Surveillance: Expect Two-Quarter Recession, Roubini Says

Osama bin Laden was killed. That was a shock as he and I took the stage at milk And Institute. And now, in the stunningly historic moment for this nation, we speak with Oriel at Rubini. Oriel, what is so important? Here is the guestimate of your profession, done with great care and great respect. I was dumbfounded today that the Bank of England framed negative four percent g d P with an abrupt reversal to positive fifteen percent. Would you explain, just shortly here, why will we not see a V

shaped recovery? Well, there are many reasons. I wrote a paper where I presented the fourteen reasons decide to be Yeah, But I think the main point is as follows. The balance sheets and the pennas of both at the household sector and the corporate sector have damaged, and the corporate

sector had too much leverage. So coming out of the crisis, people will have first of all, less income, and secondly, because of what happened, they need to have more precautionary savings because if you end up with another second or third wave, you're really in troubled. So you have let's income, you have to because your saving grades, so your consumption is gonna slow down sharply in order to build up your savings. Investment of the household factors do not collapse.

Investment means searches of new homes because credit scores are gonna be damaged and people cannot take the risk of buying a home if they don't have you a home, a job. And on the corporate sector, the same thing. You have the highly leverage corporate sector. It has to be leverage by increasing savings and reducing intent attacks. What are the savings of the corporate sector revenue minus cost which cannot cost gonna cut labor costs. We've been shedding

thirty to fourty million dollars jobs right now. So that's a rebalancing of the financial balances of households and corporate More saving, less investment implies the recovery like financial to be a you Nooral, your term here, even with your public service to the nation of serving President Clinton, is you have an old world ethos, your study, your academics out of Italy, and your your real focus on the European view putting the same tall a sort of in

that same cultural sphere and even dr al Arian folks as well, Noural with this pandemic, do we lose the American spirit and American exceptionalism and American optimism or are you optimistic we can get that optimism back. I'm worried about America because during the crisis, America is not leading. After nine eleven, the US created a coalition to fight al Qaeda and the terrorists. After the global financial crisis, US led the global efforts to find a coordination to

these crisis. This time around, the US is missing in action. Is unilateralist, his protectionists, his isolation is and both the hard power, but more importantly the soft power of the US is falling. And look at China. The virus started in China. But China is very aggressive in providing financially to other countries, medical equipment, rights, you name it, and they're on a charm offensive and they're winning it. So

soft power of China is rising. The soft power of the US is really declining because the US is missing in action, is a well on the international stage, even among our own allies. So I think that the American exceptionalist is gone. The American power is declining in relative and absolute terms, and you leve a decline of US power and the rise of power of China, and the Cold War between US and China is going to become

a colder war because of this crisis. So, professor, are you to what extent do you think that global globalism in general is on the decline? Is that? Is that just clear to you that globalism is on the decline and nationalism is on the uh you know, uh increase. Yes, I think that we reach already peak globalization. At the time of the global financial crisis, were already movements towards protection and inter nationalism, the election, for example of Donald Trump.

But because of this crisis, the tendency towards the globalization decoupling between US and China, volcanization of global supply chains, first in the text factor, pharma products. Even the food chain is going to be volcanized because people want to keep their food at home, because they worry about food supply, and fragmentation of the global economy. All these things were

already occurring and it's gonna be accelerating. And whilst there's gonna be some reshoring of economic activity from China and Asia to the United States in Europe, that's not gonna great jobs because we're going to produce from places where there is lower level costs to places whether it's highly for costs. And therefore that reshoring is the will be capital intensive, more Baltic, more automation, more AI. So it's not going to have the job that is shoring of

economic activity back to North America. Alright, So, professor, how long do you think this contraction will last? So for not in the V shaped recovery, it's just two, three or four quarters or maybe even something more. No, I do believe it's gonna be only a two quarter profession first and second quarter. We're gonna see positively growth to our the world. In the third quarter of the year.

And by the way, in the third quarter you could see even actually growth rates for the US that are double digits at the analyzed rate for one quarter, because you know, you're the complete collapse of economic activity for two quarters. So once you start from that low base, it's very easy to show a quarter of say twelve percent growth analyzed. Twelve percent rows analyzed means three percent

within the quarter is nothing. Three percent, but analyzed looks like twelve So it can happens for a quarter or a second quarter. But my view is that these forces they're gonna bring new first of all to the second wave, in the third wave of the virus, they're gonna lead you to such a massive loss of income and the precautionary savings of the house of factor. You can reopen the stores as much as you want, like in Berlin, like in Germent, like in China, people are not gonna

spend the income and they are scared. Therefore, by next year, the MS is expecting that easier roper cross goos down three percent and next year is growing six percent, twice as much as potential. In fact, instead this year is down three percent, with consensus on that the next year when I fairly growth for the global economy, so we're not gonna make up for the loss of jobs and income and GDP of this year. That's the basest story

about easier the next year. The U is a story about next year within the jobs report and the better equity markets. I thought we'd digress here and we can do that with a new digital project of Nora Rabini. He has been a pioneer and market economics folded into his first rate academic international economics at the New York University, and he's gone off digital honus with the stylish stud photographic image on Oriel today dot com, Dr Roubini, what

is Noriel today dot com? Well, twice a week I do a broadcast of about an hour and a half, but I discuss what's going on in the global economy, in the market and topics like the all market, what's gonna happen to the Eurozone? That future of money and digital currency is the wha they were in a bubble and assort the topic. The format that is much longer now and a half rather than a five minutes. Okay, great, so so basically so basically you're competing with me. I

love it. No real wonderful oil. Let us talk about let's talk about the Zeitgeistnial and this, folks, is so important. And trust me, folks, I the only time I've ever seen Billions is when my kids called me up and said, oh my god, you I was on it like in the background on a TV image. And that's all my kids care about. Norial, even Billions. The TV show is talking about bitcoin this year, and let's be blunt. You are scathing and your criticism of bitcoin. What does everybody

enthused get wrong? Well, first of all, there was a bubble in bitcoin and crypto into thousand and seven seen, but they already has gone bast I mean Bitcoin, you will reached a pick of two twenty thousand and even with the Raality series a bit depending on the day, fifty five to sixty percent below its peak. Other top ten cryptocurrencies are about eighty percent down from the peak and three thousand class of those what I call technically ship coins, they have lost their value. So this is

a bubble that has already gone past. Secondly, some people say that the bitcoin is a good hatch against risk of episodes when the markets are down. Is a head to be like hedge funds. Look at what happened in February and March. The stock market US went done by thirty five percent, Bitcoin went down by fifty and the other top ten crypto currency went done by sixty five. So when markets are in risk off bitcoin and crypto doesn't go up, it's not a hedge. It goes done

more than the market. So it's not even a hedge against risk off or in the a negative animal spirits. It just doesn't. Okay, just because the time, Nora, and you're gonna do this, folks. You can tune into Noral today dot com with Dr Rubini. I believe it's tomorrow, and he's gonna go on for this for eight hours Noral in a couple of minutes. Here you even go after the institutions talking up blockchain, and the line I get is, yeah, bitcoin suspect, but blockchain is a real deal,

and you don't agree with that. Blockchain is the most overhyped and least useful technology in human history. By the way, it's a blockchain in name only because all these corporate lt or corporate blockchain is not a really blockchain's private rather than public is permissions rather than permission. Less centralized. Rather they centralized, and it's based on a system of fasters that a thought is validating it rather than being fastlisted.

So they call it a kind of a blockchain because e'xactly, But there's nothing to be blockchain. It's just a glorified that is what they called blockchain. It's not blockchain. And everything blockchain has failed. There's not a single use case of blockchain that's work. Visions of dollars. They've done use cases.

They don't have a single app. Okay, noral. So you and I heard the Expresso bar and Davos that were hanging out with all the star oats and all that, and Brian Moyne had a Bank of America, Bill Winter's of Standard Charter or Mr Diamond from JP Morgan. They wandered by, and you're gonna tell them their banking blockchain business is suspect. Well, the money and made an interview recently and he said, we spent tons of money on

blockchain experiments. We have done actually tons of happens on blockchain stuff, and we have not seen yet a single application works. He said so. The CEO of master Cat said so. They CEEO west Father said so, they all have invested tons of money. Blockchain. They tried it because it was a new technology and the schedule. They were saying, why don't he try? They tried it, and like tons of other technology, it doesn't work, work, and they're not

using it. Nobody's using it. The joke, what else are you gonna talk about with blockchain and bitcoin? I mean, nor are you gonna This is gonna be on firefolks. This will be out on our podcast and you know the Bitcoin CREWI is gonna go nuts. Are you're telling me it's going to zero? Or does it have a fair value? The real value, the real value of bitcoin and cryptocurrency is not zero, is negative because that energy hawks.

Since you have a fifty thou validators validating every transaction on bitcoin, the amount of energy is used is more than the entire energy used by Switzerland in a year. So it's an environmental disaster. If we're taxing properly for this negative externality, the fly should not be zero, should be negative because you have to impose a tax for something it's such an environmental disaster and energy hall. The

value is negative, It's not positive. No real today dot com folks tune in Friday where Dr Rubini is gonna go mental and bitcoin and that was just a whisper of what you will hear as well. Are Obedient n y u and again his new blog No Real today dot com just turning that to the Bank of England leaving policy unchanged today, but the Governor signaling that could

be stimulus ahead. We've made a very strong commitment that says this is more and faster than the Bank of in and has ever done before, but keeping more option open to my colleagues on the committee voted to do more quee now. Other members of the committee thought that it was a sensible decision to take in in our next meeting that we're not ruling anything out at the moment because it would be unwis of us to rule

anything out in terms of responses. So I don't want to say we're nearer to negative rates, but we're not ruling anything out. Governor Andrew Bailey speaking to Bloomberg a little bit earlier on on the road ahead, Tom and the road ahead it looks like it has more stimulus and more QUI in John, this is so important, folks. And there was a know Excel spreadsheet with two underlying red marks. It is preposterous, John, to model negative team

percent with an immediate reversal up fifteen percent. How did they come up with that? Well, I think it's also impossible to model the recovery Tom, which I wonder is the reason why they waited to do stimulus in June, because they don't know how big they're going to fail to go. And I think perhaps they want a month of reopening behind them before they project forwards how much

stimulus they're gonna need. I think it's inevitable at this point, given what we heard from Hassman sawn As this morning, given what we've just heard from the governor that more quie is coming. Is just how big is the next stimulus package, the next envelope from the b A we gonna be. We welcome all of your coast to coast here in America. John, let me ask a simple question.

I'll go to Ian Shepherdson and Newcastle because that football team is they're they're I'm glace, they're glad Premier League shut down. What's the difference in a labor depression in England, in London, in your Mayfair, John versus Newcastle? Well, quite clearly tom the cities and how they're going to reopen. It's going to be very different to how things open in the north of England, and I think we're gonna see that across states in the United States as well.

We're gonna have different sequencing of reopenings for different parts of the country. That's advanced this discussion. Marcus Ashworth joins us right now Bloombering opinion. Marcus Lord Skodowski was on yesterday talking about a depression with inflation. Is that even feasible in the ash for Ashworth universe? Yeah, And I even saw something right about hyper deflation, which is a new one on me. But I think what we're gonna have is this horrid dual hits of certain things. Seeing

sharp inflation, clearly food prices. I think that's something can be really far harder than emerging markets. But at the same time, overall deflation and we're seeing that. You look at the numbers out of South Korea, that's gonna be a very big warning sign for China. Low inflation coming into deflation. That's going to hit in Europe very evidently, if it's not there already. We're going to get that round round the globe, and that's why the bangaming and

governor isn't ruling out negative rates. I think it's the Fed in the bangoving. Really you really don't want to go down there. But as John was saying earlier, QUI is going to keep on coming. It has to the Bank of England will finish its buy backs probably by the end of June into July. It needs to reload. This is a big wall of supply coming and I think we'll see a hundred billion worth of QUI minimum in June and another again in August from the Bank

of England. Marcus, how much do you expect the Bank of England to expand into corporate debt and how far into particularly junk bonds the way that the United States fitters are has shown a willingness to do A fantastic question. And I note, according to Jeff good Lack that maybe the said hasn't quite actually really bought any jump bonds yet or not very much. But the point is they put it out there that they will. They've done this

corporate so commercial paper buying stuff. We're seeing some signs that the European Central Bank might do it. They're taking in collaps or already they wouldn't rule it out for the the last meeting. The Bank of England has got about twenty billion worth of corporate bomb buying to do. It's a previously done ten billion and stopped. This is you know a few years, a couple of years ago or so.

I think it will skew more towards corporate But again a bit like John said, they're gonna waiting to a lot of stuff to for a month worth of of re reopening. See how the economy has reacted in June and it was needed. They'll go into the real economy more. They'll buy corporate bonds more. You know, we we've seen some big signs in a Glads has climbed at a one and a half billion pound bond issue this week. More of that sort of stuff. It's helping spread than possibly.

Also they go to jump ones as well. As they said, they're not really anything out. As you know though, Marcus, the Sterling credit market just does not have the depth compared to what you would see here in the United States for the Bank of England to make a difference. They've got to work for the banking channel, haven't they. What else can they do well there's no doubt about there's nothing like the US corporal market, but the Sterling

one has its moments. But the thing that the Bank of England did last time around after the Brexit referendum in twenty sixteen was a sing called Term Funding Scheme t f F. They're doing it again. It transformed the mortgage market by boosting all the challenger banks. The second they turn those tear fest apps off, the challenge of banks are nowhere that it clearly works. They are trying to put stuff into the economy. They're trying to get

banks to lend. They're realizing that they're the first game didn't work. They're going to have to go up to fifty of loans guaranteed by the government. They're looking at anything and everything, very much like the European model of Teltro's of going into real economy loans, so they'll be

they'll be working on everything and everything. Marcus Ashworth. Always great to get your thoughts on a program, Marcus, fantastic to catch up with you, sir, Marcus Ashworth, joining us out of London on the road ahead for the Bank of England. We start with Ben Laidler of Tower Hudson Research. The CEO joined us on the phone right now, Ben, fantastic to catch up with you. Let's just talk about this economy as we reopened, before we turn to equities.

How quickly can this labor market? Hell? I think it's going to be reasonably slow. I mean we can argue whether it's a switch or you or or whatever it is. But I just I mean, the numbers are dramatic. You've touched on them, right, I mean, we're gonna have the headline job blurst. I mean it's not quite as bad as that. I mean a lot of those are furloughed,

rale and unemployed, but it's completely unprecedented. We we get sort of slightly, you know, numbed by the numbers, right, I mean we talked about three million, as if it's you know, yeah, better than last week, but completely unprecedented versus where we were six weeks ago. I looked then at all this news flow and if we can take it over to your United Kingdom, and we're thrilled you can come to us from London today and if we look at a collapsing labor academy, the stock market seems removed.

Why is that? I think a couple of things, right, I mean, equity market is there's not the economy, right, there's a lot more tech. There's a lot less small business, a lot less consumer, a lot less real estate. So you know, you're comparing apples and oranges a little bit. Um, you know, equity markets forward looking. I mean, the incremental data is from here is frankly all positive. Right. Um,

you know we're getting less jobless. It's still three million, still a ghastly number, but it's a lot better than it was last week and the week the week before that. And that goes for Frankie, every single data point you're looking at from here. I think earnings have been slashed, slashed and up to q ones. Actually, I would argue better than expected. I mean, so I think we've just discounted this awful lot sentiment terrible, and the incremental data point from here is is going to continue to be

positive for you know, certainly for the near future. Wildly against your call are those that say the things are overdone. I saw some chart somewhere overnight of the continued extension of the things relative to everything else. Why is that

I have a problem with at all? I mean, you know, they have more than double um the profitability growth, much better balance sheets of anything else out there, and relative to that, I think valuations are actually very undermanding that it's going to be one sector that comes out of this crisis in much better shape. And then it went in you less competition, arguably less regulatary oversight um And

and that's an important call. I mean, as you know, you know, fangs close market at this point, and I would argue, you know, the real the real anchor here. Implicit in your call for Fangs and this idea that they've got a consolidation of business and less scrutiny from regulators is a loss of business in other areas of the economy and a huge transformation, frankly, of the way business is done to a bigger focus, even on the

online space. I'm just wondering. You said furloughs are not the same things as layoffs, and yet Sean Donnan and Joe Doo of Bloomberg News wrote a story yesterday basically saying a lot of these temporary layoffs are becoming permanent. How much do you see that accelerating. There's a lot of these old economy businesses don't find a reason to exist in the same way that they did in the past. Yeah,

that's a huge risk. And you know, what you're seeing and with the earnings numbers or what you're seeing with the economy is just this this, this this bifurcation is just getting sort of even more brutal. And you see that in your face. In the first quarter numbers, you know, you're either in a sector whose earnings were down plus or you're in the other fifty percent of the sectors in the US we are earnings are up five um. You know, forget about the absolute numbers, but you know

that is very little in between. So the debate really really bad right now or or or things are okay. And just to jump in and ask a question, Ben, this is the debate of the moment. Will there be a reopening rotation? Are you saying there won't be? I think there will absolutely will be as a margin, right, I mean, but you know, if you look at what we own today, I think those sort of quality growth sectors, you know, tech, healthcare absolutely core positions, you know, regardless

of what's happening. I think now though with the reopening, I mean you look globally, you know that sort of that that index of you know, lockdown of of loosened by sort of five six seven percent, and that's driven a rebound in the last couple of weeks of our sort of proxy for economic activity. You need to look for things that are exposed to that off the bottom. So you know, if we like small cap, we we

we like you know, we like real estate. We've just upgraded, you know, we've become less sarish on on things like energy. So you know we're running a bit of a Barbel portfolio. But quality growth definitely the sort of core of it. But I would be definitely adding sort of cyclicals here. As again that incremental data point is positive. You're adding

real estate. Really, I am really interested to know whether you're actually adding office space as well, especially as the likes of JP Morgan says that some of these work from home arrangements might become a permanent feature. Yeah, I mean, so the history of really a real estate has changed. I mean a lot of it is is not the sort of traditional real estate, and you've sort of historically looked at and then the baby's sort of been thrown out with the barthwater a little bit in that sort

of downturn. A lot of it is sort of industrial specialized data centers, etcetera, etcetera, which are pretty pretty immun here. You know, real estate did very very well off the bottom of the of the global financial crisis. Obviously things are a little bit sort of different this time around, but in many cases for the better, right, a lot less lee ridge, more sustainable dividends. Absolutely, some sub subsegments

are going to see some pretty significant changes. But you know, as I think some of these people are going to find out, it's a lot more difficult to go out of your office least is sometimes than than you might want been. One thing we haven't talked about, and I know you're US centric in big cap centric as well, is we all look at portfolios the international stacks seem way way behind. Are they an uncommon value now or is that just something to walk away from for years?

I definitely think the opportunities there. I mean, we've argued for a while with China. You know, is the safe haven here, the sort of first in to the crisis, first out of the crisis, you know, very cheap market, a lot of policy flexibility. Um, so you know, wory avoid Chinese equities. You know we added to European banks not so long ago. I mean it sounds crazy, but again following that sort of stim first out sort of narrative, you know, Europe's sort of opening up here and and

the whole is part. You know, it's just huge in Europe. I mean, you've got a sense of it with a negative fourteen percent you know UK GDP forecast, but you know Europe is you know, the epicenter of this sort of GDP slowdown, and we're looking for things that are you know, the most exposed to that sort of incremental data point of off the bottom here and banks, I mean it's pretty much European banks pretty much the cheaper

sector in the world. John to here, Ben Ladler say minus fourteen percent u K g d P. I'm sorry, I'm not incredible to it. And folks, these numbers were talking to you about we've never framed just a confirm for for Bennett does sound crazy? You're right, and we'll find out in a number of months if it was a crazy idea and we'll cash out with you against soon. Be appreciate your had some research joining us on the road ahead for the economy and what you should do in this market X or A x A is a

wonderful French institution, and they have David Paige. He is one of the most acute analysts of this mixture of policy economics and then rolling it over into the markets and the long term responsibilities of acts on mr Page joins us. Right now, David, we're having this historic moment, this place in it, and yet we still come down to the micro data in today, a more difficult claims

report than many expected. Well, this adjust your call for tomorrow's jobs report, not really, And I think you know, in terms of detail of April's number, you know it's going to be a horrible number. We actually forecast an unemployment rate of fifteen and a half decent. To some extent, if it's fifteen and a half decent or sixteen spent or sixteen and a half, you know, it doesn't matter. It's a it's a poor number, and it's gonna it was. I mean, I think you're right to focus on you're

in claims. There is strangely a couple of factors that are seeing a cumulative initial claims coming way above that the continuing claims. There are new jobs being created, and that's reducing it a bit. And there's also a bit of uncertainty about who's furloughed and who's not furloughed, and that that uncertainty is gonna las till the end of June.

But May looks like based on what we're seeing today, that we'll see a higher number whatever the number we get tomorrow for April, but we do think that May will be the peak. Trying to judge how quickly unemployment falls thereafter is very difficult, and there's much more uncertainty in the U S market than, for example, in Europe, where's a much more rigorous sort of job support scheme being put in place by the government, but you know,

US government is trying to do that as well. We've seeing the PPE so the PPP program supporting paychecks, trying to keep work as furloughed. So we do expect to see unemployment fallback very, very sharply from you know, probably from higher levels in May that are close to twenty percent we think unemployment in May. But we do think that as you get into the sort of final months of this year, that will be back down so sort of below certainly below kemp cent. We're looking at a

figure around seven and a half per cent. The Federal Reserve of Atlanta Plus has an interesting serve a few days back where they suggested at seven to five of gross claimants were probably temporarily unemployed and so should move back. So that gives you a sort of very sharp heart swinging in unemployment, but also looks like you'll see a very sharp drop as well. Yeah, what leads to the scale of the second half recovery, but there's a great

degree of uncertainty around its side. Well, David, I wanted to go to that uncertainty right now. I'm hearing you talk about a sharp bounce back, and certainly that seems to be the sentiment among a lot of equity traders as you see equity futures that are near session highs

right now ahead of the US open. Even after this devastating number of these devastating economic figures, we keep getting how can you model that at a time when it's so unclear whether even people will go back to movie theaters and restaurants and sports events, whether sports will even be open, whether we're going to see a resurgence and viruses, what the lag effect will be for people who lost their jobs, who suddenly will be less willing to make

that discretionary expenditure. How do you model for that well, as you suggest, with a large career of humility and with very wide confidence intervals. I mean, it's incredibly, like, incredibly plausible that you see a much worst outcome come through. And of course what we can't model for, what we just simply don't know is what the virus is going

to do in the second half of the year. Our projections are based on a benign scenario where social easing or restrictions of social measures continue at a measured pace across the second half, and that allows for recovery to come back, but we don't know. Particularly in the US, where the easing of restrictions has come through much quicker than we've seen in other parts of the globe, we would argue that there is a greater risk of a

second wave developing. If that second wave does actually come about in the US or elsewhere in the clobe, then that going to have a material impact as well. So we do have to recognize that there's a significant uncertainty around that and then try and make some suggestions on top of that. What what we're arguing is that given the economic supports that the US government has provided the labor market, a lot of this material number, this materially

increasing unemployment should be temporary. But you know a lot of it will obviously be policy dependent, not just you know, support for the labor market, but as you say, how much of restrictions are going to come back and how much what the new normal is going to look like? Well, David, let's talk about the support that we have had from the administration and when that support actually fades. We've had enhanced unemployment benefits, We've had checks sent out to everyday Americans.

When does that fade pretty soon? I mean, it sounds bizarre. We're talking about, you know, a headline measure that's about twelve and a half decenter GDP. It's a huge stimulus, and yet we think it's in terms of the fiscal support, we think it's primarily saleties over the next few months. We know that the extension to unemployment benefits, for example, runs for four months, it runs through July, and at

this stage that's it. Now, that's brilliant in terms of trying to fill in the hole that the dropping activity is going to produce, and it does that pretty well. I think there's a good chance that, for example, household incomes don't don't fall in the second court, which would be incredibly successful terms of policy if that can be achieved.

But as you suggest, there is going to be needs to stimulus thereafter, and at the moment it's lacking, and I think that's where you start thinking about this space force stimulus that's already being discussed being employed. David Chris rup MUFG interpretates the jobs data and he looks forward to tomorrow. He says, it interprets to an unemployment rate of twenty four point nine percent. Quote, it's official. The pandemic job losses in the United States are depression magnitude.

What is the David Page policy prescription to take us down from Mr Rutky's interpretation of unemployment? What does it say that that's not what our forecast is on the back of these not understood over fifteen But even though it's it's a large number, the policy prescription is effectively

what we've got in placed from the federal reserve. We've got material stimulus that's going to be ongoing, that's not going to fade in the second half of this year, and that does provide growth not just for this year but actually primarily for next year and the year after, but we will need to see further symptiscal stimulus. You need to build a vigorous recovery. You need to be economic growth above potential, driven above potential. Consumers aren't going

to do that alone. There's too much income lost because unemployment will stay higher than it was before the crisis. Corporates aren't going to do that. Corporates are coming out of this with much more debt, and they're going to be much more cautious in how they conduct their spending, both hiring and investment. Therefore, it's going to be down to governments to drive this um and in the US it means more fiscal stimulus is needed. This is this

is critical, and I think it's really really important. Language matters, and through much of the last few months, people I think mistakenly have used the word stimulus when actually it was aid. You don't try and stimulate an economy when it's going a shutdown. When we come out of this, we have to switch from aid to stimulus. Now I'm trying to understand what those policy tools look like as we reopen. David can you get your head around that, because we've seen so much already, how does it change.

How do they recalibrate the policy effort in Washington to adapt for the fact that we are coming out of a shutdown and we reopen. Well, some of it's likely to be in terms of doing still what they're doing, so they're providing unemployment benefits, making sure that those that are employed that have lost their jobs because of this

virus aren't suddenly seeing income drop off. If you see that income drop back for households, and that just makes it harder for households to spend, it being too dropping consumer spending. So you could expect to see a further extension, I think, and through of unemployment benefits. But some of this is going to be about trying to invigorate corporate spending coming through again, and that's likely to involve different

tax incentives. It's likely to involve trying to incentivize invest to spend, and so that's going to be slightly different. And you're right, that is slightly different from a perspective where you're just providing a lifeline to these corporates to say to say float, I think that is the sort of areas you'll see a difference comes through devid. Appreciate your time to s monic. It's a tough time for a lot of people, especially the people behind those statistics.

David Page, their actual investment manager's head of macro research on the jobless claims we had twelve minutes ago. It is National Nurses Week, but it is different this year. We've gotten some good perspective, particularly from the Johns Hopkins University in the Bloomberg School of Public Health, all of

their medical platform. We should point out that Michael Bloomberg is a founder of Bloomberg LP, you know the terminal and also this radio and television operation as well, and he is a philanthropist to his engineering school at Johns Hopkins University and much much more. We spoke to their Jason Fairley, Professor of nurse saying at j h U about the state of the profession. We are seeing glimmers

of hope were in patient bed capacity is stable. We have a wonderful Field hospital started by our governor who is helping to unpack the hospital from from those who have less acute illness and who need to convalesce in a controlled environment. And our ventilator capacity is holding strong, So we are all of those metrics are glimmers of hope that we see at our health system, doesn't farley?

Do genetics play a very big role? And who dies from COVID nineteen, You know, I think that's an important question, and we're currently investigating a variety of different types of genetic analyzes. So there's very important differences in viral genetics. So are there differences in strains. We've heard lots about strains that come from China, strains that came from Europe.

Uh So pathogenicity of the virus itself is under investigation and those viral genetics, but more importantly is our host genetics. We as humans, what do our genes and how does our immune system respond? And so what we're seeing are evidence of individuals that may have some form of weakened immunity, may have what we call a less of a strong cide, a kind storm, meaning the immune system doesn't respond as briskly,

and therefore they may become ill. But as a results of their immune system not responding as briskly, they actually are the ones somewhat protected. In moving forward into the need for mechanical ventilation because because when the immune system doesn't act as briskly, you're not as overwhelmed by its response. So that's remembrance, not the virus that actually does the bad thing. It's your immune systems response to how it responds to the virus. Jason, are there also disparities because

of gender and race? And if there are, how how can we protect the people most at risk? Yeah? Well, when we think about from uh gender perspective, we are seeing data that men are at greater risks than women in terms of a bad outcome. Um, we we have to pay very close attention related to there are increased cardiovass in our respiratory diseases in general, the prevalence is higher in men versus women the same when you look at race. This has nothing to do genetically that we

know of right now. This is to do with access to care, poverty, health disparities between populations. And so if you live in a community across any part of the world that in which your community hospital, for example, is a low resource hospital, it's more of a district non

academic hospital. You may have less available intensive care beds, you may have less to care available ventilator capacity, You may have less options of accessing a primary care provider, and that may mean you present later to care for evaluation. And so there are many things in that in that that question that need to be unpacked in relations to things may influence differences in both gender and racial disparities that we are seeing with this virus. Jason Farley of

Johns Hopkins at University. 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