Latest / Bloomberg Intelligence / Remdesivir Needs More Trials Before Going All In: MMKCC's Bach

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Remdesivir Needs More Trials Before Going All In: MMKCC's Bach · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. It is time for Bloomberg Opinion.
• 0:22
  Speaker 1: We're pleased to be joined by Bloomberg Opinion colums Peter Back.
• 0:24
  Speaker 1: He's a director at the Center for Health Policy and
• 0:27
  Speaker 1: Outcomes at Memorial Sloan Kettering Cancer Center in New York City.
• 0:32
  Speaker 1: Dr Box, thanks so much for joining us here. Really
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  Speaker 1: fascinating column you have out talking about hospitals and the
• 0:39
  Speaker 1: drug that's getting a lot of i think press and
• 0:42
  Speaker 1: a lot of attention for treatment, which is ROMM depth severe.
• 0:45
  Speaker 1: Give us a sense of kind of how hospitals are
• 0:47
  Speaker 1: viewing this drug, how successful it has proven to be,
• 0:50
  Speaker 1: and what you think it's future might be. Well, good morning,
• 0:53
  Speaker 1: Thanks so much for having me. The drug it's a
• 0:56
  Speaker 1: drug that works against the COVID virus, has some data
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  Speaker 1: us suggesting it helps speed the recovery of COVID patients
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  Speaker 1: and we don't really have a lot of other treatments
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  Speaker 1: out there. So there's enthusiasm, but right now there's a shortage.
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  Speaker 1: The drug costs a tremendous amount of money. It's about
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  Speaker 1: three thou dollars plus per treatment course. It has no
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  Speaker 1: data that demonstrates convincingly it saves lives, and uh, the
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  Speaker 1: administration has sought to corner the worldwide market for it
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  Speaker 1: so hospitals can use it. But with all that optimism,
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  Speaker 1: my column focuses on two things. One is the data
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  Speaker 1: on remdesiviere is from a different time, even though it's
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  Speaker 1: a few months ago. It was studied on older people.
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  Speaker 1: The pandemic has moved to younger people, and it was
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  Speaker 1: studied without steroids, deck and me etho zone specifically, which
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  Speaker 1: is clearly showing an ability to save lives. And so
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  Speaker 1: now we need to understand is remdesiviere have a place
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  Speaker 1: here before we proceed to give it to a bunch
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  Speaker 1: of people and spend billions of dollars on it. Dr Bach,
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  Speaker 1: what can we say categorically and scientifically about round U
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  Speaker 1: severe in terms of its relationship with COVID nineteen, We
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  Speaker 1: can say that there is one study that shows it
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  Speaker 1: shortens the duration of illness. Uh, and that is about it.
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  Speaker 1: That's good news that don't get me wrong. But this
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  Speaker 1: is not the panacea. This doesn't turn around the pandemic.
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  Speaker 1: This doesn't mean we can get rid of masks or
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  Speaker 1: go back to school or anything like that. We need
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  Speaker 1: to make these incremental steps. That's how it always works.
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  Speaker 1: And so this is not a disparagement of this piece
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  Speaker 1: of progress. It's a fair reckoning with just how big
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  Speaker 1: these steps typically are, which is not very dr buck.
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  Speaker 1: You know, I'm reading more, and I guess we're all
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  Speaker 1: reading more and more stories about hospitals in southern California
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  Speaker 1: and Texas and far to being overrun. No more, I
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  Speaker 1: see you beds available. It's just it's just a simple
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  Speaker 1: replay of what we experienced in the New York metropolitan
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  Speaker 1: market back in March and early April. Are you surprised
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  Speaker 1: that the hospital system across the country, given what they
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  Speaker 1: witnessed in New York metro area, aren't better prepared? No,
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  Speaker 1: I'm not. Part of it is you know, triumph of
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  Speaker 1: hope over experience, the optimism that you know, it hasn't
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  Speaker 1: happened here, so it won't happen. Uh ever, but it's
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  Speaker 1: also these are you know, fixed physical structures. They can't
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  Speaker 1: suddenly have four times as many I see you beds. Uh.
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  Speaker 1: There are serious limitations to workforce surge. There's not that
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  Speaker 1: much supply, there's personal protective equipment. People are scattered across
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  Speaker 1: the country, and moving people is difficult. And so no,
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  Speaker 1: I'm not surprised at all. We knew from the beginning
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  Speaker 1: that our most limited, our biggest constraint in handling this
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  Speaker 1: pandemic was the health care system itself. Was the reason
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  Speaker 1: we tried to flatten the curve so we could both
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  Speaker 1: get better at treating this and also maintain, if you will,
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  Speaker 1: a steady, manageable flow of patients. And we have failed
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  Speaker 1: to do that, even though every other Western country has succeeded.
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  Speaker 1: I think because we have foolishly sat around saying, oh, well,
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  Speaker 1: we'll get a vaccine soon so we can be casual
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  Speaker 1: about this. We've allowed ideology to creep into public health planning.
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  Speaker 1: Maybe more creep in, how about trample over And you know,
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  Speaker 1: so I'm not surprised by any of this. And these
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  Speaker 1: hospitals are I think, you know, pushed to the limit,
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  Speaker 1: and they are not designed in almost any cases to
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  Speaker 1: focus purely on the management of one problem. They manage
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  Speaker 1: a mix of problems in a ratio where there various
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  Speaker 1: constraints hospital beds, staffing, I V. Tubing, Everything is kind
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  Speaker 1: of gets them there, but dr bach when it comes
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  Speaker 1: to the round us of your problem and the fact
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  Speaker 1: that there aren't significant, large scale trials that can tell
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  Speaker 1: us exactly what it can and can't do. When it
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  Speaker 1: comes to coronavirus, how do you get around the fact
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  Speaker 1: that in a pandemic people jump on anything that looks
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  Speaker 1: like it might work. But for a trial to give
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  Speaker 1: us any real information, you need one sick person and
• 5:20
  Speaker 1: one other sick person. One gets the treatment, one doesn't.
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  Speaker 1: How do you make that kind of moral judgment at
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  Speaker 1: a time like this, Well, it's you know, this is
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  Speaker 1: the foundation of empirical science, that we take our time,
• 5:33
  Speaker 1: that we don't assume our guesses are right. And this
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  Speaker 1: isn't some fake humility. This is a hard learned humility
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  Speaker 1: from having been shown over and over again our guesses
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  Speaker 1: were wrong, and so we have to do the studies
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  Speaker 1: for exactly the reasons you're suggesting. There's an argument that
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  Speaker 1: we shouldn't be doing them. We are in a crisis
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  Speaker 1: that is exploding and expanding around us. What we learned
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  Speaker 1: today will have impact on ten times, a hundred times,
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  Speaker 1: potentially a thousand times as many people down the road.
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  Speaker 1: And so that is one element of the moral or
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  Speaker 1: ethical underpinning of research. Another is, frankly, we have a
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  Speaker 1: rimmed desevere shortage. So what I'm calling for is let's
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  Speaker 1: go do a trial. Let's it will take maybe about
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  Speaker 1: two thousand people. We could enroll such a trial, get
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  Speaker 1: the patients for it in a matter of days. Unfortunately,
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  Speaker 1: because of the number of people coming into hospital, everyone
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  Speaker 1: gets decks of methods m which we know saves lives.
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  Speaker 1: Half get rammed deseverere hal get placebo or some other control.
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  Speaker 1: We will know in fourteen days and a month whether
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  Speaker 1: or not we're out of time. I'm afraid we'll We'll
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  Speaker 1: revisit this, Thank you so much. Well. One of the
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  Speaker 1: byproducts of this pandemic is it's just kind of exacerbating
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  Speaker 1: or highlighting some of the tensions between a lot of
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  Speaker 1: nations across the world. And clearly it's a unique time here,
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  Speaker 1: and one of the questions is how will the new
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  Speaker 1: world order look post pandemic as we think about kind
• 7:02
  Speaker 1: of how the United States may or may not lead
• 7:04
  Speaker 1: in how your positioning of Europe and so on. So
• 7:07
  Speaker 1: there's no one better to discuss these big, big geopolitical
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  Speaker 1: issues in Alan Crawford, Senior editor International Government for Bloomberg News,
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  Speaker 1: joins us on the phone from Berlin. Alan, thanks so
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  Speaker 1: much for joining us here. You're out with this story
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  Speaker 1: a few days ago, A new world order for the
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  Speaker 1: coronaviruy era is starting to emerge. Give us a sense
• 7:25
  Speaker 1: of how you think this new world order may look. Well,
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  Speaker 1: I think we all get the feeling that there's something
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  Speaker 1: momentous underway, and so I tried to take a step
• 7:36
  Speaker 1: back to take a look at where we are six
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  Speaker 1: months and and already there are definite trains that we
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  Speaker 1: see that the US and I have to see it
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  Speaker 1: from an outsaye perspective, it just looks regardless of the politics,
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  Speaker 1: it just looks as if it's increasingly self obsorbed. I
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  Speaker 1: head of going into the nev election, of course, but
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  Speaker 1: also with the pandemic, it is having to this this
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  Speaker 1: terrible envirus, and it's occupied U as far as the
• 8:09
  Speaker 1: outside world is concerned. But then of course we're seeing
• 8:13
  Speaker 1: China for for reasons of its own that I don't
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  Speaker 1: think are completely understood. It's there are these high frictions
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  Speaker 1: with countries from Canada to Australia, to the UK over
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  Speaker 1: Hong Kong, and of course with the US as well,
• 8:29
  Speaker 1: and these are all coming together at once, and then
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  Speaker 1: Europe is in this kind of strange in between position
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  Speaker 1: where it's trying to it there are signs that may
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  Speaker 1: just emerge from this crisis stronger. What will be the
• 8:42
  Speaker 1: decisive moment at which it really becomes obvious that China
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  Speaker 1: has already sort of become a bigger figure in world
• 8:50
  Speaker 1: politics than maybe the US and Europe had given it
• 8:54
  Speaker 1: credit for. Well, I mean, if we're looking at the
• 8:58
  Speaker 1: six months ahead, and obvious we um the US elections
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  Speaker 1: a huge it's the elephant in the room, if you like.
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  Speaker 1: And certainly the the the analysts that I spoke to,
• 9:08
  Speaker 1: they were somewhat wary about um conflicts ahead. I'm not
• 9:12
  Speaker 1: talking about open conflict, but you know, tensions, more frictions
• 9:16
  Speaker 1: ahead of the November election. But equally, as I said
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  Speaker 1: that China is, it's there's all these frictions with other
• 9:25
  Speaker 1: countries middling powers if you like. And I think that
• 9:29
  Speaker 1: the saints is that these countries, like well across the EU,
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  Speaker 1: the UK, Assulia, Canada and others, they are being faced
• 9:39
  Speaker 1: with a very difficult choice. Do they stand up to
• 9:42
  Speaker 1: China or do they basically try and keep their head down.
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  Speaker 1: And I think that there's a sense that their decision
• 9:50
  Speaker 1: will actually go a long way towards determining the approach
• 9:55
  Speaker 1: to China. So it's interesting here We're gonna have you
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  Speaker 1: mentioned the election, And let's say, for argument's sake, that
• 10:01
  Speaker 1: the that Vice President Biden wins the election, does the
• 10:05
  Speaker 1: does his Secretary State spend the first one days administration
• 10:09
  Speaker 1: simply on a plane traveling around to all these countries
• 10:11
  Speaker 1: saying that, Okay, those last four years, just forget them.
• 10:15
  Speaker 1: We're going back to businesses as usual. We are your friend,
• 10:18
  Speaker 1: we will be part of the solution. We will lead
• 10:21
  Speaker 1: you against you know, whether it was a Cold warf
• 10:24
  Speaker 1: thirty or forty years ago to whatever way is we
• 10:26
  Speaker 1: have in the future, I think undoubtedly that would be
• 10:30
  Speaker 1: the case. But for what effect that would have, I'm
• 10:33
  Speaker 1: not sure, because on the one hand, yes, it was
• 10:36
  Speaker 1: room to improve relations um. On the other then really
• 10:41
  Speaker 1: detensions between for example, European countries and France Germany with
• 10:48
  Speaker 1: the with the Trump administration, then that has really highlighted
• 10:53
  Speaker 1: Europe's m europe dependence on the U S which is
• 10:57
  Speaker 1: as uh, it's obviously it goes back to the same
• 11:00
  Speaker 1: in World War and all of the help that the
• 11:03
  Speaker 1: US has given to Europe and the you know, the
• 11:06
  Speaker 1: how essential the transatlantic relationship is. But really it's highlighted
• 11:12
  Speaker 1: just this this dependence. And I think that I know
• 11:15
  Speaker 1: that European governments and the EU independently are already taking
• 11:19
  Speaker 1: step to try and to decoupled to some extent, to
• 11:24
  Speaker 1: some limited extent. Alan you know, there's always this talk
• 11:29
  Speaker 1: of clash of civilizations, you know, Henry Kissinger and Neil
• 11:32
  Speaker 1: Ferguson talking about, you know, a new Cold War between
• 11:35
  Speaker 1: the US and China. Those things though, are quite hyperbolic.
• 11:40
  Speaker 1: Where is there any evidence that there will actually be
• 11:43
  Speaker 1: sort of a breakout of conflict, you know, soft or
• 11:47
  Speaker 1: hard between you know, the bipolar countries in this war. Well,
• 11:54
  Speaker 1: certainly one of the islands that I was speaking to,
• 11:56
  Speaker 1: who sits in Singapore, then he said that, um, that
• 12:01
  Speaker 1: his the greatest concern going forward, and he's talking short
• 12:06
  Speaker 1: to medium term. Is not that there's some kind of
• 12:10
  Speaker 1: open conflict between the US and China, because the government's
• 12:15
  Speaker 1: obviously realized that that's it would be catastrophic. His concern
• 12:21
  Speaker 1: is more that there is some kind of like basically mistake,
• 12:25
  Speaker 1: some kind of error in in these high presentitive areas
• 12:29
  Speaker 1: such as the South China Sea. Who are you know
• 12:32
  Speaker 1: the US has same two aircraft carriers through recently, uh,
• 12:36
  Speaker 1: And that there's more it's basically an accident that could happen.
• 12:43
  Speaker 1: That's that's what the concerns are and um, certainly among
• 12:47
  Speaker 1: the analyst community. So Alan, what's the consensus of the
• 12:53
  Speaker 1: European Union and Brexit and what the role the UK
• 12:57
  Speaker 1: may play here in a prose brexit world terms of
• 13:00
  Speaker 1: the world or or well, that's a good question. That's
• 13:03
  Speaker 1: actually my next story I'm working on. But I mean,
• 13:10
  Speaker 1: the UK is in a difficult position that it's it's
• 13:13
  Speaker 1: really setting out on its own to try and forward
• 13:17
  Speaker 1: its own um, its own path in this increasingly um
• 13:23
  Speaker 1: increasingly attains world at the moment, and so that they
• 13:27
  Speaker 1: are having the DEPARTMN Minister and Domini grab Con Secretary
• 13:31
  Speaker 1: has made it clear that they have difficult choices ahead,
• 13:34
  Speaker 1: and we're seeing that already over Hong Kong, we're seeing
• 13:37
  Speaker 1: it over Huawei. That's not not unique to the UK,
• 13:40
  Speaker 1: of course, but these are these are decisions which will
• 13:43
  Speaker 1: have potentially very deep ramifications for its relations as an
• 13:48
  Speaker 1: independent country, a middle and power when it's having to
• 13:52
  Speaker 1: deal with the superpowers of of China, but also with
• 13:56
  Speaker 1: the any with either the Trump administration, which strangely and
• 14:00
  Speaker 1: wants a treat deal, or the Biden Biden administration. We
• 14:04
  Speaker 1: don't know what their position would be on on on
• 14:08
  Speaker 1: post projexit UK and a treat deal. Alan, looking forward
• 14:11
  Speaker 1: to seeing that story. But this particular story you about
• 14:14
  Speaker 1: this this morning in the last couple of days, is fascinating.
• 14:17
  Speaker 1: Out urge everybody to read it. Alan Crawford a senior
• 14:19
  Speaker 1: editor for International Government and Bloomberg News, and his story
• 14:22
  Speaker 1: as a new world order for the coronavirus era is
• 14:24
  Speaker 1: starting to emerge, and it is an interesting question Paul,
• 14:28
  Speaker 1: to talk about who Joe Biden might pick. You know,
• 14:30
  Speaker 1: in terms of foreign policy, we know already that he
• 14:32
  Speaker 1: has the former CIA deputy director on a potential transition
• 14:37
  Speaker 1: team worthy to become president at some point and you know,
• 14:41
  Speaker 1: it looks like there might be you know, quite a
• 14:43
  Speaker 1: forceful stance there. So we have a deal today, Analog
• 14:49
  Speaker 1: Devices acquiring Maximum Integrated Products twenty point nine billion dollars
• 14:53
  Speaker 1: or twenty two premium too Maxims closing shares Friday, and
• 14:58
  Speaker 1: it's helping the NASDA lead the gains for the indussees today.
• 15:02
  Speaker 1: Let's bring somebody in who can tell us so all
• 15:04
  Speaker 1: the details about why this deal was done Wood and
• 15:07
  Speaker 1: who is senior technology analyst add Bloomberg Intelligence. We'll just
• 15:10
  Speaker 1: explained to us. First of all, why Analog would want Maximum. Great,
• 15:15
  Speaker 1: thanks for having me on body. So this is all
• 15:18
  Speaker 1: about scale and trying to broaden Analog devices ship book print.
• 15:23
  Speaker 1: So the competter compete against the larger competitor Texas Instruments
• 15:27
  Speaker 1: over the long term. So actually, Fannie, I should probably
• 15:31
  Speaker 1: let you know. The first thing I do when I
• 15:33
  Speaker 1: see an M and A deal in the news, I
• 15:35
  Speaker 1: go to M A go and I see I type
• 15:37
  Speaker 1: on there and I click click click on the deal.
• 15:38
  Speaker 1: I want to see who the advisors are, who are
• 15:40
  Speaker 1: the bankers on this deal? And yes, it was be
• 15:44
  Speaker 1: of A Merrill Lynch and Morgan Stanley advising the buyer
• 15:47
  Speaker 1: on the sell side, JP Morgan. So so the big
• 15:49
  Speaker 1: heavyweight investment banks weighing in on this deal. So whould
• 15:53
  Speaker 1: can we look at this deal here? You talk about
• 15:55
  Speaker 1: it scale, we've heard that before. Give us a sense
• 15:58
  Speaker 1: of kind of how the same conductor industry is in
• 16:01
  Speaker 1: terms of consolidation. Is it's still a fragmented industry or
• 16:04
  Speaker 1: redound to just a handful of heavyweights. Well, I mean
• 16:08
  Speaker 1: it is a bifurcating market. So you you have the
• 16:11
  Speaker 1: heavyweights like Texas Instruments, um. You know, as well as
• 16:15
  Speaker 1: analog devices, you have microchip So you have these larger players,
• 16:21
  Speaker 1: and then you have a bunch of smaller players, specialized
• 16:24
  Speaker 1: chip makers. UM. So to some degree, it's still fairly fragmented.
• 16:29
  Speaker 1: Uh roughly, I would say about forty of the market
• 16:33
  Speaker 1: share go through these heavyweight players and then fragmented on
• 16:36
  Speaker 1: the on the other side. UM. And the one thing
• 16:38
  Speaker 1: I will tell you is that look like this market
• 16:41
  Speaker 1: has been uh in a phase of consolidation over the
• 16:44
  Speaker 1: last uh five years or so. Um. You know, it
• 16:48
  Speaker 1: took a hiatus for the last couple of years. Now
• 16:50
  Speaker 1: it's finally it seems as if some companies are looking
• 16:54
  Speaker 1: to come back and deal making and and and the
• 16:56
  Speaker 1: analog devices, and Maximum is an example of that. Who
• 16:59
  Speaker 1: didn't we have two D seventy five million dollar cost
• 17:03
  Speaker 1: synergy announcement. It doesn't seem like a lot of cost synergies.
• 17:07
  Speaker 1: Am I expecting too much from a merged analog Maximum? Sure? So? So,
• 17:13
  Speaker 1: I mean, you know, if you look at the scale
• 17:16
  Speaker 1: of of Maximum, there's there's really not much that you
• 17:18
  Speaker 1: can take out. And if I look at the cost
• 17:21
  Speaker 1: nergy opportunities here, it's on the gross margin side and
• 17:24
  Speaker 1: then uh, not much on the operating margin side. So
• 17:27
  Speaker 1: on the ghost margin side, you can actually poured over
• 17:30
  Speaker 1: some of the chip capacity over to the analog devices
• 17:33
  Speaker 1: uh FABS and then on on on the the outputing
• 17:37
  Speaker 1: expense side. Um uh Maximum has actually done a very
• 17:43
  Speaker 1: good job a streamlining the organization over the last five years,
• 17:47
  Speaker 1: so they were really running into the bone. There's a
• 17:50
  Speaker 1: little bit that they could take away, but not that
• 17:53
  Speaker 1: much more. But but even then you are going to
• 17:55
  Speaker 1: still see the overall maximum margins in proved to where
• 18:00
  Speaker 1: analog devices is, which is around So we'll talk to
• 18:05
  Speaker 1: us about the end users here of some of the
• 18:08
  Speaker 1: chips that analog and maxim puts out it's a sense
• 18:10
  Speaker 1: of who their big customers are and what are some
• 18:12
  Speaker 1: of the growth drivers for their part of the chip industry.
• 18:16
  Speaker 1: I wouldn't necessarily that UH call out any particular big
• 18:21
  Speaker 1: customers similar to someone like an inteler and Nvidio. If anything,
• 18:25
  Speaker 1: these guys have a portfolio of over ten UH you know,
• 18:28
  Speaker 1: ten to twenty thousand ships combined addressing you know, UH,
• 18:33
  Speaker 1: you know, fifteen thousand different customers. It'll go anywhere between
• 18:38
  Speaker 1: maximums exposure into your your Nintendo, UH, your your your
• 18:43
  Speaker 1: Nintendo switch. Apple has exposure to UH some UH Analog
• 18:49
  Speaker 1: devices as an exposure to some Apple devices. Automotive, they're
• 18:53
  Speaker 1: they're very big on automotive, industrial robotics are very big
• 18:57
  Speaker 1: on UH in that sector, and also data center powered
• 19:01
  Speaker 1: chips and and UH and UH converted chips. So well,
• 19:05
  Speaker 1: they're very broad based from from a customer and industrial perspective. Now,
• 19:10
  Speaker 1: these are two of the biggest semiconductor companies. There are
• 19:13
  Speaker 1: obviously bigger ones, but you know, Analog at forty three
• 19:16
  Speaker 1: billion dollars market cap and you know maximum eighteen nine
• 19:19
  Speaker 1: billion dollars, Well, who will be next? So even Finny
• 19:22
  Speaker 1: and we have an XP skyworks really really really tough
• 19:28
  Speaker 1: to say. Any Um, you know, I didn't think the
• 19:31
  Speaker 1: Maxim deal would happen now during the pandemic. Uh. You know,
• 19:36
  Speaker 1: I wouldn't be surprised if uh some of the smaller companies,
• 19:40
  Speaker 1: some of these these smaller these fenders would come into play. Uh.
• 19:45
  Speaker 1: You know, I've I've seen some headlines where someone like
• 19:47
  Speaker 1: a serious Logic that provides chips to the iPhone, or
• 19:51
  Speaker 1: or semd Tech which which provides a wireless chip, wireless
• 19:56
  Speaker 1: chips to the uh to industrial applications, you know. And
• 20:02
  Speaker 1: then there's also you need to think that we need
• 20:04
  Speaker 1: to have a willing buyer as well. I mean, this
• 20:08
  Speaker 1: is an all stock deal which helps preserve analog devices cash. Uh.
• 20:13
  Speaker 1: The one thing we do have to think about that
• 20:15
  Speaker 1: some of the larger companies, uh maybe in cash preservation mode,
• 20:20
  Speaker 1: so they won't be able to use their cash as
• 20:23
  Speaker 1: much to consumate a large deal like this. Wiginho, thanks
• 20:26
  Speaker 1: so much for joining us helping us break down this deal.
• 20:28
  Speaker 1: Wiginho is a senior tech analyst for Bloomberg Intelligence. He
• 20:32
  Speaker 1: follows all the devices and the chip makers out there,
• 20:37
  Speaker 1: so we appreciate his opinion. Well, The responses to the
• 20:42
  Speaker 1: economic fallout of this pandemic have been swift and severe
• 20:46
  Speaker 1: here in the United States. First, we had the Federal
• 20:48
  Speaker 1: Reserve really step in and inject tremendous amount of liquidity
• 20:52
  Speaker 1: UH into the marketplace. We've had three rounds of fiscal
• 20:55
  Speaker 1: stimulus coming out of Congress, capped by round three a
• 20:58
  Speaker 1: couple of months ago, totally three trillion dollars UH. Now
• 21:02
  Speaker 1: pressure is building on a fourth round to come out
• 21:05
  Speaker 1: of Washington, and that is less clear what will be
• 21:07
  Speaker 1: in that and the size and the timing and so on.
• 21:10
  Speaker 1: So to get an update here what it means in
• 21:12
  Speaker 1: the world of Washington and for a broader economy, we
• 21:15
  Speaker 1: welcome Matt Girkin, geopolitical strategist for b c A Research
• 21:19
  Speaker 1: based in Montreal, Quebec. Thanks so much for joining us. Matt.
• 21:22
  Speaker 1: Let's just start off there. Fiscal stimulus round number four.
• 21:27
  Speaker 1: What do you expect? When do you expect it? Hey,
• 21:31
  Speaker 1: thanks for having me on. Well, I would expect something
• 21:34
  Speaker 1: upward of two trillion US dollars and by the time
• 21:37
  Speaker 1: then it goes for recess on August and the anything
• 21:41
  Speaker 1: much less than that, anything much less than with the
• 21:43
  Speaker 1: House impress past three trillion risks forcing the U S
• 21:47
  Speaker 1: fiscal thrust to pull back, and that's not something that
• 21:50
  Speaker 1: president running for re election would want to have happened.
• 21:54
  Speaker 1: What makes you think it'll be two chillion. We're seeing
• 21:56
  Speaker 1: one trillion for the next round, and does strike me
• 22:00
  Speaker 1: that there will have to be some kind of accommodation
• 22:01
  Speaker 1: made in Congress? Yeah? Right now, the Senate GOP and
• 22:06
  Speaker 1: actually for several months been saying one trillion. President Trump
• 22:10
  Speaker 1: and some members of his administration have said two trillion,
• 22:14
  Speaker 1: but most recently Mike Pence and one of his ay
• 22:16
  Speaker 1: implied that maybe he's on the one trillion side. And
• 22:19
  Speaker 1: then the Democrats haven't mentioned we're pushing for a three
• 22:22
  Speaker 1: trillion dollar bills. So Trump's in the middle. But as
• 22:25
  Speaker 1: I say, he's got an election to fight, and he's
• 22:27
  Speaker 1: a big spinder anyway, He's been fiscally propligate, so I
• 22:30
  Speaker 1: think he'll end up on the big end of this
• 22:32
  Speaker 1: h siding with the Democrats. And then I think that
• 22:34
  Speaker 1: the GOP senators are going to have to just get
• 22:37
  Speaker 1: with the program because if they don't, they'll suffer if
• 22:39
  Speaker 1: Trump suffers. So, Matt, We're we're getting closer and closer
• 22:43
  Speaker 1: to that fall election, which strangely has been on the
• 22:47
  Speaker 1: back burner heres as everyone is focused on the pandemic.
• 22:50
  Speaker 1: What's kind of a thinking in your world as to
• 22:54
  Speaker 1: what perhaps a Biden presidency might mean. What are something
• 22:59
  Speaker 1: you're takeaways that you're looking at right now? Yeah, Well,
• 23:04
  Speaker 1: the big change that has happened is that the United
• 23:06
  Speaker 1: States is doing this massive stimulus and so if if
• 23:09
  Speaker 1: I'm anywhere close to correct on that stimulus, we could
• 23:12
  Speaker 1: end up with something of six percent of global gop
• 23:15
  Speaker 1: GDP being US physical stimulus. We're looking at the US
• 23:20
  Speaker 1: maybe putting in twenty percent of its own GDP and stimulus.
• 23:23
  Speaker 1: So that's a massive turn, and that's going to power
• 23:26
  Speaker 1: a cyclical rebound as we've seen in over the long run.
• 23:29
  Speaker 1: That should be the decisive factor kind of regardless of
• 23:31
  Speaker 1: who wins the election. But a Biden administration clearly is
• 23:35
  Speaker 1: going to have a major regulatory shock, reversing the deregulation
• 23:39
  Speaker 1: that Trump did. And that's even if he doesn't win
• 23:41
  Speaker 1: the Senate. In truth, he's very likely to win the
• 23:43
  Speaker 1: Senate for the Democrats if he does win the White House,
• 23:47
  Speaker 1: and then in that case you could have I think
• 23:49
  Speaker 1: an extraordinary windfall of of of a shift to the
• 23:52
  Speaker 1: left in terms of healthcare, in terms of immigration, in
• 23:56
  Speaker 1: terms of even the tech sector facing a little bit
• 23:59
  Speaker 1: more scrutiny. And then of course you also have, uh,
• 24:03
  Speaker 1: you have the cyclical reflationary impacts. They are spending more
• 24:06
  Speaker 1: and giving more for people in wages and household uh spending,
• 24:10
  Speaker 1: but then you have this headwind for corporates that have
• 24:13
  Speaker 1: to worry more about taxes and regulations. The only clues
• 24:15
  Speaker 1: we have us to the type of campaign that he's
• 24:19
  Speaker 1: he's you know, running, or the type of presidency that
• 24:22
  Speaker 1: he would he would lead, though Matt is the people
• 24:26
  Speaker 1: that he's already appointed to a potential transition team. We're
• 24:29
  Speaker 1: not really seeing a whole lot of economic messaging. Where
• 24:34
  Speaker 1: is your evidence to suggest that there will be a
• 24:35
  Speaker 1: hard turn left? Yeah, Biden is a centrist and that's
• 24:39
  Speaker 1: how he won the nomination. He's a He's a sensor
• 24:42
  Speaker 1: left establishment politician, no question about that. But remember that
• 24:47
  Speaker 1: the way that you try to predict the outlook for
• 24:51
  Speaker 1: things like this is not by wildly guessing based on
• 24:54
  Speaker 1: a president's preferences. I mean, President Trump had a preference
• 24:57
  Speaker 1: of a tear up on all Chinese and words, but
• 25:00
  Speaker 1: he didn't get that. The issue is that the winner
• 25:04
  Speaker 1: of the White House is likely to bring the Senate
• 25:06
  Speaker 1: with them, and when the Senate goes Democratic and you
• 25:09
  Speaker 1: get a full blue sweep, which is certainly what looks
• 25:12
  Speaker 1: likely today if the election were held today, Well, in
• 25:15
  Speaker 1: that environment, the constraint on the Democratic Party is removed,
• 25:19
  Speaker 1: Biden will be pressured by his party to take advantage
• 25:23
  Speaker 1: of a historic situation. And that's remember similar to when
• 25:27
  Speaker 1: the Obama administration came in. But there's a lot of
• 25:29
  Speaker 1: frustration in the party that there was too much of
• 25:32
  Speaker 1: an attempt to be bi partisan under the Obama administration,
• 25:35
  Speaker 1: so that this is a crisis that really can't go
• 25:37
  Speaker 1: to wait this time around. And I think that's how
• 25:39
  Speaker 1: the party is going to play things. So the filibuster,
• 25:41
  Speaker 1: for instance, very much at risk in the Senate. So, Matt,
• 25:44
  Speaker 1: given that these the Senates, the Republicans in the Senate
• 25:47
  Speaker 1: are at risk, here, are you surprised they haven't broken
• 25:51
  Speaker 1: ranks with President Trump? Well, I think in some ways
• 25:56
  Speaker 1: they have. I mean, I think in the news flow
• 25:58
  Speaker 1: over the past several months, you've seen a lot more
• 26:00
  Speaker 1: flaking off from the Senators than you had at any
• 26:02
  Speaker 1: previous time and Trump's administration. And that's because the administration
• 26:05
  Speaker 1: is just fundamentally weakened and embattled by a global pandemic
• 26:09
  Speaker 1: and a recession. Trump's handling of those issues. So I
• 26:13
  Speaker 1: do see some some wobbling within the Senate ranks. But also,
• 26:18
  Speaker 1: of course you're seeing the real divisions that always existed
• 26:21
  Speaker 1: between the establishment Republicans who might want to be more
• 26:23
  Speaker 1: physically hawkish, and President Trump, who's just a big spending
• 26:27
  Speaker 1: populist and wants, especially in this case, to make sure
• 26:31
  Speaker 1: that he gives the economy ajolt ahead of the election.
• 26:33
  Speaker 1: And that may even be behind that little difference between
• 26:36
  Speaker 1: you know, Trump implying that he wants to go even
• 26:38
  Speaker 1: bigger than the Democrats on stimulus, while Mike Pence's office
• 26:42
  Speaker 1: is maybe implying he wants to be more where Mitch
• 26:44
  Speaker 1: McConnell is at one trillion dollars. But what can we
• 26:48
  Speaker 1: expect to hear from Biden next? I mean, we haven't
• 26:51
  Speaker 1: heard all that much. I guess it's not a there's
• 26:53
  Speaker 1: not a whole lot of advantage to him being out
• 26:55
  Speaker 1: there and uh, you know, making a lot of public statements.
• 26:59
  Speaker 1: But when when Wally start well in August. You know,
• 27:03
  Speaker 1: we obviously the virus is throwing everyone for a loop
• 27:06
  Speaker 1: on timing. But in August you're supposed to have the
• 27:09
  Speaker 1: party conventions, and the party convention is a time where
• 27:11
  Speaker 1: he will complete this process. We've seen in recent months
• 27:14
  Speaker 1: of him touching every base in the Democratic Party and
• 27:17
  Speaker 1: its constituency to show everyone in across the nation that
• 27:21
  Speaker 1: he's allied with the Progressive, that he's allied with the
• 27:25
  Speaker 1: different voting groups, um and and ultimately he's gonna want
• 27:28
  Speaker 1: President Barack Obama's backing and other top Democrats backing. So
• 27:32
  Speaker 1: I think he's gonna have to start getting out more
• 27:35
  Speaker 1: uh later in uh in August. But in the meantime,
• 27:39
  Speaker 1: he is perfectly happy to kind of hide away in
• 27:41
  Speaker 1: his basement or wherever he is and let President Trump
• 27:44
  Speaker 1: attract the attention with often his controversial or unorthodox statements
• 27:50
  Speaker 1: and and take the heat. Well. Yes, indeed, Matt, thank
• 27:54
  Speaker 1: you so interesting to speak with you. And and indeed,
• 27:56
  Speaker 1: as he say, August, it seems quite late. It's I'm
• 28:00
  Speaker 1: very close to an election. It must be one of
• 28:01
  Speaker 1: the few times that you really have only had a
• 28:03
  Speaker 1: competitor sort of emerge properly a couple of months before.
• 28:06
  Speaker 1: I mean there was there was a little time back
• 28:08
  Speaker 1: where he was. He was out there, but he was
• 28:11
  Speaker 1: pulled back in quite I think it's a strategy, just
• 28:13
  Speaker 1: I think it is. It's nothing but bad news out there.
• 28:16
  Speaker 1: Why getting that news cycle exactly? Matt Garkin is geopolitical
• 28:19
  Speaker 1: strategist to b c A Research. You joined us there
• 28:22
  Speaker 1: from Montreal in Canada. So that's that'll do it for
• 28:27
  Speaker 1: this two hours of markets produced day tuned. We're following
• 28:30
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• 28:33
  Speaker 1: now of one of a quarter percent plus. In fact,
• 28:38
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• 28:41
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  Speaker 1: Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at
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• 28:53
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