This is Bloomberg Business Week. I'm Carol Masser and I'm Jason Kelly. We're here every day bringing you the latest news from the world's of business and finance, plus technology, politics, economics, all harnessing the power of Bloomberg Business Week reporters and editors, not to mention our hundred journalists and analysts more than a hundred and twenty countries. You can download Bloomberg Business
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's also set the Business Week agenda. Gotta talk a little bit about the market. Trade Here. Sarah Ponza is with Us Crosshouse at reporter at Bloomberg New She's on the phone in New York City. Dave Wilson our stocks that are at Bloomberg News on the phone from New Jersey. So, Sarah, let's start with you. What kind of interesting moves are you seeing in the
trade today. So honestly, it's really shocking in a way that you have oil prices the wt I crude oil as we speak, below twenty dollars a barrel coming into the trading day. There were a lot of warnings, a lot of research notes emails going around say this could be another rough day in the markets, considering the extremely large games at rally that we saw last week and now oil plunging yet again. Yet you look at the market and we see equities higher for a fourth day
in five. So it really is pretty striking the fact that we're seeing this resilience once again, and you have the likes of JP Morgan Cross Assets strategists saying that maybe the lows truly are in, and even Mike Wilson, who's been embarished, he was on Blueberg Television this morning and he said he doesn't even think that we will go back and retest those lows. Now. Of course, you have many people on the other end of the spectrum too,
saying that this is just a bear market bounce. But the resiliency today does make you at least question, all right, Dad Wilson, come on in here. Set the scene for us. From your perspective, you're looking at sectors, you're looking at individual names. What do you see in this trade that feels different from what we've seen over the last couple of weeks. Frankly, not a whole lot. I mean, you talk about energy stocks being down, we've gotten used to the idea since last year that energy has been a
week sister. When you look at the main industry groups in the S and P and when you see what's up today technology stocks, and we've certainly seen them at the forefront of the market's performance, even in this current bear market. I'll have more about that next hour with my chart of the day. And on top of that, the defensive areas healthcare utilities, the makers of consumer staples, food, beverage,
tobacco doing relatively well. Real estate is a bit of an exception today because it's, you know, little changed and you're finding issues. I mean, let's face it, we're coming up on April one. We already know that Cheesecake Factory isn't gonna be paying rent on any of their restaurants, and you've got to presume they're gonna be a whole lot of other companies following their example. My husband and
I've been talking about that. That's remarkable because anytime we've ever gone to a cheesecake factory, it is packed, The lines are out the door. So if a chain like that is having troubles. You know, it just is indicative of just so many of those independently owned restaurants. You just you know, it's very clear how troubling this time is going to be for them. I just I think it's interesting, and David speaks to a larger real estate story,
commercial and even residential. If folks aren't able to pay their mortgage, or if businesses aren't able to pay their rent, that's has a ripple effect through um our economy. What absolutely does. And we've already seen that play out with what they call the mortgage reets real Estate Investment Trust and either lend money for properties or buy morriage backed securities. And they have really taken a hit this month, much
more so than the broader market. And I just want to point out, you know what, Cheesecake Factory, the shares are actually hired today, and you had a firm, Googen Haun come in and raise their twelve bunts price estimate
by fifteent to thirty dollars to share. They figured that Cheesecake Factory is gonna be okay in the long run once they get past the issues in front of them now that are keeping them um at least in their own plans from paying the rent, and so Sarah Ponzac still with us, help us understand whether that is consistent across the trade and investor's mindset. At this point, are people just saying, all right, well, let's see what's going to be good in the long term and just look
past the next sixty days. Well, do you know what's really standing out to me today? And I think it's a little different, is the fact that we're back to that norm where you have tech outperforming once again, you have healthcare outperforming once again, particularly the likes of Abbott Labs, also Johnson and Johnson. But you're back to that scenario where the likes of Boeing, your airline, your transport companies
are the ones falling. And that it is a bit telling because if you were to love there to basket that Goldman Sacks tracks of the most short of stocks, and today it's actually down but very very slightly. So you're not seeing this giant rally in the stocks that were beating up most. So you're not seeing this huge short squeeze in the market, which we did see in
some of those major rallies last week. So we're back to this more sustainable buying, sustainable buying of the names that people have loved over the past ten years, over the past bull market, and I think that's a bit telling about the structure of the rally today. All Right, Sarah pon Zack, We're gonna leave it there, Thank you so much. Pon Zack is cross asset reporter for Bloomberg joining us from New York City. Dave Wilson. We are going to talk to him next hour, as he alluded
to for his chart of the day. This is Bloomberg Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. Well, we got a lot of news over the weekend and certainly continuing this morning. Jason Spain reporting fewer deaths today. Uh yet President Trump abandoning his ambition to return America to kind of normal life by Easter. H cases now of the virus topping seven hundred thirty seven thousand, thirty five thousand have lost their lives. A hundred and fifty
six thousand um have recovered. This according to JOHNS. Hopkins, let's talk about this. Dr Rhonda Meadows is President at Health Management at Providence St. Joseph's Health, the first US case of the virus was confirmed in Washington State at Providence Regional Medical Center in Everest, and this is all part of a big major health system. Dr Meadows, nice
to have you here with Jason and myself. Um tell us where we are in terms of either finding a vaccine or a better test so that we can somehow get our head our hands around uh, the virus, maybe sooner rather than later. Good afternoon, and thank you for inviting me. As far as a vaccine is concerned, that is somewhat out on the horizon. We're looking at about
a year from now. But we're most concerned with now is actually getting the personal protective equipment on the map to our frontline caregivers, our doctors, nurses, e MS and first responders. We're also to the work of actually updating our projections on potentially the worst case scenario and making sure that we have sufficient supplies including ventilators and so.
Dr Meadows, what have you seen change either in the sort of the the progression of the outbreak or the preparedness, especially in the last week or two as you've learned a lot there on the ground, and you've also watched cities like New York UH and San Francisco and others
grapple with this. So what we have seen over the last week or show is trickling in of the personal protective equipment and some mask We get a couple of days at a time when we do get some supplies from some domestic suppliers, are international suppliers are still delayed and getting the big bulk of the equipment and supplies
that we need. Um. We are seeing, UM with the good effort of the American people, UM, the efforts to do the stay in place and the social distancing, and the more we do it, the further along we will be in terms of slowing flowing the rate of the
spread of the virus itself. UM. That means that in some places like cel and the West Coast where we have been addressing this for a little over two months now since that first case January one, but we actually are seeing UM that we can actually manage UM the patient populations that are coming in. However, if we delay or becomes a liquent in doing those social distances to stay at home, we could see another surge that can overwhelm our health your systems. Still on the East Coast, Yeah,
I'm sorry, please continue. No, I was going to say, on the East coast, are rather are overwhelmed, right, they have a large number of people in population densed areas UM, they more than than anyone else, needs additional help in getting the supplies for their front line. It's interesting what you said about, you know, accessing your domestic and international suppliers.
How is UM the federal government helping and maybe you know, figuring out out the domestic and international suppliers, pulling in those resources and making sure it gets to the hospitals and the medical care professionals or the medical professionals who needed. Is the government playing a bigger and better role, if you will? And all that, I think the Settle government is beginning to play a role UM. Probably and not as aggressively if some of us would like. But we
do see some of the effort. UM. We actually went out on our own to actually procure the maths, the personal projective equipment, the ventilators, anything and everything we've needed. We've actually gone on our own. We've worked with our state partners who have been great UM to work with us UM. But part of the original problem, Carol and Jason, is that we are starting off with the blindly. We don't have the surveillance data, we don't know what the
original denominator baseline was. So we're having to assume the worst case UH scenario, and so our projections may seem large and alarming to folks, but it's because if we don't prepare and act toward addressing the worst case, we will be surely in trouble if we don't do that. UM. So we're seeing some UM, some questions in some request. We have not received any ventilators from the subtle government. UM. They would go UM when they are dispersed to state
government and then be UM dispersed. We have not seen any come to Providence yet. We have not seen any ventilators come locally, I mean domestically or internationally. We are in queue with everyone else UM, and everybody is trying. It kind of makes the use of the Defense Production Act even more important UM to basically encourage UM non traditional providers of equipment can help us get the supplies right. UM. So last question for you, Dr Meadows before we let
you get back to work. How important was it yesterday the President coming out and basically saying, look, Easter is not going to make sense we're going to go to at least April. Did that give you some some sense of optimism that maybe this is being taken more seriously. It actually does, and I will tell you that we cannot flack off, we cannot step away. The social distancing and the stay at home must be maintained at least until April. We'll have to see in other states what
they need as well. We're basically facing waves of viral spread and health care is what was The viral spread is local. We have to address it where it is. All right, we really appreciate it. Thank you so much. We know it is extraordinarily busy, very grateful for you for taking the time. We've learned so much in talking to you and your colleagues there in the state of Washington, especially as we as you point out, we deal with
a very overwhelmed system here on the East Coast. Dctor Rounde Meadows is the president of health management at Providence St. Joseph Health to joined us on the phone from Everett, Washington. As Carol said, that's where it all began in the United States, or that's at least where we first saw the US the first domestic patient. Yeah, I feel like that what we've our discussions with her and her team have really been helpful and kind of understanding the spread
of the virus and the impact of it. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Glas Carol mentioned it's the most read story on the Bloomberg and not surprisingly, this is at the heart of the financial side of this crisis. Michelle Davis wrote the story. She's a finance reporter for Bloomberg, one of our top shots. She joins us on the phone from Vermont. So, Michelle, you, I'm sure, like all of us,
saw these headlines about corporations drawing down these revolvers. You
went to the banking side and what do you find. Well, So, yeah, as you mentioned, I have been watching as lots of companies around the country have just since March nine to draw on more than a hundred and seventy seven billion from revolvers, and h that means that banks have been, you know, at the same time, banks have been talking to companies and they've been saying, look, you know, if you don't really need the money right now and you
are just topping this revolver out, of an abundance of caution, we'd advise you to please not do that. Um. And the idea is, you know, it's not anything having to do with liquidity concerns. The banks say there is there and they will honor any requests they get for revolver draw downs, but it's really one person described it as you know, trying to take a hot shower. If everyone tries to take a hot shower at the same time,
some people are gonna be left with cold water. And so in order to be able to get money to the companies or the people that need it the most and the quickest, banks are asking, you know, the healthiest companies to kind of stand down so that they can prioritize getting access to these other companies. Well, what's great about it too? I love this line in your story and you're reporting, Michelle is for Wall Street. It's not
an issue of liquidity so much as profitability. Explain that so every time, well, first of all, revolvers are technically just very low more argin uh instruments. Banks will extend them the companies of kind of a relationship thing, you know, like this is here for you just in case, But they don't accept everyone to draw them down. There a lot of them aren't even profitable, and they're seen as kind of an entryway into other more expensive capital markets fields or or you know, m and a advice um.
And so every time someone does draw down on one of these, the banks have to put aside more capital because of you know, financial crisis rules, and so that does end up straining or hitting their profitability if if everyone is doing it at the same time. Well, and it's interesting too in your story of a really important nuance is that you found evidence that some companies are saying, all right, banker, I'm going to give you a break on this one. I'm actually gonna pay a little bit more.
I believe McDonald's did this to go get a short term loan, So I don't do this at the risk of, you know, maybe making you Mr banker and they're all misters. It feels like upset down the line and maybe not giving me the attention that that I want and feel like I deserve. That's correct. You know, when I first started hearing about bankers were doing this that my first question was, why would any company agree to this, Like, why would they say, yeah, you know what, I'm just
not going to draw down on this. And the idea is no one really knows what's going to happen over the next couple of weeks or months or years even and so this companies, you know, see banks as very stable resource for them, and the last thing they want to do is is you know, bother or put their banker, you know, on bad terms. And so some of them, like McDonald's have said, okay, um, we'll work with you
on these short, shorter term revolvers UM. McDonald's actually went up for a sixty four day revolving credit facility, drew down the entire thing, even though it hadn't yet tapped an existing six billion dollar revolver that it had well. And what's interesting though, is this is also illustrating by companies maybe tapping different sources, showing that the system is working right, that companies can access money if they need
it exactly. Yeah, And this shows like McDonald's for example, by doing that, they kind of signaled to stay actually
have additional funding sources UM. I think for companies that are not as directly impacted by you know, the economic fall out that's come from the majority of a country being on lockdown, if you can show if you can go to the bond market or go and get another bank line right now, and show that you actually don't need the money, but you actually, you know, want to have it, just in case that that communicates to investors
that you're in a in a strong position. Well, I feel like I was gonna say, I feel like banks are also signaling like, all right, you draw it down, but listen, I'm going to make it up somewhere else road. And I think that's a really important point. And I'm glad that you both made it earlier in the conversation. This idea of what we're really talking about is bank
profitability here. And so as people read this story, there are probably a lot of people outside of well sheet saying like, oh, I'm sorry, you're not gonna make as much money JP Morgan. Anyway, it's a very technical term. But in any case, Michelle Davis, thank you so much. Great reporting. Most read story on the Bloomberg for a reason, A really smart look at how this is playing out, Carol. I think it's a really smart story exactly. And and you know it's just um the understanding too of how
it all works. Right. Uh So I think it's really important that that she wrote about it, and that it's certainly something we discussed. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. This was the story. Let's be honest. We had to do this when Carol Masser so into uh this because we're obsessed with the world of fitness and it's all that much more important right now. Uh, let's get into it with Mary Pollan. She is the writer of the story in
Bloomberg Business Week this week. It's on the terminal and on Bloomberg dot Com today, along with the editor of the story and editor at the magazine, Sylvia Killingsworth, both of us, both of them joining us on the phone. Mary, I want to start with you, first of all, Great Peace help us what understand what's going on in the world of boutique fitness. Sure, thanks for having me. So. This is one of the many industries that I think was completely transformed overnight. This was considered to be a
really booming part of the economy. You know, whether we're talking about the big players, your crunches, your equinoxes, etcetera, but also a lot of small businesses. There's a whole cottage industry of these boutique you know classes, whether it's bar or pilates or advanced to views. And then with coronavirus, a lot of them had to close their doors overnight. Uh, they operate with very little runway usually so they don't know how to pay rent for the next couple of months.
And you know, there's three d fifty thousand fitness trainers and instructors, most of whom work as contractors. So unfortunately this has also met a lot of people are out of a job and it's unclear, you know, kind of what with the future holds for them. I have to say, I do feel like there's these tensions within the fitness industry because every we go to these fitness classes. I love it because I do have a sense of community with all my friends and sitting in the class and
doing something. But I have to say this weekend I did a yoga class by a beloved teacher through Zoom and it was twenty of us, twenty five of us. It was pretty amazing. We could see each other um and there was a sense of community. Sylvia, I do feel like this is going to be an interesting time and maybe there are some longer lasting results on the fitness industry as a result of the virus. That's absolutely
the post I think you're seeing. Um. You know you mentioned like yoga classes of verg we also know about peloton um is one of or the mirror for example, are those services whereas you can do a lot of in home workouts. And I think you're going to see probably a lot of people shipping over to those businesses and maybe you know when things reopen, who's going to stick with that? He's going to go back to the studio. This is a really kind of like a pole uh
tug of war between those two things. I think right now they're trying to plant ye to each other. Um. The focus here was definitely those smaller business owners who um how you know, it's like usually an individual sounder who goes off on their own rather than being part of the big gym. They take on a lot of risks, they take on a lot of debt, and you know now they're sort of reduced to essentially a staff of one.
So we're looking at very much what is you know, sort of put the put the business on ice option? How do you how does one person keep a small studio afloat and for that time, and it's it's going to be really tough. Yeah, it's funny, Mary, I mean my inbox is just full of these you know offers, you know, as including from folks who are in your story like boxing, flow box plus flow uh and many others sort of shopping their wares. How does it change
the business model though, especially for these small guys. Sure, well, you've got a lot of people racing to make these videos. And you know, keep in mind obviously, like at home fitness is far from new. I mean it's almost like this return to it's a return Yeah, It's like it's like a throwback and back then you have to watch the same video over and over and over again. Now
we have all this variety. And so there's been you know, players like Beach Body, Um, we've been doing this for a long time, and a lot of you know, the bigger players had a whole video library that many other members either didn't know about or didn't use as often. So or it was a subset of people who were really devoted to these companies. So I do think that we're going to see a big boom there, and I think that was driving a lot of UM. You know
what you're alluding to his loyalty to studios. I think people who really love that, you know, local slt teacher, bar teacher. It's a great way to support people and remain connected to a specific relationship you might have UM, but a lot of us being you know, built overnight. So you know, we talked to Sadie kurts Band, who runs um Purify Fitness, which has a pretty big footprint
here New York, but it's all over the place. She's now one woman company and she is doing her dance classes at noon and six on her parents porch in Miami and quarantine, so you know, it's you know, she went from having a ton of really amazing studio space in New York, so like this is and and all thousands of people are tuning in because they are so
devot into you know, her brand of dance classes. So I think we're going to see a lot of that UM and that the scrappiness of quality sometimes can become part of what's been gearing about it too. Mary, what are we hearing about in terms of the stimulus package and the help that especially since so many of these are individuals or their contractors, you know what kind of assistance might be coming for them. Sure, so you know the gift economy I put kind of put clotes around
that that is in the stimulus package. Whether there's going to be anything specific for fitness or sports seems to remain remains to be seen. You know, in a lot of industry trade groups are already lobbying for relief. Um. The big one that I heard from people is rent release, right. I mean, if if a lot of these studios can whether or get some kind of forgiveness, you know, whether this last month or two or three, I think that will make a huge, huge difference because that's a huge
cost because location is such a big deal in this industry. Um, And I think that's something that is being pushed really, really hard. So we'll see. And you know, the iron each from a policy standpoint is this is at a time when people need to be healthy, right, Like this could be a focus for a lot of folks. So it's interesting because an industry that's really struggling yet there's demands, right, it's a little counterintuitive to how we kind of think
about business. Yeah, totally, it's that that's such a good point and Sylvia come back on in. I mean, I do think about this, and we've been sort of talking around this notion that we're going to have a bunch of businesses that are fundamentally changed by this crisis. How does this sort of figure in with other industries that you guys are looking at at the magazine. I'm really interested in what's going to happen in the restaurant and
food industry. I think, um, you're going to see a very similar sort of um, you know, crush on the space. You know, again their physical spaces that people join together to do an activity, and um, you know you're going to see the same sort of crunch on rent and spacing. Um, you know, we're gonna lose a lot of restaurants, but I think it's going to be interesting to see what we come out with on the other end of that. Yeah, now it's really really interesting. Thank you both so much.
I was obsessed with this story as soon as it came out, and Carol and I I think both saw some familiar names in here, things that we've done, folks we've talked to, like the CEO over at Beach Body is a really really nice read. Mary Pollan wrote it. She is a writer for Bloomberg Business Week. She joined us on the phone, as did Sylvia Killingsworth, an editor over at the magazine. This is Bloomberg Business Week with
Carol Messer and Jason Kelly on Bloomberg Radio. It's also really important, and we talked about this on our planning call that we do have to remember, I mean, it's hard not to forget. This is a global story. It's a virus that's impacting both developed and developing markets. So we want to talk a little bit about that, specifically the emerging markets, especially Africa in the Middle East. Andy
Brown is Bloomberg New Economy editorial director. He joins us on the phone from New Hampshire, and you know, I have to say, Andy, I have been watching like Africa and India, like some of these um emerging markets because of their populations and also because of their conditions that so many people live in and how the virus might impact them. This is this could be just incredibly, incredibly damaging for these societies. It is. It is really scary.
I mean, obviously, the story here is that the coronavirus, the pandemic, it begins in China, it heads west, it ravages parts of Europe, it's rampaging through the United States. So far, so far, the emerging world, the poorer countries of the world have largely escaped the worst effects, and that is about to change their next in line. Abbi Ahmed, the Prime Minister of Ethiopia, was writing the other day. He said, Africa is on the edge of an abyss um,
you know. And the problem. The problem here is that these these poorer countries, they neither have the instituteitutional capacity of China. I mean, China was able to mobilize these massive state resources to fight a people's war and can largely contain the coronavirus. Neither does it have the advanced medical infrastructure that you have in country richer countries of the West, or in the social wealth and nets which
cushioned pain. And so it's going to be far, far worse for these countries, as you say, in the Middle East, Sub Saharan Africa, Latin America and elsewhere. And so Andy, I want to go back to where you started, help us understand how emerging markets are different when it comes to this specific virus or candidly any sort of pandemic or infectious disease. Sure. So you know, they are by definition, many of them fragile economies and and fragile in a
number of ways. Um, they're fragile because they have already these unappalling underlying health conditions. So if you look at South Africa where the rand has collapsed, something like seven or eight million people in South Africa are living with HIV.
You take a country like Egypt, hundred million people, ten percent, around ten percent of the population of Egypt living with hepatitis C. You know, so you have you have these these these underlying conditions exacerbated by poverty, and now you're they're about to be hit by you know, COVID nineteen.
That's that's on the that's on the medical side. On the financial side, many of these economies have been piling up US dollar debt and they've been struggling to repay that debt even before, even before this this UH crisis erupted. So now they're looking at debt repayment when their economies are in deep distress. Commodity prices of full and tourism revenues have collapsed. Um, the dollar is surging, and they're going to have a much much more difficult time now
repaying uh these deaths. Now you you you take Ethiopia, you look at it. You know Ethiopian Airlines, I mean one of the iconic airlines of globalization, along with Emirates and Cathay Pacific. It is a major foreign exchange for Ethiopia. Of course, Ethiopian Airlines is in deep trouble like all of the world's airlines. This means Ethiopia doesn't have the hard currency that it needs to import drugs, to import emergency medical gear gowns and and face masks and so on.
I mean, it's it's it's economically brutal and medically devastating for these economies. Well, and the thing is andy, I mean ultimately, once we get on the other side of this, I mean we really need the global economy developed and developing to recover in order for the world world to overall recover exactly. I mean the metaphor people keep using is a forest fire, right, so you know, you you can you can contain a forest fire, but you know if you have if you have stray sparks coming in,
you're going to very quickly reignite it. And what we're going to have this situation is emerging economies acting as a sort of a you know, a source for showers of sparks which are going to descend upon the countries that have already you know, recovering. The truth is that you cannot have global health security. You cannot really declare victory against COVID nineteen until the most vulnerable countries in the world have themselves defeated it. But you do. But
you do worry, right, and you do worry that. I mean, right now the developed world is struggling to deal with this, and so their ability to even lend a hand to the developing world it's just not there right now, or not to the extent we've seen in in past crises. Yeah, exactly. I mean you look at the way that you know, even within the United States, States are now bidding against each other for medical equipment. Well, that's going to be happening in the case of countries you know, and and
and guests. Who's going to be a loser in that bidding war? Yeah? Absolutely. Well, I mean the other thing Andy, before we let you go just a minute or so left that I wanted to ask you, is you know, we are seeing, you know, sort of pictures reading stories from Wuhan, you know, where so much attention is focused. Earlier this year, we talked about it with you at the time. You were well ahead of it as a journalist and certainly helping keep us honest on what was
happening over there. As you look at that situation, what are we learning? What can we take from what has happened with China that gives us some sense of what may happen next here in the West. Well, you know, there, there there, there is light at the end of it.
I mean, that's that's that's the story from China. But the real lesson from China in addition of course to lockdown owns, it's mass testing, um, you know, contact tracing, use of technology, all of government effort, individuals and since we've talked about this before, individuals in society taking responsibilities for their own actions. Um. You know, we don't believe the numbers coming out of China. It's way worse than the numbers have suggested. I think that's very very clear.
But when I talk to my friends in China who are running factories and businesses, they're they're telling me that pretty much China is back on the economy is back online, They're big problem now is the rest of the world that their export markets are now being slammed, the United States and Europe. All right, Andy Brown, always good to catch up with you, really good contexts and a very important story the Kolonel now. But oh no, no, no, no, please do the right mate. I want to drive, just drive.
Good questions trying. This is the drive to the globe. Give me thanks. We'll drying us down. On Bloomberg Radio, it is time for the Drive to the close. David Deeds is back with us president and chief investment officer at Point View Wealth Management. They've got roughly seven and a half billion dollars in assets under management, joining us on the phone from some of New Jersey. David, UM, I hope this finds you well, your family well, Um, good to have you here with us, Carol, we're all
doing well. Good to hear your voice. Yeah, same here. Um. You know, I think we're all trying to make sense of just the day to day news, the hourly news update. Um. We do have markets pretty much holding on to their best levels here today. What how would you describe kind of the mood of the market right now. So it's really a conflict here between investors bracing for economic news, which is going to get uglier and uglier as the layoffs pile up, unemployment rates go higher, indexes of activity
are going to go down. Plus of course the very sad news of more infections, more death. Investors are bracing for that. However, a raid against the other side. Are several things of hope here. One, of course, if we've heard some great news today from for example, Johnson Johnson talking about a vaccine that is being worked on and developed, We had some great news coming. It will be ready, but but I will but I will say that's they also said it wouldn't be it's like a first quarter,
second quarter maybe at its earliest one. That's a long that's a long way away. You know, it is long way away. And of course UM but there of course not the only company biotech and pharmactical company working on these things. I actually have a lot of hope that something else is going to be developed, and you know it may get tested offshore and be rushed to UM permission from the f d A if it's available. But of course we also need testing devices so we know
where we're in safe spaces. And Abbott Labs is now shipping a device that can tell in five minutes whether you're infected, thirteen minutes to prove that you're not. So there's some help on the on the healthcare front, and so, David, it feels like the advice that we're hearing on the investment side is similar to what we're hearing from the health side in terms of our own if if we are fortunate enough to be healthy, which is stay put, stay in place, and don't and resist a temptation to
sort of get out. Is that a fair, if slightly glib characterization. Certainly every investor needs to check their risk tolerance and continue to confirm what their investment horizons. But us put this into context, We've never seen We've never not come back from a health scare over the last hundred years, We've never not come back from a bear market from a panic, and so forth. The question, of course, therefore,
is how long is this going to last? Um, we heard some news over the weekend that the stay at home rules could be in place for perhaps as long as June, but certainly that is much shorter than most investors horizons are. Of course, the other thing not to minimize is to resolve the other resolved by policy makers. We're just seeing record setting amounts of fiscal stimulus. Is student going to be ported to the economy? Does that
worry you though? On the other side as well? I mean, is there a debt burden that the US government is going to have problems with, especially if we get into an economy that slows down where the tax receipts aren't there. You know, I think most people would love to um worry about what's on the other side. They want to get there. But you are absolutely right, Carol, I don't think it's going to be a question as to whether, uh,
the government can honor the debt. I think ultimately, what we've seen in other times where we've grostly expanded the amount of debt is inflationary scare. And so I think given how low bond prices are today, how high bond prices are today, how low yields are, and the fact that we could see an inflation scared down the road, I think, ultimately, um, perhaps a year or two down the road, inflation could be the problem, even though it's very hard to believe that now. And so, David, how
do you invest? How do you look at stocks, how do you screened them right now? What are you looking for as you work through with your team. Well, we start with going back out to our clients and saying this is the time to rebounce, look at your legacy asset allocations and bring the stocks up to where they were before the downturn started. Then, in terms of what stock to buy, what sectors, I think job one is
is diversification. There is the Tennessee. However, to always go with what's been working, maybe you know consumer staples, utilities, some of the uh bulletproof balance sheets, to some of the tech names, and there's certainly a solid place in your portfolio for that, but you may also want to take advantage of this downturn and look at some of the more cyclical names, which, um, if ultimately this stimulus does work and we get pass this healthcare should have
some of the biggest rebound. Is there anywhere you don't want to be right now, David? In terms of sectors, I mean we just talked about Macy's. I mean they're laying off, you know, almost all of their workers, and I know that that's been a troubled retailer for some time. But is there any industry, any sector, any names specifically that you just don't want to touch right now. Well, certainly those trends that were in place, like the the um transition from in store purchases to online uh, seemed
to be getting accelerated during this downturn. So those are things that you really have to look at. Who are the cyber survivors and who are aren't. But I would have to say the biggest things I would avoid is some of these smaller biotech names and so forth, which have gone up tremendously on hopes of some sort of proud that's really unproven. And of course some of the manufacturers are consumer staples. I think you're a little late now to be getting into cleaning supplies and things along
those lines. Other than that, I think everything can work all right. We're gonna leave it there. David Deeds, great to catch up with you. Glad to hear that you and the family are well there in Summit, New Jersey. David Deeds as the president and chief investment strategists at Point View Wealth Management, joining us on the phone from New Jersey. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg
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