Latest / Bloomberg Intelligence / The Upcoming Fiscal Cliffs For Consumers: Deutsche Bank's Slok

Transcript

The Upcoming Fiscal Cliffs For Consumers: Deutsche Bank's Slok · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEO, market pros and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. Well. As the economic impacts
• 0:22
  Speaker 1: from the coronavirus began to be felt early in the pandemic,
• 0:26
  Speaker 1: the federal Reverse steps Federal Reserve stepped up and did
• 0:29
  Speaker 1: its part aggressively injecting liquidit into the marketplace. We even
• 0:32
  Speaker 1: had Congress with a three trillion dollar fiscal stimulus plan,
• 0:37
  Speaker 1: all designed to get cash in the hands of consumers
• 0:39
  Speaker 1: and small to midsized businesses. A lot of that stimulus
• 0:42
  Speaker 1: is going to be running out relatively soon. The question is,
• 0:47
  Speaker 1: does Congress need to come through with another round of
• 0:49
  Speaker 1: fiscal stimulus UH to continue to keep this economy from
• 0:52
  Speaker 1: going over a. Cliff Torsence Slock, chief economist at Tortche
• 0:56
  Speaker 1: Bank Securities, joins us. Torsen, I kind of want to
• 0:58
  Speaker 1: put that question to you here. How critical is it
• 1:02
  Speaker 1: for Congress to come through with another round of fiscal stimulus.
• 1:07
  Speaker 1: It is very important in the sense that the Congressional
• 1:10
  Speaker 1: Budget Office at the moment forecast that the unemployer rate
• 1:13
  Speaker 1: by the end of this year will be more than
• 1:15
  Speaker 1: ten percent. So that means that remember they're INFLOM rate
• 1:19
  Speaker 1: today is thirteen point three and if we still have
• 1:21
  Speaker 1: an on a power rate by the end of this
• 1:23
  Speaker 1: year that is anywhere around ten percent its points, that
• 1:27
  Speaker 1: means that a lot of people will still not be
• 1:29
  Speaker 1: back in jobs and therefore will not have incomes, and
• 1:31
  Speaker 1: therefore we will need to have more income support, similar
• 1:34
  Speaker 1: to the income support that we saw through the most
• 1:37
  Speaker 1: importantly higher unemployment benefits through the last evel months. Now,
• 1:42
  Speaker 1: those benefits normally last twenty six weeks, but workers who
• 1:45
  Speaker 1: lost their job back in March will have exhausted all
• 1:47
  Speaker 1: of their unemployment benefits by September. At Horston, do you
• 1:51
  Speaker 1: think that Congress finds a way around those rules and
• 1:55
  Speaker 1: if not, how do these people manage? Well? So, I'm
• 1:59
  Speaker 1: reading on my Bloomberg screen at the moment that there's
• 2:01
  Speaker 1: a lot of talk about more fiscal support coming, but
• 2:04
  Speaker 1: through your question here, it is all about the exact design.
• 2:08
  Speaker 1: Will the new fiscal support that comes will that the
• 2:10
  Speaker 1: infrastructure that will not directly help households. And if anything
• 2:14
  Speaker 1: infrastructure takes a long time, they are not that maybe
• 2:16
  Speaker 1: shovel ready projects normally when you do infrastructure investment spending.
• 2:20
  Speaker 1: So the short answer to your question is that it
• 2:22
  Speaker 1: all depends on what the exact nature of the package
• 2:25
  Speaker 1: will be. There's also been talking about a paywroll tax cut.
• 2:28
  Speaker 1: There's also been some discussion about that. Do we need
• 2:31
  Speaker 1: more supports of small businesses? How can households otherwise be supported.
• 2:35
  Speaker 1: We need to change it from paying people for being
• 2:38
  Speaker 1: unemployed to instead paying people for taking a job. So
• 2:41
  Speaker 1: this debate is ongoing. It has been said and talked
• 2:45
  Speaker 1: about that we will hear in July and after recess
• 2:48
  Speaker 1: have more discussions in Congress about it. But this is
• 2:50
  Speaker 1: extremely important for investors because if there is not more
• 2:53
  Speaker 1: fiscal support coming, and if we do end up in
• 2:55
  Speaker 1: a deadlock situation where we don't get another fiscal boost,
• 2:58
  Speaker 1: then we could run into some serious issues in particularly
• 3:01
  Speaker 1: solving the issues for the household sector towards and how
• 3:04
  Speaker 1: about at the aid for the state and local municipalities.
• 3:07
  Speaker 1: We've heard many governors led by new York Governor Andrew
• 3:11
  Speaker 1: Cuomo UH state that they really need UH fiscal stimulus
• 3:16
  Speaker 1: for the states to balance their budgets. Meant most states
• 3:19
  Speaker 1: have a balanced budget amendment, and that we're seeing UH
• 3:22
  Speaker 1: forecasts of some multi multi multibillion dollar deficits for a
• 3:27
  Speaker 1: lot of states. That's right, poll and that's why this
• 3:30
  Speaker 1: has also been a bullet point that there has been
• 3:34
  Speaker 1: talking about that this is something that's needed. So a
• 3:37
  Speaker 1: very macroeconomic way of of looking at this whole question
• 3:40
  Speaker 1: is that if you're unemployer rate is still ten percented
• 3:42
  Speaker 1: December and going into next year, that just sets in
• 3:45
  Speaker 1: motion a lot of different things that will require therefore
• 3:49
  Speaker 1: more support local governments, household sector balance sheets, corporate sector balancies,
• 3:55
  Speaker 1: on the particular small business sector palance. So that sends
• 3:58
  Speaker 1: this next year, we become absolutely critical the conversations around
• 4:03
  Speaker 1: what will the nature and the design be of any
• 4:06
  Speaker 1: the future fiscal support and will there any future of
• 4:08
  Speaker 1: physical support, Will any support be coming along? That becomes
• 4:11
  Speaker 1: very important for markets because if not, let's say that
• 4:14
  Speaker 1: we don't get more supported to the household sector and
• 4:16
  Speaker 1: if you're on a point rate does end up being
• 4:18
  Speaker 1: ten percent by the end of the years. Again, Congressional
• 4:20
  Speaker 1: Budget Office is podcasting. That means that more people begin
• 4:23
  Speaker 1: to fall behind on their payments, on their car loans,
• 4:25
  Speaker 1: on their credit cards, on the mortgages. You will also
• 4:28
  Speaker 1: see people fall behind on c NBAS payments and across
• 4:30
  Speaker 1: the board. Those, of course, increases in delinquenty rates will
• 4:34
  Speaker 1: begin to have consequence for credit, infrastructure, finance, and a
• 4:38
  Speaker 1: lot of things across the board. In fting come in particular,
• 4:41
  Speaker 1: if you believe that the Fed will not let this happen,
• 4:44
  Speaker 1: and that Congress will also not let this happen, particularly
• 4:47
  Speaker 1: in an election year, then you have to start believing
• 4:49
  Speaker 1: in M M T right towards them. Is there a problem?
• 4:53
  Speaker 1: So that's true, and this is why. Of course, one
• 4:56
  Speaker 1: option here is that the Treasury just issues a lot
• 5:00
  Speaker 1: more treasuries and then the Reserve just buys them, which
• 5:02
  Speaker 1: is essentially what's happening today. The issue is that even
• 5:06
  Speaker 1: from an MMT angled, the Treasury still needs to issue
• 5:10
  Speaker 1: treasuries and then comes to some agreement meaning Congress and
• 5:14
  Speaker 1: the White House, in terms of how the money should
• 5:16
  Speaker 1: be spent. And what we're debating is really this issue
• 5:19
  Speaker 1: of how should the money be spent we're not really
• 5:21
  Speaker 1: debating whether the money is available. This, of course is
• 5:24
  Speaker 1: a very important debate in many other countries, but in
• 5:27
  Speaker 1: the US it's almost assumed that, of course we have
• 5:28
  Speaker 1: another trillion or two trillion for this, and if it
• 5:32
  Speaker 1: is the case that they're going to spend it, then
• 5:33
  Speaker 1: for markets it does become very important for individual stocks,
• 5:37
  Speaker 1: for individual things in credit and pick income exactly which
• 5:40
  Speaker 1: balances will get support and which will not. Interesting Torsencelock,
• 5:44
  Speaker 1: thank you so much for joining US. Torsence Luck chief
• 5:46
  Speaker 1: ECONRAS for Torture bank Securities. Vanni. I think it's really
• 5:50
  Speaker 1: interesting here as we uh see some news of just
• 5:53
  Speaker 1: you know, more cases flaring up at some really really
• 5:56
  Speaker 1: key economic markets California, you know, Florida, exis. What the
• 6:00
  Speaker 1: impact will be on the overall US economy be very
• 6:03
  Speaker 1: interesting to see how this plays out over the next
• 6:06
  Speaker 1: several weeks and months. Well, plenty of you headlines on
• 6:10
  Speaker 1: the coronavirus in the heart Land and in some other
• 6:14
  Speaker 1: states like Arizona and Texas. This morning, arizonavirus cases jumping
• 6:18
  Speaker 1: five point four percent over the seven days. The previous
• 6:21
  Speaker 1: seven day average was about half of that. Let's bring
• 6:24
  Speaker 1: in someone who knows a lot about this now. Lawrence
• 6:26
  Speaker 1: Sour is John's Hopkins University Assistant Professor of Emergency Medicine. So,
• 6:31
  Speaker 1: Professor Sour, how concerned should we be with certain counties
• 6:34
  Speaker 1: in Texas saying that they're overwhelmed at this point? And
• 6:37
  Speaker 1: I think we have every right to be concerned. UM,
• 6:40
  Speaker 1: And I think that's reflected in the governor rolling back
• 6:42
  Speaker 1: some of those reopening measures. I mean, you know, there
• 6:46
  Speaker 1: is some talk of these increased testing numbers just being
• 6:50
  Speaker 1: um an artifact of the increased availability of test but
• 6:53
  Speaker 1: we're still hearing plenty of reports that people can't get tests,
• 6:57
  Speaker 1: that tests are still a challenge, and we're still seeing
• 6:58
  Speaker 1: a really high positive the rate as the hospitals start
• 7:02
  Speaker 1: to surge, and you know, you see things like Texas
• 7:04
  Speaker 1: children taking adult patients to manage some of that surge. UM.
• 7:08
  Speaker 1: I think we know it's real that that we're seeing
• 7:10
  Speaker 1: a massive increase in cases and it's very worrying. So
• 7:14
  Speaker 1: Dr Sour from the medical community perspective, are we in
• 7:18
  Speaker 1: any better shape to deal with this surge than we
• 7:21
  Speaker 1: were maybe just a few months ago when New York
• 7:23
  Speaker 1: and New Jersey and the Northeast was hit. I think
• 7:26
  Speaker 1: we have a few more tools in our tool kit. UM.
• 7:28
  Speaker 1: We have some therapeutics that are looking very promising, So
• 7:33
  Speaker 1: once the patient is in the hospital, we have some
• 7:35
  Speaker 1: UM improved ability to manage those patients. We know a
• 7:39
  Speaker 1: lot more about the virus and how it how it
• 7:42
  Speaker 1: sort of interacts in the body, and how it impacts
• 7:44
  Speaker 1: the patient. That being said, these therapeutics and this medical
• 7:49
  Speaker 1: management doesn't keep patients out of the hospital, so we
• 7:52
  Speaker 1: have to go back to those UM tried in true measures.
• 7:55
  Speaker 1: You know that physical distancing, staying home if you don't
• 7:58
  Speaker 1: need to go out, do sing, you know, the flow
• 8:02
  Speaker 1: of people out in public, and reducing large gatherings, and
• 8:05
  Speaker 1: then continuing to use that face covering whenever you are
• 8:08
  Speaker 1: whenever you do have to be out. So I think
• 8:11
  Speaker 1: we have made some improvements. UM. That being said, simply
• 8:15
  Speaker 1: throwing the switch and reopening is going to put us
• 8:17
  Speaker 1: very close to back where we started again. Yeah, I mean,
• 8:20
  Speaker 1: what would happen if everyone just stayed in place for
• 8:22
  Speaker 1: two weeks and we know that the COVID cases in
• 8:25
  Speaker 1: New York, just that that headline coming in now there
• 8:27
  Speaker 1: was which was in line with the previous seven day
• 8:30
  Speaker 1: average and that's because New Yorkers just went home and
• 8:33
  Speaker 1: stayed there for the most part. If everybody in the
• 8:36
  Speaker 1: country literally spent two weeks at home, would this virus
• 8:39
  Speaker 1: be gone. I don't think you'd be gone. I think,
• 8:41
  Speaker 1: you know, you still have your essential workers. You still
• 8:43
  Speaker 1: have people coming and going from healthcare and having healthcare
• 8:46
  Speaker 1: needs and other you know, day to day needs. But
• 8:48
  Speaker 1: we would see a reduction in in cases, just like
• 8:51
  Speaker 1: we did the last time we implemented these more sort
• 8:54
  Speaker 1: of strict measures. Um, we are working really hard on
• 8:58
  Speaker 1: development of a vaccine and if element of improvement of
• 9:01
  Speaker 1: therapeutics that can be given in the outpatient space. So
• 9:04
  Speaker 1: we have a lot of options that are going to
• 9:06
  Speaker 1: be coming on board in the next year or so here.
• 9:08
  Speaker 1: But but until we get to that time, we still
• 9:11
  Speaker 1: are going to have to limit that that out outside interaction. So, Professor,
• 9:17
  Speaker 1: So the as we think about some of the you know,
• 9:20
  Speaker 1: the it's things that I think a lot of people
• 9:22
  Speaker 1: would like to do in terms of behavior, i e.
• 9:25
  Speaker 1: Safe distancing, wearing a mask, you know, limiting exposure in
• 9:29
  Speaker 1: large groups. I mean, that really is the primary way today.
• 9:34
  Speaker 1: We don't have therapeutics, we don't have a vaccine that
• 9:36
  Speaker 1: is really the best way to kind of bend the
• 9:40
  Speaker 1: curve here in these new states, is it not? Yeah,
• 9:43
  Speaker 1: it is. And you know, I think that in public
• 9:46
  Speaker 1: health we've always said that as we start to reopen,
• 9:48
  Speaker 1: we have to be willing to to pull back on
• 9:50
  Speaker 1: some of those measures if we see surges in cases. So,
• 9:54
  Speaker 1: you know, there's a sort of hierarchy where it's like
• 9:57
  Speaker 1: staying home is the best if you have to go out,
• 9:59
  Speaker 1: avoiding large crowds is you know, better than being in
• 10:02
  Speaker 1: large crowds. If you have to be in a crowd,
• 10:04
  Speaker 1: being outside is better than being inside. So we have
• 10:07
  Speaker 1: this sort of basic understanding of where the lowest risk
• 10:11
  Speaker 1: is and how that risk starts to creep back in,
• 10:14
  Speaker 1: and the best we can do to stay on the
• 10:15
  Speaker 1: lower end of those of that risk stratification all the better.
• 10:20
  Speaker 1: What's the solution that everybody is hoping for? So obviously
• 10:24
  Speaker 1: waiting on antibody tests to be better, obviously waiting on
• 10:26
  Speaker 1: testing in general to be better. We're hoping for vaccines.
• 10:29
  Speaker 1: We're still not sure if you know, the the initial
• 10:31
  Speaker 1: vaccines will be good. Is there any any hope at
• 10:34
  Speaker 1: all that this virus just mutates itself out of existence.
• 10:38
  Speaker 1: I think you can always hope that UM, we are
• 10:40
  Speaker 1: seeing data that says that there's not a lot of
• 10:42
  Speaker 1: mutation in this virus UM. A lot of people, UM
• 10:46
  Speaker 1: with much more virology expertise than me, are working very
• 10:50
  Speaker 1: hard on that. But I think for now, you know,
• 10:53
  Speaker 1: our targets are vaccine and UM outpatient therapeutics, those things
• 10:57
  Speaker 1: that are low cost things that can be delivered out
• 11:00
  Speaker 1: side of the hospital to reduce the severity of illness UM.
• 11:03
  Speaker 1: That's where our targets are. Lauren Sour, thanks so much
• 11:06
  Speaker 1: for joining us. We really appreciate your thoughts. Always were
• 11:10
  Speaker 1: such benefits, beneficiaries of having a good smart people at
• 11:14
  Speaker 1: Johns Hopkins available to us. Lauren Sour is the Assistant
• 11:17
  Speaker 1: Professor of Emergency medic Medicine at Johns Hopkins UH School
• 11:21
  Speaker 1: of Medicine. Also will note that the Bloomberg School of
• 11:24
  Speaker 1: Public Health is supported by Michael Bloomberg, founder Bloomberg LP
• 11:27
  Speaker 1: and Bloomberg and that philanthropies as well. So, Vonnie, I
• 11:31
  Speaker 1: think the story here, it sounds to me is we're
• 11:33
  Speaker 1: listening to UH Professor Sour. It's it's kind of the
• 11:35
  Speaker 1: story we've heard now for months. Uh, we know what
• 11:38
  Speaker 1: to do. We know what bends the curve here in
• 11:40
  Speaker 1: terms of uh uh you know, behavior, it's just having
• 11:45
  Speaker 1: that conviction to get it done. And uh, the folks
• 11:47
  Speaker 1: in New York and the metro area certainly showed that conviction.
• 11:51
  Speaker 1: Now it's time for some other folks in other parts
• 11:54
  Speaker 1: of the country to do the same. Yeah, what I mean,
• 11:55
  Speaker 1: you'll end up doing it by force, if not by persuasion,
• 11:59
  Speaker 1: it seems like in the end, so may as well
• 12:01
  Speaker 1: started doing it early and uh, you know, maybe avoid
• 12:05
  Speaker 1: the worst of it. It's just such a difficult position
• 12:07
  Speaker 1: to be in. And the worst part of a pole
• 12:09
  Speaker 1: is that if you're you know, particularly affective, you could
• 12:11
  Speaker 1: end up living with very long term effects. And we
• 12:13
  Speaker 1: know that, so you know that's just terrifying. Yeah, absolutely,
• 12:16
  Speaker 1: so we will certainly follow up with that throughout the day.
• 12:23
  Speaker 1: Let's concentrate on one of those sectors, now, the banks.
• 12:25
  Speaker 1: The cap W Bank index down five and a half percent.
• 12:28
  Speaker 1: Right now, Let's bring in Alison Williams, senior banks asset
• 12:30
  Speaker 1: managers and payment analysts for Bloomberg Intelligence. So we had
• 12:34
  Speaker 1: the bank stress test. We also had a little bit
• 12:36
  Speaker 1: of relaxation of some of the Volcal rule provisions. Alison
• 12:40
  Speaker 1: Banks though not doing well today, is this because their
• 12:43
  Speaker 1: dividends are being kept so the dividend cap. I don't
• 12:47
  Speaker 1: think it should be a surprise. In fact, I think,
• 12:50
  Speaker 1: you know, for the most part, the takeaways should be
• 12:53
  Speaker 1: in line with what people expected. The ongoing scrutiny of
• 12:56
  Speaker 1: the banks. Um. You know there's there's a three quarter
• 13:00
  Speaker 1: cap on dividends, there's a buyback pause. I think most
• 13:03
  Speaker 1: investors expected that without a mandate by regulators. Uh, there's
• 13:07
  Speaker 1: another metric where they're going to look at dividends as
• 13:11
  Speaker 1: a as a ratio to the prior year earnings. UM.
• 13:16
  Speaker 1: I think the one bank in my coverage universe that
• 13:18
  Speaker 1: that screens poorly on that as well as Fargo, and we,
• 13:22
  Speaker 1: along with most expect expected a dividend cut. We might
• 13:25
  Speaker 1: get to cut there sooner than expected. We could get
• 13:28
  Speaker 1: that as soon as Monday versus later. Uh. The other
• 13:32
  Speaker 1: bank within my universe that's a focus is Goldman Sachs Uh.
• 13:35
  Speaker 1: So Wells Fargo screens well on excess capital, but their
• 13:38
  Speaker 1: income is a problem. Goldman, it's the opposite. So their
• 13:41
  Speaker 1: capital Uh, the capital ratio that we're expecting now based
• 13:46
  Speaker 1: on the stress test, results might be a little bit
• 13:49
  Speaker 1: higher than previously anticipated. We won't know exactly until Monday, UM,
• 13:55
  Speaker 1: but they have, uh, the income cushion they have, they
• 13:58
  Speaker 1: have some flexibility around that to sort of proof what
• 14:00
  Speaker 1: their capital ratio is going to be by the time
• 14:03
  Speaker 1: this rule is implemented. So they should be fine. For
• 14:05
  Speaker 1: the broader bank takeaway, the banks are all going to
• 14:10
  Speaker 1: have to basically resubmit their plans. The results came out
• 14:14
  Speaker 1: much more negative under a COVID overlay, which was significantly
• 14:18
  Speaker 1: more stressful than UM you know, the basic test that's
• 14:21
  Speaker 1: governing capital requirements at the moment. And so the negative
• 14:26
  Speaker 1: for investors is that there will be ongoing uncertainty related
• 14:29
  Speaker 1: to dividends, So not just some of the banks that
• 14:31
  Speaker 1: I talked about, UM, but across all banks. But I
• 14:34
  Speaker 1: don't think that should be a surprise to people. Were
• 14:37
  Speaker 1: in an uncertain environment, UM, and so it shouldn't be
• 14:39
  Speaker 1: surprising that the regulators are going to try to keep
• 14:41
  Speaker 1: their options open. Alison, was a little bit of surprise
• 14:45
  Speaker 1: to me in the sense that, you know, I had
• 14:48
  Speaker 1: heard from a lot of folks. You know that the
• 14:51
  Speaker 1: banks relative to two thousand and eight going to that crisis,
• 14:54
  Speaker 1: were in much much better financial shape, much better balance sheets,
• 14:58
  Speaker 1: much better on the reserve or front. Is this just
• 15:01
  Speaker 1: the federal reserve acting out of it? You know, the
• 15:04
  Speaker 1: term is abundance of caution here for the near term.
• 15:09
  Speaker 1: I think you're right on all those points. While so,
• 15:12
  Speaker 1: you know, we are in an unprecedented downturn, and when
• 15:15
  Speaker 1: we look at some of the COVID overlays in some
• 15:18
  Speaker 1: of the U and W shaped scenarios, we have losses
• 15:23
  Speaker 1: that are you know, perhaps thirty to six higher than
• 15:26
  Speaker 1: those used in the stress test. That's basically setting a
• 15:30
  Speaker 1: requirements for banks. And now keep in mind that to
• 15:34
  Speaker 1: your point that the banks have very healthy levels to capital.
• 15:38
  Speaker 1: You know, I talked about Goldman, but the bar is
• 15:41
  Speaker 1: so much higher um than where it was before, and
• 15:44
  Speaker 1: they're basically close to meeting that. The other consideration is
• 15:49
  Speaker 1: just the fact that the banks have been, you know,
• 15:52
  Speaker 1: the solution this crisis. Right, So the previous crisis they
• 15:55
  Speaker 1: were the problem. Now they're the solution, and I think
• 15:59
  Speaker 1: that regular raiders want to make sure that they can
• 16:01
  Speaker 1: continue to be the solution. So unlike the last crisis,
• 16:05
  Speaker 1: where the question was do these banks have enough capital.
• 16:08
  Speaker 1: You know that the focus right now of you know,
• 16:11
  Speaker 1: current regulators and former regulators is that, you know, we
• 16:15
  Speaker 1: want to make sure that that capital is there and
• 16:17
  Speaker 1: being used to support the economy. And I think some
• 16:21
  Speaker 1: of the thinking is UM by some of these formula
• 16:25
  Speaker 1: regulators is just to err on the side of caution. UM.
• 16:28
  Speaker 1: But keep in mind, dividends are a small percentage. Wells
• 16:32
  Speaker 1: Fargo is a company that had sort of a hired
• 16:34
  Speaker 1: payout ratio, and I think that's why they're more at
• 16:36
  Speaker 1: risk UM. But for the most part, all the capital
• 16:40
  Speaker 1: return that we've seen in several years, about seventy of
• 16:43
  Speaker 1: that has been from buy backs, and we don't buy
• 16:46
  Speaker 1: backs are paused. The banks stop those and I wouldn't
• 16:49
  Speaker 1: expect those to return this year. Alison william thank you
• 16:52
  Speaker 1: so much for that. We always appreciate your perspective. One
• 16:55
  Speaker 1: of the top banks analysts on the Wall Street, not
• 16:58
  Speaker 1: just to Bloomberg Intelligence but before that at Morgan Stanley
• 17:01
  Speaker 1: Investment Manager, and she's been covering these banks for a
• 17:03
  Speaker 1: long time. Always appreciate her perspective. Alison Williams, Senior Analyst,
• 17:07
  Speaker 1: Global Investment, Banks and Asset Management for Bloomberg Intelligence, and
• 17:13
  Speaker 1: it is Texas that we go to now for a
• 17:16
  Speaker 1: Bloomberg opinion piece called COVID nineteen gives Texas a reality check,
• 17:19
  Speaker 1: gets written by our own Timothy O'Brien, senior columnist for
• 17:23
  Speaker 1: Bloomberg Opinion, and of course a huge career before that.
• 17:27
  Speaker 1: This is just what he's doing right now, tim your
• 17:30
  Speaker 1: column is fantastic. You talk to us about the Texas
• 17:33
  Speaker 1: Medical Center, which I'll get to expand upon in a moment.
• 17:36
  Speaker 1: But first of all, is there a dereliction of duty
• 17:39
  Speaker 1: on the part of Governor Greg Abbott right now? Is
• 17:41
  Speaker 1: this his fault? Is that the humors of Texas residents,
• 17:45
  Speaker 1: that places in Texas are being overwhelmed. I mean, when
• 17:48
  Speaker 1: you take us through the timeline you start in March nineteenth,
• 17:51
  Speaker 1: when New York was already shut down, Texas only had
• 17:53
  Speaker 1: three hundred six cases, then right, you know what it's
• 17:58
  Speaker 1: I think, Vonnie, it would be share and too easy
• 18:01
  Speaker 1: to put, you know, the fallout from a pandemic like
• 18:05
  Speaker 1: this on the shoulders any one person. But certainly at
• 18:09
  Speaker 1: a minimum, Greg Abbot bears a lot of blame at
• 18:13
  Speaker 1: this point. Frankly, Uh, I think he's had a scattered
• 18:18
  Speaker 1: approach through the Governor's house in Texas to taking practical
• 18:23
  Speaker 1: measures that would have helped ensure the safeties of safety
• 18:27
  Speaker 1: of most Texans. We don't know, obviously at this point.
• 18:30
  Speaker 1: There are no silver bullet approaches to battling back against
• 18:34
  Speaker 1: COVID nineteen until we have a vaccine. But there are
• 18:37
  Speaker 1: practical measures that people can take, that states can take,
• 18:41
  Speaker 1: and that the federal government can take that have been
• 18:43
  Speaker 1: really spottily applied. And they're the basic things, UH washing
• 18:48
  Speaker 1: your hands, maintaining social distance, UH, contact tracing, and of
• 18:52
  Speaker 1: course mask wearing and and I think masks have been
• 18:57
  Speaker 1: a useful UM symbol in Texas for some of the
• 19:00
  Speaker 1: problems there, because you had mayors across the state asking
• 19:04
  Speaker 1: Greg Abbott to impose uh A law requiring that that
• 19:09
  Speaker 1: masks be worn, and he wouldn't do it. He gave
• 19:11
  Speaker 1: guidance that people should do it, but he left it
• 19:13
  Speaker 1: up to Texans themselves to decide whether or not they
• 19:16
  Speaker 1: should wear masks, and that ended up being spottily applied.
• 19:21
  Speaker 1: The same thing has happened around business openings UM. Early
• 19:25
  Speaker 1: on Abbott put it in order to lockdown businesses across
• 19:29
  Speaker 1: the state, but within about I think uh, five weeks
• 19:33
  Speaker 1: or so of of the pandemic bursting into view, he
• 19:38
  Speaker 1: began easing that those lockdowns some people said to prematurely,
• 19:42
  Speaker 1: and now he's backtracking. Alright, So Timmy talked about the
• 19:45
  Speaker 1: spotty applications on a statewide basis for precaution measures and
• 19:51
  Speaker 1: responses to the pandemic. That kind of brings me back
• 19:54
  Speaker 1: to something. I still don't have a clear picture of
• 19:57
  Speaker 1: what there does not appear to be any FED rule
• 20:01
  Speaker 1: efforts to combat the pandemic in terms of laying out
• 20:05
  Speaker 1: some regulations and how this should work at a federal level,
• 20:09
  Speaker 1: should there be have their historically been in these types
• 20:12
  Speaker 1: of situations as a Trump administration kind of not fulfilled
• 20:16
  Speaker 1: its duty. Oh I, I don't think the Trump administration
• 20:20
  Speaker 1: has fulfilled its duty at all here, Paul, and I
• 20:22
  Speaker 1: think that's where I think first and foremost criticism has
• 20:27
  Speaker 1: to reside. All of the governors across the country, regardless
• 20:31
  Speaker 1: of party, have had to send for themselves essentially during
• 20:34
  Speaker 1: this crisis because the federal government has not stepped in
• 20:37
  Speaker 1: and done important things like playing coordinating roles around the
• 20:41
  Speaker 1: supply of PPE and testing equipment to the various states.
• 20:46
  Speaker 1: The states have been left to compete against one another
• 20:49
  Speaker 1: and come up with their own policies because the federal
• 20:52
  Speaker 1: government isn't playing a very necessary uh coordinating role, which
• 20:57
  Speaker 1: is always done during disasters are even localized, like for example,
• 21:02
  Speaker 1: Hurricane um. You see FEMA and the federal government play
• 21:06
  Speaker 1: a role intervening and coordinating the rescue. The Trump administration
• 21:10
  Speaker 1: is totally um given up its responsibility for playing a
• 21:14
  Speaker 1: meaningful role in the crisis. And again that's not an
• 21:17
  Speaker 1: ideological or partisan observation, It's just an observation of the facts.
• 21:22
  Speaker 1: So yes, I agree with you. I think I think
• 21:24
  Speaker 1: it first has to start with where is the federal
• 21:27
  Speaker 1: government um even in that vacuum. Some states have been
• 21:31
  Speaker 1: more proactive than others in terms of taking this on,
• 21:34
  Speaker 1: and there are some useful comparisons now among the various
• 21:37
  Speaker 1: governors about approaches that have worked in Heaven. Yeah, I
• 21:41
  Speaker 1: mean the Trump administration could also have gone the regulation road,
• 21:45
  Speaker 1: directing agencies to issue regulations which might have shut down
• 21:49
  Speaker 1: parts of the economy as well as there are plenty
• 21:51
  Speaker 1: of things that the administration could have done legally and
• 21:52
  Speaker 1: without having to jump through hoops and get Congress involved. Either,
• 21:57
  Speaker 1: Tim what happens next, and we saw a massive spy
• 22:00
  Speaker 1: in Florida numbers again today, you know, people are saying
• 22:04
  Speaker 1: maybe it's younger people and maybe that will have an impact,
• 22:07
  Speaker 1: but it's terrifying. This virus isn't going away. Fauci even
• 22:11
  Speaker 1: said during the week that you know that the summer
• 22:13
  Speaker 1: isn't helping a lot of people thought that summer would
• 22:15
  Speaker 1: help because long disease tend not to spread as fast
• 22:18
  Speaker 1: in summer. But they're just the diseases we know. Right,
• 22:20
  Speaker 1: we don't know anything about coronavirus, and it's not slowing down, right.
• 22:24
  Speaker 1: I mean, I think Vanni that was you know, based
• 22:26
  Speaker 1: on our understanding of how the flu operates. Typically, the
• 22:29
  Speaker 1: flu season comes in colder months, and there was an
• 22:33
  Speaker 1: anticipation that the summer would give help to folks battling
• 22:37
  Speaker 1: the coronavirus. You know, what we've learned now is that
• 22:41
  Speaker 1: COVID nineteen is a particularly fierce virus. It mutates, it adapts,
• 22:46
  Speaker 1: it appears to be resistant to warm weather. UM. But
• 22:51
  Speaker 1: but the things that we do know that defeated our again,
• 22:53
  Speaker 1: things like masks and social distancing UM. Scientists now have
• 22:58
  Speaker 1: reached UM. I've think some sort of joint views that, uh,
• 23:03
  Speaker 1: you're you're safer outside than you are indoors. It doesn't
• 23:06
  Speaker 1: last on surfaces as long as as people might have
• 23:09
  Speaker 1: thought it did, but it does get communicated to people
• 23:12
  Speaker 1: through close contact, often through the mouth and whether it's talking, singing, etcetera.
• 23:19
  Speaker 1: When we have practical information like this, there are steps
• 23:22
  Speaker 1: we can do. Steps we can take to battle back,
• 23:25
  Speaker 1: like closing bars, which Texas just decided to do again today,
• 23:29
  Speaker 1: but it unless it's taverns open and again. I think
• 23:33
  Speaker 1: these are practical responses that have become politicized because of
• 23:38
  Speaker 1: the current political environment we're in, which is unfortunate because
• 23:41
  Speaker 1: it's leaving public safety and the lurch. Yeah, that's kind
• 23:44
  Speaker 1: of where I want to go to maybe thirty seconds.
• 23:46
  Speaker 1: Are you surprised at the level of politicization here because
• 23:48
  Speaker 1: we do not see that really in other parts of
• 23:51
  Speaker 1: the world at all. No, I mean, I think I
• 23:54
  Speaker 1: think the United States is facing a reckoning right now.
• 23:58
  Speaker 1: We have a very immature and active political dialogue that
• 24:01
  Speaker 1: doesn't allow us to reach solutions, and and we are
• 24:05
  Speaker 1: politicizing things that simply shouldn't be politicized. Because we've gone
• 24:10
  Speaker 1: through years now this idea of the sort of war
• 24:13
  Speaker 1: on objective reality and facts that makes it hard for
• 24:16
  Speaker 1: people to trust one another and reach consensus. Yeah, it's
• 24:20
  Speaker 1: it's just so odd. I mean, I suppose the closest
• 24:22
  Speaker 1: you would come to it in the world is Britain's
• 24:25
  Speaker 1: response as well. And I mean Boris Johnson himself had
• 24:28
  Speaker 1: the virus and it was very dangerous and he ended
• 24:30
  Speaker 1: up in hospital. He had one of the one of
• 24:31
  Speaker 1: the worst cases of the virus, and it still didn't
• 24:34
  Speaker 1: really change how he handled the affair. Another close comparison
• 24:40
  Speaker 1: his Romper Room. Yeah you remember that, Tim, Thank you
• 24:46
  Speaker 1: so much. Tim O'Brien is a senior columnist for bloombrig Opinion.
• 24:49
  Speaker 1: I would urge everybody to have a look at his
• 24:51
  Speaker 1: column today. It's it's fantastic. And that that that opening
• 24:56
  Speaker 1: paragraph or two about the Texas Medical Center, Paul, it
• 24:59
  Speaker 1: was it was send shivers down your spine. Yeah, it
• 25:02
  Speaker 1: really does, and it's interesting. So Tim has a great
• 25:04
  Speaker 1: column on Texas. His colleague from Bloomberg Opinion, JOHNA. Sarah,
• 25:08
  Speaker 1: also has a great column out today about Florida and
• 25:10
  Speaker 1: maybe a little bit different take. So good. Comparing those
• 25:13
  Speaker 1: two columns, there two states thinking about how to deal
• 25:17
  Speaker 1: with this surge in pandemic. Thanks for listening to the
• 25:22
  Speaker 1: Bloomberg Markets podcast. You can subscribe and listen to interviews
• 25:25
  Speaker 1: at Apple Podcasts or whatever a podcast platform you prefer.
• 25:29
  Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and
• 25:32
  Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before
• 25:35
  Speaker 1: the podcast, you can always catch us worldwide at Bloomberg
• 25:37
  Speaker 1: Radio