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Don't See More Than 50bp Emergency Cut: Amundi's Todd · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl podcast. I'm Paul swing you,
• 0:05
  Speaker 1: along with my co host Lisa Brahma wits. Each day
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  Speaker 1: we bring you the most noteworthy and useful interviews for
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  Speaker 1: you and your money. Whether at the grocery store or
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  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
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  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. We have been talking a lot
• 0:20
  Speaker 1: about stocks, as the SMP and NASDAC enter correction territory.
• 0:24
  Speaker 1: There is a question though about the bond market, in
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  Speaker 1: particular the risk your credit markets. I'm really glad to
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  Speaker 1: say that we've got Christine Todd, head of US Fixed
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  Speaker 1: Income with us from a MOONDI pioneer which oversees ninety
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  Speaker 1: billion dollars. Christine, thank you so much for being with us.
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  Speaker 1: I want to start with high yield bonds because we're
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  Speaker 1: seeing unprecedented outflows from the biggest e t f s
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  Speaker 1: that invest in these uh in these securities, and we're
• 0:49
  Speaker 1: also seeing the shares of those ETFs decline significantly today
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  Speaker 1: h y G, which is the biggest of it. UH
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  Speaker 1: thinking the most is how concerned are you? Without getting
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  Speaker 1: to the esoterics of E T F S versus the
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  Speaker 1: underlying market. How concerned are you about some sort of
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  Speaker 1: liquidity spiral that's going to really push prices down a
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  Speaker 1: lot more? From here in bonds, we more see it
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  Speaker 1: as an opportunity than a concern. UM. When you're an
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  Speaker 1: active manager and you see that there is UM fear
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  Speaker 1: based selling UM not fundamentally based UM, then you really
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  Speaker 1: are seeing correlations separate and that the opportunity for bond
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  Speaker 1: picking increases. So we can take advantage of forced selling
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  Speaker 1: causing dislocation and valuations and improve the UM credit profile
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  Speaker 1: and the yield profile of the portfolios as this is happening. UM. Interesting, Well,
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  Speaker 1: I was going to say that, UM, you're you're really
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  Speaker 1: seeing a process of price discovery and that when you
• 1:58
  Speaker 1: look at ind see and UM marked prices, Uh, it's
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  Speaker 1: it's really more a gauge than a execution level. So
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  Speaker 1: that too is something that you can take thorough advantage of.
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  Speaker 1: And that the ets being four sellers are at the
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  Speaker 1: mercy of so Christine. So if someone was brave enough
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  Speaker 1: to dip their toe back into the bond market, here
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  Speaker 1: where some sectors that you think they should look for initially, Well,
• 2:26
  Speaker 1: the obvious place to look is in the energy sector
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  Speaker 1: UM that is taking the biggest hit from the fears
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  Speaker 1: around the coronavirus, and the more stable subsectors with energy
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  Speaker 1: UM like pipelines are are less leveraged to the price
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  Speaker 1: of the commodity, and we think there are really strong
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  Speaker 1: opportunities there. What we're doing is really topping up our
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  Speaker 1: best ideas rather than adding new names to the portfolio,
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  Speaker 1: So sticking with our convictions and doubling down on where
• 3:01
  Speaker 1: we see value. So are you doubling down on pipelines?
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  Speaker 1: We are reaching our targets, which is UM an equal
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  Speaker 1: to overweight an energy via exposure to pipelines. And why
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  Speaker 1: did you start doing that? So we've been active in
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  Speaker 1: UH managing around the subsectors of energy, and we've been
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  Speaker 1: accelerating that process in the last couple of days, but
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  Speaker 1: not phrenetically. I mean, the key here is to be patient.
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  Speaker 1: And we don't think that we've seen floor and prices
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  Speaker 1: in the wides and yields UM. You know, we've only dropped,
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  Speaker 1: you know, in high yields in the terms of the
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  Speaker 1: index you know, call it eighties and ninety basis points
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  Speaker 1: since the UM Corona scare really took hold and we're
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  Speaker 1: down you know, over our d and twenty basis points
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  Speaker 1: since the beginning of two thousand nineteen. So this is
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  Speaker 1: not UM, you know, a wide by recommendation. This is
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  Speaker 1: being very selective in the names that you pick and
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  Speaker 1: UM sticking with your convictions from a bottom up fundamental analysis. So, Christine,
• 4:03
  Speaker 1: I'm looking at my Bloomberg termal here to your treasury
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  Speaker 1: one point zero five, very near the all time low.
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  Speaker 1: Do we need to be on a zero interst rate
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  Speaker 1: watch for the two year? Do you think? Well? The
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  Speaker 1: Feed has been very clear about wanting to stay very
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  Speaker 1: far away from zero bound interest rates and UH. The
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  Speaker 1: at some point though the FED is resisting. At some point,
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  Speaker 1: the Fed is going to want to see UM longer
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  Speaker 1: term rates rise more than shorter term rates UM, but
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  Speaker 1: to see optimism in the markets. So you might see
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  Speaker 1: the front end of the curve come down with the
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  Speaker 1: FED succumbing to pressure UM from the coronavirus, mainly from
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  Speaker 1: tighter financial conditions UM, not so much from the administration UM,
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  Speaker 1: but in reaction to UM. You know, the consumer retrend
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  Speaker 1: shan and probably what you'd see is a fifty basis
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  Speaker 1: point move UM characterized as an emergency cut that could
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  Speaker 1: be walked back when the crisis subsides. So the answer
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  Speaker 1: to that is, we could see lower two year rates,
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  Speaker 1: but UM, the market wouldn't come down to zero because
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  Speaker 1: they would be optimism around the stimulative leaning of the
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  Speaker 1: Fed and the stability of economic growth. Christine, just real
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  Speaker 1: quick here thirty seconds. I'm looking right now. It Fed
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  Speaker 1: funds rates pricing in almost three and a half rate
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  Speaker 1: cuts by the end of January. Do you think that
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  Speaker 1: that's reasonable? Do you expect the Fed to cut that
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  Speaker 1: that much? We do not. UM. We are very confident
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  Speaker 1: that the FED is influenced by the economic fundamentals and
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  Speaker 1: that the pressure from as I said, the yield curve
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  Speaker 1: the administration UM can be avoided. UM though UH, a
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  Speaker 1: consumer retrend MINT and the reversal of some of the
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  Speaker 1: very strong economic numbers that we've seen would cause the
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  Speaker 1: Fed to act. And as mentioned UH, an emergency move
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  Speaker 1: of fifty basis points could be easily walked back, but
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  Speaker 1: we don't see a strategic plotting towards easier policy because
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  Speaker 1: of the fear in the market of the coronavirus. It
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  Speaker 1: would be based on the fundamentals the consumer, the housing market,
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  Speaker 1: the job market, et cetera. Christine Todd, thanks so much
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  Speaker 1: for joining us to really appreciate your, uh, your thoughts
• 6:34
  Speaker 1: on the fixed income market. Christine is the head of
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  Speaker 1: US fixed income for a Mundi pioneer of about ninety
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  Speaker 1: billion dollars under management based in Boston. There's sort of
• 6:47
  Speaker 1: an expectation that at a certain point there will be
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  Speaker 1: some sort of stimulus, whether it be monetary as is
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  Speaker 1: currently being priced into the Fed funds features, or whether
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  Speaker 1: it will be fiscal. And this certainly comes as the
• 7:00
  Speaker 1: Democratic debates heat up as we head into Super Tuesday,
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  Speaker 1: leading to a question, what is the cost of some
• 7:07
  Speaker 1: of these fiscal stimulus plans, in particular those put out
• 7:10
  Speaker 1: by Bernie Sanders And doesn't matter? Ben Holland took a
• 7:13
  Speaker 1: look at that. He's a political economy editor for Bloomberg News,
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  Speaker 1: joining us from our ninety now on studios in Washington,
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  Speaker 1: d C. Ben, you wrote that perhaps it doesn't even
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  Speaker 1: matter whether Bernie Sanders is numbers actually add up because
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  Speaker 1: borrowing rates are just so low. Can you explain? Yeah,
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  Speaker 1: I think what's striking here is that there is this
• 7:33
  Speaker 1: debate going on in the Democratic Party, you have Bernie
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  Speaker 1: Sanders with all these very big, you know, unprecedented in
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  Speaker 1: recent history spending plans. He says he's going to pay
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  Speaker 1: for them all by raising taxes on various things, and
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  Speaker 1: his opponents say, oh, well, but your numbers don't add up,
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  Speaker 1: and Bernie Sanders says, yes they do, and the opponents say, no,
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  Speaker 1: they don't. And what's old is that while all this
• 7:53
  Speaker 1: is going on, the cost of government borrowing in the
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  Speaker 1: United States has plunged to levels that have never been
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  Speaker 1: seen before. So you might think it would be a
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  Speaker 1: good time for both Bonie Sounders and the other Democrats
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  Speaker 1: to say, well, if these plans don't in fact that
• 8:05
  Speaker 1: it doesn't matter, it might be a good thing. Maybe
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  Speaker 1: the economy could use some more physical stimulants. So it's interesting,
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  Speaker 1: Ben It raises a question, don't deficits matter? Doesn't the
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  Speaker 1: national debt matter anymore? I think there's I don't think
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  Speaker 1: that many people would make the case that deficits don't matter,
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  Speaker 1: but I think more and more economists would make the
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  Speaker 1: case that there is no reason why we should worry
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  Speaker 1: about the ones that the United States is running right now,
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  Speaker 1: because there's running deficits of around five percent of gross
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  Speaker 1: domestic product. That's pretty big. It's nothing like you had
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  Speaker 1: in two thousand and ten after the crisis, but for us,
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  Speaker 1: you know, for a decade into an expansion, it's a
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  Speaker 1: pretty big deficit. It's not causing inflation, it's not causing
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  Speaker 1: flight from bond markets, it's not causing yields to go up,
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  Speaker 1: it's not crowding out any investment. So a lot of
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  Speaker 1: economists have concluded, well, it's not something we need to
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  Speaker 1: worry about right now. Ben, what's the alternative? Certain here
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  Speaker 1: that the more debt that an economy takes on, the
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  Speaker 1: more that you head into a deflationary spiral where it's
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  Speaker 1: sort of a weight hanging over the economy and it
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  Speaker 1: doesn't act in a stimulative manner. Well, I think that
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  Speaker 1: is a concern. But I think what's happened if if
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  Speaker 1: you look at Japan, which has kind of led the
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  Speaker 1: way and a lot of this stuff, and a lot
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  Speaker 1: of other developed economies like the United States and Europe
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  Speaker 1: are kind of getting that what you had was was
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  Speaker 1: a big build up in private debt, and when that crashed,
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  Speaker 1: which was about ten years before it crashed in the
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  Speaker 1: United States. So in the late n what the government
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  Speaker 1: was doing was really stepping in with deficit spending to
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  Speaker 1: fill that big hole in demand that have been left
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  Speaker 1: by the bursting of a private credit bubble. Well that's
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  Speaker 1: pretty much what happened in the United States ten years later,
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  Speaker 1: and the United States ever since two thousand eight, the
• 9:50
  Speaker 1: government has been stepping in just like the Japanese government
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  Speaker 1: did to fill the gap in demand by its own
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  Speaker 1: deficit spending. So Ben this sounds to me a lot
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  Speaker 1: like modern monetary theory or M empty. Can you explain
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  Speaker 1: what M empty is and is it becoming more accepted
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  Speaker 1: by more economists? If you listen to what the most
• 10:11
  Speaker 1: economists say about m MT, you'd probably conclude that it
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  Speaker 1: isn't becoming more accepted. But then if you listen to
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  Speaker 1: the way that the economists talk about things like deficits
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  Speaker 1: and government that I think you'd conclude that it is
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  Speaker 1: becoming more accepted. So it's kind of creeping into the debate.
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  Speaker 1: And the essential argument of m m T is that
• 10:30
  Speaker 1: when governments run depth sits, the thing that they have
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  Speaker 1: to worry about is inflation. They don't have to worry
• 10:36
  Speaker 1: about going bankrupt. They might do if they're using another
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  Speaker 1: you know, if they're borrowing in another currency. But if
• 10:42
  Speaker 1: you're the United States, if you're Japan, the United Kingdom,
• 10:45
  Speaker 1: you don't have to worry about going bankrupt. You have
• 10:47
  Speaker 1: to worry about, well, will I spend too much money
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  Speaker 1: and create inflation? That's clearly not a problem right now. Fascinating.
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  Speaker 1: Ben Holland, thank you so much for joining. I spend
• 10:58
  Speaker 1: hard political economy at for Bloomberg News, joining us from
• 11:02
  Speaker 1: One Studios in Washington, d C. And I will say, Paul,
• 11:05
  Speaker 1: the conversation comes at a really salient point, especially as
• 11:08
  Speaker 1: Hong Kong starts to do helicopter money, essentially giving each
• 11:12
  Speaker 1: family a certain quotation of just cash to go out
• 11:15
  Speaker 1: and spend an on street of us. And just walked
• 11:30
  Speaker 1: into the Bloomberg Atta Active Broker Studios in his hoodie,
• 11:32
  Speaker 1: his Bloomberg Intelligence hoodie, and he said, the world's melting down,
• 11:35
  Speaker 1: and you want me to talk about ink cartridges And
• 11:38
  Speaker 1: we said, yes, that is exactly what we want to
• 11:39
  Speaker 1: talk about. Because even though we do have the coronavirusphere
• 11:42
  Speaker 1: spreading and concerns about what that means, there is actual
• 11:45
  Speaker 1: business getting done and discussion of it and we want
• 11:48
  Speaker 1: to bring in Austin Carr, technology reporter for Bloomberg News,
• 11:51
  Speaker 1: as well as an on screen of Austin senior semi
• 11:53
  Speaker 1: conductor and hardware analyst. And Austin you wrote a story
• 11:56
  Speaker 1: for Business Week that Xerox and HPR and a thirty
• 11:59
  Speaker 1: five billion dollar fight over in cartridges, which is comical
• 12:03
  Speaker 1: considering the fact that the concept of paper and ink
• 12:05
  Speaker 1: seems to be going the way of the cart and horse.
• 12:09
  Speaker 1: What was sort of the gist of the piece. Well,
• 12:11
  Speaker 1: I think first of all, we should just clarify that
• 12:13
  Speaker 1: the printer market is still massive. In fact, it's estimated
• 12:16
  Speaker 1: that between the consumer and office market there's still about
• 12:19
  Speaker 1: three point two trillion pieces of paper printed every year.
• 12:23
  Speaker 1: So that takes a lot of ink, That takes a
• 12:25
  Speaker 1: lot of printer sales um So this is really a
• 12:27
  Speaker 1: story about two aging innovation giants the twentieth century. They
• 12:30
  Speaker 1: own the innovation market if Silicon Valley, they arguably invented
• 12:34
  Speaker 1: the sort of garage startup, and yet they've seen in
• 12:37
  Speaker 1: the last decade or so this disruption in the digital
• 12:39
  Speaker 1: market and then just hanging on to their old world
• 12:42
  Speaker 1: products like printers and ink, which really is what accounts
• 12:46
  Speaker 1: for a large portion of their profits. So this is
• 12:49
  Speaker 1: a story about Xerox trying to take over a much
• 12:51
  Speaker 1: larger aging giant to see whether they can create some
• 12:54
  Speaker 1: sort of printer super giant as the market continues to consolidate.
• 12:58
  Speaker 1: So on, and give us a sense here, I'm looking Zerox.
• 13:00
  Speaker 1: It's a much smaller company than HP. How are they
• 13:03
  Speaker 1: going to finance this thing debt? Quite quite simply today
• 13:08
  Speaker 1: than it was back in November when they proposed the deal. Absolutely,
• 13:11
  Speaker 1: and and this has become a point of contention to
• 13:15
  Speaker 1: UM for for HP in its refusal and its continuing
• 13:18
  Speaker 1: refusal of of the Xerox M and AM approach is
• 13:25
  Speaker 1: that it will be too debt heavy. UM and our
• 13:28
  Speaker 1: take is that, in fact, HP looked at xerox um
• 13:32
  Speaker 1: last year and they spurned that deal potentially because they
• 13:36
  Speaker 1: weren't enough cost synergies and they couldn't make the deal work.
• 13:40
  Speaker 1: Look in the grand scheme of things, right, So Austin
• 13:43
  Speaker 1: story is on point in that supplies is what matters. UM.
• 13:48
  Speaker 1: If you look at the supplies business, it is roughly
• 13:52
  Speaker 1: of overall HP sales. It's a very very all of
• 13:55
  Speaker 1: supply printing, including the consumer business and the corporate business
• 14:00
  Speaker 1: and supplies has a six operating margin which they want
• 14:02
  Speaker 1: to take to seventeen. Supplies alone probably is well into
• 14:06
  Speaker 1: the twenties UM. And they've tried to sort of use
• 14:10
  Speaker 1: this four box model in the previous CEO's tenure to
• 14:15
  Speaker 1: try and push more printers um and have it be
• 14:19
  Speaker 1: sticky over a long term with an office such that
• 14:22
  Speaker 1: it can drag the supplies business and so they'll give
• 14:25
  Speaker 1: you the printer at their discount. In the consumer business,
• 14:27
  Speaker 1: that hasn't necessarily worked because the consumers are buying the
• 14:30
  Speaker 1: cheap printers and then going to the fake printing supplies
• 14:34
  Speaker 1: from off brands and using that, so you you're not
• 14:37
  Speaker 1: sort of benefiting from that. I love the quote Austin
• 14:40
  Speaker 1: and your story. The industry may not be sexy, but
• 14:43
  Speaker 1: it's not going anywhere. There is a question though, and
• 14:46
  Speaker 1: I do want to bring it forward since and now
• 14:48
  Speaker 1: you did come in here and then the coronavirus is
• 14:50
  Speaker 1: the headline right now? What about supply chains? What about
• 14:54
  Speaker 1: some other aspects of these companies? Both of them shares
• 14:57
  Speaker 1: down more than three percent on a daylight today and
• 14:59
  Speaker 1: on I'd love you to take a crack of that,
• 15:01
  Speaker 1: I mean, do you have a sense of how much
• 15:03
  Speaker 1: they are affected? Here? Absolutely? Look, I mean the entire
• 15:07
  Speaker 1: tech ecosystem supply chain goes through China, and this is
• 15:11
  Speaker 1: the downside of having become concentrated in that part of
• 15:15
  Speaker 1: the world of the last twenty years, given logistics, ease,
• 15:19
  Speaker 1: cost preference, etcetera, etcetera. And so um uh and and
• 15:26
  Speaker 1: you're going to be impacted. One queue is done, right,
• 15:28
  Speaker 1: so you're gonna take numbers down for one queue. The
• 15:30
  Speaker 1: question is what does two Q look like, both from
• 15:33
  Speaker 1: a demand perspective as well as from a supply perspective,
• 15:37
  Speaker 1: and can you get product out the door to meet
• 15:40
  Speaker 1: that demand? And that's going to be the telling sign
• 15:44
  Speaker 1: if you don't have enough product and if demand is
• 15:46
  Speaker 1: week that matchup of those two will determine how you
• 15:50
  Speaker 1: shape up for the full year. Um and we have
• 15:53
  Speaker 1: some sensitivity here from from our work if you and
• 15:57
  Speaker 1: supplies are a big portion of that to what happens
• 16:00
  Speaker 1: is if you take supplies down, you take margins down
• 16:03
  Speaker 1: with it pretty hard. I mean, because because PCs are
• 16:06
  Speaker 1: a low to mid single digit operating margin business, it
• 16:10
  Speaker 1: ain't sexy by any stretch, right, So the printer, the
• 16:13
  Speaker 1: printer business and the supplies business is what's carrying HP.
• 16:17
  Speaker 1: You ding that business, coronavirus dings that and you print
• 16:20
  Speaker 1: even less then EPs is disproportionately her Austin, is this
• 16:26
  Speaker 1: still going to get done well? I think that's the
• 16:29
  Speaker 1: big question about the announcement that they had earlier this
• 16:32
  Speaker 1: week attached to their earnings, is that they're pushing back
• 16:34
  Speaker 1: on this deal by announcing, uh, you know, this big
• 16:37
  Speaker 1: boost of fifteen billion dollars in buy backs, uh, huge
• 16:41
  Speaker 1: cost savings is not just mentioned that they're looking for.
• 16:44
  Speaker 1: And so if you see any disruption that supply chain
• 16:46
  Speaker 1: or slow down in PC or printer sales even more
• 16:49
  Speaker 1: than what they've seen, that's gonna put a lot of
• 16:52
  Speaker 1: pressure on HP to sort of explore this deal more.
• 16:55
  Speaker 1: In Enrica, Laura's who came in a CEO in November
• 16:58
  Speaker 1: basically said, you know what, we're sort of going we
• 17:01
  Speaker 1: have a winning strategy. He dis xerox a bunch on
• 17:03
  Speaker 1: the earnings call, but at the same time he kept saying,
• 17:05
  Speaker 1: we're open to this idea. But a lot of if
• 17:07
  Speaker 1: you talk to analysts, they do feel like, you know,
• 17:10
  Speaker 1: there may be more of a likelihood of that HP
• 17:12
  Speaker 1: ends up buying Xerox than the other way around. Just
• 17:15
  Speaker 1: on the call. On the call, he was very explicit
• 17:18
  Speaker 1: about he says, they don't have good technology, they're they're
• 17:20
  Speaker 1: small by comparison, and uh, you know. And we spoke
• 17:24
  Speaker 1: to him after the call and he was, uh, he
• 17:26
  Speaker 1: said he was pumped up about how well it went.
• 17:28
  Speaker 1: Austo Car, thanks so much for joining Austin Car, technology
• 17:32
  Speaker 1: reporter for Bloomberg News and on Entreni bast and our
• 17:34
  Speaker 1: senior UH technology analyst for Bloomberg Telenges posts joining us
• 17:38
  Speaker 1: here in our Bloomberg Interactive Broker studio. Well. Last night,
• 17:48
  Speaker 1: President Trump held a press conference along with members of
• 17:51
  Speaker 1: the CDC to talk about the coronavirus and the state
• 17:54
  Speaker 1: of US preparedness for the virus. Let's tick a listen.
• 17:57
  Speaker 1: Because of all we've done, the risk to the American
• 18:01
  Speaker 1: people remains very low. We're ready to adapt and we're
• 18:04
  Speaker 1: ready to do whatever we have to. This one is different,
• 18:07
  Speaker 1: much different. This is a flu. This is like a flu.
• 18:10
  Speaker 1: I think the stock market will recover. Uh, the economy
• 18:13
  Speaker 1: is very strong. We are totally ready, willing enabled. That
• 18:18
  Speaker 1: was President Trump last evening at the White House talking
• 18:21
  Speaker 1: about the coronavirus and the preparedness of the United States
• 18:25
  Speaker 1: for that. Let's take a little bit deeper onto that
• 18:28
  Speaker 1: state of preparedness uh by the US government and economy.
• 18:32
  Speaker 1: Vivian Ho she's at James A. Baker, the Third Institute
• 18:34
  Speaker 1: Chair in Health Economics and Director Center for Health and
• 18:38
  Speaker 1: Biosciences at Rice University in Houston, Texas. Vivian, thanks so
• 18:43
  Speaker 1: much for joining us. Give us a sense of kind
• 18:46
  Speaker 1: of where you think the US is in terms of
• 18:48
  Speaker 1: preparedness for dealing with a potential wider outbreak of the
• 18:54
  Speaker 1: coronavirus in the US. I think the US is actually
• 18:58
  Speaker 1: in a fair amount of trouble in terms of what's
• 19:00
  Speaker 1: going to happen with the coronavirus, because the speech yesterday
• 19:05
  Speaker 1: basically told citizens that there wasn't much to worry about.
• 19:08
  Speaker 1: But we see the spread of the disease all over
• 19:12
  Speaker 1: the world. There are several countries with cases now, which
• 19:15
  Speaker 1: means it's only a matter of time before the disease
• 19:18
  Speaker 1: reaches the US unless the President wants to make a
• 19:21
  Speaker 1: decision that we cut off all trade in goods and
• 19:24
  Speaker 1: services and people traveling, which we could. We could do
• 19:27
  Speaker 1: that and we could then shut down the economy because
• 19:30
  Speaker 1: of how much of our economy depends on trade and
• 19:34
  Speaker 1: UM transfer of goods and services and people across borders
• 19:38
  Speaker 1: and so UM. We have local governments and schools and
• 19:42
  Speaker 1: and other UM places not prepared for what will happen
• 19:46
  Speaker 1: when this disease actually reaches this country. So what Vivian
• 19:49
  Speaker 1: should they be doing to prepare well? I thought that
• 19:53
  Speaker 1: UM when Anthony Fauci spoke yesterday afterwards, UM you know
• 19:58
  Speaker 1: he's he and others are saying, UM, try not to
• 20:03
  Speaker 1: be two alarmed. This is this is something like a flu.
• 20:08
  Speaker 1: We're going to have cases of UM diseases similar to
• 20:12
  Speaker 1: say to pneumonia, and those are of high risk to
• 20:16
  Speaker 1: seniors and those with compromised immune systems UM, and we
• 20:21
  Speaker 1: need to be directing more resources towards the c D
• 20:24
  Speaker 1: c UM. Apparently we don't have enough test kits that
• 20:28
  Speaker 1: are adequate for local UM local governments and state governments
• 20:32
  Speaker 1: to be able to test UM patients, So that's going
• 20:35
  Speaker 1: to be a problem. We're probably gonna have cases where
• 20:39
  Speaker 1: parts of the country are going to try and and
• 20:42
  Speaker 1: UM quarantine people at home, closed schools temporarily, UM, close
• 20:47
  Speaker 1: work offices temporarily. But my guess is because this is
• 20:52
  Speaker 1: so hard to control the spread of the disease, eventually
• 20:55
  Speaker 1: officials are going to throw their hands up and say, uh, sorry,
• 20:58
  Speaker 1: we can't handle this um and and try and go
• 21:01
  Speaker 1: about your normal everyday business or otherwise the economy really
• 21:05
  Speaker 1: takes for a significant period of time. So, Vivian, you know,
• 21:08
  Speaker 1: over the last several days, it appears that there's kind
• 21:11
  Speaker 1: of a disconnect between the CDC and the Trump administration
• 21:15
  Speaker 1: different you know, kind of framing the risk profile of
• 21:18
  Speaker 1: this disease. How problematic is that for you know, local
• 21:22
  Speaker 1: authorities to maybe make the decisions they need to make.
• 21:25
  Speaker 1: I think it's extremely problematic because there needs to be
• 21:29
  Speaker 1: some guidance and expertise at the top saying what resources,
• 21:36
  Speaker 1: um are these governments going to receive and what should
• 21:39
  Speaker 1: they be planning for And you need to have that
• 21:42
  Speaker 1: coming from the federal level unless there are UM state
• 21:45
  Speaker 1: experts who are going to give this guidance. Now, now,
• 21:47
  Speaker 1: I think Alexaser is a terrific Secretary of Health and
• 21:50
  Speaker 1: Human Services, but it troubles me that that that Vice
• 21:54
  Speaker 1: President Pence was put in charge of dealing with this disease.
• 21:58
  Speaker 1: You know, when America goes to war or goes to battle,
• 22:02
  Speaker 1: we put a general in charge who has military experience.
• 22:05
  Speaker 1: Um if we're as a country going to try and
• 22:09
  Speaker 1: fight this disease, we should be having a doctor or
• 22:12
  Speaker 1: an epidemiologist who understands the spread of infectious diseases calling
• 22:16
  Speaker 1: the shots. So let's walk through the iterations of what
• 22:19
  Speaker 1: you expect is most likely, because it is highly unlikely
• 22:23
  Speaker 1: that the United States at this point would or could
• 22:26
  Speaker 1: completely shut off its borders and all trade. What do
• 22:30
  Speaker 1: you expect to happen based on the contagiousness of the
• 22:33
  Speaker 1: disease that we are familiar with at this point, as
• 22:36
  Speaker 1: well as the preparatory measures that have been put in place.
• 22:39
  Speaker 1: I think it's I think it's highly unpredictable at this point,
• 22:43
  Speaker 1: simply because they're going to be different authorities who are
• 22:46
  Speaker 1: going to make different decisions and and and we don't
• 22:49
  Speaker 1: know who is going to be giving them counseling. But
• 22:52
  Speaker 1: you could have everything from um uh, you know, certain
• 22:56
  Speaker 1: governors saying Okay, we're going to declare a holiday and
• 23:00
  Speaker 1: and everyone stay home for a week to try and
• 23:03
  Speaker 1: get control of what happens to other states saying, well,
• 23:07
  Speaker 1: we need to go about our business and let's go
• 23:10
  Speaker 1: ahead and do this and UM, but let's try and
• 23:13
  Speaker 1: funnel as much resources as we can towards UM, towards
• 23:17
  Speaker 1: public clinics, and towards hospitals to deal with the expected
• 23:22
  Speaker 1: rise in the number of cases. I mean, there's a
• 23:24
  Speaker 1: fair amount of fluctuation that goes on every year in
• 23:28
  Speaker 1: the health care system already because of the flu and
• 23:31
  Speaker 1: so um. So our health care experts, you know, people
• 23:35
  Speaker 1: running our hospitals do know how to deal with this.
• 23:38
  Speaker 1: There's always a lot of discretion in terms of do
• 23:41
  Speaker 1: we admit patients with pneumonia and do we not? So
• 23:45
  Speaker 1: so in a sense they can deal with this. I
• 23:48
  Speaker 1: think it's just the problem is there's so much anxiety
• 23:51
  Speaker 1: and panic on top of it. You know, if you
• 23:54
  Speaker 1: get the flu, you're kind of like, I've had this,
• 23:56
  Speaker 1: I've you know, I've had this before, and they're saying
• 23:58
  Speaker 1: the mortality rate is somewhat similar or to the flu,
• 24:00
  Speaker 1: but it's just new. So Vivian, how do you think
• 24:04
  Speaker 1: this will play out in terms of the spread in
• 24:06
  Speaker 1: the US? Are you are the good folks at Rice
• 24:09
  Speaker 1: thinking this is going to happen and this is gonna
• 24:11
  Speaker 1: be bad. What's kind of your base case there? Oh,
• 24:13
  Speaker 1: I think everyone is is in is in disagreement right now.
• 24:17
  Speaker 1: I personally think it's only a matter of time. And
• 24:20
  Speaker 1: I have no idea whether it's going to happen within
• 24:22
  Speaker 1: the next two or three months, or whether it's going
• 24:25
  Speaker 1: to happen in six months or in a year. It's
• 24:29
  Speaker 1: just too early to say, because the scientists don't know
• 24:32
  Speaker 1: how the disease is spreading. They don't understand why it's
• 24:35
  Speaker 1: showing up, for example, in California with a person who
• 24:38
  Speaker 1: supposedly has no contact with anybody from China. Vivian Ho,
• 24:42
  Speaker 1: thank you so much for being with us. Vivian Hoe
• 24:44
  Speaker 1: is the director of the Center for Health and Biosciences
• 24:47
  Speaker 1: at Rice University, also the James A. Baker Institute Chair
• 24:50
  Speaker 1: and Health economics. Really interesting to hear what the potential
• 24:55
  Speaker 1: concerns are in terms of how to prepare for something
• 24:58
  Speaker 1: like this. It does seem though, Paul, and not being
• 25:01
  Speaker 1: a doctor or anything else, but looking at the medical
• 25:04
  Speaker 1: supplies industry, there seems to be a little bit more
• 25:07
  Speaker 1: optimism that six months a year run rate actually is
• 25:11
  Speaker 1: helpful in developing the right medications, UH and and vaccines,
• 25:15
  Speaker 1: and we are seeing some of those companies seeing their
• 25:18
  Speaker 1: shares surge as they prepare for that. Yeah, exactly right.
• 25:21
  Speaker 1: And as Vivian Hoa suggesting, like we've heard from a
• 25:24
  Speaker 1: lot of people, it's just too early to to kind
• 25:26
  Speaker 1: of figure out how this will play out in the US.
• 25:28
  Speaker 1: But again, I think it would be foolish probably, you
• 25:31
  Speaker 1: know what we're hearing from a lot of people. Would
• 25:32
  Speaker 1: would be foolish to think that it won't come to
• 25:34
  Speaker 1: the US and it won't be an issue. So now
• 25:36
  Speaker 1: it seems to be a question of how prepared is
• 25:38
  Speaker 1: the U. S Thanks for listening to the Bloomberg P
• 25:40
  Speaker 1: and L podcast. You can subscribe and listen to interviews
• 25:42
  Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
• 25:46
  Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds.
• 25:49
  Speaker 1: I'm on Twitter at Lisa Abram Woyds. One. Before the podcast,
• 25:52
  Speaker 1: you can always catch us worldwide on Bloomberg Radio.