Latest / Bloomberg Intelligence / Moderna Vaccine Holds Promise But In Very, VERY Early Days

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Moderna Vaccine Holds Promise But In Very, VERY Early Days · 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
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money. Whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:18
  Speaker 1: that Bloomberg dot Com. Stefan bon Cell CEO Moldern are
• 0:22
  Speaker 1: talking to Vonnie Quinn and Guy Johnson and Bloomberg Television,
• 0:25
  Speaker 1: Uh Lisa talking about the potential vaccine that they're working
• 0:29
  Speaker 1: aggressively towards UM and that news really pushing the stock
• 0:33
  Speaker 1: up buzz Vonnie mentioned over this morning. But I guess
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  Speaker 1: the key takeaway from me is the kind of the
• 0:38
  Speaker 1: sense of timing here getting into a phase two UM,
• 0:41
  Speaker 1: you know, I guess by July and then hopefully, if
• 0:44
  Speaker 1: all goes well, having it available by your end. It's
• 0:47
  Speaker 1: interesting you're as Vanni mentioned that the stock has risen
• 0:51
  Speaker 1: twenty two percent, Goldvin Sachs raising their target for the shares,
• 0:55
  Speaker 1: with one analysts saying that this initial study seems to
• 0:58
  Speaker 1: have hit the mark. The question that I have and
• 1:01
  Speaker 1: maybe Max Neeson of LIBC Opinion can answer it is
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  Speaker 1: does a first mover advantage when with respect to the
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  Speaker 1: vaccine equate to profits given the political pressure to keep
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  Speaker 1: costs down. This is an issue John Farroll raised earlier
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  Speaker 1: this morning. I think it's an important one, Max Neeson
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  Speaker 1: joining us now and Max before we get into the
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  Speaker 1: details of the study. Will the creators of the first
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  Speaker 1: vaccines make a lot of money? I think it's. Um.
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  Speaker 1: It's a complicated question because Maderna especially is getting a
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  Speaker 1: big chunk of money from the U. S. Government, and
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  Speaker 1: with that comes expectations. Um, you know that the pricing
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  Speaker 1: will be moderate, that availability will be broad, and I
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  Speaker 1: think that that genuinely is going to crimp on any
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  Speaker 1: profit that's available. On the other hand, if you actually
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  Speaker 1: successfully develop a COVID nineteen vaccine, you will end up
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  Speaker 1: making some degree of money. You'll at least recoup your investment,
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  Speaker 1: probably more. And on top of that, you know, if
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  Speaker 1: it's Maderna, you can't imagine a better validation of of
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  Speaker 1: the company's technology if it was able to turn around
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  Speaker 1: a vaccine this rapidly. But I don't think they'll They'll
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  Speaker 1: be able to price it at sort of the profit
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  Speaker 1: maximizing level, it will be somewhere closer to cost and
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  Speaker 1: and a little bit on top of that, I would
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  Speaker 1: I would imagine so Max one of the models, I
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  Speaker 1: guess what I what I'm thinking about. And one of
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  Speaker 1: the questions I have is just distribution. Whenever a vaccine
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  Speaker 1: is approved, are we going to need billions of doses
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  Speaker 1: for everyone on the planet or what's the thinking there?
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  Speaker 1: Because if it is something along those lines, it sounds
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  Speaker 1: like not. You know, you're gonna have to need multiple
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  Speaker 1: companies to get into the manufacturing and distribution game. Howes
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  Speaker 1: that figure out? Yeah? You you absolutely are going to
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  Speaker 1: need multiple companies and all likelihood multiple vaccines. Um, just
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  Speaker 1: because of the bottlenecks of of of manufacturing at such
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  Speaker 1: a broad level. You don't have to man vaccinate everybody
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  Speaker 1: on the planet. You need to get at a level
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  Speaker 1: that that makes community transmission unhighly unlikely. That's somewhere in
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  Speaker 1: the sixty seventy percent range. We're not exactly sure. Um,
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  Speaker 1: you know, because this is a novel virus, but that
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  Speaker 1: still equates to billions of doses. So yes, you will
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  Speaker 1: need multiple different manufacturers of multiple different companies multiple different vaccines.
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  Speaker 1: Some require cold chain to be refrigerated the whole time.
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  Speaker 1: That's tough in Sub Saharan Africa. So you may also
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  Speaker 1: need a more stable and more shelf stable vaccine. It's
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  Speaker 1: a lot of different things that factor into this. So
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  Speaker 1: the more the merrier in terms of manufacturing and a
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  Speaker 1: number of vaccines. Max can you put into perspective the
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  Speaker 1: success of this EARL early phase trial, in other words,
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  Speaker 1: how much faith we can really place in this indicating
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  Speaker 1: with the virus that the vaccine will be effective in
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  Speaker 1: preventing sickness. So I think the really key word here
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  Speaker 1: is early, and I'm going to repeat it again early
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  Speaker 1: because it really small, really small study that was designed
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  Speaker 1: mostly to focus on safety. And now the fact that
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  Speaker 1: there's immunogenicity and and that there's this appears to be
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  Speaker 1: an antibody response, and that there's other patients produced antibodies.
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  Speaker 1: That's definitely positive. But that antibody is from eight patients,
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  Speaker 1: and the relative to the bar that it's being measured
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  Speaker 1: against is equivalent or greater than the antibodies you see
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  Speaker 1: and recovered patients. We don't know if that's actually protective
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  Speaker 1: and for how long that's protective. So I just want
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  Speaker 1: to emphasize that it's a really long way before we
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  Speaker 1: can have any certainty that this vaccine or any vaccine
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  Speaker 1: produces a durable immune response on a population level UM.
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  Speaker 1: And then beyond that you always have to look at
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  Speaker 1: at safety issues which which can emerge when you when
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  Speaker 1: you test in a much broader population and at the
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  Speaker 1: highest dose of the second of dudos of his vaccine, UM,
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  Speaker 1: three people did did have food like symptoms, So there
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  Speaker 1: is the potential for that negative immune response and we'll
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  Speaker 1: have to watch that closely. So there really is no
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  Speaker 1: substitute for running really big phase three trials, and there
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  Speaker 1: is still a significant failure risk despite the fact that
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  Speaker 1: you have UM these nice early little pieces of data. Max,
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  Speaker 1: just refresh our memory here aside from mode mode, Danna,
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  Speaker 1: what are the other potential vaccines that seem to be
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  Speaker 1: farthest along at there? Who should we be listening to? UM?
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  Speaker 1: You know they're I mean, there are dozens, but there
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  Speaker 1: in terms of what's in human trials. Another mr Anda
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  Speaker 1: vaccine from fiser Um Johnson and Johnson moving rapidly on
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  Speaker 1: on a viral vector vaccine UM that then multiple candidates
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  Speaker 1: in China, a couple of which are are sort of
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  Speaker 1: what I would describe as relative to Madernau kind of
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  Speaker 1: older approaches. Um. So on one hand, they might have
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  Speaker 1: a harder time creating a really robust and meaning response.
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  Speaker 1: On the other hand, we understand and them better um
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  Speaker 1: than than this messenger. Our vaccine, which again it's worth emphasizing,
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  Speaker 1: has has never been used in a in a large
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  Speaker 1: approved vaccine in humans. So, UM, you really do have
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  Speaker 1: to as much as it's nice to focus on this
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  Speaker 1: one kind of early um, you know, first mover or
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  Speaker 1: at least first report of interim data. Um, you do
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  Speaker 1: want to develop a number of different candidates because the
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  Speaker 1: relative benefits and risk will only emerge when you run
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  Speaker 1: those much larger trials. Max Neeson of Bloomberg Opinion on
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  Speaker 1: the late stage phase. Oh wait a second, early early
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  Speaker 1: I think I got that. Max Neeson of Bloomberg Opinion,
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  Speaker 1: joining us on that that moderna vaccine study that was
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  Speaker 1: very much in the early phases but still promising. Nonetheless, well,
• 6:51
  Speaker 1: with more and more people working from home, one of
• 6:53
  Speaker 1: the questions is what does that mean for commercial real estate. Well,
• 6:56
  Speaker 1: companies need less space because they're finding that they're your
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  Speaker 1: employees can efficiently work from home or perhaps even more
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  Speaker 1: space because when they do eventually come back into the
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  Speaker 1: work space, they may need more space to spread out.
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  Speaker 1: So it's really kind of a question about what this
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  Speaker 1: means for office space going forward. Lisa n Co leader
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  Speaker 1: for the national real Estate practice at Eisner Amper joins us. Lisa,
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  Speaker 1: give us a sense of kind of how you guys think, Um,
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  Speaker 1: this pandemic and this work from home trend is going
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  Speaker 1: to impact commercial real estate going forward. Hi, thank you
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  Speaker 1: for having me in this morning, so that our pleasure
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  Speaker 1: perfectly put. So, when you examine and compare the loss
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  Speaker 1: of jobs from the office using sectors to some of
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  Speaker 1: the other sectors the office sector, professional service firms, finance, government,
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  Speaker 1: hi Tech, they're seeing a fewer job losses than any
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  Speaker 1: other sector. But how is that really going to correlate,
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  Speaker 1: as you mentioned before, to the need for commercial office space.
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  Speaker 1: There's still always going to be a need for this
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  Speaker 1: office space. But here's the big question that you mentioned.
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  Speaker 1: The tension really is forming between the need for space
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  Speaker 1: for social distancing, which is going to demand more space
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  Speaker 1: per worker, versus the economic pressure of working from home.
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  Speaker 1: So it's an example, when I started in the industry
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  Speaker 1: twenty years ago, the workforce model was three or three
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  Speaker 1: and a half people per thousand square feet versus right
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  Speaker 1: before the pandemic it was six people per thousand square feet.
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  Speaker 1: So that really is going to be the dynamic of
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  Speaker 1: whether you're going to encourage your office workers to work
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  Speaker 1: from home or you're gonna reconfigure spaces to give people
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  Speaker 1: that ability for social distancing. And so that's really the
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  Speaker 1: question and communicating It's also going to depend on the
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  Speaker 1: type of office um job that the people are using
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  Speaker 1: within those buildings. So there's also going to be a
• 8:44
  Speaker 1: pushback a little bit on the dentification. So we're going
• 8:47
  Speaker 1: to see coworking space really change the way that it's
• 8:51
  Speaker 1: been doing in the in the past. The reworks, they're
• 8:53
  Speaker 1: all going to be rethinking their models where it's probably
• 8:56
  Speaker 1: is going to become more of a managed service. And
• 8:59
  Speaker 1: so now maybe the landlords are going to get in
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  Speaker 1: direct contact with those people that were using the coworking
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  Speaker 1: space and be able to create spaces for them directly
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  Speaker 1: with more managed amenities. So, as I mentioned before, a
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  Speaker 1: lot of that's going to depend on the tenant and
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  Speaker 1: the location and what we've really seen, which is even
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  Speaker 1: more interesting, is that the office space outside of urban
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  Speaker 1: cities are in really high demand. It's really really hard
• 9:23
  Speaker 1: to find. So these commercial real estate tenants are rethinking
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  Speaker 1: going into an elevator on the thirtieth floor, right. And
• 9:30
  Speaker 1: so now those suburban markets with maybe three stories have
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  Speaker 1: seen a lot, a lot of activity, and so that
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  Speaker 1: new norm for office is really that tricky question of
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  Speaker 1: how that how it's going to be balanced going forward. Lisa,
• 9:44
  Speaker 1: there's a lot there. Let's unpack a little bit of
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  Speaker 1: it there. I want to I want to get into
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  Speaker 1: the shift away from densely populated urban areas because this
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  Speaker 1: is something a lot of people are wondering about, especially
• 9:56
  Speaker 1: given the high valuations of commercial real estate in the
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  Speaker 1: big urban centers. Is that all dead in the water now?
• 10:05
  Speaker 1: So people are still going to be in the urban
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  Speaker 1: cities and want to work those those high tech jobs,
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  Speaker 1: the professional services firms, you know, they're still going to
• 10:14
  Speaker 1: be in the in the larger cities, those gateway cities
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  Speaker 1: are still going to call a demand for that. And
• 10:21
  Speaker 1: so I think it's just a rethinking and repositioning of
• 10:24
  Speaker 1: how you're using the space, rather than people just flooding
• 10:27
  Speaker 1: and evacuating, so to speak, those dentification markets. It's just
• 10:31
  Speaker 1: figuring out how to get that tension to be where
• 10:34
  Speaker 1: people are gonna feel comfortable going back into that space. It'sentering, Lisa.
• 10:38
  Speaker 1: I wonder how the workspace itself is going to evolve
• 10:41
  Speaker 1: when I start on Wall Street. You know, thirty years ago,
• 10:43
  Speaker 1: everybody had the cubes, or if you're an officer, you
• 10:46
  Speaker 1: had an office, and if you were a senior, you know,
• 10:48
  Speaker 1: a managing director, you had a really big office. Um.
• 10:51
  Speaker 1: But now you know it's much more of an open
• 10:53
  Speaker 1: floor plan. That's certainly how Bloomberg has been configured globally.
• 10:58
  Speaker 1: How do you think the floor plans are going to evolved?
• 11:00
  Speaker 1: Is the open floor plan where everybody's just kind of
• 11:03
  Speaker 1: sitting with little to know barriers? Is that a thing
• 11:06
  Speaker 1: of the past here until maybe we get a vaccine
• 11:08
  Speaker 1: or something different. I think it has to be right.
• 11:11
  Speaker 1: I think that people are gonna have to feel comfortable
• 11:12
  Speaker 1: and safe in their work environment. So whether they're going
• 11:15
  Speaker 1: in on shifts, if there is some hoteling, um where
• 11:18
  Speaker 1: it's an A or a B day um, but people
• 11:20
  Speaker 1: are going to have to feel that they're secure and
• 11:23
  Speaker 1: it's clean. And so that model of either putting up
• 11:26
  Speaker 1: barriers UM or some sort of protection. Uh. We even
• 11:29
  Speaker 1: had some conversations with people about antiseptic finishes, non touch
• 11:34
  Speaker 1: access to things within the office. Things are people are
• 11:37
  Speaker 1: really going to have to feel that their space is
• 11:40
  Speaker 1: their own space and they're going to feel comfortable, um
• 11:43
  Speaker 1: and safe going back into the workforce. Um. And and
• 11:46
  Speaker 1: even in the urban cities. You know, I'm sure you've
• 11:48
  Speaker 1: been speaking a little bit about you know, people on
• 11:50
  Speaker 1: the subways and getting back into the city. But once
• 11:54
  Speaker 1: they're they're getting in that elevator, they need to feel
• 11:56
  Speaker 1: that they are safe and secure. Lisa y Colider for
• 12:00
  Speaker 1: the national real estate practice at Eisner Emperor in New York,
• 12:03
  Speaker 1: thank you so much for being with us. And I
• 12:04
  Speaker 1: will just say talking about getting around the city, Paul,
• 12:07
  Speaker 1: everyone's biking and and really biking and and actually this
• 12:11
  Speaker 1: weekend I purchased a new bike for four guns and
• 12:15
  Speaker 1: they were almost out of bikes and the line was
• 12:17
  Speaker 1: around the block. I mean, really, this is sort of
• 12:19
  Speaker 1: the mode of transportation now, um for for people who
• 12:23
  Speaker 1: don't want to go back. It really is. I was
• 12:25
  Speaker 1: just reading an interesting an article on that on the
• 12:27
  Speaker 1: Bloomberg terminal today. I think sales are up in April
• 12:31
  Speaker 1: and the tracking even higher, uh in the month of May,
• 12:34
  Speaker 1: and they're you know, getting to the point where you
• 12:36
  Speaker 1: mentioned list there's a shortage in a lot of areas here,
• 12:39
  Speaker 1: so um, yeah, it's gonna be interesting to see how
• 12:41
  Speaker 1: this all evolves. As you know, we're seeing in New
• 12:43
  Speaker 1: York City shutting down streets to allow more efficient foot traffic,
• 12:47
  Speaker 1: and you just wondering how much of this is gonna
• 12:49
  Speaker 1: be permanent or just kind of transitory. Yeah, and we'll
• 12:51
  Speaker 1: hear more about the reopening plans coming up. Andrew Cuomo,
• 12:54
  Speaker 1: Governor of New York State, talking about the latest there
• 12:58
  Speaker 1: with the daily coronavirus is briefings that have become a
• 13:02
  Speaker 1: key part of this entire era. J C. Penny filing
• 13:09
  Speaker 1: for bankruptcy on Friday just kind of this is something
• 13:12
  Speaker 1: that has been expected for a long time. This is
• 13:14
  Speaker 1: a department store chain that's really been on the bankruptcy
• 13:19
  Speaker 1: for some time, as department stores in general really feeling
• 13:22
  Speaker 1: the brunt of the move towards e commerce. Do you
• 13:25
  Speaker 1: get a sense of what it means for not only
• 13:27
  Speaker 1: J C. Penny but the department store genre in general.
• 13:31
  Speaker 1: We turned to brought Bert Flicking German. He's a managing
• 13:34
  Speaker 1: director for Strategic Resource Group. Bert, thanks so much for
• 13:37
  Speaker 1: joining us once again here so kind of put into
• 13:40
  Speaker 1: context force Bert, kind of what this j C. Penny
• 13:42
  Speaker 1: bankruptcy filing means for them? Is this a company that
• 13:45
  Speaker 1: can continue? Is this a brand that can continue? Oh? Yes,
• 13:50
  Speaker 1: j C. Penny's viable will continue. It got wrecked by
• 13:54
  Speaker 1: the Wall Street pirates, Bill Ackman, Pershing Square, etcetera. Uh,
• 13:59
  Speaker 1: Walsh didn't understand Main Street and the difference now Paul
• 14:03
  Speaker 1: and Lisa's leadership. Penny's got great leadership with Jill saltal
• 14:09
  Speaker 1: great great store teams, and as you mentioned a minute ago,
• 14:14
  Speaker 1: Penny is getting rid of the stores and the d
• 14:17
  Speaker 1: n C malls that were impaired by being co located
• 14:21
  Speaker 1: by liquidated Bonton and Herberger's stores and soon to be
• 14:26
  Speaker 1: liquidated Sears stores. Now they'll stay in mostly A malls,
• 14:31
  Speaker 1: H and B plus malls. So bet on J C.
• 14:33
  Speaker 1: Penny to win and bet on Neiman Marcus to lose.
• 14:36
  Speaker 1: Just I want to go back to what you said initially,
• 14:39
  Speaker 1: Wall Street versus Main Street, and you view this as
• 14:41
  Speaker 1: a well Street not understanding the story here and and
• 14:46
  Speaker 1: kind of creating a bad scene for J. C. Penny.
• 14:48
  Speaker 1: But what would you say to people who argue that
• 14:52
  Speaker 1: the store doesn't have an identity that works with the
• 14:55
  Speaker 1: modern era. They used to be the mail order company.
• 14:58
  Speaker 1: Now what are to day? Lisa? You're bringing up key
• 15:03
  Speaker 1: considerations and what Penny is is the UH leading department
• 15:07
  Speaker 1: store for United Nations of consumer constituencies. Number one with
• 15:12
  Speaker 1: Spanish speaking consumers, number one with people of color, number
• 15:16
  Speaker 1: one with Caucasian consumers. UH. And it doesn't cater to
• 15:22
  Speaker 1: mestize prestige or luxury. It caters to working people who
• 15:27
  Speaker 1: want good quality. Penny's got great cotton, great color palettes. UH.
• 15:31
  Speaker 1: Sephora for beauty UH, the number one partnership anywhere anywhere worldwide.
• 15:36
  Speaker 1: Sephora's flagship store in Paris actually draws more tourists than
• 15:41
  Speaker 1: the Eiffel Tower does every day. And they bring back
• 15:44
  Speaker 1: the salons and UH in kitchenware and home goods, just
• 15:51
  Speaker 1: like Craig Coleman and Ashley Glazier. They're great team at
• 15:54
  Speaker 1: Macy's and similar teams at Dillard's. Macy's is taking advantage
• 15:59
  Speaker 1: of the rent sots and food retail. Uh, as is
• 16:02
  Speaker 1: j C. Penny and selling a lot more kitchen and
• 16:06
  Speaker 1: home item So was a question of bad locations uh
• 16:10
  Speaker 1: and Ackman and company wrecking retail, UH, leaving Penny on
• 16:15
  Speaker 1: death store step and now with a good team and
• 16:20
  Speaker 1: a customer base that loves Penny as an iconic retailer, UH,
• 16:24
  Speaker 1: Penny will be viable. Your your point, Lisa, J C.
• 16:27
  Speaker 1: Penny dot com long Way to Go needs a lot
• 16:30
  Speaker 1: of improvement. Uh. They needed to get out of appliance
• 16:33
  Speaker 1: as they are, But they're Jill's taking corrective action. We're
• 16:37
  Speaker 1: needed and Penny is gonna go through real retail retail requiem,
• 16:42
  Speaker 1: while while the rest of much of the rest of
• 16:45
  Speaker 1: the department and specialty store retail is going through an
• 16:48
  Speaker 1: accelerating retail ice age. So Bert, I know they're shutting
• 16:53
  Speaker 1: a bunch of stores here. Maybe the stores. Is that
• 16:56
  Speaker 1: enough or do they need to shrink the footprint even more?
• 16:58
  Speaker 1: Do you think, Paul? Paul, your important point is key
• 17:01
  Speaker 1: the thirty percents en off. It's thirty that they should
• 17:05
  Speaker 1: have done a few years ago. But but UH, to
• 17:10
  Speaker 1: the company's credit, they had to wait uh to see
• 17:14
  Speaker 1: what was going to be impaired and left vacant by
• 17:17
  Speaker 1: the Bontan, the boss covs UH and the the other
• 17:22
  Speaker 1: bankrupt bankruptcy is most most notably Sears. So now UH,
• 17:28
  Speaker 1: the surviving Penny stores on on your key point, Paul
• 17:32
  Speaker 1: will be co located with Macy's and other leading anchor
• 17:36
  Speaker 1: department store chains. And then we're seeing Chris Paul Wound,
• 17:40
  Speaker 1: Lead Delaney UH, David pico U taking Great anchor department
• 17:45
  Speaker 1: stores UH and converting him with BJ Soulesale Club. Craig
• 17:49
  Speaker 1: jellinek Uh and Rich Galante at Costco are taking Great
• 17:52
  Speaker 1: department Stores converting him to Costco. That's gonna be a
• 17:55
  Speaker 1: real revitalization of customer counts that will help Penny and
• 17:59
  Speaker 1: macey He's and other mall based retailers across the country.
• 18:03
  Speaker 1: We're speaking with Bert Flicking ger managing director at Strategic
• 18:06
  Speaker 1: Resource Group, and I want to zoom out from j C.
• 18:09
  Speaker 1: Pennymore broadly into the retail sector where we've seen bankruptcy
• 18:13
  Speaker 1: is really accelerating. Yes, this is because of the pandemic. However,
• 18:17
  Speaker 1: we also are seeing a consolidation of power both by
• 18:20
  Speaker 1: Amazon and Walmart, which will report earnings tomorrow. I'm just wondering,
• 18:25
  Speaker 1: is this going to be the era where the big
• 18:27
  Speaker 1: get bigger in retail and all of the weaker players
• 18:31
  Speaker 1: ultimately have to completely rethink themselves or go out of business.
• 18:35
  Speaker 1: Lisa Big, Big, get better. UH, we get boxed up
• 18:40
  Speaker 1: for the bankruptcy Bone Yard. The difference is the keystone
• 18:43
  Speaker 1: in the bridge to success is food retail and for
• 18:46
  Speaker 1: International Council shopping centers, Tom Shay's great team with Stephanie
• 18:50
  Speaker 1: Sagalski and Malachi Kevanagh, we did a webinar people all
• 18:56
  Speaker 1: shopping center owners and retail executives U similar to the
• 19:00
  Speaker 1: work we did for Ben Camaratta Carol Myerwitz at t
• 19:03
  Speaker 1: j X. If you have a high volume locally owned
• 19:07
  Speaker 1: or chain UH that's based in food, UH, Penny Macy's,
• 19:13
  Speaker 1: the other retailers, hard goods, soft, soft goods, general merch tabletop.
• 19:19
  Speaker 1: As America goes from UH consuming food percent at home
• 19:25
  Speaker 1: to now eight cent at home, we think that will
• 19:28
  Speaker 1: settle at six sixty five. Anybody who sells food related
• 19:32
  Speaker 1: retail items and merchandise as well advertised as well, especially
• 19:37
  Speaker 1: with language specific consumer communication, will be winners. And that's
• 19:42
  Speaker 1: Macy's penny will come back the same way. And Lisa,
• 19:45
  Speaker 1: to your point on Walmart, Walmart will probably reported dollar
• 19:50
  Speaker 1: twenty share tomorrow versus one oh two. Bert Lickinger, We're
• 19:54
  Speaker 1: gonna have to leave it there. I'm sorry to cut
• 19:56
  Speaker 1: you off. Bert Flickinger, Director IT Strategic Resource Group, talking
• 20:00
  Speaker 1: about the landscape of retail. FED Chair J. Powell and
• 20:07
  Speaker 1: all of the federals or of governors have talked about
• 20:09
  Speaker 1: the likelihood of a growing rash of bankruptcies amongst smaller
• 20:13
  Speaker 1: business America, and there's a question of how quickly the
• 20:16
  Speaker 1: federal government is getting aid to these businesses. On the
• 20:20
  Speaker 1: front lines of that is Don McRae, vice chairman and
• 20:22
  Speaker 1: head of commercial Banking at Citizens Financial Group in Boston
• 20:26
  Speaker 1: and Providence Road to Island, a question about how successful
• 20:30
  Speaker 1: the Paycheck Protection Program the p p P has been
• 20:33
  Speaker 1: so far and what's necessary to shore up this sector
• 20:36
  Speaker 1: of the U. S. Economy. Don, thank you so much
• 20:39
  Speaker 1: for being with us. Can I just first ask you
• 20:41
  Speaker 1: to kind of grade the Paycheck Protection Program as Congress
• 20:46
  Speaker 1: members debate how to change it, tweak it to make
• 20:48
  Speaker 1: it more effective. How effective do you think it's been
• 20:51
  Speaker 1: so far? I actually think, Lisa, that has been a
• 20:54
  Speaker 1: pretty good program. You know, our experience has been quite
• 20:58
  Speaker 1: strong with our clients. We have about forty five thousand
• 21:02
  Speaker 1: some odd clients apply for the program for around five
• 21:06
  Speaker 1: billion dollars and UM we have now funded almost those
• 21:12
  Speaker 1: of those loans and they're they're really going to small
• 21:15
  Speaker 1: companies I think of them or companies with less than
• 21:19
  Speaker 1: twenty five employees. So it's really ending up in the
• 21:22
  Speaker 1: hands of small businesses that um that need the money.
• 21:27
  Speaker 1: I think one of the challenges is depending where you
• 21:29
  Speaker 1: are in the country, so we may be a little
• 21:31
  Speaker 1: bit different being in the Northeast. Is the makeup of
• 21:35
  Speaker 1: small businesses expense spaces varies widely, and some take a
• 21:40
  Speaker 1: restaurant for example. In some parts of the country, labor
• 21:43
  Speaker 1: is a very significant cost UH component, but in another
• 21:46
  Speaker 1: part of the country, say New York City, it really
• 21:49
  Speaker 1: is rent. So some of the usability of the of
• 21:52
  Speaker 1: the of the moneys for employees versus other parts of
• 21:55
  Speaker 1: the cost structure I know as a pressure point for
• 21:58
  Speaker 1: some of these small businesses. So don given that you're
• 22:01
  Speaker 1: seeing some success with your client based small and midsized businesses.
• 22:05
  Speaker 1: With his first round of fiscal stimulus. Is it's your
• 22:08
  Speaker 1: expectation that, again dealing with your clients, that they really
• 22:12
  Speaker 1: need a second round of stimulus as well. I think
• 22:16
  Speaker 1: it depends on the client. I think you've got the
• 22:20
  Speaker 1: main street programs which are beginning to roll out. Uh,
• 22:23
  Speaker 1: some clients will access those. They aren't fully formulated yet,
• 22:27
  Speaker 1: but there's an allowance of people who receive the paycheck
• 22:31
  Speaker 1: program to take take main street money. I think the
• 22:34
  Speaker 1: fet is is at work thinking about other ways to
• 22:36
  Speaker 1: distribute kind of different forms of aid into UM into
• 22:42
  Speaker 1: the corporate America, so they and then and then really
• 22:45
  Speaker 1: the wild card is going to be how quickly things
• 22:47
  Speaker 1: begin to open. I was just on the phone someone
• 22:49
  Speaker 1: in South Carolina, for example, and he said, Hey, the
• 22:53
  Speaker 1: restaurants here are really busy. So business is back. And
• 22:56
  Speaker 1: that's the first state that's reopened. So I think it's
• 22:59
  Speaker 1: a combination of company and location and reopening rate. John
• 23:04
  Speaker 1: There's been a question as the middle market sector comes
• 23:08
  Speaker 1: under pressure from COVID nineteen, there's a question about regional
• 23:12
  Speaker 1: banks in general and an expected wave of consolidation that's
• 23:15
  Speaker 1: expected to accelerate on the heels of this pandemic. Where
• 23:19
  Speaker 1: are you seeing in that space, and are you interested
• 23:22
  Speaker 1: in participating in an acquirer type mode. UM. You know,
• 23:26
  Speaker 1: I'd say, right now, our focus is unilaterally taking care
• 23:31
  Speaker 1: of our customers, and so I think for the next
• 23:34
  Speaker 1: six months it's going to be all about helping our
• 23:37
  Speaker 1: clients through UM, this disruption. UM. And it's literally client
• 23:41
  Speaker 1: by client UM. And then I think it's the consolidation
• 23:46
  Speaker 1: question will really be you know, what does the industry
• 23:49
  Speaker 1: look like when we're through this. We're quite optimistic based
• 23:52
  Speaker 1: on what we're seeing right now, um and uh. And
• 23:55
  Speaker 1: then are there a logical combinations? So it's not it's
• 23:58
  Speaker 1: not strategically something that we're focused about. The split second.
• 24:01
  Speaker 1: So done. How has this pandemic and the work at
• 24:04
  Speaker 1: home work from home phenomena impacted your business? I suspect,
• 24:09
  Speaker 1: you know, your bankers like to spend a lot of
• 24:11
  Speaker 1: time on the road meeting with their clients, you know,
• 24:14
  Speaker 1: but now they're forced to work from home. How has
• 24:16
  Speaker 1: it impacted your business? So? I think I think it's
• 24:19
  Speaker 1: actually been surprisingly good. UM. We don't think we've lost
• 24:24
  Speaker 1: a beat in terms of in terms of interaction with clients. UM.
• 24:28
  Speaker 1: We actually think our efficiency has gone up as people
• 24:32
  Speaker 1: aren't on airplanes and aren't commuting and aren't doing all
• 24:34
  Speaker 1: the things that take them away from actually doing work.
• 24:38
  Speaker 1: We've been able to process everything through our operations units
• 24:41
  Speaker 1: remotely without a hitch um And actually we were finding
• 24:46
  Speaker 1: the interaction with our clients largely because we're in the
• 24:49
  Speaker 1: middle of a crisis and they want to talk to us,
• 24:51
  Speaker 1: you know, pretty seamless. Um. So we feel we feel
• 24:54
  Speaker 1: good about it. It's actually surprised us. We thought going
• 24:57
  Speaker 1: into this that we were going to have, you know,
• 24:59
  Speaker 1: some challenges in terms of keeping productivity up and staying
• 25:03
  Speaker 1: in touch with people. But I'd say it's had zero
• 25:05
  Speaker 1: negative impact. And and and well, you know, we're regardless of
• 25:08
  Speaker 1: where we go, we'll be like this for a while,
• 25:11
  Speaker 1: not necessarily working remotely, but you know they're going to
• 25:14
  Speaker 1: the restaurants and going to the sporting events, and you know,
• 25:17
  Speaker 1: getting on airplanes and pitching will be at a very
• 25:19
  Speaker 1: different level than it was for some some period of time.
• 25:23
  Speaker 1: So don does that mean just real quick here twenty seconds,
• 25:25
  Speaker 1: are you going to shrink your footprint and office space.
• 25:28
  Speaker 1: I haven't decided that yet. We do. We we may
• 25:30
  Speaker 1: actually bring some things back on shore, which I think
• 25:33
  Speaker 1: will be good. Um, so I'm not sure we'll actually
• 25:36
  Speaker 1: need to shrink off space, but we'll be doing some
• 25:39
  Speaker 1: on shoing. Don McCree, thanks so much for joining us.
• 25:42
  Speaker 1: We always appreciate your thoughts and opinions. Don McCree, vice
• 25:45
  Speaker 1: chairman and head of Commercial Banking for Citizens Financial Group
• 25:48
  Speaker 1: based in Boston as well as Providence, Rhode Island. Interesting,
• 25:51
  Speaker 1: kind of interesting, Lisa, you know, having a little to
• 25:54
  Speaker 1: to know negative impact kind of working from home issue. Yeah,
• 25:58
  Speaker 1: We're hearing this from a lot of people, and I
• 26:00
  Speaker 1: wonder as time goes on, will the negative impact on
• 26:04
  Speaker 1: new ideas and things that can kind of get generated
• 26:06
  Speaker 1: when people pass themselves in the hallway, will that will
• 26:10
  Speaker 1: that be felt? Or is this really going to be
• 26:12
  Speaker 1: a referendum on office space. Yeah, it's really interesting. I mean,
• 26:17
  Speaker 1: I think a lot of folks feel like being in
• 26:19
  Speaker 1: the office has value, but there's certainly now I guess,
• 26:22
  Speaker 1: an appreciable cost to that, so that might be changing
• 26:25
  Speaker 1: the calculus a little bit. So I'm sure a lot
• 26:27
  Speaker 1: of companies will be thinking about this going forward. Thanks
• 26:31
  Speaker 1: for listening to the Bloomberg P and L podcast. You
• 26:34
  Speaker 1: can subscribe and listen to interviews at Apple podcasts or
• 26:36
  Speaker 1: whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter
• 26:40
  Speaker 1: at pt Sweeney. I'm Lisa Abram woids I'm on Twitter
• 26:42
  Speaker 1: at Lisa Abram Woyds One. Before the podcast, you can
• 26:45
  Speaker 1: always catch us worldwide on Bloomberg Radio