Mnuchin on Next Stimulus Bill

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. Right now, I do want to take you back to our Bloomberg Live event, our invest Global Virtual event happening right now on Bloomberg Radio and TV as well. We have with us joining is U S Treasury Secretary Stephen Manu Shim joining David Rubinstein of the Carlisle Group. He's the co founder and co

executive chairman. Let's listen in. I would like to do a stimulus bill. Unclear whether it's uh something that other Republicans want to do. On Capitol the What is your view on the likelihood of another bill and what is the timing for that? Well, David, it's something we're very seriously considering. The President has been clear that we put

a lot of money into the economy. We had an unprecedented response on a bipartisan basis and in the last Care's bill, and there's no question that money is having a major impact on the economy. Whether it's the p p P which impacted fifty million workers, or whether it's the direct payments of over a hundred and sixty million or enhanced unemployment, these are all having an important part

of protecting American workers in American business. I actually just left the Republican Senate lunch and we are beginning to discuss the different aspects of what another bill would look like. We want to take our time because number one, uh, there's a lot of money we still haven't put out. Number Two, we want to make sure whatever we do going forward is much more targeted to the businesnesses that

are most impacted. But the timing, you think that it's likely that sometime in July a bill might pass both houses. I do that that would be the timing. Okay, and the negotiations. There are some people who think that you are not tough enough on the Democrats, and therefore some Republicans are saying that you should have a partner, Mark Meadows or somebody else to negotiate. But in your view, you'll be the principal person negotiating with the Congress on

this legislation. Is that right? Well, David, I mean, let me first be clear what I'm doing. I'm doing at the direction of the President and the president's policies. Uh, last time Mark had just come on board, and I asked Mark to come up with me. He was He was very critical and helping with the last bill. So we have a great, great teamwork and he will be there with me. But let me just say I'm very proud of the fact that the last two bills were

nine to zero and a hundred to zero. That this isn't a question of being tough enough or not being tough enough. We had unprecedented bipartisan support at a time when it was critical to get money into the economy and to help American workers. The parts that are the various bills have passed so far, which do you think has been the most effective so far. Uh, the p p P, the unemployment insurance, Uh, the other loan programs. Which are you think I think is working the best

so far? Well, David is as you know, because you you've lived through other financial times. Uh, this is a very very different situation than we've ever seen before. This is the first time that we've shut down the entire US economy because of a virus, and we we had to have a different approach. And the reason I mean a different approach was it was very important to get money into the economy quickly. Things that took four or five or six months, even if they in the long

term worked better, would not have been effective. So we needed to have a range of tools, and if you look at the Cares Act, there were different tools that we used to put massive amounts of money into the economy. Obviously, as I just mentioned before, you had the p p P, you had the direct payments, you had the unemployment. We also had a program for the airlines, which was was

very critical. We had fifty billion dollars that we could work with the Federal Reserve on the thirteen three facilities, and this really worked perfect. The mirror announcement of some of these facilities unlocked the markets even without spending a penny of taxpayer dollars. It unlocked to the point where

you know, we've had unprecedented corporate issuance. Companies like Boeing, which I thought we're going to need to come to us in our national security program, bar twenty five billion dollars in the market without putting a penny of taxpayer money at risk. So right now, would you say that the legislation that you've passed as working reasonably well? Would you say the Fed has done as good a job

as you would like them to do. They have an lending program which I think has not yet actually spent money. And can you say whether the President is happy today or happier today with the Secretary with the head of the Federal Reserve. Well, I think I think the Federal Reserve has done a phenomenal job. We speak to them almost on a daily basis. These programs are a combination of work of the Federal Reserve and the Treasury, and I think we've worked very well together. Every single one

of these programs is now up and running. So we have a municipal bond program, we have a money market program, we have a commercial paper program. We have a main street program that's now up and running. We have a corporate primary and secondary. We had a program that lent to two banks and non banks for P p P loans. So the Fed acted in unprecedented response. And yes, I I think you've seen the President is very please with what the FETE has been doing. Okay, in terms of

these programs, they do cost money. So the debt of the United States has increased a fair bit. I think maybe four trillion dollars or something like that. Are you worried about the impact of that, either on the dollar or inflation? Well, David, this is this is like a war. Fighting those virus is like fighting a war. And the President I were determined to spend what we needed to spend to protect the American workers in the American public. This was not their fault. So no different than going

into a war. You don't say I'm gonna stop here and and and deal with the consequences. I think over the long term, the good news is long term interest rates are very low, so the cost of this debt is very low. We're borrowing a lot of money long term. We have a lot of liquidity. Uh, the dollar is the reserve currency of the world, so we have a lot of liquidity and borrowing. And yes, over time we're

going to need to deal with the debt. I think you have to look at both the debt as a percentage of GDP and a percentage of what it costs to carry it. So these are things we'll look at over time. In terms of the loans that are being made. Now, at one point you had said it was important not to reveal who the borrowers were. Recently you've said you think it's okay that it's closed. Why did you change

your mind or why did the government change its position? Well, David, let me clarify when when we negotiated these deals on a bipartisan basis, we agreed to an unprecedented level of transparency and oversight. And we didn't need to do this, but we agreed within the federal reserve programs and within the programs coming from the Treasury, the direct loans, there

would be complete transparency, and that was very clear. We never really discussed the specifics of the p p P. Now, it is true when the SBA makes seven A loans, they are transparent. The issue here was you had businesses that took loans based upon their payroll and and no different we're not publicizing everybody's name who is getting enhanced unemployment. We wanted to make sure we protected small businesses the confidentiality of their payroll. So I think we've struck the

appropriate balance on protection and transparency. And what we just agreed on a bipartisan basis with the SBA Committee is that we would release the names on about seventy five percent of the dollars and about twenty of the actual loans, So that's all loans above a hundred and fifty thousand, and we'll put them in buckets, so you don't know the exact size, but we'll bucket them. Uh, there'll be

you know, one fifty to three fifty. I think it's a million to two million, five million to ten million, various different buckets. And on the very small loans a hundred and fifty thousand and below or at least the detales of the names, but not the borrowers. So I think we got to an important compromise of transparency on the majority of the money with the idea of protecting very small businesses sold proprietors and and and others confidentiality. Okay,

in this quarter, we have slipped into our recession. And according to the Natural Bureau Economic Research, which makes the official determinations and when you're in a recession or not, do you think by the end of this year we might be out of the recession, David, I I do, But the the traditional economic metrics are aren't really appropriate

given we shut down the economy. So first, let me say there were way too many people that lost their jobs and got laid off, and again, we're not going to be done until we get every single one of those people back to work. So I'm not really focused on the technical issue of it is a recession or it's not a recession. I'm focused on helping all these small businesses and all the workers, and that that's what our job. And I think you saw the recent employment numbers.

People thought there'd be another eight million people unemployed. We put two and a half million people back to work. Clearly, this is the p P P working. And you saw a great retail sales. I think you're gonna see the economy had a very bad second quarter. I think you're going to see a spectacular rebound off the bottom in the third quarter. And some people who have been gotten the p PP loans are very happy with them, but they say it's unclear whether they have to repay them

or not. Will the s b A clarify who actually has to repay or not repay those loans. Well, the good news is again I think we struck the right balance here and for for all loans that are less than two million dollars, we created a safe harbor around

the certification unless there's things like fraud. And for loans over two million, they're going to go through an electronic review do to make sure that the companies needed the money in the certification, and I think that would be a very fair process as we go through that, if you owe taxes on April fifteen, you could file on July. Is there any consideration, as some people have speculated that it might be postponed once again to maybe September fift Well, David,

it's something I'm thinking about. As of now, we're not intending on doing that, but it is something we may consider. I am pleased to report that I think it was absolutely the right thing to do at the time, because we were absolutely worried about people couldn't get to their accountants couldn't get their information. And I'm pleased to report that returns filed or down only ten percent year over year, and refunds are down only ten pc. So the majority

of Americans have filed the mad already. Those people that needed to get refunds got them. I'd encourage all Americans, if you can file your tax returns, go ahead and do it, particularly if you think you have a refund, and we will look carefully as we we approached this July day. Okay, now, you've talked about shutting down the economy, which obviously we had to do and was done, but you've also said recently that we can't do it again

because we just can't afford to do it. So are you worried that new COVID cases are breaking out in states like Florida or Texas and how will you deal with that in terms of opening up the economy again but also protecting the safety of people. Well, David, I think the President made the absolute right decision. Was a very difficult decision in shutting down the entire economy. The issues that we were concerned about at the time were

hospitals were getting way overcrowded. We had issues of ventilators, and we had issues of not having enough medicines. Um. I think, you know, kind of. We had an unprecedented effort, especially in places like New York, where we built out extra hospital beds in the convention center. We sent the Navy ship there to be ready as a hospital in The good news is those never needed to be used. Um.

Right now, we're in a different situation. Right now, we have plenty of capacity, We've got plenty of ventilators, We've made great progress on viral treatments, and we've had made great progress on testing. So I think this is going to be an issue that we have to look at on a local by local basis. Where there are breakouts, they'll they'll be contract tracing UM. And I think we're just in a completely different situation. So I I think it would be highly unlikely we get to a point

where we need to shut the economy down again. Okay, you were one of the principal negotiators with Bob Leheiser of the deal with China. Are you confident that the Chinese can honor the commitments to buy the products from the United States that they agreed too. I have every expectation that they will. They have continued to tell us that they will, as recently as last week when Secretary of Pompeio met with one of the senior people that

flew in from China and they had a summit. So I have that I have that expectation that they will lead up to their obligation. Now having said that, UM, let me just comment on I think the world wants a lot more transparency on COVID. How did it start, how did it spread, how did it spread around the world, And it didn't spread within China, So we shouldn't confuse

these two issues. Yes, we have expectations that they will live up to their trade agreements, but we also have expectations they need a lot more transparency around the disease. There is not more transparency. Do you think there will be a decoupling with the Chinese economy and the US economy. I think you have talked about that recently, but you see that as being separate in the trade agreement. But are you worried about or you think it could be

appropriate to have a decoupling at some point? Well, I don't want to speculate, David, it could, Um, I think you have a lot of companies that are beginning to look at their supply chains and making sure they diversify them, and I think that's something that's prudent to do wherever they are around the world. You have a lot of companies that are looking at bringing jobs back to the

US because of our tax incentives in other areas. As we have said all along, if we can compete with China on a fair and level playing field, it is a great opportunity for US businesses and US workers, as China has a large, growing middle class several hundred million people. But if we can't participate and compete on on a fair basis, then you are going to see a decoupling going forward. So the Chinese government is thinking about changing the ways in which it operates and overseas Hong Kong.

The President has been concerned about that, so has Secretary Pompeio. If the Chinese government were to go forward with legislations considering, do you think the US government might impose some type of sanctions to show its disapproval of what's going on? Well, David, it's it's our policy. We don't comment on future sanctions. But what I will comment on is the President and This was a few weeks ago. It is Rose Gardens speech instructed me to convene what's called the President's Working

Group on Capital Markets. This is myself and all the major regulators, and we're looking at all of these issues very carefully as it relates to both Hong Kong and as it relates to UH Chinese issuance on on the US exchanges. Hey, now, recently there was a report that we're running out of not running out of, but we're having a little uh less demand for less supply. I should say up coins. We have a lot of dollar bills I guess in circulation, but because of COVID, we

don't have as many coins. So what are you gonna do about that? Well, David, let me first say I want to thank the hard working men and women at the buer of engraving and at the mint UH and that that's where we make both the money and where we make the coins. And through this entire period they

didn't shut down production. In matter of fact, as it relates to UH circulating money UH in in bills, we had unprecedented deliveries to the Federal Reserve which they were able to put into the various banks as it relates to coins, because so business, so many businesses shut down, a lot of coins got stuck in in the system. So we we got a little bit far behind on coins. But I know they're redoubling their efforts and that that'll workout fine. I have a lot of pennies and quarters

at my house. Maybe I can drop them off somewhere and help them some loudest way. I'll let you know, So ask as many as you have, David. I know you've got plenty of them, okay. So, Um, being Secretary of the Treasury in a normal time is not easy, very busy, one of the most important jobs in Washington or in the country. But during this time you've been, you know, working around the clock. Have you had any time to just breathe, any time to see your family?

How are you? Are you working out of your office, You're working out of your home? How are you getting through this period of time? I'm working out of the Treasury, So basically every day I go from my home to the Treasury, to the White House, which is right next door, and back. Um, we we've had about a hundred and fifty people working around the clock in in the Treasury

and the rest of the people working telecommuting. I think, like a lot of businesses, we were actually pleasantly surprised that a lot of areas we could effectively work by telework. There were other areas like the I R s where it was much harder to do certain things. You can't open the mail. We had truckloads of mail back up

in physical returns and audits. But uh, I want to thank we had an enormous uh group of people here that have been working around the class and uh, I'll have plenty of time to rest down down the road. My family understands that percise there's any time it just just relax, a little bit of walk or exercise, or you have no time for that, trying to do a little bit of exercise. Never enough, but trying to do

a little bit. So as you go forward, UM, you obviously enjoy the job, and you obviously are well respected by many of your colleagues. UM. So, if President Trump is reelected, would you be interested in serving another four years in this position? Yes, David, as I said before, I would be, But that's for the president to decide, Okay, And going forward, what kind of advice would you give to anybody else who serves as Secretary Treasury at some point what is the best thing to do and what's

the thing you should avoid being doing as Secretary Treasury. Well, the interesting part about Secretary of Treasury is it spans across so many different parts of the government. So a large part of the job is domestic and international finance. Very big part of the job is just operational. We we we manage a lot of the payment processing, obviously, all the borrowings for the government, and something that I spent a lot of my time on and I think

I've talked about this before. Prior to COVID, I was probably spending fifty percent of my time on national security issues because sanctions have been such an important part of our national security strategy. And despite John Poulton's comments in the books complaining that I didn't do enough sanctions, it's really somewhat ridiculous since under President Trump we've done more

sanctions than any previous administrations combined. But we've had a very unified approach myself, Secretary Pompeo, d O D, and the c i A as to how we approached the national security issues. Hey, the stock market is roughly where it was before we went into the recession. Why do you think the stock market seems to be so ebulliant relatively strong when the economy is not as strong as

a stock market. That has that been a surprise to you as somebody who used to spend a lot of time in the markets, Well, David, having spent a lot of time in the markets, as I always like to say, I'm not good at predicting where they are going to be tomorrow or next week. I am good at predicting where they're going to be in the future. I think what you've seen and first let me just say the stock market is a market of stocks. So certain stocks

have done phenomenally well. You look at companies like Apple that are great companies, and and again Covid is not going to have a giant impact on their business and they're a technology leader. You look at some of the retailers and that they've had a pretty difficult situation. Uh, if you haven't been a major retailer, you know you had your stores closed, You're already dealing with online issues. And the fact that interest rates came down obviously also

changes valuations. But I think the bigger issue is the US is the still the bright spark of the economic growth around the world. Beloved confidence that our economy is going to come back in the third and fourth quarter, and people want to invest in the US. So as part of a new bill, if a bill does go through Congress, would infrastructure be part of the President is talked about having an infrastructure bill. Would that be a separate or would that possibly part of our stimulus bill

or a relief bill. I think, as you know, the President has been very interested in infrastructure since the campaign. It's something we've been talking about on a bipartisan basis. The President's interested in roads and bridges and tunnels, and we continue to have those conversations. The issue with infrastructure is normally these are not shovel ready. So normally these even if we pass something, this isn't going to impact

getting people back to work in September and October. So I think that the likelihood is the CARES the next Care's bill, is going to be very focused on. We want to make sure that twenty million people that don't have jobs because of COVID get back to work, and that's going to be our focus, and for them to get back to work quickly. How do you keep up with your colleagues around the world. Who are the finance

ministers of major countries that we have relationships with? You regularly consult with them or you do it one on one. How do you do that right now during this crisis. Well, I have very good relationships with a lot of my counterparts, so I do speak to them on a regular basis. Also, this year, UH, the United States is chairing the G seven presidency, so I convene pretty much every other week a call of the G seven finance ministers, your deputies.

We tend to rotate, so we're we're in direct communication. And one of the things I've said to all of them is now it's even more important than ever that we are working together as we all battle this disease

and focus on rebuilding our economies. So do you worry about the impact of COVID on the emerging markets, which uh, you know have a different currency which is relatively weaker against the dollar recent months, or so are you worried about the economies uh in those countries being able to repay debt that they may owe to people in the United States. Well, I am worried about that. We're doing a lot of work at the I m F and

the World Bank on those economies. We've we've created a debt moratorium for the particularly poor countries because what they're going through, and that that's something we are definitely focused on, is is working with the poorest countries. Were also very focused on what we call debt transparency, making sure that it's transparent when country is borrow whether it's from China or Europe or anywhere in the world, that there's transparency

into the situation. Now, in the last recession ten years ago or so, the banks were in pretty big trouble and they had to be in effect given additional capital by the United States at some points. Um right now, you think the banks are in very good shape and our financial institutions are safe and strong despite the COVID crisis. I do, David, Unlike last time, as you said, the bank capital rules have changed, the mix of their books have changed. You don't have these problems mortgages that you

had last time. Underwriting has gotten much better. So the banks had very good capital and very good liquidity coming into this. And I think what we've seen is in the beginning of COVID there was a big run to draw revolvers, and I think we've seen a lot less of that. And my understanding of speaking to the major bank CEO is the typical mid market companies again, if they're not in retail and entertainment and restaurants, if they're not in the areas that are particularly hard hit, have

a reason amount of liquidity and borrowing power. So the first Treasury Secretary was Alexander Hamilton's and you probably have seen the play Hamilton's. So do you ever get any whispers at night from the ghost of Hamilton's saying you're doing a good job, or do this, or do that, or you just imagine what he might be recommending that you do all the time, David, I got I got a big portrait of him. He stares at me at my desk and occasionally he gives me some good advice. Okay, Steve,

Mr Secretary, thank you very much for your time. I appreciate your giving us your insights and good luck on all the things you're working on. Thank you. David. All right, you've been listening to our Bloomberg Live invest Global virtual event. The Carlisle Group's co founder and co executive chairman, David Rubinstein catching up with our U S. Treasury Secretary Stephen Minution, and of course some of the key headlines, uh were a bunch actually a lot listening. Um are talking about

the economy, um, he said. The Secretary said that they are very seriously considering another stimulus and that they discussed aspects of a net of another stimulus bill with senators and said it could pass possibly by July. He did talk us at Terry Stephen Monution about it being more

targeted to those businesses who need it. He also talked about the economic outlook and said he does expect, like many that we talked to here on Bloomberg, that there would be a bad second quarter and thinks that we will see a spectacular rebound off of the third quarter. Does think that we will be out of a recession by the end of the year. But then went on to certainly point out about how we need to watch all of those that will still be out of works

out of work. One more thing, though highly unlikely that we will get to a point where we would have to shut down the economy again. This on a day when we continue to see spikes and virus cases around the country. All right, be sure to check out Bloomberg Live on the Bloomberg Terminal for more of these conversations from our invest Global Virtual event. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio.

You are listening to Bloomberg Business Week. I'm Jason Kelly wandering into the studio. Yarl mass does this started to Yeah, it starts at too. You missed two killer interviews, Um, but I know you'll catch up later. Certainly, the US Treasury Secretor Stephen Manustion just wrapping up with David Rubinstein, and then we heard from Carmen Reinhardt of the World Bank, so lots of talk about the outlook. I feel like Carmen Reinhardt a little bit more cautious than Stephen Manution. Yeah,

well that probably checks out, right. I mean, I guess nuctions job to be a little uh enthusiastic, right, Yeah, absolutely so we did feel that. And there's talk of another stimulus, as you know, that's certainly given some support

to the financial markets. We do need to get into though our Bloomberg economics today because what's interesting is, you know, we know, Jason, you and I have talked about how Americans have managed to put aside some money in savings in this shutdown, Right, you're not out there spending as much money maybe as you you were in the past.

That's the good news. The bad news is, as Bloomberg News Personal Finance editor Ben Steve Berman reports, it may not be enough to get Americans through the aftermath, and Ben joins us for today's Business Week Economics. He's on the phone in New York City. Ben, So, what's going on here? Well, for the longest time, economists have been worried about the fact that there's a big chunk of Americans that just don't seem to be saving very much money.

So if you ask people, can you handle a four hundred dollar expense, about two and five americans say no. Actually, if I if that came along, if I had a car repair bill or something, I would actually have to go into credit card debt to handle it. I don't have four hundred dollars in cash sitting around. And that was before this crisis. So when this crisis hit, there's a bit there's been a lot of worry about like what what is this going to do? Especially if it

goes on too long. So, as you said, right now, things look pretty good. There's government stimulus, money has gone out and people just aren't spending as much money. But um, my story is just basically about what happened as time goes on, and there's some reasons to really worry about American households. Yeah, I mean the numbers here are really scary, as you say, Ben, So what is the I mean,

is there a remedy here? I mean the market is Carol mentioned is rising on the possibility of more stimulus. Is more stimulus than the answer or what happens? I think I think more stimulus is definitely part of it. That the real problem these households are facing is so you have people that aren't saving, right, but you actually be surprised that um, about half the people who live sort of hand a mouth that they're not able to save, but half of them actually have some middle class wealth.

They're actually middle class or not poor. And that's because what they're doing is they're putting a lot of their wealth in retirement accounts and in their homes, and then that just makes it so much harder to access that money,

um in an emergency. Basically, it's the same liquidity problems we face in the financial crisis for for banks, this is the same liquidity problems households are potentially going to face if there isn't the kind of stimulus, isn't the kind of um are the are the kind of benefits for safety unemployed or for small business owners that are shut down? Um? If those things go away, then then households are going to be really having to do things like cash out of retirement accounts, which we could mean

selling at the exact wrong time. It could mean taking out uh, you know, home equity loans, even selling homes um, just just to be able to survive. Yeah, And that's the that's the tough part. Right. So even if they've created some wealth, whether it's in their retirement accounts or even in their homes, they may be forced to tap into the into that and that's really unfortunate, right because those are the things that are going to carry them

in those later years as they get older. Right. And the really troubling thing is is when this is happening to say people in their fifth these are sixties who are getting close to retirement, they don't have time to go have a new career um and restart that that four ohn K like the money and there is really valuable to them, and um, you could really have some people who are getting close to retirement who really have

have a lot to worry about. Well, and it must be frustrating for a lot of folks been because in some ways, you know, saving for retirement, I mean we were sort of beaten, were we beat people into that rights like save your money, save your money, put it, put it aside. And so to be in this situation where folks have to dip into that is uh, beyond disappointing.

I mean, it's troubling to some extent. Yeah, And there's some really good policy questions about that, like should we be encouraging so much retirement, so much retirement savings that they have the expensive day on a rainy day fund? And there are actually some people who say, hey, we should really be encouraging middle class people to have these randy day funds somehow maybe you can kind of keep it off limits somehow, but we you get people to save for emergencies like like as I said, like a

car repair build. If you can't handle a four dollar expense, that's really a problem for getting to work every day potentially, and so um, but really I don't. I'm not I wouldn't blame any of these people for for putting all their money retirement accounts. And I mean there's there's a tax incentive to do so for both of those things, and and you're actually going to get a higher rate of return if you do that, as long as nothing

goes wrong. And of course what's happening now is something went wrong, and we're not even tapping those people who don't have those retirement plans, or those people who don't even have enough money to be able to afford home, so they can't even tap into that equity if they

wanted to. So it's it's a tough situation. Ben, thank you so much, and I think it's really timely, especially just coming off of Secretary of the Treasury Steve of Venusian and Carmen Reinhardt talking about the outlook and what kind of recovery we might see on the other side. Ben Steve Hman is Personal finance editor. Bloomberg News on the Phone in New York City City and check them

out on Twitter as well as Applomberg dot com. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio, we turned out to Nick Lieber to talk about small business owners still struggling. This has been I'm sorry, UM, we are We're continuing to look at this story and just try and figure it out. So tell us what's going on with this story. Hi, Hi, this is Nick weiber Um. I'm a contributor to Bluemberg Business Week, and we've been doing a series about how

main street businesses are dealing with the pandemic. And there's been a number of small business administration relief programs and other programs to try to help them, and it's been kind of uneven and kind of choppy, and the businesses, many of the smallest ones, have been having a hard time navigating the programs. There's the paycheck Protection program, which we've heard a lot about UM and which the application deadline is June. There's still over a hundred billion dollars

available two independent contractors and two small employers. UM. There's the e I d L program. There are a bunch of different programs. There's there's been a bunch of conflicting information UM, and think for the smallest business owners, it's been a frustrating process. Yeah, no, doubt about it, Nick, and and listen, there's a lot going on in our and to forgive us if we were a little crazy, my apologies, it's just you know, it's just one of

those days. Tuesdays are those days where we're always like, ah, so listen, I completely get no need please, no need to your very busy no needs because totally totally cool. I have to say, Jason and I talked to a lot of CEOs, and we've talked to a lot of members at the small business community. Just yesterday we talked with Todd Left, who was the CEO at Hand and

Stone Massage and Facial Spot. They have a bunch of franchisees across the country and about half of them were able to tap into the p p P virus relief program from the government. And he said, you know, they worked with their franchisees to make sure that they could get into it, but it's not been so easy for everyone. So you guys do this great story and continue the great coverage in the magazine about how to do it.

So what should they be thinking? Because that p p P program right the application now deadline is June, so it's just around the corner So what do people need to be thinking about and where they If you are a small business owner, you can still tap into I mean, I think you can go to there's an advocacy group's website that has a list of lenders i e. Banks

and others that are still accepting applications. And you don't need to be an existing customer, So you can go to Small Business Majority's website and you can find a list of lenders that will take your application, even if you're not an existing customer. You can apply for up to ten million dollars and and then you can see

if you get it. That's part one. Part two, of course, is getting that loan forgiven, and the sp A has recently released new rules making the forgiveness process in theory easier. So those, I think are the two things to keep in mind. One that there are still lenders that will help you access the money, and to the in theory,

the forgiveness guidelines are easier. Yeah, it's interesting to to have seen this, you know, through the eyes of a lot of small businesses, uh, Nick, because it was challenging on the front end, and even uh that notion of do you have to be a customer you don't have to be a customer. I mean that so much of

this was not clear at the beginning. And I do wonder if businesses who aren't smart enough to read Bomberg Business Week and your coverage, you know, even realize, you know, some of how this is has evolved, because it's certainly and this is not a no shade to anyone, but it certainly wasn't perfect and easy to understand from the beginning. Oh yeah, there was a lot of conflicting information. It's

the rules have changed. Their multiple programs. There's another program called E I d L, which used to make loans, not not forgivable loans, but loans after disasters of up to two million dollars. It's been reduced to a hundred and fifty thousand dollars. Confusingly, when you apply, you can't put the amount you actually would like to borrow. They assess you and they give you what they give you. Even more confusing, they will also give you up to

ten tho dollars. There's a grant you get a thousand dollars per employee. Add add you know, to your point, just add add to all of that the fact that if you're really you know, you run your hair stylist, your run a hardware store, your in a pretty small business. You don't have a cp A, you don't have a lawyer. You're trying to figure this stuff out. Is this alone? Is this a grant? So I think it's it's been. It's been really tricky for a lot of a lot

of the smallest businesses. And let's not forget I just got about thirty seconds here. You've got the main Street lending program from the FED. We heard j Powell talk about that a lot. There's also an employee retention credit, I mean, there's pandemic unemployment assistance. I mean, and of

course there's state programs. I mean, this is really a helpful article, and we're gonna make sure we put it out on Twitter, Nick, because I do think, um, some small businesses they just don't have the they're just trying to stay alive and they don't even know what's out there. So this is a really helpful guide to it. Nick, Thank you so much, really appreciated. Bloomberg business Week contributor

Nick liber joining us on the phone from Brooklyn. I have to say, Jason, this series, um that Business Week has been doing their Business Week Small Business Survival Guy, which you can find out more at Bloomberg dot com. These stories have been very specific, lots of details and just telling you here's what you need to do here Titan go about maybe finding some assistance for your small basis. And even the way they're laid out. I love the way they're laid out because it's like bing bing bing

bing bing. This is what you need to know about this one. It's very very useful. It's the sort of thing you can send around to the small business owners that you know and love, and I hope that they can take advantage of some of this. And I do go back to that conversation as you mentioned yesterday. I'm the CEO of handed Stone because if you were able to participate in this, I mean, it was the difference between surviving and not in many cases. I'm growing a

journal now. But you let me drive. Oh no, no, no, no, dr home, honey, please, I'll do the riding revels me. I want to drive, just drive, baby questions trying this drive to the Cloboberg radio. It is time for the drive to the close and back with us. Is Eric Clark, portfolio manager of Rational Dynamic brands Fun on the phone from San Diego. That Fun, by the way, beating just about all of its peers uh this year and over

the past three years. Over the past three years, Jason has been up on average eighteen percent annually, so really a consistent top performer. I thought you were going to pour one out for the segue. I know I was. Dan came in. I wonder what he has to say that we should catch up with him anyway. It's like to talk to Eric Clark, though. UM, guessing you're not tooling around on a segway there in San Diego, though, But there's some cool you could be. I mean, there's

some cool segue tours around San Diego. I'm sure as long as I wear a helmet, right exactly, That's exactly right, all right? So what do you make of this market? Where are you looking? At a time where it feels like everybody's enthusiastic about just about everything. It makes me nervous. It always makes me nervous when everybody's too excited about anything, or when everybody's too scared about everything. So we've actually

been trimming into this strength. Were at the top end of the range and that's you know, that's kind of part of our process. You know, sell it the at the top end of the range and then and then you know, raise some cash and then be able to buy at the bottom end of the range because I feel like we're going to stick to this higher than average volatility, which just gives you bigger ranges that you can trade versus invests. So that's that's kind of where

we're focused. So eat Eric. So if you're trimming into the strength, does that mean you're just because some stocks have had a significant run up that their positions have just gotten too large, So you're just kind of, you know, reallocating a little bit or are you increasing cash because you feel like we're just at a bit of a top here, Well, I feel like we're we're closer to a short term top. But you know what, some of the names, some of these tech stocks and and digital

payments stocks have just gone completely insane. I mean, you know, Shopify, Amazon, Spotify, PayPal, Square Trade Desk, you know, some of those names have just been tremendous performers and and I still think July earnings will be a little bit more of a realization that things are probably getting better on the margin, but maybe not as good as the stocks uh and their

performance over the last month or two. So you know, just kind of risk managing, trimming some of those positions that got a little bigger than I would like given, you know, the fundamental So we're we're pretty disconnected, and I think most people would agree with that. So where do you add in a in a market like this because there have been some some stocks that have have taken some hits here. Yeah, I mean, we're we're adding to some of the names that have pulled back. You know,

I've added to Lulu when it pulled back. Um, I added to Facebook when it pulled back, added to home Depot, I mean, Sherwin Williams. You know, we're we're selling some of the sexy stuff and at in to some of the boring stuff, you know, a Domino's pizza, a Walmart, some of that stuff. And and that just gives me a little bit more balance between you know, being all in on the really sexy um, you know, kind of high tech brands, high beta brands, and and just getting

a little bit more balance. And and we're back down to you know, having seven or eight per sending cash that I love to use as transitional cash because the market always gives you an opportunity to buy something on a dip. Yeah, what do you make of Starbucks here? I mean, that's a pretty radical move that they made a couple of weeks back, you know, sort of closing stores shifting to this walk up, pick up, drive through

uh model. It feels like it says something about at least where they think we're going in terms of the new world order. Yeah, I think I think the road might be a little bumpy for for Starbucks. But I think they're doing the right thing. They are taking a look at their footprint, identifying where they can expand where they can get better at least prices, where they can

add the drive through capabilities. Um, so I think they're doing everything that they need to do for any You know that you get a pandemic or something like this, and it and it shows you where you have some holes in your business model, and the smart companies try to fix those holes and and I think they'll be they'll come out stronger on the other end, just like most of the best brands that have the footprint locally, they're gonna now get a chance to get better real

estate prices, better locations for expansion if they have the capital and they have the really relevant brand. So the Chipotles and the Lulu's and um and Starbucks, they're going to be able to expand and that's going to add to growth over time. What are some of the trends you think coming off the virus eric that will stay with us and that might shape your strategy longer term here. Well,

I think the exercise. I mean, I don't know about you guys, but I mean we see more people outside just because they're a little bit pent up, and I think that that people are getting in shape again it's summertime, and I think the trend of just feeling better and and and exercising, and that that feeds into the ath leisure with the Nike and the Lulu And then I just think the e commerce thing is just going to continue. If you were an e commerce user, there's nothing that's

going to change that. But if you were a laggered and you were forced to do that and you've realized how easy that process is with an Amazon or or whoever your favorite brands are, I think you're going to start continuing to do that and really focus on the brands where you really have a great experience at the shopping level, like a Lulu um that that that's gonna You're gonna focus on those physical stores where you love it, but you're also going to use e commerce as a

way to you know, streamline your day and be more efficient, and that that leads into a big overweight in Amazon still. And I know, Jason, you guys as a family do a lot of stuff online and a lot of apps. We do too, But it's interesting having conversations. I talked to Buddy just this morning. They're like, yeah, we did our first order you know, through instacrt as a result

of being shut down, you know, several months ago. So it's I do think that there it's an environment that Eric's right, you know, like we've heard from others that people are doing things differently and they're like, Okay, this wasn't so hard. I like it and may stay with it.

And so that's the trend. Yeah, And so what do you worry the most about sort of disrupting this market, Eric, Well, I I think the unemployment claims and the support that we're getting, you know, if Congress decides to drag their views a little bit, there's a lot of people, I mean millions of people who are going to find themselves with not having some of the support that they have and they don't have a job, and if it's harder to find a job, I mean that that's certainly an issue.

So I hope that they do what they need to do to support this economy and the and the population and the unemployed. Um, while while we're kind of getting back to normal with with companies feeling better about hiring again, so not always worries me. July earnings again, not that they're going to be particularly bad, but maybe they're just not as good as the doc market indicates. And then I and then I always worry about the election, that that will come over, you know, when we get in

through the through the rest of the year. But the July earnings and I think the support the Congress is kind of giving people I think are the bigger issues because those are those are near turn that we have to focus on well. In the Secretary of Treasury Steven and Nushan already said second quarter not expecting much, but expects to start to see a recovery come the third quarter and into later this year. Eric Clark, Thank you so much, portfolio manager at Rational Dynamic Brands Fun joining

us on the phone from San Diego. Thanks so much for listening to Bloomberg Business Week. Download the podcast on itune, South Cloud, Bloomberg dot com, or wherever you get your podcasts. And of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio, or watch us on YouTube by searching Bloomberg Global News.