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"We're Halfway There" to 10-15% Correction: Jim Bianco · Bloomberg Intelligence

0:01
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Along
0:04
Speaker 1: with my co host of Bonnie Quinn. Every business day
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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
0:10
Speaker 1: along with essential market moving news. Kind the Bloomberg Markets
0:13
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
0:17
Speaker 1: and on Bloomberg dot com. It is time now to
0:20
Speaker 1: introduce our first guest. Also, somebody who has been around
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Speaker 1: for some time and will remember very very vividly eleven
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Speaker 1: and that's Jim bianco founder and president of Bianco Research
0:32
Speaker 1: based in Chicago. And I'm sure Jim, you know it
0:34
Speaker 1: would have been a fearsome size to be watching that
0:38
Speaker 1: on the floor, on the trading floor in Chicago. Yeah,
0:43
Speaker 1: in a lot of ways, like it was yesterday, and
0:46
Speaker 1: it was you know, I've been in the markets for
0:48
Speaker 1: thirty three years and it still remains one of the
0:52
Speaker 1: seminal days of my career. Jim, you know, it's been
0:57
Speaker 1: a difficult time recently, and you know today obviously is
1:01
Speaker 1: it's extra difficult for a lot of people. But the
1:03
Speaker 1: difficulty that we've seen in the last few months, does
1:06
Speaker 1: it persist through the end of the year. And into
1:08
Speaker 1: the next year in terms of economic fundamentals, in terms
1:11
Speaker 1: of just general suffering out there. We'll get to the
1:15
Speaker 1: markets in a moment. Yeah, you're You're right to point
1:19
Speaker 1: out that there's the economy and what's happening with the economy.
1:23
Speaker 1: And I do think that what we've seen is a
1:25
Speaker 1: series of stumbles. The economic recovery off the COVID low
1:29
Speaker 1: and may seem to have stalled around July. The need
1:33
Speaker 1: for stimulus, because remember the government shut down the economy
1:37
Speaker 1: and a lot of people lost their jobs because of that,
1:40
Speaker 1: seems to be dead now since to at least past
1:43
Speaker 1: the election, and that's going to also kind of drag
1:47
Speaker 1: on the economy as well too. So I don't think
1:50
Speaker 1: the economy is going backwards. I just think that the
1:53
Speaker 1: recovery to something that was a pre COVID normal has stalled,
1:58
Speaker 1: and we've got more AVID instead, it's going to be
2:00
Speaker 1: even harder to get back there. So the economy itself,
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Speaker 1: um seems to have just slottened out at a lower level,
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Speaker 1: and net net, that's not the best place to be,
2:11
Speaker 1: so Jim. And given that backdrop, and given the fact
2:14
Speaker 1: that Congress looks like I will be unable to deliver
2:17
Speaker 1: at least a near term fiscal stimulus. What are investors
2:21
Speaker 1: to do? Are they just simply leaning back on that backstop,
2:25
Speaker 1: which is a federal reserve and ECB just you know,
2:27
Speaker 1: providing tremendous liquidity in the market, And is that all
2:29
Speaker 1: we need? Well, that's what we have. Let's put it
2:33
Speaker 1: that way, because we talked about with the economy. Let's
2:36
Speaker 1: add in then that if you look at valuations and
2:39
Speaker 1: you look at the forward pe ratios, even if you
2:41
Speaker 1: take out the Fang stocks, you're near the two thousand
2:45
Speaker 1: bubble peaks in terms of how overvalued this market is
2:47
Speaker 1: by a lot of metrics. Others aren't, but a lot are.
2:50
Speaker 1: So this is by no stretches as a cheap market.
2:53
Speaker 1: So if you're an investor, you're saying, look, the economy
2:56
Speaker 1: is stalling, the market's overvalued. Boy, let's sound like a
3:00
Speaker 1: really that mixed. Why am I in this market? Well,
3:02
Speaker 1: you've got the federal reserve and you've got the government
3:06
Speaker 1: that's been promising to build out the airline industry and
3:08
Speaker 1: the cruise ship industry, and they're not going to go
3:10
Speaker 1: down without a fight. To at least protect investors, we
3:14
Speaker 1: could debate whether or not that's you know, eth a
3:17
Speaker 1: color or proper for them to do it, but that's
3:19
Speaker 1: what they are doing, and that's a big support for
3:22
Speaker 1: the market. And I think I don't know if there's
3:24
Speaker 1: enough to push the market up, but if you it's
3:27
Speaker 1: enough to really temper being very barished at this point.
3:30
Speaker 1: So that's why I think we're gonna have a ten
3:32
Speaker 1: to fifteent correction. We've already got eight of it done,
3:35
Speaker 1: so we're already halfway there and probably continue to grind
3:39
Speaker 1: sideways for the next several months. Jim being a fixed
3:42
Speaker 1: in common voultility expert, what do you do in a
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Speaker 1: market like this? Do you traders? Do you stay on
3:47
Speaker 1: the sidelines? Yeah? The bond market has been a real
3:51
Speaker 1: tough one for traders because there's nothing to trade. It
3:55
Speaker 1: doesn't do anything. We're now down to watching three basis
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Speaker 1: point moves which are not very significant, and pre COVID
4:02
Speaker 1: world as something meaningful, but they're really not um I
4:06
Speaker 1: think the way you want to look at the bond
4:08
Speaker 1: market is the big basic question is does all of
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Speaker 1: the stimulus and all of the Federal Reserve action and
4:15
Speaker 1: everything worldwide, Let's put all the central banks in there
4:18
Speaker 1: lead to inflation sometime next year. I think the answer
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Speaker 1: is yes, and I think that's going to put upward
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Speaker 1: pressure on interest rates at least in a year or so,
4:28
Speaker 1: not immediately. Uh. And that would be my bias towards
4:32
Speaker 1: trading the market. But your basic question is right, it's
4:35
Speaker 1: a tough market to trade because it doesn't do much
4:38
Speaker 1: of anything right now. It's been one of the narrowest
4:40
Speaker 1: ranges we've seen in the history of the bond market
4:42
Speaker 1: over the last three or four months. Alright, So Jim
4:45
Speaker 1: sticking with the bond market, Where in terms are we
4:49
Speaker 1: seeing credit quality issues creeping into this market in a
4:52
Speaker 1: meaningful way? We had early on in the pandemic to
4:55
Speaker 1: you know, some of the retailers, you know, file and
4:58
Speaker 1: kind of talk and you know, disclose the financial hardship
5:01
Speaker 1: they are having. Are we seeing more of that in
5:03
Speaker 1: other sectors? Yeah? You know, credit quality you can look
5:07
Speaker 1: at it one of two ways. You can look at
5:09
Speaker 1: just the fundamentals of the companies that are issuing debt
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Speaker 1: and saying how court worthy are they? And the answer
5:15
Speaker 1: there is yeah, you can see some definite signs of
5:18
Speaker 1: credit quality issues. The only way you can look at
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Speaker 1: it is. How about investors are they demanding more uh,
5:25
Speaker 1: you know, tougher standards in order to ballrow or let
5:28
Speaker 1: companies follow. And the answers now, they've just been head
5:30
Speaker 1: over heels and grabbing anything that they can get their
5:32
Speaker 1: hands on because we've been setting issuance records. Um, we've
5:37
Speaker 1: already broke the the yearly record and it's only September
5:40
Speaker 1: right now. So yeah, companies, shake your companies are allowed
5:44
Speaker 1: to trade thatt and investors are stepping up on it.
5:47
Speaker 1: Why our investors buying to shake your debt? Hate to
5:50
Speaker 1: come back to the same issue again. The photow Reserve
5:53
Speaker 1: is buying the stuff too, and that there's a perception
5:56
Speaker 1: that they're backdropped in there. And the battle cry on
5:58
Speaker 1: Wall Street has been called invest with the Fed. If
6:01
Speaker 1: they're going to buy corporate bonds in corporate et bond
6:05
Speaker 1: e t F tied to corporate bonds, you should too.
6:07
Speaker 1: Don't get blong up on the credit quality issues. And
6:11
Speaker 1: that seems to be what has driven this absolute need
6:15
Speaker 1: by corporate investors to buy corporate bonds even no matter
6:18
Speaker 1: what the credit quality is. Is it wise for companies
6:22
Speaker 1: to continue to issue Jim, I mean I suppose the
6:24
Speaker 1: obvious answer is yes, right, issue as much as you
6:27
Speaker 1: can until this era is over. But at the same time, well,
6:30
Speaker 1: companies have a headache after all of this. Well, it
6:33
Speaker 1: depends on why the company is issuing. You know, if
6:35
Speaker 1: you take a company like six Flags or Carnival Crews, Uh,
6:38
Speaker 1: they issued a tremendous amount of debt early on in
6:41
Speaker 1: April and May, so that they had enough cash that
6:45
Speaker 1: if they if they never opened use six Flags, if
6:47
Speaker 1: they never opened their theme parks, they're still going to
6:50
Speaker 1: be in business next year. And so that made sense
6:53
Speaker 1: that they were looking over the ravine and trying to
6:55
Speaker 1: get to the other side. But if you're a company
6:59
Speaker 1: like Apple or one of the things, you don't need
7:02
Speaker 1: the money, Should I just go out and ball it
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Speaker 1: just because I can? That could be a situation where
7:08
Speaker 1: down the road you could say, why did I do this?
7:11
Speaker 1: You know, it just puts an extra burden on me.
7:13
Speaker 1: I didn't need the money, but now I gotta pay
7:15
Speaker 1: it back as well. So it's not always a good
7:18
Speaker 1: thing to ball unless there's a specific reason. Carnival and
7:22
Speaker 1: six Flags had a specific reason. Some of these other
7:24
Speaker 1: companies don't. So Jim if investors are searching for yield,
7:29
Speaker 1: and maybe they're willing to go down the credit chain
7:32
Speaker 1: a little bit potentially having that FED reserve backstop About
7:35
Speaker 1: emerging markets, is that too far out or there's some
7:37
Speaker 1: areas there that you're seeing some opportunities. You know, that
7:41
Speaker 1: might be a little too far out because there is
7:44
Speaker 1: no backstop there. For one two, they are really allvered
7:50
Speaker 1: play on the emerging markets are an allovered play on
7:53
Speaker 1: the global recovery. If you think the economy, the global
7:57
Speaker 1: economy is going to recover from the pandemic, they should
8:00
Speaker 1: do better because they will benefit from it. Uh I
8:03
Speaker 1: see it even if you take China out of the equation,
8:05
Speaker 1: because there's such a big player in it. But really
8:08
Speaker 1: you've got to look at that a little bit differently.
8:10
Speaker 1: I look at that more fundamentally and answer that basic question,
8:14
Speaker 1: are you expecting a global recovery? Well, we flattened out
8:17
Speaker 1: in the U S in the case, cons in Europe
8:20
Speaker 1: are back to their April peaks. Sounds like a recovery
8:24
Speaker 1: continuing again, not necessarily going backwards, but continuing is going
8:28
Speaker 1: to be difficult, at least for the next several weeks
8:31
Speaker 1: or a few months. And I think that emerging markets
8:34
Speaker 1: are gonna you know, stall in that mix until we
8:37
Speaker 1: see some clarity on whether or not we're back on
8:40
Speaker 1: the road to getting to something to what we call
8:42
Speaker 1: pre COVID normal. Jimm, are you spending more time looking
8:45
Speaker 1: at Europe these days? There's definitely a little more action
8:48
Speaker 1: in Europe. Yeah, there's uh, yeah, exactly. I have been
8:53
Speaker 1: spending more time, you know, with the strength in the
8:56
Speaker 1: euro and with the uh the higher case counts of
9:01
Speaker 1: COVID and the lack of of their markets not being
9:05
Speaker 1: as overvalued as the US markets are. They're not back
9:08
Speaker 1: to their highs. Europe has presented itself as some interesting
9:12
Speaker 1: opportunities with a lot of cross currents. It's a mix
9:14
Speaker 1: to try and figure it out. Yep, Hm, text so much.
9:17
Speaker 1: Jim Bianco founder, president Bianco Research. I'm going to talk
9:22
Speaker 1: about something that is really emblematic of this really hot
9:26
Speaker 1: market we're in, and that is the blank check companies.
9:29
Speaker 1: We used to call them spack special purpose uh issues. Um,
9:34
Speaker 1: they're all the rates here, you know, and they're getting
9:36
Speaker 1: some big name financiers going out with blank check companies
9:40
Speaker 1: to get more details on that. We're fortunate, Crystal say
9:44
Speaker 1: she's a Bloomberg News reporter. Crystal tell us just first,
9:47
Speaker 1: what is a blank check company and why is it
9:51
Speaker 1: the rate today? Yeah? Um, blank check companies. They are
9:55
Speaker 1: called special purpose acquisition vehicles UM all blank check or SPACs.
10:00
Speaker 1: We these are companies that go through the ip A
10:03
Speaker 1: process raise a pool of money from investors without knowing
10:08
Speaker 1: a target, without having an operating business, and further down
10:12
Speaker 1: the line, usually twenty four months later, they identify a
10:15
Speaker 1: target and they acquire usually a minority state. And we
10:20
Speaker 1: are really in this moment in time where we're seeing
10:22
Speaker 1: a huge boom of these deals in the market. Like
10:26
Speaker 1: I think there's been thirty five billion of deal has
10:29
Speaker 1: been raised this year and that's like more than ninety
10:32
Speaker 1: SPAC deals so far, and and we're seeing all these
10:36
Speaker 1: big names coming. Yeah, Crystal, how does the SPAC sponsor
10:39
Speaker 1: decide what kind of size of SPAK he wants to
10:42
Speaker 1: go to market with? Because technically, if they don't know
10:45
Speaker 1: in advance what they're target is, right, what company they're
10:49
Speaker 1: targeting to to reverse merge with and and go public with,
10:52
Speaker 1: then they could literally sort of you know, look at
10:55
Speaker 1: any kind of size of company. And yet you have
10:59
Speaker 1: like Cliff Robbins raising sey million, but you like a
11:03
Speaker 1: black man raising four billion. Yeah, the strategy used to
11:08
Speaker 1: be you raise a very small spack in the beginning,
11:11
Speaker 1: and then you add on with a pipe investment to
11:14
Speaker 1: finance the deal at the end. So it gives you
11:16
Speaker 1: a little bit of flexibility because in the beginning, like
11:18
Speaker 1: you said, you have no idea what you're gonna buy.
11:21
Speaker 1: But I think in reality a lot of responsors have
11:24
Speaker 1: a little bit of an idea what they want, at
11:26
Speaker 1: least in the size of what they want. For instance,
11:29
Speaker 1: when Bill Aggon raises four billion dollars back, he said
11:33
Speaker 1: in the perspectives that he's looking for a mature you
11:34
Speaker 1: unicon that has a market cap or market value of
11:38
Speaker 1: like ten billions. So they do have a site, they
11:41
Speaker 1: do have a size. If you have a target, they
11:43
Speaker 1: most likely have a sector in mine as well. A
11:45
Speaker 1: lot of the target. A lot of the time they
11:47
Speaker 1: tell you in the perspectives that they target either like
11:50
Speaker 1: consumer companies, tech is a very hot one, and then
11:52
Speaker 1: they're obviously general at SPACs, but like sector focus back
11:56
Speaker 1: a lot more common. So Crystal can any I mean,
12:00
Speaker 1: you have to be a bill actman to really kind
12:02
Speaker 1: of get these special purpose entities done. I mean it
12:06
Speaker 1: just you can't just be some hotshot trader, can you.
12:10
Speaker 1: So our and in our research we found that sixty
12:14
Speaker 1: percent of the issuers that race back this year has
12:18
Speaker 1: never done at before. So the the the entry barrier
12:23
Speaker 1: seems to have seems to be a little you know
12:26
Speaker 1: lower these days. But but does it mean that investor
12:29
Speaker 1: will give anybody money? I don't think that's the case. UM.
12:33
Speaker 1: Spack is a very much of a charismatic driven product.
12:36
Speaker 1: It's very much up to how much the investor trust
12:39
Speaker 1: that the sponsor has the ability to find a good target.
12:43
Speaker 1: So UM, at the end of it, like, it's always
12:46
Speaker 1: helps having some celebrity investors or even someone who just
12:50
Speaker 1: has who just is a household name to be on
12:53
Speaker 1: the spectboard or a spec director UM to be able
12:56
Speaker 1: to get a deal done. It's for sure feels like
12:59
Speaker 1: if you are the company getting acquired that it might
13:01
Speaker 1: be nicer to go with somebody who is going to
13:06
Speaker 1: be accountable to the public markets rather than say private
13:09
Speaker 1: equity for example. But is that the only reason these
13:12
Speaker 1: companies are choosing SPACs isn't that they can't go public
13:18
Speaker 1: on their own? I feel like there is an element
13:22
Speaker 1: of it. Like some companies on its own, they don't
13:25
Speaker 1: have a story, they don't have an easy story to
13:28
Speaker 1: tell in an I p O process, or they really
13:31
Speaker 1: need the capital that therefore they can't go for the
13:33
Speaker 1: direct listening process. By the way, that is changing because
13:36
Speaker 1: direct listening now allow companies to raise capital. But but
13:40
Speaker 1: I think everything combined and if you if you're a
13:42
Speaker 1: company and you look at the sponsor team, you look
13:44
Speaker 1: at the bill Acman, and you think this team is
13:46
Speaker 1: going to help you with your business, and it's going
13:49
Speaker 1: to raise the profile of your company, then going with
13:51
Speaker 1: the fact does come with that UM expertise and they
13:55
Speaker 1: do come with that stamp of approval UM. But but
14:00
Speaker 1: other benefits of going with a private equity there's still
14:02
Speaker 1: are because there's still private and you know, accountable the
14:05
Speaker 1: public market. UM. But I do think there is increasingly UM.
14:10
Speaker 1: Increasingly tech companies or like high profile companies are more accepted,
14:15
Speaker 1: are more receptive to this idea of selling to a
14:17
Speaker 1: spect so Crystal, there are those in the market that
14:21
Speaker 1: are saying, boy, these things are really speculed off. They
14:24
Speaker 1: are perhaps a signal of frothiness or top in the market.
14:28
Speaker 1: What did you hear when you're doing your reporting, if
14:32
Speaker 1: history is any guide the laws broom that we see
14:36
Speaker 1: or this this size and scope, it's in two thousand
14:39
Speaker 1: and seven, two thousand and eight, and we oh know
14:41
Speaker 1: what happened after that. UM. So so there is a
14:45
Speaker 1: little bit of vindicator that this is roughly and there's
14:50
Speaker 1: a lot of money in the market. There's you know,
14:52
Speaker 1: the interest rates low people looking for for alpha spects
14:56
Speaker 1: seems to be the product to be UM. But we
15:00
Speaker 1: are also seeing sort of different different signs that that
15:04
Speaker 1: even even the sack market is showing the slowdown. UM.
15:08
Speaker 1: But but I guess we will see. But but it's
15:10
Speaker 1: this frothy I think definitely. So you know, what's the
15:15
Speaker 1: typical length of time, because yes, you do have two years,
15:18
Speaker 1: and of course you can extend the two years. But
15:20
Speaker 1: I feel like these days a lot of this money
15:23
Speaker 1: has been raised with the notion of taking advantage of
15:26
Speaker 1: pandemic era valuations. Yeah, so twenty four months is UM. Legally,
15:32
Speaker 1: when they how long they have UM, they can apply
15:35
Speaker 1: for usually a three month extension. But what is interesting
15:38
Speaker 1: is that we are seeing UM these facts closing deal sooner. UM.
15:44
Speaker 1: They used to close deal probably like a year out
15:47
Speaker 1: of a year ahead of the closing of the I
15:49
Speaker 1: p O. But for instance, the deal that we reported
15:52
Speaker 1: yesterday um Social Capital Um they found a target after
15:58
Speaker 1: three months of of listing, and that is backed by
16:02
Speaker 1: Schamaz which took Virgin Galactic public right. So that's the
16:07
Speaker 1: high profile viewser Yeah, the high profile is a closing spooner.
16:11
Speaker 1: But we we haven't seen much of the sort of
16:14
Speaker 1: second tier mid market one Crystal, thank you so much
16:17
Speaker 1: for joining us, Crystal, say, Bloomberg IPO reporter on a
16:20
Speaker 1: fascinating story about these these SPACs, if you will, the
16:23
Speaker 1: blank check companies. Uh, they're certainly popularly this year as
16:27
Speaker 1: Crystals reporting just billions of dollars raised, uh, and then
16:31
Speaker 1: kind of getting mergers done and getting into the public markets.
16:34
Speaker 1: That way, fascinating story in this market. Right here, it
16:40
Speaker 1: is time for Bloomberg Opinion and the latest column from
16:43
Speaker 1: Tim O'Brien is entitled of Course Trump couldn't resist Bob
16:47
Speaker 1: Woodward subtitled once again he was takenly trusted in his
16:50
Speaker 1: own ability to steer the story. We welcome now Timothy O'Brien,
16:53
Speaker 1: a senior columns to for Bloomberg Opinion. So obviously the
16:57
Speaker 1: story has sort of gotten out of it in Trump's hands.
17:01
Speaker 1: Is there any way that he didn't know this is
17:04
Speaker 1: going to happen? I mean, it's Bob woodword after all,
17:06
Speaker 1: And this isn't the first time, even in the Trump
17:08
Speaker 1: presidency that this has happened to him. Well, Bonnie, yes,
17:12
Speaker 1: there is a possibility actually didn't foresee this spinning out
17:17
Speaker 1: the way it has because he doesn't think strategically or
17:21
Speaker 1: think ahead in that regard. But the other so that's
17:25
Speaker 1: a weakness. The other thing is he doesn't usually care
17:29
Speaker 1: about the fallout from a lot of this stuff anyway.
17:32
Speaker 1: In in in an odd way, it's a strange strength because
17:36
Speaker 1: this is what has allowed him to spend decades plowing
17:39
Speaker 1: through adverse media coverage and and um and and some
17:45
Speaker 1: of it does authentically get to him. But by and
17:47
Speaker 1: large he's very unusual because the things that make him
17:50
Speaker 1: um apathetic and sort of lacking in compassion for other
17:55
Speaker 1: people's struggles are the very things that makes some of
17:58
Speaker 1: the stuff roll off of his act like water. Uh.
18:02
Speaker 1: The problem is every it's different when you're president, quite obviously,
18:07
Speaker 1: and and the things that he was used to doing
18:09
Speaker 1: as a private businessman or as a celebrity. Um had far,
18:15
Speaker 1: you know, less significant implications than things he's doing now
18:20
Speaker 1: that he fessed up too in the Woodward interview, including uh,
18:24
Speaker 1: you know, irresponsibly and I think horrifyingly knowing that the
18:29
Speaker 1: pandemic was far more dangerous than he was letting on publicly. Tim,
18:33
Speaker 1: I'm so glad that you. I was actually fully expecting
18:37
Speaker 1: a column something like this to him, because you're unique
18:40
Speaker 1: history with President Trump, having written a book about him
18:44
Speaker 1: and then have been litigation with him. Is this just
18:47
Speaker 1: a case where, like with you, he craves this type
18:52
Speaker 1: of exposure and he's just not worried about the downside
18:55
Speaker 1: per se. I think that's a big part of it, Paul.
18:58
Speaker 1: I think that's spot on. I think the other thing
19:01
Speaker 1: is he regards it as a challenge. He he has
19:03
Speaker 1: this belief that he has this magic wand extending from
19:06
Speaker 1: his index finger that he can wave across the media
19:09
Speaker 1: landscape and around the heads of reporters and uh, they
19:14
Speaker 1: will suddenly have the same sense of high regard for
19:17
Speaker 1: Trump that he has for himself. And even if the
19:21
Speaker 1: fact pattern suggests otherwise. And when I you know, when
19:25
Speaker 1: I wrote the book about him. I had spent the
19:27
Speaker 1: previous decade episodically covering him. I had interviewed him for
19:30
Speaker 1: another book I had done in the mid nineties on gambling. Um.
19:35
Speaker 1: And then I was at The New York Times in
19:37
Speaker 1: the early two thousands, where I was covering him in
19:39
Speaker 1: the news pages very critically. Uh. And then we did
19:43
Speaker 1: the book together, and he wanted to do the book
19:45
Speaker 1: with me, and we spent a ton of time together.
19:47
Speaker 1: I think I've spent more time with him than any
19:50
Speaker 1: other reporter. It was dozens of interviewer interviews and you know,
19:55
Speaker 1: scores of hours together. And UM, he just didn't have,
20:00
Speaker 1: I think, a sense that maybe he needed to be
20:03
Speaker 1: more uh judicious about what he was saying or how
20:07
Speaker 1: we were engaging. And I'm not unique in that regard.
20:09
Speaker 1: It's it's that's probably informed every interaction he's had with
20:13
Speaker 1: reporters over the years. Tim, how do you feel about
20:16
Speaker 1: the question of whether Bob Woodward really had an ethical
20:19
Speaker 1: or moral duty to release some of the content of
20:22
Speaker 1: these tapes before the book actually got written. Well, you know,
20:26
Speaker 1: Margaret Stulti in the media the media columnists for the
20:28
Speaker 1: Washington Post did a lengthy or you know, an interview
20:33
Speaker 1: with with Bob about that. His response was, when um,
20:38
Speaker 1: he began reporting this, you know, the first conversation they had,
20:41
Speaker 1: it was in February earlier this year. No one really
20:45
Speaker 1: knew at that point what a full blown public health
20:47
Speaker 1: crisis the epidemic of the pandemic would become. And um uh,
20:54
Speaker 1: and he wanted to spend more time coming to understand
20:58
Speaker 1: the administration view on all this and didn't and had
21:01
Speaker 1: an evolving understanding of it himself. Um. You know, I
21:05
Speaker 1: think that that's that's all fine and good, and say
21:07
Speaker 1: the first three months of it, but certainly by April,
21:11
Speaker 1: you know, lockdowns began in mid March. By April, we
21:13
Speaker 1: all certainly knew there was a crisis of foot, and
21:18
Speaker 1: I think it would have been useful for for him
21:20
Speaker 1: to disclose some of that. I do think by April
21:23
Speaker 1: we knew there was already public information that the White
21:26
Speaker 1: House knew the pandemic was far more serious than they
21:29
Speaker 1: were letting on and had known that earlier. So that
21:32
Speaker 1: had come out from other sources at that point too.
21:35
Speaker 1: But I think that's a good question to be asked
21:36
Speaker 1: of of any book writer who holds onto important information,
21:42
Speaker 1: especially in the midst of a crisis like this, Tim,
21:44
Speaker 1: do you think the contents of this book, you know,
21:47
Speaker 1: and and the heels of all the other books that
21:49
Speaker 1: have been written just recently let have any impact on
21:53
Speaker 1: this election? Or will it be like it seems like
21:56
Speaker 1: all the other noise and information out there, it just
22:00
Speaker 1: won't stick or turn the needle, um, you know, move
22:05
Speaker 1: the needle, you know. I here's the thing. I partisans
22:10
Speaker 1: who don't like Trumps and partisans who love Trump aren't
22:14
Speaker 1: usually gonna get swayed by any of this. But the
22:16
Speaker 1: reality is what's going to happen to that middle range
22:19
Speaker 1: of swing voters independence in six or seven states, We're
22:23
Speaker 1: going to determine the outcome of the election. And one
22:26
Speaker 1: thing that this book has done is it as radically
22:30
Speaker 1: turned the focus back to Trump's management of the pandemic,
22:33
Speaker 1: which is his biggest liability in this election. And coming
22:36
Speaker 1: off the Republican National Convention, UH, the GOP has been
22:41
Speaker 1: has been mightily trying to make this salaon order issue
22:46
Speaker 1: and there's protests in the street and Trump is better
22:48
Speaker 1: than Biden in that regard, and they've been spending tons
22:51
Speaker 1: of their time messaging around that and in one fell swoop,
22:55
Speaker 1: Trump's um injudicious interviews with Bob Woodward, UH and the
23:01
Speaker 1: publication of this book have put the pandemic front and center. Again.
23:04
Speaker 1: That's a campaign liability. There's no question about that. Whether
23:08
Speaker 1: or not that will turn the elections. Another thing, Tim,
23:11
Speaker 1: what's the strategy behind no More Stimulus? I mean, is
23:14
Speaker 1: the president going to unilatterally sign an executive order at
23:16
Speaker 1: some point right before the election in order to try
23:19
Speaker 1: to to to beef up sentiments, positive sentiment towards him,
23:23
Speaker 1: because otherwise people are literally going to starve. No. Well,
23:28
Speaker 1: I think, you know, I you know, I'm of the
23:30
Speaker 1: view that the federal government needs to have a new
23:33
Speaker 1: Deal esque thought about bringing the private sector in the
23:37
Speaker 1: public sector again to solve the problems we're facing right now,
23:40
Speaker 1: and that that requires, um, a fiscal effort and a
23:45
Speaker 1: federal effort, and UM, they're clearly not up to that.
23:48
Speaker 1: And I think this is decades of sort of anti
23:51
Speaker 1: government mentality catching up to us. I think it's a
23:55
Speaker 1: knee jerk views of the business community is not being
23:58
Speaker 1: created and responsible, which they can often often be. And
24:02
Speaker 1: I think both sides need to come together to resolve
24:04
Speaker 1: that this again isn't something Trump can simply waives away
24:08
Speaker 1: with an executive order. You really need Congress in the
24:11
Speaker 1: American public to get behind it. And I think you
24:13
Speaker 1: know the fact that Mitch McConnell couldn't get even a
24:16
Speaker 1: skinny um you know, Cares Act three through to the
24:20
Speaker 1: Senate floor for a vote, really shows how behind the
24:24
Speaker 1: eight ball we are right now on this in Congress. So, Tim,
24:28
Speaker 1: what do you think President trump strategy will be between
24:31
Speaker 1: now and an election day? Well, I think he laid
24:34
Speaker 1: it out Paul last night in Michigan. He's going to
24:37
Speaker 1: say that, um, Democrats want to populate the suburbs with
24:41
Speaker 1: people of color, and Democrats aren't friends of law enforcement,
24:46
Speaker 1: and Democrats are socialists, and they're gonna let terrorists come
24:49
Speaker 1: over the border. In some I think he's going to
24:52
Speaker 1: use scare tactics to condidates people that everything will implode
24:58
Speaker 1: if if Biden becomes president. However, Trump, in saying that
25:02
Speaker 1: has to confront the reality that the economy and public
25:06
Speaker 1: health have gone completely off the rails during his presidency. Yeah,
25:09
Speaker 1: and the pandemic making it worse. I mean, honest, somebody
25:13
Speaker 1: does something. People are just don't going to start running
25:15
Speaker 1: out of their medications. They're going to start I mean, tim,
25:18
Speaker 1: we know already the tens of thousands of more people
25:21
Speaker 1: are going to die between now in January inauguration day. Right,
25:25
Speaker 1: what kind of legacy will the next president have, whether
25:28
Speaker 1: it's President Trump or Biden? If if, if nothing more
25:32
Speaker 1: is done, I mean, it feels like they're they're finished,
25:34
Speaker 1: right except for the vaccine race. You know, even if
25:37
Speaker 1: people don't have a compassion on those issues. Seventy of
25:40
Speaker 1: GDP is consumer spending. In order to keep the economy vibrant,
25:45
Speaker 1: you need to empower average people to be able to
25:48
Speaker 1: shop at the most basic level. And we've now run
25:50
Speaker 1: out of that. Extra extended benefits for unemployment, insurance and
25:55
Speaker 1: payments to families that I think helped keep both the
25:58
Speaker 1: markets and the economy be more buoyant than they would otherwise,
26:01
Speaker 1: has been between March and now, and now we're starting
26:04
Speaker 1: to see slippage in the markets, and I think you're
26:07
Speaker 1: gonna start to see earnings problems at the corporate level
26:10
Speaker 1: and and in in a GDP effect in addition to
26:14
Speaker 1: raw human misery. But if if human misery won't sway
26:18
Speaker 1: the needle for folks, then they should really look at
26:21
Speaker 1: what the economic and macroeconomic and market impacts of the
26:24
Speaker 1: stuff will be. Hey, Tim, thanks so much for joining us.
26:26
Speaker 1: We really appreciate you taking the time this morning. Tim O'Brien,
26:29
Speaker 1: senior columnist for Bloomberg Opinion, joining us on his column
26:34
Speaker 1: about the Bob Woodward book of some fascinating perspective that
26:37
Speaker 1: Tim has Vanny given that. Again, Tim did work with
26:42
Speaker 1: then Donald Trump on an authorized biography and then was
26:46
Speaker 1: in some litigation with Mr Trump about that person whatever
26:50
Speaker 1: went a lawsuit on in that regard, right, Yeah, absolutely right.
26:53
Speaker 1: So it's very interesting to see here whether there will
26:56
Speaker 1: be any political fallout for President Trump as it relates
26:59
Speaker 1: to this book and others. Uh, but certainly this one
27:02
Speaker 1: as it relates to putting the pandemic, as Tim said,
27:04
Speaker 1: back on the front burner for this election. Well, we're
27:09
Speaker 1: very lucky right now to have Laurence Sour with us,
27:13
Speaker 1: Lauren Jackson with us regularity. She's from Johns Hompkins University.
27:16
Speaker 1: She's the assistant for emergency medicine there, and it's been
27:19
Speaker 1: quite the six months for Laurence Our and our colleagues. Lauren,
27:23
Speaker 1: you know, as we head towards full and as we
27:25
Speaker 1: get the announcement that a court at a quarter capacity
27:28
Speaker 1: New York City restaurants can open, and you know, state
27:32
Speaker 1: restaurants already open at half capacity for indoor dining. How
27:35
Speaker 1: concerned are you that will we'll see a resurgence of
27:39
Speaker 1: coronavirus in New York and that that will couple with
27:43
Speaker 1: flu season. I think we have to watch the numbers
27:46
Speaker 1: very carefully as these reopening activities happen, um, particularly since
27:50
Speaker 1: it's going to be happening right around the same time
27:52
Speaker 1: that people are less likely to be spending time outside,
27:55
Speaker 1: that they're less likely to take advantage of the outdoor
27:57
Speaker 1: seating as the temperature school down. Um, So there is
28:01
Speaker 1: going to be these other pieces that sort of tip
28:05
Speaker 1: the scale towards the indoor activities. And so when all
28:07
Speaker 1: that comes together, we have to watch for the upticking
28:10
Speaker 1: COVID cases, but also our ability to manage the COVID
28:14
Speaker 1: cases and identify the COVID cases as flu season is
28:17
Speaker 1: Overlaid on top of that, so you know, similar symptoms
28:20
Speaker 1: people also needing to come to hospitals potentially. Um, it's
28:24
Speaker 1: a great time to advocate to get that flu vaccine,
28:26
Speaker 1: so that you reduce your likelihood of getting flu or
28:29
Speaker 1: getting as sick from the flu um. All of those
28:31
Speaker 1: sort of come together to to make an opportunity for
28:35
Speaker 1: the COVID cases the search. So Professor Astro Zeneca had
28:40
Speaker 1: some news where they're a little bit of a pause
28:42
Speaker 1: in their vaccine trial. How unusual is that. How much
28:45
Speaker 1: of a setback is that? Is that part of the
28:47
Speaker 1: normal course of testing? How should we think about that?
28:51
Speaker 1: The This is part of the normal procedure for UM,
28:55
Speaker 1: the process of creating um UH and testing a vaccine.
29:00
Speaker 1: So we while we never want to see adverse events
29:03
Speaker 1: in any of themselves, we do want to see the
29:06
Speaker 1: process is happening appropriately. So when you have a pause
29:09
Speaker 1: like this to investigate and evaluate an event, you know,
29:14
Speaker 1: an illness possibly associated with the vaccine, it should be
29:19
Speaker 1: somewhat reassuring to the public that the process is working
29:23
Speaker 1: as it should that UM we are seeing the process
29:27
Speaker 1: play out the way we wanted to to ensure both
29:29
Speaker 1: the safety and the efficacy of the vaccine. Lauren. We
29:33
Speaker 1: also saw the news today that China has injected you know,
29:36
Speaker 1: thousands of its citizens with potential vaccines. On the one hand,
29:41
Speaker 1: you know, you think this might be a great thing.
29:44
Speaker 1: We might find that all of these work. On the
29:46
Speaker 1: other hand, sort of wondered, did these people volunteer? How
29:49
Speaker 1: does how does the doctor feel about reading an article
29:52
Speaker 1: like that? You know, I think that what's happening in China, Uh,
29:56
Speaker 1: we need a lot more information about the process that
29:59
Speaker 1: the vaccine went through. UM about there, if if it
30:02
Speaker 1: has gone through phase three data phase three, and what
30:04
Speaker 1: their data look like. UM. I think things like this
30:07
Speaker 1: always worrying me when UM, you know, if the US
30:10
Speaker 1: is stepping out of being a global contributor to the
30:12
Speaker 1: vaccine process, Um, other countries will step in and that
30:16
Speaker 1: process will happen without US, And so we we want
30:21
Speaker 1: the US to be involved in this process so that
30:23
Speaker 1: there is not a gap and subpar vaccines are filled
30:27
Speaker 1: in that gap. And UM, you know, I don't know
30:31
Speaker 1: if the consent process that we would use here was
30:34
Speaker 1: used in China. I haven't seen sort of the granular
30:37
Speaker 1: information about what happened there. But I think you always
30:41
Speaker 1: worry if a vaccine is being pushed on citizens without
30:45
Speaker 1: the process of either informed consent or the you know,
30:48
Speaker 1: full licensure of a safe and effective product. UM that
30:52
Speaker 1: that leads to problems, and it is an is an
30:54
Speaker 1: ethical problem in and of itself. So, Lauren at the
30:59
Speaker 1: Johns Hopkins, you know, versually one of the leading medical
31:01
Speaker 1: facilities in the world. As we think about the potential
31:05
Speaker 1: for a second phase in the fall or the winter time,
31:09
Speaker 1: how much do you think the healthcare community at large
31:12
Speaker 1: has learned? Is it better prepared, does it know what
31:15
Speaker 1: works what doesn't work? Is there a sense that we
31:17
Speaker 1: won't see those terrible scenes of hospitals being overrun. I
31:22
Speaker 1: think that's definitely the hope. We do not want to
31:24
Speaker 1: see that in the fall. UM We have learned so
31:27
Speaker 1: much both about the virus and how to manage it
31:30
Speaker 1: when it infects people, UM, how to better take care
31:33
Speaker 1: of patients to fall ill um and and how to
31:37
Speaker 1: move them to the hospital system more safely and more
31:40
Speaker 1: effectively to ensure that we maintain that capacity. We're still
31:44
Speaker 1: struggling with the testing piece. We still need a strategic
31:47
Speaker 1: and systematic approach to testing across this country, which can
31:51
Speaker 1: only help um our ability to manage patients. And we
31:55
Speaker 1: do have some concerns that our ppe used of just
31:57
Speaker 1: going to go back up and that you know, respiratory
32:00
Speaker 1: iris season, and we have to get a hold on
32:02
Speaker 1: how we're going to restock and um box fill our
32:06
Speaker 1: PPE usage if we if that need creeps back up.
32:10
Speaker 1: That is a number one priorities we enter into this
32:13
Speaker 1: well respiratory virus Briefly, Lauren, does the country still have
32:17
Speaker 1: shortages of things like respirators and PPE equipment? Um? I
32:22
Speaker 1: think that we are. I've heard anecdotal reports of shortages.
32:26
Speaker 1: I think we have a disparate sort of of PPE
32:30
Speaker 1: um and respirators and things like that. So UM, we
32:33
Speaker 1: have to keep we have to have a national level
32:35
Speaker 1: view of this so that we can have resources around
32:38
Speaker 1: to where they're needed at any given time. And it
32:40
Speaker 1: should be leveraging the Defense Production Act to improve PPE
32:45
Speaker 1: access in places where there are shortages. Lauren Soer, thank
32:49
Speaker 1: you so much for joining us. As always, we appreciate
32:52
Speaker 1: your time, You appreciate your insights. Laurence Soer Sistant Professor
32:55
Speaker 1: of Emergency Medicine at Johns Hopkins UH University. We should
32:59
Speaker 1: also note that the Bloomberg School of Public Health at
33:02
Speaker 1: Johns Hopkins is supported by Michael Bloomberg, founder at Bloomberg
33:04
Speaker 1: LP and Bloomberg philanthropies. Um, you just hope, Bonnie, that
33:09
Speaker 1: as from a healthcare facility perspective, we're in a better
33:12
Speaker 1: spot than we were in back in March. Yeah, and
33:14
Speaker 1: very definitely. I mean, we've spoken to the CEOs of
33:16
Speaker 1: hospital systems and they've said that it's true that they
33:19
Speaker 1: know more now, they can triage better, and that they
33:22
Speaker 1: are in a better way. But you just hope they're
33:24
Speaker 1: not taxed even at half the level they were taxed at.
33:28
Speaker 1: Thanks for listening to Bloomberg Markets podcast. You can subscribe
33:32
Speaker 1: and listen to interviews at Apple Podcasts or whatever a
33:35
Speaker 1: podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter
33:39
Speaker 1: at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter
33:41
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
33:44
Speaker 1: us worldwide at Bloomberg Radio