Coronavirus Impact on the U.S. Postal Service

on iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio. Let's understand where we are medically and how that may inform the decision to reopen, and how we ultimately do that. Dr Andy Pekosh is back with us. He is a professor of molecular microbiology and immunology at Johns Hopkins University Bloomberg School of Public Health.

As you might tell from the name, Bloomberg School of Public Health is supported by Mike Bloomberg, the founder of Bloomberg LP and Bloomberg Philanthropies. Dr Pekosh, great to have you back with us very much. So you guys have been doing some remarkable work and really have become the

gold standard it comes to tracking the virus. The data that so many people are relying on help us understand where we are, especially in the context of these peaks or plateaus that you're hearing the governors talk about, and how that may inform both regional and national Uh sort of getting back to business, Yeah, well, you know, everything's gonna be focused on regions right now. Different regions of

the countries are in different places in their curves. Um. You can hear things from New York about their being plateaus going on there. Places like Texas are still in their increased stages. So, UM, this is going to be really focused on individual regions, county cities, UM, portions of states, UM, monitoring how the epidemic is progressing in those particular regions.

So yes, okay, So how do you anticipate, um dr package that that will roll out in real time, especially when you know Jason and I keep talking about this

theme of you know, fear versus greed. There is you can feel it, the pressure to get the economy back open because we're starting to see some optimism in those numbers, and yet those numbers are only getting better because we're all staying at home Yeah, So what's going to have to come in parallel with UM with the cases going down, is going to be a continued increase in our testing, and that testing is going to come into forms. It will come in continue testing for people who were infected,

so looking for the virus UH in these people. And then the second arm of that testing will be testing for antibodies, which will tell us if people actually were infected and are still maintaining some level of immunity to the virus. So those two tests are really going to help inform us in terms of how quickly we can

start rolling out the rolling back from the public health interventions. Okay, so you say that, and I feel like this has been the big question from day one, you know, getting more and more testing out there, we're still just testing small quantities of our society. So help me understand, then, when do we get to a level where we are testing enough people to safely and securely kind of start

to go back to normal. Well, you know, as the number of cases starts to drop, that will free up more tests to go out there and be able to test UH, to loosen our parameters for testing. So so again as a testing as the number of cases goes down, we'll be able to expand testing and that will be important because that will help us keep a really good

track of cases as they rebound. When we start easing up on some of the public health interventions, we fully expect that as we let people come back into society and do their things, we'll see some upticking cases. What we have to be is prepared then to identify those cases and UM isolating quarantine those individuals instead of having the entire society undergo the same kind of public health

and interventions. Are we going to need an app like China has that basically says okay, I was tested, I'm okay, Well you know we have the I'll say it's an advantage and that we can see other parts of the world who are now past their peak and are trying to deal with things. And there's lots of different approaches there in terms of understanding who's immune, who can go out, and who's potentially getting exposed to um to to virus

in the in that in that plateau phase. So um we have a lot of things to try to get working here, but we have some examples to use from countries in Southeast Asia where they have been able to control the virus. I do want to bring back Dr Andy Pekosh, Professor of Molecular Microbiology and Immunology at Johns Hopkins University Blueberg School of Public Health. Of course, um

the school is supported by Michael R. Bloomberg. So, Dr Pekosh, so what do you think is the most important thing that's going on right now in terms of getting the virus under control? Well, I think that the public health interventions that have been put in place all across the country are working. You know, it takes because this virus are such a long incubation period, it takes two to three weeks before we start seeing the true effect of what we've been doing in terms of the numbers of

cases and the numbers of fatalities. So things are working. Now is not the time to take our foot off the gas pedal. We need to keep these things going and drive this forward until we get past the peak in most parts of the country. And so Dr PECash, very basic question for you. You know, from the perspective of our listeners out there trying to live there everyday lives, what do you recommend in terms of masks, What do you recommend in terms of like people getting exercise, Can

they go running with friends, can they take a walk? Like? What should people be thinking about? What have we learned about this virus that maybe is helping us refine what social distancing and what our interaction in public, as limited as it is, should be. Yeah, so getting outside, uh, walking around, running, exercising outside is fantastic. UM. Keep your social distance from people, trying not to run next to each other, trying not to um uh get too close

to people as you're talking. But getting out and exercising is a is a wonderful thing to sort of break the monotony of being inside all the time. UM, if you're going out for your grocery runs or to do something else, you know essential. UM, it's great to have a mask on UM. The CDC is now updated it's guidance and wants everybody to be wearing masks when they go out, even just cloth ones. UM. Again, that happened because we're realizing how many UM people are having mild

symptoms full abible to spread the virus. So this is really meant to try to capture that small percentage of the population that might be spreading the virus and not know it. UM. And um again didn't. Now is not the time to let up on these things. May be difficult, but we have to keep going. So Okay, I do wonder how our world has changed. I mean, it's obviously changed a lot of different ways, but I mean, is it all about getting a vaccine so that we can

alter itly, really get this under control. Is that the final solution to this or is it a case of you know, it's going to mutate and we start all over again. Well, right now, it doesn't look like this

virus is going to go away anytime soon. So UM, A real important key will be our tool will be to get a vaccine, because when we have a vaccine, that's when we can go out and really start immunizing the vulnerable parts of our population and really make a big dent in terms of the disease that's that's being

caused in the decent diseases with severity in the population. Um, We'll have to see how things go over the next few months as more and more people become immune to the infection, UM, and how the virus will be spreading it that at those times, But does that also mean the big gatherings, whether it's sports events, UM going back to college like things like that, they will just they

cannot happen for a while, really large gatherings. It's very there's very little chance that that can be put back in place anytime in the near foreseeable future, because what we're seeing from other parts of the country or parts of the world is that the virus never really goes away like we have with what we see with influenza UM. It seems to be hanging around UM at all parts of the year, and once once it goes through the population, there's still some some people left around who are spreading

the virus. So UM. Gradual rollbacks of some of the public health interventions maybe occurring, but I don't foresee going back to seventy person football games in the near future. Yeah, it's really amazing, you know, we hear about that and hear about what the new normal may ultimately look like.

Dr Andy Pekars, Thank you so much. Great to catch up with you again, always such a great voice to bring us the real scoop on what's going on out there, especially as we start to wrestle with some really big questions related to what it looks like on the other side of this. He is Professor of molecular Microbiology and Immunology at the Johns Hopkins University Bloomberg School of Public Health. As you can tell, it is supported by Mike Bloomberg,

founder of bloom GELP and Bloomberg Philanthropies. Great resource they have all been and uh Dr Pekosh included. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. I have to say I was just following Twitter and my brother just tweeted everyone should buy stamps, and it was in response to somebody saying, listen, these postal workers are out there on the front line, you know, delivering our packages, you know, delivering our mail. Um. But Jason,

it's a tricky time for them. It absolutely is a fantastic story coming up in this edition of Bloomberg Sweet Magazine, but you can read it now online and on the Bloomberg terminal. Devin Leonard wrote it, Projects and Investigations reporter for Bloomberg Business Week. He joins us on the phone from New Jersey as just Joel Weber, the editor of the magazine. He joins us on the phone from Brooklyn, and Joel, I want to start with you, Uh, Devin is our go to guyde figuring things out in terms

of the government. He certainly has been over the last couple of years. We've relied heavily on him. What teed up this story for you? Well, I mean, Devin has actually written a book about the Pystal service. So that was like the one where in the middle of all this, that was like getting mail and I was just so looking forward to getting my mail every day, um, and I was like, what's going on with the postal service

right now? So it's like sometimes it feels like I had this like a bat phone and I get that call certain people and ask for help. And so Devon was obviously top of mind a couple of weeks ago when we pulled this up. And you know, I think it's just a really compelling story because there are certain, um, humans that are really on the front lines right now, and the postal services really that and it's uh, you know, absolutely essential form of communication still and um, they're also

not getting the support that you might expect. Devin, How how does that What did you learn about that on that front? Well, I mean it looks it's the it's probably the nation's oldest essential service and you know that you know, you get you get your mail through. I guess as you were saying, you know, you know, neither rain,

nor stone, nor nor coronavirus. And you know, even when a disaster happens, when when you know, mail delivery stops, like nine eleven or Katrina or something like that, once you see those letter carriers, you know, going around the street, that's and you have a sense of you know, oh my god, you know, you know, we're back to normal. And you know, this is a really tough situation because like you know, doctors, nurses, cops, firefighters, you know these

you know, the people work for the postal service. There they're sent you know, they're providing the central service. But they didn't have you know, the mask, the gloves, you know, you know, the the hand sanitizer that they needed. But they had to go out in the midst of in the midst of you know, this crisis, and you know a lot of people are getting sick, people were going weren't going going to work. But you know, as as you say, we're still getting we're still getting our mail.

It's just kind of amazing. I have to say, just like Joel I mean there is something in my home too. It's like, oh the mail came, like or or package, you know, because it's just kind of it's the world we're living in right now. The thing is devon. The U. S. Postal Service has been struggling for some time, and you know, as you rightfully write about, it's you know here we need them more than ever, and yet you know, the future continues to be so uncertain for the U. S.

Postal Service. Well, Cary, you're I mean, you're right. You know, they were in trouble before this. They've been in trouble for a while pretty much, you know, almost two decades now. But right now they're just getting hit really hard like so many other governments. I'm gonna be businesses in the United States by just a total you know, drop off in business. I guess we found out just on on Thursday.

Megan Brennan, the Postmaster General, told Congress that they expect mail volume to drop, you know, in a year to year year of a year basis, you know, you know, by the summertime. So so you know, they were already in a tenuous financial situation. They've told Congress that they might run out of money you know, as early as June. So you know, you know, what what what what is the question? And and uh um, Congress did just just allow them to you know, would the approval of President

Trump allow them to borrow ten billion more dollars? But I don't I don't think that's enough. Also, just barring more money doesn't you know, it doesn't solve their problem. You know, you know, Congress has to do something to really change their business models to get them out of this. And Devin, what role does the private sector play in all this? Because you know, we think about Amazon, we think about all that we're relying on in terms of

delivery here. But take us into to that side of it, sort of the private versus public Well, you know the ups FedEx, you know, and and now Amazon. Now Amazon, Amazon's more recent because I've been doing this for a while. They they deliver a lot of packages, but you know, in terms of overall mail volume, they don't deliver any anywhere near you know, you know, the volume that the United Its postal service does. And also the postal service has to hit every address from the country six times

a day, sorry, yeah, six days a week. And also you know, sometimes on Sunday. Now, so if you were just to do away with the postal service, those those private sector companies you know, you know, would serve the urban areas and in areas with this a lot of volume where they can make money, but they wouldn't do everything the postal service does. And so so how does this get resolved? I mean because we also see and

you alluded to this. You know, the President did step in, but at the same time he's been very skeptical about how all of this works and how the U. S. Postal Service uh fits in. What's the next step in all this? Well, look, I mean what really needs to happen is something you know, this should have happened a while ago. You know, Congress needs to you know, you know,

basically revamp the postal services business models. They have more control over over costs, so they can it can raise revenues, you know, they have they have no real control over over over their pricing. But that's not going to happen right now, you know, with you know, you know what, it's a crisis, you know, an economic crisis along with a health crisis. So I think in the end they're going to get bailed out, which is what Trump I

didn't want to have happened. You know a lot of Republicans to but I don't think they really have much choice. And also when we're talking about voting by mail in November, I mean, they need a lifeline. Even though even though they're the ones the postal service itself, we're saying we didn't we need a new business level. They're not just asking for money. What does the world feel like we still need it? I mean in terms of the way

we communicate. I mean, what's the thinking from you know, some of the experts that you talked to, Devin Well, I mean you you make a really good point, which is which is that you know, when's the last time you know, you wrote a letter? You know, the the postal service was more important to you know Americans, you know, a century ago, you know, two centuries ago, when there was, when there was it was the main way that people communicated. But but even now, you know, we we needed for

for a lot of basic things. We you know, we need packages. There is still some some you know, some hard copy mail mail that we need. You just can't get rid of it for the reasons I was saying, But we're also we get medicine and you know, and things like that, and there's all these people there I shouldn't So there's always people. There's a fair amount of people in the country. Don't we have internet yet, so you know, rural areas so and there is an argument

in some circles that it should be privatized. That's happened in Germany, it's happened in Great Britain, it's happened in Sweden, and it works there. But we're just so far from We're so far away, you know, from from even sort of contemplating that here, that that sort of proposed it and say that solution and we needed it tomorrow. This is not going to happen. It's just, you know, it's amazing tool, like something we just take for granted, right

and are just assumed. But it's it's the times have changed a lot over the last decade, for sure, you know. You know. The other thing that I just wanted to say that Devon and this you know, warrants everyone reading it really is. You know, there's also like this labor

element on top of it. And I think one of the other things that Devon did a great job of bringing to light here is like what it's like to actually be organizing on behalf of the postal service amid all of this um and so just on that note, that's like another fascinating element of the story that is just you know, some great nuance from Devon. Well, definitely check out the story everyone, there's so much details. Also check out his book as well on the US Postal Service.

Our thanks to Devon Leonard, Projects and Investigations reporter at Bloomberg Business Week joining us on the phone along with Jill Webber Weber, editor of Bloomberg Business Week. You're listening to Bloomberg Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. All right, Andy Brown is with us. He's a little further north than we are, up in New Hampshire. He is, of course, editorial director of Bloomberg

New Economy. He joins this on the phone. Uh So, Andy, take a look around at the world and tell us what you see, because we are seeing different leaders. We've heard from a lot of them today. Uh step into the breach here, governors, especially some mayors here and there, but take a global view of this. What are we

learning about leadership? Yeah, so, you know the story that we've all been listening to in recent years about leadership and power in the twenty one century has been very much a binary one East versus West, China, USUS the US UH, the incumbent power versus the challenge, and the big unknown is will they go to war as they

struggle over global supremacy? And yeah, I mean the story has never been particularly satisfactory because it's never taken into account the wishes of smaller yet still pretty powerful regional countries and economies like India and Japan and Australia and the Middle Stay Iran. But you know, this coronavirus seems

to have completely blown this narrative out of the water. Um. You know, it is now clearer than ever that neither the United States nor China have the aptitude right now for global leadership, nor frankly, do they seem to have much appetite for it. Andy take a step back, though, because last week you guys kicked off Bloomberg New Economy Conversation series, which was an online gathering folks for more than sixty countries. You had some really high profile people talking. Obviously,

leadership came up in this. UM, I am curious you know who who you guys talked to, and and some other main topics that kind of came away from that discussion. Yeah, this this well, I mean this really I would say this, this was the main conclusion to emerge. And we had Joe and I who was the architect of this concept of soft power. We had at um Michelle Flournoy, who was a former Deputy under Secretary of Defense and may well have been a Defense secretary ahead Hillary Clinton won

the last election. And Jason Firman, who was, um, you know, President Obama's one of President Obama's chief economic aids. But this, this issue of leadership came up again and again and how the US and China have performed in this global

once in a century crisis. And frankly, both China and the US came in for a battering, you know, I mean so on the Chinese side, Yeah, sure, the economists, the economy is is substantially up and running, and China is now in a position to provide aid to some parts of the world, even though they're scoring all kinds of propaganda points out of it. But you know, the

world will never forget that. The Corona outbreak began in Wuhan, and you know, Wuhan was saturated with this virus, and this virus was being carried to the rest of China and the and and the and the whole world, while local officials there were engaged in a cover up, you know. And and by the same token, you know, the point was made that neither will the world forget the images that we're seeing right now in real time coming out

of the United States. You know, the demonstrating the frailties and the fragilities of multiple systems in the US, I mean the healthcare system, you know, doctors and emergency rooms wearing ski goggles and nurses wrapping themselves up in garbage bags, and you know, the failures of the of governance with with the fumbled response from federal patchwork response in states.

You talk about states, you know where red states and blue states apparently going in different directions, and one part of America lockdown, Florida is still partying out on the beaches and so on. And then the social systems, you know, the the long food food lines. Now you ah, and this is this is this is really shocking too. People all around the world who are looking at the most part of the richest and most powerful country in the

history of the world. One thing in in the column that you wrote to Andy that really jumped out for me, and this was from uh something Jason Furman said, who said no, He said, no economy will be safe until the entire world has this pandemic under control. I mean, this whole idea of you know, we just heard from six governors in the New York metro area because they are talking about in order to reopen the economy, you have to have a coordinated event, you know, and response.

You can't just you know, everybody come up with their own plan, and we really need that on a global scale, and we're lacking in that. That's exactly right, Carol, is that that's the point that that you know, not just Jason, but they were all making that this is a common challenge and requires a collaborative approach. And what's truly depressing about this is that it is by it is not at all the only global challenge, common challenge we face.

Um And you know, if this is if this is the botched, failed response that we've seen to coronavirus, what about what about an even bigger crisis, which is which is climate Yeah, what hope is they have a global collaboration on that. It's so interesting you bring that up, because I do wonder about things like climate and cooperation going forward. You know, we have a promo running about Bloomberg Green and saying, you know, this is the biggest

crisis of our time. It's like it is one of the biggest crisis crisis of our time at this point, so only about forties seconds left here, Andy, what does this pretend for US China relationship? Just to take us all the way back to the beginning, Where where does us trying to go from here? So you US China, I'm afraid it it just digs these two countries deeper into a hole. I mean it almost is another almost

literally another nail in the coffin um. You know. And then the one of the one of the conclusions from inaugural conversation was, you know, what is what is future power? Looked like? I mean, uh, and it's likely to be there's a vacuum, you know, anarchy law of the jungle UM at best, a regional response to what ought to be to to what ought to be a joined up, coordinated um, you know, global effort against common problems all right, Andy Brown, thank you so much, Editorial director of New Economy,

joining us on the phone from New Hampshire. I hope you continue to stay safe the jolonel now, but you let me drive. Oh no, no, no no, no, honey, please, I'll do the right reveal. I want to try all Just drive, baby, it's the question trying. This is the drive to the globe. Thanks. We'll drying us. Dawn Bloomberg Radio, it is time for the drive to the clothes. Randy Watts is back with us. Great timing to to have him here. He's executive vice president and chief investment strategist

at William O'Neil and company. Today we find him on the phone from Miami. Um, Randy, nice to have you back here with us. You're doing okay. Your family is doing okay, they are. I appreciate you asking, and I hope everyone is uh safe and healthy there in New York. Yeah. Yeah, we're certainly, uh, we're getting there and certainly dealing with our doesn't look like Miami outside my window that I'll tell you that much, Rammy. It is the opposite, h

at this point. And I understand the weather has been quite bad up there. Yeah, it's pretty miserable today. I was thinking, I was looking back over my notes, and I think you were with us late February, UM, and it was a day where we were all of course, we're about the virus. We weren't. We were back in our studio, but we weren't at home. UM. The market was selling off because of concerns about the virus. That was our theme for the day. How do you see

the markets right now? We saw a tremendous amount of selling. UM. Randy went into technically a bear market. We've bounced back a lot. How do you see it when you look at all of your charts and you do some analysis. Well, a couple of things. Obviously, this has been a very very strong rally. We're up about seven percent off the lows in three weeks. We would expect either some consolidation here or even a move backwards. This is a much stronger rally than a typical sort of up nine to

ten percent bear market rally. I think one thing to keep in mind, though, is we're only in the ninth week of this bear market, and usually bear markets last more than thirty weeks. In addition, at the low, the market was down about thirty on the SMP, A normal bear market takes it takes it down to about four down. If you look at where we sit to today this afternoon, the Dow is down about year to date, the SMPS down fifteen, and nastcts down about ten. So I am

a little nervous about two things. First, the time element of what's going on. We're not that deep into it in terms of weeks. And second, we're going into earning season, and I think earning season is gonna be a lot worse than the street expects. Well, let's talk about that. Let's go at level down there, because I feel like

we're all bracing ourselves for for earning season. But what does bad look like in your estimation, either in terms of percentages or in terms of maybe even the lack of visibility, because that's one of the things that we've heard so consistently, uh from c e O S as they've given even you know, ad hoc updates, is they just don't know where this is going to go next. I mean that's true, Jason, they don't know. In about of the SMP five hundred now suspended guidance for the year.

If you look at where earnings estimates are for the SMP five hundred. At the start of the year, people were expecting the SMP to earn about a hundred and seventy five dollars this year. That numbers down to one seven. But if you look at it on a year to year basis, last year earnings were about one sixty two.

So consensus estimates right now are only looking for about a ten drop in earnings, and I suspect it's likely going to be worse than that, you know, I want to go back to what you said, though, we're only in the ninth week of this bear market. Usually last you know, a usual, typical normal bear market lasts around thirty weeks. Is this normal, though, Randy like, there's a logic, logical side of my brain that says, I get what's going on. We shut down the economy. Of course it's

going to be really, really bad. But I do wonder and this is just not I shouldn't just say just but it's really a timing element that when we reopened people get back to work, they will resume spending that we could see a pretty dramatic bounce back. I think the key on that is really unemployment. So you know, we entered this scenario with about three and a half

percent unemployment. We've done about sixteen million job was claimed in the last three weeks, which means unemployment today, the real unemployment number is probably in the thirteen and fourteen percent range. To put that in perspective, unemployment in the two thousand and nine recession peaked at ten percent. Recession peaked at ten point eight. So unemployment is already a lot higher than it was in the last couple of recessions.

And I think the question for the economy is how quickly are those people are going to get hired back if we start opening the economy. I don't think that means that all those restaurant, hospitality workers, etcetera instantly all get hired back, And so that question of job absorption is really what makes me nervous. Okay, yeah, I mean that's that's such the big question, right is it reopens. To Carroll's point, you reopens and people get back out there.

But if a restaurant, I mean this is just very parochial, but like if a restaurant can only see half the people that it used to because of social distance things, how many people does it need you know, does it and and how many? What's the revenue breakdown and the profit breakdown? And does the fact that there are you know, fewer people working ultimately mean that there are a fewer people spending money? Yes? In general, I just have such

a hard time, in part because nobody knows. And it just goes back to this, nobody knows that, and yet you have to make investment decisions Randing exactly. And I don't want to be too bear ash here. Um. I do think we're going to get through this. I do think the economy is going to recover. We do expect to be a better year for both the economy and for corporate earnings. But I think the point I'm really trying to make is one, the market has had an awfully big move in a short period of time from

it's low. I'd like to see the market digest that a little bit. And second, I just think this going into earning season right here today, there's a lot of uncertainty. I'd prefer to see us start to get into somebody's company reports, see what companies are telling you about profitability before really getting aggressive and adding capital. Light here, So, what do you do for an investor, you're saying, what just I mean just kind of I think we're I

think we're looking for two things. First, I'd like to point outlet in this bounce, a lot of the stocks that bounced were not what we would call leadership companies. There are a lot of companies that have been very beaten down the last month or so, and those were the ones rising. The action today is actually more positive in a way, and that a lot of the more high quality companies are having good days, you know, names

like Amazon. I think what we're looking for here is to see leadership stocks and companies start to do better a relative to the market, and to start to add some of those names into your portfolio that you know, we're gonna not only some somebodys are even gonna benefit from what's going on, you know, whether it's an Amazon, a, Microsoft, etcetera, or end companies that we think can be long term holdings.

We really don't want to chase some of these beaten down names and hoping they're going to bounce even more than they have already. All Right, it's still smart, Brandy Watts, Great, all right. Randy Watts, Executive vice President, Chief Investment strategies for William o'neili company. Johnny is on the phone from sunny Miami. Good for him, happy to hear his voice, and it is safe and well and some good insights. Has always taken a ton of notes and a ton

of notes about his market insight. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show every weekday at two pm Eastern only on Bloomberg Radio