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The Pandemic Could End Shareholder Supremacy For Good: Joe Nocera · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul Swinge. You,
• 0:05
  Speaker 1: along with my co host Lisa Brahma wus. 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. There's a question of some of
• 0:21
  Speaker 1: the permanent market shifts that will occur following this pandemic.
• 0:25
  Speaker 1: A lot of people have been trying to understand how
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  Speaker 1: the world as we know it will change. Joe No Sarah,
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  Speaker 1: longtime columnists at The New York Times, a columnist now
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  Speaker 1: for Bloomberg Opinion who I deeply respect and always appreciate,
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  Speaker 1: wrote a fantastic column a highly recommended pandemic could end
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  Speaker 1: shareholders supremacy for good, talking about how a shift in
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  Speaker 1: the priorities of executives could change the way companies are
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  Speaker 1: viewed in the world to come. Jonah Sarah joins us. Now, Joe,
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  Speaker 1: can you talk a little bit about what the main
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  Speaker 1: idea here is behind your column? Yeah? I UM, My
• 1:02
  Speaker 1: basic view is that just as we people in isolation
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  Speaker 1: or wherever have become nicer to each other, more generous
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  Speaker 1: to each other. Much the same thing is happening in
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  Speaker 1: corporate America UM, where executives and top executives are caring
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  Speaker 1: a lot more for their employees than they have in
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  Speaker 1: the past. UM. You know, furloughs instead of layoffs, where
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  Speaker 1: people get to keep healthcare UH, really trying to keep
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  Speaker 1: people on the payroll even though they don't have that
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  Speaker 1: much work to do the you know, free coronavirus testing UM,
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  Speaker 1: and and on and on and on and and you
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  Speaker 1: see this over and over and over. You you see
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  Speaker 1: it in in the quarterly conference calls. Now you see
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  Speaker 1: it in so many companies trying to do something to
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  Speaker 1: h to stem this virus, even if even if their
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  Speaker 1: business has nothing to do with medicine or health care UM.
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  Speaker 1: And it just made me think, boy, you know, this
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  Speaker 1: could signal a shift that would be good for the
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  Speaker 1: country and good for employees and and and you know,
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  Speaker 1: maybe even good for the stock ultimately. It's interesting, Joe,
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  Speaker 1: I guess one of the key questions is can this
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  Speaker 1: blast or is this just simply a function of the
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  Speaker 1: time we're in Well, that's what we don't know. And
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  Speaker 1: I certainly didn't um uh suggest that this is automatically
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  Speaker 1: going to happen, or this was a guarantee. It's obviously
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  Speaker 1: not a guarantee. UM, it's it's a little wishful thinking
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  Speaker 1: on my part. I'm hopeful that this could happen. You know.
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  Speaker 1: One of the things you've seen in America over time
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  Speaker 1: is that you have seen these shifts in corporate values
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  Speaker 1: over time. And the column that I wrote, I talked
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  Speaker 1: a lot about, um, the post World War two era
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  Speaker 1: where companies consciously hired more workers than they needed, knowing
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  Speaker 1: that that was important to prevent a new depression. Uh,
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  Speaker 1: and also to create kind of a virtuous cycle where
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  Speaker 1: you know, workers made products, other workers bought them, you know,
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  Speaker 1: and you expanded the economy. Then you got into the
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  Speaker 1: era of shareholder value, which really started with the bullmarket
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  Speaker 1: of the nineteen eighties, and you had a very different UM.
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  Speaker 1: You had people like Chainsaw Al Dunlap bragged about all
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  Speaker 1: the people he fired, you know, and UM, we are ready.
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  Speaker 1: I think we're as a culture. I think we're ready
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  Speaker 1: for something different. People are tired of the shareholder value
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  Speaker 1: stuff and and the damage it does to employees and
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  Speaker 1: consumers and and and in the country at large. Yeah, Joe,
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  Speaker 1: that sounds wonderful. And uh, and I would I would
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  Speaker 1: think that probably people would feel very happy if that
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  Speaker 1: were the case. I'm looking right now Bank of America's shares,
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  Speaker 1: they've gotten killed. And Bank of America is come one
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  Speaker 1: company you highlighted as is trying to do the right
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  Speaker 1: thing and promising no layoffs and and doing a host
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  Speaker 1: of other issues to try to forestall some of the uh,
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  Speaker 1: some of the pain throughout corporate and main street America.
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  Speaker 1: Do you think that shareholders are going to get on
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  Speaker 1: board here and basically end up sort of rewarding companies
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  Speaker 1: that do take the angle that you're looking at, or
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  Speaker 1: are they going to just say, look at the bottom line,
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  Speaker 1: you're not gonna make as much money for me. Well,
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  Speaker 1: there's going to be a giant reset in the market.
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  Speaker 1: I mean, there's gonna be an enormous reset. And and
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  Speaker 1: and yeah, Bank of America shares it down in part
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  Speaker 1: because its revenues were down. Like, um, you know, I
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  Speaker 1: think that I basically think that we could get to
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  Speaker 1: a point where companies basically say, you know, dear Wall Street,
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  Speaker 1: we're doing our best, but we've got a lot other
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  Speaker 1: things to worry about, and we want you to have
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  Speaker 1: a seat at the table, but you're not the only seat,
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  Speaker 1: and Wall Street is going to have to If enough
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  Speaker 1: companies say that, Wall Street will have to accept it.
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  Speaker 1: If they don't, you know, then then we're back to
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  Speaker 1: where we were. Yeah, So it's interesting there. As you
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  Speaker 1: well know, there's a movement within particularly institutional investing e
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  Speaker 1: s G. Environmental sustainability and governance. So even institutional shareholders
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  Speaker 1: are you know, have been paying more and more attention
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  Speaker 1: to things other than the bottom line. So perhaps this
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  Speaker 1: just could be, you know, a further catalyst towards that,
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  Speaker 1: and maybe you make e s G perhaps even more vibrant. Right,
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  Speaker 1: and then you have the whole thing with the Business
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  Speaker 1: round Table last year, UM, you know, changing its uh
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  Speaker 1: motto or or creed or where you want to call
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  Speaker 1: it UM to be more employer and consumer friendly and
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  Speaker 1: not as as focused on shareholders. UM. You know a
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  Speaker 1: lot of people thought that was this PR and exercise
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  Speaker 1: and PR. But if you have some movement and then
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  Speaker 1: all of a sudden you have this coronavirus that really
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  Speaker 1: changes the way people think. Maybe it can last. I'm
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  Speaker 1: not saying it will. I'm saying I hope it does
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  Speaker 1: at least, and I join you in that hope, Joe.
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  Speaker 1: We'll see. But I agree it seems like something profound
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  Speaker 1: uh is happening around the world as it relates to
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  Speaker 1: a coronavirus and will be lots of implications longer term,
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  Speaker 1: and we'll see if that applies to Corporate America's Jonas
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  Speaker 1: Sarah Calmness for Bloomberg Opinion, joining us on the phone
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  Speaker 1: from Los Angeles. Joe, thanks so much for joining so
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  Speaker 1: you can read all of Joe's excellent opinion pieces as
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  Speaker 1: well as all of the other work from Bloomberg Opinion
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  Speaker 1: at Bloomberg dot com, slash Opinion or O P I
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  Speaker 1: n Go on the terminal. They do excellent work. So
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  Speaker 1: there's a conundrume right now, Paul, and I keep using
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  Speaker 1: that word because it's very hard to understand the market
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  Speaker 1: right now. It's hard to understand the rally that's recouped
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  Speaker 1: all the gains all the losses. Rather, at least when
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  Speaker 1: you look at the top one hundred nasdacs shares, is
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  Speaker 1: it time to get in and are we pricing in now?
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  Speaker 1: The other side of this pandemic and the related recession
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  Speaker 1: or people getting ahead of themselves and only there's no
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  Speaker 1: one better to talk to than Chris Heisi, chief investment
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  Speaker 1: officer for Maryland Make of America Private Bank, as he
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  Speaker 1: talks with clients all day long about where what they're feeling,
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  Speaker 1: and there are allocations. Chris come on in and when
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  Speaker 1: we take a look at the rally that we've seen
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  Speaker 1: over the past few weeks, are people viewing this as
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  Speaker 1: a dead cat bouncer? Are they viewing this as the
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  Speaker 1: true signs of of sort of a shift in mood
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  Speaker 1: at least on the part of equity buyers. Yeah. I
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  Speaker 1: think the quick answer to that is when you're seeing
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  Speaker 1: volatility declined by fifty from the record levels of eight
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  Speaker 1: plus that we saw, which was indicating at least for
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  Speaker 1: equities a five to six percent swing daily back you know,
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  Speaker 1: during the the throes of March, now get into the
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  Speaker 1: mid thirties, which is indicating, you know, below a two
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  Speaker 1: daily swing. What that does is for the long term
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  Speaker 1: UH investor, it provides comfort that, um, forget the fact
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  Speaker 1: that whether or not you're gonna retest loads. It just
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  Speaker 1: provides comfort that there is a little bit more a
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  Speaker 1: surety that we're going to get to the other side.
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  Speaker 1: Like in March, people didn't think we were going to
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  Speaker 1: get to the other side at all. So now you've
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  Speaker 1: got a little bit of comfort level on the long
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  Speaker 1: term investor, but the short term investor, and you guys
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  Speaker 1: have all seen this, Uh, the positioning in the marketplace
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  Speaker 1: is still very very barished. And and if you're if
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  Speaker 1: you're someone who thinks about quarter to quarter, whether you're
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  Speaker 1: a hedge fund or an institutional investor, what what they're
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  Speaker 1: still very nervous about is this proverbial quote unquote need
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  Speaker 1: to test the lows. And and that's a statement that
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  Speaker 1: most people use because that's what's happened in history. But
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  Speaker 1: quite frankly, this episode, this three pronged crisis, health, financial,
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  Speaker 1: and economic that we're still going through is unlike anything
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  Speaker 1: in history. The speed of the decline is being matched
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  Speaker 1: by what we call the speed of the exhale rebound. So, Chris,
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  Speaker 1: is this just a rebound within a longer bear market
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  Speaker 1: or do you think that once we do get to
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  Speaker 1: the other side of this, And quite frankly, I'm not sure.
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  Speaker 1: I don't have great confidence that it's going to be
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  Speaker 1: you know, shorter. It just feels all the information I
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  Speaker 1: hear from the officials is that it could be longer
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  Speaker 1: than people think. But do you think once we do
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  Speaker 1: get to the other side, that this is a market
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  Speaker 1: that can still work higher. Yes, yes, there's a there's
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  Speaker 1: a few reasons for that. In the short term, it
• 9:07
  Speaker 1: was about liquidity. We we got through that. Now now
• 9:10
  Speaker 1: we call the second phase the buffer or the bridge,
• 9:13
  Speaker 1: and that is that is where the physical stimulus is
• 9:15
  Speaker 1: simply designed to to UM stop the ABYSS or at
• 9:19
  Speaker 1: least cover the ABYSS that we're all going through in
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  Speaker 1: the second quarter and potentially part of the third. So
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  Speaker 1: UM investors are looking at the other side is a
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  Speaker 1: lot longer than the ABYSS. So that was stage one,
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  Speaker 1: and then stage three, which is next year, is a
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  Speaker 1: true economic recovery. And then stage four or phase four
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  Speaker 1: would be at the end of where you have a
• 9:39
  Speaker 1: pent up demand cycle. Now it's hard to see that now,
• 9:43
  Speaker 1: but when you look at income data in terms of
• 9:46
  Speaker 1: the number of claims, what these programs are designed to
• 9:51
  Speaker 1: do is still that unemployment claim gap. So even though
• 9:56
  Speaker 1: you're you're likely to see unemployment go way up. I mean,
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  Speaker 1: that's pretty obvious people are getting that extra payment, so
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  Speaker 1: when you come out on the other side, consumer spending
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  Speaker 1: could actually go back to where it was, even though
• 10:10
  Speaker 1: consumers will still be tentative. Chris, when we look at
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  Speaker 1: what has led some of the rebound recently, it's really
• 10:16
  Speaker 1: been big tech, and I've been really struck by the
• 10:19
  Speaker 1: NASDAC outperformance, with the top one hundred names out performing
• 10:24
  Speaker 1: the Dow the most in decades. I'm trying to understand
• 10:28
  Speaker 1: whether big tech will continue to be the leadership going forward,
• 10:31
  Speaker 1: or whether perhaps people have hidden out too much in
• 10:34
  Speaker 1: these sort of the havens of this cycle, and these
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  Speaker 1: are expected to underperform in the near term. Great point, Lisa,
• 10:41
  Speaker 1: and I think the knee jerk reaction on a lot
• 10:43
  Speaker 1: of part of the analysts the analyst community is going
• 10:46
  Speaker 1: to be Hey, some of these companies are getting to
• 10:49
  Speaker 1: multiples that are simply too high. What many analysts are
• 10:53
  Speaker 1: not factoring in on a forward twelve, even thirty six
• 10:57
  Speaker 1: month basis is many of these companies are now being
• 11:00
  Speaker 1: being um their value creators, their growth creators, and actually
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  Speaker 1: they happen to dominate the index. So if you get
• 11:08
  Speaker 1: passive investment flows coming back in, they filter down into
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  Speaker 1: these names. They also happened to be the names that
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  Speaker 1: are breaking through the COVID nineteen pressure, and they also
• 11:19
  Speaker 1: happened to be the names that are creating the greatest
• 11:21
  Speaker 1: free cash flow with yields where they're at in fixed
• 11:24
  Speaker 1: income land, free cash flow yield is extremely attractive and
• 11:29
  Speaker 1: equity land. So it's kind of a three pronged benefit
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  Speaker 1: for these companies, which is why we fully expect many
• 11:36
  Speaker 1: of them, particularly in tech and healthcare, UH, should go
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  Speaker 1: to two multiples that they haven't experience in quite a
• 11:41
  Speaker 1: long period of time. Okay, christ, so we've got some
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  Speaker 1: stability back in the marketplace. Is there enough stability in
• 11:47
  Speaker 1: the marketplace to even think about emerging markets an area
• 11:50
  Speaker 1: that's just been really, really crushed unfortunately. Now, we just
• 11:54
  Speaker 1: downgraded emerging markets on that little bit of a bounce
• 11:57
  Speaker 1: that we had a couple of weeks ago, the downgrade
• 12:00
  Speaker 1: to underweight from neutral UH and then took those proceeds
• 12:03
  Speaker 1: and moved into US large caps. And the whole reason
• 12:06
  Speaker 1: was is because of the extreme dollar liabilities, and until
• 12:10
  Speaker 1: the dollar goes through a very significant week cycle, those
• 12:14
  Speaker 1: dollar liabilities, unfortunately can pressure emerging markets. At the same time,
• 12:19
  Speaker 1: that many of them have less than than high quality
• 12:22
  Speaker 1: health care systems. So if you put that out there,
• 12:25
  Speaker 1: the risk reward is still to the is still on
• 12:28
  Speaker 1: a relative basis, UH much less than than the developed
• 12:32
  Speaker 1: markets UM and specifically the US. Is there any asset
• 12:36
  Speaker 1: that you just would not own right now? Well, I
• 12:39
  Speaker 1: think on the real estate side, it's it's very difficult
• 12:42
  Speaker 1: to to suggest that UM coming out to the other
• 12:46
  Speaker 1: side that things will be normal and and we're not
• 12:49
  Speaker 1: significantly bearish on real estate commercial real estate in general,
• 12:54
  Speaker 1: but it's on the watch list, and it's on the
• 12:55
  Speaker 1: watch list for obvious reasons. What does corporate life look
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  Speaker 1: like UM for the foreseeable future even when we get
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  Speaker 1: to the other side and we have this this phrase
• 13:05
  Speaker 1: we call the new frontier, and the new frontier UH
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  Speaker 1: is simply taking behaviors that we're all learning right now
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  Speaker 1: while we're we are during the shutdown. What type of
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  Speaker 1: behaviors that we're exhibiting now stands the test of time
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  Speaker 1: and continues even if there's vaccines. And that hits at
• 13:22
  Speaker 1: the heart of what real estate may be pressured by,
• 13:25
  Speaker 1: which is telecommunity, more telecommunity, less need for office space
• 13:30
  Speaker 1: than before E everything E learning, E education, virtualization, digitalization,
• 13:36
  Speaker 1: things like that, um, you know, and less urbanization quite frankly,
• 13:40
  Speaker 1: so those are all things we're going through right now. Hey, Chris,
• 13:42
  Speaker 1: thanks so much for joining us. We appreciate your commentary
• 13:45
  Speaker 1: as always. Chris Hazy, chief investment officer for Meryl and
• 13:49
  Speaker 1: Bank of America Private Bank. One of the most fascinating
• 13:56
  Speaker 1: aspects to consider about this coronavirus is how it's going
• 13:59
  Speaker 1: to impact consumers longer term. Will consumer trends be changing materially.
• 14:04
  Speaker 1: To get some thoughts on that, we're really fortunate to
• 14:06
  Speaker 1: welcome Mark Douglas. He's the chief executive officer of marketing
• 14:09
  Speaker 1: firm Steelhouse based in Los Angeles. Mark, thanks much for
• 14:13
  Speaker 1: joining us. Again, it just seems like everybody's lives has
• 14:15
  Speaker 1: been turned upside down with quarantining, and you just can't
• 14:19
  Speaker 1: do any of the things that you used to do
• 14:22
  Speaker 1: back pre crisis. What what have you observed about consumer
• 14:25
  Speaker 1: behavior over the last you know, call it four weeks, Yes, um,
• 14:29
  Speaker 1: good morning, So things have actually changed quite a bit.
• 14:33
  Speaker 1: There's kind of what we think of as a consumer
• 14:36
  Speaker 1: journey that's going on, and the wayward thing that is
• 14:39
  Speaker 1: my company Stillhouse. We're collecting data on about a billion
• 14:42
  Speaker 1: dollars a week in consumer spending. So the first week
• 14:46
  Speaker 1: is what you would expect. Everyone stocked up and so
• 14:50
  Speaker 1: you know, groceries, UM, all those kinds of things really skyrocketed.
• 14:55
  Speaker 1: Probably the most interesting thing is UM about fourteen percent
• 14:59
  Speaker 1: more consumers two hundred and two percent more UM alcohol
• 15:02
  Speaker 1: and wine the first week, So it kind of shows
• 15:04
  Speaker 1: you how people are coping exactly at exactly. But the
• 15:11
  Speaker 1: second week, UM, what sort of happened is everyone UM
• 15:14
  Speaker 1: fitness grew by a dent week over weeks, so you know,
• 15:20
  Speaker 1: almost tripling a money spent on fitness equipment, UM, fitness
• 15:24
  Speaker 1: at home, UM, those kind of trends. UM. The other
• 15:28
  Speaker 1: thing that started to happen in the second week is
• 15:30
  Speaker 1: that other UM kind of what you would think of,
• 15:33
  Speaker 1: like business service people started building out their home offices
• 15:37
  Speaker 1: those kinds of things by the third in the fourth week,
• 15:40
  Speaker 1: what has happened is there's kind of a new consumer
• 15:43
  Speaker 1: to develop, what we're calling calling this COVID super consumer,
• 15:46
  Speaker 1: and they are buying anything on sale furniture, UM, luxury
• 15:51
  Speaker 1: goods UM just just like UM home. They're buying fishing equipment,
• 15:56
  Speaker 1: golf clubs, just anything that's on sale, and and you know,
• 16:01
  Speaker 1: so this body of consumers that feel very secure financially
• 16:04
  Speaker 1: apparently are are like shopping like we've never seen before.
• 16:07
  Speaker 1: We kind of stay now like every day is Black
• 16:09
  Speaker 1: Friday for the consumers that can afford it. Wow, I
• 16:12
  Speaker 1: didn't expect that. Um. So is there any sense, Tim,
• 16:16
  Speaker 1: I mean, Mark, as you look forward here, um that
• 16:20
  Speaker 1: you think some of these behavior changes might be more permanent?
• 16:23
  Speaker 1: I'm thinking restaurants, Will people go out to restaurants as
• 16:27
  Speaker 1: much as they used to? And I'm sure the cruise
• 16:29
  Speaker 1: industry is trying to figure out will people ever come
• 16:31
  Speaker 1: back on our cruise ships? And will people get into
• 16:34
  Speaker 1: airplanes again? Is there any thought on that? Um? Yeah?
• 16:38
  Speaker 1: Bit So, We've worked with a lot of travel industry
• 16:41
  Speaker 1: customers and that all of them, literally one hundred percent,
• 16:45
  Speaker 1: are now spending zero dollars on marketing at least um
• 16:48
  Speaker 1: the ones we work with, and we work with a
• 16:50
  Speaker 1: bunch of big ones, but we're also in conversations with them,
• 16:53
  Speaker 1: and they are very eager to store marketing again as
• 16:56
  Speaker 1: we start to come out that as crisis. So I
• 16:59
  Speaker 1: think the avel industry is going to be pretty aggressive
• 17:02
  Speaker 1: and trying to get those early consumers to start um
• 17:05
  Speaker 1: traveling again. I think restaurants and this is a bit
• 17:08
  Speaker 1: more of my personal opinion, not so much based on
• 17:11
  Speaker 1: the data. Um, there was a trend at least in
• 17:13
  Speaker 1: l A and New York to the concept of those
• 17:15
  Speaker 1: kitchens where restaurants don't have a storefront anymore. And um,
• 17:20
  Speaker 1: and there's a startup founded by the founder of Bouber
• 17:24
  Speaker 1: who's got one of leading those kitchen companies. I think
• 17:27
  Speaker 1: that is I'm betting, actually talking to someone yesterday, that
• 17:30
  Speaker 1: that is going to take off. And restaurants are a
• 17:34
  Speaker 1: lot of restaurants gonna become at home only, delivery only. Yeah. Yeah,
• 17:39
  Speaker 1: I think people are getting you know, maybe getting good
• 17:42
  Speaker 1: you know. The result of this may be getting more
• 17:43
  Speaker 1: comfortable you know, ordering uh, from getting it delivered. How
• 17:47
  Speaker 1: about retailers, I mean that's another industry that had been
• 17:50
  Speaker 1: challenged going into the crisis. We know that stores have
• 17:53
  Speaker 1: been closing and more and more shoppings going online. And
• 17:56
  Speaker 1: I guess it seems reasonable to assume that that trend
• 17:59
  Speaker 1: towards a line shopping will just accelerate, I guess to
• 18:02
  Speaker 1: the benefit of Jeff Bezos. Yeah. Absolutely, the and and
• 18:06
  Speaker 1: we're seeing in our data. So you know, the first week,
• 18:09
  Speaker 1: you know, you had all of these categories that decline,
• 18:13
  Speaker 1: and we're seeing that the FLNE lesson each week. So
• 18:16
  Speaker 1: so consumers who who are in good shape financially UM
• 18:21
  Speaker 1: are buying in the retailers are you know, they're just
• 18:24
  Speaker 1: shifting their their their focus there. We have one customer
• 18:29
  Speaker 1: that has nine hundred stores, none of them are open,
• 18:32
  Speaker 1: and they are now spending pretty aggressively UM towards e
• 18:35
  Speaker 1: commerce results UM e commerce sALS and getting good results
• 18:39
  Speaker 1: from that. I think consumers UM are there Probably one
• 18:42
  Speaker 1: category that suffered the most is apparel, basically clothing. I
• 18:46
  Speaker 1: mean there's not much no one's really going out, there's
• 18:49
  Speaker 1: not much reason by appower. But we even seeing UM
• 18:52
  Speaker 1: an increase in the apparel category in the fourth week
• 18:55
  Speaker 1: since that we we consider the crisis started March. Their
• 18:57
  Speaker 1: team the day after the NBA stops to travel from Europe.
• 19:00
  Speaker 1: And so you know, we're at the end of the
• 19:02
  Speaker 1: fourth week right now we're seeing even apparel has picked
• 19:04
  Speaker 1: up UM and and clothing things that are a little
• 19:08
  Speaker 1: harder to buy online, but consumers are still starting to
• 19:10
  Speaker 1: get active in that category. Interesting very interesting. I'd be
• 19:14
  Speaker 1: interesting to see Mark, how this plays out longer term.
• 19:15
  Speaker 1: We'll have you back to kind of as we get
• 19:17
  Speaker 1: through this pandemic, to kind of see how the consumer
• 19:19
  Speaker 1: is reacting. Uh, and uh, you know, we'll get some
• 19:22
  Speaker 1: more details, Mark Douglas, CEO of Steelhouse. It's a media
• 19:25
  Speaker 1: consulting firm and spending a lot of time with consumer
• 19:28
  Speaker 1: products companies and consumer facing companies getting a sense of, h,
• 19:32
  Speaker 1: you know, how the consumer is changing, and clearly consumer
• 19:36
  Speaker 1: behavior is changing dramatically. Uh during this lockdown. The question
• 19:40
  Speaker 1: is how permanent will it be? Looking at the markets
• 19:43
  Speaker 1: right here, just get you a quick data check, we
• 19:45
  Speaker 1: still have green on the screen, still holding on to
• 19:48
  Speaker 1: those gains although they are giving there. We are off
• 19:51
  Speaker 1: the highs in the markets. Looking at the SMP right here,
• 19:53
  Speaker 1: up thirty eight points thirty seven on the SMP that
• 19:56
  Speaker 1: dows up it's called even three fifty points. That puts
• 19:59
  Speaker 1: it at twenty three thousand, eight eighty right there on
• 20:02
  Speaker 1: the Dow. And then n AS DAK up thirty nine
• 20:05
  Speaker 1: points eight seventy one on the Dow. Oil still negative,
• 20:10
  Speaker 1: still under twenty dollars a barrel. Just incredible supply demand
• 20:14
  Speaker 1: dynamics are pushing oil to just tremendous lows. We'll bring
• 20:19
  Speaker 1: it all more coming up. This is Bloomberg. Joe my
• 20:25
  Speaker 1: seco covers all things municipal bonds for Bloomberg News. Joins
• 20:28
  Speaker 1: us job. I'm so glad you hear because I saw
• 20:30
  Speaker 1: an interesting article on the Bloomberg about mass transit. I
• 20:34
  Speaker 1: don't know, but I'm sure I'm like most people here
• 20:37
  Speaker 1: in the metro area. I haven't been on in New
• 20:38
  Speaker 1: Jersey transit train in a month. I haven't been on
• 20:40
  Speaker 1: a subway in a month. That's got to be a big,
• 20:44
  Speaker 1: big revenue issue for some of these issuers. Talk to
• 20:47
  Speaker 1: us about what's going on in mass transit and musical
• 20:50
  Speaker 1: bond market. Mr Slaney, nice to speak to you again. Well,
• 20:56
  Speaker 1: as you point out, with the lockdown, when they're shutdowns
• 21:00
  Speaker 1: and so many of the large cities across the US,
• 21:05
  Speaker 1: and the ridership has evaporated, So you know, it depends
• 21:11
  Speaker 1: you know which city you're looking at, but you could
• 21:15
  Speaker 1: see ridership off fifty six because uh, so many people
• 21:21
  Speaker 1: are just not using any more. Schools are shushed, a
• 21:24
  Speaker 1: lot of businesses are closed, or as you and I
• 21:28
  Speaker 1: are doing, people working from home. Um, so it's that
• 21:32
  Speaker 1: has a real impact on the fair box. Now most
• 21:36
  Speaker 1: places don't make uh, you know, their entire amount they
• 21:41
  Speaker 1: need from the fair box because it's you know, always
• 21:44
  Speaker 1: in mass transit there's so much dead time. Um. But
• 21:48
  Speaker 1: that's having a real impact. And certainly we've heard from
• 21:52
  Speaker 1: Pat Foy on several occasions, you know, head of the
• 21:55
  Speaker 1: mt A in New York here and uh he's made
• 21:59
  Speaker 1: his uh you know, dissatisfaction or um, you know, a
• 22:04
  Speaker 1: feeling of of of lacking money in the federal government
• 22:09
  Speaker 1: several occasions. Yeah, so Joel, you know one of the
• 22:13
  Speaker 1: you think about transportation. Initially we thought about the airlines.
• 22:16
  Speaker 1: Of course they're got getting crushed. They're getting some significant
• 22:19
  Speaker 1: aid from the government. But you know, the airlines before
• 22:23
  Speaker 1: the crisis, we had a great run here, a great
• 22:25
  Speaker 1: decade of profitability and cash flow. But most mass transit
• 22:29
  Speaker 1: systems kind of went into this crisis already under pressure.
• 22:35
  Speaker 1: Well you know, of course, they they were actually some
• 22:41
  Speaker 1: of them were losing ridership. And one of the reasons
• 22:45
  Speaker 1: was alternative methods of going in, meaning you know, people
• 22:50
  Speaker 1: were biking in and sometimes people were taking uber and
• 22:53
  Speaker 1: lifted and even working from home. So I remember, Wow,
• 22:59
  Speaker 1: we talked about this last summer. Moodies came out with
• 23:02
  Speaker 1: a little port on this very subject about how there
• 23:06
  Speaker 1: were a lot of different, uh you know, alternatives that
• 23:09
  Speaker 1: were eating into mass transits ridership, and of course this
• 23:14
  Speaker 1: you know is you know, chips us over the edge here.
• 23:19
  Speaker 1: It's interesting thinking about this, the shutdown and work at home.
• 23:22
  Speaker 1: I mean that I'm thinking about the states as well. Um,
• 23:25
  Speaker 1: California saw in the story on them on the Bloomberg
• 23:27
  Speaker 1: California faces a budget shortfall that could top thirty five
• 23:31
  Speaker 1: billion dollars. How are the you know, what's the feeling
• 23:34
  Speaker 1: in miss A bond Land about how some of these
• 23:36
  Speaker 1: states and local municipalities deal with this crisis. Well, you know,
• 23:41
  Speaker 1: there's always a little bit of the weight and see attitude.
• 23:45
  Speaker 1: You don't want to, you know, hit the panic button immediately.
• 23:49
  Speaker 1: Plus the federal government is throwing a lot of money
• 23:53
  Speaker 1: at the situation between um, you know, the the money
• 23:58
  Speaker 1: that Congress put a side at two point two trillion
• 24:02
  Speaker 1: relief package that's going to help out, and then you
• 24:05
  Speaker 1: have the federal reserve with I have the billion dollars
• 24:08
  Speaker 1: ball apparently being just the first, uh, the first step
• 24:13
  Speaker 1: of that sort of rescue package. But yeah, they you know,
• 24:19
  Speaker 1: you've you've shut down. Um, I guess of the economy,
• 24:24
  Speaker 1: they say, And for some states that's going to have
• 24:27
  Speaker 1: a much bigger impact than others. Uh so yeah, it's
• 24:31
  Speaker 1: people are sort of they're shocked, but they're not surprised. Wow.
• 24:37
  Speaker 1: Interesting not to see the federal government come to the rescue.
• 24:41
  Speaker 1: And there's a lot of states that are hit worse
• 24:43
  Speaker 1: than others, I think in some of the bigger states
• 24:44
  Speaker 1: like New York, like California. John Meis, thanks so much
• 24:48
  Speaker 1: for joining us on this Friday. Stay safe working from home,
• 24:52
  Speaker 1: and we will chat with you soon. John mysec Easyness Baban,
• 24:55
  Speaker 1: editor for Bloomberg Briefs. Thanks for listening to the Bloomberg
• 24:59
  Speaker 1: pl podcast. You can subscribe and listen to interviews at
• 25:02
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• 25:06
  Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa abram Woyit's
• 25:08
  Speaker 1: I'm on Twitter at Lisa abram woits one before the podcast.
• 25:11
  Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio