Oracle and Walmart’s Deal for TikTok

Business Week on iTunes, SoundCloud, bl Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. Let's set the Business Week agenda, now a lot on it. Gina Martin Adams, Chief Equity Strategies for Bloomberg Intelligence. She's in New Jersey, as is Stave Wilson, Stocks Editor, author of the Chart

and Stock of the Day. Gina, I want to start with you because it's a pretty gloomy picture across all the major indices. What are you seeing as you and your team really break it down? What's the big driver here? Yeah? I think it's have to articulate one driver or another. The SMP five opened this week testing key levels. We saw the index crush through its fifty day moving average as of Friday, so we knew we were in for some continuation of the corrective process when we woke up

this morning. Irrespective of some of the news, in particular the news on Financial Spector and maybe some dubious nefarious behavior among participants being potentially pretty dangerous for that space, has been the big news of today, and that may have contributed to a broader a broader sell off than would have been likely otherwise. But I'd say the technicals were set up for a rough day to continue today.

Now we may be looking at finally a capitulation point, which you know, for the first time since the end of August, we can say the index is nearing over soul levels. Um, so we want to watch through the clothes to see how broad the correction is. If we get to a fourteen day moving average or a fourteen day rs I back near over souled levels, that could represent a buying point for capital that's been looking to get into this market but waiting for an appropriate time

to do so. Dave Wilson come on in on what you're seeing in the trade today. You know, there are a couple of things that jump out besides what's going on with the banks. You know, after this report from the International Consortium of Investigative Journalists talking about you know, how they may be handling or not handling suspicious transactions properly. So, uh that that's a piece of it. Beyond that, I mean, you look at what's going on with hospitals and with

health insurers. All this so tied up with what happens to the Affordable Care Act now that the Supreme Court Justice Ruth Bader Ginsburg has passed, and you know, we may get a successor before election day, which would mean we'd have a successor when a week after election day the High Court here's arguments by the states trying to get rid of Obamacare. So you know, those stocks are

especially weak in today's trading. And then there's the saga of Nicola, the electric truck developer, and yeah, the do you wonder they're sitting at General Motors saying whose the idea was this? I mean, they're still they're still more to know and I don't want to, you know, kind of they aren't doing it at GM. I can assure you GM shareholders at least some of them are asking that question. Because while Nichola is down nineteen percent, GM's

off more than five and a half percent. And there's another company that's already working with Nicholas, c NH Industrial. Now they're big in two tractors and you know other types of sort of industrial machines. CNH is down almost eight percent. So there's definitely a toll being taken that

goes beyond you know, this development stage company. And and so that's another one that jumps out, especially because Nicola is the product of, you know, a deal with one of these special persents, acquisition companies, backs, blank check companies, calling what you will, real black eye. Absolutely, we've been talking about those a ton uh Gina Martin Adams before we let you go the election, Paul Ticks, Is that

starting to weigh on this market in a more meaningful way? Yeah, well, politics, I think they've already highlighted the Ginsburg passing and what that may mean for the Supreme Court and the a c a um sort of battle upcoming. So there certainly is a portion of politics. I would also say, though

the election is absolutely getting priced into Vic's futures. I mean, we've seen over the last month VIX futures for November getting even more expensive than October, which says to me the market is trying to price for a very uncertain or highly followtile election season lasting right through the end of November, which would be very unusual. So I do

you think it's part of this? But obviously there are a lot of moving parts, and it all started with the deflation of a mini tech bubble which is now extending into other issues. Right, all right, well, good, good context as always, Thank you so much. Gina Martin Adams, chief equity strategist for Bloomberg Intelligence, along with Dave Wilson, Stocks editor for Bloomberg, both joining us from New Jersey. This is Bloomberg Business Week with Carol Masser and Jason

Kelly on Bloomberg Radio. One of the best stories and one of the best reporters. Candidly, I just love talking to him, love reading his stuff. Jeff Green, Managing Diversity reporter for Bloomberg. He joins us on the phone for Michigan to talk about a story it's in the upcoming edition of the magazine. It's about Southern Bank Corps. It's CEO named Darren Williams. He joins me as well as

Joel Webber, the editor of Bloomberg Business Week. So Joel part of the equality issue, I believe, and this is a really really important piece of the puzzle when it comes to undoing a lot of the systemic racism, candidly going after the wealth gap and the lending gap to a large extent, that's right. And so Darren Williams um one of finances only black CEOs, and he's a CEO of of Southern Bank Corps, which Jeff is gonna tell

about more in a second. What I found so interesting about this was it's like there's this void um in the country, uh, in the South in particular, where there are thousands of underbanked people and that has obviously limited their ability to not only get capital but also you know, move up in society. And that's a problem that UM UH Darren has sort of recognized and that UH Southern Bank work has moved to solve UM. And Jeff how I talked to us about how he's going about addressing

this problem. Yeah, Well, it's it's really interesting that you know, it's the under underbanked about a quarter of the population, and they're predominantly they tend to skew heavily black UM and people of color in general, but mostly black UM.

And it's the kind of thing that's somewhat hidden and it's a little bit intractable attractable because these are people that banks really can't lend money to, and thus they in up going to payday lenders, which makes them even higher credit risk because they have they have so much debt.

So what there in and Southern we're trying to do, even before the pandemic, was a figure out a way to sort of bridge this, to bring these people into the banking system, help them to trust the banks, give them some sense that what they're doing with the payday lenders, they're never going to gain sort of the wealth that you get. You can't get a house, you can't get a mortgage until you kind of straighten that stuff out.

So like that's his big goal is to put more people in a position to be able to have a bank account, gang credit and ultimately have a mortgage and

have something we're wealth as accrued. And it was interesting because we started doing this a year ago, prior to the pandemic and the big frustrating thing for him was it was sort of in the background, and it was like, you knew this was a problem, you knew it was sucking the life out of people, but it was really hard for people to sort of understand just how momentous

it was. And you know, then the pandemic hits, and you know, front and center are people dying at three times the rate in black communities, and it's like you start to say, Wow, this is not just esoteric philosophical discussion. This is life and death, and the death is really

stunning to a lot of a lot of Americans. Well, and Jeff, I think then on top of that, in the aftermath of the killing of George Floyd and and this reckoning, this long overdue reckoning around all of those issues that you described, around the wealth gap that's been brought to the foe by the likes of John Rodgers over at Ariel and others. And I do wonder, you know how Darren Williams sees this and sort of to your point, like this has been hiding in plain sight

for a long time. He's happy for the attention, but what do we do about What does he say we should be doing. What is he doing to sort of help the cause. Well, the solution that both you know, he sees because he is his bank is called the Consumer Development Financial Institution, which is sort of a specially chartered bank that is designed to try and bring money and you know, loans and financial wherewithal to the poorest

people in the country. Um. It was something actually created by President Clinton in ninety four and the and Southern was the model for Hillary. Clinton was on the first version of the the Southern Board when it was formed, you know, more than a quarter century ago, so it's like a long standing pieces. This is not a new struggle. But his idea is to use the c d fys more effectively.

In fact, Bank of America and Goldman Sachs were on a call with him and President Trump basically saying we need to do this, we need to do more of this. And it led to a big infusion of money to the c d f ies. And that is sort of the question is will discontinue. I mean, it was in a crisis moment, the paycheck Protection Plan was not getting to the people that needed to because the big banks

didn't have the infrastructure. Meanwhile, here's Darren Williams working on the weekend with his staff getting you know, wrote fifty checks when other people hadn't even got an application yet. So that's sort of his hope is that now people know the c d I fis are, they're the big banks have kind of thrown some money their way. Netflix is involved, Google's involved. Will you get this to contin new so the focus stays on the c d fys. More money is available so they can do more loans.

I mean that's the only way it works is they need basically below market rate money that they can then lend out to keep this moving. So Jeff, there there's a thousand of the c d f I s um out there that are in a position to help UM, and it's all been modeled on on on basically Williams and sort of in the model that they've adapted. I'm also curious what other ideas he has for how we could be helping UM vulnerable Americans right now. Well, I mean one of the key things is credit education. They

were doing this. I mean I went with them to a class in this little town site in uh, you know, just off a cotton field, just you know, middle of nowhere. But twenty people. They're learning about credit and how it works and how interest cruise and debt and all those sorts of things. Basically just right at the grassroots level, trying to teach people, um, you know, how to get

their finances in order. And then at the end of that, they would give them this nine percent loan, which you know, keep in mind, a payday loan is around, you know if you don't pay it off right away. So this nine percent loan at the time UM that they would keep, they would pay half of it, half of it would be available for them to pay bills and half to be held in sort of like a certificate of deposit.

And that was like one of the tools. I mean, there's lots of things that he's basically saying, you need to just do the block and tackling UM in the

communities to keep this going. And a lot of the big banks have pulled out, and he's like, great, you don't want to deal with it, Give me more money so that I can deal with this, so I can get the money to the people that needed, I can focus on the hardest hit communities UM with more effectiveness, right right, Well, And it's interesting and I highly recommend people read this story because there's an aspect of this and you alluded to this, Jeff, around the payday lenders.

That's a really important piece to understand. The delta in the interest rates there is massive and game changing in a lot of ways. It's a terrific piece to reporting. As always from Jeff Green, Managing Diversity reporter for Bloomberg. He joined me on the phone from Michigan. Check out that story in the upcoming issue of Bloomberg Business Week. Can read it now on the Bloomberg and Bloomberg dot Com. My thanks as well to Joel Webber, the editor of

Bloomberg Business Week. He joined from Massachusetts. This is Bloomberg Business Week with GARYL. Masser and Jason Kelly on Bloomberg Radio. All right, you are listening to Bloomberg Business Week, kicking off the three pm Wall Street time. Our Let's do a little business week economics if we can. Andy Brown is with this, editorial director for Bloomberg New Economy, joining us on the phone from New Hampshire, picking up where

Doug Chrisner just left off. When it comes to TikTok Man this deal, and we've talked about it before, Andy is just headspinning, head scratching, however you want to put it. It's nothing like we've ever seen before, and it ain't over when it comes to getting done. What's the most important thing we need to understand about this because as I look at it at least, and I think you may agree, it's kind of a mess. It is a complete debacle and has been really right from the very beginning.

And stuck in the middle of this U S China geo political tug of war is a company and investors that are desperately trying to figure a way out. On the one hand, they this is TikTok and its parent

bike Dance. On the one hand, they've got the Chinese government, which essentially looks at what's happening as a politically inspired smash and grab raid by the Trump administration, and on the other hand by the Trump administration UM which is using the TikTok issue and we chat as a chip or as a bargaining chip in uh in in domestic politics, essentially beating up on China as a vote getting vote,

vote getting ploy. And so they've been twisting this way and that way, and it now looks like this deal that they stitched together, which by the way, gets Trump almost nothing of what he wanted in the first place out of it. Um, and even that deal now looks shaky.

It's not at all sure that the Chinese side are going to sign off on it, or whether Trump himself is satisfied with it, and so, knowing the intricacies of the governments and that nexus between the national governments and the national champions as it were, both of which I think you can argue you have on either side here. What went wrong? Was this just sort of too hard, too fast, or was everybody not on board to begin with?

Like what do you make of it again, especially knowing some of the nuances of how each side interacts with the other. Well, it just the whole deal is is unprecedented. Um. We've never had a company caught up in this way before with kind of m and a UM being dictated literally out of the out of the Oval office. Um. So it's it's incredibly it's incredibly difficult. There are so many constituencies that need to be satisfied. Um. And in the end it looks like nobody is gonna be so.

So Trump came into this, he said, look, I've got three things. Number One, this TikTok has got to be owned by a US company. Number Two, we have to make the data secure UM so that doesn't foll into the hands of the Chinese companist party and they have all this personal data on on on the US population. And three we want to have a big chunk of change.

They're going to make a big payment to the U. S. Treasury. Well, actually, even under this new deal, any percent of the company after the I p O if it i p O S is still going to be owned by by byke Dance UM. The algorithm UM are going to be open to inspection by Oracle, the trusted technology partner. But it won't they won't in that sense sort of belong to any U S entity. Bite does has them and asked

for this five billion dollar payment that Trump talks about. Um. You know, it turns out that this is kind of tax that they were going to be paying anyway to the U. S. Government. And there's some sort of vague, nebulous promise that they'll come up with a kind of some kind of patriotic education program, whatever that may mean for for US kids. UM. So, so he's got he's

got actually very little of what he pushed for. So if if your concern with national security, this deal doesn't really do it for you, And so as you widen the aperture a little bit and think about this from the context of ongoing tensions, ongoing negotiations around trade and the broader relationship when the U with between the U

S and China, what does this tell you? You know, if you're a Chinese company and you're thinking about making an investment in the US, um you're thinking strategically indeed about your global position. Or if you're an American company now and you're thinking about, you know, the China market and how you should be positioned there. This should really worry you because because it has been so unpredictable. I mean,

we're in we're in uncharted territory. Um, there are no there are no real rules, at least under the old system, the CIFIERS system, this sort of you know, the screening process. Um, it was somewhat predictable. You knew what you were getting into. A lot of deals didn't get done because companies thought to themselves, well, it's not going to get through the U S screening committee, so we won't bother. This one just came right out of left field in surprise, surprise everybody.

And so on the other side, if you're a US tech company, what do you think about this? Well? So, and actually it's not just tech right now, there's there's uh, there's a lot of talk about an entities list. So the Chinese could actually come up with a list of companies that could be subject to retribution, not necessarily US companies, So that could include tech companies, but banks, um, trading companies. Um. You know, China hasn't retaliated so far because it really

needs foreign investment, it needs foreign technology. Um. But but you know, pushed, pushed far enough, they actually could start to take action against US companies, international companies in China. Wow. All right, Andy Brown, thank you so much. Andy Brown, of course is the editorial director for Bloomberg New Economy. He has been breaking down this deal trying to make sense of it alongside the rest of us. I have to say, Uh, this is something we've watched incredibly closely.

We've had a global team working on it from all angles, corporate, dealmaking, political, international. It has touched all boxes and cantinues to evolve and change in this week. Seems like it will be a big week when it comes to that deal happening or not happening, And obviously a lot of it just comes down to the President United States and what he decides to do when it comes to TikTok our. Thanks to Andy Brown. This is Bloomberg Business Week with Carol Masser

and Jason Kelly on Bloomberg Radio. Happy to welcome to this program. Pete Stavros, he's co head of America's for Private Equity for KKR. Heard of it. It's one of the best known private equity firms, and it's a firm that has been talking a lot over the past years about its various stakeholders, and that includes employees. At a time when we're more and more concerned about all of the constituencies involved in a company. Pete, you've got some news today to share with us about what you're doing

with some of your portfolio companies. First, welcome, tell us what's going on at Ingersol RAMD. Thanks for having me, Jason. So today we celebrated a hundred and fifty million dollar equity award to non members of management. So these are mostly hourly employees who work in our factories and our

distribution centers and earning ourly hourly wage. This is on top of a hundred million dollar grant we did at our I p O in two thousand and seventeen, which because the stock has performed so well, is now worth about a hundred and seventy eight million dollars. So you add both those up, it's more than three hundred million dollars of equity in the hands of hourly workers, and

so very meaningful financially. And you know, we've got lots of kind of personal stories we've been able to to hear firsthand in terms of what it's meant for them, and then just as importantly in terms of outcomes for companies and for our investors. You know, we see higher employee engagement, better returns, better results, and better outcomes for

our investors. Well, and let's talk about the personal side of this, and I'm going to start with you, because part of the genesis of this, I think is your own history and sort of growing up and understanding the industrial landscape, not just as now an investor, but as a kid from from your dad. Yeah, that's right. My my dad was a construction worker. He operated a road grader for his whole career in Chicago earned an hourly wage, and you know, I just saw firsthand the lack of

incentive alignment. And if you think about it, if you're an hourly employee, really all you care about are getting more hours, so that can be at the expense of efficiency. If you're too efficient, you may work fewer hours and earn less money. And there was just constant conflict around hours. And my dad always dreamt about, you know, shared ownership or profit sharing at his um construction company with his union, and you know, unfortunately never happened, but that's certainly really

stuck with me. And then as a graduate student, you know, years later, this is not still twenty years ago, but as as a young adult in graduate school, you get a lot of flexibility to study what interests you. And I had an opportunity to study broad based ownership for my second year in business school. And there was a hot topic in the nineteen seventies around ESOPs had really kind of cooled and I was interested to learn why it interest dissipated. Could it still be relevant today, could

it be relevant to private equity? And then when I joined KKR back in oh five and and was fortunate enough to step into a leadership position running industrials. That was when I was able to kind of first put these ideas into action. And it's fascinating too because this, and I'm just gonna say it out loud, this cuts against candidly that the public profile of private equity uh in many ways that tends to enrich a few and

and not think about the rest in many ways. So I do wonder what the conversations are like as you engage companies around this. Are they looking at you like, I don't know about this? Yeah, we do encounter some some skepticism, you know, maybe even some cynicism. Some of our companies we are buying from other private equity firms, and so we do get a little bit of I've

been around the block. I've seen this before, you know, and I just don't believe that we're going to share an ownership and you're gonna do all these things you're telling us around investing in the facilities and investing in employees. So there is some uh, you've got some wood to chop at the outset. We overcome it by bringing in c e o s from companies that have run businesses for us before and telling them that this is this is real, We really mean it. We also do a

lot to make that ownership feel real. So we print physical stock certificates. Often we will open up Fidelity accounts for people, even though the stock of their company might be private and not publicly traded. You know, we we do as our valuations internally changed for that company, we flow it through Fidelity and then they see value being created in their portfolio. So but but I have to say, even public companies Inger saw Ran, the predecessor company Gardner

Denver when we took it, is a public company. In six thousand employees, eighty six people had ownership, which is very typical. One to two of a company typically takes up all the ownership. And so you know, even in public companies, we do come up up against the skepticism you're talking about. And so talk about other elements of this, because obviously the financial element is super important. But one

of the things that we're increasingly talking about. We talked about it earlier on today, and it's part of the Business Week issue this week is not just about shared ownership, but basically sort of a holistic view of someone's finances and creating wealth and and I believe you've done some work with Operation Hope. John Brian Hope, John Hope Briant excuse me, has been a guest on this program. Uh, tell me a little bit more about what you're doing there.

You're right, it does have to be broader than just ownership, because if it's just ownership and you just hand out the ownership and that's the end of the conversation, that's just compensation. And if what you're after is a better employee experience, more engaged employees, and better ultimate performance in the company, you've you've got to be broader than that. So even as it relates to ownership, the CEOs who do this well in our CEO of ingersoll Rand is

exceptionally good at this, Vicentia Reynal. You've got to treat people like owners So you've got to share the business plan, share the vision where we headed, how are we going to get there? How are is everyone going to participate in the upside, you know, assuming we achieve our plans.

But then beyond ownership, we do things around investing in the workforce, um improving the work environment, which starts with the basics like employee safety, but also we've extended to you know, we've brought in healthier food options to our manufacturing plants. Right now, we're building an on site medical clinic at one of our facilities because the employees have complained about having to drive so far for you know,

basic um medical care you mentioned John Bryant. We work closely with Operation Hope to do first personal financial training. I mean, if you're gonna get about ownership and have people really have a shot at wealth creation, they're going to have to understand what, you know, get some basic training on what to do with it um, and that ranges from debt repayment to understanding the earned income tax credit to you know, how to invest money, you know,

once they have some wealth. So um. The last part, by the way, is our companies also, I think do a nice job of engaging with the community. And this is all about building pride in the organization, showing employees, hey, this is about more than just making money. And so we've we've struck a number of really exciting partnerships with nonprofits as well. So, Pete, I would be journalistically negligent if I didn't ask you about the broader private equity world.

You guys at KKR have been exceedingly busy. I think it's fair to say, putting a lot of money to work, doing a lot of deals during a time when the world is, to say the least, topsy turvy. What are you seeing out there now? Six months into a work from home environment where the economy remains a little uncertain. The stock market remains pretty resilient today, notwithstanding what are

you seeing out there? Yeah, we were. We have remained active both on the investment side and on the distribution side, returning capital to our investors, and we're proud of having been able to accomplish both during this this COVID period of time. In terms of what we're seeing right now, you know, in the economy itself, it's as you would expect. There are some things doing well. Um, some aspects of

retail are actually surprisingly doing quite well. Anything around housing, if you look at the exodus from urban areas to suburban areas, low interest rates, strong housing prices, anything touching that, building products, etcetera doing really well. Anything around travel, leisure, aerospace, people making manufacturing aerospace components. Obviously a much tougher environment in terms of what we're looking for. We're looking for either secular trends and themes we really believe in health

and wellness, E commerce, etcetera. Or areas that are really in the crosshairs of COVID that if you've got a ten year horizon, you know you're gonna there's a lot of growth from here. Might not recover all the way back, but there's a lot of growth from here. So things like we invested in US Foods, great business that serves restaurants as a distributor. That's something that with the fullness

of time, is going to come back. And so as you look at the end of this year and into twenty one, what's the biggest challenge for you as an investor? The biggest challenge I would say is just the lack of visibility. I mean, everything is changing so quickly, and there's so much going on between you know, you've got a potential spike and COVID coming, you know this fall, you've got the election, You've got trade issues with China.

I mean, there's just a little bit. It's coming at you so fast it can be hard to separate the signal from the noise. I would say that's the biggest issue, and investor's got is the amount coming at you is a little bit, you know, unprecedented and more to come on this program where equity continues to go uh in deeper into the organizations you own. Definitely, this is something we're continuing to expand experiment with, try and constantly improve. You know, we we understand that this is not a

perfect fit for every sector. You know, if you take retail as an example, average employee turnovers ad percent a year. If you walk in and start talking about a five year business plan, that's not going to be effective. So so yes, it's this is here to stay for us. We are going to be expanding it and continue to experiment with it. But again we're you know, we we understand that it's not going to be right for every situation. Alright, Pete stavrog is really good to catch up with you,

cohead of America's Private equity for KKR. A novel solution to spreading the compensation and the ownership throughout the economy. My thanks to him. Journal. Yeah, but you let me do oh no, no, no no, no, home an please, I'll do the right vel. Ex I want to drive, just drive the question trying. This is the drive to the globe Commune. Thanks, we'll drying us down on Bloomberg Radio.

It is time for the Drive to the close with us as Dave dona Vide and he's chief Investment Officer of CIBC Private Wealth Management roughly seventy four billion in assets under management, on the phone from Baltimore. Hey Dave, nice to have you here with Jason and myself. How

do you explain the selling today? How do you see it? Well, I'll tell you it brings back bad memories from the COVID bear market of Februarrian March, not just because of the market down, but um, you know, we've got about of the stocks in the S and P five under it her up and it's the old stay at home stocks. It's e commerce, it's comfort foods, at home, entertainment, video gaming,

even testing labs. That's about all that's up. And if you look at what's kind of getting crushed today, it's airlines, casinos, cruise lines. It's UH again rings very familiar to the dark days of Feborrian March, and so in some of that obviously emanates from the UH concerns coming out of Europe about a resurgence of of COVID nineteen and the notion that maybe again what hits there first will we'll we'll come here next. Right, a reminder we're not out

of the woods yet. But having said that, we are off our loads of the session, our investors still out there thinking, okay, when there's a pullback, it's an opportunity for me to get in. I do, I do think that there there is definitely a significant you know, by the dip constituency out there, and the support behind that

is liquidity, liquidity, liquidity. Right, there's the usual wall of worry in the market, what you know, what to worry about, like COVID and the economy and and so on, um, but the onslaught of liquidity provided by the Federal Reserve another central bank is kind of a constant reason to want to look to buy the dips. And so when you think about the election, it's forty three days away, as we keep reminding people today and we'll probably remind people as it gets to forty two and all the

way down. How much does that figure into your calculus here and how much pause does it give you in terms of making any big moves. Dave, Yeah, I think that, you know, maybe the most important investor trait when you're considering marrying election implications to the market, maybe humility, simply because it is so difficult to forecast all the variables correctly.

You know, wh who's going to win the White House, who's going to control the Senate, what will the immediate market reaction be, which sectors will will be, you know, kind of winners and losers. Threading that needle is ext really difficult, so we tend not to do a lot of positioning around election results. I will say, though, that the interplay between this Supreme Court battle and the election,

I think does ramp up the potential volatility here. And that's because I think that the the fight over this Supreme Court seat is going to suck all the air out of Washington for the rest of the year. And I think it's now very unlikely that we see a significant fiscal support package. It's just been pushed to the side, and and that that is in the short term anyways, somewhat troubling to me, because I think the economy needs some of that to sustain his momentum through the fourth quarter. Yeah,

I mean, it's interesting. Every economist we talked to it's not a matter of like, well, maybe you can make an argument against it. Just about every economist will tell you something more needs to happen. And I think we also worry, as you said at the top of the conversation, about a second wave, and if we see you know, furloughs or layoffs or slow down in spending, you know that's only going to become more pressing. Yeah, I think that's right. There's still an incredible amount of impairment in

the economy. You just look at the number of of unemployed and a trend towards you know, the percentage of unemployed essentially being long term unemployed instead of just furloughed. And um, you know, we have this remarkable situation now where you know, g d P has been clabored, but disposable income is still up. That's all because of government support. Without that, um, you know, we would we would still

be in a in a recession. That was what was getting worse as opposed to the beginning of a recovery. So this is a bit of a going to be a bit of a high wire act for the fourth quarter. Okay, yikes, So the potential to stay in recession, go back into recession I don't know what's the scenario. What are you what are the scenarios that you guys are playing out at your office. Well, the way I view it is, we were not in recession anymore. We're we're in recovery.

And we'll see that, you know, kind of verified with third quarter, big jump in third quarter gdp UM. The question is when can we get to expansion? You know, when when? When? How long do we have to go before we just recover what was lost from COVID nineteen. I think that is probably you know, sometime late into one and and if things don't go well, you know, in the fourth quarter, you know, we're probably looking at two before we can even think about um an economic expansion.

And that leads me to think that some of the quick upward revisions that have been having to corporate earnings maybe maybe ahead of themselves. Well, the Feds already told us right that they're going to keep rates low, and of course that can change, but they've said low for a long time. I mean, it's just kind of more of what we've had, you know, post financial crisis, but it just potentially continues for even longer. Yeah, I think

that's right. I mean you can't ask too much more of the Fed in terms of clarity over not just the months, but the years. But I think there was the assumption that there would be some some fiscal support

along away here, and that's what's really come into question now. Well, it seems like there was that assumption from j. Powell and his pals, So you know, they've been sort of saying it, whether it's in his testimony or whether it's in his statements or his statements to the press and his colleagues as they've talked to reporters and given speeches, etcetera. All Right, Dave Donavidian, thank you so much, Chief Investment Officer for c IBC Private Wealth Management, joining us on

the phone from Baltimore. Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, South Cloud, Bloomberg dot com, but 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.