Preparing for Potential Coronavirus U.S. Outbreak

Week on iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio. Let me throw out some numbers for you. More than eight two thousand hundred coronavirus cases they have been reported, with more new cases being reported outside China than within the country for the first time, highlighting the spread of the epidemic. Now, the first US case of the virus was confirmed in Washington State at

Providence Regional Medical Center in Everett. That hospital is part of the twenty five billion dollar Providence St. Joseph Health System, which includes fifty one hospitals, more than eight hundred clinics, and a hundred fifteen thousand caregivers. Dr Amy Compton Phillips is chief clinical officer an executive vice president at Providence St. Joseph Health Health, and she joins us on the phone from Everett, Washington. UM. Dr Compton Phillips, nice to have

you here with Jason and myself. So how do you now prepare for maybe what's expected in the US and what are your expectations for the virus spread here in the United States? Thanks so much for asking. Our expectation out here is that this virus is now circulating in the community and we need to be prepared for for in FLUXI patients with symptoms UM. And so that includes making sure that that UM all of those access points in the community, so doctor's offices, we have express care clinics,

and Walgreens, we have urgent cares. All of those need to be prepared for people with symptoms UM. So we're really revving up our capacity not only to take care of patients when they come in, but also our online capabilities helping people have access to care through phone and through video visits so that they can get care from home and minimize the risk of transmitting the virus further UM.

And then in our acute care hospitals we're making sure we're prepared not only to keep patients isolated as we need to with any person with infections with that can be transmitted through respiratory droplets, um, but also who may need more intensive care, so with respirators and ventilators and and more acute services. So it really is an all out attempt to make sure that we're ready and able to care for patients should this get significantly out of control.

So Dr Cometon Phillips, obviously there's a whole lot of information, a lot of misinformation out there. Help us understand just as sort of human beings in the world, what should we be doing. What are you advising folks to do to to minimize it, but but also to sort of deal with this as this potentially spreads. Sure, well, I think the key thing is, right now, don't panic. It's one case. Does not mean you know, we have an

epidemic here in the US. Um, it is like a very bad flu bug and people we've been dealing with the flu, and nobody is afraid of the flu, right, Um, so is this much worse than the flu? I think that's what we're trying to understand a little bit. It is a more severe version. Um So, it causes very similar symptoms. It causes fever, headache, cost shortness of breath. Um it's just so far in the statistics out of China, which we'll see if they play out here in the States.

Um that of the people who get this infection about get a severe case. Um So it goes from from the average flue symptoms to having a cost of severe and short espress of severe you actually need supplemental oxygen um and in two and a half percent around the more between two and three percent of cases, it gets so severe causes death. Um So, one in five patients getting this infection in China needed needed much more acute treatment.

And that's significantly worse than the the statistics in most years. Um So, it is like a very very virulent proof. One of the challenges is that, um, you know, most of us don't have antibodies to this version of coronavirus, and so being a novel infection, there's not any kind of what we would call herd immunity around where people are are more resistant to this journ and so and you described a little bit of what you guys are

doing at your facilities. Um. You know, what should people expect if they go into a doctor's office or a hospital in terms of how they may be quarantined or how they may be treated. Yeah, what we have been doing up until yesterday is asking about travel history and and if you if you have been traveling, We've been

asking you in h year isolated. If you're traveling and have symptoms, we would also um uh put you in a specific kind of isolation rooms, including negative pressure rooms, so that we could do a test safely and send that test off to the CDC UM or or to the state departments, depending on where we are, if the state department has capacity, UM, so that we could actually

do this new test for for COVID nineteen UM. That said, now that now that we have at least one confirmed case in the US, UM, we're working with the CDC and with our departments of health in each state to say how broadly do we need to be testing patients here on the West Coast, which tends to be UM ground zero for infections that are coming over from the Pacific rim. I mean, have we learned something from treating that first patient that you guys, UM that actually was

in your hospital system. We we have UM We've learned a couple of things. One is that in our first patient, and now we've treated several patients, but in our first patient, UM, he actually didn't quite well for several days and then to return for the worst UM. And so we know that we can't just we can't just write it off and say you're going to be fine. We actually are are being a little more cautious and watching people, so we know what the natural history of this new disease

looks like. UM. And the second thing is that we were again in conjunction with the CDC and and UM several several of our national international experts, UM, we were able to get him access to an experimental drugs which made a big difference in his care. All Right, listen, we really enjoyed UM talking to you and getting UM your firsthand experience with all of this. So much appreciated, and I know our viewers and listeners appreciated as well.

Dr Amy Compton Phillips, chief Clinical Officer and Executive vice President of Providence St. Joseph Health Health, on the phone from Everett, Washington. All right, so to me, this is one of the stories of our time. In many ways, the expansion of access to different kinds of investments, and

we talked so much about it. We talked about the private markets, the public markets, and and it's really an important question as we think about our own retirement, as we think about institutional versus retail for yield in a low yield environment. Absolutely so, right at the heart of it. Uh is in this discussion, as often is, is near a case our columnist for Bloomberg Opinion joining us on the phone from Washington, d C. And you're great to have you back with us. Thanks for having me, Jason.

All right, so give us the set up here. I love the headline, mom and pop should be free to skip private equity, which is sort of a provocative statement in the sense that private equity really wants these guys. And there's also been this sense that retail investors want to get a piece of this. You have a little bit of a different take. Yeah, I mean, you know, there's a yeah, there's a movement now to try to

democratize private equity. Um. You know, I make an observation in the column, which is that you know, if you if you say to people, market should be available to everyone.

You know, everyone should have equal access to market. That would be a pretty you know, banal statement in most respect, but when it comes to investing, it's hugely controversial because we have this idea that we need to put gates around certain investments to protect ordinary investors from themselves, because they're presumably not sophisticated enough to to have access to certain corners of the market. That includes private equity, that

includes hedge funds and other in other places. The problem is that these gates eventually come down. They don't last forever. And we're talking now about giving access to ordinary investors private equity, which I support, but inevitably what happens is these gates come down too long. It takes too long for these gates to come down, and they come down after everyone else has feasted. And in this case, you know, private equity has been usually successful for the last three decades.

Valuations are very high, and I worry that ordinary investors are going to be invited at the party just in time to get hurt. Well, that's what I love, you know, you know how we kind of look for peaks in the market and signs, and I feel like Sam's l sold his reat, you know, just ahead of the financial a crisis and mortgage melt out were like, all right, that was a peak. I do wonder if we talk about so much money that has been, um, you know,

gathered by the private equity firms. We talked about all the dry powder that they have, and I do wonder if it's you know, a sign also along with the reaching out to more regular investors, that maybe it's a sign of the pe top I think it is, Carol. I mean, there's there's two different ways I think you could look at that. One is just objectively at the numbers.

I mean, you look at the valuations pe there twice what they were twenty years ago, UM and also obviously relies heavily on leverage, and for the last three decades you had this secular trend of interest rates going from you know, very very high levels in the in the mid to late nineteen eighties to what they are now, which is on the floor. And when you take away those head winds, it's just difficult to see how private equity is going to be able to put up the

numbers that it has in the past. And when you look at projections for private equity going forward, I mean there are some some people who think that returns are going to be even lower than what you're going to get from the S and P, which itself is not

particularly cheap. But there's also to your point, Carol, there's also this mechanism, this is stealing that you know, the smart money knows what it's doing and and and when it when it owns rich assets, you know, maybe the thing to do is to is to dump it on unsuspecting ordinary investors. And so there's a feeling that that's

happening to right. Well, it's interesting too, and here I think you point out point this out in your calm as well, that not all private equity is created equal to and and sort of ripping on your lead with your your ground show marks quote about I don't want to belong dating club that would have me as a member. You know, part of it is which private equity funds you could get into, because the really exclusive ones maybe they don't want to make room, you know, for other investors,

because they've got all the money that they need. So not everyone's created equal here, right, that's right, And I think that's where you really have to distinguish, because you know, in private equity and particularly adventure, there's a big difference in the distribution of return um if you look at if you look at, for example, what the returns of the most successful private equity investors get, it's it's it's orders of magnitude greater than what the than what sort

of like the average private equity returns are. And so there is also there there is also the feeling that as private equity proliferate, as fun proliferate, that to the except that they're going to be available to ordinary investors, or the ordinary investors are not going to get the top of the line access exactly. That's a further problem. All Right, we're gonna leave it. They're always good to catch up with. You love your columns in Your kids

are columnists for bloom Grade Opinion, founder of Unison Advisors. Yeah, and that's exactly what abortion clinics are facing. They're getting nickel and dimed out of business. This is a fascinating story. It's my must read in Bloomberg Business Week magazine. Rebecca Greenfield is in charge of the diversity coverage here at Bloomberg News. This story reported by her and Cynthia Coon's Rebecca's here in our Bloomberg Interactive Broker Studio. As I said,

it is my must read. What's going on here? Thanks for having mem Yeah, so we looked into the business of being an abortion provider in UM as you know, you know, with Donald Trump and the White House and a more conservative court, the climate on abortion is definitely changing. We wanted to see what does that mean for clinics

and what is their business like. And so our story really digs into really how hard it is to run a clinic these days, and not just because of the laws or the political climate, but because of the business climate. We'll talk to us a little bit more and what that means. Yeah, so there are restrictive laws, and those laws oftentimes do make it costlier for clinics to operate, But then there's the general culture of fear and stigma that makes other business owners not really want to work

with the business of abortion provider. And let me just jump in because you do talk about one individual in particular, Amy Heckstrom Miller Um, who is I think, in your words, de facto legal guardian of the choice movement. But she has talked about this abortion tax right, and this talk gets into some of the additional costs on running a clinic. Yeah, I love that phrase, like she she took, but yeah

for to her. Listen the abortion tax the way she describes it, And what we found is kind of a litany of search charges or increased costs or general nuisances that make it more expensive to operate just because you're in the business of abortion or just because you're an abortion provider. So that can be anything from as little as your local plumber doesn't want to come work with you because he's scared of being targeted by protesters or because he doesn't want to work with an abortion provider.

But we also found some bigger examples of this. So we found UM insurance companies dropping abortion clinics or not renewing their policies UM from their Business and Compliance insurance UM because they I mean potentially because they were fearing greater risks that these clinics might face in the giving climate that we're in now. And also banks declining loans. I mean that's a huge deal. Banks declining loans for

people who want to open up clinics. It's really hard for these clinics, and it's kind of all wrapped up together. You know, you can't just say, oh, the bank is saying I don't want to be in the business of abortion.

The bank might be saying that. They might be saying that there they don't want to get into the business for business reasons, because it is all tied up in this stick right right well, because often these are essentially even in this globalized world community bankers, you know, they're thinking about their other clients and and things like that.

And as you say, uh, sort of sort of that spreading around you and Cynthia Coon's worked on this, it feels of a piece with a lot of the work she's done and you've done, put it into the context of sort of everything else that we're seeing in a in a changing world, it feels like, especially around both women's health and reproductive health in many ways. Yeah, like I said, we definitely came at those through lens. You know, people have written about abortion before, we've written about women's

all before. But we really feel like we're in a moment right now, um, where the legislator looks different, where the courts look different, where things might actually change, and um, there's actually like a long history of these tactics and the kind of building to this moment now. So that's really where we thought this piece fit in. I wondered because you know, we talked earlier this week about a couple of stories. Of course this story that's in the magazine,

but you know, putting together getting your head around. Okay, here we are, how many decades since Roe v. Wade, Right, And you would think that running a clinic would be an easier business to do or easier process. It's not. And yet at the beginning of the week we had Harvey Weinstein, right, uh, and so the charges against him, the verdict um and also doing some time and you know, the whole me too movement. We have actually in the

last couple of years made some progress on that. So it's kind of you know, kind of these mixed blessings progress on that. And yet when you look at what's going on with abortion clinics, we're sliding backward. Yeah, it's it's a really dissonant right for this. So next week the Supreme Court is hearing um arguments in an abortion case that's really similar to an abortion case that they

heard four years ago. And it's really I mean, it's potentially they could decide in the favor against the abortion clinics, and yeah, that would be a huge backslide. Basically four years ago they had this big victory and then it would be a backslide. Um. And then you put that against yeah, the whole me too movement, and that's kind

of a grassroots movement. It's very pressuring companies. Um. We saw some movement in the criminal justice system with Harvey Winston on Monday, But I think, yeah, it's just this disconnect between basically like the laws and the court system and what I think grassroots movements are happening now well.

And public opinion obviously plays into this as well. Was so powerful when it came to the Me Too movement and the velocity at which that happened obviously with Weinstein specifically and all the sort of powerful people who ultimately came forward there. But then the way that it that it really went viral in a lot of ways. And yet as you say, on the other side, in many cases that has empowered uh, this other side going the

other way. Yeah, And we mentioned this this one statistic in the story where it's seven out of ten people according to a really reason survey, don't want to overturn movie weight. Um, so that is the public opinion here, of course, there's so much nuance and the abortion debate that does that statistic doesn't get at But I still think a lot of people would say they want most

abortion to be legal in many cads. You also talk about the role of social media and all of this, and that has proved I admit a lot of momentum for the anti abortionists. Yeah. I don't know if you guys, do you remember we talked about this moment but in when those videos came out that purportedly showed Planned Parenthood selling um doing illegally selling field body parts and then it turned out to be a false claim and edited videos, and that moment I remember being such a huge deal.

It also feels like it was much longer ago than to me. But in our story we found how impactful that was in the movement. It wasn't just a way to get people to kind of rally against or behind or for a Planned Parenthood, but it also motivated these anti abortion activists to target medical waste companies because they were saying, oh, yeah, these medical ways companies do work with abortion providers, and if we can get them to stop working with abortion providers, it will be really hard

for those providers to do business. All right, Well, it's a really powerful story. Uh, Carol's must read. Uh. And further conversation with Rebecca Greenfield on our can show this weekend catch that starting Friday night, both an analysis of this story and a little more conversation about the impact of the Weinstein verdict, another story that Rebecca and her team have been falling very closely. She oversees all of our managing diversity coverage here at Bloomberg News. Our thanks

to Rebecca Greenfield. Alright, so mid all the talk of markets. Companies continue to roll along, make decisions, People continue to come and go, and on the going side, a couple of people leaving some key roles over at Apple. And when we think about Apple and wanting to know exactly what's going on there and what it means, there's only one guy for us, that's smart German. He joins us from our Los Angeles bureau. I was delighted to catch

up with him briefly earlier in the week. So Mark, tell us what's going on over at Apple that we're talking ops and supply chain here. Yeah, Hi, Jason, get you two? Yes, so too, Long time operations VPS, which is basically the highest level you can be in the Apple you know, in the Apple ranks other than a senior VP or the CEO, CEO, etcetera. Have left the company. One person named Nick for Lenza has retired. The other do Go Pasmog is planning to leave later this year

and discussions about his exit. And they've both been very key to the manufacturing and supply chain, like you said, around nearly every major Apple product that you can think of. So how serious is this? Like, what does it mean? How do I read this as an investor? Yeah, this isn't the end of the world. This is like Jason said, it's the comings and goings of any corporation. People come,

people go. But these were you know, the two notable names internally who who supervised you know, hundreds of people and oversaw lots of manufacturing. So it is you know, significant front from that standpoint. But does this change anything long term for the company? Does this have anything to do with the coronavirus of the trade war that's in

now well? And are you point out in your story, which I think is really important for for folks to remember and understand, that operations has been the core of Tim Cook's Apple, right I mean, this is what has really helped this company extend its lead over its rivals to expand. This is the cornerstone of the strategy. So when people leave in this business, maybe you know, back in the day and the Steve jobs Apple, you know, people have been like, it's an ops guy, you know,

don't worry as much about it. But this this is the core of the strategy here, yeah, Apple, and it's core is operated or run by operations people. I should say three of their most senior people on that senior executive team come from operations backgrounds. Like you said, Tim Cook as an operations guy. His number two, Jeff Williams, is an operations guy. They added a new operations person to the executive team that sort of replaced Johnny. I've

on that executive leadership team, Sabby Khan. So this is an operations driven company and it's you know, for a long time the company, his division for ops hasn't really seen much shifting at that top level. But now you're seeing two people you know, coming and going in a very short period of time. So Mark got to ask you from a supply chain perspective, obviously, lots of people have been talking about Apple through the lens of the

coronavirus and the impact there. They've made some changes. We've talked to you about it over the last year or so, especially in light of the trade war, help us understand the impact on supply chain and operations that the coronavirus is having. Now. So I think the impact is really going to be in the month of March and potentially in April. What you're going to start seeing is Apple running out of iPhones at a lot of retail stores in the United States, Europe, etcetera. So the impact is

going to be there. But obviously people are now coming back to work, things are starting to ramp up, and there's about a four to six week lead time, right, so you're going to see some impact for the next two months. But I think after those two months things are going to start being uh, are going to start to clear up and things should be fine. But you know,

there is some concern about the next iPhones. There is concerned about some of the engineering work because these things are developed hand in hand between Cupertino in China not being able to be done. Um. But not not to be too optimistic, but I honestly I don't anticipate any big, you know, shifts away from the iPhone normal September launch time for him because of this at this point. So it's not gonna okay, so it's not gonna mess anything

up ultimately. Longer term here, I really don't think so. Uh what we're seeing now were some conferences being canceled. Souple was going to hold some sort of you know, product launch event in March. I would anticipate that would be sort of maybe like a press release situation instead, or maybe at a smaller sort of a smaller gathering. Other than that, I really don't see a long term impact alright. I just want to bring you a red headline crossing the Bloomberg right now has to do with

some of the key Canadian exchanges. Uh TMX exchanges, including the t SX the Toronto Stock Exchange have been halted. Trading there have been halted due to some technical issues. That redhead crossing the Bloomberg just a few minutes ago. So we'll bring you more as that develops. But you know, obviously an important market, an important series of index the technical halt and now it's going to be closed for

the rest of the day, that's right. Yeah, we're turning the t S T s X, t X, t s X V excuse me, and t s X Alpha exchanges. Technical halt was declared and TMX now saying that the technical halt to remain for the rest of the day on the t s X the Toronto Stock Exchange. So

more on that as it develops. Our thanks to Mark German out in Los Angeles Tech Reporter bringing us the latest and greatest on Apple, as we said, some comings and goings as it relates to some top executives there, and a nice update from Mark as well on the supply chain, because if you think too last week, I

think was it last week? You know, Apple was really, you know, among the first to come out and say here's how this is going to affect it being the coronavirus our operation, you know, sort of shutting some things down, and they talked about lower sales obviously in China right because their retail outlets were closed. So it totally makes sense. But I do wonder be coming off of US China trade war, coming off of the virus. I really do think there is a major rethink potentially going on when

it comes to supply chains around the world. Oh journal, Yeah, but you let me drive. Oh no, no, no no, non, please, I'll do the right drivel. I want to drive, Just drive, baby, it's the questions. Drying. Yea, this is the Drive to the Globe community. Thanks well, Drying us to Dawn on Bloomberg Radio. All right, it's time for the Drive to the clothes on a Thursday, pretty ugly thursday here on

the markets. Norm kindly back with us CEO and c I O of JAG Capital Management, looking after about one and a half billion dollars for clients, joins us on the phone from St. Louis, Nor. I'm great to have you back with Carol myself. Oh, thank you, so glad to be here. All right, So what do you make of a week like this? I know we're gonna talk about some big caps and some names that you're following, But how do you assess this? What are you hearing from your clients as they you know, look at so

much read over the course of this week. Yeah, I think it is it is nerve racking. This is this has been you know, uh in terms of depths of decline compared to you know, historical corrections. And we're not that deep at least not at least not yet, but over this short of a period of time, it's it's, you know, getting to be somewhat unusual. I mean, we're you know, after all, I think we were at fifty two week highs on there really all time highs in

the SMP five hundred about a week ago, right. So, uh, in just a few trading sessions, we've you know, we've fallen quite a bit as the as the fear levels of risin UM in terms of you know, uh, you know what I'm telling folks, Uh, you know, we've got to kind of I think, uh, you know, find a balance between you know, um, on the one hand, not being complacent about the virus risk, but on the other hand, uh not not not going too far in the other direction in terms of you know, fear. Uh So it's

it's an interesting time. If it wasn't uh such an unpleasant uh you know backdrop, it would be you know, fascinating. So how do you make sense of a normal an environment? Though like this? I do wonder is it similar to some of the steep selloffs and then bounce backs that we've seen I feel like several times over the last few years, especially when the market got a little pricey or got a little elevated. UM, you know, is it similar to that? Is there something different about this one?

I mean, I think many people safe to say, considering the run up that we've had in the past year, you know, it was looking four we're we're looking excuse me, for some kind of correction to bring valuations more in line with what made sense. Yeah, I mean this this, while it's unusual, it's it's certainly not um not unique. I mean, just to give one example, we had a uh back in in the in the late two thousand and eight summer of two thousands fifteen, UH, the SMP

had about a ten percent down draft in in four days. Now, if today ends like it is, uh like it looks like it's going to uh, this will be at about an eleven eleven and a half percent draw down in five days. UM. So you know, again it's somewhat unusual, but but not unique. UM. And and and here's the tricky thing. In the past, as you as you kind of allude to, UM, these short, sharp, relatively deep pullbacks, unless they occur during you know, an ongoing bear market.

You know, for example OH eight or early oh nine or uh two thousand, two thousand one, two thousand two. So with those exceptions, unless it's already unless we're already in a bowl market, the tendency over the next you know, uh, six months, twelve months has tended to be positive. Returns have tended to be positive and actually more positive than

all other periods of roughly six or twelve months. And so talk to us about some names that you're watching amid all of this norm Yeah, so, um, you know, we've on Mac Microsoft as one of our largest holdings for for several years. Microsoft selling off um still you know, still not a classically cheap stock, but in terms of being extremely well run company that although they may experience it, you know, and they told us they're going to experience a bit of a slowdown near time in their Windows

business because of what's happening in China. Um, you know, people are still going to use Microsoft software and solutions and cloud solutions and Microsoft Office on the I many years. I think you know that one looks interesting on further weakness. UM. Another one that that we've owned for a while and and really like it as kind of a a thought leader in retail, uh is Lulu Lemon, which I'm talking

to you now. Um, you know, it's off about seven percent today and and you know, my my educated guess is it's related to their China exposure because that is a, um, you know, a material part of Lulu's UM growth strategy. Yeah, that's been a huge effort over the past few years. We wrote a story about that in the magazine late last year and that was a really big push, especially when their private equity owner, their former private equity owner, Advent,

came back in right right, right, yeah. So so we like the management, we like their strategy. Um you know, we like their strategy with men'swear so to a certain extent. And I don't know this to be the case, but you know, as I look at my screen with several hundred tickers on it, you can see that those with the Chinese exposure, either actual or perceived, um you know, getting getting getting hit a bit, maybe more than than

most of the other types of names. So um, so I think you know, you know, I'm not pound of the table, like I said, we have to draw you know, a healthy balance between respecting what's going on and and and not being complecent. Well, I forgive me if I can just break in because we are seeing stocks take another leg down. We are definitely at our loads of

the session. We are now down officially a correction ten percent on the week for the Dow, the NASTAC, and the SNP five hundred of thousand points one thy one points, one thousand, twenty eight points lower on the Dow Jones Industrial Average, so we're down almost three point nine percent, down almost three point nine percent as well on the S and P five hundred. We are below three thousand on the s n P five hundred, and the NASDAC now looking at a decline of more than four percent,

down three d sixty eight points. So you know, this is two here, We've got roughly less than five minutes left to the closing belt and we're selling into the close. So norm, I mean, that's not a sign you want to see. You want to see a little bit of a bounce back. Yeah, we saw that a little bit earlier today. And my good uh good friends, a long time subscriber of the Spoke Investments and they just they just tweeted that, Uh, the SMP is only declined ten in a week four other times since the end of

World War two. UM April two thousand, September two thousand one, Octo October two thousand eight, and guess what October. So three of those other four instances were you know, in the midst of ongoing either at the beginning of or in the midst of ongoing bear markets. And this is, uh, this is kind of a standout. Yeah, absolutely, well, yes, certainly is standing out for all of us. Norm kindly, thank you so much for your time. Is always CEO and ce IO of Jack Capital Management, joining us on

the phone from St. Louis. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show every weekday at two pm Eastern only on Bloomberg Radio m