Episode Transcript
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Speaker 1 (00:00):
This is Bloomberg Business Week. I'm Carol Masser and I'm
Jason Kelly. We're right here every day bringing you the
latest news from the world's of business and finance, plus technology, politics, economics,
all harnessing the power of Business Week reporters and editors.
And of course Carol that's part of a team of
twenty seven hundred journalists and analysts and more than a
hundred and twenty countries and Jason. You can download Bloomberg
(00:22):
Business Week on iTunes, SoundCloud, bl Bloomberg dot com. You
can also listen to our radio show at two pm
Eastern on Bloomberg Radio every weekday, or watch us on
YouTube by searching Bloomberg Global News. Investors. They are perhaps
rightly worried about this spike that we're seeing across the
country in coronavirus cases, especially in the sun Belts. This
(00:45):
is not a disease. We know that summer is going
to just sort of take away from us. Uh, the
numbers are scary. John Tazzi is healthcare reporter for Bloomberg.
He joins us on the phone from Queens And you know, John,
I grew up in Houston, and so I look at
what's going on in that city. I look at Texas
and it's really troubling and a little bit scary. Help
(01:07):
us understand where we are because two months after, almost
three months after we were facing this in New York City,
we're back to counting beds again. Yeah, I mean, I
think it's a really concerning situation, um, as you said,
and you know, not just in Texas, but a number
of states um Arizona, California have recently set records for
(01:33):
new cases um and you know, we we are seeing
a rise in hospitalizations as well. So you know, sometimes
new cases are just an indication of more testing. But
I think there are an increasing number of positive tests, uh,
and an increasing number of hospitalizations. And you know, the
concern I think everywhere is to avoid getting to a
(01:57):
point where hospital systems are, uh, you know, are overwhelmed
that they have you know, not that they don't have
enough debts to treat the patients they have coming in right,
so much so that as you you know, put in
your story that late yesterday the Texas Children's Hospital System
in Houston began accepting adult COVID nineteen patients because of
a surging demand. I do wonder John and your reporting.
(02:20):
Have those states that are now dealing with surges and
cases and and increasing hospitalization, have they learned anything? Are
they better prepared than we were potentially here on the
East Coast, you know, where it just kind of I
think safe to say no one expected it, you know,
to to shoot up as much as it did, and
I think a lot of people were caught uh not,
(02:41):
you know, unprepared. So I just wonder our hospital systems
across the country better prepared now. UM. I think there
are a lot of valuables in play. I think in
some ways, yes, um, you know, everybody has now had
uh some time to sort of see this coming and
you know, to begin uh stockpileing uh personal protective equipment,
(03:02):
UM you know in medicines, UM, you know, and to
kind of really look carefully at their plans around how
they are going to create surge capacity uh if they
need to, um you know. But there are some other
um factors that uh, you know pulling the other direction.
In New York in uh in March and early April,
(03:25):
basically everything stopped. People were not getting uh medical care
for you know, non emergent issues other than COVID. A
lot of schedules. Care was just canceled for weeks um
in order to give the hospital's capacity to uh, you know,
to treat the COVID surge. Um. In most of the country,
(03:47):
elective surgeries are have resumed and hospitals are treating patients
you know who who couldn't put up care indefinitely for
you know, really serious issues in some cases, so you know,
they're balanced thing that as well, along with you know,
the kind of rising number of um of coronavirus cases,
(04:09):
so being a little bit prochial here. How much do
we need to worry in the Tri state area, which
is starting to get back to work, where we it
feels like, have been assured along the way that New
York and and states surrounding would be ready if there
was a second wave. What have we learned? What do
(04:31):
we need to be worried about, especially because of what
happened uh here before? Um. Well, I think that what
the epidemnologists will tell you is that the potential for
more spread of the virus exists everywhere, right because most
of the population is still susceptible. So even though you
know in New York that the number of people testing
(04:53):
positive is very low, now and it feels much safer
than it did, certainly a couple of months go. Um,
you know, there's nothing to say that, you know, we
won't be in a similar situation to what we're seeing
in in Texas and Arizona again at some point down
the line. And I think, you know, hospital systems everywhere
are you know, considering, um, you know what they have
(05:17):
to do to prepare for for uh, that kind of situation.
And you know, one of the messages I think we're
hearing from Health US victuals no, no, you know what
I was just gonna say, just to wrap up, is
I love the way you wrap up your story. And
there's a quote I believe from one physician who talks
about that even if the health system is as prepared
(05:38):
as we can be, if we see the degree of
COVID cases and hospitalizations and it keeps growing exponentially, Um,
this doctor says, I don't know if even the best
preparation of the world would be enough. And it just
is once again, Um, you know, Jason, a repeat of
you know you can prepare and prepare about when those
numbers go off the chart, it's really tough to keep up.
And that's potentially what we could see again. Um, John,
(05:58):
thank you so much, really appreciate the story. And you're reporting.
John Tazzi, healthcare reporter at Bloomberg News, joining us on
the phone in Queens, New York. And Jason, listen, you
know here we are once again check out most red
on the Bloomberg terminal there are. You know, for a
while the virus updates was trending much lower in terms
of what everybody was reading on the terminal. It's back
up again. We've been here before. We've seen this movie
(06:20):
and and I think we didn't like it the first time,
and we like it even less this time. So we're
gonna keep a close eye on this for sure. Eager
to get some time later with the dean of the
Stanford Medical School and get his perspective on what they're
seeing from a medical perspective. We have leaned heavily on
doctors and deans like him to give us a real
(06:41):
reality check in terms of preparation, but also, you know,
some prescriptive advice on what should we what we should
be thinking about when it comes to work in life
and all of it. I have advice for you, Jason,
wear a mask, yeah, and social distancing. Yeah, I'm just
going to put it out there. Sorry, Sorry for the sarcasm.
Large family grew up on sarcasm. Alright, it's not even
(07:01):
sure it's sarcastic at this point, it's just direct. You're
absolutely right. This is Bloomberg Business Week with Carol Masser
and Jason Kelly on Bloomberg Radio. Well, today was day
three of Bloomberg Global Amazing event wrapping it up actually
right now, I believe they're wrapping it up here in
the US. So it went around the world. It was
(07:22):
in Asia, Middle East, Europe, and the United States obviously,
and during the European portion. This morning I got to
catch up with Bruce Flat. You've met him. We've spent
some time with him out in l a and elsewhere.
He's based in New York. He was in London. He's
got a global portfolio. They are a massive real estate investment,
massive real estate, infrastructure, renewables. We talked about all of it.
(07:45):
Check out a portion of this conversation. I would just
say that, you know, leave aside the health um impact
of everything. Um, the only thing constant in life is changed.
And uh, we've witnessed from all across the world, the
closing down of offices and the opening up of offices,
(08:07):
and we're we're virtually opened up all of our offices
globally and we're back up at some office in London
here we're probably New York were thirty um and you know,
so the numbers have been have been going back up
and it's taken us three months. It's been stressful for
(08:28):
a lot of people. But um, you know the bottom line,
this will pass, and this is the crisis of the day.
But we'll look back at it, um and some small
things are going to change. Bought a lot of going
back to where they were, and we'll have another crisis
in the future. I'm sure, um that will be just
as bad as this one. When you're in the middle
(08:48):
of it. So what are those small things that have changed?
Because you have a window literally in figuratively into how
we work. We spent so much of our time at
the office, we spent shopping, you also have a window
into that. What are the things that you see that
will change in the short to mid term that we
should be thinking about. Yes, so for offices, once we
(09:14):
shut down office buildings around the world and that people
went home, we started thinking this three months ago. We
started thinking about what is it that we need to
do get those offices back open, and that has included
all of the things that you have seen if you're
in an office today or you will see when you
shortly go back, which is there's more distancing, elevators are
(09:37):
have spacing out, there's more cleaning. Our air is better
than what you're breathing in your house because we are
um taking particles out of the air that we never
took out before. So all of those things are happening
in office buildings today and they are going to be
some of the safest places in the world to be
in the future. UM In In in retail, there's no doubt.
(09:59):
There was this trend that was going on, and the
trend was online and good retail. We're moving together and
retailers were using them together as one UM space to
deliver goods to customers, and that's going to be accelerated.
There's no doubt. Uh. With curbside pick up probably increasing
(10:20):
and other things happening, the trends that we're happening are
going to continue to UM increase, some of them exponentially
as you come out of this. And it's safe to say,
and I know that this is your business, but you're
still long office as a way of working. You've talked
(10:43):
several times over the past few weeks about the power
of people being together and those sorts of things. I
think we're seeing that manifesting even in our social lives.
Help me understand that a little bit. So here's what
I would say. Our our view is that office space.
After talking to virtually every company that we lease space
(11:05):
two um that they're bringing their people back. The only
the only reason some are saying we're actually not bringing
back everyone right now is they don't have they don't
have enough space to be able to have social distancing.
While that's important to bring everyone back, So they may
be bringing back of the people because of that, but
(11:26):
eventually they're going to bring them all back. And I
guess the point I would make, and I think this
is in our company, but it's in other companies we
talked to. The office is about the social interaction of
people that creates a culture in a business. The spontaneity
and the collaboration that comes from an office is incredibly
important to a business, and you can't create that by
(11:48):
video conference. Uh, you can maintain it for a while,
and that's what we've all done for a little while.
But you really can't do that over the longer term.
So offices are going to be incredibly important as they
were before, and in fact today, um, Jason, we're actually
releasing greater amounts of space to people than they had
before because they want to accommodate all our people and
(12:09):
get them back quickly and uh, and so they're increasing
their footprints versus getting taking less. That's fascinating. But you
can go either way, right Jason. People can either you know,
reduce their footprint and either have people out in the
suburbs or working from home, or they can increase their
footprint in the big cities to give everybody more space
(12:30):
so that they feel comfortable. So that's and I listen,
I've heard the death of major cities. How many times?
How many times have we heard it. I don't think
that's going to happen. I just think we're gonna have
to figure out new ways. I think cities are going
to change. I think you're going to have you know,
I was talking to some people on the heels of
this conversation, you know, because lots of people wanted to
talk about what Bruce had to say, and you know,
(12:53):
it's interesting. I think we're going to be living in
a hybrid world. Um. You know, I just think about
my experience this week alone, you know where it's like
I spent a couple days in the office here I am,
I'm doing the show, you know, with you. I did
the show with you yesterday in a totally different location. Um.
You know. Obviously, different people's jobs require different things at
different times, and you know, I just I do think
(13:16):
though the structure of cities could change. You know, one
of the things we talked about later on in the conversation,
prompted by an audience question, was does the architecture and
design of cities change? And this is something you've talked about,
which is do we move to a place where actually
we want a little more space, so we need more
walkable spaces, we need more space for outdoor dining, and
so does that change the way cities look and feel?
(13:40):
I think it's possible. It's so funny. For the first
time I went into our local supermarket just recently, which
has been like it was kind of a big thing
for me because we've just stayed away and it was
I gotta say it was a clean place to begin with.
It was cleaner, it was really organized, there was more space,
like the aisles were open and there were you could
only walk one way down, And I have to say,
(14:00):
to some extent, maybe we need to rethink some of
the way things are built and on a grander scale cities.
I gotta say the city has gotten crowded. There's a
lot more cars because of Uber and Lift, And I'm
not saying those need to go away, because I think
they have provided great services. But I think we need
to think about it's a walking city, and it's become
much more difficult to do that. So let's figure that out. Yeah,
(14:22):
I think in order to do that, though, you've got
to figure out public transportation. And I've yet to take
public transportation, so I can't judge it um fully. But
the reality is is that that has to be clean.
I mean it has to be clean beyond clean. And
by all accounts, the MTA has done a great job.
But the thing we have to worry about is large
groups of people, right listen, and it's needed to be
(14:44):
cleaner than what it's been. Okay, I'm just gonna put
that out and I know, it's really tough when you
think about my husband. I were talking about the numbers
that ride it on a daily basis. When everything is normal,
it's unbelievable. But it can be better, and I think
we need to figure that out. So um fascinating to
hear his conversation. And I think stay tuned everyone in
terms of how things play out. But cities I still love.
(15:07):
They love it well. You and Bruce flat your long cities,
your long offices. So we'll see where that goes. Check
that whole interview out on Bloomberg Live dot com. This
is Bloomberg Business Week with Carol Messer and Jason Kelly
on Bloomberg Radio. In today's Bloomberg Business Week, Economics, we
want to look at the interesting and complicated and often
(15:29):
problematic relationship between the FED and acid bubbles. Great voice
to have to talk about that. He put out some research.
Joe Kalish is back with us. He is chief Global
macro Strategist at ned Davis Research, and he joins us
on the phone from Sarasota, Florida. Joe, it is so
good to have you back with us. How are you.
I'm doing well, Carol, Thanks for having me back. Well,
(15:51):
it's great to have you back. And you know, it's
interesting we've heard from the FED a lot lately. J
Powell a lot, and certainly various FED governors you dig into.
First of all, kudos and thank you because you give
props to our own Mike McKee here at Bloomberg News.
And the question that he asked J. Powell at the
last press conference, why don't we kick off there? What?
(16:11):
What kind of intrigued you about that question? I thought
Michael really zeroed in on some really critical questions that
the said is going to need to grapple with I
think longer term, and what we as investors need to
grapple with and policymakers need need to deal with it,
(16:34):
and and and essentially, you know, Michael asked to two things. One,
uh was on the question of acid bubbles and whether
the FITS policies were helping to UM promote that. And
the second one was as a consequences would have said
therefore contributing to wealth inequality. There are a lot of
(16:56):
questions at the press conference about income inequality, but Michael
focused on on the wealth and equality aspect. So I
think both of those were really UH important. UM questions
to ask and and and and essentially, you know, the
Fed chairman UH said they really didn't have much choice,
(17:18):
that they weren't hitting their goals in terms of maximum
employment and price stability. UM, that you know, they were
really couldn't be concerned with the level of asset prices.
And and he really kind of you know, sidestepped the
whole question about um wealth inequality. UM. But he also
(17:39):
did you know, I think Michael is also asking about um,
you know, financial stability, and I thought, UH, Chairman Powell's
way of framing that was to go to the banks
and say, well, the banks were better capitalized. H And
that's true, but in other areas of the Monetary Policy Report,
(17:59):
they it flags some issues with households and businesses and
non bank financials, so um, you know, he started put
them more a little bit more of a positive and
in the actual report, well, it's tricky. It gets to
the heart of what we've been talking to so much
about here at Bloomberg. UH. And in light of the virus,
to be quite honest, and also what happened in Minneapolis
(18:21):
and the killing of George Floyd, and again we're talking
about inequalities, racism, in America and we're once again having
that discussion of wealth creation versus income, you know, and
where we're seeing the gaps, and there's a lot, uh
and a wide gap in America when it comes to
who has the wealth and who does not. And you
certainly get into that, you know, lots of questions about
(18:42):
the FED and central banks, you essential banks and their
role in creating bubbles. Your point is, I mean, we
can learn from the past, and I guess the past
has shown us that the FED doesn't necessarily think a
lot about the bubbles they're creating. Well, they may be
aware from but I guess they feel there's not much
they can do about it. So the most famous one
(19:06):
was the so called a rational exuberant speech that form
ofthe Chairman Greenspan gave in December ninety six. And at
that time the NASDAK was around twelve hundred or so,
essentially climbed to five thousand. So you know, I think
(19:28):
the attitude on the part of the policymakers is that
they really can't identify a bubble, uh, and they'll just
deal with the aftermath. And we have a very similar
situation two thousands with the housing bubble and you know
that the said was very slow to react to that,
and then they kind of let asset prices go here
up until you know, the COVID crisis and just let
(19:51):
let the you know, stack prices continue to rise and
without much concern. To be fair though, and and you know,
and I know you listened to the in Burg. I mean,
as we've had many discussions for a long time, it
felt like the FED was the only game in town. Uh.
And we've certainly seen relief come from from the US government,
but the FED was certainly looking at ways to calm
(20:13):
the markets, you know, make it easy to make sure
that money was flowing throughout the economy, especially in the
early days of the crisis and the shutting down of
the economy. And so, you know, is it fair to
say that you at least you know, understand kind of
what the FED is thinking about and what it's watching
and maybe what it kind of almost had no choice
but to do and to make it and kind of
(20:34):
set the path for potentially creating another bubble. Well, the
problem is they really didn't have a choice because if
they didn't do those things would be a whole lot worse.
Well that's no, but that's my point. That's my point
exactly that they didn't really have a choice, right, They
really didn't have a choice. They had to restore the
(20:54):
functioning and of the financial markets number one, which I
think they've done a pretty good job of doing that. Um.
And then because of the huge uh you know, setback
we've had in the economy, Uh, you're actually restoring some
wealth can be helpful in terms of spending, and that
(21:15):
could help support the economy. So you know, I'm not
saying it's not necessary, but my point was, you know,
in that the financial markets basically have a green light
to go where they want to go, and the FIT
is not going to come in and stop it and
pop it. Well, and I just just got about thirty
(21:35):
seconds here, Joe, So do you see a bubble and
what that bubble might be at this point? Just quickly so? So, um,
you know, I think there's a limit on how much
uh you know, the treasury rates can go down here. Um.
You know, I think we kind of explored where those
lows were not just in the US, but but globally. Um.
And in terms of stock market evaluations, I see those
(21:58):
is more fairly proh. There's a measure I'd like to
look at on a forward basis, right looking at the
Triple Bonniels and and we're close to zero today on
the equity risk premium um and we never went below
that during the entire two thousand nine to two thousand
(22:21):
That's that's great. Yeah, that's great perspective. UM, Joe, thank
you so much. Nice to get some time with you
on this Wednesday. Really appreciate Jo Kayleish, his chief Global
macro Strategies at ned David's Research, joining us on the
phone in Sarasota, Florida. This is Bloomberg Business Week with
Carol Masser and Jason Kelly on Bloomberg Radio and our
(22:41):
weekly Bloomberg Green segment. We're gonna take a look at
the common traits that are often found in leaders who
really really move the needle when it comes to sustainability.
So let's get right to that story. I feel like
I love when we get to specifics. Emily Chason is
Sustainability editor Bloomberg New She joins us on the phone
once again in New York City. UM, Emily, good to
have back with us. Tell us about this story. I'm
(23:02):
just curious about they said, Okay, you're gonna go talk
to leaders and find out what's in come and tell
us how it came about and what you found out. Yeah,
so thanks so much for having me again, Kara Um.
This is a really interesting topic right now because there's
so much systemic change in the system right now. There's
a pandemic, there's climate change, there's um huge issues around
(23:24):
inequality and social justice. And who are the types of
leaders who can solve those problems and identify these issues
sooner rather than later and pivot and make changes in't that?
So what we did was we talked to Russell Reynolds Association,
which as a recruiter, and they have been looking at
the traits of leaders at the companies that are sort
of scoring the best unsustainability UM. That's companies like Unilever,
(23:49):
companies like Hilton Hotels UM. They were un Global compact
to sign those and what they found was there were
some traits that sort of make a sustainability leader and
some traits they might be born with. I have to
just say just kind of a call out and maybe
a little flex for Jason and me, but we have
talked to both the head of Hilton, Christmas Set and
Alan joke of Uni Leaver. So we have talked with them, Yeah, exactly, exactly, So, UM,
(24:12):
tell us a bit more about what those traits are. Yeah.
So well, the first one they found was being a
multi level systems thinker and being able to incorporate systems
thinking into your your leadership style. Right. And then there
were also people who wanted to actively include stakeholders in
their talks and really you know, understand the issues of
(24:32):
stakeholders and UM bring them in, not in terms not
managing them, not telling them what to do, but to
bring them in and bring them along. UM. The other
one was disruptive innovation UM and being able to challenge
traditional approaches and cut the bureaucracy and sort of figure
out where those tradeoffs are between profitability and sustainability. And
the last one was having sort of a long term mindset.
(24:54):
So they found these four ideas and it wasn't necessarily
that leaders were born with them a lot of times
maybe they were, but sometimes they wake up to them
across the course of their career, like they go through
a UM transformative business opportunity and say, oh my gosh, wait,
I can think differently about this. Yeah, I mean, and
man as you said, we are seeing this so across
(25:15):
the board right now in this moment, right I mean,
in this moment where a CEO isn't allowed to I
shouldn't say it is allowed, isn't able to just like
jet around the world and sort of hop from place
to place. They're usually in one spot. They're having to
deal with everything that's in front of them. Uh. And
one of those things, obviously, are these big issues of equality,
(25:38):
which demand a level of accountability and transparency that we
just have not seen leaders subjected to in a long time,
if ever, Carol, Yeah, I think it's a really good point.
And there's another story in the terminal and and we
I don't know if you saw this too, but it
talked about E s G investors, those who run E
s G funds, you know, and they're constantly saying to
(26:00):
other companies and leaders like, hey, where's your diversity, we're
your sustainability, And now they're looking at their own firms
and finding out, oh wait, we're not doing so well
on that Market's just kind of, you know, kind of
blows your mind. And it's great that I think people
are finally really understanding what it means to be either
diverse or sustainable. You know, it has to be all
the way around. Yeah, it's definitely important to be authentic
(26:23):
and all of these things sort of walk the walk
um to talk to talk um. So we also talked
to the Carlisle Group, which is that what the Impact
report this week on what they've been doing, and we
asked them about, you know, how are you seeing this
in the real world, and they said that the management
teams that really focus on where the world is going
versus where it has been are the ones that are
(26:44):
generating great financial performance. Interesting. Yeah, I mean, and I
will say private equity in in many ways, and Emily,
you and I have talked about this before. We've been
at some of the same conferences around investing, and you know,
the private equity fronts for all of the slings and
arrows that they take it in many ways, they seem
to have kind of gotten religion around impact over the
(27:06):
past few years. You know, you think about what KKR
is doing, Carlisle you mentioned, and others, you know, and
not to mention the ones who are very focused, uh
specifically on this, like Generation which I know, our Gore Shop,
which you've spent some time with. Yeah, definitely. A lot
of them are focused on this right now. KKR actually
had a deal this week on water Um. There's a
(27:28):
lot of thinking about the thing. You know, it would
look at those long term trends. We want to happen
to them right now, especially in private equity, and especially
in finding those leaders who can make the pivots necessary
to build the infrastructure of the future. Well, and not
for nothing, but what the private The reasons the private
equity guys have gotten religion around this, as you well know, Emily,
is because they can make a lot of money, and
(27:49):
and these executives that they can attract can make a
lot of money, and so you know, not surprisingly Hilton,
you know, not necessarily a sustainability player and impact play,
but private equity back. So really interesting, all right, Emily Chason,
thank you so much. Good to catch up with you.
Our sustainability editor for Bloomberg joining us on the phone
from New York City. Sustainable leaders have these traits in common.
(28:09):
Check that out on the Bloomberg or Bloomberg dot com.
Pretty interesting, right, yeah, totally interesting. But I think you
know you and I've talked about too about everybody. Okay,
let's do another focus group, let's talk about the problem.
Blah blah blah. You know this is getting down to okay,
what makes a leader a really great leader in creating
a diverse workforce, a diverse supply chain. Like, let's get
down to the stace. How do you do That's that,
(28:32):
that's what That's what creates it. Doing stuff. There's our
next T shirt. Yeah, doing stuff, Just do it. Just
do good stuff. At a boss a long time ago,
he said, just do good stuff. He didn't give any
direction other than that, but that's the way went did.
But it was pretty clear message. Yeah, just can you
say it's like it makes sense. You're listening to Bloomberg
Business Week on this Wednesday, Carol Master along with Jason Kelly.
(28:53):
It is time to cut you down to the closing bill.
Aaron Kennon is back with us. He's co founder and
chief executive officer at Clear Harbor Asset Management. Back with
us once again on the phone from Greenwich, Connecticut. Aaron,
good to have you here with us. You know we've
been talking with you certainly throughout the year and throughout
this crisis. Um, I don't know how has your outlook
(29:14):
on the markets, on the economic rebound maybe changed over
the last few months. Well, great to be back, Carol,
thank you. Um, well, let's see. I mean, certainly we
are going through a period where there's this huge divergence
right between the the equity markets and the real economy.
Now that that's not necessarily a new thing, but the
(29:35):
degree to which we're seeing a divergence is quite uh significant,
meaning that you know, the equity market tends to be
a discounting mechanism. It tends to recover or start to
recover ahead of a recovery in the real economy. But
you know, to come thirty nine, not including today, off
of that March twenty three low is quite a significant.
(29:57):
I think there's a lot of optimism built in the
equity markets and when we you know, sort of look
at the divergence even within the equity market. Um, I
think it really details a tale of two stories. Um
the technology piece is in a bowl market and the
financial piece is very much in a bear market. And
(30:17):
I think that's really sort of proven itself out maybe
perhaps since we last spoke. And so where does it
go from here? Do you think, Karen? Well, I think
as as we wade through this crisis, it's going to
be long. They're going to be a lot of speed bumps, Jason,
and UM. I believe that, you know, the technology sector
is an asset light sector that's focused on providing productivity
(30:37):
to their clients, to their corporations. UM. In this period
of future deglobalization, where you're going to have supply chains
moving all around the world, technology is going to play
a key role in that effort. I think companies with
strong balance sheets, with strong management, and strong capital allocators
more generally are going to capture some market share during
(30:58):
this crisis. They have been capturing markets or during this crisis,
and will be even stronger as we come out the
other side. So I think that trend continues. In The
real question in our minds at Clear Harbor is well,
what about valuations and UM? Technology valuations have become you know,
quite quite lofty across the board and UM. But you know,
you look at the banks and they're they're in a
(31:18):
bear market. UM. Net interest margins are are collapsing, loan
loan growth is certainly a problem UM, and and the
credit picture is being butchered by the Fed. So UM,
go ahead here, No, you know what I was thinking, Aaron,
They're listening to you what you said about technology, and
I certainly agree with you, but I got it to say,
I look at my world and increasingly, I mean, Jason
(31:39):
and I are doing our radio show because of technology,
and everybody is working at home because of technology. And
I feel like, despite what the outlook is, if there's
any one consistent theme that we can count on, and
I know it's been what's propelled the market's higher, you know,
coming off the crisis, but it is technology, absolutely, so
I would be in in plead agreement with that. And um,
(32:03):
and I think you know, we we do have points
of concern across the economy. I mean, certainly if you
look at the SP five as in its entirety trading
at you know, pick your number, but it probably best
case twenty four times two thousand and twenty one earnings,
so that that's a lofty multiple. UM. Corporate debtloads are
are high. We saw the record high yield issuance this month,
(32:27):
and um, you know that's that's all very much supported
by by FED policy. Around the fallen angels. Unemployment, I
think it's a huge question mark. And I've been hearing
a lot about the rise in the savings rate. Um,
it's at a record. I don't think we saw a
savings rate spike like this in our entire lifetime. And
some of you that as a positive that there's cash
on the sidelines. Well, you know, can I just can
(32:48):
I just jump? Because Jason and I talked about this yesterday,
you know, as our reporting Ben Steve Berman put out
a story that you know, yea that Americans have some
money on the sidelines, but there is still consistently, you know,
research showing that most Americans out there don't even have
enough money to deal with like a car bill of
four hundred dollars like that money on the sidelines. Some
(33:08):
people are gonna have to live on that. And I know,
well that's right, that's absolutely right. And and the money
on the sidelines is is it an indication of optimism
or is an indication of of anxiety? What will be
the catalyst for altering that anxiety level? And so, you know,
you mentioned the FED Arran and I feel like history
(33:30):
will be very kind. I've said this on this program
before to j Powell and his cohorts for what they
have done. Don't fight the FED obviously has been one
of the mantras that We've heard over and over again
from both institutional and individual investors, what do you think
the FED cannon should do next or what can we
(33:50):
expect them to do next? Well, I think they're going
to continue to provide um, you know, college stimulus, um
monetary growth for as long as far as the eye
can see. And I think the fiscal side, trickularly heading
into a president presidential election, will do the same. So
expect another fiscal stimulus package four point oh coming along
(34:11):
next month. But I also think the FED is stuck
because they're trying to weaken the dollar. They would never
say that they are, but the world is faced with
this COVID crisis. It's not just the US economic slowdown,
and so it's difficult, you know, for the U S
Dollar to, you know, which is a flight to quality
currency along with the en to depreciate here in the
midst of this global uncertainty. And I think that's one
(34:32):
point of a real frustration for the FED right now.
Do you think the Fed's creating another bubble? And it's
just piggybacks on a conversation that we have with Joe
Kalis earlier Na Davis's research, and you know, the Fed,
doesn't you know, they're doing what they can to how
about this economy, but as a result, maybe not so
concerned about bubbles. They haven't been in the past. We
need to be concerned about that. Aaron, Well, I mean,
(34:54):
I think the FED is caught between a rock and
a hard place. Certainly, they're creating some bubbles. Some are
maybe identifiable now and some will be identifiable uh later.
But that isn't to say that the FED policy to
try to sort of keep this economy flow, which was
sort of a government induced initiative to close down the economy,
is not warranted. I mean, I think the FED is
is in a is in a very difficult position, but
(35:16):
they have a lot of firepower, and I think they'll
continue to provide liquidity and will liquidity to allow for
insolvency rage to decline. I think that's a big question
and only time we'll tell on that. All right, Aaron Kennan,
thank you so much. We're gonna leave with their co
founder CEO Clear Harbor Asset Management joining us on the
phone from Greenwich. Thanks so much for listening to Bloomberg
(35:38):
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