The Outlook for Reopening

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 get into the virus. We're so glad to have back with us. Dr Masha Adalga. He is infectious disease physician at John's Hopkins Center for

Health Security at the Bloomberg School of Public Health. On the phone from Pittsburgh and of course the Bloomberg School of Public Health, supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Radio. I'm Dr Adalge. Nice to

have you back with us. I gotta ask you something I want to jump to something that are Mike make Key did an interview with um I believe it was the head of the Dallas FED, and they said he said, specifically, we need a Manhattan Project, a federal initiative of testing and tracing in order to really get control of this virus.

Is that true? It is definitely true that we have to have testing and tracing basically as close to perfect as we can, because that's what's going to give people confidence to go about their lives knowing that that they're going to be cases out there, but those cases are

going to be handled appropriately. They're going to be found, they're going to their contacts are going to be traced, and we're not going to allow chains of transmission to go undetected and then still into our hospitals and create havoc like they did in New York earlier. So this is something that needs to be done in every state as we move forward in the air of the pandemic and so Dr Dolls, what do we know about reopening so far? What have we learned as we look across

the country, what's working? What should we be worried about or is it too soon to tell? We know that reopening just because that's going to allow people to socially interact will cause more cases to occur, and some of those cases will end up hospitalized. The key has always been about making sure that those cases stay to a level that's manageable by hospital. The virus isn't going anywhere,

and right now we haven't seen anything alarming. There are places where cases are going up, and we know that that's going to be the case. We haven't heard about any hospitals running into a problem where they are unable to perform their other operations or or other types or having strains on their personal protective equipment or mechanical ventilators.

So everything looks good so far. This is something we have to constantly be vigilant about them and continually look at and titrate our response in terms of what social distancing can be removed based on what's going on in the hospital. So so far, so good, But I think this is going to be something we have to eternally watched while this virus is around. What do you make of so far the pursuit of a vaccine. This is really something that is going at a very very fast pace,

faster than we've ever seen but four. We have multiple candidates in phase one and phase two clinical trials using innovative technology that wasn't available even a decade ago. But it's important to remember that even though we're going as fast as we possibly can, vaccine development is something that

is measured in years, uh not necessarily in months. And I don't think it's a good idea to wet ourselves to some exact date when we think that we're going to have a vaccine, because everything has to go perfect. We're just in phase one clinical trials for the most part, and we need to get more people studied. We need to understand all of the side effect profiles because remember we're going to be vaccinating the entire country or the even the entire world, and we want to know even

small side effects. And we have to think about the supply chain of things that are simple, like just the glass bials that you keep the vaccine, and we have to make sure that all of that is put into place because this is going to be an industrial scale scale vaccine endeavor like we've never seen before. How does making it a global effort though that with everybody focused on it, helped to reduce the timetable. As you said, we've got you know, there's certain things you just got

to have in place. But I do wonder, with everyone so focused on it, is it do something to that timetable. As you said, it usually happens in years, not months. But because of this concentrated and coordinated effort, at least just certainly feels that way. Does that mean we can expect it to be done much more quickly? I do think we will get a vaccine on a quicker pace than than we've seen with prior endeavors to make a

vaccine on the fly. And I do think that the global energy behind us, the fact that we've got multiple companies in multiple different countries all working on it, will help everybody learn from each other and see what's working, what isn't working. And you have individuals like Bill Gates talking about building factories ahead of time for different candidate vaccines.

All of that is going to probably make this the fastest time we get to a vaccine, and and certainly true that we've gotten to a vaccine candidate much faster than we have in the past putting things into get into phase one clinical trial. So I just don't want people to be over to get I don't want over promise or be overly optimistic, but everything is looking good. But I think we're going to have probably a period of eighteen months two years or so before the population

is eacinated. We may get smaller batches before that for healthcare workers or high risk individuals. Interesting, so, when you think about sort of the other two pieces of the medical stool here, and we've all come to learn things that you know better than anybody else around. You know, we talked about vaccine, but also when it comes to therapeutics, and when it comes to the antibody test, where are

we on those other two elements? Well? When so, the antibody testing is something that's been rolled out kind of in a staggered fashion, and you're starting to get more information that there are better kids out there. Some of the national lab chains like Question Lab Corps have developed prology tests that they're using as well. And the roach

test is very good. There are some there that have a high rate of false positives meaning you don't really have you didn't really have the infection, but it's still reading positive that we have to be careful about making sure that people don't use those types of testament that they're using, the high validated, highly validated one when it comes to therapeutics, I do think we're in a better position than we were, just even if you months ago,

there had been some positive views about ramdes Sevier, which is an experimental anti viral which received emergency use authorization from the FDA. This does seem to get people out

of the hospital quicker. It is not a fantasia, it's not a knockout blow against the virus, but it is one tool that can help us preserve hospital capacity, and it does give you hope that we can make other anti virals than There are people trying to work on antibody based therapies, not just from recovered patients, but also synthetic antibody. So it is looking good, but we'll probably see those types of therapeutics much before we will see

a vaccine. Dr Dolga, You know, here we are at this interesting junction, and Jason and I were planning for our weekend show. We talked a lot about this in relationship to Bloomberg Business week Magazine's cover story about reopening. There's so much discussion about it, you know, d Delay, do you go quicker? I mean, no matter what kind of reopening we do, there are they're going to be some individuals, right who will be at risk and some,

unfortunately we will lose their their live. It's just the result of increased social interaction, right, It doesn't matter when we start. Is that fair to say? Exactly? That's exactly the truth. And I think many people don't appreciate that the virus didn't go anywhere. So someone says, I'm gonna

wait till next week to get my hair cut. Um, there's nothing different going to be there because social distancing, the way that those stay at home orders were put in place was really and was really just to an eye in hospital capacity. It wasn't going to make things risk free. And nothing is going to be risk free

in the air of the pandemic. And people are going to have to think about what's important to them, what their personal hierarchy of values are, what what they want, what's essential for them to do, what's not essential for them to do, and make these decisions on their own about what risk they're going to tolerate. Because it is true that the virus is here, and now this is something that we have to incorporate into our own risk calculation. Every time we step out the door, we're talking with

Dr Amish Adalgia. He is infectious disease physician at the Johns Hopkins Center for Health Security, the Bloomberg School of Public Health, as you can tell by the name, the Bloomberg School Public Health supported by Mike Bloomberg, the owner of this RABI a station, founder of Bloomberg LP and

Bloomberg Philanthropies. So, Dr Dolgha when it comes to reopening, one of the questions that we hear all the time, whether it's around our dinner tables or when we are talking to folks, is about schools, both elementary school, secondary schools, and higher ed. We're seeing colleges say they're going to bring students back onto campus. What's your read on the plans so far? Schools are something that's very controversial, and even the closure of them back in March was something

that wasn't completely supported by everybody in my field. And we do know that school closures are something that have lots of negative consequences in terms of how do you how the students still learn? What about the students that rely on schools for meals? What about the students resocializing outside of school, especially as state at home orders are listed.

All of that's really important, and what's the the impact the marginal value of closing schools, And there hasn't been a lot of data that shows that there are effective and really at stopping the spread of this. They don't magnify it doesn't magnify this disease the way they do influenza. We know they get infected, we know they have the virus in their nose, we know they have lots of contact, but we haven't seen data of children driving the epidemiology

of that. So I do think that schools are going to probably be one of the first things that that reopen. It's going to be controversial, and right now we do have schools open, for example in Idaho and Montana, these private schools have opened, and I do think that that's going to be something that's done on the state by

state level. But I do think it should be one of the first things that we start thinking about doing, because there are lots of negative consequences to it and not a lot of positive data that actually shows that it's beneficial. You know, you've been working in infectious diseases for a long time, and I do wonder you know what change is going forward in terms of how we approach it as a society. I think for such a long time, certainly the developed world was like, well, that's

not something that happens to us. And I do think we are all changed dramatically because of this. I'm just curious, though you're much smarter than me on this, how do you see it? This pandemic has touched everybody. Often, infectious disease experts that that work on emerging infectious diseases and pan m A preparedness and biosecurity are often talking to

themselves more than they're talking to the general public. But now we're seeing how impactful the pandemic can be and how important it is to think about pandemic preparedness beforehand, to make those investments ahead of time so that you don't end up in the situation that we're in now.

And I do think that going forward, this is going to be something that people think about and and try to fortify, and hopefully this won't fall into that same cyclopanic and neglect that we've seen after anthrax or bird flu or H one N one or or Middle East respiratory syndrom, rozico or ebola, that these things come and go and they disappear from the headlines, and then policymakers

forget about them even though they're still there. Hopefully this, this pandemic and its impact will change that line of thinking. And what have you learned through through all of this, Like,

what's been the biggest surprise to you, dr Adlga? Knowing this so well and either in terms of the reaction in the public or the reaction even in your community, the biggest surprise to me is the fact that the United States was the most prepared nation against the pandemic, and we failed miserably at it, not because we didn't have the plans, not because we didn't know what to do, it, just because it was not executed properly. And there was a lot of politicization that occurred from the get go

that really we still haven't recovered from. When you talk about what happened was testing and the testing protocols and viewing this mostly as a travel related infection that wasn't

going to come here. All of that time that was wasted from January and February and part of March, where the focus was on the wrong actions and not the right actions, which would be increasing diagnostic testing capacity, fortifying our hospitals, public health communication to the general public about what was going to becoming, and getting our public health departments in line to be able to do contact tracing.

That to me was surprising that this was all kind of textbook stuff that we've talked about for a long time and it just wasn't going didn't occur. Yeah. Well, I've got to say we've learned so much from you and the whole team at John's Hopkins. Uh, and let's

hope we all learn a lot going forward. Dr amesh adalgia He's infectious disease physicians and at Johns Hopkins Center for Health Security at the Bloomberg School of Public Health, of course, supported by Michael R. Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropies. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio talk about tones. I feel like the cover story Jason Kelly kind of looks at some of that and the implications of what

it might mean for US post COVID nineteen and the recovery. Absolutely, so let's get into it. If we can with the man who put it together and then the man who puts the whole magazine together every week. We're talking about the writer Peter Coy, economics editor for Bloomberg Business Week, joining us on the phone from New Jersey, and Joel Webber, he is, of course the editor of Bloomberg Business Week,

joining us from Brooklyn. Alright, So Joel set the stage for us because I want to know the conversation you guys have, ye because leading into this, you know, and you're you're very kind in helping us sort of put together how we end up framing the cover story. You can listen to it every weekend. It's a great way to absorb it and to as a companion or instead of reading it. And when you sent us the notes, both Carol and I were like, WHOA, okay, kind of

a little bit. That's that's a take. So te this up for us. So Peter and I have been sure of having ongoing conversations, um about obviously the biggest story in the world right now, which is not only the virus, which I think he's done an amazing job covering, but um, the economy, which is the other thing that he covers. Really well, and I basically sort of asked him to say, like, Okay, what's our what's our take, what's this gonna mean going forward?

And and the you know, the the outlook, um is the thing that as business leaders, I think everyone's wrestling with, like what what's this thing gonna look like going forward?

And so when we started talking about that, UM, I said, I, you know, I think one of the things that we have to bring in here is a conversation and about President Trump and and sort of this mismanagement of the virus from the outset and also now almost the mismanagement of perhaps reopening too soon and if if that goes um you know, uh not, well, that's going to have a serious impact on the economy. It's also a gamble

for his re election campaign. And when I when we started talking about that, Peter goes, well, there's this thing called gambling on a resurrection you should know about. And I'll use that as a way to transition to Peter. Peter, what's gambling on a resurrection? Right? Term from game theory, So the idea would be if you're behind in a game, it could be any game. It could be uh football

game or running for election or a laboratory experiment. Then you, uh, if you just play by conservative, normal rules, you'll probably lose, Whereas if you gamble, take a big chance, there's some chance that it will pay off and you'll be very happy.

And if it doesn't pay off, well you're gonna lose anyway, So no big deal, um, And so a lot of you'll see that a lot of executives who are losing money and wanted trying to keep their jobs will gamble for resurrection, and up to the shareholders to discipline them and make sure they don't, you know, gamble too much in a way that ends up harming the company. So I said, well, we can carry that analysis over to

the United States the federal government. Trump is taking a fairly big risk that this reopening will will work, that there will be relatively few extra deaths and the economy will rebound, and then he can win reelection. That's good for him. It's also good for the country if if it actually works out that way. But let me just

finish on the downside quickly. The downside scenario is that he um loses, which she probably might have done anyway, but the country loses more than it would have under a conservative approach because they're more deaths in the economy, does not reopen quickly because you're getting resurgences and re

shutdowns and people are afraid to stay at home. Exactly like, it gets to this whole idea, you know, by postponing, do you improve or reduce the impact by delaying the the open I feel like it's the big question that everybody is debating. The problem is, this isn't a game. This is you're dealing with people's lives and livelihoods. So I do wonder, you know, kind of how you see it, what's the alternative way of kind of approaching this versus

maybe what we're getting from President Trump. Well, what we're hearing from a lot of epidemiologists is that you need to have um. You need to move gradually open the things that are most critical and where the risk of new outbreaks the smallest, and then keep shut the things that where they're the upside of reopening is relatively small

and the risk is great. For example, we've heard Trump a lee think he can't wait to see you know, stadiums, sports stadiums filling up again, And I'm thinking, really, that's exactly the last thing you should want to open, just

because there's so much exposure. Once one person asymptomatic person carrying the virus could expose dozens or hundreds of people in a single afternoon watching a football game or something, and so Joel, I mean that that's such an interesting point too, And as someone who looks across all of this, and also I think has has done a really tremendous job over the course of this administration sort of trying to understand not just economically, but from a business perspective

and from a political perspective, the Trump presidency. I mean, I have to say this feels on brand to some extent. I mean, this is in some ways that a measure of this presidency. Well, that is certainly one of the ways that we wanted to touch on it um in this our coal and you know, to be clear, like we I really try not to put Trump on the cover episodes some extent, you know, in general, like this is I think only like maybe the third or fourth time I've done it in two and a half years

as editor. And I also feel like it is the exact moment that we have to talk about this because it is a huge political gamble that he's also taking here, like and you know, if this goes well, to Peter's point, small chance that it does, but if this goes well, like he he might have the economy roaring by the time, um, you know the people are casting ballots, and that is

obviously the thing that he's hoping for. And I think the realist part here is, as Peter did a really great job pointing out, is like it's it's probably not going to go well. It's probably gonna get worse if we reopen too soon. Everywhere we look around the world, the people who have gotten this thing under control, whether it's New Zealand, Iceland, um, South Korea to some extent, all of those places basically extinguished and eradicated any new

cases before they reopened. We're not seeing those numbers in the US, especially outside of places that's coming down like New York. If anything, we're starting to see those numbers take up. And if that continues unabated, we could be in a world of hurt if we have to shut things down all over again. Well, and I just want

to add on. You know, Jason and I had a conversation with Bill Haseltine, who created human genome sciences, and he said, you know, we'll have to remember that I took one person in China to create essentially where we are today, and so we need to think about I think there's something in your store. Peter. You say, to defeat the virus, we have to think like the virus

um and I think that's really smart. Yeah, It's like we have a quote from a South Korean government minister who said that one infected person entering and previously unexposed population, it's like gropping a blob of ink and to a pool of clear water. It just where spreads everywhere really really quickly. And so, Peter, as you did this research, how our economists thinking about this? How are the experts

that you're talking to thinking about this? I mean, are folks coming down on sort of in one camp or another in terms of what the right paces? And obviously this isn't a binary question, but I do wonder, because you do so much reading and reporting, I know, every day, like, what's the sentiment out there at this point? You know, some of the Bloomberg subscribers who responded to my email

thought that, you know, we were being overly cautious. So that's one read on the situation, but I would say that most of the things I've been reading following uh there's there's mixed views, of course on this, but it's more like there's no single answer, like yes, reopen or no, won't reopen. It's it's, as I said, case by case and looking at costs and benefits in each particular situation,

and also looking at local conditions. There are big differences between states that have the virus well in control and ones that don't, and they can't treat the same as. One of the points of Maiden Hear is that a shutdown of stay at home order is punishing but has a virtue of clarity, whereas the reopening that's happening at different paces in different ways all over the country, from county to county, state to state, is just going to

be agonizing for everybody involved. Yeah. Absolutely, and I love to that you remind us to that. What's further complicating all of this is that you know, we are not all speaking with one voice, certainly not here in America, and that division is not a good thing because if one theme I feel like we have heard from everybody we've talked to medical community, even the corporate community is that we need to have coordination in order to really

fight this. It's a must read. It's a fantastic cover story. Uh, and we highly recommend that you check that out as well. Us check out our podcast feed um for the cover story, it can be read to you. Economics editor Peter Coy, thank you so much, and of course our thanks always to Bloomberg Business Week editor Joel Webber joining us on the phone. But yeah, I mean, the thing about that story, I've just I've been thinking a lot about it, especially

since we recorded the intro to that pod. You know, part of it is it will make you think like you may agree with it, you may disagree with it, And certainly there is to Peter's point, people are agreeing and or disagreeing a lot about this. But uh, it definitely it's a good thought starter and a good conversation starter with your family exactly. This is Bloomberg Business Week

with Carol Masser and Jason Kelly on Bloomberg Radio. All right, we want to do a little bit of Business Week Economics, and we knew we had to talk about China and US tensions trade. It's such a part of our economy, our global economy, what impact it might have, and what to make of these tensions back with us? Is Andy around. He's Bloomberg New Economy editorial director. He's on the phone from New Hampshire, and you've seen the stories on the Bloomberg.

You know, President Trump now pointing his finger at President G of China and basically saying he's responsible for quote, disinformation and propaganda attack on the US and Europe. I mean, what do we make of this back and forth and what seems to be increased tensions, particularly coming from President Trump at this moment. Is it just it's a campaign year and it's all about that, or how do you read it and how does President G take it? Well? Well, look,

it's it's clearly escalatory rhetoric um from Donald Trump. I mean, it's very typical of his approach to take a line and then, um, when he gets resistance, double down on it.

So last week he was saying that, you know, I don't want to speak to jimping anymore, um, And and that was quite a quite quite a shift, you know, because um, you know, the there's always been this figly because we were talking about last last week on on your show, where you know, whatever else has happened in the U. S. China relationship, she and she jimping and Donald Trump of a great relationship and they still get on the phone and then can still talk talk through

problems and disputes and sort of it added a certain ballast to the relationship. And now he's saying now he's he's pointing it. Not explicitly today, I mean he didn't actually say she jimping, but it was pretty clear. Um, he said that this disinformation and propaganda comes right from the top. And of course the top in China is self explanatory. It has to be she jimping. But the thing is, isn't just rhetoric. I mean, so you've got this angry, personalized rhetoric now, and it's being backed up

by a series of actions coming from the U. S. Administration. Um, you know, which is which is putting the which is you know, adding to real tension in the relationship. So you know that the latest was the Senate, um, you know, passing this bill which may well become law, which would result in Chinese companies being kicked off US stock exchanges.

Companies like Ali Baba, huge companies, Bai Do, JD, Dot com you know, you've had the Commerce Department essentially um putting in place a global licensing regime that will essentially deny Huawei access to semiconductors or at least semi conductors that are manufactured with US software and hardware, which is pretty much all of the semi conductors in the world. UM. You know. So it's being backed this, this inflammatory rhetoric is being backed by by real action coming out of

the U S side of Coase. This is on top of all the other things that we've seen, I mean, investment restrictions, technology restrictions, visa restrictions, and song well, and it's interesting to a headline just crossing US senators to offer a bill sanctioning China over Hong Kong. That's, according to dal Jones, a place you used to work actually, uh Andy Brown back before you came into you are

lovely family and Empire. I mean, it's interesting to see the political might on this side of the equation, the US side, and meanwhile in China. And this is the story you know very well because you have tracked the career of President chi Jumping very closely. He appears to be by all accounts, kind of not wasting this crisis. In the immortal words of Rama Manuel, he's he's doubling down in his own way from a consolidation of power.

He that's exactly right. And I think that's Jason, the point you made you know about about the you know the the so so you've you've you've got this this souring of the relationship. I mean, Henry Kisney was telling us last year that he thinks of the U s and China and the foothills of the Cold War, right, so now we're moving out of the foothills and we're moving into the uplands and went and into the mountains now. So so you have all of these tensions, then the

question is what would be the flash point? Um And we've seen just in the last few days potential flash points. Taiwan is a real potential flash point. Now the Chinese are infuriated at at Pompeo's um you know, congratulatory messages to Taiwan President's haiing Wan on her inauguration. Now you have the Hong Kong story bubbling. So you know, you've got the meeting of China the National People's Congress, China's

parliament today, which is likely. According to press report, South China wanting posts saying that, you know, delegates to the Chinese Parliament may well pass a national security law to be imposed on Hong Kong, which you know could very well lead to a resurgence or renewal of street protests, um, you know, a crackdown, and calls for for Hong Kong

to lose its special trading status with the United States. So, you know, and and and again this is just this is just to flash when you got the South China Sea, you have the East China Sea. You have many other places where the US and China potentially could come into

really serious conflict, right, multiple flashpoints. But to speak to Andie what Jason said, you know, President she you know, meantime, there's another story on the Bloomberg about how China's got a new one point four trillion dollar plan to overtake US and technology. Meanwhile, you know, they make these long term grand plans, you know, to move their economy into the future, and you know they're moving ahead. And I do wonder what we're missing, you know, as we focus

on this spat once again coming out of the White House. Yeah, it looks kind exactly so you know, when what what what what What to the United States is decoupling to China is self reliance. Right, So the message they're taking away is we cannot trust the United States. We have to you know, we have to develop our own technology. So this is this is doubling this is this is China. This is she jimping, doubling down on technological self reliance, saying, look,

you know, we're in a long term war. I mean, you know, they've they've accepted for a while now that this his confrontation and they're in a long term struggle UM with the with the United States. So one point four trillion dollars um. You know, they've been moving in this direction for quite some time. This COVID nineteam what we're seeing out of the White House accelerates those trends. Yeah,

it's amazing. I mean, I go back to the conversation you and I had earlier this week, Andy about those threads, those two very very thin threads that are that have connected, And it feels like that personal relationship thread that you mentioned, he just the President of the United States. Seems to be Um has a pair of scissors right there. Uh, And and maybe he's already cut it. Maybe it uh, it can be saved, but it's it's an important point.

But this conversation that Andy explains why there's some nervousness once again among investors and in the markets, because it's definitely playing out. I'm so glad we got some time with Andy. Andy Brown, editorial director at Bloomberg New Economy, joining us once again on the phone from New Hampshire. Andy, take care. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Well, it doesn't quite

roll off the tongue like government sas does. But when you think about the firms here in twenty that have the tightest connections to Washington, maybe not so much in terms of personnel going back and forth, but in terms of the connection, the deep connections, the advice and the business that they are doing with the government, it feels like black Rock stands head and shoulders above. The world's largest asset manager is in the midst of this crisis,

working with the Fed, advising the President. Is the CEO Larry Fink, advising us and keeping us honest about this. Is Annie massa investing reporter for Bloomberg. She follows black Rock incredibly closely, a frequent guest on this show, contributor to all of our platforms. So Annie, first of all, great to talk to you. It's been a while. I know, Hey, how's it going. We're doing okay, We're doing okay. It's nice to hear your voice. So what's happening with black

Rock here? Because we have seen Larry think maneuver in some ways in a non nefarious way, but in a very effective way, at least not a nefarious that we know of. Uh, into the conversation here, what is black Rock up too? So black Rock has been coming up a lot in the past couple of months because the firm is taking a huge role in the Federal Reserve bailout of the corporate bond market and um, so what black Rock is doing is acting in a kind of

expanded capacity. It had a role in the last crisis, and now in this one it's buying corporate debt on behalf of the shed and buying agency commercial mortgage backed securities on behalf of the shed. So really playing a central role in the said um, you know, hundreds of billions of dollars that is rest and I totally get why this is among our most read stories on the Bloomberg.

It's been that way, um all day. So I'm just thinking for a casual listener, they're gonna be like, Okay, it sounds like black Rocks getting a great deal and they've got an you know, in with the government, So explain the relationship why it's necessary, Um, just just take us there. Sure. So if you think about the said, I mean the faids wheel houses obviously buying government debt, but when it comes to something like this, the unprecedented um,

you know, rescue plan that they have the corporate bond market. Um, they're not necessarily uh carrying out those measures themselves, going out into the market and you know, valuing and buying uh corporate debt themselves. So that's why I need an asset manager to come in and do that on their behalf. So um, the said is black Rocks client in this case,

and black Rock will perform that function for them. They'll buy newly issued bonds um from companies, they'll buy sting bonds, they'll buy some debt ets and that is um, you know, one big piece of this mandate that that black Ock has been handed over, and so they're turning to black Ock for their you know, expertise in in those markets and also for some of the risk technology UM that they have that can help in that process. So who

ultimately owns it the FED? So yeah, so what's happening is black Rock is buying the debt on behalf of the FEDS is acting as the investment manager. And so Annie remind us to Larry Fink, very very important figure on Wall Street and I believe was rumored too maybe have been considered for a cabinet post had there been a Hillary Clinton presidency. He's been a pretty close advisor, frequent advisor to the current president. Right, yep, that's right.

So you you kind of see UM black Rock having the ear of UM all kinds of administrations, both Democratic and Republican UM. But that's absolutely right that there was a lot of intrigue around whether Larry think would be considered as a potential trigury secretary and a potential Hillary Clinton administration. We've seen those kinds of UM rumors come

back up now for a potential Joe Biden administration. So over the years, especially since the financial crisis, black Rocks gone from having a pretty limited presence in DC before that to um really a huge relations huge relationships down there, right, It's it's complicated, as they say. UM. What's interesting though, as you said, they're buying the debt on behalf of the FED. So they are the investment manager for the FED.

I mean essentially they are an investment manager for Americans, right, I mean for the country to make sure they make smart investments because ultimately the FED will sell these investments back to the marketplace. That's exactly right. It's a really critical role in basically this uh this mission to prop up the corporate debt markets. And understandably it's brought a

lot of um considerations over. Okay, how are they going to manage conflicts adventure to be because black Rock is a huge firm obviously, UM, you know, on other sides of the firm, they're participating in debt market so there's um, you know, knowledge of what the FET is doing could

be useful. So what they say in their contract with the FED is listen, there are huge there are strict information barriers between what that side of the business, um, their financial markets advisory side of the business, which is the piece that's working for the FED. There's there's a wall ups basically between that and the rest of our firm. But that's then, you know, one of the questions that keeps coming up as people look at this steel, right,

they wonder it's hard to call them an insider. Man. Yeah, come up, it's pretty amazing, all right, Well she's our insider. Any massa investing reporter Bor Bloomberg, Johnny Us on the phone from New York City. Great reporting, one of the most read stories on the Bloomberg. Not surprisingly black Rock. They got a big job, they got a lot of money, they got an influential ceo. I'm a journal now, but you let me drive. Oh no, no, no no, no's home, honey, please,

I'll do the riding drivel. I want to drive, Just drive, baby, the questions trying. This is the drive to the Globe Community thing world Dry Russ Radio. It is time for the Drive to the close. Back with us is David Coudlaw. He's CEO and chief investment strategist at Mainstay Capital Management two point seven billion in assets under management. David back with us on the phone from Michigan. How are you tell me about Michigan? Man, I feel like the state

just can't catch a break. It has been, uh an interesting time in Michigan. We've had certainly we've been one of the states that's that's been a hotspot for the COVID nineteen coronavirus, and certainly because of the auto industry, because of our overall economy here, it's been particularly hard on Michigan. When we see these unemployment numbers, jobless claims, we know that's coming right at the heart of of

our industry and everyone here in Michigan. And then the floods, I'm sorry, the floods, yeah and oh and oh, yes and yeah in in uh Base City in mid Michigan, it's just been incredible, incredible with the damn that broke loose, and it's just been devastating, and so stepping over to the markets in the meantime, David, it's been quite a ride there, as we have experienced you across these ten or so weeks of sheltering in place here in New

York City, you know, certainly seeing some literal highs and lows. What's your take at this moment, especially in a week where as Carol pointed out a little while ago, you know, the SMP is still in the green even with a little bit of an off trade today. Are we finding some stability or is this just kind of a moment

where we're catching our breath. I think we are. You know, we've the way that we've played this is, you know, we've gone to the secular growth stories and and specifically that takes US two technology and e commerce and the cloud stocks and I t UH that held up really very well through the downturn and have done well even in the rebound. But now we are looking to the cyclicals. We've gone ahead and come back to the cyclicals, uh,

leisure and entertainment. UH, come back to U E t s like I t B, the Ice shares, Dow Jones, U S home construction E t F. UH those E t F s that are already starting to rebound off these deep lows that they experienced all the way down to the low in the in the markets in general on March twenty three, and they've just really rallied off those lows already a lot and have that uh that rebound.

We think more runway left in them now. It could be a bumpy ride, there could be if if we see um a second wave that some talk about or as we reopen the economy. Uh, that's a bumpier ride than we expect. But you know, so far, so good it. I think it's it's been not too early to come into those names because they've already had a real good rally off the bottom. Yeah, I'm just I gotta ask you that I T B, that I Shares Home Construction, et F. I mean it's up from that March low.

You still think that there's opportunity there? Or do you think a lot of the enthusiasm about whatever bounce back we get is already priced in there? How could you not think it's not priced already priced in there? Well, because it it fell more than from from the level it was at down to March, so you know it is. Yes, it's come back seventy, but that's really about about two thirds, uh from the bottom. So we think we think it still has a little bit further. We still think it

has a little bit further to go. And uh, we think that, you know, it still makes sense now we're starting to see uh, and I think have enough traction and even feel comfortable enough more recently coming into even UH names like you know, E T F, T, E J. The invest COO Dynamic Leisure and Entertainment ETF. We've been more concerned about, uh, you know, some of those sectors. But as planes start flying again, states start opening up. We talked about Michigan at the beginning to segment the

northern part of the state is opening up. There are going to be uh more reopening in our We've had been on a very strict lockdown here in Michigan. But as as states start opening up, there's a lot of pent up demand and people that want to get out and about and and we'll see that reflected in these stock prices of the companies in these industries. What do

you think of the automakers? And I think I thought it was last fall October you were short Tesla and I'm just curious, Um, you know how you see the automakers obviously an industry that has certainly been impacted by the lockdown. We caught up with the UH president CEO of Porsche Cars North America, Claud Zelmer, this week. UM about seventy or eight percent I think at their dealerships here in the US have have open, but they're learning

to do a lot more things digitally. The other thing is they can't meet supply because the production lines have been shut down. So I'm just curious what are your takes on some of the auto names. David, Well, there's there there's going to be a significant gap. You know, a lot of the auto dealers are operating on appointment only to continue to deliver cars. But the plants haven't been building. You know, they're just starting to come back online.

Production is start coming is just starting to come back online with all the producers. So there will be uh, some gaps in inventory. But again, you know, autos will be another area where uh we'll see that there's also pen up demand to meet that. So I think that uh, you know, when we look three or four months down the road, Uh, autos will be doing very well. Again, it's really just where they'll see some gaps in inventory here. As a production comes back online, the auto dealerships open

back up, and that that pen up demand gets. Uh. It is sort of amazing to you speak of demand, and uh you do wonder sort of what the shopping and the and the retail online versus brick and mortar looks like on the other side of this. It's got to be a tough question to answer. Yeah, it is. You know, it was interesting coming into this. There's an e t F that that we've held before, clicks, it's

appro shares, long online short stores. It was really just a slam dunk, you know, the with the government shutting down brick and mortar stores and really forcing or compelling those that weren't even comfortable shopping online, uh to do their shopping in that manner. And you know that et F has just been stellar, a stellar performer. Um, it's it's up some. It's down today because of those other names we're talking about. It's taking hit today, but still

up over year today. You know, when the major indexes are still you know, in negative territory and didn't take that hit like you saw from so many other parts of our economy and so many different sectors. It really has just been a move up from you know, if I take a look in March. Yeah, it's been remarkable. Yeah. Interesting. All right, Well it's great to catch up with you.

We really appreciate it as always. David Coula, CEO and chief investment strategist at main Stake Capital Management, looking after about two point seven billion dollars, Joinius on the phone from Michigan. Always good to get some perspective a from a different part of the country. Uh. And also some very specifics on the on the E T F side, which I feel like some so often we sort of talk about it in general, but those are some really

specific names, especially that the long online short stores. I've never heard of that. That's a really interesting pix. Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, Southcloud, 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