Restaurants, Bars May Pivot To Private Buyout Models

on a very difficult wound there for restaurant owners. But as we head into the autumn and then the winter, you have to think about indoor dining. How is that going to work in New York and in other markets. To get a sense of that, we welcome Kate Creator, food editor for Bloomberg Pursuits. Kate some really interesting stories on the Bloomberg recently. I guess one that caught our I librot it In will be New York's first three star dining room to reopen, so I guess they're gonna

give it a try. What are most restaurants how are they thinking about it? I think most restaurants are excited to be back. And so many of them have done such a terrific job with outdoor dining here in New York City. UM, but a lot of them have just waiting holding their cards for indoor dining. And then Governor Cromo announced it in a place like Lea Bernadine that had not been open, that wasn't doing take out, jumped and was like, you know what, it's going to be

a risk no matter when we do it. And so now as the time so September thirty, they'll be reopening. Well so interestingly with Lebernardna and they obviously have a huge amount of resources. It's a huge airy space. UM. People were probably socially distant in there even before COVID. Given the amount of space it's it's in midtown Manhattan. They will be able to potentially make a little bit of money or least cover their overheads. But what about

smaller or more closely uh fitted restaurants. I mean, it's going to be such a challenge. I know you talked to Amanda Cohen from Dirk Candy, whose restaurant is tiny, who would maybe have six guests, eight guests, and those numbers just don't work. I think air Repair, like you said, has resources. He got p PP money and was able to say even in the best case, will break even, and we're willing to take a loss. But they all everybody's betting that it's going to go up to in

the near future. Governor Cuomo hinted that it might happen as soon as November one, which can't come soon enough for a lot of these places. So, Kate, how did how did some of the restaurants that really did make the investment in outdoor dining? Um? You know, you drive, I've been in the city a few times, and even out here New New Jersey, We've seen people get really creative on how they outfit space and now I'm starting to see more of the space eaters popping up. Hell,

how did those restaurants do? Do you think in hindsight? Um, I mean, I think a lot of them have sort of gotten into the moment and then engaged. And also a lot of them have a hospitality gene and they like to serve people, and they want to see customers and faces and cook. You know, chefs like Tom Colichio, they want to cook. You know, they're not They're not like lobbyists. They don't want to spend their time in Washington.

So I think for a lot of them, you know, until as as the numbers start to shake out, and then we'll start to see I think, more and more closings, which is gonna be hard. But right now I think a lot of them are engaged and going day to day. The p PP money obviously it's coming to an end of the end of the month, and there's no word on whether it's going to be an extension as all. Right now it looks like there isn't going to be. So what about the restaurants that took p PP money

that now don't feel like they can reopen. Do they have to pay that back in full? Um? They do, well, they have to pay back. It's the loans. The terms of the loans are actually pretty good. I think it's one percent um that you have a year two to pay back. So in terms of in terms of taking money and and you know, making having an investment in

your restaurant, it wasn't the worst deal to make. But a lot of them, I mean, the best case scenarios is if they can follow the guidelines and not have to pay it back at all, and then that just becomes money that like for our repair at laburner Den Fuels, they're reopening. So, Kate, do we know how many restaurants have closed in New York or are expected to close? Have you heard any reliable data on that? There's um no, everybody.

I mean there's a lot of like scary numbers. I think open table ahead, um an eight percent number that might close. That was nationwide and New York has been really hard hit because a lot of these restaurants are small and the signs aren't aren't great for them reopening given current guidelines. But there's no we we haven't seen numbers that we really trust yet. What are restaurants, the smaller ones in particular, putting money into in order to

try to keep going? What's the design you know, costs that they're spending on. What are they spending will see on? They've been you know what a lot of them have been. Really they've they've figured out like fun ways to make money, like meal kits and take out. A lot of them have pivoted to meal kids. I'm actually betting that a lot of them also, like bars, will become sort of

private dining rooms. So Amanda Cohen, for instance, could you could buy out her restaurant with ten of your friends or whatever the mandated group is, and then it becomes something that's viable for her, viable for you and your friends,

and then you feel safe when you're there. And that's also bars are going to be really hard hit right now, especially in New York City, because you don't go to a bar for it to be empty, you know, you go to a bar for it to be sort of crowded and fun and um, so I think a lot of bars are going to rely at a model like um buyouts, having like a group of friends buy it out, and then that hopefully will be economically sustainable for them.

So it's interesting, Kase. I mean they guess the next several months are gonna be critical here as we pivot to the cooler months. Um, how much longer can out were dining really go? Do you think that's the that's the what D twenty billion dollar question? But I think I'm I've talked to like there's a lot of enterprising she have some restaurateurs and someone was like, I'm going to go full Game of Thrones, you know, I'm going to have like sterilized furs and wraps and we'll figure

out some really good heating lamps. And I found that engaging. I feel like I'm in Like I'll put on my down jacket and go eat outside, and I feel like I'm in Game of Thrones totally, as long as the cast is there as well. Thank you so much. Always fun and very informative. Kate Crater is food editor for Bloomberg Pursuits, and her recent story, What the Future of Restaurants Might look Like has some terrifying data in there, but also some some great pointers for restaurants and people

who might want to eat in them. It is time for Bloomberg Opinion. We're joined today by Noah Felment, Professor of Law at Harvard University. Professor is also a Bloomberg Opinion Calmness from Boston, Massachusetts. Professor, thanks so much for joining us here. I want to go to your when of your most recent comments, a new justice won't win Trump an election verdict? Talk to us about that, because it seems like if Trump gets his another appointment on there,

it will be six to three conservative verses, perhaps more liberal. Um, how does that play a How does a math work? Well? First of all, it's important to say that that could happen. You might get all of the Republican appointees lining up

with the president. But until now, Chief Justice John Roberts has been signaling like crazy that he does not want the Court to be seen as a partisan body, and I don't think he would be on board, which means that without a new appointment, it could well be five to four, you know, without with Justice Ginsburg still haven't been alive, it could have been five to four with ch Chief Justice Roberts crossing the aisle. The point is that right now, a new justice might actually not go

along with the other Republicans. Imagine a new justice who has just been named by Trump. That person's reputation would be ruined not just for today or tomorrow, but for twenty or thirty years if she decided to vote in order to give the presidency to Trump in a closely contested case, so she might act differently, or other Republican nominated justices might also cross the line. So my point

is just that we don't have a guarantee. Yeah, I mean, what about the idea of court packing, because if the conservative justice were to fear that that might also sort of play into it. If there's a whole lot of game theory going on here, isn't there? No, there absolutely is. You know, imagine that we get a Republican nominee confirmed right now before the election, and then Um, in a

close vote, gives the election to the president. Democrats are going to be enraged, not just for a day or two, but Democrats are gonna be enraged for four years, and the call to pack the court is going to become almost impossible for a Democratic majority to stop. You know, many people, including Joe Biden, have said they don't like court packing. What court packing would need to become mainstream

would be four more years of Donald Trump. That would really change I think almost everybody's mind if the Supreme Court gave the election to Trump. So I think some of the justices who care a lot about the court might be worried about producing that outcome. So Noah, it looks like, uh, we're going to get a vote on a replacement for Ruth Bader Ginsburg. Um. You know, before the election, we're gonna get an appointment here. How do

you what do you think the ramifications are of that? First, you know, some Democrats are going to turn out and vote more aggressively for Donald against Donald Trump as a consequence, But there's also going to be part of Trump's base that sees this as a major accomplishment. There are many Republicans who voted for him just because of what he would do for the Supreme Court, and some of those people are also going to turn up. So it's not

at all clear that it helps or hurts Trump. And from Trump's perspective, he also can't take the risk probably of not choosing somebody because then his base one might become frustrated or angry with him. So we don't really

know what it's going to mean in that term. In those terms, what we do know is that it's going to create a new norm in the United States that if you're the president from one party and the senators from the same party, you're going to choose justices, and if there's any split between those things, you're not gonna be able to pick any justices. That's the new world

that we're going to be entering. What about the tenor of the court just more generally, maybe definitely have had some non typical or maybe unexpected decisions from the likes of Justice Roberts and others. You know that you would have assumed would vote one way, and then they arrive in the court and they vote another. In recent years,

it's a super important point that you're making. We have to remember that even people who look extremely conservative, chief just as Roberts or Justice Neil Gorsuch who is put on the Court by Donald Trump, have come up with some surprisingly liberal outcomes, not because they're liberal, but because they're jurisprudence in those cases pushed to a liberal outcome. So you know, this past July, we got a vast expansion in the rights of LGBTQ people from Justice Core

such joined by Justice Roberts. So even though we're about to get a very conservative nominee, in my opinion, somebody more conservative than Roberts or Gore such. Nevertheless, you can't predict for certain that for ever that person will always line up with the conservatives. There is always some element of unpredictability in it. So, Professor, what do we know about some of the leading candidates for this vacant spot.

The leading candidate, I think, by pretty much all accounts is Judge Amy Coney Barrett, who is a judge on the Seventh Circuit, one of the appeals courts in the United States, and she previously was a professor for many years at the Notre Dame Law School. She's incredibly smart. I clerked at the same time she collected the Supreme Court, she worked for Justice Scalia, I worked for Justice Suitor.

By all accounts, everyone agreed was maybe the smartest or one of the two smartest lawyers in our entire group. Very very well thought of, and extremely conservative. Um openly, so it's not, you know, I'm not saying anything negative about her. She would own that that description. So you know, she seems overwhelmingly likely to be the pick because she's eminently qualified and her perspective matches that of many of

Trump's voters. I would add that she was involved in a confrontation with Senator Diane Feinstein when she was up for nomination, in which Diane Finstein used kind of um antique what I would call when did call at the time in Bloomberg anti Catholic language to question her about her religious beliefs, and that further galvanized support for Judge Barrett among conservatives. I would say that backfired very badly

for Senator Finstein. No, it is briefly is it true that as the country wishes, so the Supreme Court goes. It does seem to have been that way over the past number of years. Sometimes the Supreme Court, as they say, follows the election returns, but not always. You know, there are there have been moments in our history where the Court got way out ahead of what the public wanted.

Um An example would be Citizens United the Supreme Court opinion that says the corporations have free speech and that they can spend essentially unlimited amounts of money on candidates. Most people in the public, acquainted poles, don't like that outcome, but it's still out there. On the other hand, as the public became more in favor of rites, the Court started delivering constitutional men statuary decisions on gay rights. So you know, you can't you can't absolutely make a rule.

Sometimes the Court is with sometimes it's out had right. Noah Feltman, thank you so much for joining us once again. Fascinating discussion. We will keep a close eye on this. Noah Feldman, Professor of Law, Harvard University, also a Bloomberg Opinion columnists. You can read his work at Bloomberg dot Com, Slash Opinion, or O P I N Go on the terminal. Fascinating work coming out of our Bloomberg opinion folks, and interesting.

It's gonna be very uh interesting to watch, I think Vannie just kind of not only kind of the appointment, the voting, the vetting, the hearings for the Supreme Court nominee once again highly contentious. It's always fascinating. I mean, just think back to the Kavana hearings. You know, it's

just really fascinating to watch. But isn't it a small world pole when you know, we're speaking with no Feldman who literally clerks at the same time as the top contender for the post right now, it really is just a very you know, not small, but very rare world. Yeah, yeah, it's it's interesting and U you know, so he Professor Feltman obviously has a great read on this potential Supreme Court nominee. And uh, I think my takeaway was two things.

You know, obviously very qualified, as you would expect, but also very conservative, and I guess you would expect that as well. So we'll see how the vetting process and the you know, the hearing and the you know, the testimony and so on and so forth, how that plays out over the next several weeks. Again, President Trump would like to get this nominee, uh, you know, put forward

and kind of on the court by election day. I do think it's important to read editorials like Noah as though a new justice won't win Trump in an election. Verdict is his his editorial today, because there are so many factors that go into these things, and to tease out all the elements is really important. It's I think it's it's so important not to just jump to an

initial conclusion from an initial reading of something. Dr Anthony Fauci still believes that we could be back to relative normalcy in America by the end of one The head of the National Institute for Allergy and Infectious Diseases spoke with Carlile co founder David Rubinstein at the Bloomer Equality Summit, and they discussed how the US will ensure it is distributed fairly throughout the population. Now there's a concern in

the minority community. I believe that when the vaccine is available, wealthy white people will get it first, and then it will trickle down and the last people to get it will be minorities who might need it better more than than wealthy white people. What can you do to assure people that people of minority backgrounds will be getting this

in the same fair way that it should be distributed. Well, there will be a prioritization, I mean classically, notwithstanding COVID nineteen, whenever there is a shortage of vaccine in the sense of when you're rolling it out and you don't have all the doses. Classically, the Advisory Committee on Immunization Practices advises the c d C who makes that determination about

what prioritization is going to be done. We're complementing that with another group from the National Academy of Medicine, which has recently met to also give a recommendation. We don't know exactly what the decision is going to be, but I can tell you, David, from past experience, clearly people who can benefit from the vaccine the most and those who are at the highest risk of serious complications will

be in the higher priority. Almost certainly, the first priority will be the frontline workers, the people such as the health care providers who put themselves at risk, but close behind them will very likely be people who could benefit the most, and almost certainly that would include minorities. The vaccine has become a political football with President Trump pushing

for a vaccine pre election. Our next guest, Riley Griffin and Bloomberg health care reporters here to tell us how the Trumpet illustrations going overdrive to make that happen again. We just heard from Dr Fauci with David Rubinstein with those interesting comments. So interesting, Riley, what do you take from what we just heard from Dr Fauci as you're

speaking with David Rubinstein. I think that's fairly consistent with with what we've been hearing previously, which is that frontline workers, those who are in health care facilities, and those who are on the grounds and say today jobs where they can't work from home are certainly going to receive prioritization. Next,

Ye're gonna want to consider at risk communities. But one major concern here is an increasing embudding sense of vaccine hesitancy among broad Americans as this game of political football, as you say, um create an additional set of doubts surrounding vaccines efficacy. So explain that a little bit more. Is this across groups and across the country, or is it in particular demographics and in particular communities. We're still learning more about their distribution plans, so that's all subject

to change. But the idea would be that communities that are at risk UM, Black American Hispanics and so forth might get prioritization. But again we don't know this yet. We have yet to see a vaccine receive an emergency use approval. UM vaccine makers are still in late stage studies. We actually saw Johnson and Johnson launch its Phase three trial just today in sixty thou patients. So all of this is going to depend on the data and as

soon as we have a positive read out. The Trump administration suggests that within twenty four hours of clearance by US regulators, those vaccines which have been manufactured at risk amid the clinical trial process will be deployed to administration site. So we can really get this going, Riley. Do we even know how the decision or is going to be made or who is going to make it in terms

of who gets the vaccine first. Is it simply a f D A type of decision or does can it become politicized by having some involvement by the White House or other political entities. So this is certainly a team effort.

What we have right now is a cohort called Operation Warp Speed, which brings together the Department of Health and Human Services, It sells the health federal agencies UM as well as the Department of Defense, which brings to it a logistics expertise, and they are determining these IS strategies

together with the CDC, and that's quite critical. Something my college and I have reported today UM actual in Santaz and Sheriffs Dine and I is that the Trump administration has shifted billions of dollars previously allocated to public health programs into its Operation Warp Speed Vaccine Push, which reflects the US government's increasing focus on a medical solution to

use the COVID nineteen pandemic. But simultaneously are reporting raises um question about how transparent the effort is being in terms of disclosing the funding it's received as well as the money deploying to vaccine makers. And that has taken some money away from p PP equipment and masks and so on as well. According to the story Riley talked us about Johnson and Johnson, it's now entering the last age and its trials. Is this particularly because we had

the story on Fiser yesterday. Do they really want to jump in there. They've been planning for a September started date for its Phase three clinical trials for quite some time, really pushing UM their clinical trials to the test in terms of acceleration. So what we know from today is

they've launched the sixties thousand person final stage studies. It's one of the largest two dates and that's bringing it into the folds of only a handful of front renders conducting trials in the US in hopes of bringing a shot to market to call the pandemic um. The important day to keep in mind here is that the company expects to be able to approach US regulators with an emergency authorization in the beginning of contingent on good data.

And we'll have answers as to whether or not this is safe and effective as soon as by the end of the year. And Vonnie, one thing I want to share with you that makes this candidate so different from Madernas and spisors and after Zenica's is that J and J is taking a one dose shot approach, which is different from those other other front runners which have a

two dose vaccine regimen. It also doesn't need uber cold storage facilities to be able to maintain the vaccine UM and generated a strong immune response in early studies in

only fifteen days. So if you talk to J and J and their chief medical officer, like I did just this morning, what you'll hear from them is they think they're differentiated and that they're going to have a vaccine that's more easily distributed globally to health care facilities with limited infrastructure, um, and can get that immune response quickly. But again, all eyes are on this data. UM. Yeah, Riley just robbly just in the last twenty seconds here.

Is it gonna be like a cocktail approach or is it gonna be one winner take all? So what J and Jay's suggesting right now is that they're going to take a one those shot approach. UM. I think that this is a really important question though, because if you're a patient and you get one of the first vaccines

that's mildly efficacious, you may want another candidate down the road. UM. We don't yet know how these vaccines interact with one another as they're being tried in very stringent um studies solo. So I'll have more to you on that question in six months. Now, well, Ronny, we're gonna need a little sooner than that. We're all hoping fingers cross. All right, Riley, thank you so much. We appreciate it. Riley Griffin Bloombrick

Healthcare Reporter. All right, it is time how to continue our look at this market which could be a head scratcher if you weren't following the narratives that we just spoke about with Sarah Ponzac. So do you very likely is following all those narratives? Is Hugh Johnson Chairman and ce IO of Hugh Johnson Advisers you we're seeing another down day for the NASDAC and of course this idea that the rotation to sicticles is overtaking the narrative? Again,

does this last? Is this a lasting narrative? It's a lasting narrative from this point of view. Is that we've we've come very far, very fast. I think you know that in this market since the late March, and we've gotten to a level that was very overvalued, overvalued in my judgment, and now we're still overvaluedent overvalued. So we are getting sort of a gift back or a decline, let's call it a correction in what I think is

an ongoing bowl market. The perception also is Vannie, that we're going to get in the future, uh, and I mean two thousand twenty one, we're going to get us spreading out of the growth in earnings. And when we start to get that where it's not limited to so few stocks, you're gonna start to see, Um, you're gonna start to see broader performance in the SNP five dred It won't be limited, it will be broader, and consumer cyclicals or consumer discretionary stocks will be at the top

of that list. That's very consistent what we've seen in the previous bowl markets are in history. So things are going to broad now, which in my judgment is a is a good thing. But right now we're still pricing or overvalued. We have to come down to levels that make more sense. We're in the process of doing that, Hugh. How do you view valuation here? Are you a price to earnings type person and looking at the pe ratio of the marketing of sectors relative to historical levels, or

how else do you think about valuation here? Given that rates are so low, price earnings ratios are key, and the key to price earnings ratios is just as you say or imply, is interest rates. And right now, when we take a look at what we expect for inflation one point one two thousand twenty maybe two percent in two thousand twenty two, that means the Federal Reserve is not going to change rates before two thousands, say twenty three,

rates are going to stay low. Returns from fixed income are going to be just uninspiring, And that's a kind way of saying it. Between now and two thousand twenty three. The level of rates that we're looking at, therefore, can be supportive of price earnings ratios round current levels. Now, current levels, in my judgment, would mean twenty but we're up at twenty four right now, which is a problem.

In other words, rates are supportive of price earnings ratios that are below current levels, not at current levels, and that's why we need this correction. So you're solutely right. It's rates, it's price earnings ratios, and they the price earnings ratio has to come down to be consistent with the level of rates. So we're pricing overvalued. However you want to say it. I love how you put this.

You tell investors to maintain a meaningful exposure to equities, but also maintain a meaningful cast position to support lifestyles for at least six months to a year. What are you anticipating and what's a meaningful cast position. Yeah, that's a great question. It all depends on the person and exactly what they what they need, and my judgment that means six months of essentially of living expenses. Some would say that's not enough, it has to be maybe a

year of living expenses. But given the risks in this market, Vannie, I think what we're talking about is is yes, I think you have to maintain a meaningful allocation equities because I think it's a bowl market. We're talking about a

correction in a bowl market. But at the same time, given the level of risks, particularly the level of risk with a sort of second wave and we start to sort of roll back some of the reopenings, I think what you have to do is you have to have a meaningful defensive position or cash position six months to a year of your living expenses. So you, I know, again a long term bowl market only game in town.

Are you happen to your clients, who again are looking for yield, you suggest that they look to perhaps some risk your asset classes perhaps emerging markets. Yeah, you kind of have to do both. You have to kind of have a little bit of if you're very price sensitive, and again with the risk being high and price sensitive,

you should have a little defense. And again that means buying stocks like I mentioned Verizon, I there are plenty of others that have attractive dividend yields and will give you good defense if the market does go down further as I as I expect. At the same time, let's keep in mind that this is a correction and maybe a stiff one in an ongoing ball market. So you want to be sort of half position for defense and

half position for the ball market. And that means really buying some of those stocks that will do well in a ball market, things like Facebook, Master Card, UH and Vidia, Apple, you know what they are. So you have to have some of that in your portfolio as well and take a hard look at them. If you're looking at international, I would still underweight international, but emerging is going to be better than developed. Hugh Johnson, thank you so much

for joining us. As always, Hugh Johnson, Chairman and Chief Investment Officer of Hugh Johnson Advisors, giving us his thoughts on the market again, Vonnie, where given where interest rates are, given what we're hearing out of the Federal Reserve, looks like rates are gonna be lower for longer, kind of pushes investors valuations notwithstanding, into equities. Yeah, I mean, I think that's why you get these sort of bouts of massive gains and equities. It's just people desperately looking for

something to do. And it's absolutely absolutely thinking going down, you have taken on more risk, maybe you know, going down the risk curve in terms on the credit as well. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio