Surveillance: Expect Growth in 2nd Half, Kudlow Says

on a day like this morning. Let's just start with the basic question, what are you looking for from this payrolls report? In not evenutes time? Well, I tell you you know, this is a case where everybody's looking for the report, But I'm looking beyond the report because I think at this point for the markets, it's pretty much all priced in and it's all about, um where we're

going to go from here. I think the elements going forward in an inner term that are most relevant are how long to the furloughs last, how long do they turn in? At what point did they might be turned into firing? There any strange quirks in this particular report, Catherine, like wages that we should ignore pay less attention to I think that actually there are a lot of things in this report that are not really going to be

representative of the challenge going forward of restarting the economy. So, I mean, you know, it's it's new, it's news that hasn't happened yet because it hasn't been announced. But at this point it's old news, and we've got to move on to thinking about what we're gonna do. What are the number is going to look like? What are the trajectory is going to look like about getting the economy back on track. When you talk about getting the economy back on track, US markets seem to have already moved

past the catastrophic report. And you were quoted in a story today talking about this massive divide, this disconnect between stock markets that continue to rally then as that now positive on the year, and the bleakest economic reports in history. You don't think it can last? Why not? H No? I don't. I mean at some point there's the market either the fundamentals catch up to the markets, or the markets,

uh come down to the fundamentals. And and of course the reason why they're so disconnected is because there has been a tremendous amount of policy support put forward to underpin the financial markets in particular. That's where the FEDS broad set of programs. They actually haven't done much yet. I mean they just sort of given forward guidance of the market for writing market guidance, um. But and there's also a lot of funding, you know, on the fiscal

side as well. So the markets are sort of saying, we know all that it's gonna it's gonna work out. So we're looking to Yeah, I think that's when they're gonna be you know, they were going to be surprised in later on in the year. Good morning. I look out of my abode here and I can look over and wave to Columbia University and the wonderful Laureate Edmund Phelps.

And there can be phrases like nehru output gap and all these other stuff, And it devolves down to John Williams Modern Kent, which is our start as we go into this report and as we come out of it, do we have a clue where our start is? Well, you know, I'm interested. You say the neighbor they output gap, our star. I put them all into the category of

we don't observe them. They are all estimates and they move over time, and so sort of thinking that any of them are your north star is really a bad way of thinking about things because they are not a north star. They don't uh you know, they're they're not changeless. We should not be guided by them because they are so uh in this moment in particular, so affected by underlying data that we really have to go and look at a much more microeconomic analysis, micro data, higher frequency data.

What does the micro data say about wage dynamics here or will it take you a month or two or a three to really get an understanding of a disinflationary tendency expected? So there's a lot of uh you know, there's a lot of challenges here because uh sure, there's a tremendous amount of of unemployment going to be coming out of this report. Um, it is broad based, although

there's there's higher intensity in some sectors than others. But going forward, the question to me is when the economy starts to reopen and people start to go back out to we call us going back out to play. Of course, people work at restaurants, but there are a lot of people who play, and by going out to restaurants, as hit the theater and sporting events and travel and tourism and so forth. When people do that, what are the

rules of engagement by companies? Um? Do they only have half as many tables, no middle seat, half as many tickets in the theater? Under those situations, you you have a very interesting dynamic because you don't need as many people UM, and you still have to you know, make a profit otherwise you're going to go out of business. So how does that translate into prices that people have

to pay? So the disconnect between wages and prices could actually get bigger, Catherine, I'd like to talk about what's about to happen with interest rates as well, and the difference between now and what we saw after the last crisis. After the last crisis, it took a long time for people to figure out rates weren't going up anytime soon. I don't think two year rates actually bottomed out until as you look at things right now, is this a market that's accepted that reality The rates are going to

remain low for a whole lot longer from here. So I think that the market definitely thinks that rates are going to stay extremely low UM, And in some sense they know this now for sure because of the range of FED programs that have been put into place. But they even knew that, um when the FED pivoted last year after the December debacle. So you know, the markets know for sure that the FED is so far away from monetary policy normalization that they know that there's a

put on ptic practically every single asset in the portfolio. Well, a put is a different thing than necessarily going negative. And right now we're seeing traders uh that that the Federal Reserve will take rates negative despite the fact that the forms he has said repeatedly that it will not do.

So do you think that this is a disconnect, that the market is in for a rude awakening and that FED officials have come out and reiterate their stance against negative rates, or do you think that the Fed is going to have its hand forced yet again by the market. So I think so perhaps the market is taking a queue from negative w t I Right, nobody thought the

roil prices could go negative either. Um, So there are policy rates that could go negative, and and the f O m C has said, no, we're not going to do that. That's not the same thing as the market taking market determined rate negative. Right, there's a distinction between the two. Okay, there's a distinction, but there was a headline today. UBS is getting a lot of uh response from their their customers. They're not going to play in the negative rate space. You know, They're just not gonna

participate in this. Ken Rogoff in the late Marvin good Friend would suggest we need to see a greater magnitude, a greater courage, doctor Man of affecting negative rates. Do we need a more bold negative rate policy or is it a failed policy to be negative? Negative rates is not Uh, it's not appropriate. I mean, this is not a situation where we need negative rates. There's plenty of

credit available. Um, it's going into the financial markets. The challenges is not going from financial markets to the real economy.

That's the disconnect, and negative interest rates won't help that. Cancine, appreciate you time this morning, history making day on this payrolls Friday, Catherine Man that City Global Chief Economists to Bloomberg survey changes day to day depending on the mix of opinions we get, and we've sort of migrated it casually from twenty to one two million with an update.

Ellen Setner of Morgan Stanley. Ellen, I know that John and Lisa have all sorts of current questions about a thirty What have you learned in May, the short days of May that we've had about what we will see in the June, the July or the August report. Can you take this out further as we have taken out weekly claims. Yeah, it's a good question, tom Um. So we should be looking ahead. I mean, any of these numbers that are just absolutely shocking should not surprise me one.

And as we continue to get April data, it's it's largely backward looking because they are starting to open up. They're opening up the limited capacity, but they're opening up, and so you're going to be pulling some people back into the labor market very slowly here as we're in May.

And I'll tell you some of the best highest uh, the best high frequency data at least that we have at Morgan Stanley are these weekly alpha wise surveys of roughly two thousand households where we could already see in April that they were starting to look forward to a better day, to opening financial expectations had stopped declining and started rising uh, and so people are looking forward to a better day. Just what is that better day gonna

look like? But we do know that the worst of the data is past us, even though we're getting confirmation of just how bad it was. Now, how will the urgency of our politics change off of the stark numbers at eight thirty? So I think it's certainly going to make the argument for continued expanded fiscal support greater um, even though some policymakers will assume that this is already um at this this kind of bad data was already

accounted for in the fiscal support that's been past. But you know, if we are going to look ahead, you know, to the day when say the six hundred dollar weekly supplemental checks start to uh fade, So those that were the first to claim that would start happening in July.

In July, unemployment rate is still going to be extraordinarily high. Um. There will be some states in July that that may not have a fully fully reopen and so you can imagine cries from households and how can you pull this support out from under me when the unemployment rate is still very high and I don't even have the opportunity to look for a job, And so our public policy strategy.

Just don't think we're done. Which fiscal support that means a roughly three trillion dollars in support we've passed already will continue to rise, and it will have to rise until we climb out of this hole. And then how does that policy support adapt evolve as you go from a closed economy to an open one or one that is slowly reopening. How do you recalibrate the policy effort um, So it's a good question, John, I think that um, some of the support, especially of households, is going to

be have to be stepped down. Uh. And so you know, can you design the six hundred dollar weekly supplemental check to step down and stayed in the same way we do unemployment benefits as the unemployment rate improved, because you do have to step that down at some point over time. How much will small businesses have to pay people in order to attract them off of unemployment benefits? Because in thirty four states, as we've estimated, people are getting as

much as not more than when they did work. Uh, And so you're gonna have to up pay them in order to get them back in. So that's something that policymakers will have to take into account on the small business side. You know, the demand for those loans will wane over time. We've still got some room here. Um, We've still got about a hundred billion or so left in the coffers for those loans and demand has flowed.

And then the credit facilities from the said those haven't even been in use yet because they've because they've not been defined and really open yet. Um, but those have unlimited capacity, and just those things improve, you would see usage of those facilities naturally way and so a lot of this is just natural wind downs. I think on the unemployment benefits, there's going to have to be a

design to that six dollar weekly supplemental. We all want to see things improve and improve quickly today when we get these numbers, and I think we're pretty familiar with the size. As tragic as it is, these are gonna be huge job losses when this number comes out. What we don't know a lot about right now, escope the breadth of the job losses. What are you looking for

just in terms of breadth underneath the headline number. So we've seen in the weekly jobs claims that started out that most of the job loss um we're in the the usual suspects, um, you know, services industries, in this case, very tourism related industries as well, and it was very concentrated restaurants, tourism, leisure, and hospitality. UM. But as a job's claims progressed, we saw it start to broaden our

cross the labor market. So I would I would want to look at the diffusion index to see how broad spread the clients are, because I think we're going to see it hit across just about every uh, every industry. Those still the bulk of it concentrated in those uh discretionary services related areas. Ellen. Initially, when the shock first started, people were saying that the job losses we're going to be temporary, that it's something different than in the past,

because this was a manufactured shutdown. As time has gone on, people are revising that and saying it's going to take a long time for these jobs to be brought back into the economy. Where do you stand on that? How many of these job losses have gone from temporary to permanent?

So I think by the so, um, good morning, Lisa, it's uh, the you know, it's it's a bit upsetting to talk about these kinds of jobs numbers, because there are a lot of people that will have permanent job loss from this, and you know, we've had more of the thirty million jobless claims filed. Um, we think it's reasonable to the expect that ten to twelve million of them could come back by the end of the year. Um. You know that's not enough. We'd like to get them

back to work more quickly. Now, how do we get people back to work at all? Because states will be reopening and there will be in need for some of those jobs to come back. Um. A lot of those have been furloughed and so they're more they're more connected to the employer, and as those employers open back up, you're gonna need labor quickly. That means the folks that you've already trained that can easily walk in the door and start working right away. But there will be an

element of either permanent job loss here. It just takes people longer to get back into the labor first than we previley previously thought. Some of that is because the

phase reopening will be very gradual. Um. But also our biotechnology UH analysts are now pointing out that you know, the the US, unlike other countries states have been reopening when cases are still rising um and so unlike most countries that have had strict lockdowns, the US has plateaued at its peak and daily new cases without any sustained decline.

And so if that dynamic continues, then the reopening will be even uh phased in an even weaker pace, if you will, a weaker capacity than we then we had thoughts. So these are all things are going to constantly adjust

these expectations around the labor market. I think in the if I could said just say, I think in the short term here we can get some really upward surprising bounces in the data, just because you're going from very little activity to some activity, and that can look explosive on a month over month change, but it's really the path after that it's going to be fairly shallow. Ellen, just real quick here, which industries do you expect the

job losses to be most permanent? Well, I think that that certainly, UM tourism, um energy, you know, the restaurants, you know, those are areas where the jobs losses will uh you may as well consider them um permanent. And when you think about recovery across the nation state by state. Look for states with more diverse industries to recover more quickly. Uh, you need that. You can't be a state that's easily concentrated it with jobs and tourism or jobs and energy. Um,

it's going to weigh on date GDP for longer. Now. The history of that's watching new. Jersey Ellen sentner with us with Morgan Stanley, thank you so much. Right now, as we look at this job's report, try to synthesize it into the markets where we see yields sustain ever lower as we saw yesterday. Jeffrey Rosenberg joins. He is with black Rock. Jeff, I want to take the mix of this shocking report. I guess it's better than the gloom that was expected, but I really don't want to

sell that to you right now, Jeff. We have to bring it over to yields. Why did yields come in yesterday? Say? And is it just the gaming of a crushingly difficult labor market? Thanks Tom, Um. Yeah, I think it's hard to turcret a lot of those moves, uh, you know, under their normal I'm a reaction function because you have so much of the fed and supply interacting as as

kind of the major drivers. You know, we're we're about to embark on a historic expansion of debt issuance, UH, and a historic expansion of the FED effectively taking down that debt issuance to make sure that the financing rates are are not disruptive. So you know, it's you know, your question is, you know, what's the what's the rate moves telling us UH, it's really hard to parcel out this kind of very unique technicals from say, some of the numbers that we that we normally would look at.

All right, let's let's talk more about this job to report the worst of a port in American history. Digging a little bit more into it, it does appear that, as feared, the job losses were widespread the leisure and hospitality, retail, healthcare, professional, manufacturing, construction information these millions of job losses, and then also we saw the wage gains, pointing to a disproportionate amount of job cuts at the lower end of the income spectrum.

I'm wondering, from your perspective, given this dynamic of the layoffs, what does that say about the path of the recovery ahead. Well, it confirms what we expected in terms of the distributional impacts of the Corona virus crisis, and um, you know, the big issue going to go forward basis is re engagement versus reallocation. And I don't have all the data in front of me yet. There's there's some things we can tease out from this report that will that will

help to uh answer that. But but that's really going to inform the path of the recovery because if you can re engage your workers, you know, one of the one of the things that's that's sort of anomalous about this report is the unemployment rate. There's a note from the BLS saying, you know, there's there's a misclassification going on and if you if you classified yourself um as employed but not at work because of the Corona crisis, you know, that's understating the unemployment rate by about five

percentage points. That's kind of a technical issue, but that that's a that's a kind of a good thing, right, that's what we want to feel. We're we're still employed, but we just can't work because of the coronavirus. And it really gets to the heart of this notion of you know, is this a temporary dislocation or is it or is it permanent? So re engagement is about temporary that's a faster recovery. Reallocation is you know, my job is gone and it's not coming back. I have to

realy keep somewhere else in the economy. That's a much more longer term process, filled with lots of frictions, and and it slows the process down. Um, that's what we're going to debate. And I think the impact on the lower end is really going to be focused on did those jobs come back? Jeff. The market seems to be pricing in increasingly a bottoming out of the economic data, people saying this was the worst that we're going to see, probably in our lifetimes, possibly in history. But there's a

question about a second wave of layoffs. And I've heard a growing number of economists and market participants talk about this, this idea that the longer that you remove a big cohort of of the labor market from their jobs, they don't have the discretionary spending and that will eventually bleed

into the higher income jobs, which is starting already. Are you seeing any signs of that, Well, I think it's I think it's early to say that we're seeing signs of that, But I think the sentiment is correct that there is there. There is kind of the initial shock, there's an initial recovery, and then there's the what are the longer term implications. That part of the thing, of course, that's challenging the longer term implications is we don't know

what the path of the virus itself look like. But even beyond the path of the virus itself, there's the question of, well, what is the more kind of permanent reaction of the economic structure to the crisis. What is the reaction to consumption, what is the reaction to savings rates,

what is the reaction to behaviors. So at the macro level, a very kind of puberly simplistic perspective is, you know, there's a higher savings rate, there's there's more precautionary savings, there's less consumption, and that just overall changes kind of aggregate demand, aggregate activity. But beyond that, there is a much more distributional impact as to how does expect various sectors.

Let me ask some money question, Jeff, I'm sure you're gonna get it today, You're gonna get it into the week, and certainly when you roll out your reports from Monday. Can we get the debt genie back in the bottle? I mean, I get the rationalization of all this debt build up given THEE it's a virus, it's a pandemic. Great, are you optimistic we can you get the debt genie back in the bottle? No, I I think that. I don't think that's actually a debate right now. I mean

there's a little bit of a pushback and there's a question. Now. You saw some comments from from from the House and some of the congressional leaders about the next wave, and there's a bit of a debate about that because there is some concerns about the debt, but there's the there's the direct fiscal policy, and then there's the expansion of the FED support. Um we we are really kind of

put as secondary the longer term concerns about indebtedness. And this isn't just in the US, this is this is globally. So I don't think we're putting the debt genie back in the anytime soon. I think we're going to be dealing with very high levels of indebtedness and a different structure of monetary policy to help to finance those levels

of indebtedness. It's it's almost like and I think the analogy is apt that that we're at war against a virus, and both debt policy and monetary policy are are at wartime settings where you don't really worry about how large the debt to GDP is getting, will deal with it after the war. So I think it's secondary at this point.

We're speaking with that. Jeff Rosenberg, black Rock portfolio manager of the Systematic Multi Strategy Fund, a long time leader in thought and in investment at black Rock and Bank of America. Jeff, I'd love to get your perspective about the response to this lack of income by corporations. We have seen an increasing number of companies try to borrow money at increasingly high yields just because investors are increasingly

unwilling to lend to them. We're seeing that with the likes of some of the troubled industries, in particular United Airlines struggling to raise money. How much does this increase the pain and the length of time that it takes to climb out of this With the idea that these difficult times are being met with additional leverage at high rates for companies, where their business models may not return

in the same kind of way. So I want to I want to challenge a little bit of the premise of the question that, um, there's there's there's a big distributional impact here where if you if you focus on some of the very challenge sectors, yes they are facing much higher rates of financing, but you are also seeing eden sectors that are in the heart of uh COVID crisis concerns getting access to liquidity and getting access to refinancing. And so in some sense, that's the good news, that's

the glass half glass half full. That the that the federal reserve liquidity interventions are working and investors are lending. Yes, in some cases at higher rates UH and certainly at higher spreads, but overall the access to liquidity for the large company segment has been pretty robust and and and the liquidity sources of unnecessary default have been forestalled, and

that's that's that's a good news. Now there's a longer term consideration here, which is how much leverage is on the balance sheet, how much is the liquidity bridge bridging you to a sustainable level. And you're seeing that in the most distress vectors like retail um where you're seeing the bankruptcies where basically it's very clear you can't use debt and increases in leverage to bridge you to a

recovery because there isn't recovery. And that's the shakeout that we're going to see industry industry, company by company, and the smallest, most over levered balance sheets will be the most vulnerable, and default rates are absolutely going to rise. But the liquidity interventions here to prevent unnecessary restructuring is unnecessary defaults purely because of the lack of access to liquidity and financial markets. I think it's been a good

part of the story. It's part of the financial market healing that you're seeing in capital markets. Just real quick here, Jeff, I'm wondering going forward, do you buy this rally that we're seeing in equities? Uh? Well, you know, do we do we buy the rally that we see in equities? You know, I think that what you saw in equities was forward looking, and what you're seeing in equities again is forward looking. However, the markets don't have a great ability.

We have to recognize this in predicting where is the virus path going to go? So right now, do I buy it. That's the market condus is basically saying it's be shaped, or it's it's check mark shaped, or you know, got all all these different shapes that that there isn't a more destructive, disruptive second wave, And from that vantage point, it reflects what we know. Maybe it reflects optimism, but we have to be clear here that we don't really

know where we're going. And certainly if there is a second wave that leads to more shutdowns, leads to more disruption, the equity market is going to reflect that. But from the vantage point of we are putting historic levels of fiscal policy and monetaries policy to mitigate the impact. Yes, I think the equity market pricing that incorrectly. Jeff, thank you so much for the brief. Jeffrey Rosenberg with black Rock for our Listenshan Blomberg Radio, us O Blomberg TV.

I'm pleased to say with joint now outside the White House by Larry Cartlo, National Economic Council Director, on a difficult day with one of the worst payrolls report we've ever say, Arry, fantastic to catch up with you. As our audience knows, Larry, over the years, you and I have these very energetic back and forth, a little bit of rough and tumble and a few jokes along the way, and I think we have to get the tone right this morning. This is a really tough time, and it's

a tough time as a policymaker as well. There is a cost to keeping this economy lockdown as a cost to opening it to and Larry, I'd really love your perspective in this moment, how difficult it is to calibrate the right policy response in a moment like this. Well, I just want to say and that you know your earlier point. Look, this is a tough time, but it's a tough time for everybody in America. There's no question about that. Wherever you work or don't work, it's a

tough time. This job's report today is full of heartbreak, it's full of hardship. I believe that it will prove to be temporary, because I think the pandemic contraction or the contraction in the economy caused by the pandemic COVID nineteen were proved to be temporary, and that we are actually coming down the home stretch in terms of reopening the economy. But it's a rough number there's no question

about that. Uh. Some of this looks to be temporary layoffs, maybe about three quarters of it, but that still doesn't necessarily making any better. People expect to return to jobs. Let's hope that they can return to jobs. Look, we eat have done President Trump's leadership, Vice President Pence. UH, we put together enormous, enormous rescue package. UH, cash liquidity,

Federal reserve, payroll protection. It's a remarkable thing. I actually actually adding it up, it's about nine trillion dollars now, including the Federal Reserve and what we've done on fiscal policy and the budget. Some of this may have worked, We may have cushioned the decline. That may be part of this story inside these very very difficult numbers. So we will see how this works, and we will see

whether we have to go back. Let's talk about presidential policies in a few moments, because I do believe the second half of this year, according to the CBO and private forecasters, the second half is going to have very significant bounce back in economic growth and that will head into which could be a fantastic economic recovery. Here. We all hope for that. Larry and I know there's going to be an extra push in Washington to try and

see that vision come to life and materialize. There's been a huge collective effort, Dan in Washington, not just the administration. You've worked really well with Democrats as well. The Fed has done its part. I'm trying to understand how the policy effort evolves. Quite clearly, when we're shut down, you don't stimulate the economy. You offer aid. When we reopen,

that's the time to stimulate. How do you see the policy effort changing in the months to come, adapting Larry Um, Well, you know I'm not here in negotiade, but I will simply say this President try has had a set of policies that worked very well before this pandemic the first three years plus, and indeed, in January and February the economy was growing at three or better. Um. I think that he wants to extend a lot of the ideas.

He wants us to be a free enterprise economy. He wants to reward people for their success and their initiative in their efforts. As you know, he has talked about from time to time talked or tweeted about payroll tax holidays. He's talked about capital gains taxes. He's talked about tourism, restaurants, traveling deductions that might work. We've talked about capitaling, business expensing.

For example, there's gonna be a lot of COVID related adjustments, whether you're a large factory in Detroit or whether you're a small restaurant in a small town in the heartland. All of that. If you ask me, safety first here, as we reopen all that, every nickel of that should be completely expensed deductions and so people won't have to pay extra for that and open the door. We've talked about fair trade agreements. We will continue. We talked about

on shoring. We will continue that. I think a lot of people have learned we probably will way too far in our off shoring of factories and uh, either manufacturing or pharmaceuticals. President Trump has talked about making it much easier to come back home to America. So that's a smattering of the policy ideas that he has put out there. Um, we haven't begun to negotiate with the Hill. That will come in due course. We've had a bit of a pause. We're gonna take a look at how the situation is.

May is a reopening month, Jonathan. It will spill over into June. In phases, we've seen the federal guidelines have come down. Now the states doing the same. Uh. We had Governor Abbot of Texas yesterday. I've been in a lot of meetings with the President and the Governor's all that's moving ahead in phases. That's a big plus for the economy. We have to open safely and then get people back to work, and I think the temporary layoffs

show that they will go back to work. And then we have to move ahead and make sure that the incentive structure of this economy remains intact so we can have the blue collar boom that we had, so we can have the entrepreneurship, so we can have the fair trade and the energy independence. These are Trumpian themes, and I think that's where the President is going to move. I know you want to talk about trade, Larry. I'm

gonna get to that in just a second. When it comes to reopening, I want to understand, and I know you're an optimistic man, whether you've done any contingency planning for a second wave and another shutdown. Are you doing that contingency planning now? Yes? We are. As a matter of fact, it's a subject that comes up. I'm not going to go into details outside my lane. I have talked to Ambassador Burke's on that Dr Faucci, and Vice President Trump's a terrific team that's he's assembled. I will

tell you this without naming names. But one of the senior people on that group, I asked that person, what happens. You know right now the virus numbers are flattening out. That is a really good thing. That means we can reopen this community. So I asked this person what happens if you get a jump back up in the virus numbers, And the response was simply, look, we won't have to re shut down because, first of all, we know more, we have more experience, and second of all, we are

much better equipped with the right tools. I mean, President Trump deserves some credit for putting together a massive infrastructure, whether it's testing or face masks or gowns or whatever, running the whole gamut. So I don't want to dwell on the worst case because I am an optimist. I think that the governors and the mayors are very well

aware of the safety needs as we reopened. But when we do reopen, that is going to give this economy a tremendous boost, and we will see that in the summer at autumn quarters and spilling into one could be a fabulous year if we keep the right policies in place, Larry, I hope that's the case truly too. I know you want to talk about trade, and we've only got a few minutes left, so let me give the opportunity to

do so. When it comes to the administration's trade stance, you just mentioned supply chain repatriation, will you actively be looking to provide a tow companies that repatriate their supply chains. Yes, I think we will do it by creating incentives. It's not a matter of punishing, it's a matter of incentivizing. I don't want to go into details, but on shoring is a very important theme come back to America. I think we've learned too much emphasis on supply chains overseas.

Too much emphasis is not safe and not reliable and not good business practices. Again, I do want to unveil or get ahead of our own policy process, but the President is very keen on on shoring. There are many ways to do that. Are you rethinking again your relationship with the Chinese Communist Party, Well, I don't think we ever stopped thinking about it, but all I'll say is this UM. First of all, as you know from reports, today, Basslar lighth Hazer Secretary Manution met with Vice Premier Leo

Hay of China. It was a very constructive meeting. Uh. The print out that communicate, if you will, was very positive. China continues to tell us that they have every intention of meeting the requirements and the implementations of the deal that was signed formally last winner. Seems like a thousand years ago, but it was actually only a couple of

months ago. They're a little bit behind on commodity purchases that may be a funk, and of course of market and economic conditions, but Liu He said they are pledged to continue, including I might add remedies for UM intellectual property theft and related measures. So those talks seemed to go well and we're constructive. However, the Chinese relationship is very complex, and we know that the virus originated in China.

We are investigating. We the US government, the intelligence agencies, National Security Council, State Department, et cetera, are carefully investigating what happened and what didn't happen, what may have happened, and what actually happened. China has been not transparent. A lot of people are concerned. I saw this with the President at the G seven video teleconference meeting a couple of weeks ago, when the other world leaders felt the

same way. They will be held accountable, Jonathan, they will be held accountable. Uh, when the final studies are in, well, I can say this morning is the trade relationship and it's going to be a pretty good deal. A lot of exports going to come out of that. When the economies recover, the trade relationship appears to be on track. It sounds a lot like a lot of talk, Larry, I've heard a lot of talk over the last week about this about holding China accountable. Can we talk about accountability?

How does the United States hold China accountable by doing what? Jonathan? I don't want to disappoint you or create otherwise emotional upset, But I'm not going into details about that. This is national security stuff and we'll just have to leave it at that. I understand that, I understand that it's a really delicate topic, but to round things out quite clearly the United States and other countries for that matter as well,

do not trust the Chinese Communist Party. So I'm not sure how much weight we should put on a statement released by U s TR overnight about working towards this Phase one agreement, because quite clearly the United States looking to hold China accountable. How can I reconcile those two things? Two countries working on a Phase one trade deal, two countries that don't trust each other, and one country that wants to punish the other. UH, without accepting your premises

there you put out quite a lot. I don't want to go there. I would just say the relationship with China is always a complex relationship. It covers trade, it covers other economic matters. It covers national security matters, it covers espionage matters, it covers cyber security matters or the lack thereof. It covers on shoring and off shoring matters.

It's always a very complex, UH relationship. UM problems in one end doesn't necessarily mean everything stops, but President Trump has said any number of times they will be held accountable. We continue to investigate the problems regarding the coronavirus of virus and the lack of transparency. We're trying to get

to the bottom of what actually happened in China. Those efforts are ongoing, and I believe the President in the Oval Office yesterday said the next couple of weeks will probably have a lot more information to share, and Larry, I look forward to get in the answers and more clarity from you. Larry. Can I just say thank you for the compassion this morning for difficult time for a lot of people without a job. Larry Carlow, I appreciate your time and I hope you and you also doing well.

Larry Cardlo that the National Economic Council director from the White House. There's an historic day of newsful, no question about that. And of course the backdrop is a pandemic with us now Andrew Pekosh with John Tompkins University and the Bloomberg School of Public Health. I should point out that the philanthropist of the School of Public Health is Michael Bloomberg, the founder of Bloomberg LP, and of course

it is television and radio ration as well. He has donated to his Johns Hopkins University and I pack Gosh, I want to step back. I remember Crystal Clear the path from Jonas Sack to Dr Sabin in about nineteen sixty one sixty three, and those little pink drops that were a polio vaccine. When we get a vaccine for this horrific virus, is that what it's gonna be Like,

We're all gonna line up and get drops in our mouth. Well, you know, it's really difficult to predict the future, but I would imagine that, UM, we are going to get a massive vaccination program going in place. The vaccines that are currently in the lead in the pipeline are ones that are gonna be given by injection UM and so UM so, so I think it'll be a little bit

different from the polio pipeline. But I do think that everything looks like UM vaccines are going to be the game changer here UM and once those things get online, UH, they'll be massive plans to initiate vaccination campaigns across the country. In fact, from US the world. What is your best practice to get to that miracle point? Well, you know, things have been moving forward at light speed when it

comes to vaccine UH testing UM. Just this week, the UM, uh FDA and the NIH gave approval to move into the second phase of vaccine testing with a number of the vaccine candidates. Um. The first phase was just the safety testing. I haven't seen that data yet, but I assume since they've been approved to go into the second phase that the safety data has come up looking really good. UM, And now the second phase is gonna be the critical one where they really start to look at how those

vaccines are functioning. Are they making the right immune responses that we predict would protect people from infection. Good morning to you, Andrew. Let me ask you about the mobile technologies that many countries are employing to try and get us out of lockdown and to reopen economies here in the UK. I'm talking to you from London, and by the middle of this month there is a hope that there will be wide use of an app that, if it's taken up sufficiently, would would be able to help

in that in that endeavor. How excited is the medical

community about this as a way of fighting the virus. Well, you know, the mobile apps are going to be a way for us to really do incredibly effective contact tracing, meaning once we find an infected individual, that's going to be an objective, independent way to try to identify where that person has been and who might have come in contact with them, and for that recovery phase of this h pandemic, that's going to be the critical way that we're going to use to try to minimize the number

of cases. Of course, there are some implications in terms of privacy, and so some people are feeling a little bit um leary about this technology. But when it comes to just straightforward being able to track individuals and and therefore slow down the infection spread, it's going to be an incredibly useful tool for that purpose. Well, and the pecosh to you and all of you at Johns Hopkins University.

Thank you for your perspective each day. Dr Pekosh with the Bloomberg School of Public Health at j H at you. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keane before the podcast. You can always catch us worldwide. I'm Bloomberg Radio