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Mnuchin: Following Law In Seeking Return of Fed Funds · 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
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  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
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  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
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  Speaker 1: and on Bloomberg dot com. Let's bring in a fearsome
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  Speaker 1: tosome right now, we have salehams in US Treasury Reporter
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  Speaker 1: on the phone from Washington, d C. With US AT
• 0:27
  Speaker 1: in studio Michael McKee, International Economics and Policy correspondent. If
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  Speaker 1: you hadn't guest, of course, you want to talk about
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  Speaker 1: the little back and forth let's call it between the
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  Speaker 1: Treasury and the Federal Reserve. So see, yeah, let's get
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  Speaker 1: the skinny from you. First, Treasures Actory Steve Manuten asked
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  Speaker 1: for funds back unused funds. Was it really necessary to
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  Speaker 1: ask for them back? Would they have just sort of
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  Speaker 1: reverted at some point? I mean, that's an absolutely fair
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  Speaker 1: point to make. The Secretary said that he was merely
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  Speaker 1: following the law that the Cares Act as it was written.
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  Speaker 1: He was in the room when it was in cobbled
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  Speaker 1: together that it did play that that those funds need
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  Speaker 1: to be returned to Congress. UM, you could make a
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  Speaker 1: case to say that he should not have done anything
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  Speaker 1: and just let that money revert back. But at the
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  Speaker 1: same time, I've heard from some UM experts that the
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  Speaker 1: Tradure Department seeks not to make any market sensitive announcements
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  Speaker 1: in December or too late in the year, or any
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  Speaker 1: kind of big moves because of the lack of liquidity
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  Speaker 1: and markets, and so I think they were also fear
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  Speaker 1: that not saying anything or letting this sort of surface
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  Speaker 1: on its own late in December would have shaken up
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  Speaker 1: markets more than it needed to. Mike, what do you
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  Speaker 1: what's just summarized for us the response from the FED
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  Speaker 1: and what you think the FED will do going forward. Well,
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  Speaker 1: the FED basically said, we don't want to give up
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  Speaker 1: the money, we don't want to end these programs. And
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  Speaker 1: what was unusual is not that they feel that way,
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  Speaker 1: but that they so expressly said it so quickly after
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  Speaker 1: Secretary of Minution released his letter to them. Uh. The
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  Speaker 1: FED is obviously a government bureaucracy on the one hand,
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  Speaker 1: and blowth to give up powers, but also their feeling
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  Speaker 1: is the Secretary got it backwards that the Secretary was saying,
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  Speaker 1: we don't need these anymore because we've brought down spreads
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  Speaker 1: because the loans have kept the markets open, and the
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  Speaker 1: feed is saying yes, but it's the fact that they
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  Speaker 1: exist that's keeping the markets open, and so you have
• 2:24
  Speaker 1: run a risk if something goes wrong that the market
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  Speaker 1: sees up again the capacity for intervention of the confidence
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  Speaker 1: as well, that engenders Michael um, what will the Federal
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  Speaker 1: Reserve do? I mean, is this a political motivation on
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  Speaker 1: the part of Treasure Secretary Minution? I mean, he won't
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  Speaker 1: be Treasure secretary next year. There's a lot of speculation
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  Speaker 1: about what the point of it was, and there doesn't
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  Speaker 1: seem to have been a real strong point to do
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  Speaker 1: it yesterday. Whether he's carrying out the president's wish to
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  Speaker 1: sand bag the Biden administration or not, we don't know.
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  Speaker 1: The FED will probably go along. Uh. They do have
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  Speaker 1: the ability to tap the Exchange Stabilization Fund. All this
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  Speaker 1: money that Congress appropriated went into the e s F,
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  Speaker 1: and they've pulled the money out of there and then
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  Speaker 1: give them If the money is repurposed, then they'll still
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  Speaker 1: be about seventy four billion dollars that they could use,
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  Speaker 1: which is more than they've spent. I mean, they only
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  Speaker 1: spent about billions, so they probably have enough money to
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  Speaker 1: deal with things. What they wouldn't be able to do
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  Speaker 1: is start up a whole new round of programs should
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  Speaker 1: the economy go pear shaped in the first quarter or
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  Speaker 1: something like that. The other question is what would Treasury
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  Speaker 1: do with the money? And remember we're not talking about
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  Speaker 1: the four billion, because they've spent about a hundred billion
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  Speaker 1: of it, so we're maybe talking two hundred and sixty
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  Speaker 1: billion or so that would go back. Congress has to
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  Speaker 1: officially appropriate that. And so the other suspicion is that
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  Speaker 1: what Manucha was doing was trying to jump start negotiations
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  Speaker 1: with the rational Democrats by saying, you know, we can
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  Speaker 1: all agree, here's a pot of money that's not being used.
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  Speaker 1: Let's just get it out to some money. Well, so, Celia,
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  Speaker 1: based upon your exclusive interview with Treasury Secretary Stephen the Nuchin,
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  Speaker 1: do you think that he and the Treasury are prepared
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  Speaker 1: to move forward on this and act on this or
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  Speaker 1: was this more posturing? Do you think I don't think
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  Speaker 1: this was posturing. He was very clear in the letter
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  Speaker 1: and in the press release. In his comments to me,
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  Speaker 1: that he is following the law, he is doing what
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  Speaker 1: was expected to be done. He pointed out that when
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  Speaker 1: the half trillion dollars was put into the e FF,
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  Speaker 1: Democrats were saying that this is Stephen the Nation Flush Fund,
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  Speaker 1: and now they're criticizing him for returning that money as
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  Speaker 1: the law says. The other point to be made is that,
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  Speaker 1: as Mike points out, is that the e FF has
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  Speaker 1: another roughly seventy five billion dollars that it has nothing
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  Speaker 1: to do with Congress, and that money can be very
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  Speaker 1: quickly activated but the Treasury and Fed Department if the
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  Speaker 1: markets do need it. Um. But the other thing is,
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  Speaker 1: you know, he Schary Secretary Monution has never fully understood
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  Speaker 1: how to works of Congress. So I have to at
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  Speaker 1: least put it out there in wonder if he had
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  Speaker 1: made this announcement but also had been able to say
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  Speaker 1: that he had already spoken to Mitch McConnell, Kevin McCarthy,
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  Speaker 1: maybe even Nancy Pelosi's that I've got this money was
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  Speaker 1: and we are going to try to put this into
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  Speaker 1: the economy. You couldn't get anything else, and maybe it
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  Speaker 1: would have had a different reaction to it right, and
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  Speaker 1: also just the very fact that if the FED didn't
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  Speaker 1: know this was coming and so unusual, I mean, wouldn't
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  Speaker 1: you have thought that there would be a heads up
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  Speaker 1: given that there was going to be some kind of
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  Speaker 1: announcement that might impact markets. Mike, Well, I think the
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  Speaker 1: FED knew it was coming, because they reacted so quickly,
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  Speaker 1: and they don't put out statements that fast unless they
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  Speaker 1: already knew what was going to happen. So I presume
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  Speaker 1: that the Treasury Secretary and the Fed German had spoken
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  Speaker 1: about this, and Manugent had given Paul the bad news,
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  Speaker 1: and so the FED was prepared, certainly to get in
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  Speaker 1: the Treasury's face like that. They would have had to
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  Speaker 1: have a discussion about whether there's a good idea and
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  Speaker 1: why do we want to do it and stuff like that. Silely,
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  Speaker 1: do we have any sense of timing this may roll out?
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  Speaker 1: I don't recall this happening in the past. I'm just
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  Speaker 1: not sure how this is going to going to go
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  Speaker 1: in terms of timing. Well, I mean, the programs, by law,
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  Speaker 1: they spend it onto some thirty one, though sometime by
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  Speaker 1: then you know that money has to be returned to
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  Speaker 1: Congress and taken out of treasuries, not only the Exchange
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  Speaker 1: Stabilization Fund. But it cannot just rest in Treasury General
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  Speaker 1: Service account. It has to be given back to compers.
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  Speaker 1: I'm thinking sometime by the end of the year, and
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  Speaker 1: we should really ask why so little of it was used, Mike,
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  Speaker 1: I mean, yes, there's other benefits to having money in
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  Speaker 1: a part lying there, but actually use of this Why
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  Speaker 1: why did not more get used? Well, there's two aspects
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  Speaker 1: to what they were doing. One was opening the markets,
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  Speaker 1: and by cutting rates to zero and opening the primary
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  Speaker 1: and secondary credit facilities, just that act alone reassured markets
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  Speaker 1: that there was a lender of last resort at work,
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  Speaker 1: and so spreads came down without them spending a lot
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  Speaker 1: of money. They did by in the secondary market, but
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  Speaker 1: they never bought in the primary market. And then the
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  Speaker 1: other was the lending programs, particularly main Street in the
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  Speaker 1: municipal facilities, and they the main Street facility took so
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  Speaker 1: long to set up that it didn't have a lot
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  Speaker 1: of utility, in part because the companies that could get
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  Speaker 1: loans got loans and those who couldn't. The banks didn't
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  Speaker 1: want to make loans to anyway because they felt they
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  Speaker 1: couldn't handle the debt. Municipal facility has a penalty rate
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  Speaker 1: on it in a fee, and so the when the
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  Speaker 1: FED acted, spreads came down in the muni market and
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  Speaker 1: it was cheaper just to directly borrow than to go
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  Speaker 1: through the FED. So that's why they didn't use a
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  Speaker 1: lot of the money. But again the FED are used.
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  Speaker 1: If we hadn't had the money in the first place,
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  Speaker 1: then the spreads, et cetera wouldn't have come down. Fascinating.
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  Speaker 1: Selia Molson, thank you so much for joining us. Siliamilson,
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  Speaker 1: u S Treasury reporter, fascinating story she has for Bloomberg News,
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  Speaker 1: and of course Michael McKee, international Economics and Policy correspondent
• 7:55
  Speaker 1: joining us as well for this fascinating story that was
• 7:57
  Speaker 1: certainly the news of the warning hasn't really moved markets
• 8:01
  Speaker 1: all that much. We'll remember, back in the early days
• 8:06
  Speaker 1: of the pandemic, we're talking V shape or U shape
• 8:09
  Speaker 1: or maybe an L shaped. Then K shaped came into
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  Speaker 1: the discussion as well. Well. Here we are eight months,
• 8:17
  Speaker 1: nine months into this, let's see where we are with
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  Speaker 1: the economy and the rebound. We can do that with
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  Speaker 1: Lindsay Piegza, Chief economists for Stiple Financial lindsay, thanks so
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  Speaker 1: much for joining us here. As we stand here, you
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  Speaker 1: know in late November, eight months into this pandemic, we've
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  Speaker 1: seen what the Fed can do, We've seen the stimulus.
• 8:37
  Speaker 1: What's your outlook for the next six to twelve months
• 8:40
  Speaker 1: here as we try to gauge the shape of our
• 8:42
  Speaker 1: rebound here, Well, I do think it's important to know
• 8:46
  Speaker 1: that the U s economy rebounded at a record case
• 8:49
  Speaker 1: in the third quarter, more than offsetting the decline that
• 8:52
  Speaker 1: we saw on the second quarter, at least from percentage terms.
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  Speaker 1: But going forward, it does appear that the US economy
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  Speaker 1: is already beginning to lose momentum, particularly on the consumer front.
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  Speaker 1: Retail sales up just a couple of tents of a
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  Speaker 1: percentage point, the latest report coming in about half of
• 9:08
  Speaker 1: expectation and also representing a multi month low. So we
• 9:13
  Speaker 1: do have some concerns about this waning momentum, not to
• 9:16
  Speaker 1: mention the rising risk of a second round resurgence of
• 9:19
  Speaker 1: the virus and subsequent policies put in place then to
• 9:22
  Speaker 1: help stem the spread of the virus. UH continuing to
• 9:26
  Speaker 1: support elevated joblessness, business closures, really undermining or potentially undermining
• 9:32
  Speaker 1: the improvement that we have seen in the third quarter.
• 9:35
  Speaker 1: So we do expect growth to slow markedly going into
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  Speaker 1: the end of the year, and as we turned the
• 9:39
  Speaker 1: corner into the new year, potentially, depending on the depth
• 9:43
  Speaker 1: and duration of this second round resurgence resurgence, we could
• 9:47
  Speaker 1: see growth fall back into negative territory, sparking a second
• 9:50
  Speaker 1: round recession. So right now, the risk to the economy
• 9:54
  Speaker 1: are certainly to the downside. Yeah, I mean that would
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  Speaker 1: be very very, very difficult to pull ourselves out of.
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  Speaker 1: And Z at that point, would it be just necessary
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  Speaker 1: for Congress to you know, I mean, what would we
• 10:05
  Speaker 1: even talking helicopter money at that point? Well, I don't
• 10:09
  Speaker 1: know if necessarily we need helicopter money, but but we
• 10:12
  Speaker 1: certainly do need some sort of artificial support. Remember that
• 10:15
  Speaker 1: this isn't a market crisis. This is a health crisis,
• 10:17
  Speaker 1: and we're talking about millions of individuals losing their jobs,
• 10:21
  Speaker 1: losing their businesses, income revenue opportunities through no faults of
• 10:26
  Speaker 1: their own, but rather through the government's direct design. And
• 10:29
  Speaker 1: so right now that this is not a normal scenario
• 10:34
  Speaker 1: by any means, we do in fact needs some continued
• 10:37
  Speaker 1: artificial support that being said, we want to make sure
• 10:40
  Speaker 1: that any additional aid or relief that comes down the
• 10:43
  Speaker 1: pipeline is used smartly and reaches those individuals or small
• 10:48
  Speaker 1: businesses that it is intended for. So, what is in
• 10:52
  Speaker 1: your base case, Lindsay's as you think about the remainder
• 10:54
  Speaker 1: this year and more importantly going into next year. Is
• 10:57
  Speaker 1: there some fiscal stimus. If so, what kind of eyes
• 11:00
  Speaker 1: and what kind of timing are you thinking about. So
• 11:03
  Speaker 1: we are factoring in a fifth round stimulus package, but
• 11:05
  Speaker 1: we're looking for something more muted around one trillion dollars.
• 11:08
  Speaker 1: And it's amazing that we're talking about a muted level
• 11:11
  Speaker 1: of expenditures around one trillion, But I mean that in
• 11:14
  Speaker 1: compared to the initial proposal from Democrats looking for two
• 11:17
  Speaker 1: plus trillion, and of course relative to what goop senators,
• 11:21
  Speaker 1: we're looking for less than a trillion, much more a
• 11:24
  Speaker 1: much a much smaller, much more targeted package. So we
• 11:27
  Speaker 1: do think it will be somewhere as struck in the
• 11:29
  Speaker 1: middle around that trillion dollar mark. The timeline for that
• 11:32
  Speaker 1: is likely to be in the first quarter. Right now,
• 11:35
  Speaker 1: it does seem that officials on both sides, both Republicans
• 11:39
  Speaker 1: and Democrats, are more concerned about really uh marking a
• 11:44
  Speaker 1: political victory or at least as not acquiescing to the
• 11:48
  Speaker 1: demands of the other side, So really playing politics as
• 11:52
  Speaker 1: opposed to getting down into negotiations trying to reach some
• 11:56
  Speaker 1: sort of middle ground in order to get this much
• 11:59
  Speaker 1: needed aid to individuals and businesses. Is that what's going
• 12:02
  Speaker 1: on with the Treasury secretary as well, that it's more
• 12:04
  Speaker 1: politics that he's asking the FED to return unused funds. Well,
• 12:09
  Speaker 1: I don't know, and necessarily if it's politics or if
• 12:11
  Speaker 1: it's a different way of viewing these programs, remember they
• 12:14
  Speaker 1: were always intended to be temporary, and he's not terminating
• 12:18
  Speaker 1: them early. He's simply saying that he'll allow them to
• 12:20
  Speaker 1: run out at their scheduled time at the end of
• 12:22
  Speaker 1: the year. That being said, you could certainly reagnitiate those,
• 12:27
  Speaker 1: reignite those at that started the year, or leave it
• 12:29
  Speaker 1: to the Biden administration once they are presumably sworn in
• 12:34
  Speaker 1: in late January, to reignite those lending programs. In the meantime,
• 12:38
  Speaker 1: the FED is not being left without additional tools. The
• 12:42
  Speaker 1: Federal Reserve certainly could implement additional forward guidance, yield curve targeting,
• 12:47
  Speaker 1: ramp up asset purchases, so they still have a number
• 12:50
  Speaker 1: of tools in their tool belts. But to the Fed's point,
• 12:53
  Speaker 1: we have heard from a number of officials that they
• 12:55
  Speaker 1: would rather have all of the possibilities still on the tape.
• 13:00
  Speaker 1: Will given that the economy is in such a fragile position,
• 13:03
  Speaker 1: and given that we are facing a second round resurgence
• 13:06
  Speaker 1: and potential second round lockdown as we look out to
• 13:09
  Speaker 1: the end of the year. Hey, lindsay, just real quickly
• 13:11
  Speaker 1: twenty seconds, what's your view of the labor market given
• 13:13
  Speaker 1: that we may be going into some more lockdowns. I
• 13:16
  Speaker 1: think the labor market is increasingly fragile. We have seen
• 13:19
  Speaker 1: massive job layoffs, and while we have recaptured about half
• 13:22
  Speaker 1: of the job's loss at the start of the year,
• 13:24
  Speaker 1: if we see more and more business closes, closures, that
• 13:28
  Speaker 1: will result in further layoffs, temporary layoffs, you name it,
• 13:32
  Speaker 1: further wage losses, which will only compound the difficulties that
• 13:35
  Speaker 1: we've seen in the consumer sector. And lindsay, just one
• 13:38
  Speaker 1: last thing, your run rate for GDP through the end
• 13:41
  Speaker 1: of the year. An incident next year, I think the
• 13:43
  Speaker 1: US GDP is going to struggle to maintain a sustainable
• 13:47
  Speaker 1: level nearer that two percent that we saw heading into
• 13:51
  Speaker 1: with very low single digit growth, if not falling back
• 13:55
  Speaker 1: into negative territory, if in fact we do see a
• 13:58
  Speaker 1: second round locksown even as I can down light lockdown scenario, Lindsay,
• 14:03
  Speaker 1: thank you so much for that. M. Lindsay, Vaga's managing
• 14:07
  Speaker 1: director in chief economists at Stevel. Nikolas there with I
• 14:11
  Speaker 1: guess some good news and some bad news. I mean,
• 14:12
  Speaker 1: it really is a kind of a mixture. It's a
• 14:15
  Speaker 1: tough situation to have to read, and I don't envy
• 14:18
  Speaker 1: the job of those who have to put all this
• 14:20
  Speaker 1: into models. Well, one financial term that has come into
• 14:25
  Speaker 1: my vocabulary at least during this pandemic has been corporate zombie.
• 14:29
  Speaker 1: And apparently corporate zombie is a company that it's not
• 14:33
  Speaker 1: even earning enough to cover their interest expense. And there's
• 14:36
  Speaker 1: some notable names that are quote unquote corporate zombies. Boeing, Carnival,
• 14:41
  Speaker 1: Delta Airlines, even Exxon Mobile. Let's get a little bit
• 14:44
  Speaker 1: smarter about this issue, and we could do that with
• 14:46
  Speaker 1: Brian Schapada, debt markets columnist for Bloomberg Opinion. Brian, thanks
• 14:50
  Speaker 1: so much for joining us here. Corporate zombies. So this
• 14:54
  Speaker 1: is really a thing. It is, Um there's one point
• 14:58
  Speaker 1: for a trillion of that you used to mention the
• 15:00
  Speaker 1: criteria that my Bloomberg News colleagues were looking at earlier
• 15:04
  Speaker 1: this week, which is trailing twelve month operating income versus
• 15:08
  Speaker 1: interest expenses. So the idea basically is that if you
• 15:11
  Speaker 1: don't even make enough to cover your obligations, they're not
• 15:13
  Speaker 1: really in a position to hire more people. You're not
• 15:15
  Speaker 1: really in a position to invest in more opportunities to grow.
• 15:19
  Speaker 1: So these are companies that are kind of hobbling along
• 15:22
  Speaker 1: and getting by through ultra cheap borrowing costs. So there's
• 15:27
  Speaker 1: a risk there that they'll hamstring the economic recovery here
• 15:31
  Speaker 1: out of the coronavirus pandemic. Yeah, what is the thinking
• 15:35
  Speaker 1: of these companies that they'll just keep going as long
• 15:37
  Speaker 1: as they can and the you know, this is a
• 15:40
  Speaker 1: good offer. Well, one of the things that that that
• 15:44
  Speaker 1: we really try to look at me in my Bloomberg
• 15:45
  Speaker 1: Opinion colleagues was there's a variety of companies that are
• 15:49
  Speaker 1: in here, right, So you talk about things like Axon Mobile,
• 15:52
  Speaker 1: ge Boeing. I mean those are pretty big companies, right,
• 15:55
  Speaker 1: And I mean they're kind of value place at at heart.
• 15:59
  Speaker 1: You also have growth companies that are you see companies
• 16:01
  Speaker 1: like Beyond Meat, Spotify, Uber, even Maderna are technically corporate
• 16:06
  Speaker 1: zombies under this criteria. UM, but they have a reason
• 16:10
  Speaker 1: for that, right They're not necessarily focused on profitability right now.
• 16:13
  Speaker 1: They're trying to grow UM. So it's a bit of
• 16:15
  Speaker 1: a mixed bag. But there are certainly some industries where
• 16:18
  Speaker 1: you kind of look at it and you think that
• 16:20
  Speaker 1: the the outlook, isn't it pretty bleak? So Brian, early
• 16:24
  Speaker 1: in my career, I was a corporate finance banker where
• 16:27
  Speaker 1: I made loans to media companies. In my job as
• 16:29
  Speaker 1: a low man on the totem pole, the team was
• 16:31
  Speaker 1: to build a spreadsheet and to make sure there is
• 16:33
  Speaker 1: enough cash flow to support the interest uh and even
• 16:37
  Speaker 1: the debt service principle. And if the special little cell
• 16:40
  Speaker 1: came up red I either wasn't enough cash flow to
• 16:43
  Speaker 1: support the interest, we didn't make the loan. How are
• 16:45
  Speaker 1: these guys coming back to the market. What are creditors thinking? Well,
• 16:50
  Speaker 1: I mean the credit markets are wide open right now,
• 16:52
  Speaker 1: so I think that there's not a lot of there's
• 16:54
  Speaker 1: not a lot of concern there's this feeling that for
• 16:57
  Speaker 1: certain companies, especially that the federal government will step in
• 17:01
  Speaker 1: if necessary, that they're too systematically important, thinking more of
• 17:06
  Speaker 1: Boeing in that in that instance. But you also really
• 17:08
  Speaker 1: have other companies like the movie theater chains for example,
• 17:13
  Speaker 1: My bombing colleague Tara la chappelle um wrote about them,
• 17:17
  Speaker 1: and they really made kind of a blunder in the
• 17:20
  Speaker 1: past few years, kind of really you know, expanding these
• 17:23
  Speaker 1: movie theater facilities, making all these acquisitions is taking out
• 17:26
  Speaker 1: a lot of debt, and now there's a real question
• 17:29
  Speaker 1: about their going concerned uh status in a way, because
• 17:33
  Speaker 1: who wants to go back to a movie theater right
• 17:35
  Speaker 1: now when especially there's all these streaming services that are competing.
• 17:39
  Speaker 1: So there are certain industries that are really coming under pressure.
• 17:41
  Speaker 1: But for now, I think there's a feeling that investors
• 17:45
  Speaker 1: just are piling into corporate credit. Um we'll see if
• 17:48
  Speaker 1: that changes at all with the shutdown of the Fetes facility,
• 17:51
  Speaker 1: but it's been wide open for a long time, and
• 17:53
  Speaker 1: of course that's what all the serious debt guys are
• 17:55
  Speaker 1: waiting for right there. Some of them are already invested
• 17:57
  Speaker 1: in some of these companies that we're finding a difficult
• 18:00
  Speaker 1: to get loans, but others are waiting for them to
• 18:03
  Speaker 1: be even in more trouble, at which point they'll help
• 18:07
  Speaker 1: them through some kind of a bankruptcy process and we'll
• 18:10
  Speaker 1: still see companies return, but they'll just be leaner and miner. Right. Yeah,
• 18:14
  Speaker 1: that's a great point. I mean, you think about the
• 18:16
  Speaker 1: distress of debt investors out there, Howard Marks and and
• 18:19
  Speaker 1: and his ILK. I mean, they're all they've raised a
• 18:22
  Speaker 1: lot of money for distress credit funds and they're kind
• 18:25
  Speaker 1: of waiting for the next shoot drop here. So to
• 18:28
  Speaker 1: the extent that some of these companies do come under
• 18:30
  Speaker 1: even further pressure and may be locked out of the
• 18:33
  Speaker 1: more traditional credit markets. I do think that there's a
• 18:36
  Speaker 1: lot of money out there waiting for uh, for liquidation
• 18:40
  Speaker 1: as type yields, you know, ten percent or higher, hing
• 18:43
  Speaker 1: being able to turn things around and and and lock
• 18:46
  Speaker 1: in a really nice profit there. Well, you know it's
• 18:48
  Speaker 1: interesting when I was an equity analysts, say, all we
• 18:51
  Speaker 1: had to do was just tell a nice rosy story
• 18:53
  Speaker 1: about a year or two them the road, and that's
• 18:55
  Speaker 1: all you needed to do to sell stock. Whereas these
• 18:57
  Speaker 1: credit analysts, uh, that's these are tough folks, they look
• 19:01
  Speaker 1: at the numbers, and if the numbers aren't there, you know,
• 19:03
  Speaker 1: they really put this wait a second, go back and
• 19:07
  Speaker 1: say that again. All you have to do is tell
• 19:10
  Speaker 1: a rosy story that was absolutely absolutely and I always
• 19:16
  Speaker 1: you know it's gonna be great two years down the road,
• 19:18
  Speaker 1: Biden stock now. But in the interim, for the credit folks,
• 19:21
  Speaker 1: they gotta make interest payments and principal payments and things
• 19:24
  Speaker 1: like that. So are you getting a sense, Brian, that
• 19:26
  Speaker 1: the standards within the credit markets are are you know,
• 19:30
  Speaker 1: getting dangerously lax? I mean, I think I think that
• 19:34
  Speaker 1: that's been kind of the assumption for a while. Um,
• 19:38
  Speaker 1: with the FED being kind of in the in the markets,
• 19:41
  Speaker 1: there was this expectation that things wouldn't quite get so bad. Um.
• 19:46
  Speaker 1: You sort of look at share prices to your point
• 19:48
  Speaker 1: about equity. Um, you take a little bit share prices
• 19:51
  Speaker 1: on some of these companies and they've rebounded quite dramatically,
• 19:54
  Speaker 1: and there will be some that survived. I mean, my
• 19:57
  Speaker 1: my colleagues there. How Zach wrote about Darden restaurants and
• 20:01
  Speaker 1: Olive Garden, and there's a feeling that there will be
• 20:05
  Speaker 1: a return to dining out once uh, once people feel comfortable,
• 20:09
  Speaker 1: and there's a vaccine. That's not something that's going away
• 20:12
  Speaker 1: anytime soon. But retailers may season gap, they might have
• 20:17
  Speaker 1: a bit more struggle. And it's kind of just this
• 20:19
  Speaker 1: question of whether COVID has exacerbated friends that had been
• 20:22
  Speaker 1: happening for a long time. You talk about the retail
• 20:25
  Speaker 1: apocalypse that's been a thing for a long time and
• 20:27
  Speaker 1: people's vocabulary versus something that was more of just a
• 20:32
  Speaker 1: shock to the system. Thinking about restaurants and dining out,
• 20:36
  Speaker 1: there is a huge trend towards doing more of that
• 20:38
  Speaker 1: that's suddenly reversed this year, Brian, just briefly, because we're
• 20:42
  Speaker 1: you know, only about a minute left. This returning money
• 20:45
  Speaker 1: to the treasury or returning unused funds to the treasury,
• 20:48
  Speaker 1: and you explain it to the labors and are there
• 20:50
  Speaker 1: actual funds sitting somewhere that need to be you know,
• 20:52
  Speaker 1: carded off from one place back to the treasury. Kind
• 20:56
  Speaker 1: of Um, you can think about it that way. I
• 21:00
  Speaker 1: yet that there's just funds that are fear marked that
• 21:02
  Speaker 1: can't be re earmarked. I mean, it's kind of just
• 21:05
  Speaker 1: it's kind of a mess. But basically, the Fed has
• 21:07
  Speaker 1: money that it had appropriated to it. The Treasury wants
• 21:11
  Speaker 1: that money back so that Congress can reappropriate it to
• 21:14
  Speaker 1: something else. Congress could also just raise more money and
• 21:19
  Speaker 1: appropriate it elsewhere and not touch the Fed's money, but
• 21:22
  Speaker 1: they're choosing not to for whatever reason. So I think
• 21:25
  Speaker 1: we'll have to watch and see what happens. But Steven
• 21:28
  Speaker 1: Newton seems to be doing some political maneuvering, I think,
• 21:32
  Speaker 1: and everyone's just kind of wondering if the FED will
• 21:35
  Speaker 1: actually honor its request or if it's going to be
• 21:38
  Speaker 1: any more pushback, right, I mean, yeah, I'd love to
• 21:42
  Speaker 1: have a long conversation about this because it goes to
• 21:44
  Speaker 1: all the all the inner workings of the monetary system
• 21:48
  Speaker 1: and and and how Congress can I guess, you know,
• 21:53
  Speaker 1: help the FED fulfill its mandations in some ways. Brian,
• 21:57
  Speaker 1: thank you. That is Brian Shapata, and he is a
• 22:00
  Speaker 1: Bloomberg Opinion Dead columnists read a story today, but also
• 22:03
  Speaker 1: follow him all the time because he knows what's up. Well,
• 22:09
  Speaker 1: you know, when Larry Ellison's little Hawaiian island Lanai is
• 22:15
  Speaker 1: hit by coronavirus that it is really serious. It had
• 22:17
  Speaker 1: been coronavirus free for the whole spring and summer and
• 22:20
  Speaker 1: now it's three thousand residents are plunged into the virus
• 22:26
  Speaker 1: outbreak and tourism. Hold all that to say, we are
• 22:30
  Speaker 1: not even coming out of the woods. We're still right
• 22:33
  Speaker 1: in the center of the woods. And let's talk to
• 22:35
  Speaker 1: Lauren Soura now John Tompkins University, Associate Professor of Emergency Medicine,
• 22:39
  Speaker 1: to tell us more. Lauren, you know, is there any
• 22:41
  Speaker 1: place in the United States where it's not exponentially rising now,
• 22:46
  Speaker 1: not from what I can see, you know. And we
• 22:49
  Speaker 1: we've had a total of over two hundred fifty thousand
• 22:52
  Speaker 1: desks to start this pandemic, and um that number just
• 22:55
  Speaker 1: keeps growing, approaching almost two hundred, sorry, almost two thousand yesterday.
• 23:00
  Speaker 1: I think as we look at many of the maps
• 23:02
  Speaker 1: that are trying to um estivate risk across the country,
• 23:05
  Speaker 1: they're all, you know, screaming red. They're all they're all
• 23:09
  Speaker 1: showing risk. They're all showing widespread community transmission. And it's
• 23:13
  Speaker 1: something that, um, I think we really need all eyes
• 23:15
  Speaker 1: on right now. Lauren, this feels worse than maybe I
• 23:20
  Speaker 1: was expecting. As you talk to your colleagues in the
• 23:23
  Speaker 1: medical community, does it feel worse than expected? To them
• 23:28
  Speaker 1: as well. I think it feels worse for a couple
• 23:31
  Speaker 1: of reasons. I think the key reason is it feels
• 23:33
  Speaker 1: worse because it kind of feels like no one's listening. Right,
• 23:36
  Speaker 1: So we have the experience from the summer and spring,
• 23:40
  Speaker 1: and we feel we did, feel like we've learned a
• 23:43
  Speaker 1: lot of lessons UM. And then you know, you go
• 23:46
  Speaker 1: out into the community and you see people not wearing masks.
• 23:49
  Speaker 1: You here on social media and on the news UM
• 23:52
  Speaker 1: protests around masking and social distancing and other UM measures
• 23:57
  Speaker 1: that are protective of the public's health, and UM just
• 24:01
  Speaker 1: generally speaking, I think that the part of the reason
• 24:04
  Speaker 1: it feels worse is because it feels like, um, it
• 24:08
  Speaker 1: was preventable, yeah, and or at least, you know, controllable
• 24:12
  Speaker 1: in some way. Lauren, there was some Bernstein research that
• 24:17
  Speaker 1: was looking at the various states and how many people
• 24:19
  Speaker 1: would have to be in a restaurant for there to
• 24:21
  Speaker 1: be a fifty percent chance of you you know, coming
• 24:25
  Speaker 1: across one person with coronavirus. And I wondered how you
• 24:29
  Speaker 1: look at statistics like that, because there were complaints that
• 24:32
  Speaker 1: you know, that's not a true measure of how much
• 24:35
  Speaker 1: coronavirus is out there that you're you're talking there about
• 24:37
  Speaker 1: only asymptomatic people that appear in a restaurant. Anyone who's
• 24:41
  Speaker 1: symptomatic is likely to not be going indoor dining for example. Yeah,
• 24:46
  Speaker 1: I mean, I think restaurants are very risky right now. UM,
• 24:49
  Speaker 1: And I think part of that is because we don't
• 24:51
  Speaker 1: fully understand the picture of asymptomatic infection and um, partly
• 24:56
  Speaker 1: because the environment just creates opportunities for exposure that may
• 25:00
  Speaker 1: not be in other situations. Right. You used to take
• 25:03
  Speaker 1: your mask off to eat and drink. Um, you have
• 25:05
  Speaker 1: to be handed materials from another person, So that plate
• 25:09
  Speaker 1: or that drink or um, your silverware and so and
• 25:13
  Speaker 1: and then on top of it, as the weather gets colder,
• 25:16
  Speaker 1: more people are moving inside, you're sitting closer together. Um,
• 25:19
  Speaker 1: you know, having that mask off with the long periods
• 25:22
  Speaker 1: of time, as people are moving about the restaurants. Um,
• 25:26
  Speaker 1: it is hard to take general numbers that that are
• 25:28
  Speaker 1: estimated across the community or across the region and apply
• 25:32
  Speaker 1: them to the to the experience that happens within a
• 25:35
  Speaker 1: restaurant that very unique environment. So, Lauren, I mean Johns
• 25:40
  Speaker 1: Hopkins is obviously one of the finest medical centers and
• 25:44
  Speaker 1: scientific centers in the world. If I were to go
• 25:46
  Speaker 1: into the emergency room today, if Johns Hopkins in Baltimore,
• 25:50
  Speaker 1: what would I find in terms of how many patients,
• 25:53
  Speaker 1: how crowded, how crazy is it they're the morale of
• 25:57
  Speaker 1: the people in the emergency room, What would I find? Yeah,
• 26:01
  Speaker 1: I think what you would find first and foremost is
• 26:04
  Speaker 1: UM is a lot of people. UM. You know, all
• 26:07
  Speaker 1: those people who would have had emergencies if it weren't
• 26:10
  Speaker 1: for the COVID pandemic are still having those emergencies, right,
• 26:13
  Speaker 1: So they're still in our emergency department. They still you know, critical,
• 26:18
  Speaker 1: they need critical care. UM, they need emergency observation or
• 26:23
  Speaker 1: treatment from our physicians and our nurses. UM. And so
• 26:26
  Speaker 1: they're all still there. You would also see a lot
• 26:28
  Speaker 1: of people with undifferentiated respiratory infections and respiratory symptoms, and
• 26:33
  Speaker 1: they're in the process of being determined whether they have
• 26:36
  Speaker 1: COVID or they have flu, or they have some other
• 26:38
  Speaker 1: respiratory infection. UM. You'd see a lot of people in
• 26:41
  Speaker 1: our waiting room, and you'd see a lot of exhausted
• 26:43
  Speaker 1: physicians and nurses trying to move these patients through as
• 26:46
  Speaker 1: safely and quickly as possible. The volumes across the country
• 26:50
  Speaker 1: are are high. They're they're higher than we want them
• 26:53
  Speaker 1: to be, and they're higher than UM then they should
• 26:56
  Speaker 1: be to create a safe environment to provide optimal care.
• 26:59
  Speaker 1: Do we have enough PPE? I think PPE feels a
• 27:03
  Speaker 1: little better. It's one of the pieces that we're less
• 27:06
  Speaker 1: worried about than UM than you know, healthcare workers for example,
• 27:11
  Speaker 1: I think as we move into flu season there are
• 27:14
  Speaker 1: risks of having those PPE gaps. Again, a lot of
• 27:18
  Speaker 1: work was done to create PPE stockpiles and stores across
• 27:21
  Speaker 1: the country, and so I feel a little more confident
• 27:24
  Speaker 1: in the PPE supply chain. That being said, you know
• 27:27
  Speaker 1: there there are going to be gaps and UM, there's
• 27:31
  Speaker 1: gonna be dramatic need for PPE as we moved through
• 27:34
  Speaker 1: the winter. Lauren Sour, thank you so much once again
• 27:37
  Speaker 1: for joining us. We always appreciate you taking the time.
• 27:39
  Speaker 1: Laurence Sour, Associate Professor of Emergency Medicine at Johns Hopkins
• 27:42
  Speaker 1: School of Medicine. We should know that the Bloomberg School
• 27:45
  Speaker 1: of Public Health is supported by Michael R. Bloomberg, founder
• 27:48
  Speaker 1: of Bloomberg LP, and Bloomberg from the MTPS and this
• 27:51
  Speaker 1: radio station, and Vonnie, I just you know, your hearts
• 27:54
  Speaker 1: goes out to these healthcare workers. They've been working for
• 27:56
  Speaker 1: so many months under such incredible stress, and here we
• 28:00
  Speaker 1: with for many of them, the third wave. Hopefully they
• 28:03
  Speaker 1: can do well. Thanks for listening to the Bloomberg Markets podcast.
• 28:09
  Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
• 28:12
  Speaker 1: or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm
• 28:16
  Speaker 1: on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm
• 28:18
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 28:21
  Speaker 1: always catch us worldwide at Bloomberg Radio