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Flattened Curve Doesn't Mean The Dying Is Ending Anytime Soon · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you.
0:05
Speaker 1: Along with my co host Lisa Brahmas. Each day we
0:07
Speaker 1: bring you the most noteworthy and useful interviews for you
0:10
Speaker 1: and your money. Whether at the grocery store or the
0:12
Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast
0:16
Speaker 1: or wherever you listen to podcasts, as well as at
0:18
Speaker 1: Bloomberg dot com. We've been hearing over and over again
0:22
Speaker 1: flatten the curve. Bill de Blasio, Mayor of New York City,
0:25
Speaker 1: coming out and saying that the numbers are looking encouraging,
0:27
Speaker 1: that you're actually seeing them go down when it comes
0:30
Speaker 1: to the death counts as well as the hospitalizations and
0:33
Speaker 1: diagnosed cases of the coronavirus in New York. But what
0:37
Speaker 1: will this curve look like? That is the question that
0:41
Speaker 1: Kathy O'Neil explored in a column recently for Bloomberg Opinions.
0:46
Speaker 1: Just to give you a sense of her background, her
0:48
Speaker 1: math background, which I deeply respect. She founded worka o
0:52
Speaker 1: r C. A a and algorithmic auditing company, and she's
0:55
Speaker 1: the author of Weapons of Math Destruction, which I love
0:58
Speaker 1: the title of and can joins us now you wrote
1:01
Speaker 1: in a recent column. Cathy, this isn't the flattened curve
1:04
Speaker 1: we were promised. What do you mean by that? Well,
1:07
Speaker 1: thanks for having me. Um. Every time you go to
1:10
Speaker 1: a Cuomo press conference midday, he he'll have slides, and
1:15
Speaker 1: often those slides have models of what the flattened curve
1:19
Speaker 1: looks like and what the current curve looks like. The models, UM,
1:23
Speaker 1: which I think are often made by McKinsey or some
1:25
Speaker 1: other modeling group. UM, there are symmetrical, which is to say,
1:28
Speaker 1: they go up to a peak and they come back down.
1:31
Speaker 1: They often look like normal distribution curves. UM. That is
1:34
Speaker 1: not the actual empirical information we've had. If you look
1:37
Speaker 1: at Italy, Spain, France, UM, places that are a couple
1:41
Speaker 1: of weeks in front of us, what actually looks like
1:44
Speaker 1: this is both for the counts of people infected and
1:46
Speaker 1: as well as for the death counts. It looks like
1:48
Speaker 1: a pretty rapid rise at the beginning. So the first
1:51
Speaker 1: part of the curve looks right, It hits the top,
1:54
Speaker 1: and then it just slowly plateaus and then slowly descends.
1:57
Speaker 1: It is not coming down as fast as it went up. So, Cathy,
2:01
Speaker 1: what do you think I mean? I remember we've heard
2:05
Speaker 1: Governor Cuomo talked about a plateau ing, you know, as
2:07
Speaker 1: opposed to the apex and then coming down. Um, so
2:10
Speaker 1: is it your sense that the the coming down on
2:13
Speaker 1: the backside will be significantly longer than kind of that
2:16
Speaker 1: ramp up we saw in the month of March. That's correct,
2:20
Speaker 1: And I should mention by the way that, um, the
2:23
Speaker 1: weekends are always looking better than during the week So
2:26
Speaker 1: the fact that the last couple of days looked pretty good,
2:28
Speaker 1: I'm happy about that, of course, but I want us
2:31
Speaker 1: to be prepared for what's going to happen today and tomorrow.
2:33
Speaker 1: But by tomorrow night it will look a little bit
2:36
Speaker 1: less positive than it does now. And then it happened
2:39
Speaker 1: last Tuesday, it happened the tuesday before that. So that's
2:41
Speaker 1: one thing to keep in mind when we look at
2:43
Speaker 1: these these daily data tables. But yeah, the real, the
2:46
Speaker 1: real reason I think that this matters, this asymmetry of
2:50
Speaker 1: this curve, is that when Cuomo says, you know, we're
2:53
Speaker 1: past the peak, and when he says the worst is over,
2:56
Speaker 1: that's technically possibly true, but it doesn't mean we like
3:00
Speaker 1: half the people who have died have died, or have
3:02
Speaker 1: the people who will have died, have died. We might
3:05
Speaker 1: be looking at many, many weeks of lots of multi
3:08
Speaker 1: hundred UM deaths per day. We don't actually know how
3:12
Speaker 1: long it's gonna last and how quickly it will descend. Now,
3:15
Speaker 1: of course I hope that it descends very quickly, but
3:18
Speaker 1: the evidence from Italy and Spain, where they had quite
3:21
Speaker 1: strong restrictions for social distancing and saying your home and
3:25
Speaker 1: quarantining um, those graphs do not go down quickly. They're
3:28
Speaker 1: still at hundreds of deaths per day in both of
3:31
Speaker 1: those countries. The importance of this isn't just to understand
3:35
Speaker 1: what we're in for that perhaps we have a whole
3:37
Speaker 1: lot more pain ahead of us, but also when to
3:40
Speaker 1: reopen Kathy. Is that right? I mean, in other words,
3:43
Speaker 1: if a lot of people are still getting diagnosed with
3:45
Speaker 1: the coronavirus, being over the peak in the short term
3:49
Speaker 1: doesn't necessarily mean that the danger necessarily is gone. Right,
3:54
Speaker 1: That's very true. I mean, I think what what Cuomo
3:57
Speaker 1: cares about very much, and and it's a very real concern,
4:01
Speaker 1: especially if for the governor, is that the hospitals are
4:04
Speaker 1: not overwhelmed, that the number of ventilators we have in
4:07
Speaker 1: our state or in our country UM is sufficient. And
4:12
Speaker 1: so in that sense, the fact that we have passed
4:14
Speaker 1: our peak, it's very very important. It's it's crucial in fact,
4:16
Speaker 1: because the peak is of course a very real thing
4:20
Speaker 1: for hospital UM, you know usage. However, it doesn't say
4:24
Speaker 1: a lot about timing UM. And for that matter, even
4:27
Speaker 1: if even if the number of deaths per day goes
4:30
Speaker 1: down to quite small, reopening too early before we actually
4:34
Speaker 1: have control whether we have don't have treatment, we don't
4:36
Speaker 1: have a vaccine UM, and we don't have UM you know,
4:39
Speaker 1: widespread testing might be a huge mistake because that curve
4:42
Speaker 1: can pick right back up again. So, Kathy, that's kind
4:44
Speaker 1: of where I wanted to go, because that seems to
4:46
Speaker 1: be where the conversation is shifting now is to when
4:50
Speaker 1: and how do we reopen UH the economy, And in
4:55
Speaker 1: the absence of any federal guidelines, which we don't seem
4:58
Speaker 1: to be getting, it's kind of left up to the states.
5:01
Speaker 1: How do you think it should go based upon some
5:03
Speaker 1: of the data we've seen from some of the countries
5:05
Speaker 1: that maybe a little bit ahead of us. Yeah, I mean,
5:09
Speaker 1: and I'm no, I'm no expert, and I'll just say
5:11
Speaker 1: it this way, there's lots of ways to define success UM,
5:15
Speaker 1: and in this case, Cuomo has defined success as the
5:18
Speaker 1: peak has passed, and really that is only success in
5:21
Speaker 1: a very narrow sense. It's a success for hospital um,
5:24
Speaker 1: hospitals not being overwhelmed. It says almost nothing about when
5:28
Speaker 1: we should open, how we should open, how we should
5:30
Speaker 1: do that, beyond the fact that we don't want this
5:33
Speaker 1: to happen again, and we don't want this to happen
5:35
Speaker 1: again worse than it happened the first time. Kathy, as
5:38
Speaker 1: a mathematician and a hedge former hedge fund analysts, and
5:41
Speaker 1: a professor, you look at data a lot, and there's
5:44
Speaker 1: a question about the integrity of the data that we're
5:47
Speaker 1: getting when it comes to virus counts. Just by virtue
5:50
Speaker 1: of the lack of testing. By one asktimate Johns Hopkins data,
5:54
Speaker 1: it shows that about one percent of the US population
5:58
Speaker 1: has been tested. Do you trust the extrapolations that we're
6:01
Speaker 1: seeing as accurate based on the numbers, as being a
6:06
Speaker 1: full representation at least of how far this has spread?
6:11
Speaker 1: Absolutely not, and thank you for the question. I wrote
6:13
Speaker 1: another column last week about ten data flaws that I
6:17
Speaker 1: have observed with the daily data UM. One of them
6:20
Speaker 1: that I was quite adamant about was that we are
6:22
Speaker 1: just missing a whole slew of nursing home depths, and that,
6:25
Speaker 1: of course has been coming out in the last few days.
6:28
Speaker 1: There's so many biases going on in the in these numbers, UM,
6:34
Speaker 1: the very first and most prominent one being that I
6:36
Speaker 1: believe that the actual number of infected people is around
6:40
Speaker 1: ten times as many as as as are reported, simply
6:43
Speaker 1: because there are so many asymptomatic people. But there's also
6:46
Speaker 1: other problems like besides the nursing home death, besides death
6:49
Speaker 1: that happened in homes, besides death that happened where people
6:53
Speaker 1: where there's more than one cause of death and we
6:55
Speaker 1: don't really know because there was no test available. We
6:57
Speaker 1: simply have tests themselves that have more false negatives and
7:01
Speaker 1: false positives. Some doctors are thinking, some researchers think that
7:05
Speaker 1: the solve false negative rate is more than which is
7:08
Speaker 1: to say that if you get tested and you get negative,
7:11
Speaker 1: there's a chance that you are positive. UM. That's for
7:14
Speaker 1: the individual, but for the for the overall data set,
7:17
Speaker 1: what it means is that we are vastly underestimating the
7:19
Speaker 1: number of positives, even for the people that we're testing.
7:22
Speaker 1: So it's a major problem. Our data is not good
7:25
Speaker 1: and we are so spoiled for data. We think of
7:28
Speaker 1: data as just being as available as the Internet, and
7:31
Speaker 1: in a lot of ways it is. But this is
7:33
Speaker 1: a whole new kind of data set that we just
7:35
Speaker 1: don't have do not have yet. So, Kathy, you know
7:39
Speaker 1: there's a role here for technology. And I think in
7:42
Speaker 1: the last week or so, Apple and Google have talked about,
7:44
Speaker 1: you know, getting a COVID nineteen tracking app, and I
7:47
Speaker 1: know you've done some work on that. What do you
7:49
Speaker 1: do you think that holds some hope for really tracking
7:52
Speaker 1: this and getting better data. You know, we would get
7:56
Speaker 1: some more data. My biggest concern about that are the
7:59
Speaker 1: blind boss of that data set because UM, as I
8:02
Speaker 1: understand it, almost all of the tracking apps UM that
8:06
Speaker 1: have been suggested are opt in. So who would opt
8:09
Speaker 1: into The first question have to ask is who would
8:11
Speaker 1: opt in for that UM And the answer is people
8:13
Speaker 1: who are worried but do not? Uh do not? You
8:17
Speaker 1: know that basically have the luxury of being worried if
8:20
Speaker 1: you will. So in other words, the people that are
8:23
Speaker 1: delivering our food, the people that are the frontline workers,
8:27
Speaker 1: they don't have the option of sort of not going
8:30
Speaker 1: to work because they need the money, or they even
8:34
Speaker 1: even more stark, they might not even have the option
8:36
Speaker 1: of getting treated if they do get sick because they're
8:38
Speaker 1: not insured. So I just think there's a whole slew
8:41
Speaker 1: of people, and it's not just a random selective of people.
8:43
Speaker 1: It's the people that are most at risk, most likely
8:46
Speaker 1: to be getting infected, that will simply not opt in.
8:49
Speaker 1: And so then the question becomes how useful is a
8:51
Speaker 1: tracking app where the most infected population, the most vulnerable population,
8:56
Speaker 1: not to mention people that don't have cell phones, that
8:57
Speaker 1: live in nursing homes or prisons. Those people are the
9:00
Speaker 1: very ones that will not be part of the system.
9:02
Speaker 1: So I feel like it is actually a pretty limited
9:05
Speaker 1: amount of good that could be done. Although you could
9:07
Speaker 1: collect some data, the data you're most interested in would
9:11
Speaker 1: be invisible to you. Kathey O'Neill, thank you so much
9:14
Speaker 1: for being with us. Kathy O'Neil a mathematician, a Bloomberg
9:17
Speaker 1: opinion columnist, also a former Hedge fund analyst and professor
9:21
Speaker 1: UH and of course author of fantastic book. I recommend
9:26
Speaker 1: you do read it. Who all about the practice of
9:30
Speaker 1: math and the intersection between it and the financial world. Paul,
9:35
Speaker 1: very much. The financial world right now focused on the
9:38
Speaker 1: price of oil as we look at a plunge to
9:40
Speaker 1: lois and two, a lot of disparities between the front
9:44
Speaker 1: end contract that expires tomorrow, not a lot of volume,
9:48
Speaker 1: people kind of discrediting it as it plummets and looking
9:51
Speaker 1: to the June contract. Nevertheless, what it highlights to me
9:54
Speaker 1: is the massive gap between where you can actually buy
9:58
Speaker 1: or sell a barrel of oil versus the futures contracts.
10:02
Speaker 1: In other words, the physical demand is just non existent,
10:05
Speaker 1: and there are circumstances where I say, in Texas, uh,
10:09
Speaker 1: some shell producers and drillers are actually accepting two dollars
10:13
Speaker 1: per gallon in order just to get it off of
10:16
Speaker 1: their lots. And it raises this question of of what
10:18
Speaker 1: this does longer term, how long this will persist, and
10:22
Speaker 1: what kind of cuts would be required turn it around.
10:28
Speaker 1: What we've been talking about today is oil uh w
10:31
Speaker 1: T I training down about here today to ten and
10:35
Speaker 1: seventy five cents a barrel that's on that may contract
10:37
Speaker 1: that June contracts, which is a more actively traded one
10:40
Speaker 1: that is up north of that. But still down for
10:42
Speaker 1: the day. It's got a sense of what is going
10:44
Speaker 1: on in the global energy space. Vince Signarella, global macro
10:48
Speaker 1: strategist for Bloomberg News, joins us on the phone. So, Vince,
10:51
Speaker 1: what do you make of what's going on with w
10:53
Speaker 1: t I today. Well, I mean this, you know, the
10:56
Speaker 1: story just hasn't changed really. Um, we're seeing basically drop
11:00
Speaker 1: and demand of what O pe plus has put at
11:02
Speaker 1: something around thirty million barrels a day and potential O
11:06
Speaker 1: pep plus cuts between ten and fifteen million barrels a day.
11:10
Speaker 1: So at the end of the day, it doesn't really
11:12
Speaker 1: change the story. It just means oil will fall in
11:15
Speaker 1: in theory, uh, you know, more slowly, but we're getting
11:19
Speaker 1: towards levels and I think this is running it around
11:23
Speaker 1: my British petroleum days of of the late eighties, where
11:26
Speaker 1: I think ten dollars or so was about as low
11:28
Speaker 1: as we got in the oil. So it kind of
11:30
Speaker 1: have to wonder if we're getting, you know, pretty close
11:33
Speaker 1: to the bottom of this. Can US equities rally if
11:36
Speaker 1: you have oil this kind of level. Yeah, you know,
11:40
Speaker 1: the the the correlation between US equities and crew is
11:46
Speaker 1: very very tight historically. Um, but it moves. This moves
11:50
Speaker 1: more on the demand side of things. So it's the
11:53
Speaker 1: demand side of oil that that that correlates with equities,
11:58
Speaker 1: not the supply side. And this drop in oils supply
12:01
Speaker 1: related um um in the sense that there's way too
12:06
Speaker 1: much of it, uh and they can't cut down to
12:08
Speaker 1: where the to where the demand is. But I think
12:11
Speaker 1: we're now at a place where we've we've reached as
12:14
Speaker 1: pretty much as low as we're going to get. You
12:16
Speaker 1: know this, this lack of demand is what weighed I
12:19
Speaker 1: think equities looking backwards now, the equity market is looking
12:24
Speaker 1: forward and they're looking past this next month or two.
12:27
Speaker 1: I think they maybe a little prematurely, but they seem
12:31
Speaker 1: to have discounted it, and they're looking at demand being
12:35
Speaker 1: aggressively picking up in the future from these levels. At least.
12:38
Speaker 1: This is what folks are telling me when I talked
12:40
Speaker 1: to guys this morning about career futures, and what they're
12:43
Speaker 1: doing is yelling at me and telling me, don't look
12:45
Speaker 1: at the as we as we hothead oil flowing to
12:47
Speaker 1: the lowest in April, don't look at the front contract
12:50
Speaker 1: expires tomorrow. The June contract down eight point six percent,
12:54
Speaker 1: is more indicative of to where the price of oil
12:57
Speaker 1: really is. Yeah, this is what I'm struggling with. People
12:59
Speaker 1: expecting that demand will pick up in the following months,
13:02
Speaker 1: and you're seeing this in the steepening of the forwards
13:05
Speaker 1: curve when it comes to two futures in the oil pad.
13:09
Speaker 1: I'm starting to understand why people think that the demand
13:12
Speaker 1: is going to pick up so much. In other words, yes,
13:14
Speaker 1: we're going to have some sort of reopening, but is
13:17
Speaker 1: that going to be enough at a time when in
13:19
Speaker 1: Texas there some producers are paying two dollars for for
13:23
Speaker 1: people to come and take the oil off their off
13:24
Speaker 1: their property. Yeah. No, I I totally agree with the least.
13:27
Speaker 1: I think that's I think the market is way too optimistic,
13:30
Speaker 1: and I think, you know, one of the things we
13:32
Speaker 1: really need to look forward to look toward, and what
13:35
Speaker 1: you know people like Dr Fauci are reminding us of
13:38
Speaker 1: is opening up too quickly or reopening too quickly and
13:42
Speaker 1: perhaps seeing a second surge in the virus. That is
13:44
Speaker 1: without question or real possibility. The state of Texas is
13:48
Speaker 1: looking at reopening um plans when they've tested from what
13:54
Speaker 1: I understand, one percent of the population. So it's really
13:57
Speaker 1: difficult to see how you can be looking at reopening
13:59
Speaker 1: things is where you have absolutely no handle on really
14:02
Speaker 1: the spread of the of the virus. So Vin's just
14:06
Speaker 1: going at the overall volatility in the equity markets. I'm
14:09
Speaker 1: looking at the vix here something Tom likes to call out.
14:11
Speaker 1: Tom King likes to call out. And you know, we
14:13
Speaker 1: peaked at over eighty, but we're certainly a long ways
14:16
Speaker 1: from the you know, the mid teens level that we've enjoyed.
14:19
Speaker 1: I guess pre virus give us a sense of kind
14:22
Speaker 1: of what that tells you is the market getting a
14:25
Speaker 1: little maybe too sanguine about kind of the near intermediate term. Yeah,
14:31
Speaker 1: I mean in a way it doesn't mean you look,
14:33
Speaker 1: you know, I have to say I looked. I look,
14:35
Speaker 1: when I look at futures in the evenings, you know,
14:38
Speaker 1: the night before, I'm like, they're only down four hundred.
14:40
Speaker 1: You start to think like, I'm getting accustomed to these
14:43
Speaker 1: moves of of being, you know, almost getting getting used
14:47
Speaker 1: to the fact that you know, two point moving into doubt.
14:50
Speaker 1: It's really not that big a deal anymore in terms of,
14:52
Speaker 1: you know, comparatively speaking, And I think the markets starting
14:56
Speaker 1: to fall into that trap as well. Where you know,
14:59
Speaker 1: a lot of the money that we're trading right now,
15:01
Speaker 1: a lot of what we're seeing. You know, everybody talks
15:03
Speaker 1: about it, but it's it is a reality. It's a
15:05
Speaker 1: lot of it as machine driven. Um. I think the
15:08
Speaker 1: the interesting point is these are algorithmic, algorithmic programs that
15:12
Speaker 1: are pre virus written. They're running I think in a way,
15:18
Speaker 1: I think that's trading on the world things. I mean,
15:20
Speaker 1: they're just not built for this type of the move
15:23
Speaker 1: So that's why I think we're seeing this volatility and
15:25
Speaker 1: we'll see it continue for a while. Vince Signarella, I
15:27
Speaker 1: would love to keep talking with you. We have to
15:29
Speaker 1: leave it there for Tom constrains. Vince Ignerella, global macro
15:31
Speaker 1: strategist for Bloomberg speaking to us about those algories which
15:35
Speaker 1: are written for another era. Everything written for another era,
15:37
Speaker 1: nothing written for this era, which is unprecedented in every
15:41
Speaker 1: which way. Let me take a look at gold that
15:46
Speaker 1: is up eleven percent year to date. Is people look
15:50
Speaker 1: for a safe haven among other issues here in this
15:53
Speaker 1: incredible time we're living through. Will Ryan is a founder
15:56
Speaker 1: and CEO of Granite Charity Space in New York City,
15:59
Speaker 1: UH and spends a lot of time looking at the
16:01
Speaker 1: gold market, So will give us your thoughts as we
16:05
Speaker 1: take a look at gold. How do you think gold
16:07
Speaker 1: should be used in investors portfolio in these uncertain times?
16:11
Speaker 1: All right, Paul, good morning. Um, well, I think the
16:13
Speaker 1: main demand for gold at the moment is the people
16:15
Speaker 1: that are really looking for some kind of protection, some
16:19
Speaker 1: kind of installation from what's happening. And typically these times,
16:24
Speaker 1: people are not investing in gold to make money per se,
16:27
Speaker 1: They just don't want to lose money. And that's really
16:30
Speaker 1: been the main theme I think since this crisis has started.
16:33
Speaker 1: So you know, gold typically acts as a diversifier because
16:37
Speaker 1: it's uncorrelated to the stock markets. In other words, of
16:40
Speaker 1: the stock market falls, typically you can see gold rising
16:44
Speaker 1: and really that's created a big demand for investors who
16:47
Speaker 1: are fearful about you know, losses in the portfolio. So
16:51
Speaker 1: gold has been a big winner recently. Is people look
16:54
Speaker 1: to the potential for money printing around the world and
16:58
Speaker 1: just sort of a lack of stability. Uh, as we
17:01
Speaker 1: head towards are in a global recession, I'm wondering though
17:05
Speaker 1: going forward, what arguments people should really be looking at
17:08
Speaker 1: in terms of deciding whether to buy or sell gold.
17:10
Speaker 1: In other words, is it the money printing argument that
17:13
Speaker 1: the idea that developed markets are going to somehow devalue
17:17
Speaker 1: their currencies because they are engaging in unprecedented stimulus and
17:21
Speaker 1: bailout efforts, or is it more behaven investment strategy. During
17:25
Speaker 1: a tumultuous time, people want something to anchor their bets to,
17:29
Speaker 1: and gold is a good place. I think it's both, Lisa.
17:33
Speaker 1: I mean, I think you've got a verse situation that's
17:36
Speaker 1: very similar to what happened in two thousand and eight.
17:39
Speaker 1: Of course, in two thousand and eight, you had those
17:41
Speaker 1: two particular situations at play, where you had a lot
17:46
Speaker 1: of money printing here in the US but all around
17:49
Speaker 1: the world. At the same time as you had, you know,
17:53
Speaker 1: fears about the market in general and people looking for
17:58
Speaker 1: an alternative two stocks and bombs. So I think you
18:02
Speaker 1: give the same thing this time around. I would just
18:04
Speaker 1: add in one more thing that, of course, all this
18:07
Speaker 1: money printing is unprecedented. We said that last time in
18:11
Speaker 1: two thousand and eight, but um, this time around, it
18:13
Speaker 1: it's even bigger in terms of the magnitude and the scale.
18:17
Speaker 1: I think what comes with it this time, which is
18:19
Speaker 1: different from two thousand and eight is I think we'll
18:21
Speaker 1: see a lot more spending from the federal government. In
18:25
Speaker 1: many ways, a lot of the policies that were enacted
18:28
Speaker 1: post two thousand and eight were more restrictive. You could
18:32
Speaker 1: you might argue that they were sort of austere or
18:34
Speaker 1: policies of austerity, um, and that limited or put the
18:38
Speaker 1: brakes on inflation. I think this time around, Um, we've
18:42
Speaker 1: already already started talking about what the administration is talking about,
18:46
Speaker 1: you know, potential two trillion dollars of infrastructure other types
18:49
Speaker 1: of spending, and I think that this time around that
18:51
Speaker 1: could lead to inflation. So it's it's interesting, Will, So
18:56
Speaker 1: what is your sense as two bonds here? I mean,
18:59
Speaker 1: we've had tremendous for school stimulus, monetary easy looking at
19:02
Speaker 1: the bond market right here. Yeah, so the bond market,
19:07
Speaker 1: I means has been big mess um as you know,
19:11
Speaker 1: but obviously the Federal Reserve is stepped in and really
19:15
Speaker 1: backstop the entire bondmark. And then you know, clearly that
19:18
Speaker 1: started with treasuries as one would expect, which is the
19:21
Speaker 1: playbook from the last financial crisis of from two thousand
19:25
Speaker 1: and eight. And then what's different this time is that's
19:27
Speaker 1: been extended into corporate bombs and now obviously the latest
19:32
Speaker 1: as jump bonds, and so really the entire market has
19:35
Speaker 1: been back stopped by the Federal Reserve, which has made
19:38
Speaker 1: that again unprecedented versus what we've seen in the past.
19:43
Speaker 1: And you're just talking about inflations, you sort of have
19:46
Speaker 1: the fedbackstop, and then you also have the idea that
19:48
Speaker 1: you do believe that inflation is going to start picking up.
19:52
Speaker 1: I'm trying to square that with the reality that we're
19:54
Speaker 1: looking at right now of oil and the fact that
19:58
Speaker 1: oil prices have fallen to the lower since nine two
20:01
Speaker 1: and just keep falling. And I'm talking about the front
20:03
Speaker 1: end contract and let's just put aside some of the
20:06
Speaker 1: technical backings here. It's clear that there is a glut
20:09
Speaker 1: of oil and we are running out of storage capacity.
20:12
Speaker 1: Square that with the idea of inflation. Well, oil is
20:16
Speaker 1: a very very specific thing at the moment, and you
20:20
Speaker 1: know you have again this is really quite incredible situation
20:24
Speaker 1: where we're probably here in terms of Cushing, which is
20:28
Speaker 1: the main storage you know, hub for W T I oil,
20:31
Speaker 1: We're probably going to reach the top of the tanks
20:34
Speaker 1: in terms of storage capacity sometime maybe as early as
20:38
Speaker 1: next month, and really there's no other place or very
20:41
Speaker 1: few options as to where else you can store excess capacity.
20:46
Speaker 1: As you know, the the coronavirus has taken all transportation
20:51
Speaker 1: for the most majority of transportation offline, and you need
20:55
Speaker 1: to see a recovery in in the gasoline market to
20:58
Speaker 1: increase oil prices. But I think, coming back to the
21:02
Speaker 1: inflation re argument, you can have a situation where this
21:06
Speaker 1: money printing, extreme kind of debasement leads to inflation, albeit
21:12
Speaker 1: albeit while you have severe sort of economic indicators that
21:16
Speaker 1: that are down and an oil is a big one,
21:19
Speaker 1: all right, So there's this idea of the print a
21:22
Speaker 1: lot of money and it loses its value and prices
21:24
Speaker 1: go up, and then you have oil is sort of
21:26
Speaker 1: a barometer of global trade and global growth. Do you
21:29
Speaker 1: expect oil prices to remain depressed for a long period
21:33
Speaker 1: of time or do you adhere to the idea that
21:36
Speaker 1: in the short roum we're going to see production drop off,
21:38
Speaker 1: We're going to see oil producers just stop out their
21:41
Speaker 1: their wells, and then that will lead to a spike
21:45
Speaker 1: in oil prices when the economy comes to some sort
21:49
Speaker 1: of new normal post pandemic um. You know, I I
21:54
Speaker 1: don't know, is the honest answer, because there's so much
21:58
Speaker 1: play here. I mean, one thing I will say is
22:01
Speaker 1: there's been a lot of talk about the Opeque Russia
22:05
Speaker 1: UM supply cuts that were announced just over a couple
22:09
Speaker 1: of weeks ago, but that doesn't come into play until
22:12
Speaker 1: May one, So we've still got another month to play
22:16
Speaker 1: out of all that supply cut takes place. But even then,
22:20
Speaker 1: I don't think that's enough to, you know, to stave
22:23
Speaker 1: off the sheer demand destruction that we've seen. I mean,
22:27
Speaker 1: as you know, the biggest, you know, the biggest contributor
22:31
Speaker 1: to demand is transportation. And if transportation it's just not operating,
22:38
Speaker 1: then you don't have that demand. And that's why we've
22:40
Speaker 1: seen this unprecedented build up in capacity. So I think
22:45
Speaker 1: that you're going to exceed this continue for as long
22:48
Speaker 1: as that, um, you know, that sector stays down, our
22:51
Speaker 1: dormant and so we start driving again. And if that's
22:55
Speaker 1: into the into a that's into a market where apply
23:00
Speaker 1: as being cut or adjusted to coordinate, and you could
23:03
Speaker 1: see as blank in demand. But I think right now, UM,
23:06
Speaker 1: you know, the clear and obvious thing is the oil
23:09
Speaker 1: prices are going to be low for some time until
23:11
Speaker 1: this this is correct grafted. Yeah, well Ryan, thank you
23:14
Speaker 1: so much for being with us. Will Ryan, chief executive
23:16
Speaker 1: officer of Granite Shares talking to us about a range
23:19
Speaker 1: of commodities as we face a recession and the question
23:22
Speaker 1: is for how long and how will we restart the economy.
23:26
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
23:29
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts
23:31
Speaker 1: or whatever podcast platform you prefer. Paul Sweeney, I'm on
23:35
Speaker 1: Twitter at pt Sweeney. I'm Lisa abram Woyds. I'm on
23:37
Speaker 1: Twitter at Lisa A. Bramwoits one before the podcast, you
23:40
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.