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People Made Bad Bets, And Now They Need Cash To Cover It · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,
• 0:05
  Speaker 1: along with my co host Lisa Brahma wits. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money, whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. We got some news coming out
• 0:21
  Speaker 1: of Europe this morning. Germany lines up six hundred billion
• 0:24
  Speaker 1: dollars for virus aid and also the European Union is
• 0:26
  Speaker 1: backing stimulus. We're starting to get some movement coming out
• 0:29
  Speaker 1: of the Western Europe. We had, of course, the US
• 0:31
  Speaker 1: Federal Reserve immediately expanded the repo offering this week by
• 0:35
  Speaker 1: one and a half trillion dollars. So starting to get
• 0:38
  Speaker 1: some movement there. To get a sense of what this means,
• 0:41
  Speaker 1: will ask Steve Blitz, chief US economists for T. S. Lombard.
• 0:45
  Speaker 1: He joins us on the phone. Steve, thanks so much
• 0:47
  Speaker 1: for joining us. Give us a sense of kind of
• 0:49
  Speaker 1: how you feel the response has been from the Fed.
• 0:52
  Speaker 1: We had that emergency rate cut, we had them coming
• 0:55
  Speaker 1: in injecting some liquidity here this week. How do you
• 0:59
  Speaker 1: think the FED is kind of handling this a crisis here? Well,
• 1:03
  Speaker 1: I think they're doing the best they can obviously, um.
• 1:07
  Speaker 1: I think the hard thing is that I think you
• 1:09
  Speaker 1: have to go back to point one, which is that
• 1:12
  Speaker 1: this is not a financially driven sell off, right, So
• 1:16
  Speaker 1: this was a non financial event, uh that created the
• 1:20
  Speaker 1: sell off, and as such, the Fed doesn't have a
• 1:24
  Speaker 1: misguided policy to walk back right as they did kind
• 1:28
  Speaker 1: I'm sorry about a year ago. So it is, um.
• 1:32
  Speaker 1: So they don't have anything to unwind here that they
• 1:35
  Speaker 1: did wrong. So that puts them a little at sea
• 1:39
  Speaker 1: in terms of what's the right move. So one habit says,
• 1:44
  Speaker 1: cut the funds right, Cut the funds right, cut the
• 1:46
  Speaker 1: funds right, and that's the habit both of the market
• 1:48
  Speaker 1: as well as the Fed, and they'll cut and will
• 1:51
  Speaker 1: be basis points after the FOMC meeting on Wednesday. The
• 1:57
  Speaker 1: I think the more interesting thing that's going on was
• 2:00
  Speaker 1: their move yesterday because in this move you would expect
• 2:03
  Speaker 1: treasury yields to go down, which they have a lot,
• 2:07
  Speaker 1: but the selling that's occurred and the widening credit spread
• 2:11
  Speaker 1: that we're seeing basically the old live woory three months,
• 2:13
  Speaker 1: they'll spread. That's widening out. Tells you that there's stress
• 2:18
  Speaker 1: in the system, which isn't that unusual if you think
• 2:22
  Speaker 1: about this rapid and this much of a drop in
• 2:25
  Speaker 1: the equity market. To create that, people have made bad bets.
• 2:29
  Speaker 1: I mean at the very you know ABC part of it. Uh.
• 2:34
  Speaker 1: And people make bad bets and now they have to
• 2:37
  Speaker 1: they need cash to cover it. Uh. And so there's
• 2:41
  Speaker 1: a scramble for cash, So you sell treasuries, you go
• 2:44
  Speaker 1: to the banks, you try to draw calf from the banks.
• 2:47
  Speaker 1: And I think that's what that's what's going on right now. Seven.
• 2:50
  Speaker 1: This is a really important point because we have on
• 2:53
  Speaker 1: one hand an economic shock and economic potentially crisis and
• 2:57
  Speaker 1: developing as a result of the slowdown that's been forced
• 3:01
  Speaker 1: on the whole world frankly because of the coronavirus. But
• 3:04
  Speaker 1: then you have the financial shock that you're starting to
• 3:07
  Speaker 1: see the stresses in this in the system. How much
• 3:11
  Speaker 1: do you think the financial shock in the financial crisis
• 3:15
  Speaker 1: was alleviated or prevented enough to just sort of focus
• 3:18
  Speaker 1: on the economic at this point, Do we have more
• 3:20
  Speaker 1: to go on the economical It's a great question, and
• 3:24
  Speaker 1: I would say, we have more to go, because I
• 3:26
  Speaker 1: think that what we we we can now begin I
• 3:29
  Speaker 1: think looking at China coming back, and I think you
• 3:32
  Speaker 1: can sort of now model out you know, probably in
• 3:36
  Speaker 1: six weeks the NBA will be back playing. You know,
• 3:38
  Speaker 1: it's just a guess obviously, um and things will come back.
• 3:42
  Speaker 1: So there's this quick economic contraction that will then of
• 3:46
  Speaker 1: that that that that's going to come back. But wait,
• 3:49
  Speaker 1: see you before you continue, I just want to bring
• 3:51
  Speaker 1: you some breaking news. The New York Federal Reserve announcing
• 3:54
  Speaker 1: that today they will be buying treasury security is of
• 3:56
  Speaker 1: up to thirty years a bona fide que four q
• 4:00
  Speaker 1: E five, whatever number you want to put on this.
• 4:03
  Speaker 1: But after the program that they opened up yesterday, the
• 4:06
  Speaker 1: REPO operations, the expanded ones that they're operating that they're offering,
• 4:10
  Speaker 1: which were really aimed at alleviating funding pressures and systematic issues.
• 4:15
  Speaker 1: This is this is outright qui. It sounds like we
• 4:17
  Speaker 1: will bring you more details as we get them, but
• 4:19
  Speaker 1: carry on. Yeah, okay, so let's just pick up that. Okay,
• 4:23
  Speaker 1: So what's happening here? And this is I've been a
• 4:26
  Speaker 1: very important point to understand. They're not the old QUI was,
• 4:31
  Speaker 1: Let's flatten the curve. Let's get ten uere yields even
• 4:34
  Speaker 1: lower to stimulate you know, borrowing, you know, mortgages, things
• 4:38
  Speaker 1: like that. What they're doing is they're saying, you know what,
• 4:41
  Speaker 1: this financial pressure, there's a lot of people out there,
• 4:44
  Speaker 1: invite people. I don't necessarily mean individuals, just people's institutions
• 4:47
  Speaker 1: as well, uh, domestic and foreign that need to raise cash.
• 4:53
  Speaker 1: And the thing you sell when you need to raise
• 4:55
  Speaker 1: cash is treasuries. And what the and what the FETE
• 4:58
  Speaker 1: is saying is we will be on the the other
• 5:00
  Speaker 1: side of that trade to buy the treasuries to alleviate
• 5:03
  Speaker 1: any funding pressures in the repo market. So we'll be
• 5:06
  Speaker 1: there to buy it. So that institutions that need to
• 5:09
  Speaker 1: raise cash because of financial stress from the collapse in
• 5:13
  Speaker 1: equity prices as well as all the other bets that
• 5:16
  Speaker 1: go wrong, credit bets, you know, you name it. You've
• 5:19
  Speaker 1: got people on all the time talking about you know,
• 5:21
  Speaker 1: hedge funds, trades and things like that. Um, they need
• 5:25
  Speaker 1: to raise cash. And what they're with the FEDS stepping
• 5:28
  Speaker 1: up from doing is saying, I'm here, We're here, We're
• 5:31
  Speaker 1: buying the treasuries from you. You don't have to find
• 5:34
  Speaker 1: private sector buyers will buy them from you to keep
• 5:36
  Speaker 1: the markets functioning. Uh. And that's and that's step one,
• 5:40
  Speaker 1: and that is the step to take, and all the
• 5:43
  Speaker 1: other steps about you they get a steeper curve because
• 5:46
  Speaker 1: this isn't a good steepening of the curve. So a
• 5:49
  Speaker 1: steepening of the curve and all the other things I've
• 5:52
  Speaker 1: talked about about things to try and get the economy
• 5:54
  Speaker 1: going again and borrowing and to keep lending going really
• 5:57
  Speaker 1: takes second place to this. Steeplitz, thank you so much
• 6:02
  Speaker 1: for being with us. A good luck out there, Stay healthy. Steeplitz,
• 6:05
  Speaker 1: chief US economist at TS Lombard uh joining us on
• 6:09
  Speaker 1: the phone as we all isolate ourselves into our own
• 6:11
  Speaker 1: little pods to prevent us all from giving each other's diseases.
• 6:15
  Speaker 1: It is it is really interesting to see the federers
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  Speaker 1: are coming out with this step. And to Steve's point,
• 6:21
  Speaker 1: which I think is a really important one, it does
• 6:23
  Speaker 1: not the FED does not want to see the price
• 6:26
  Speaker 1: action that it saw this week in treasuries, where yields
• 6:29
  Speaker 1: rose simply because people were selling what they could and
• 6:32
  Speaker 1: they wanted to sell longer dated treasuries because that is
• 6:35
  Speaker 1: a haven asset, and this, to me is going to
• 6:37
  Speaker 1: put a backstop on that kind of activity. At least, Paul,
• 6:40
  Speaker 1: it is an intended immediate impact on the equity markets
• 6:43
  Speaker 1: at Lisa, we had the doll up close to a
• 6:44
  Speaker 1: thousand points here, so I had routed a couple hundred
• 6:46
  Speaker 1: points here on this news of about four point six. Yeah,
• 6:50
  Speaker 1: and taking a look at thirty year treasury yields, which
• 6:53
  Speaker 1: had been higher on the day now not surprisingly lower
• 6:56
  Speaker 1: on the day at one point for one percent. We
• 7:00
  Speaker 1: got much more coming up, Lisa, Abramwods, Paul Sweeney, this
• 7:03
  Speaker 1: is bloomberg. One of the things that we've clearly learned
• 7:10
  Speaker 1: with this coronavirus, it is a global pandemic affecting all
• 7:14
  Speaker 1: parts of the globe and that includes UH, the UK,
• 7:17
  Speaker 1: and Western Europe. We have Marion Harkin, she's an independent
• 7:20
  Speaker 1: member of Ireland's parliament joining with us. She's also a
• 7:23
  Speaker 1: former European Union Parliament member representing Ireland. Marian, thanks so
• 7:27
  Speaker 1: much for joining us. You know, as we deal with
• 7:30
  Speaker 1: the effects here and the growing effects of the coronavirus
• 7:34
  Speaker 1: here in the United States, give us a sense of
• 7:36
  Speaker 1: kind of how it's been in Ireland. I know that
• 7:39
  Speaker 1: Ireland partially shut down schools as a virus outbreak worsensia.
• 7:43
  Speaker 1: Give us a sense of what's happening on the ground
• 7:45
  Speaker 1: in Ireland. Well, good morning, Paul, and it's certainly we
• 7:51
  Speaker 1: woke up to a different world, a different reality today.
• 7:56
  Speaker 1: And I was in the Irish Parliament yesterday and our
• 8:00
  Speaker 1: Prime Minister Artichia announced the new regulations actually from Washington,
• 8:08
  Speaker 1: and we have completely closed down our schools, our colleges.
• 8:13
  Speaker 1: People are being asked to maintain what they call social
• 8:17
  Speaker 1: distance or social distancing, which is to remain about a
• 8:22
  Speaker 1: meter apart from other people. Hand Washing is strongly encouraged
• 8:28
  Speaker 1: on a very regular basis, and the purpose of an
• 8:33
  Speaker 1: All large events have been canceled, anything over a hundred
• 8:38
  Speaker 1: in an enclosed area or five hundreds outside. And I
• 8:43
  Speaker 1: have no doubts that maybe even by this evening or tomorrow,
• 8:47
  Speaker 1: that that will be changed again. I mean, if you
• 8:50
  Speaker 1: look across the EU, for example UM, in Norway, UM
• 8:55
  Speaker 1: they have closed all their pubs, and in Belgium there
• 9:00
  Speaker 1: are significant restrictions on opening ours for pubs, for restaurants, etcetera.
• 9:06
  Speaker 1: So there's a whole raft of measures being taken at
• 9:11
  Speaker 1: a pace, shall we say, And the whole purpose, Paul,
• 9:15
  Speaker 1: is to slow down the transmission of the virus, because
• 9:22
  Speaker 1: we want our health care systems to be able to
• 9:26
  Speaker 1: deal with what happens when somebody catches this virus. And
• 9:31
  Speaker 1: that's the real issue. It's not that we can stop its.
• 9:34
  Speaker 1: We we can't stop transmission of a virus unless we
• 9:38
  Speaker 1: have immunity, and of course we have none. So it's
• 9:42
  Speaker 1: it's to make sure or to try and make sure
• 9:45
  Speaker 1: that we don't find ourselves in a position that our
• 9:50
  Speaker 1: health care systems are completely overwhelmed, like, for example, as
• 9:55
  Speaker 1: has happened in Italy, Marianne, there's sort of an irony
• 10:00
  Speaker 1: baked into the concept of social distancing right now because
• 10:04
  Speaker 1: we're being told to stay away from each other, and
• 10:07
  Speaker 1: yet there seems to be a greater degree of cooperation
• 10:10
  Speaker 1: among elected officials and central bankers when it comes to
• 10:14
  Speaker 1: trying to formulate some sort of response. And I'm wondering,
• 10:17
  Speaker 1: as an independent member of Ireland's Parliament, do you get
• 10:20
  Speaker 1: the feeling as people are coming together, regardless of their
• 10:24
  Speaker 1: political event or what country they're from. You do you
• 10:27
  Speaker 1: get a sense of unity or not really. Oh absolutely,
• 10:33
  Speaker 1: there is a real sense we're in it together. You know.
• 10:37
  Speaker 1: It's not actually doctors and medicine, certainly in the short
• 10:41
  Speaker 1: term that that will help us. It's the actions that
• 10:46
  Speaker 1: we take as individuals. As I said, we we cannot
• 10:51
  Speaker 1: stop the virus spreading. What we can do is slow
• 10:55
  Speaker 1: down the transmission so that healthcare workers number one, don't
• 11:00
  Speaker 1: have to make awful choices about who they treation who
• 11:04
  Speaker 1: they don't, and secondly that they themselves don't get overwhelmed
• 11:09
  Speaker 1: or come down with the disease. So I think people
• 11:13
  Speaker 1: recognize that the only way we can get through this
• 11:18
  Speaker 1: in any ship is that we must as individuals take responsibility,
• 11:25
  Speaker 1: and then our governments and our health care systems take
• 11:29
  Speaker 1: their responsibilities. But nobody is immune from this. And as
• 11:36
  Speaker 1: I said, have woken up to a new reality. This
• 11:40
  Speaker 1: is important and I think that it is true, and
• 11:42
  Speaker 1: people are taking responsibility and schools are closing around the world.
• 11:46
  Speaker 1: As a government official, though, there is a responsibility to
• 11:49
  Speaker 1: act on the fiscal side, and we did get out
• 11:52
  Speaker 1: of the European Union. Today a plan to to loosen
• 11:56
  Speaker 1: the budgets of a number of different nations in order
• 11:59
  Speaker 1: to allow them to provide the stimulus needed. German these
• 12:02
  Speaker 1: government came out and said that it was going to
• 12:04
  Speaker 1: provide unlimited credit. It appears to be ready to abandon
• 12:07
  Speaker 1: its balanced budget credo that it's gone by for a
• 12:10
  Speaker 1: long time in Ireland. What are you doing? How much
• 12:12
  Speaker 1: is it going to cost? Well, at one level, we
• 12:17
  Speaker 1: were lucky we had a certain amount of money put
• 12:20
  Speaker 1: aside to deal with the fallout from breakxfit, and that
• 12:24
  Speaker 1: of course is being completely used up now to start
• 12:28
  Speaker 1: funding some of the measures that we have put in place.
• 12:31
  Speaker 1: It probably won't be enough, but it's the start. So
• 12:34
  Speaker 1: some of the measures that we will be putting in
• 12:37
  Speaker 1: place and have put in place include next week, for example,
• 12:42
  Speaker 1: we will have a sitting of Parliament where we will
• 12:45
  Speaker 1: put through emergency legislation on those who have to self
• 12:51
  Speaker 1: isolated or who have to leave work, both employed and
• 12:55
  Speaker 1: self comployed, that they will get a certain race of
• 13:01
  Speaker 1: payments that they can continue to live and feed their families.
• 13:05
  Speaker 1: If you work in the public service, you're entitled to
• 13:08
  Speaker 1: sick pay, but otherwise your employer may not be able
• 13:11
  Speaker 1: to pay you. So we are putting in place those
• 13:14
  Speaker 1: emergency measures that nobody will be outside the loop and
• 13:19
  Speaker 1: that people will take the responsible decision to sell size
• 13:23
  Speaker 1: place without fear of having to say I have no income,
• 13:28
  Speaker 1: I have no money. And for example, other measures that
• 13:32
  Speaker 1: have already been taken in the last twenty eight hours
• 13:37
  Speaker 1: would include all of our police who are in training
• 13:41
  Speaker 1: at the moment, even those who are only there for
• 13:44
  Speaker 1: a couple of months, have all been given full guard
• 13:48
  Speaker 1: the powers because we need more policemen available. The army
• 13:55
  Speaker 1: is beginning to move in as certain buildings that have
• 13:59
  Speaker 1: been you for other purposes will now be available if
• 14:03
  Speaker 1: necessary for a medical use. So a lot of action
• 14:08
  Speaker 1: in the last twenty four hours, some of it preparatory
• 14:12
  Speaker 1: and some of us are pretty immediate. And the good
• 14:15
  Speaker 1: news for workers here is that we will backdate any
• 14:20
  Speaker 1: payments to the ninth of March for people who are
• 14:23
  Speaker 1: sick or who have to sell isolates. Marian Harkin, thank
• 14:27
  Speaker 1: you so much for being with us. Marian Harkin, independent
• 14:29
  Speaker 1: member of Ireland's Parliament and former European Union Parliament member
• 14:33
  Speaker 1: representing Ireland, joining us to give us a sense of
• 14:37
  Speaker 1: what they're doing to grapple with this. In the United States,
• 14:40
  Speaker 1: the focus very much front and center in Washington, d
• 14:43
  Speaker 1: c and what kind of plan is being drafted by
• 14:46
  Speaker 1: Nancy Pelosi and Treasures diectory Stephen Manuchin. They have been
• 14:50
  Speaker 1: discussing all of the details hashing that out. Meanwhile, the
• 14:52
  Speaker 1: Federal Reserve came out and basically announced around of quantitative easing.
• 14:57
  Speaker 1: Basically they're going to be buying treasuries with maturity is
• 15:00
  Speaker 1: ranging up to thirty years. We are seeing a rally,
• 15:03
  Speaker 1: although it is off earlier highs and Nadack up three
• 15:06
  Speaker 1: point two percent, the SMP three, the Dow two point
• 15:09
  Speaker 1: seven percent. This is Bloomberk. I want to take a
• 15:18
  Speaker 1: look at the medical side of coronavirus, in particular how
• 15:22
  Speaker 1: we track it, how we test for it, and frankly,
• 15:26
  Speaker 1: how close we are to actually crying it or solving
• 15:28
  Speaker 1: it or a merely rating at least the effects. Luckily,
• 15:30
  Speaker 1: we have Maxinis and Bloomberg opinion columnists covering all things
• 15:33
  Speaker 1: healthcare with us today. Max I want to start with
• 15:37
  Speaker 1: Anthony Fauci, who is the director of the National Institute
• 15:40
  Speaker 1: for Allergy and Infectious Disease. Yesterday, he was testifying in
• 15:44
  Speaker 1: front of Congress and he said he admitted that it
• 15:47
  Speaker 1: was a failing of the U S healthcare system that
• 15:50
  Speaker 1: we did not have sufficient testing at the outset. Can
• 15:53
  Speaker 1: you just walk through why we did not have better
• 15:57
  Speaker 1: testing available right away so that we could try and
• 16:00
  Speaker 1: isolate people immediately. So there you know, any number of
• 16:05
  Speaker 1: reasons or failures for this, UM. You know, a failure
• 16:08
  Speaker 1: of cooperation between agencies like the CDC and the f D,
• 16:12
  Speaker 1: a failure to bring in private companies and state labs
• 16:17
  Speaker 1: rapidly enough. Decision at the outset. Instead of using w
• 16:21
  Speaker 1: h O developed tests one that's been deployed all over
• 16:24
  Speaker 1: the world, we decided to develop our own, which turned
• 16:28
  Speaker 1: out to have problems. The introducing those problems obviously created
• 16:32
  Speaker 1: difficulties and and slow the raw and beyond that, UM
• 16:36
  Speaker 1: just an overall decision by the government for UM, you know,
• 16:39
  Speaker 1: not necessarily the best reasons to restrict deliberately the number
• 16:45
  Speaker 1: of tests that were deployed and developed and and like
• 16:49
  Speaker 1: the number of people that were tested, limiting it only
• 16:51
  Speaker 1: to people with the direct travel history to China in
• 16:54
  Speaker 1: spite of the fact that there was you know, already
• 16:56
  Speaker 1: evidence of spread in other parts of the world, and
• 16:59
  Speaker 1: you know the reality that the earlier, you know better
• 17:02
  Speaker 1: to overtest and under test and we really didn't even
• 17:06
  Speaker 1: get to that that mindset until just a few weeks ago.
• 17:09
  Speaker 1: So failure of leadership, failure of science, failure, um on
• 17:15
  Speaker 1: on many many levels has led to this this point, Max,
• 17:18
  Speaker 1: where are we right now in terms of the number
• 17:20
  Speaker 1: of kids we have in this country, how widely dispersed
• 17:25
  Speaker 1: they are right now? How easy is it for somebody
• 17:27
  Speaker 1: to get a test? And and just kind of where
• 17:30
  Speaker 1: are we today? Do you think, unfortunately, all that we
• 17:33
  Speaker 1: really have our sort of these ad hoc estimates. Um.
• 17:36
  Speaker 1: I'll point people to former FDA Commissioner Scott Gottlieb, who
• 17:40
  Speaker 1: has been you know, talking to state labs of the CDC,
• 17:44
  Speaker 1: private companies, trying to come up with a reasonable estimate. UM.
• 17:47
  Speaker 1: So we we really don't have a confirmed number unfortunately.
• 17:51
  Speaker 1: And UM it seems to be the case that you know,
• 17:53
  Speaker 1: your ability to get tested really depends on where you are.
• 17:56
  Speaker 1: Are you in a state that that took early steps
• 17:59
  Speaker 1: to to you know, develop its own tests to stand
• 18:03
  Speaker 1: up at more capacity than it needed any any given
• 18:06
  Speaker 1: moment um, when we're still not at a point where
• 18:08
  Speaker 1: everyone who needs to be tested can be unfortunately, and
• 18:11
  Speaker 1: probably won't be for a little bit to come, although
• 18:13
  Speaker 1: Anthony Fauci did say today that he expects the number
• 18:17
  Speaker 1: of tests to increase dramatically over the upcoming weeks, and
• 18:21
  Speaker 1: part because the US government is partnering with private companies.
• 18:24
  Speaker 1: Can you talk a little bit about that. Yeah, absolutely,
• 18:27
  Speaker 1: So this is basically, you know, looking to companies like
• 18:30
  Speaker 1: lab corp and and quest Um, you know, these sort
• 18:33
  Speaker 1: of brand name companies that have labs all over the
• 18:35
  Speaker 1: country and um just basically making sure that they too,
• 18:39
  Speaker 1: are are part of this effort that you know, if
• 18:41
  Speaker 1: if a public lab is overwhelmed, if there isn't one available,
• 18:45
  Speaker 1: send it to these companies and they're finally beginning to
• 18:48
  Speaker 1: to stand up capacity to to get you know, validate
• 18:52
  Speaker 1: these tests and begin to run them. That will be
• 18:54
  Speaker 1: a huge help because they're they're more dispersed UM and
• 18:58
  Speaker 1: and potentially you know, quite cape bill of running a
• 19:00
  Speaker 1: lot of tests. You know, we're not at the stage
• 19:02
  Speaker 1: where even they are are going to provide all the
• 19:04
  Speaker 1: capacity we need, but they will certainly help a lot.
• 19:07
  Speaker 1: Let's talk about cost, Max, I know you're out with
• 19:09
  Speaker 1: account A really interesting coronavirus crisis makes a case for
• 19:13
  Speaker 1: medicare for all. Talk to us about that does that
• 19:16
  Speaker 1: actually have some legs? Yeah, so, you know, the it's
• 19:20
  Speaker 1: a uniquely American um phenomenon that in addition to people
• 19:26
  Speaker 1: worrying about getting coronavirus, if they're smart, they will also
• 19:30
  Speaker 1: be worried about the cost of getting coronavirus UM. You know,
• 19:34
  Speaker 1: the first step is obviously testing. There's been an effort
• 19:37
  Speaker 1: from insurers and from individual states and the government to
• 19:40
  Speaker 1: make sure that that that that people won't be faced
• 19:43
  Speaker 1: with costs. But that's you know, you actually have to
• 19:45
  Speaker 1: take really aggressive steps to make sure that even testing
• 19:48
  Speaker 1: in a pandemic is not going to cost people thousands
• 19:51
  Speaker 1: of dollars. And then you get to the stage of
• 19:53
  Speaker 1: of whether when people actually have a hospital stay UM.
• 19:56
  Speaker 1: You know, a lot of people that don't use their
• 19:58
  Speaker 1: health insurance set off into assume that they're protected from
• 20:01
  Speaker 1: unexpected bills. But if you end up with an inpatient
• 20:04
  Speaker 1: hospital stay, you're gonna hit your deductible UM, You're gonna
• 20:07
  Speaker 1: potentially face coinsurance, and that will get you to your
• 20:11
  Speaker 1: plans out of pocket maximum, which in many cases is
• 20:13
  Speaker 1: in the thousands of dollars. And that's a financial strain
• 20:16
  Speaker 1: on many companies. And that's the best case scenario, there
• 20:19
  Speaker 1: there are steps the government can take in an emergency
• 20:22
  Speaker 1: to kind of prevent that from happening, to protect people
• 20:25
  Speaker 1: from costs. Uh still in the works and and unclear
• 20:28
  Speaker 1: whether it will be broad enough to help. I'd argue
• 20:30
  Speaker 1: that you might want a system in this is what
• 20:32
  Speaker 1: I argue might call them where you don't have to
• 20:34
  Speaker 1: take emergency steps to protect people from those costs. Max Nis,
• 20:37
  Speaker 1: and thanks so much for joining us. We always appreciate
• 20:39
  Speaker 1: your perspective on all things healthcare. Max Neison is a
• 20:42
  Speaker 1: biotech farm and healthcare condus for Bloomberg Opinion, joining us
• 20:45
  Speaker 1: here in a Bloomberg eleven three oh studio. Thank you, Max.
• 20:47
  Speaker 1: I mean, honestly, that's just to me. Highlights a lot
• 20:50
  Speaker 1: of weak spots, and you know, there's there's a question
• 20:53
  Speaker 1: of how much is going to be temporary and how
• 20:55
  Speaker 1: much well this entire episode reshape the way some people
• 20:59
  Speaker 1: think about a variety of different issues. This medicaid from
• 21:03
  Speaker 1: medicare for all. I think it will be back on
• 21:05
  Speaker 1: the table, certainly for the Democrats as they think about,
• 21:07
  Speaker 1: you know, kind of how to position uh, the US
• 21:10
  Speaker 1: against some of these pandemics. If you're looking to distract
• 21:15
  Speaker 1: yourself by watching basketball game or a football game, or
• 21:18
  Speaker 1: I mean even a golf tournament. Too bad forget about it.
• 21:21
  Speaker 1: You're out of luck. They've all been canceled. American sports
• 21:25
  Speaker 1: has been shut down. Scott Sashnik covering it all. Scott
• 21:28
  Speaker 1: Sashnik is a Bloomberg Sports columnist joining us here in
• 21:31
  Speaker 1: uh in New York. And I'm wondering, Scott, how big
• 21:35
  Speaker 1: of it hits this going to be economically? Well, it
• 21:37
  Speaker 1: depends on what you're all around. If you're a Madison
• 21:41
  Speaker 1: Square Garden, you have two teams, it's the arena, it's
• 21:45
  Speaker 1: the network, and you're getting hit on every single part
• 21:48
  Speaker 1: of that business. Uh. You have other theaters as well.
• 21:51
  Speaker 1: If you're Live Nation, you've got nothing, great company but
• 21:54
  Speaker 1: no events, you're getting crushed. Um. If you're a e g.
• 21:58
  Speaker 1: An arena operator, you're you're getting crushed. So, uh, it
• 22:03
  Speaker 1: remains to be seen what the contracts with the networks
• 22:07
  Speaker 1: will look like, what the contracts with the players union
• 22:10
  Speaker 1: will look like, whether they get together and figure out
• 22:13
  Speaker 1: how to help each other out. But they just don't
• 22:15
  Speaker 1: know how long this is gonna last. So let's talk
• 22:17
  Speaker 1: about the media rights. That's just the bread and butter
• 22:21
  Speaker 1: of the economics of professional sports. And I'm thinking about ESPN,
• 22:25
  Speaker 1: Fox Sports, CBS with you know, the March madness. How
• 22:29
  Speaker 1: bad is it gonna be for these media companies. It's terrible.
• 22:31
  Speaker 1: How bad is it going to be? It's it's terrible,
• 22:34
  Speaker 1: but they have to put something on the air. And
• 22:38
  Speaker 1: ESPN yesterday put out their statement like we're doing it
• 22:40
  Speaker 1: one day at a time. This is what we've got
• 22:42
  Speaker 1: on the air tonight. That's all. That's just I mean,
• 22:44
  Speaker 1: nobody has done this before. So the bread and butter,
• 22:48
  Speaker 1: as you know, why do they pay all these money.
• 22:50
  Speaker 1: It's two words live right studio shows and what's called
• 22:54
  Speaker 1: shoulder programming. All the things that surround those are just
• 22:58
  Speaker 1: sort of the advertisers to the feast, which is the
• 23:00
  Speaker 1: live event game. That thing that's been driving O T
• 23:04
  Speaker 1: T and driving those rights fees. They're not there. It's
• 23:07
  Speaker 1: just not there. I'm just thinking back to a Gary
• 23:10
  Speaker 1: Larson cartoon that had a family all around, uh, and
• 23:14
  Speaker 1: it was I'm describing cartoons on radio, the best the
• 23:17
  Speaker 1: best kind of radio, looking at one spot on the
• 23:22
  Speaker 1: wall with nothing there, and it said the world before television,
• 23:25
  Speaker 1: and it sort of raises a sort of exesstential moment
• 23:27
  Speaker 1: for people could do with their time. What do you
• 23:29
  Speaker 1: fill the airwaves with if you don't have this? You know?
• 23:32
  Speaker 1: The sports? Yeah, I mean well you know if you're Turner, yes,
• 23:37
  Speaker 1: you have a a big portfolio of sport events you do.
• 23:42
  Speaker 1: But Turner can show me myriad other things. It's not
• 23:46
  Speaker 1: an all sports network like ESPN. Turner has a big
• 23:49
  Speaker 1: it's a a t T. Of course, they have a
• 23:51
  Speaker 1: big movie library. You want to show me Shawshank, you
• 23:54
  Speaker 1: want to show me Rudy. People may still tune in
• 23:57
  Speaker 1: for those things, but if you're missing that key component,
• 24:01
  Speaker 1: that that ardent fan who wants the game, you're in trouble. Me.
• 24:04
  Speaker 1: Just last night I went down the channel guide with
• 24:07
  Speaker 1: my son. We're like just going like, nope, that one, Nope, nope, nope.
• 24:11
  Speaker 1: But it's amazing how many channels are devoted to sports.
• 24:17
  Speaker 1: You think about all the regional sports, all the RSN. Yes,
• 24:21
  Speaker 1: Sinclair is exposed there absolutely what what? What are the
• 24:26
  Speaker 1: transmission fees? What made? And everybody says the same thing.
• 24:29
  Speaker 1: I've talked to all these folks. We don't know, we'll
• 24:32
  Speaker 1: figure it out. Are the players do they get paid no. Uh. Specifically,
• 24:36
  Speaker 1: the NBA, specifically, after nine eleven, a forced measure clause
• 24:41
  Speaker 1: was inserted into the labor contract with the players that
• 24:43
  Speaker 1: includes things like disasters, but also the word epidemic. I
• 24:48
  Speaker 1: mean that's a specific term. The NHL has a forced
• 24:51
  Speaker 1: maasure clause in the standard player contract, but the word
• 24:55
  Speaker 1: epidemic that particularly does not appear. You know, I'm just
• 24:57
  Speaker 1: struck by how big of a business the athletic leagues
• 25:01
  Speaker 1: really are. I mean, it's not just the athletes, it's
• 25:03
  Speaker 1: not just the networks, but it's also all of the
• 25:06
  Speaker 1: gig employees who work around broadcasting all of these events.
• 25:09
  Speaker 1: It's all the people who work on setting up the courts.
• 25:12
  Speaker 1: I mean, it's just it's a massive industry. You have
• 25:14
  Speaker 1: seen some owners. Mark Cuban immediately addressed those hourly workers.
• 25:19
  Speaker 1: Josh Harris and David Blitzer have also addressed they will
• 25:22
  Speaker 1: figure out a plan to address compensation for these hourly
• 25:26
  Speaker 1: workers who who just rely on this income. I don't
• 25:29
  Speaker 1: know if every owner will do that, because I certainly
• 25:31
  Speaker 1: don't have to, but at least it was nice to
• 25:33
  Speaker 1: see Mark thinking about it at the outset that those
• 25:36
  Speaker 1: folks who not are on the front lines. They're not
• 25:38
  Speaker 1: the players, they're not the million dollar assets, but they
• 25:40
  Speaker 1: are integral to putting on the whole thing and on
• 25:43
  Speaker 1: the broader scale of pro sports that people don't think
• 25:46
  Speaker 1: about it. These are real estate investments, their media investments.
• 25:50
  Speaker 1: These teams are just the centerpiece of all these arms,
• 25:54
  Speaker 1: and a lot of that disappears when the game's not there.
• 25:57
  Speaker 1: So are the leagues? Are you getting a sense? It's
• 26:00
  Speaker 1: seems like most of them are suspending their seasons some
• 26:03
  Speaker 1: I guess, like the n C Double A, we're done
• 26:05
  Speaker 1: with winter and spring sports and things like that. Are
• 26:07
  Speaker 1: they suspending it hoping they can salvage something at some point?
• 26:11
  Speaker 1: I guess, you know, it depends on which league you are,
• 26:13
  Speaker 1: because the yeah, well almost all sports sports league and
• 26:16
  Speaker 1: you know this better than most. What does everybody ramp
• 26:18
  Speaker 1: up for the playoffs? Right? The NBA and the NHL.
• 26:22
  Speaker 1: You want to see the playoffs, that's what matters most.
• 26:24
  Speaker 1: In fact, the joke around NBA circles is the season
• 26:27
  Speaker 1: doesn't even start until Christmas, so he's just washing a
• 26:29
  Speaker 1: couple of months. Anyway, If big if if four weeks
• 26:35
  Speaker 1: from now, six weeks from now, situation improves to a
• 26:38
  Speaker 1: point where they can stage games with fans or without,
• 26:42
  Speaker 1: because let's not forget the main driver here is always television.
• 26:45
  Speaker 1: You'll give up the gate. If they can put those
• 26:48
  Speaker 1: teams on the court, on the ice and stage of playoffs,
• 26:52
  Speaker 1: they would be happy to do so. Can you imagine
• 26:56
  Speaker 1: just having everyone wear masks? I don't exactly. I don't
• 27:00
  Speaker 1: think so. But actually there was a picture from the
• 27:02
  Speaker 1: nineteen eighteen World Series where the batter was actually they
• 27:07
  Speaker 1: were wearing masks in the games. I saw that, So
• 27:09
  Speaker 1: maybe maybe you're onto something that At Lisa's and there
• 27:11
  Speaker 1: was no there was no Scots sports business reporter for
• 27:14
  Speaker 1: Bloomberg News joining us here in our Bloomberg eleven three
• 27:17
  Speaker 1: studio talking about the business of sports. Check out The
• 27:20
  Speaker 1: Business of Sports podcast with Evan Novi, William Scotts, and
• 27:24
  Speaker 1: Michael Barr. A new episode is available now at Bloomberg
• 27:26
  Speaker 1: dot com and at iTunes. Thanks for listening to the
• 27:30
  Speaker 1: Bloomberg pen L podcast. You can subscribe and listen to
• 27:33
  Speaker 1: interviews at Apple Podcasts or whatever podcast platform you prefer.
• 27:36
  Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa
• 27:39
  Speaker 1: abram Boy. It's I'm on Twitter at Lisa A. Bramloit's
• 27:42
  Speaker 1: one before the podcast. You can always catch us worldwide.
• 27:44
  Speaker 1: I'm Bloomberg Radio