NAACP President on Racial Equality

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. Jason Kelly and Alex Steel here with you on a Friday. Delighted to have back with us our reality check, our human gut check, which actually is a little bit of a pun since you're a gastrointurologist. Dr Ian les Vader. I had never really

thought about that. Jason, You are always funny, but especially today. How are you doing very well? Uh? And I'm happy to introduce you if you haven't met her before, to Alex Steele, our colleague from Blomberg Television and Bloomberg Radio joining me and Carol's absence. Uh, doctor less fair of course, his clinical associate professor of medicine at n y U s Land Gun Medical Center. So give us that reality check, Ian.

You know, I feel like the news has been slightly better, maybe a little this week as we look across the country. Certainly things feel stable in New York. What do you see from your perspective? Definitely good news and bad news. By the way, I too, am a native New Yorker born and raised on the Upper West Side, so there are not a lot of us that we have to stick together, but I'm a little more than sixteen years.

In terms of the virus, there was a recent article of the New England Journal and ME correspondence that was a little disconsorting. It showed patients with mild UH disease that that were treated with oxygen, you know, not totally asymptomatications how to drop over the course of approximately a hundred twenty days in their antibodies. So uh, it is more clear that the antibodies that are forming are maybe

transient uh finite, and that raises questions about vaccines. How much of an antibody response they elicit, and certainly for patients who say I don't want a vaccine, I don't need a vaccine, I had it, there really is a question even if you do have anibodies, how long they will last? Laugh. So I think that that was an interesting new bit of data, not to mention, of course, the increased cases that we're seeing. Always good to meet another fellow New Yorker. Uh, where do you grow up?

By the way, uh, nineties between Columbus and Amsterdam, and they moved over to the East Side. So I went to school and medical school here. So I'm a longtime New Yorker, but I love the whole country. Thank Yeah, yeah, you have to say that. Eighty seventh and West End, so we were in the hood. Okay. So um, the antibody research was a little confusing this week. But also confusing to me was then the positive T cell research. Can you walk me through sort of what the differences are? Well, Uh,

the immune response really is composed of two arms. Typically we think of the cells which form antibodies, and they work both in a short term called I G M anti bodies, and that I G G which tend to be longer lasting, but all of those can vary. Typically, if you have certain viruses like measles, if you actually get the disease as opposed to the vaccine, those are lifetime antibodies small pox or variety. But then there are also diseases like hid or hepatitis C, where you get

antibodies and they do not kill the virus. People have chronic hid or chronic hepatitis C. You need anti viral treatments. But there are also cellular immunity typically we call the key cell related immunity, which also helps kill a variety of pathogens from bacteria also the viruses, and that we feel maybe longer lasting. We're just really beginning to see with these vaccines, we need to study what is the nature of the response. Ideally you get both and ideally

that will give you a longer pertition. Again, assuming the virus does that, you take so ian as you look at the look ahead to the vaccine. I wanted to ask you a question that came up in a conversation we had yesterday with the new president of the a m A. And it largely is about actually I'm checking myself.

A conversation we had with a doctor from Johns Hopkins, who I believe is actually a sociologist, and talking about the culture of vaccination and how she and her colleagues are actually worried about when the vaccine is available, essentially convincing people that they should get it. How much do you worry about that? You are exactly right, and that

really is a concern. I've spoken to my own patients, and I've also looked at studies, and really we're talking about perhaps fifty people who would be hesitant, and it's unclear, you know what this is, what kind of beliefs are going on their fear. And certainly some of these vaccines are new message or a name Maderna, the astra zanca, a variety of new approaches which we think are more effective, but they are untested, meaning they haven't been used for decades.

So vac scenes are essentially useless unless you get people to take them. Well, what percentage of the population would have to We really are worried about at least a fifty herd immunity, So we're talking about of the population fifty or sixty maybe even more than that. They either have the disease with long lasting antibodies, So we just said, many of the cases do not have long lasting antibodies

and or getting a vaccine. So even people who have had the disease, be it mild, if they do not have antibodies or antibody tigers, even if they were proven to have it, we're going to have to convince them to take the vaccine. In addition to people who have never had the sellon people is a lot, and so you're talking potentially, you know, a hundred million people who will made a vaccine, maybe more, and that is a

serious concern. If if the majority or even a large percent don't want to take a vaccine, that would be a problem. Right all right, in less Pader, dr Ian les Pader, hang with us for a minute. We're gonna do some news and uh, some other business and come back to you. We're gonna talk about reopening what you're seeing here in New York because it is very different, I think from what's going to the rest of the country. One headline, Alex Crossing that you are nice enough to

just share with the group here. Trump says China trade deal means less to him now after the virus. This is based on an interview I believe he's giving with barstool sports, barstools, Florts, bog Man. I'm pretty sure that's David Portnoy's. Uh, yeah, it is. He was the guy who sort of incited all the robin Hood traders, right, He would take scrabble letters out of a scrabble bag and then decide that's where he was going to invest. So it's really interesting to me that Trump is giving

an interview to him specifically. But beside that point, you know, the trade deal. Going after the trade deal, that's the nuclear option in the market. So if he does that, all bets off. Yeah. Absolutely, And we saw a lot of evidence this week that even with consulate closures and all the back and forth, as long as the trade deal is intact, are exactly right investors like, all right, we're gonna exactly all right. Much more ahead, including more with Dr les Vader MS Boomberg. All right, so talk

to us about schools. Dr Ian les Pader, what's your latest thinking as you talk to your colleagues on the medical side, because everybody's got to take here, well, I've got a number of teachers who are a little afraid to go back. I think has been has been stated, you know, young kids generally do very well. Also, they carried the virus, but they tend not to be very sick, so they're sort of acient tramatic carriers. So I think students will be fairly safe, really even up through high

school without a problem. I probably through college as well. Their teachers may have a little bit more risk, but I believe nothing is risk free. Everything you do has some risk, and I would say if you're not in a high risk group high blood pressure, diabetes, obesity, many of our teachers do have some of those problems. And I think if you're wearing a mask and you're teaching,

I think you're you're relatively safe. And I think we have to try school openings um because I think we can't get the economy back until basically kids are safe in schools. So I think it is reasonable to do certainly in certain states like New York where the case rate is way down, I think it's very reasonable and appropriate to do that. And I think as we do it and it works, people will feel more confident about it. Other businesses may have a challenge. I see people sitting

in outdoor restaurants. It's definitely a smaller volume, and that may be an economic risk, but I think people eating outside, uh, if they're not shouting or speaking loudly and spreading virus, I think that's also reasonably safe. And obviously with a vaccine and with more herd immunity, it will over time

become more safe. Well, it seems like the two issues tied together, and that like, once it gets cold, New Yorkers don't like to be cold, so we're not going to go out and sit outside in the restaurant, which brings people back inside. You can't eat inside a restaurant until least October one. It's the same thing for schools. If it's crowded, what kind of indoor systems can you have to make the ventilation better? So it's kind of

like being outside. You're exactly right. So I was recently at the dentist and they have not only air cleaners that exchange air in the roofs frequently, but UV lights and so they've already adopted a series to make that time in the chair a safer experience, and I think we're going to really have to do that. It would be smart to get a jump on this, and certainly the New York City school system and really in other classrooms. The most you can do is reduced risk. You can

ever eliminate risk. People may have asymptomatic carriage of the virus, certain kids. But I think if we can do better air exchange filters, ultra violet light, we can I think at least reduce the risk to everyone in the classroom. So Ian I asked this of almost everyone when we talk about the virus or the markets right now, as you think about it from a physician's perspective, what worries

you the most about the virus at this point? Well, exactly as Alex said, you know, we're going into the UH fall and winter where it will be difficult to be outside where we will by definition of closer contact, you can't entertain outside. And I don't think we're going to have a vaccine until early that's what's for a January or February. And exactly as you said that everyone

is willing to take it. So I think we may reach a crunch not only in the number of cases, but in the the exposure as the weather gets colder, as we move indoors UH and as we perhaps get a second a wave. So away think, no matter how we slice it, We're going to see more and more cases and unfortunately, more and more hospitalizations in depths. And we're seeing that in the South and the next area to rule maybe other parts of the country that have been spared so far. Right, all right, well, we will

keep in touch with you. You You are always great at giving us the latest, and we really really appreciate it. Have a great weekend. Dr Ian less Paid, our clinical Associate Professor of Medicine n y US Langon Medical Center, joining us on the phone. And Alex, you nailed it. I mean schools, schools, school schools. I feel like ones in college are going to college, both both both finish it. One finishing high school next year and one going to

be a junior. Yeah, senior, one junior. But they're going back, right, they're going back as it right now? Yeah, yeah, here in Westchester, part of New York State. But we are thinking, we're still waiting to hear on the what the what Governor Cuoma has to say because he is going region by regions, so we'll see where all that ends up. You know, I feel like Alex, coming out of that conversation with Dr Ian les Bader, it is fair and right to remind people that this virus is still ravaging

this country. It's easy, maybe a little easier to lose sight of that here in the Greater New York area, the Tri State area, because the numbers are way down. California reporting the biggest one day record of a hundred and fifty nine COVID nineteen deaths uh in California. I don't know how you feel about this, but it felt

like at the beginning, California was on it. I totally agree, and then all of a sudden, and I don't know the intricacies of which regions opened up faster and than how it spread, to be honest, but you're right and that they had it together and the cases were down, and then look what happened. And I think the reason why this matters to investors is the difference in asset allocations.

So if you owned US assets because of the safety trade and because the US government has a lot room to move and because of the FED, and then you see the case is just not under control, and you see much more activity in Germany if you just take a look at restaurants activity, for example, it's exploding in Germany versus here. Um, where do you put your money. Then yeah, I think it's a it's a really good point because we are trying to to get a handle in this. I mean to go back to something you

said before. Increasingly the reporting that I'm seeing indicates that you really have a tale of two states in California. That Northern California which did lock down a little bit sooner, led by San Francisco, the mayor of San Francisco, and really that whole Bay area all the way down through Silicon Valley to San Jose they locked down very early,

stayed lockdown. Southern California was just enough behind. And I think especially as you go south, just south of Los Angeles into Orange County and maybe down to San Diego. You know, you you go back, you think about those pictures from the beaches a few weeks ago, um or maybe now a couple of months ago. Time sort of is melting together. Here is no there is no irrelevant, but you know it is. Those are two very different things.

And I talked with a few people this week who basically said, listen, I'm in northern California, and that's a big distinction. But listen, I mean you look at Texas and and also Texas I was talking to somebody this morning about this sort of depends on where you are in Texas as well. Florida is a little bit similar to so UM. But what we do know is exactly what you said a few minutes ago or a minute ago, which is it's not under control. No, it's not UM.

And I think what's also interesting is if we do get under control in that maybe the cases that we're recording our younger people, so hospitalizations eventually will take lower, and we do get stimulus out of d c UM. Well, how does that set up the US economy then? I mean, I don't I don't know how much we're priced for that particular scenario either. And I just wonder how you look at that, m Maybe you look at us really yields and the inflation expectations, and that's kind of what

we're looking at. But I think that's an interesting part uh A situation too, if we actually get it under control, right, and so much of it You're exactly right, so much of it keep saying that I'm exactly right. I'll come back anytime. I know, I know, I really, I'm I know as I get that at home. I'm a president of the Alex Steel Fan Club. Um. But you know, a lot of this is on the minds of legislators clearly as they try and figure out what happens with

this next round. And someone who's watching this really really closely is Derek Johnson. He is the president and chief executive officer of the Double A cp Joints. Is on the phone from Baltimore. Derek, really nice to have you with Alex and myself. Thank you for our opportunity. So let's talk about what's going on just down the road from you in Washington as Congress in the administration try and figure out what this next round should look like.

What is your key piece of advice, your key piece of input to them, I will hope consider everyday working people, UH, consider our economy, and to make sure our elections are safe. Those are the key things that are on the table now, both BLOT and MA up provision making sure that elected administrations in place so we can carry it out election

in November. They can ensure that there are some extensions of things like the undemployment benefits and a few other things that are fingering because of the current health crisis that we're in. Making sure that their their resources for municipal and state governments because they are they're about to hear the financial law, which will be devastating across the country. And in terms of action, UM, no matter what the government does, what kind of steps do you see companies making?

It are real? We see a lot of numbers being thrown out X amount of money to black pecs, X amount of money for equality, etcetera. What's real? What is real is true systemic approaches to address that the cays A loan problems that have built up around inequity. Uh. Some companies are are season punting the moment to give the rosy statements and then uh, in a few months from now, when all of the attention has died down, whether or not they're going to go back to business

as usual. UH. I think Ropert Smith had put forth a really good uh and a smart plan. UH. Let's talk about the super cent solution. We have twenty one African American banks across the country. How can they get more capital to lend out to build a stronger entrepreneur class within the black community. The number one problem with entrepreneurs and small business of the black community has access to capital, and it with more capital, you see more growth is UH. It's it's a great opportunity that has

been untapped in our realized well. And it's interesting. I did want to talk to you if we could, Derek briefly about a deal that you did with Viacom CBS, because you know so much of this really is it's an economic piece that you just discussed it. There's also a representation piece that ties right into that. UH into

that economic piece of it. Tell us about this deal with CBS, but we begin to have a conversation with CBS Studios UH with the goal in mind of n Double ACP partnering to build and developed content how people see African Americans on the screen, whether big screen or television, oftentimes the perception of how we are treated out in public. For the INN Double A c P, we have always

advocated around the images that are projected. At a hundred and eleven year old organization, our second major advocacy fight was around the release of a movie call Birth of a Nation, because we knew the impact of that movie would have a devastating impact on African Americans UH in

nineteen and which came which came to be true. As a result of that movie, UH clan membership UH was greater in states like Indiana and Michigan UH in the nineteen thirties than it was membership in states of Georgia, Alabama, and Mississippi. UH. That projection from that movie spurred a whole new unfortunate reality for African Americans and how we were treated. So this deal is leading on that. On that reality, we have a president in Hollywood. We do

an annual show called The Image a Wars. But it is our goal to expand our footprints so that more positive images will be projective of African Americans because there are so many rich stories around how we have America be America. We know, alright, we're gonna leave it there. Thank you so much for your time. We really appreciate. Dereck Johnson, President and CEO of the Double A CP

will hope you'll come back. He joined us on the phone from Baltimore and Alex such an important point there at the end, and you know, takes me back not a little quick flex here, you know, to the story that I was working on for a long time about Lebron James and Maverickrtter what they're doing with spring Hill.

You know they did a documentary about the first female millionaire in the United States, African American woman just down the road from me in Irvington, New York, Madam C. J. Walker, Which that's Westchester, but still New York, but still New York. But it's important to remember that. It is important to remember that, and I'm glad you made that distinction. It means a lot to me, you know, it means a lot that you're listening to me, and and that I

just we're not married. I'll listen to you all the time. You're listening to Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. All right, let's talk a little Business Week economics. Now, this is the guy we need to hear from as everything is going on between the US and China. Alex, we're talking about Tom or Like, chief economists for Bloomberg Economicsly joins us on the phone from Washington. All right, Tom, I feel like this is

a little bit of a reality check Friday. So many headlines, so much rhetoric, but even beyond that, some actual action being taken with consulates closing here in the United States and then of course over in Chung do. What do you make of this? Great to be on Jason Um, So, I think the latest developments are a little bit alarming. Um. If we think about the last four years of US China relations under the Trump administration, UM, clearly it's not

been super friendly. Right. We've had a trade war, we've had sanctions on Huawei. UM. But all of it was within the framework of engagement. Right. There was a recognition that there were benefits to the relationship. Yes, the US said China was behaving badly on intellectual property, on market access, and we needed to take steps to address that. But if we could address those problems, then we could have

a mutually beneficial trading relationship. If you read the latest speeches by senior officials, the Pompeo speech, a bar speech, the O'Brien's speech, there's just a completely different tone. Um. It's no longer talking about some problems that we need to fix so we can move forward. UM. It's talking really in terms of a sort of an existential conflict

between two mutually incompatible systems. And if that's the approach which DC is now taking, then the question is, well, what can the US and China work together on in a constructive way. What is interesting to me is the last two days President Trump and some capacity said that he no longer loved the trade deal, that he likes it less because of COVID. What does that mean? What does that signify to you? Yeah, I think that's a

really that was a striking quote from President Trump. Aallex um And I think that the trade deal, Um, it's sort of it's funny to think about it in this way in some ways, because of course the trade negotiations and the tariffs at the time, we're sort of an enormous source of conflict between China and the US. But in retrospect, it now seems that actually that was what

was keeping things on the rails right. It was the desire to get a trade deal done, which was preventing these sort of more hawkish voices from from from increasing the volume and adding tension to the relationship. And now we have the COVID crisis, the trade hill just seems much less important. So we're seeing these much more hawkish voices from Pompeo, from bar from o'bien, from O'Brien starting

to reshape the debate. So tom uh I neglected to mention, and I should always mention when someone has a new book out. You have a great new book out, it's called China, the Bubble that Never pops. I do wonder through that lens, through the economic lens that you view the entire world, but especially China, what are the economic ramifications? And as Alex just Alex just nicely tied up, you know,

trade is clearly a part of this. And as you're looking at China and its economic might or it's economic fragility, what do political moves like this ultimately potentially mean. So I think about this in two steps, Jason. So the first question is, well, what if the US just goes down this path on its own, What if the US

unilaterally attempts to kind of freeze China out. Well, if that happens, I'd actually be more worried about costs to the US, because if that happens, China can continue to do technology transfer, do trade with the European Union, with Japan, with Korea, with all the other emerging markets in the world. Um second step is or the second question is, well, what if the US starts to build a kind of

multilateral alliance around this new view on China? Right, What if the S convinces Europe, Japan, Career and other countries that there is this existential threat um. And it's not just the US, but it's all these other countries saying we need to change the trade relationship. We can't cooperate with you on research, we can't share our technology. Um. If that happens, UM, I think we're going to have to start getting a little bit more pessimistic on China's

medium term growth prospect. Haven't we started to see that? Uh? And the recent moves by the UK, for example, UM. France though sticking with Huawei for now. But aren't we starting to see this? Yeah? So I think that's another good point, Alex um So. Three years ago, it really seemed like the US was out on its own on this and indeed doing a bunch of things which weren't that constructive. Right. So, the US was trying to have a trade war with China, Mexico, Canada, and Europe all

at the same time. And when you do that, you can't bring your allies with you if your main objective is changed during the relationship with China. UM. So what's changed clearly in the last few months is that We've seen some other voices the UK, Australia and really start to change their tone on China, the UK for example, saying they're going to pull Hua away out of their telecom system. Um. The question I have, and it's sort of it's a difficult one to answer, is well, what

happens in November? Um is the is it if we get the Trump administration coming back, then clearly it would be sort of on the same course if we get a Biden administration. How much would they be locked into this new sort of adversarial relationship with China and how much would they try and sort of pull back and say, yes, there's areas where we disagree and we need to be tough here, but there's also areas where we can work together. Tom Or, like you always make a smarter We really

appreciate it. Thank you so much for joining us. Tom Or like of course, as chief economists for Bloomberg Economics, joining us on the phone from DC and check out his very timely book, China The Bubble That Never Pops. It's a terrific read. Uh, and you should read it during quarantine. You've got time, right, Yeah, we have time? What's time anyway? But we are seeing China get more

aggressive in other areas, like with India, for example. I'll China, see so I wonder how offensive or defensive that actually is right now in this environment. And I really liked Tom's point to about you know what November brings and really I guess more pointedly what a new administration brings versus a maybe uh slightly more aggressive Trump administration when it comes to China. Because this certainly has been a story that we've been following very closely and will continue to.

You are listening to Bloomberg Business Week, Jason Kelly and Alex Steel here with you on a Friday, So let's turn to the magazine. A great story by William Turton. He is cybersecurity reporter for Bluemberg, joining us on the phone from New York along with Joel Webber, edit or a Bloomberg Business Week. He joins us from Massachusetts. I love this story, Joel, in part because I read it and said, wait, did that's a facts Missip? What what

this is a story tell us about? We brought it, We brought William here to tell us all about facts machines. Um No, but for really this, uh, it's sort of this incredible story. UM, a company called North Hydro, big player in the aluminum world. Uh, with the victim of a ransomware attack. And usually that does not end well

for companies. And there's a whole cottage industry of of consultants who who comes to your assistance to help you get yourself out of a bind and maybe you to negotiate um and pay the bitcoin and UH, this company, North Hydro said we're not going to do that and they would totally analog for as an answer. UH. And William was the one who sort of unearthed this story for us. Um, William, how did how did you on the story and how did this drama unfold their at

the company? So thanks for having me by the way. You know, something that's really interesting is that companies are very often hit by these kind of ransomware attacks. But you know, what they decided to do is to um keep it quiet. You know, they don't want people to know that they've been hit by a ransomware attack. And you know that's kind of understandable. You have these concerns about customer data and the reputation of your of your company.

But North guastally did something really different here. UM. You know, most companies keep this all wrapped up under attorney client privilege when they bring in these consultants to to fix the attack. But North decided that they would talk about it and they would talk about their response. Though. I was really grateful to them for kind of letting me inside and seeing how it all worked. And you know,

the story is pretty incredible. They their entire network was taken down and suddenly at all their plants and all their offices around the world had to kind of scramble to keep the company running, to keep everything afloat, and to figure out, you know, how do you pay employees, how do you process orders when you literally don't have access to your corporate network anymore? How did you find

this story? Uh So, a lot of the word kind of got out that North could have been hit by ransomware, right they had posted publicly that their network was down. And also, you know, something really interesting happens often when

UM companies are hit by ransomware. You know, you'll have the kind of smart computer people come in and a lot of times they'll upload, uh, you know, the malware that the company got hit with to a portal called virus Total So suddenly, on the same day that there was, um, you know, a ransomware event announced it north there was an upload from Norway to virus total of this this ransomware called locker goga UM. So you know you could kind of put the pieces together that they had been

hit by locker goga UM. So from there I kind of reached out to the company and they were gracious enough to let me come inside and see what it was. Like. I mean, William, it is sort of amazing how reliant we are on technology. I mean, I'm sure everyone on this interview has had that experience of you know, the power goes out of the WiFi goes out, and you're like, what am I support? Like everything I need and do and one relies on this and I'm just a dude,

like I'm not running a company here. It's got to be a really sort of disturbing thing machine, right. You know. There's there's this kind of great character in the story, this guy Michael Hammer, who runs the plant in in Crosona, Pennsylvania. He's been running this aluminum plant for twenty five years. You know, I walked around with him. He could tell you every single little detail of how the plant works and who works there. But he has this great quote

this in the story. He said, you know, I didn't know what the hell a bitcoin was um when they got packed. So you know a lot of people were scandling and figuring out what to do, and they and they seriously were just you know, they had an incident response plan, they had planned you know, business continuity plans, but at some level you kind of have to wing it right. So you know, they were setting up group chats on text messages on their own personal phones. They

were placing signs on the door. Um. You know, bank would not communicate with Norse electronically because the banks were afraid that, you know, somehow maybe the malware might jump from the North network to their network, so they had to find ways to issue payment and invoices and that involved you know, facting back and forth. So a great part of the story becomes this analog solution um that

the company ends up doing. And could you walk us through that process, William, And then also I'm curious, you know what for brother companies out there, like if if this drid forbid ever happens to them, like what's the end game? Ultimately looked like and you have one minute

to do that, William. Sure. So you know, they brought employees in and a lot of employees were concerned about their data being missing, and they brought in Microsoft, they brought another teams and they what they did is they rebuilt their entire network from scratch. Um. They had backups

to rebuild the network. But the key for you know, for other businesses you'll hear this from cybersecurity companies, is that you need to make sure that your corporate data is backed up and that you test those backups so that it works. Because these criminal ransomware groups are constantly on the hunt for vulnerable companies and they'll attack you

whether you know your your secure insecure there. You know, they'll spend a lot of time researching your company and trying to you know, infect it with malware and then hold you for millions of dollars of ransom in some cases. Um, so you need to be like vigilant and and not think that it won't happen to you, because you know eventually it might. Yeah. Absolutely, Well, it's a great story. Next weekend. Read William Turton's cybersecurity reporter for Bloomberg. Join

us on the film from New York City. Joel Webber, the editor of the magazine, joined us from Massachusetts, crippled by ransomware an aluminum giant when analog to survive facts posts in old PCs to beat those bad cyber criminals. Alex Steel, I mean I still use post its ps. You should look at my computer. It's like littered impost its. Oh yeah, no, my my regular broadcast white has that

same problem, brother, journal. But you let me drive? Oh no, no, no no, no, drive home, honey, please, I'll do the riding drivel Let me. I want to drive, Just drive, baby, good questions trying. This is the Drive to the Globe Funk community. Thanks, We'll dry dawn on Bloomberg Radio. It is time for the Drive to the close. Delighted to have it back with us. Randy Watt's chief investment Strategies for O'Neil Global Advisors. Johnny's on the phone from what

I'm guessing is very steamy Iami. He joins Alex Steel and me on this Friday afternoon. All right, Randy, First of all, how are you? How are things down in Florida? Things in Florida are a little messy. Obviously, the number of cases has been rising pretty pretty rapidly, and and some of the hospitals are starting to see a real increase in the I c U utilization. Hopefully that is gonna peek out soon, but obviously it's you know, like in many parts of the country, having an impact on

the local economy. Yeah. I love that you ask people that, by the way, on this show, I think that's awesome. Side note, you're welcome, um, Randy. When you take a look at say, so, it's messy down there, and there's some messy things happening in the market. And I did want to start with gold because it seems to want to break out, but it's been like a melt up rather than a breakout in the last kind of a few days. What do you see on the charts for this?

I think, first of all, gold does look good technically. We've been positive on it for I think over a year now, and I think what it's really reacting to is first that money supply in the US is up very strongly. It's up about a year to year. That's been driven partially by the FED balance sheet expansion. The FED balance sheet at the low last September was about three point eight trillion it's now risen to close to seven trillion, and I think gold is reacting to that.

I also think it continues to be a historical store of value and a defensive play. And I think people are very uncertain about both the economy and financial markets, and that's a logical place for them to go to. Randy, I do want to ask you about this rally that you know, this past couple of days, notwithstanding we've been seeing and it does seem to be driven by a pretty small number of stocks in a pretty narrow set

of sectors. I mean, we do have these days where everything seems to be up, but ultimately if you sort of strip out some of those specific names, maybe it's not so great. How do you analyze that? So a couple of things. The first is that there's two sectors that are up double digit year to date. That's Tech and consumer discretionary combined. Those are about thirty cent or so of the market, so they've really been driving driving

the tape. The top five stocks of the SMP right now are about of the index, and clearly they have been driving it. What's been driving that is really they've had pretty good earnings and revenue growth and the market is gravitated to where growth is. I do think for the market to move higher right now, we really need to see a broadening into some other sectors and hopefully have some of these beaten up sectors like financials, which

are down year to date, start to do better. So I think the technical look for the market is the markets likely to kind of stall out or go sideways here unless we can see that broadening. And I think that broadening has got to be driven by a better outlook on the economy. How do you feel about next week going into big tech earnings like Facebook, Amazon, Google, Apple? I mean, are we set up for disappointment all of the Microsoft situation? And I wonder if that sort of

triggers that reversal into value that you're talking about. I think there's there's a few things going on first off earning season. So far, about twenty five of the SEPs reported of those companies that have reported, have reported positive surprises. So I think what's going on with regards to earnings is that the bar is very low and a lot of companies are kind of stepping over that. Though we should note that if you look on a year to

year basis for the market. Earnings are right now running down about and sales are running down about ten and a half percent, So the absolute numbers aren't that great. What's been troubling the market recently, and you kind of saw it with the Microsoft quarter, was that forward guidance is actually coming down right now. So if you look at where we were for earnings entering earning season and where we are now, that forward one number is falling

right now. It's about a hundred and dollars for the SMP five hundred. That's about a twenty five game. The market is projecting for next year and earnings, and I think that's optimistic, and I think those earnings are gonna have to come down. So I think the market is

focused not on this quarter. Again. I think for big tech earnings next quarter, a lot of them are gonna be pretty good, but it's really what what do it look like for the future, And I think there is risk at disappointment because I think those numbers still have to come down. Randy in a typical year, I shall I say, if twenty where typically you're in any former fashion, we would be talking a lot already and certainly a lot over the next month or so. Through November. About

the presidential election. I know you've done some analysis historically about this, how much does what we're living through right now? If I hear the word unprecedented one more time from anyone about anything, I don't know, Like I it's it's a little frustrating, even though it's true it will be unprecedented. My reaction. Um but what how do you sort of think technically about a presidential election in a year that's as topsy turvy as this. I like how you made

that pun there in an election year unprecedented. Um, So a couple of things I think. I think the election is on investors minds, but I think right now it's actually third on the list. So I think the first thing investors are concerned about is this this stimulus bill going to happen and what's in it? So that's that's the most immediate data point. I think the next data point is are we amping up again a trade war

with China? The SMP five gets about ten percent of its sales in Asia, the majority of that in China, So I think if we're going to amp that up again, that's another negative for one earnings. And then finally the election. I think investors are going to start to focus on the election more, but I think that's a late more of a late summer type event. I think these first

couple of data points initially are going to matter more. Normally, what happens is the market technical usually has a stalling out period in the summer and then kind of rallies after the election. I'm not sure if we're going to see that again, but I think given how far the market has moved, and given the fact that we are in the summer, I would not surprise me to see the marketing leader sideways or pull back right here. Interesting. All right, great to catch up with you as always,

Randy Watts. One of our phase Carol will be sad she missed you. She sends her records seeing having seen you on the rundown, she said to make sure and tell you Hello. Chief Investment Strategies for O'Neil Global Advisors, Johnny is on the phone from Miami. Thanks so much

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