The Small Business Survival Guide

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 go a level deeper, as they say, into Dr Fauci's testimony, but also get a real sense of where we are. We've got one of our go to docs back with us, Dr Andy Pekash. She is professor of Molecular microbiology and Immunology. I practice saying that at night, just so I get it right.

JOHNS Hopkins University, Blumberg School of Public Health. As you can tell by the name the Blueberg School public Health. It's supported by Mike Bloomberg, the founder of Bloomberg LP and Bloomberg Philanthropies. Dr Peckash, great to have you back with us. Thanks for having me on. Alright, so let's dive right into the Fauci testimony. Because all eyes obviously, as we've been saying, have been on Washington to the trained eye, of which you have to uh, what did

you see and hear from the doctor? Uh? You know, these are the things that everybody should be really aware of. Um. When we pull back public health interventions, we expect to see some cases come up. If we pull them back too soon, the magnitude of the cases, the number of cases will be higher. Um. If we're not prepared to do testing and really good contact tracing to identify the people who have become in contact with infected people, we run the risk of having a rather large second bounce

back wave. UM. So it's really going to be important for us to time it right and be prepared pull back these public health entrance so we can control a virus at a different level. Right. So I don't want to get political, that is certainly not my aim here, but I do wonder coming off a press conference yesterday that was predominantly from the President and his team about testing and saying we have enough tests out there and

everything that we need. Tell me about that specific event and if we do indeed are doing the right kind of testing, and that we are doing enough testing, especially I think twenty four hours or was it this morning where Wuhan is talking about testing everybody in their city. Yeah, exactly, And and it really becomes a question of capacity. Um. You know, we're we're able to test in most parts of the country, and again this can be different in

different localities. Right. UM, Here in Maryland, we're doing a good job of testing the symptomatic individuals. Um to turnaround time on tests are fairly good. Um. But what we'd like to be is a level above that. We want to be able to turn around tests really fast, within a day. You want to be able to test almost immediately people who have come in contact with the pre people who are sick, so that you can catch them before they really start showing symptoms and tell them to

quarantine a little bit earlier. So we need more testing, we need more coordination, we need more contact racing to be able to deal with um the situation when we relieve our public health interventions you know, Dr pekash I saw a poll this morning that was talking about contact tracing specifically, and people's willingness to participate was largely based on their enthusiasm for it was largely based on who's

doing the administering. What's the right method to go about doing that in your estimation, so you know, the best method is to have train individuals who can UM capture this information, contact you and give you the correct information in terms of what needs to be done. UM. There are people at state public health and county public health

departments who were doing this. UM. We hear at Johns Hopkins Bloomer School of Public Health has had a number of professors who have started horses to try to educate people in terms of how to do that to increase the number of people that are capable of doing good

social contact tracing. So there are some things that you need to know to be able to train to be do this all quite possible, UM, but you need to invest right now to increase those numbers of individuals again, so you're ready when you pull back public health interventions.

So when Health and Human Services Official Admiral Britt grow says that states and territories aimed to do twelve point nine million tests over the next four weeks and represents more than about nine point four million tests that the US has done to date. Is that a lot in a nation of more than three million people. So again, you have to look at it at the local level

where there's outbreaks. UM, that's where you have to be looking at the testing, because having to asked some places where there aren't any outbreaks right now or little numbers of cases maybe isn't the best way of utilizing those tests. So we need to do more. We need to be able to be testing individuals um um outside of just the CDC recommendations for symptomatic individuals to really jump ahead of this epidemic and be able to tamp it down

even greater. So as you look across the world, what countries are good examples of where we should be headed in? What countries are cautionary tales? Dr Pekash, Well, you can look at a lot of the countries in Southeast Asia who were on the front lines during those first few weeks of the of the pandemic. UM countries like Singapore, countries like UM, Japan, UM, Hong Kong, um. They have all been able to stay ahead. Oh and I and

Taiwan is probably even the best example of that. Right, Um, you can get ahead of the epidemic with massive amounts of testing and good interventions. And if you can muster those resources and and and put them to use effectively, then you can. It's clear that you can keep this epidemic UH down to manageable levels. All right, Charlie, thank you so much. And of course, Charlie talking to some of our great sources over John's Hopkins about how this virus,

some of the symptoms, and how it has evolved. We want to continue our conversation with someone else from Johns Hopkins. Andy Pekosh still with us, professor of Molecular bank robiology and Immunology at Johns Hopkins University, Bloomberg School of Public Health, on the phone from Baltimore. So I have to ask you, Dr Pekosh about a vaccine. Anthony Facci saying, don't expect really anything by fall. He says, more likely within a year to eighteen months. We've talked with you about this before.

I mean, we need to be realistic. That's the time frame, you know. Yes, I think that is a realistic timeframe. Uh. There's a chance things to go faster, there's a chance things could go slower. So I think, um, Dr Fauci brings up a good realistic time frame. I think, you know, this is all this is. This is a disease. That's

about all the little steps. The last two weeks have have have shown that a couple of vaccine candidates have made it out of that first phase of testing, which is the safety phase, and are now moving into the larger scale of testing, which is to see if they actually are inducing immune responses in a large segment of the population. So we're seeing some good signs. Um, if these vaccines didn't pass the safety stage, then of course we'd be in we'd be worried a little bit more.

So things are progressing. Um, everybody is trying to maximize, uh, the amount of time or minimus should have minimize the amount of time that is going through this by sort of maximizing overlap wherever that's possible. So everybody's moving as fast as they can. But we have to be sure about safety and we have to be sure about efficacy before we even start thinking about vaccination strategies. And so Dr Pekash help us understand Once we have a vaccine, what's the smart way to sort of get it to

the world. Yeah, So there will be a lot of discussions about this. Will be bringing in bioethicists to discuss this as well as medical doctors as well as as well as modelers and other scientists that can help figure out, UM, what populations to immunize. UM. Clearly, we want to immunize and protect the most vulnerable populations. So in the case

of COVID NINETEAM, that certainly does seem to be the elderly. UM. But we also want to immunize those people who are caring for them, so healthcare workers, frontline first responders, UM. And if the data shows us that particular sections of the population might be responsible for a lot of spread, well it might be really useful to target those sections of the populations to try to again cut these trains

of transmission. I do wonder too, you know, it feels like over the last few decades we have seen certainly an increase in autoimmune illnesses. UH, and these viruses that are getting maybe tougher and tougher. Is this our new world order? And are we going to have similar viruses like COVID nineteen that are going to kind of paralyze our society in the future. Uh. You know, uh, there's so much to deal with this current one that it's hard to think forward. But um, yes, you know we shan't.

We have to be constantly aware that, um, we are coming in contact with more and more viruses that are present in more and more animal reservoirs out there. And COVID nineteen is just a great example of the fact that some of those viruses are actually able to make the jump into humans, um, with relative ease. You know, the vast majority jumping to humans is a problem and they don't do that successfully. But in two thousand nine we had swine influenza become a pandemic, and now in

two nineteen we had COVID nineteen. And you know, as population grows, as we come in contact with more and more unique animal reservoirs, we should expect that these things are going to be a constant threat going forward. All right, well, we really appreciate it as always. Dr Andy Pekash is Professor of molecular microbiology and Immunology at the Johns Hopkins

University Bloomberg School of Public Health. That school, of course, supported by Mike Bloomberg, founder of Bloomberg LP and Bloomberg Philanthropis. He joined us on the phone from Baltimore. Couple headlines. We want to bring you New Jersey, home state of Carol Masser. Uh, the fewest new virus cases in more than six weeks. Uh. This is a trend, a good trend that we are starting to see New York City in the Tri state area at testament to some pretty

aggressive measures that the governors in this region have made. Carol. Meanwhile, we did here also from Charlie about the New York COVID nineteen cases rising four tenths of a percent versus the previous seven day average that was double that, eight tens of a percent. So but again, these trend lines have to be going for I believe a decline of two weeks right before you can really think about reopening.

And that's that's a key metric. Another important thing. On a lighter note, Room Raider Anthony Fauci ten out of tens, of course zero. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. This is one of the most read stories on the Bloomberg it's about if landlords get wiped out, Wall Street wins and not renters.

It is in the magazine, it's on newsstands later in the week, online and on the Bloomberg Perssont Coople is US real estate reporter at Bloomberg News on the phone from Massachusetts, along with Bloomberg Business Week editor Joel Weber on the phone from Brooklyn. And you know, Joel, like so many stories in Business Week, you guys do talk. There's always, it seems, winners and losers, that's right, UM, And this one I think is um somewhat somewhat unexpected

as UM as this pandemic has sort of transpired. And obviously, UM, the hits to the job market have impact on people's abilities to pay their rent and mortgages. And there's been you know, a modest amount of relief on that front, at least it's in progress. But the maybe an unexpected

victim is the landlords, especially small landlords. Not what do you find as you kind of dug into the story, Yeah, I mean like they're you know, landlords are often not the most popular group out there, but you know, and and maybe that's one of the reasons why they're not really getting help, whereas a lot of other people are. Um. You see that, you know, when people don't pay rent um, a lot of these small landlords um don't have the res verse is necessarily to kind of withstand that. Hint.

If you have you know, let's say five units and three of them are not paying, that's a big percentage of your portfolio. Well and and presian. This story goes to something that you and the team have done such an amazing job over the past few years of documenting, and it goes back to you know, a lot that the magazine has done here about who the landlords really are, especially the big landlords are in the country, and a

lot of them are from Wall Street. Yeah, you know, but it's interesting actually if you look at all the the the properties and all the actually if you look at the all the properties in the US, um about you know, the properties are actually owned by individuals are small land um. If you look at the individual units right then it's for it's over fifties. Still interesting, So a lot of the landlords out there are actually um,

mom and pops and um. You know, so we think of you know, these very wealthy people are company companies right with deep pockets that can withstand this kind of shock. But which is they're actually just your neighbors, you know, the local dentist or you know, or somebody with less money than that. So, for shot, what is the scuttle on Wall Street? Is there is this viewed as an opportunity. Is Wall Street youre going to sweep in here much like in the financial crisis and just walk out holding

all kinds of new real estate? Or is it a little bit more great than that? Well, so okay, let's take a step back because what what what's happening right now is that we have in many states their eviction bands in place, so the small landlords in general UM aren't able to evict tenants who aren't paying UM. And that's for good reason, right we don't want people out

in the streets during a health crisis. But the effect of that is that they are going now month after months without income coming in and they can't really they don't have any tools to kind of convince people to pay and and many of them still have mortgages and they have to pay property taxes. There's no forbearance on property taxes. So eventually, uh, you know, they're gonna get in trouble, they're gonna have to sell, probably at the stress prices and guests. Who has the money to buy

those properties? Um, it's likely going to be Wall Street in some form, private equity firms. Um. That's what happened last time. They came in and they bought up single founding homes at very low prices that pennies on the dollar, and um turn them into rentals. And this time they may just be buying rentals. I have to say. I mean, just some of the anecdotes and the people that you talked to in this story just you know, remind us, as you say, the backbone of so many of these properties.

It's a lot of small businesses. Um. And it's just such a contrast to homeowners being given a break through, you know, the Washington programs. But renters are not what what are trade associations and you know, groups of landlords, you know, what are they lobbying for? What are they likely to get maybe in some kind of stimulus or you know, help from the government, federal government. It's not clear they're gonna get anything, to be honest, but right

there are some bills floating out there. Um, you know, there's there's the UM some of the trade associations are kind of getting behind an idea, UH for like a hundred billion dollars UM that would go to landlords directly and UM and and that would pay for missing rent um that you know read that they're not collecting UM. But you know that at this point there's no UM.

You know, I don't think they're really behind any particular bill, right, all right, Well, it's a really terrific story, one of the most read on the Blue Berger's in the magazine UH coming out this week, but you can read it now on Bloomberg dot com and the Bloomberg terminal care. I love how he writes the next housing crisis is here, and this time it's about rentals. I mean, you know, it's always the devil's in the details. When you look at things from you know, ten tho miles up, you

don't always catch the nuances to a situation. And I feel like this is one of those stories. It's a typical you know, great reporting Barber Shawn and his team and Business Week, where you dig down into it you're like, oh, Okay, that's what's really going on, and that's who ultimately owns this or who doesn't and and these are the implications and started playing it out. Really nice stuff. This is Bloomberg Business Week with Carol Masser and Jason Kelly on

Bloomberg Radio. All right, you are listening to Bloomberg Business Week. Time for Business Week Economics, and today we're talking with Harvard University economist Professor UH Robert Barrow, and he looks back to history for some guidance on the lifting of restrictions put in place by COVID Nineteam. It's something that Jason Business Week Economics, thatder Peter Correy wrote about UH

in the magazine. We talked about it with Peter. It's based on Professor Barrow's work, and lucky for us, Professor Barrow joins us on the phone from Maine. Welcome to Bloomberg Business Week. Thanks good to be on. So tell us a little bit about your work, because the headline on Peter's story was a lesson from the Spanish flu, don't end restrictions too soon. And as you know, it feels like there's so much in terms of conversations debate about social distancing and how long we need to stay

in isolation and shut down. Tell us a little bit about what we learned from the Spanish flu and how that might help us today. Well, first, I think it is the historical example that's most relevant for today in terms of a coronavirus pandemic um of a very serious event nine eighteen to twenty worldwide, including the United States.

But the work you were specifically talking about is on the so called non pharmaceutical public health interventions, and there's information about at that across UH forty three US cities in nineteen eighteen nineteen nineteen, and you can see what was the impact of things like school closings and prohibitions, on public gatherings and quarantine isolation measures, and you can see the effect of that on the flu death rates and on flattening the curve among these r g u

S cities. UM. The basic finding is that these measures succeeded clearly in flattening the curve, so the relative peak in the death rate was pretty dramatically reduced when there were more of these interventions put in place. UM. But the disappointing part is that it didn't actually end up ultimately reducing the total death rates in this nineteen nineteen period. And I think that's probably because the measures were not

kept in place long enough. They were typically only in place about four to five week and uh, A likely inference is that it had to be more like ten to twelve weeks to be really effective on the overall deaths. And that's the kind of debate we're having currently in the US. I would say absolutely. I mean, what you are speaking to Professor Barrow is exactly. We just heard a tidbit of this from our news guy Charlie Pellett that you know that Dr Fauci was saying earlier this

morning to lawmakers on Capitol Hill. Is this just a question? You are an economist after all. Is this just a question of people being so worried about the economy that they're just they're moving too fast? You know, it's reasonable to be worried. I mean, a major economic downturn, it's going to be costly. The key thing there is not so much how deep is the contraction, but how long

is it gonna last? Are we're going to have a pretty rapid rebound And I think there's a good chance of that if we can get past the disease issue. Oh well, what's interesting for people to be worrying about this well, absolutely, And what's interesting too is we keep talking about the economic cost of certainly the stimulus packages or the relief packages that are being done, and also

the cost to the economy. But you also have done work on the value of a single life, right and what that person does in terms of working and economic input. I mean, I hate to put it in such kind of black and white terms, but right we all have a value to society and certainly to our economy, and if we're not alive to contribute, that's going to have an impact too. Well. There's a pretty big literature on this, not one to which I've contributed, but which I've read

what a good deal of interest. So it's really about how much would people be willing to pay ex ante in order to reduce the probability of dying in order to for example, make your job safer for risk here, or to put it in other way, how much extra do you have to be paid in terms of wages to take a job that's a little riskier in terms of the risk of life and death. And people have

done a lot of work backing out from that. What's the implicit so called statistical value of a life and a typical estimate for a rich country like the United States is that it's a pretty high number. It's about ten million dollars. That's a sort of current estimate. Of course, has a range that's used. Even the Environmental Protection Agency

uses a number which is in that ballpark. Um. So I've tried to think about trading off the economic costs, for example, of the interventions we've been putting in place, and you know what's the loss there in GDP versus what's the gain? If you have some idea how many lives do you save and how do you value those?

And when I put that together as a rough calculation, I get that even though the economic cost is large, it looks like it's worth it, and it's worth keeping the marriages in place for for longer, for another four six weeks something like that. Probably. Uh, I think that's consistent with what Dr Facci has been arguing. Right, that's exactly right. And I do wonder in the minute or so we have left, think what did you see in terms of the variants as you did this study across cities.

Were there other elements other than the shutdown that that played in here? Well, you see a big variation in cities. But there was a pattern in the US because this big wave of the Great Influenza pandemic started actually in Boston, um UH in September nine, and then it gradually spread. And then the countries that were further away, particularly going

towards the West Coast, had more time to prepare. They knew was coming, and they were more likely to put in these measures to try to stem the tide of the epidemic, and they did that. Uh, definitely flattened the curve. But again, and the disappointing part is it seemed to be more postponing the deaths and a worse, completely avoiding them. Yeah. Well, it's a really really interesting piece of work, and to understand it further, do check out Peter Koy's story in

Bloomberg Business Week. Professor Robert Barrow, he's an economist and a professor at Harvard University, joined this on the phone from Main. Really thoughtful and look, he is exactly right that this is the epidemic that so many people are going back to to take some lessons and a very timely conversation given what we heard from Dr Fauci earlier today in Washington, and may not be the exact same,

but it does give us so much information. It was interesting I saw a piece to where they were, you know, showing people back then wearing masks and going through so many of the things that we're going through. And so it really is the best historical example. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. A new segment, a new feature to some extent in Bloomberg Business Week. You know, they've always been focused to

some extent on small business. But surviving in the world of small business, it is even more challenging right now, Carol, to say the least, we are so happy to have our next guest. We haven't talked to her in so long, especially in this pandemic world where we're out of the office to meet your Cassidis is an editor at Bloomberg joining us on the phone from New York City to meet. Great to have you back with us. Thanks, guys, it's great to be with you. It's great to hear your voice.

So tell us about this small business survival guy. Well, um, we launched it, uh, I would say a little over a month ago at this point, maybe close to two months ago. I mean, it was very clear, as we all know and we hear these stories that small businesses we're going to be really hit hard by what was going on with the shutdown and the lockdown. They are a huge, huge driver of our economy. They employ so

many millions of people across the US. When you consider a business that's a small as a one person business the sole proprietorship, you know, up to even a few hundred people. And so it was clear that this was going to be a situation where beyond covering some of the stories of the Excel businesses, we could provide a service and really get into a lot of sort of how to how to navigate the federal relief programs. Where

else can people turn to for help? We want to really be a resource for these small businesses and the owners and the people who lead them to find the information they need to do the best they can to survive under very very challenging circumstances. Yeah, and circumstances where we really don't have the playbook, and you guys are certainly setting it out for everyone. So let's talk about

the theme. Um are one of the themes that you've tackled, and that is small businesses accessing money that they need, and it has to do with lenders and loans. So tell us a little bit about the coverage along that line. Yes, and again, you know we're seeing that because of course we've all heard the stories about the challenges and accessing the government's p PP loans and some of the other

financing options. You know, what we've looked at most recently, for example today, was to really consider that not all lenders are the same. And as a small business, you know, your your inclination might be to simply go to the bank that you know, and maybe the bank that you're banking with personally is a bigger bank. But you need to really be very creative and versatile in the ways that you're going to access capital. Capital is the name of the game right now. No matter what you're doing,

you need to access it. So, you know, we've talked to various experts about how small businesses need to identify their priorities um figure out exactly what they need money for be guided by that in terms of where they're going to go seeking out lenders. Is that uh C

s c I a community finance development organization. Is that a smaller community bank on midsize bank, you know, the Chase, Manhattan's and the city banks of the war world are very responsive to certain types of businesses, but they're not the right kind of thing for all of these businesses. So that is one area that we've spent quite a bit of time on and that there's been a lot of coverage out there. Um today we published a tip sheet for how to really approach this and think about

how do I acces that capital? How do I not get discouraged by the first loan application that was rejected. I need to find a bank where I can go and put in a second application, and I maybe need to work with a different kind of institution or credit union or what have you. Well, and that discouragement, I mean, it is really rampant at this point, Demetro, because you know businesses and you have it right there in the title of this series. I mean, this is largely about

survival in many ways. This isn't the like, well, it would be nice if I got this money. This is I need this money to basically hang on through this. You know, what are you hearing from small businesses in terms of how worried they are about survival? Well, they're they're very, very worried because you know, from day to day and week to week, so much is changing, and there are pivots that are easier for certain types of

businesses than for others. You know, if they are in manufacturing, if they have machinery that can maybe produced ppe right protective equipment, if they have the type of setup as a restaurant where they can close the restaurant but open a window that faces out to the street and serve coffee, takeout,

pastry takeout, food takeout. So it all depends on so many things, and sometimes you just don't have those things that fall into place where you can say, well, I can minimally run this business to some degree and still, you know, and and ensure some level of bringing money back. The reason they're also very worried is because these federal release programs, you know, for many businesses have been structured in a way that maybe doesn't help them in the moment.

Rehiring right now for one business and keeping them on payroll for another month or two, um might just be money that they're spending simply to keep them around, but they can't actually do the busin this that they're typically engaged in doing so. The level of worry is very high, and it is a very paint speaking process. Like the one message that's super clear is you know you're going to commit a lot of time and energy and resources to staying on top of this situation of where you're

getting money from and how you're getting it. It's going to become part of your daily routine. You're going to check in with your banker. You're going to check in with your accountant, You're going to talk to your lawyer. You're going to resubmit an application. You're gonna hear back that maybe you were rejected. You're going to start the process again. It's you know, it's not it's not fun, right right, check your temperature and then check your relationship

with your banker. I mean, I mean that's what that's the new world reality. Well, it's a great series and I know there's a lot more to come and we'll be checking in with you weekly. Um to see a bathe latest angle and help for the small business community. Um, Demitri, thank you so much. Great to hear your voice, to meet your Cassaniti, she's editor with Bloomberg News on the phone from New York city and check out this coverage the small business of our Survival Guide and you can

find it at Bloomberg dot com. But it's something that you and I have talked a lot about because we know small business. We've just heard about it when it comes to landlords. Right, you think you know, you own a building, you think you're among you know, the wealthiest, and yet it's a small business and it's one with you know, maybe you're not making a ton of money and some type margins, right, the margins. I think that that's really true. And there's just not a lot of

cushion there. Broom a journal now. But you let me drive? No, no, no, no, who's going to drive? Honey, please, I'll do the right rival. I want to drive, Just drive, baby, the questions drying. This is the drive to the globe. Give me thanks. We'll drive up dawn on Bloomberg Radio and it is time for the drive to the close back with us. One of our guys we love talking to because he's really good at his job as fund does really well.

Uh So we like to get his advice on what's going on as observations and what's happening in the market, especially on a day, where the market a little more skeptical? Eric Clark, his portfolio manager at Rational Dynamic Brands Fund Johnny Us on the phone from the West coast, San Diego. To be exact, Eric, how are you? I'm great? How are you guys? We're doing okay a little Sonny? Are here today? Uh? In New York? Not so sunny in the markets? Give us your take on on where we are.

I think we talked to you a month or so ago, maybe a little bit more. How's the world changed? How's the market changed in your estimation? Well, I think the market I think this is a very consensus view. That doesn't mean that it's wrong, but I think the market is well ahead of where the economy is. And this has been a big technical move driven by stimulus and policy, accommodations and a really over sold market. And I think

now we've just reached a little bit of equilibrium. You know, the rubber band got stretched way too far to the downside. It's snapped back, and not surprisingly, we kind of failed at a technical level where we should have failed at least the first time up. So we saw a big cell program. I mean, everything's going down today. When it started, you know, Staples, healthcare technology, it didn't really matter. So that's that's clearly more of a programming, programmed sell off.

You know that, so, Eric, So my question to you is, Goldman says stocks are due for a drop after the rally, driven by fomo fear of missing out. We've talked about that a lot on our air, so we know we've had quite a bounce back. They're saying we need a drop from here. Do you agree that we need a drop or do you think we just kind of level off here for a while? Well, listen, need is is difficult. I mean, the market kind of does what it does,

and it doesn't often do what it should do. And it's really hard to understand how the stimulus and the the accommodation is a balancing act between the actual fundamentals. If you take away the stimulus part, the market should

be a lot lower than where it is today. And so I suspect we're going to find some equilibrium after this big ramp uh And maybe you know, the best thing would would be just to go sideways for a little while and work off some of these these conditions and just see how the economy opens, see what kind of virus numbers we get because of the opening, and then see what kind of consumer spending happens as people

get back into the economy a little bit well. And one of the things that that we've been talking about, especially with the less couple of days or so eric as we're more or less through this earning season, and Dave Wilson pointed this out yesterday or stock Sky, when we look at the retailers that are going to come out, they're going to give us actually a better view of

where people were shopping or not shopping. And it does feel like, you know, those results and then the second quarter results, the sort of calendar second quarter results are really gonna give us a better sense than the last earnings did about who's winning and losing, who's really resilient here right absolutely, you know, I think the July earnings in particular will probably the most important, most insightful earnings and commentary that we've had in many, many years, because

now we get a chance to see which companies, which brands are really resonating with people either online or in person once we open up a little bit, and and which ones are somewhat naked if you will, and and and in a lot of bigger trouble. And my big issue is that a lot of these companies are raising

more debts. So if your earnings are going down and your revenue is going down, and your cash flows are going down, but you're using more debt and you need to service that debt right, and you're a brand that isn't really resonating, that's the trouble. That's a troubling thing for certain companies. Did you say July earnings. I think the next earnings are going to be more important than the ones we've just seen because everybody expected the earnings to be down. Now we get a chance to see

three straight months of when we've really been living with this. Yeah. Um. So what's interesting is we've had a lot of conversations about brands and that the brands that seem to do something help, you know, take a leadership position during this crisis, that consumers are going to reward them. On the other side, you look at brands and I am curious about the brands that are stepping up and helping out consumers, are helping out society and community versus those that are laying low,

uh and going dark during this crisis. Are you looking at them as investment to help and make an investment decision I do. I mean, if if you are building more loyalty in a really difficult time, that loyalty is gonna stick. I mean, Amazon has just been a rock for for people and it's been the go to place, So I anticipate that's just just going to cement people's

loyalty costco cement people's loyalty. You know some of the brands that that we kind of anchor to, the Roku and the Netflix, um, you know that that that we love and we've been using more of, We're we're probably gonna stay even more loyal to to those companies, and those subscription models are going to be great and we're gonna have low turn So there's definitely gonna be a this versus that in the mind of the consumer as

we start to spend more. One of the names that I think you're interested in of late, which speaks to my amateur athletic endeavor, is his garment. Yeah. You know, I tried to look and say, well, if summer's approaching and we're going to get out into the world a little bit, there's gonna be an appetite for athletics, at leisure, working out, some local travel by car, and to me Garmin. You know, it's got a great balance sheet, a little

over two billion in cash. The stocks pulled back, and you know, as you exercise more in your outdoors, you're gonna want the GPS and you're gonna want the nice watch because in some ways you've been pent up in spending, so you're gonna want to reward yourself a little bit. And so I'm kind of looking for those potential shorter term trades over the next couple of months. And we've been very tactical because I think you have to be more tactical and active if you're going to capture gains

in a highly volatile market. And that's what we're doing. So a name, so garments, a name that you've recently purchased, we have, we have, and I'll add to it on on this this step too. What else, what what else have you added to Well? Uh, we have mostly been adding as as the market has come up to the

resistance level. I've been trimming the the kind of offensive basket, you know, the Nikes and the Lulu's and the Microsoft's and the Apples and the shopifies, and I've been adding to the defense basket the Dollar General and the Costco and the healthcare names and the Procter and Gambles. So you know, top of the range, you sell the beta and you buy the defense. Bottom of the range you do the with the reverse. Alright, love catching up with you,

Eric clark Uh. You're the man portfolio manager Rational Dynamic Brands Fund, one of the top performers over the past few years, so check that out on the Bloomberg e Joness on the phone from San Diego. Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, South Cloud, blooberg dot com, or wherever you get your podcasts.

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