The World Isn’t Ready For The Next Global Virus Outbreak (Podcast)

Bloomberg dot com. As we sit here and we track the spread of the coronavirus, there is a realization that even if developed nations are cracking down on trade, the world is still getting more global, at least when it comes to people and viruses moving around, and there's a growing concern that we are ill equipped to handle another pandemic. Joining us now is Robert Langrith, healthcare reporter for Bloomberg News, who are an incredibly interesting and frightening, frankly story for

Bloomberg Business Week about a potential pandemic. I just want to start with this quote from the World Health Organization. Epidemics in the century are spreading faster and farther than ever. Outbreaks that were previously localized can now become global very rapidly. Robert, why is that well? That's absolutely true. We just have a world with much more population, is much more interconnected

than ever before. And even that, you may remember, one of the first scary emerging viruses, Stars, one of the last ones to come out of China, killed killed about

eight hundred people in two thousand three. Uh And now UH dis coronavirus is the next emerging virus to come out of China, and the differences that's spreading you know, much faster because even since two thousand and three, there's just so many more uh discount plane flights and so many more high speed trains, so people just from all over China and Southeast Asia travels so much more than

they used to. So a virus that emerges, you know, somewhere out in the world just gets all around the world, you know, much more quickly than it that it used to. And it probably is the case that you know, years and decades ago, we had a lot of you know, emerging viruses that hit some obscure city out out in the developing world somewhere and just didn't spread that far and kind of died out before we even kind of

heard of it. Now, these things that spread every around the world, Robert just you know, given I know we're early days of this coronavirus, but kind of what's the um thought out there in the health community about the China's response to this coronavirus. Well, the problem is, I mean, obviously China is doing very aggressive response now and it's basically locked down the whole city, the whole province of sixty million people. Uh, you know, it's sort of an

unprecedented quarantine or there. The problem is that in the kind of key early weeks of the virus spreading, you know, it didn't it didn't really communicate much what was going on, you know, internally, and and the big response that didn't begin until like several weeks into it because apparently because you know, local officials are waiting for the top level communist parties for what to do and what they could say, and so that basically allowed it to spread, you know,

before people really knew what a big deal what it was for you know, two or three weeks before like a heavy, heavy response. And that's the sort of that's sort of the key period in sort of are you gonna need to slow these things down right away and nipped them in the bud. And when that doesn't happen that allows them to escape the headline of the of the piece that you're over the magazine man versus microbe.

We're not ready for the next global virus outbreak, and I'm wondering whether we can glean any insights from the spread of the coronavirus and extrap played out Why is this the case? Why are we unprepared well? One of the problems that happens is that, you know, we have lots of scientific smarts, and there has been real progress and better better testing and drug development, uh and you know, new gene sequencing technology, so we know exactly what's in

this coronavirus very quickly. But kind of what's missing really is a long term focus. You know, every time you know, you know, they call it the cycle of panic and neglect. You know, every time there's a new outbreak is global panic, but there's momentary resolved and then kind of that a few years later, we kind of forget about it fades away, and that kind of gives away to kind of in action. And the problem is we're only uh as as prepared

as our weakest lengths. So it doesn't matter. The CDC is a great job inside the United States if we haven't provided support to developing countries so they have some first responders that can identify emerging outbreaks right away. What does it mean to be prepared? Is it just the in terms of the sanitary equipment and testing kids? How can you be prepared for something if you don't even know what the virus is. Well, there's like two different

things here, you know. One one is that well, i'll give you an example of the Ebola outbreak in West Africa and two fourteen or so that killed more than eleven thousand people. But it's not that Ebola was an unknown virus. What happened there was it took literally the thing was brewing in Guinea for three full months and expanding before the wider world knew uh. And that allowed

it a chance to reach cities. So if there had been some you know, first responders, some some better little bit of better infrastructure there not a lot, but just enough to recognize and do tests right away, we could have nipped that in the bottom. That wouldn't have killed anywhere near you as many people. So that's the one thing.

Another thing is that you know, that's a real problem, and people think that one of the places where this coronavirus originated or spread to people, isn't uh one of these uh These food markets in China and Southeast Asia called wet markets, and that's where live animals and freshly soltered, unrated beat kind of commingle with lots of shoppers and and the and they've live animals there, and cages often stacked and top each other, different types of live animals,

so they're very unsanitary of their team with germs. Are these perfect breeding grounds are deadly pathogens And a lot of the health experts we talked to said, these really need to be shut down. That's just not safe, not in the not in the new interconnected world, and that just provides too much opportunity for the emerging virus that kind of mixed around the different animals and then spread onto people. And that's what we think probably happened with

the virus from Uhan. So, Robert, one of the areas of focus has been on kind of the healthcare industry, big pharma, the ability to come up with maybe antidotes or just vaccines or something like that for something that pops up. Is that a fair criticism? Do you think big pharma should respond better or more quickly. Well, the problem is, you know, for emerging virus, they're they're kind of you know, is not it's not a regular market.

There is an a regular market for you know, disease it doesn't exist yet, or a vaccine like this, where we just you know, don't know what the market could. But we don't know is this is going to be doing a year from now, whether it's going to disappear entirely, whether it's still going to be here with us but it's contained in China, whether it's going to be something you know, that's endemic in the population, and we need

to like vaccinevaccidate, like influenzo. So that means it's just kind of not a regular market for drug companies to go after. And and people, you know, top thinkers like Bill Gates says, we need to treat this possibility pandemics, you know, more likely prepare for war kind of as

a national security threat. And we don't really do that we need because Robert just real quickly here, I'm wondering about the Chinese doctor who initially was sanctioned for warning about the deadly Wuhan coronivor virus outbreak and that was in December, and there is a concern that perhaps this was spreading for a lot longer within China and there was a political incentive not to really disclose it because

of the ongoing trade negotiations. Have you heard any discussion to that effect or is that just a conspiracy theory and rumor at this point, Well, I don't know what the link to the trade negotiations in particularly, I don't know that, but certainly there is a concern that for whatever reason, the Chinese of provision provincial officials were trying to keep talking about this down, you know, not not say a lot about this, you know, they didn't they

you know, it certainly seems like I think that, you know, they didn't announce there was definite human to human transmission until just one or two or a few days before they kind of locked down the whole city. And it certainly seems like looking back at it, there's pretty clear evidence and they should have known well before that there

was human to human transmission. So so certainly there does appear to be been an effort to underplay this or at least minimize this, uh, for you know, several weeks, and it's just not clear was that because officials and the province were timid and they kind of wait for Beijing to tell them what to do. It's really not clear what was going on there. The information coming out of China now is so kind of murky and confusing and hard to know. You know what's true and you

know what's not true. Even with the death of this doctor, you know, first we heard it was dead, then they started to retract it there talking and we're gonna have to leave it there. Thank you so much for that. Robert lang Greth, healthcare reporter for Bloomberg News. With this latest it's actually a Bloomberg Business Week cover story, man versus micro very timely look at pathogens and the disease

in the case of the Corona virus. This is Bloomberg trying to check in with Bloomberg Opinion returned by opinion columnists A. Lisa Mark Tinouzi. She covers all things finance for Bloomberg Opinion based in London, Alsa, thanks so much for joining us boys. Some more news at Credit Swiss

t gent Tim ousted as CEO. What happened? Well, it's been um a long time coming in that you've had, you know, a bank that has been tarred by a series of embarrassing league for the last four or five months or so um starting with the revelation that one of their former employees who had just jumped trip to to rival ubs, had been tailed by a contractor for the bank, and that that triggered a sequence of events.

There was an internal probe that found that the CEO wasn't aware that it was actually the c O who had you know, orchestrated this um and and then subsequently another another incidence of corporate um um surveillance of one of the employees, and you know, and you know, continuing um to be followed by news about you know, internal warfares, etcetera, etcetera, And and this came to a head really in the last week where it appeared, you know, it was reported

that the chairman was about to ounced the CEO. Investors weighed in backing the CEO, and it's you know, today's the outcome of that boardroom battle sees T and TM leave to be succeeded by the first Swiss born CEO in almost twenty years, atop the Swiss farm initially shares of credits we traded in Switzerland down UH they still are down, but much less than they were initially, now down just for tense of a percent. Do we have

any sense of the new path forward? Was this an issue with t gent TM strategy or a culture clash or perhaps something personal? Well, I think, you know, you've had a strategy that he put in place, and this this structuring which basically saw the bank shrink and and shift more of the business towards wealth management and away from UM invest and banking and volatile trading, that hasn't really yet delivered as much of of the fruits as

t and would have liked. By now that was starting to come through, and I think we'll see some strong numbers on the fourth quarter when their report next week. UM. So you had a you know, some questions over strategy just because it's taken so long for that to translate

into better shareholder returns. UM. On the other hand, yes, you've had this huge damage to the bank's franchise and reputation UM over what appears to be you know, quite a bitter internal UM internal warfare and and and certainly it's put a spotlight on on the culture but also on the governance of the bank. UM. You know, the CEO claiming not to know about what his CEO was up to, and the board equally being in the dark

about what its leadership was up to. It all points to, you know, certain concerns of controls and governance right across the farm. Well. Attentioning to me a Lisa about this whole saga was that some just recently in the less several days, some big shareholders of Credit Source came out in support of the austed CEO TM yet the board still moved to ausked him from the company. What's the situation there? But of course, you know, these were three

large shareholders, but they're not the only shareholders. You know, Bloomberg is reporting that other investor does, including the Guitars. We're backing the chairman on this. Um. I think, um, you see, you have to you have to bear in mind that what we're seeing is not, you know, necessarily

everything that's going on behind the scenes. Um. But I think what's what's significant is really that from what I'm picking up and what I'm reading and from one of what we're hearing, is that this doesn't necessarily bring closure to this chapter. There's still an investigation on going by the local regulator. Into governance and controls. And you have a CEO now who will take over from t J and t M um who who's you know, whose remate is a little bit unclear because in a year's time

the chairman will definitely go. He's confirmed that he's only going to serve out maximum another year. Um. And that leads to potential questions as to whether this is really a permanent CEO succession or whether it's you know, an interim step towards you know, further strate teacher reviews further down the line, and perhaps a new management at least. So I'm just wondering, what do you think that Credit

Suite needs to do in order to bolst their profitability. Well, I think we'll learn a little bit more, um, you know this coming um, these coming elearnings next week. In terms of how how successful that restructuring has been. I think there's been a very strong shift towards UM lending in particularly in the wealth management business and particularly in Asia.

And of course we've we've seen, um, you know, what's been happening in Hong Kong and the repercussions in the economy from from the coronavirus both you know, in China and Hong Kong. There are some questions as to whether this, you know, very excessive growth in Asia driven really by top line targets is going to um you know, it's going to lead to potential more difficulty in delivering those shareholder returns. A Lisa Martin News thank you so much for being with us. A Lisa Martin News is a

columnist covering finance for Bloomberg Opinion. Joining us from London. You could read our columns Bloomberg dot com, Slash Opinion or O P I and go on the Bloomberg. Interesting to see the market response to the credit suit. Snoo is t G and TM after joining the bank as chief executive officer in two thousand and fifteen to parting being pushed out ousted after a battle in the boardroom. We got the latest US jobs report out this morning.

It was a blowout number two thousand jobs added that was compared to estimates of economist survey by Bloomberg of a hundred and sixty five. The market's response negative. It took it as bad news. Joining us now to talk about the actual underlying market and why there could be such a negative response. Tom gimbal He his chief executive officer of global staffing company LaSalle Network. Tom, can you give us a sense was there anything in this report

that was anything other than positive? Well, I think people are always looking for there to be a bigger increase in wages. They're always looking to have a jump in participation rate. UM. What I always call the chicken little effect that that the better it gets, the more people are waiting for the sky to fall. And so there's

there's that situation. But you know, when you're when you're talking about the market and how they're seeing it, sometimes it is just serendipitous that the market goes down based on whatever the number is. Tom, I know that you guys talked to a lot of companies out there. Are you finding are the companies out there finding It's really

hard to find talent and keep talent. It is extremely hard to find town when you're looking at a three point five percent unemployment radio ticked up at tentsive a point to three point six percent UM. It's really hard to find people. So what companies are doing is they're hiring a lot more recent college graduates, they are transitioning people, They're spending a lot more money on training and development is one of the leading areas that companies are investing in.

And then also, um, you're getting people to move. But the act of people, even executives, leaving one job for another, there's a little bit of hesitancy because they don't want to be the low man on the totem pole if the bottom does followut this is interesting because we're hearing the job gains are coming at the lower end of the totem poll when it comes to wages and skills

in the jobs market. So if that's the case, and that's where we're seeing the additional jobs and the wage increases, why aren't we seeing them more at the top where skills are are sort of more necessary. The people don't exist, right, So so the factory if you will, of producing people is always going to be in college graduates and unskilled uh labor if you will call centers and customer service

uh people doing hospitality and service jobs. So when you have that, that's where it's going to be there there you don't just find a surplus at three point five percent unemployment of DYR people. Which is the question again about capital expenditure, about why we're not seeing a company spend more on training people and getting up the skills UH to fill these jobs. If there just aren't the people, why aren't we seeing more of that? Well, I think

we are. It takes time. So you know, every Fortune five hundred companies, different small the medium sized companies have always been the engine for UH for growth in this country and so, but they're not going to have full huge UM training and development when you get the Fortune five companies to implement something like that at the level of jobs that it needs to be there, there just isn't.

If you look at where the skills gap exists, the majority of jobs that people that companies need on the medium to bigger size companies are where there aren't people. You can't train somebody who's been a construction worker to be a data scientist. You can't take a salesperson turn them into an accountant. So the aspect of training is very different for UM training and acclimating them for a job going up on a vertical level versus horizontal movement

into a totally different category. And if someone's brain isn't programmed to be an engineer, you can't turn them into one. Tom are you seeing any regional you know differences and across the US in terms of job demand job creation is it's still the you know, the sun Belt is kind of the growth area for example. No, I'm seeing a lot more of the coast springing in higher volume

jobs into the Midwest. Uh So, what we're seeing is is that the cost of living and the cost of salaries on both coasts have gotten so high, and for for non technology driven jobs, non developer, non engineers, a lot of those jobs can be done from the Midwest.

So you're starting to see uh, kind of not a rebirth but for lack of a better phrase, in Chicago, in St. Louis, I think it'll end up going into Detroit, UM and you're seeing more that Dallas continues to be a big, big hub of companies and then obviously the Austin of the second Silicon Valley s type of environment. But you're gonna see a lot more in the Midwest and continue to see that flourish. Is that at the

expense of the workforce in the big cities on the coasts. No, because the companies that are air still have huge hubs, whether it's San Francisco with with LinkedIn and Oracle and what Exist and Apple obviously, and Facebook and what's there. They have so many huge companies out there and on the East Coast with the financial services of Fidelity and Goldman and and what have you in financial services, that

those are still going to be there. But you know, if you look at uh it's not necessarily the Midwest, but Salt Lake City is a huge hotbed for hiring right now, has been probably the last half decade. And Goldman SAX has a huge office in uh IN in Salt Lake City. Tom Gimble, thank you so much for joining us. Tom as a founder and CEO of LaSalle Network based in Chicago, helping us breakdown the jobs numbers today.

Five thousand jobs added in the latest month, wages up about three point one percent, So and uh it just some continued strength in the job sector, driving continued strength in the US consumer, driving continued strength in the US economy. That has been the story that continues to be the story in the US. Looking at the markets here the SMP down six, down down one seventy three, uh NASDAC down six here to end the week. Looking at the treasury market up fifteen thirty seconds, pushing a ten year

yield down to one point five eight percent. But we're about two thirds of the way through earning season, and we've heard a whole host of CEOs from a whole host of industries talking about the impact of the coronavirus on their businesses, and none more so than the global travel business. To get a sense of what's going on with the US airlines, we welcome Mary Slangenstein. She's a US airlines reporter for Bloomberg News, joining us on the phone from our Dallas bureau. Mary, thanks so much for

joining us on. I want we want to get that Jet Blue story they're launching a new low cost airline, but first I just want to get your thoughts kind of what you're seeing right here right now as it relates to the US airlines and maybe how they're being impacted by the coronavirus. Well, the US carriers UM that fly to China have pretty much suspended their flights to mainland China. UM they've also suspended or are suspending Hong Kong routes, but on a little bit different time frame.

For example, American Airlines UM is only suspending DFW to Hong Kong to February, and UM United is suspending Hong Kong also to February twenty so there that's a little bit shorter suspension of flights than to mainland China. UM. They aren't really talking yet about monetary damages or monetary losses related to the suspensions of flights, Mary, so we'll keep watching to see whether there's any kind of financial impact. But interesting to see, UH, that they are suspending some

of these flights. In the meantime, you wrote a story that got our attention because it seems like a time of consolidation in the airline industry, and yet the founder of Jet Blue is trying to launch a new airline. It's on track to start flying this year, and it will focus on routes that primarily don't have anyone currently operating in them. Can you explain what this is sure, UM.

David Neilman, who founded Jet Blue and has founded several other airlines, including Ausul in Brazil, has decided he wants to get back into the US aviation market, and so

he's founding UM an airline called Breeze Airways. And what Neilman says he's done is he's been able to go through look at routes and pull out five hundred potential city pairs, So that's you know, flying from city A to CITYB that don't have any NonStop competition, and those are the routes that he wants to focus on with this new airline, and he's planning to operate on midsize cities that may be lost NonStop service as larger airlines combined and then started to focus on building up there

already established hubs. Mary, I mean, I'm always fascinating when I see people getting into the airline business. It seems like such a brtally tough business with competition and the unions and jet fuel and all those type types of things. Is a tough, tough business. What's his cost advantage going to be to, you know, go up against some of

these bigger players. Well, Newman claims that, you know, he's going to be excuse me, get a big cost advantage from the size of the aircraft that he's gonna fly. He's smalling flying smaller planes. And also the fact that he's not gonna fly, um every day of the week to every location, and there may even be times of the year where he doesn't fly. He's gonna fly only on peak days periods of peak demand. Um that's a very similar model to what Allegiant Airline flies and they've

been very successful with it. How much room is there for another airline, um, you know, there's probably room for another airline. UM. It's hard to tell from this, you know, this date, at this point in time, how successful Neilman will be. He's certainly been successful in the past with um West Jet in Canada and then Jet Blue he founded Jet Blue here in the United States, So he's been able to work some magic in the past, and we'll have to see if he's able to do that again.

It's interesting, you know, I certainly have I'm aware that a lot of midsized cities have lost a lot of capacity here, but I often think that it's because of the Uniteds of the worlds are the Deltas of the worlds have said it's just not economical to fly there, given the load factors and whatnot. So is it really all about the fact that he's gonna fly different planes,

maybe less union workforce? Is that kind of his business model? Yeah, he's probably initially not going to have any unions working at the airline as they get started, which was the situation of Jet Blue for quite some time. But then he also is saying that he's going to have a lot of this stuff linked to technology, so that people will be able to do almost everything on an app. Right, So maybe they won't have to have people standing at counters in the in the airport, or you know, there'll

be other ways that they can reduce the requirement for personnel. UM. So I think he's going to count on technology a lot. He's going to count on um. These new Airbus A two twenty aircraft that he's ordered, Um, they're they're very fuel efficient, they're very popular new aircraft. He's also flying some used planes from his airline in Brazil. UM, but he's saying he's going to be able to make good use of those and even if he only has fifty or sixty people on them, that they'll be able to

be profitable. When I hear Mary fuel efficient, I think of a box with nothing else in it, and you're basically foisted into the corner. It's and a little sardine in the corner. Because that seems to be where we're heading in terms of economy travel. I'm wondering is there any pushed back by consumers at this point with respect to the comfort of the seats that they have, or

is it entirely a cost basis um. You know, for the people whose primary concern is the cost of flying, um, you know, they will buy the basic economy seats, which doesn't always translate to less leg room. It's just less, you know, addition all things that are included in the fair UM, and people continue to fly on Spirit Air, which you know has a very little leg room. UM. It just depends on what you value when you fly, and certainly if you value more leg room, that option

is available for you on all the big carriers. You know, they have sections that have more leg room cost you more. But if that's what's important to you, then you know they seem to be having a lot of success with it. Mary Schlangenstein lang in Stein, thank you so much for being with us. Mary s Langenstein, us airlines reporter for Bloomberg News, joining us on the phone from Dallas. I have to say I've flown Spirit and I will say, um, well, I mean you have to pay for for absolutely everything.

Everything's all a cart. Now, everything's all a cart, and you have to wonder whether at a certain point it all adds up to the same price yeah, absolutely, I'm I'm just looking at the airline stock sort of trailing twelve months, decidedly mixed again, United down ten percent, America down on Delta up seven team. So it's just a brutal business. There's kind of a double way I mean though here going on, because on one hand you have

reduced travel because as the spread of the coronavirus. In the other hand, you have oil prices coming down, and that cap is actually a huge tail wind to the airlines because this is one of the biggest expenses. So interesting to see how both of this will will affect the industry at a time when in general travel is getting hit pretty hard. Meanwhile, and markets were looking at

losses of the really clawing back from earlier declines. We're seeing the NASTAC down less than two toenns of a percent now, the SMPH down three tons of a percent, thirty three thirty six on the SNP, and we're looking at the NASTAC seven. Interesting to see how people are interpreting the signs of whether the FED will cut or not. After they released this report saying they're worried about the coronavirus, people now saying, oh, maybe they'll just cut rates a

couple of times. Yeah. Absolutely, And you mentioned fuel as it relates to the airlines. Looking at w t I crewd here fifty dollars sixty seven cents barrel. Here. We broke below fifty a couple of days ago, So oil down on lower global demand expectations. Yeah, and just a few weeks ago it was treading above sixty three dollars a barrel at the beginning of the year, So down dollars so far this year. And Lisa bramwe's with Paul Sweeney.

This is Bloomberg Markets. Thanks for listening to the Bloomberg pen L podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa abram Woyit's I'm on Twitter at Lisa abram woits one before the podcast. You can always catch us worldwide on Bloomberg Radio.