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Want Ventilators? Roll Back Trump's Tariffs · Bloomberg Intelligence

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  Speaker 1: I've been checking with the work opinion to join by Bloomber.
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  Speaker 1: Welcome to the Bloomberg Piano Podcast. Each day we bring
• 0:08
  Speaker 1: you must noteworthy for you and your money, whether at
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  Speaker 1: the Social Store or the Bloomberg Podcast, on a couple podcasts,
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  Speaker 1: or wherever you listen to podcasts. Two point part issue.
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  Speaker 1: So on the one hand, I mean, I think it's
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  Speaker 1: worth remembering that, you know, these terrorists that were put
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  Speaker 1: in place did affect medical goods that we shipped over
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  Speaker 1: from China. So this includes face masks, hand sanitizer, protective
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  Speaker 1: gear that is now very much in demand. And the
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  Speaker 1: Trump administration did you know, offer exemptions for those products,
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  Speaker 1: but they took that very recently ago, as then you know,
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  Speaker 1: one to two weeks ago, and at that point, you know,
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  Speaker 1: some of the damage is already done. I mean, we've
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  Speaker 1: already then shifted the flow of goods now to places
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  Speaker 1: like Europe, which of course are battling their own issues
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  Speaker 1: with the coronavirus and may in the future be less
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  Speaker 1: willing to export some of those products to US UM
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  Speaker 1: And then you know, it's also an issue of whether
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  Speaker 1: or not you know or necessarily the the customer of
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  Speaker 1: first choice for um Chinese suppliers. You know, the Peterson
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  Speaker 1: Institute did a really great piece on this, just looking
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  Speaker 1: at the ways in which it changes incentives when you
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  Speaker 1: do have those tarrifts in place. So that certainly is
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  Speaker 1: not helpful. But I think about it also, you know,
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  Speaker 1: the second part of this is just in a broader sense,
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  Speaker 1: manufacturers are getting hit really hard by this, whether that's
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  Speaker 1: just you know, a total drop off in demand or
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  Speaker 1: a disruption of their supply chain, and the terrorists just
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  Speaker 1: seem like an extra tax that makes this harder on them.
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  Speaker 1: It just seems unnecessary. And that's particularly true at a
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  Speaker 1: time when we're really starting to see an emphasis on
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  Speaker 1: calling the manufacturers to step up and use their idol
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  Speaker 1: factories to make products like masks and ventilators helps to
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  Speaker 1: still this shortage in America right now. And if they
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  Speaker 1: do that is the reward then that when we go
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  Speaker 1: back to normal life, they still have to jump through
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  Speaker 1: the obstacles of tariffs when they answered their patriotic duty.
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  Speaker 1: I just I don't know if it makes sense, and
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  Speaker 1: it strikes me as more of a hindrance when we
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  Speaker 1: should be spilled a thing on everything that can possibly
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  Speaker 1: help us in this spite against coronavirus. Brook really interesting
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  Speaker 1: to take at a time when it's like whack a
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  Speaker 1: mole with respect the information coming at you every single
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  Speaker 1: day in terms of which part of the market, which
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  Speaker 1: part of the economy, which part of the political world,
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  Speaker 1: which part of the central banking world is in the
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  Speaker 1: front and in the focus. Amid all of this, we
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  Speaker 1: haven't talked as much about supply chains, just more broadly,
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  Speaker 1: and before we get into just what the tariff policy
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  Speaker 1: should be, how much our supply chains still disrupted from
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  Speaker 1: what happened in China and what's been going on now
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  Speaker 1: in in in Europe. I mean, how much are those
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  Speaker 1: supply chains still intact to begin with? Look, I mean
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  Speaker 1: I think they were significantly disrupted by what happened in China,
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  Speaker 1: and you know, at the time that sparked a conversation
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  Speaker 1: of oh, are we too dependent on China? But then
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  Speaker 1: as you've seen this virus spread across the world, I
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  Speaker 1: don't know if it really makes the difference at this
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  Speaker 1: point where your supply chains are. We're same factory shut
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  Speaker 1: down in Latin America, factories shut down in the US,
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  Speaker 1: factory shut down in Europe, and so you know, I
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  Speaker 1: think as we think about how supply change changed down
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  Speaker 1: the road. Initially I was thinking of this as more
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  Speaker 1: of a geographical rethink, but then I think that now
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  Speaker 1: maybe we pivot to what do these factories look like?
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  Speaker 1: You know, robots don't get coronavirus? Does this just speed
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  Speaker 1: the spread of automation? Do we see more and more
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  Speaker 1: companies relying on additive manufacturing where you don't need to
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  Speaker 1: get parts from different parts of the world. You can
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  Speaker 1: just have something come out of a printer and be
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  Speaker 1: in your factories. So I think those types of conversations
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  Speaker 1: are maybe now where we're more headed at this point
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  Speaker 1: in time, because you are seeing amazing disruption to the
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  Speaker 1: flow of goods um you know, across a broad range
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  Speaker 1: of products, and I think we're going to have to
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  Speaker 1: think about how we better safeguard those systems. Well, I
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  Speaker 1: think the line of the day Lisa is robots don't
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  Speaker 1: get coronavirus. Yeah, And I kind of malfunctioned a little
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  Speaker 1: bit earlier when I'm trying to speak, so I think
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  Speaker 1: I'm safe. So Brooke, just practically speaking, can I auto
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  Speaker 1: manufacturing plant? Switch were to make ventilators? So there are
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  Speaker 1: issues with this, So you know the UK is also
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  Speaker 1: calling on its manufacturers to make ventilators, and the confirm
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  Speaker 1: there that these are very heavily regulated devices, and we
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  Speaker 1: don't I think, want to be in the practice of
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  Speaker 1: vending those rules because obviously we don't want to do
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  Speaker 1: anything that might make this health crisis actually worse. But
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  Speaker 1: I do think, you know, companies that have experience making
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  Speaker 1: heavily regulated equipment UM might be in a better position
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  Speaker 1: to step up, at least as far as that is concerned. Now,
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  Speaker 1: I will say, you know, auto factories do require require
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  Speaker 1: assembly line somewhat similar to ventilators, and there are similarities
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  Speaker 1: that you think about. You know, the highly advantaged like
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  Speaker 1: h sex systems that are in those cars, and you
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  Speaker 1: know the technology that you would need to do a ventilators,
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  Speaker 1: So there are some similarities there. Also, there are hurdles
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  Speaker 1: that need to be worked out masks and hand sanitizer
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  Speaker 1: and protective year that is a lot easier to do.
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  Speaker 1: You may see more companies stepping up on that front,
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  Speaker 1: but I do think there is a path to make
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  Speaker 1: more ventilators. We will have to figure out some of
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  Speaker 1: the logistics of that, and it's not quite easy as
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  Speaker 1: just flipping a switch to making a totally different product.
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  Speaker 1: Brook Sutherland, thank you so much for being with us,
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  Speaker 1: brook Sutherland, Bloomberg Opinion industrials columnist, joining us to talk
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  Speaker 1: about the tariff situation rolling them back, but also the
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  Speaker 1: supply chains. And I do think, Paul, you raise really
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  Speaker 1: interesting point, which is in a wartime situation, typically, uh,
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  Speaker 1: the US has mustard all of its capabilities to manufacture
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  Speaker 1: weapons or manufacture clothing for the troops. And you have
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  Speaker 1: to wonder if this is being treated as a wartime situation,
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  Speaker 1: at what point will the factories that are offline to
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  Speaker 1: make cars be corralled into making ventilators and be making
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  Speaker 1: masks and purel and toilet paper, because that seems to
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  Speaker 1: also be a concern for a lot of people. There
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  Speaker 1: is a question though about the oil patch and how
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  Speaker 1: much is sort of exacerbated by the fact that Saudi
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  Speaker 1: Arabia and Russia appear to be in a tiff that
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  Speaker 1: does not seem to be going away anytime soon, where
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  Speaker 1: both of them are doubling down on production at a
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  Speaker 1: time when demand is falling off a cliff to try
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  Speaker 1: to understand this relationship, what happens if they come to
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  Speaker 1: some sort of accord and curb production. What will that
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  Speaker 1: mean for oil? What will that mean for the entire
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  Speaker 1: relationship of nations in the Middle East and Russia joining
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  Speaker 1: US right now? Professor Megan O'Sullivan, Professor of International Affairs
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  Speaker 1: at Harvard's Kennedy School, former National Security Council advisor, also
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  Speaker 1: a Bloomberg Opinion columnist. Professor, I'd love to get your
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  Speaker 1: opinion for starters of how long in the making this
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  Speaker 1: tiff between Saudi Arabia and Russia really was. I mean,
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  Speaker 1: in other words, how entrenched are they on their respective sides,
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  Speaker 1: unable or unwilling to come to the come to the
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  Speaker 1: table and stop producing as much oil. Well, as you know,
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  Speaker 1: Russia and Saudi Arabia and the rest of OPEC began
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  Speaker 1: producing and cooperating in an unprecedented fashion towards in ten,
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  Speaker 1: basically to deal with the price plunge of that time.
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  Speaker 1: And for quite a few years people predicted that this
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  Speaker 1: would be a very transitory relationship, both basically between Russia
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  Speaker 1: and between Saudi Arabia, and it was more resilient than
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  Speaker 1: people thought. Um every time there was an opportunity or
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  Speaker 1: needs to renew a production cut or to revisit it.
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  Speaker 1: People product predicted some kind of collapse like the one
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  Speaker 1: that we saw on March six. But Um, I would
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  Speaker 1: say that both sides have been taken by surprise at
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  Speaker 1: the market reaction, because unlike the other times when it
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  Speaker 1: looked like Russia might walk away from its cooperation with OPEC,
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  Speaker 1: this time it we have both a supply surge and
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  Speaker 1: we have this massive demand contraction. And so while both
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  Speaker 1: sides I don't think we're planning for this fallout to happen, um,
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  Speaker 1: the fact that it happened and that the repercussions have
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  Speaker 1: been so dramatic, I think does create at least some
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  Speaker 1: kind of an opportunity for the two sides to come
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  Speaker 1: together in the coming I would say months. However, the
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  Speaker 1: longer this goes on, I think there are certain new
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  Speaker 1: variables that are coming into the mix that could change
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  Speaker 1: the trajectory of what I think everyone began thinking was
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  Speaker 1: just going to be a temporary kind of tiff that
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  Speaker 1: would ultimately be resolved in coming together in a new
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  Speaker 1: production cut. So, Megan, it's just extraordinary to me that
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  Speaker 1: the behavior of Saudi Arabian Russia on the supply side,
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  Speaker 1: given what we now know, about the demand side and
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  Speaker 1: the creating demand for oil. Who do you think is
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  Speaker 1: going to blink first? And why? Well, I mean, we
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  Speaker 1: already have seen signs that the Russians are acknowledging that
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  Speaker 1: the economic impact here is going to be greater than
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  Speaker 1: they thought. We've seen the finance minister just a couple
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  Speaker 1: of days ago talk about how Russia is going to
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  Speaker 1: go into a deficit. You can see the impact on
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  Speaker 1: the ruble um. Russia has more difficulty borrowing than Saudi Arabia,
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  Speaker 1: so it probably is less well prepositioned to endure a
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  Speaker 1: long term slow price decline. So I would say, if
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  Speaker 1: we're really assuming that this is going to result in
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  Speaker 1: the two sides coming together that at some point, I
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  Speaker 1: think Saudi Arabia is not wrong in thinking that Russia
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  Speaker 1: will feel the pain and there'll be an opportunity to
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  Speaker 1: come back to the table. However, and I still think
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  Speaker 1: that is the main most likely scenario. However, there are
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  Speaker 1: a couple of things unfolding, as I mentioned that could
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  Speaker 1: change the perspectives of these two players. One, the demand
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  Speaker 1: plunge is so much deeper than people thought. I mean literally,
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  Speaker 1: it's only been two weeks since these two countries came apart,
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  Speaker 1: and we've seen that the projections for demand have changed dramatically.
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  Speaker 1: Two weeks ago, Saudi Arabia was arguing that a cut
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  Speaker 1: of one point five million barrels of oil a day
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  Speaker 1: would be enough to stabilize the situation. People are now
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  Speaker 1: talking about this quarter of oil demand going down by
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  Speaker 1: ten million barrels of a loyal day. So coming together
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  Speaker 1: to agree on a cut of a million barrels is actually,
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  Speaker 1: even within these two weeks, is no longer perceived to
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  Speaker 1: be sufficient to the challenge at hand. Also, we're seeing
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  Speaker 1: producers in the US, Brazil, Canada already coming together and saying,
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  Speaker 1: you know, it looks likely that our production is going
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  Speaker 1: to shrink, We're going to have capex limitations. And this
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  Speaker 1: is much quicker, I think than Saudi Arabia um expected.
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  Speaker 1: And it must be heartening to these producers Russia and
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  Speaker 1: Saudi Arabia that have been frustrated that their policies have
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  Speaker 1: basically helped high cost producers. So it's possible that you
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  Speaker 1: might have both of these sides, Saudi Arabian particular saying hey,
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  Speaker 1: we didn't expect to move to the situation where we
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  Speaker 1: were kind of playing for longer, and but here we are,
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  Speaker 1: and maybe we have to make the best of it
• 10:50
  Speaker 1: given the situation. So despite that backdrop, given the glood
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  Speaker 1: of production, and given the fact that demand is falling
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  Speaker 1: off way faster than people had expected. I want to
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  Speaker 1: put the perspective the huge rise in prices that we
• 11:02
  Speaker 1: saw yesterday after President Trump said that he could intervene,
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  Speaker 1: that he would intervene if this carries on, and that
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  Speaker 1: the US has great power to do so to bring
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  Speaker 1: Saudi Arabia and Russia to the table. What power does
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  Speaker 1: the United States have to to do that. Well, my
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  Speaker 1: feeling is the President probably overstating the US power here.
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  Speaker 1: The US does have a lot of diplomatic and political
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  Speaker 1: leverage with Saudi Arabia just because of the importance of
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  Speaker 1: that bilateral relationship, and so certainly you can imagine that
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  Speaker 1: the United States would be putting a lot of pressure
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  Speaker 1: on Saudi Arabia to come to the table, especially if
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  Speaker 1: Russia started the show indications that is interested in doing so.
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  Speaker 1: The United States does not have much control over Russian behavior,
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  Speaker 1: and the thought was that the United States could threaten
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  Speaker 1: some more sanctions. I actually think that could backfire We've
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  Speaker 1: seen repeatedly over the last five years that Vladimir Putin
• 12:00
  Speaker 1: is willing to take an economic hit in order to
• 12:03
  Speaker 1: stand up to the United States. So to imagine that
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  Speaker 1: the threat of sanctions could change Russia's calculation in a
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  Speaker 1: way that makes it look like Putin is acquiescing to Trump,
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  Speaker 1: I think that is not tenable. An interesting idea surface
• 12:16
  Speaker 1: just this morning you had one of the commissioners of
• 12:19
  Speaker 1: the Texas Railroad Commission saying, actually Texas could return to
• 12:24
  Speaker 1: a policy of pro rationing that it hasn't had since
• 12:26
  Speaker 1: the early seventies and rain in some of America's production.
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  Speaker 1: That opens the possibility still likes say distant, but for
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  Speaker 1: a Russia Saudi um uh Us conversation that the Russians
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  Speaker 1: have wanted to have for a long time, and that
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  Speaker 1: could be where this could go. This would be the
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  Speaker 1: real wild card in this situation. But absence that, I
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  Speaker 1: don't think the United States has the ability to solve
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  Speaker 1: this problem just through diplomatic pressure. A. Megan, thanks so
• 12:54
  Speaker 1: much for your perspective. We really appreciate you helping us
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  Speaker 1: understand what's going on the global energy markets. Megan O'Sullivan,
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  Speaker 1: Professor of International Affairs at Harvard's Kennedy School, former National
• 13:04
  Speaker 1: Security Council advisor, and a Bloomberg opinion columnists giving us
• 13:08
  Speaker 1: her sense on the markets here weekend. We still have
• 13:11
  Speaker 1: a little bit weaker oil today after the big, big
• 13:14
  Speaker 1: pop yesterday, but still way way down supply and demand
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  Speaker 1: not good for the price of oil. The question is
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  Speaker 1: when will Saudi Arabia and Russia come to the table
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  Speaker 1: uh and come to an agreement. This is Bloomberg. We
• 13:30
  Speaker 1: are looking at a markets that are trying to find
• 13:33
  Speaker 1: some calm after a storm that was the biggest storm
• 13:38
  Speaker 1: ever if you look at the VIX index and was
• 13:41
  Speaker 1: certainly included some of the biggest whip saws since seven
• 13:45
  Speaker 1: Black Monday. And the question is how do you find sane?
• 13:48
  Speaker 1: How do you find sanity? How do you find a
• 13:50
  Speaker 1: compass amid a complete dearth of any information? Peter Anderson,
• 13:55
  Speaker 1: a voice of reason, a voice of calm, founder of
• 13:58
  Speaker 1: Anderson Capital Management, joining us now. Peter, thank you so
• 14:01
  Speaker 1: much for being with us. What's going to help people
• 14:05
  Speaker 1: stay sane as they invest their money in this kind
• 14:07
  Speaker 1: of environment? Well, Lisa, I know that you've talked to
• 14:10
  Speaker 1: a lot of investors and a lot of investor managers,
• 14:13
  Speaker 1: and I thought I'd take a little bit of a
• 14:15
  Speaker 1: different take. Instead of just going back on histories of
• 14:18
  Speaker 1: UH selloffs and how we react, I thought I could
• 14:21
  Speaker 1: propose a couple of tools for everybody out there, because
• 14:24
  Speaker 1: I think most investors are feeling really uncomfortable about the
• 14:29
  Speaker 1: information and how they should act on this information. And
• 14:32
  Speaker 1: if we could just get some simple categories, I think
• 14:35
  Speaker 1: that might help people. So I have a couple of suggestions.
• 14:38
  Speaker 1: The first thing is this concept of leading versus lagging indicators.
• 14:42
  Speaker 1: Now we've used those a lot in economics and investing,
• 14:45
  Speaker 1: but probably not so much when we're talking about something
• 14:48
  Speaker 1: like the virus. And if you recall Dr Fauci recently
• 14:52
  Speaker 1: mentioned he made a little bit of a reference to
• 14:55
  Speaker 1: this when he said, look what we're seeing now are
• 14:58
  Speaker 1: the results of what the virus did two weeks ago.
• 15:01
  Speaker 1: So I find it very helpful. Whenever new information comes,
• 15:04
  Speaker 1: I put it in a category. Is this leading indicator
• 15:07
  Speaker 1: or a lagging indicator? And what should I do if
• 15:10
  Speaker 1: it is lagging? It doesn't matter that much to me,
• 15:13
  Speaker 1: But the leading indicators are the things I think we
• 15:15
  Speaker 1: should focus on. Interesting, Peter, So as we think about
• 15:19
  Speaker 1: this market volatility. Are you trying to Are you suggesting
• 15:22
  Speaker 1: to your clients that they sit on the sidelines and
• 15:25
  Speaker 1: not panic and maybe take the longer view here, And
• 15:28
  Speaker 1: if so, are you having any success with that? Well?
• 15:31
  Speaker 1: I am. You know, I've talked to all my clients
• 15:35
  Speaker 1: and most of them are saying and mature that they say, Look,
• 15:39
  Speaker 1: I've seen versions of this in the past. You know,
• 15:42
  Speaker 1: the virus is a new twist, but in terms of selloffs,
• 15:46
  Speaker 1: we've been here before, and we also are quite familiar
• 15:49
  Speaker 1: with the way we react psychologically and from a behavioral perspective,
• 15:53
  Speaker 1: So why don't we focus on what the leading indicators are?
• 15:57
  Speaker 1: And so to me, the leading indicators are when we
• 16:00
  Speaker 1: have the press conferences every day, I tell them to
• 16:03
  Speaker 1: focus on the following you know, what are the what
• 16:05
  Speaker 1: is the news about the vaccination? What's the news about
• 16:09
  Speaker 1: trends in the current cases, not the past cases, but
• 16:13
  Speaker 1: what might be happening in the future, Because when we
• 16:15
  Speaker 1: get these cases reported to us now, they're just going
• 16:18
  Speaker 1: to get worse because it's the results of the virus
• 16:22
  Speaker 1: in the past. So looking forward, also, let's think of
• 16:25
  Speaker 1: do they announce new innovative approaches, For instance, yesterday they
• 16:29
  Speaker 1: mentioned cruise ships could be available for hospital beds. I
• 16:34
  Speaker 1: think that's very creative if we need that. They've also
• 16:37
  Speaker 1: mentioned drive by testing. So the more creative we get
• 16:40
  Speaker 1: with this, and the more we get a handle on
• 16:42
  Speaker 1: when the virus is going to peak, that is the
• 16:45
  Speaker 1: main driver of everything. Everything else, to me is expendable
• 16:49
  Speaker 1: at this point. But we should focus on what are
• 16:52
  Speaker 1: the leading indicators to tell us when we think this
• 16:55
  Speaker 1: might crest, and then we're off to the races, because
• 16:57
  Speaker 1: then we have a data point and we can say, okay,
• 17:00
  Speaker 1: what should our actions be as a result of now
• 17:02
  Speaker 1: knowing that we've reached the maximum case accumulation. Well, and
• 17:07
  Speaker 1: speaking of press conferences and paying attention, we will bring
• 17:10
  Speaker 1: you some comments by Treasury Secretary Stephen Mnuchin and UH
• 17:15
  Speaker 1: majority leader and seminjority leader Mitch McConnell. They will be
• 17:19
  Speaker 1: joining shortly and with some comments that they gave in Washington,
• 17:25
  Speaker 1: d C. And we will bring them to you when
• 17:27
  Speaker 1: we get them. But there is a question when you
• 17:30
  Speaker 1: start talking about how people have been through this type
• 17:33
  Speaker 1: of thing before, have they? I mean, this is sort
• 17:36
  Speaker 1: of one thing that I'm struck by the speed that
• 17:38
  Speaker 1: this has occurred has just been so dramatic that in
• 17:42
  Speaker 1: some ways it feels like perhaps this is a different
• 17:46
  Speaker 1: kind of sell off and a different kind of economic
• 17:49
  Speaker 1: downturn than we have seen in modern history. Do you agree, Yes,
• 17:53
  Speaker 1: I do. I mean to a great extent, of course.
• 17:55
  Speaker 1: You know, when you look back at the major sell offs,
• 17:57
  Speaker 1: each one has its own story in its own cause,
• 18:02
  Speaker 1: and who would have expected, uh, something like a virus
• 18:05
  Speaker 1: to have this major world impact. So I agree with
• 18:09
  Speaker 1: you on that level. However, I also say that we
• 18:12
  Speaker 1: can look back at how we react to each one
• 18:15
  Speaker 1: of these surprises. Peter Anderson, a voice of reason, founder
• 18:18
  Speaker 1: of Anderson Capital Management, joining us by phone. Really interesting,
• 18:23
  Speaker 1: trying to find that compass right now amid a sea
• 18:26
  Speaker 1: of uncertainty. Paul, Yeah, it really is. At Lisa, and
• 18:28
  Speaker 1: I think a lot of investors, Um, you know, they're
• 18:30
  Speaker 1: if they haven't already panicked, Um, you know, I think
• 18:32
  Speaker 1: they're obviously I was looking at their portfolios, looking at
• 18:34
  Speaker 1: their flour one case, and just kind of in shock here.
• 18:37
  Speaker 1: But um, you know, I think one constructive thing is
• 18:39
  Speaker 1: to really take a look on the other side. When
• 18:42
  Speaker 1: we do get the other side, How do you want
• 18:44
  Speaker 1: to be positioned, what do you want to maybe look
• 18:46
  Speaker 1: at in terms of some investment opportunities. So that's hard
• 18:49
  Speaker 1: to do right now as we continue see the Baltilo
• 18:52
  Speaker 1: in the markets. But I think that's what Peter was
• 18:54
  Speaker 1: suggesting that his clients do. The Federal Reserve just announced
• 19:01
  Speaker 1: coordinated Central Bank swap line enhancements. It says it will
• 19:05
  Speaker 1: act with the Bank of England, Bank of Canada, Bank
• 19:08
  Speaker 1: of Japan, the European Central Bank, and the Swiss National Bank.
• 19:12
  Speaker 1: The swap lines to commence on March twenty through three,
• 19:16
  Speaker 1: and they will go through UH the end of April
• 19:20
  Speaker 1: at least. And this would be the dollar swap lines
• 19:23
  Speaker 1: that they initiated over the past few weeks UH in
• 19:26
  Speaker 1: order to ease up some of the dollars shortage and
• 19:30
  Speaker 1: liquidity crunch there a few weeks, a few days, I
• 19:32
  Speaker 1: should say, it's been weeks at least each day has
• 19:36
  Speaker 1: felt like that. And meanwhile they're going to switch each
• 19:39
  Speaker 1: swap line daily from weekly, just showing this ongoing effort
• 19:45
  Speaker 1: to try to ease some of the kinks in the
• 19:49
  Speaker 1: workings of financial markets right now. Yeah, global coordination there
• 19:53
  Speaker 1: at least, I think that's the key takeaway here and
• 19:55
  Speaker 1: again it goes to that liquidity issue or cross markets
• 19:58
  Speaker 1: that we've been talking about. So it's ice to see
• 20:00
  Speaker 1: the coordination. So our Jersey chief strate strategist at Bloomberg Intelligence, Uh,
• 20:05
  Speaker 1: we have him standing by here to give us his
• 20:08
  Speaker 1: sense on how important this is. And we have seen
• 20:11
  Speaker 1: some dollar weakness today which has actually been a huge
• 20:13
  Speaker 1: positive for global markets. I mean, are we seeing the
• 20:16
  Speaker 1: beginnings of this bleed into markets the feed is actually
• 20:19
  Speaker 1: being successful in easing some of the dollar shortage. Yes,
• 20:23
  Speaker 1: so I I do think that this type of activity
• 20:26
  Speaker 1: in particular will be helpful for markets globally and primarily
• 20:30
  Speaker 1: for uh, those folks who have funded in dollars who
• 20:33
  Speaker 1: aren't in the United States, right, So that that's really
• 20:35
  Speaker 1: where the funding shortage in dollars has been. That people
• 20:38
  Speaker 1: have been hoarding their dollars wanting to keep them as
• 20:41
  Speaker 1: a safe haven currency. Um. So this allows basically for
• 20:45
  Speaker 1: the flow of dollars in the global financial world to
• 20:48
  Speaker 1: to continue. And the fact that they're doing these weekly
• 20:51
  Speaker 1: operations on a daily basis I think is important because
• 20:55
  Speaker 1: that means that there's liquidity on demand. So the way
• 20:57
  Speaker 1: that they did it before by only having an offer
• 21:00
  Speaker 1: and once a week is you only had liquidity on
• 21:02
  Speaker 1: that day, you didn't have liquidity all those other days.
• 21:05
  Speaker 1: So UM, while I think the total dollar amounts might
• 21:07
  Speaker 1: not be massive in this program, UM, keep in mind
• 21:10
  Speaker 1: they did get up to almost five hundred billion dollars
• 21:13
  Speaker 1: during the crisis. So it's very possible that you can
• 21:15
  Speaker 1: wind up with you know, fifty a hundred billion dollars
• 21:18
  Speaker 1: of usage in these swap lines um every day. And
• 21:22
  Speaker 1: and you know, so you wind up with with a
• 21:24
  Speaker 1: rolling hundred billion dollars every day that that basically helps
• 21:27
  Speaker 1: the financial markets to work. You know, some of the
• 21:29
  Speaker 1: other things that the Fed's done, I don't think we'll
• 21:31
  Speaker 1: have a massive issue. Like last night the FED announced
• 21:34
  Speaker 1: that they were bringing back the commercial paper. Um that
• 21:38
  Speaker 1: that the money market funding Facility book. Great. Frankly, money
• 21:40
  Speaker 1: markets weren't really your problem this time. This is you know,
• 21:43
  Speaker 1: this is a much different crisis than two thousand eight. Well,
• 21:46
  Speaker 1: I do want to just before we let you go,
• 21:47
  Speaker 1: because I know you've got a lot on your plate.
• 21:49
  Speaker 1: There is still a question though about the demand for dollars.
• 21:53
  Speaker 1: And I look at one month and three months t bills.
• 21:55
  Speaker 1: The rates on those are both negative. You can find
• 21:58
  Speaker 1: negative rates currently in the United States. Is that a
• 22:01
  Speaker 1: concern for you given the fact that the lower bound
• 22:04
  Speaker 1: for the Federal Reserve has been and has been stated
• 22:06
  Speaker 1: to get again is zero and they are not planning
• 22:09
  Speaker 1: to go negative. Well, I don't think that that's a problem.
• 22:12
  Speaker 1: I think that does show you the risk off mentality
• 22:15
  Speaker 1: that's still pervasive within the markets. And and you know
• 22:18
  Speaker 1: the fact that you have UM interest rates that are
• 22:20
  Speaker 1: not going to go up anytime soon. The UH, the
• 22:23
  Speaker 1: the idea that you have UH tea bills that are
• 22:26
  Speaker 1: still in demand. It's basically the the safe haven of
• 22:29
  Speaker 1: safe havens. If you if you have to buy securities
• 22:31
  Speaker 1: and you can't hold cash, then you have to buy
• 22:34
  Speaker 1: something and that winds up being in front of te bills.
• 22:36
  Speaker 1: And you know that this did happen. I mean this
• 22:38
  Speaker 1: did happen not so long ago. You look at two
• 22:40
  Speaker 1: thousand eleven, you look at two thousands nine, you had
• 22:43
  Speaker 1: negative tea bill yield. So this is this a rehash
• 22:46
  Speaker 1: of that. This is almost like you know, where is
• 22:48
  Speaker 1: last time in two thousand seven and two thousand nine
• 22:50
  Speaker 1: you had a significant um uh. It took a little
• 22:55
  Speaker 1: while for all of this to happen. This is kind
• 22:57
  Speaker 1: of just the sped up version of of a risk off. Yeah,
• 23:03
  Speaker 1: thanks so much for giving us a few minutes. We
• 23:04
  Speaker 1: know you're busy, but we appreciate your insight. There, our
• 23:06
  Speaker 1: Jersey chief interest rate strategist for Bloomberg Intelligence looking at
• 23:10
  Speaker 1: the markets. Here, we are slightly green on the screen.
• 23:12
  Speaker 1: Let's see where the action is. Bloomberg Stocks editor Dave Wilson, David,
• 23:15
  Speaker 1: are you looking at this morning? Well, even though uh,
• 23:18
  Speaker 1: you know, we were green, I should say that the
• 23:20
  Speaker 1: SMP is now turned lower by a tenth of a percent.
• 23:24
  Speaker 1: You have more stocks down than up. I mean you're
• 23:27
  Speaker 1: seeing department stores or one area that jumps out because
• 23:31
  Speaker 1: you know, you had Coals closing all of its US
• 23:34
  Speaker 1: retail stores more than locations until at least April first
• 23:39
  Speaker 1: because of the coronavirus. Coals is down about seven and
• 23:41
  Speaker 1: a half percent. You're seeing Macy's Nordstrom fault as well.
• 23:45
  Speaker 1: And then there's the story of a T and T.
• 23:47
  Speaker 1: And that's a pretty interesting case because this is a
• 23:51
  Speaker 1: company that's been buying back stock that they issued when
• 23:54
  Speaker 1: they bought Time Warner. They had a four billion dollar
• 23:57
  Speaker 1: program in place to do that uh, after a previous
• 24:02
  Speaker 1: one in December what they call an Accelerated Share Approaches
• 24:06
  Speaker 1: program worked out with Morgan Stanley. Pretty common for companies
• 24:10
  Speaker 1: to go this route. So today A T and T
• 24:13
  Speaker 1: comes out and says we're canceling the current program. And
• 24:17
  Speaker 1: we report that A T and T is going for
• 24:20
  Speaker 1: three billion dollars and loans to try and bolster its finances.
• 24:24
  Speaker 1: So you put that all together, you've got A T
• 24:26
  Speaker 1: and T down six and a half percent. So I
• 24:29
  Speaker 1: mean it's really two sides of the same coin in
• 24:32
  Speaker 1: a sense, companies pulling back from buying back their shares
• 24:36
  Speaker 1: even though they're way down clearly from where they were
• 24:38
  Speaker 1: just a month ago, and increasingly having to line up
• 24:43
  Speaker 1: financing at the very least to make sure that they
• 24:46
  Speaker 1: can keep their business going. Tables and Bloomberg Sox editor,
• 24:50
  Speaker 1: thank you so much for the update. Thanks for listening
• 24:53
  Speaker 1: to the Bloomberg pen L podcast. You can subscribe and
• 24:56
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 24:59
  Speaker 1: you prefer. I'm Paul Sweeney, I'm on Twitter at pt Sweeney.
• 25:02
  Speaker 1: I'm Lisa abram Woods. I'm on Twitter at Lisa abram
• 25:04
  Speaker 1: woits one before the podcast. You can always catch us worldwide.
• 25:08
  Speaker 1: I'm Bloomberg Radio.