker 1: come back. Anyone who has doesn't have a financing issue,
Speaker 1: that doesn't have to refinance debt, and even I'll tell
Speaker 1: you everyone's gonna be looking for at this point for
Speaker 1: the yield, right, They're gonna be looking for those dividends,
Speaker 1: which is why even though utilities are kind of expensive still,
Speaker 1: we're gonna see, We're gonna see, yeah, everyone kind of
Speaker 1: going towards those. But you don't want to be in
Speaker 1: anything that you know has to has to refinance or
Speaker 1: that you know could have that has an ugly balance sheet. Um.
Speaker 1: At the same time, we got to think about the banks, right,
Speaker 1: like maybe you want context for today. You know, JP
Speaker 1: Morgan down twelve and it's not because Jamie Diamond had
Speaker 1: heart surgery. Okay, I mean, so what do you worry
Speaker 1: about with the banks here? Okay? So the market tells us.
Speaker 1: What everyone needs to know is that the stock market
Speaker 1: is telling us what's going on. It always tells us
Speaker 1: and knows ahead of what we know. So something is
Speaker 1: happening in the banking sector. And it's not just this
Speaker 1: like net interest margin that we always talk about when
Speaker 1: rates go down own uh and the banks can't make
Speaker 1: as much margin, right, But there's something else happening there
Speaker 1: now and we don't necessarily know exactly what it is.
Speaker 1: Is it? And and a lot of the debt though
Speaker 1: they have, you know, they have sold off to insurance companies, endowments,
Speaker 1: pension funds. Uh So are they at risk? So who's
Speaker 1: at risk? Oh? Well, it always comes down to the
Speaker 1: pension funds. You know. Anyone who thinks that their pension,
Speaker 1: and this is an unpopular thing to say, but that
Speaker 1: their pension is written in stone, including city employees, it's not.
Speaker 1: It's not if there just isn't the money there, And
Speaker 1: so that's what's such a shame you know, when we
Speaker 1: talk about kind of all this new money that's been
Speaker 1: created out of Silicon Valley, it's the where has it
Speaker 1: come from? What's been financing it? And I think so
Speaker 1: many people don't realize it's coming from us, the Royal US,
Speaker 1: the royal we are putting that money in. And Hillary, Yes,
Speaker 1: the bond market and the equity markets, because I hear
Speaker 1: what you say about the equity markets. You know they're
Speaker 1: telling us something, they're leading. But I really feel like
Speaker 1: the bond market is always or credit markets are really
Speaker 1: often out there in front. Are they telling the same story? Finally, Yes, Yes,
Speaker 1: with this, with this, with this blowing out of these uh,
Speaker 1: the blowing out of the margins between the US Treasury
Speaker 1: and and junk bonds, genre bonds are the junk bonds
Speaker 1: are looking really really bad. Now there's a headline finn
Speaker 1: saying banks may need to alter trader supervision because of
Speaker 1: the virus. And we keep talking about this about traders.
Speaker 1: Maybe the mechanics basically of how banks do business and this,
Speaker 1: I mean, you've worked on Wall Street, Uh, you understand
Speaker 1: this as well as anyone. I mean, the day to
Speaker 1: day operations. I think it's such a fascinating element of this,
Speaker 1: right Hillary, in the sense that the financial crisis is
Speaker 1: one thing. It is a financial crisis, and there are
Speaker 1: certain things that the I can do. There's certain things
Speaker 1: that regulators can do. Part of this is human behavior,
Speaker 1: right and changing the way people do their Okay, yes,
Speaker 1: and so what we need to think about there's there's
Speaker 1: there's two worlds. One world is we will get through
Speaker 1: this and the market will start going back up. That
Speaker 1: will happen. And anyone who's like tempted to like sell
Speaker 1: it all right now, even if we go down another
Speaker 1: ten percent, even look at another This isn't the time
Speaker 1: to be selling off because you're never gonna time it right.
Speaker 1: You're gonna get nervous and you're gonna try to jump
Speaker 1: back in, and then we're gonna have another big draw
Speaker 1: down retracement day. This isn't Yeah, you know, maybe if
Speaker 1: you had sold three weeks ago, but that's why, you know,
Speaker 1: you really can't really can't time the market. Um. So
Speaker 1: that's that's the good news, you know that that's all
Speaker 1: coming back. Here's the bad news. Conferences. Okay, So conferences
Speaker 1: are canceled, and that's a big business. And this is
Speaker 1: just an example. So do companies decide does Cisco, which
Speaker 1: hit a fifty two week load today to Cisco decide
Speaker 1: um to have their conference next year when they canceled
Speaker 1: it this year. I don't think so. I think that
Speaker 1: that is um. You know, these sort of boondoggles. Basically,
Speaker 1: this is going to be a good excuse and good
Speaker 1: reason for companies to say, hey, we don't need to
Speaker 1: do this anymore and to set the precedent. It's very expensive,
Speaker 1: but it always serves the interest in everyone from the
Speaker 1: administration to sales to management. Everyone loves these sort of
Speaker 1: conferences and opportunities, whether it's for sales purposes or just
Speaker 1: internal purposes. So that's going to be a problem. How
Speaker 1: is there risk Carlton Naples or how is uh New
Speaker 1: Orleans going to do? And there's something there's some things
Speaker 1: that may just not be rescheduled, not happen. I heard
Speaker 1: Dana tells a she's un surveillances, we aren't talking about
Speaker 1: she's fabulous talking about retail and talking about it being
Speaker 1: a lost year that you just ultimately there are things
Speaker 1: that you're just never going to get back, you know,
Speaker 1: and people who maybe we're going to take a trip well,
Speaker 1: they can't take it later in the year. You're just
Speaker 1: not going to get exactly or a conference south by Southwest?
Speaker 1: Are they going to reschedule it? I heard that they
Speaker 1: may not actually do the conference next year, which was
Speaker 1: kind of interesting. That was a very odd headline. Yeah,
Speaker 1: there's a lot of dueling, uh versions of that in
Speaker 1: some ways. Because I heard that they were hoping that
Speaker 1: they could reschedule it for later in the year. I
Speaker 1: also heard they may not do it at all. The
Speaker 1: Milk and conference supposed to happen the first week last
Speaker 1: week in April, one week in May. That's been postponed
Speaker 1: to July for now, and then it'll get then the
Speaker 1: Allen and Company conference with the way did and then
Speaker 1: something is going to have to a doing, because I
Speaker 1: do wonder if we're all going to look at back
Speaker 1: at this in six months and say, man, that was
Speaker 1: a great buying opportunity. Of course, So what are you doing?
Speaker 1: What are your clients asking you to do? Are you
Speaker 1: buying me? Yes? Yes? What are you buy a buying?
Speaker 1: We are buying these staples, right, so we're buying the
Speaker 1: smuckers and we're buying, As I said, the General Rold mills,
Speaker 1: the Hormail. We love p s A, which is um
Speaker 1: that's public storage. So take a look at public storage
Speaker 1: div it in yield there, what is it at that
Speaker 1: two four dollars and the DIVDAN yield is about three
Speaker 1: point six percent. That's the largest self storage company in
Speaker 1: the country this year, So why is that important? Nine
Speaker 1: billion dollar market cap? It's a great company. I actually
Speaker 1: worked on the private placement of it in six so
Speaker 1: I haven't kind of an intimate you know, love for
Speaker 1: this company and have seen it where we are all
Speaker 1: store that stuff. Everyone, yes, so when people have to downsize,
Speaker 1: they store their things. But even if the market comes
Speaker 1: back and it's good, everyone accumulates stuff and they and
Speaker 1: the and they'll pay the money to go into storage.
Speaker 1: But again the downsizing, and then of course you have
Speaker 1: the whole baby boomer um, the baby boomer kind of
Speaker 1: you know, um evolution, which is uh going to um
Speaker 1: smaller condos, town houses, and but they don't want to
Speaker 1: let go of the suburbanizing, right, And I bet you
Speaker 1: that all those public storage p s A is filled
Speaker 1: with records with alb like who the who Bruce Springsteen
Speaker 1: and boxes of like their kids report cards from the
Speaker 1: eighties exactly. I want to ask you, would you buy
Speaker 1: a carnival that's just getting decimated? What would you found
Speaker 1: this year? No, I would not. I would not be
Speaker 1: buying right here if there's just no way, because again,
Speaker 1: it's going to take time for the reputation to come back,
Speaker 1: for people to stop being fearful. You know, you hope
Speaker 1: that a new culture is informed where we're all like
Speaker 1: just this bumping and kind of like keeping separate from
Speaker 1: each other. What about an Expedia down right now? I
Speaker 1: wouldn't go for Expedia, but I would go for United
Speaker 1: Airlines and American Airlines. Now, United wasn't down that much
Speaker 1: as a Friday, you know. Today, I mean it's it's
Speaker 1: it's actually had a resiliency. It's down nine percent today United,
Speaker 1: which is not bad considering the fact that I came
Speaker 1: back from Florida and three it's I think three flights.
Speaker 1: This is what my impression was, that three flights were
Speaker 1: combined into one last week. It's down this year. I'll
Speaker 1: tell you that baseball preseason baseball packed. It was, Yeah,
Speaker 1: everyone was still there. There are some people that I mean,
Speaker 1: you know, the the bigger problem. It's not like the coronavirus.
Speaker 1: This is a great you know, more great news. The
Speaker 1: coronavirus is not going to kill us all. And probably
Speaker 1: the mortality rate is much lower than we know. Because
Speaker 1: we only know the people that die. We don't know
Speaker 1: how many people have gotten it and thought it was
Speaker 1: just a cold or bronchitis or as sinus infection. Well
Speaker 1: we joke that there are many many people we know
Speaker 1: who've had it and it's gone. Yeah, you probably didn't
Speaker 1: even know, right. I never knew it, right. And that's
Speaker 1: that's what's kind of interesting here. What else are you buying?
Speaker 1: I know, are you're selling anything or no, you're not selling,
Speaker 1: because we're not. We're not selling. We are looking to
Speaker 1: do options. You know, we do options on e T s.
Speaker 1: But that's a whole other kind of a whole other
Speaker 1: kind of game out there. We do like some of
Speaker 1: the company's you know, Flowers Foods has so depressed right now.
Speaker 1: That is the maker of Wonder Bread and Dave's Killer Bread.
Speaker 1: And when you look at that, you think to yourself,
Speaker 1: and actually, I just bought it to do. Okay, well
Speaker 1: it had really fall I mean it had a terrible
Speaker 1: year last year. But you have this three point three
Speaker 1: five percent diven in yield. Uh and they they they've
Speaker 1: done the right thing. They have the wonder bread for
Speaker 1: one group, and then they have this day's killer organic
Speaker 1: bread that has different levels of seeds in it from
Speaker 1: down to sixteen fourteen. You like Dave's. You like Dave's
Speaker 1: and he likes a lot of bread. But it goes
Speaker 1: back to that. So Flowers food is f l O
Speaker 1: and there's upside there. And when also the market comes back,
Speaker 1: and when and when the credit markets open back up,
Speaker 1: you're gonna see acquisitions. You're gonna see companies come in
Speaker 1: swoopers and pick up these Yeah, and then they're gonna
Speaker 1: drip down and they're gonna pick up these kind of companies.
Speaker 1: What everyone should have heart, this is fine. Everything will
Speaker 1: be fine. Is this the financial crisis in your view?
Speaker 1: Absolutely not, because it's not systemic in the sense that
Speaker 1: and I understand that there might be issues. Look, it
Speaker 1: might be the financial crisis in Europe. I mean, we
Speaker 1: don't really know. We already know like Barclays is sort
Speaker 1: of gone, so but we don't know how bad Deutsche
Speaker 1: Bank And Jason, what did you say about Deutsche Bank
Speaker 1: today and the Deutsche banks market cap. Deutsche Bank's market
Speaker 1: cap is roughly equal to the compensation that they paid
Speaker 1: their workers last year. How crazy is that? Oh, they're
Speaker 1: not supposed to do that. There was there's a there's
Speaker 1: an equation. It should be like like eight into Well,
Speaker 1: it's probably because they've been so beaten up. Isn't that insane?
Speaker 1: I mean the sort of joke, the sort of tongue
Speaker 1: in cheek tweet that I saw about it was essentially
Speaker 1: that if everybody just put their salaries together, they could
Speaker 1: just buy the bank. They're not going to do that happen.
Speaker 1: Is there another name that you tell people? Um, well,
Speaker 1: I love Golden Sacks. Goldman Sacks will come back. Goldman
Speaker 1: Sachs has the balance sheet. They're smart, you're the executive
Speaker 1: changes we keep I know. But they they have invested
Speaker 1: in the top talent. I have no concern because if
Speaker 1: you think about it, it's Goldman Sacks rather than you
Speaker 1: know about a Wasserstein. You know, it's not about one
Speaker 1: heroic kind of you know, it's about the first legend.
Speaker 1: It's the firm. You know, a person's a partner of
Speaker 1: Goldman Sacks versus what their name might be. So I
Speaker 1: think that you want to be in Golden Sacks. If
Speaker 1: I if I had to buy today, I'd buy Goldman
Speaker 1: Sacks right here downtown, one seventy seven Goldman Sacks. I
Speaker 1: mean they are going to be and if there's restructuring,
Speaker 1: you're gonna be the first ones at the table and
Speaker 1: they're gonna take a piece of the credit. One of
Speaker 1: our one of our loyal listeners Watchers is saying, we
Speaker 1: hear you. Leadership to reduce the damage is needed with
Speaker 1: a coordinated plan. Do we need something from the government though,
Speaker 1: in order to get out of this in a in
Speaker 1: a better way, if you will, And just got about
Speaker 1: we need to see these temporary payroll taxes, you know,
Speaker 1: some kind of payroll tame shuts we need right or nearly.
Speaker 1: I wouldn't be on that, but that's what we need
Speaker 1: to kind of create a spark. And and then I
Speaker 1: think we're going to be fine. But everyone should know
Speaker 1: you'll have more money ten years from now. And don't
Speaker 1: just buy gold. And don't just buy gold, don't buy gold,
Speaker 1: buy gold men nicely, President of Angi Capital Researchero game
Speaker 1: Change Investing, you how to profit m Tomorrow's billion dollar
Speaker 1: transport Thanks for listening to Bloomberg Business Week. You can
Speaker 1: subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com.
Speaker 1: You can also listen to our radio show every weekday
Speaker 1: at two pm Eastern, only on Bloomberg Radio