Surveillance: Virus Impact With Fed's Kaplan

by asking about what you're seeing in your district. You've been at the epicenter of the latest COVID surge in cases. What's happening to the economy there now? Uh, probably around mid June, the sharp rebound we were seeing started to moderate and started to stall. That was coincident. It came at the same time and along with the resurgence of the virus, and so we saw cases increase, we saw hospitalizations,

UH steadily increase. That has started to moderate. Based on the numbers I see the daily numbers, I get it's started to moderate over the last number of days. But what you saw the state do is put in and cities put in uh in UH a backup or unwinding to some of the reopening steps. Re emphasize how important is to wear a mask, and we saw we saw some effect to that, but you're seeing a rebound that's stalling to some extent. That's what we're seeing in in Texas. Well.

That caused you to do a rethink of your economic forecast. What do you see ahead for growth and inflation and unemployment. Well, and we're because we were seeing it here and in a number of other states. Uh, it's still our view that will contract for the year at about four and a half to five percent has been our view. After a very sharp decline in the second quarter, we'd have very healthy rebound in the third and the fourth quarter. I think I think uh that rebound is more muted

in the United States now. UH. And it's caused me to think that the unemployment rate, if we don't do a better job managing the virus, the unemployment rate is likely to be above nine percent, between nine and ten percent. So we've we've moved up our unemployment forecast. UH. And so UM, I think we've got a rebound, UH, but it's it's much more muted than it was and if we if we don't do a better job managing the virus, we're going to have lower growth and we're gonna have

a higher unemployment rate. And so I've been spending a lot of my time talking more about the virus than anything else because it's so critical to the recovery. Well, the six extra unemployment bonus and eviction moratorio they're gone now. First, has the FED has your staff modeled the impact of that on the economy? And second, should we expect a

wave of defaults that might affect credit markets? We have looked at it, and one of the things that's unusual about this downturn that we've just had is incomes have stayed relatively solid, and a big part of the reason is these unemployment benefits. And so we're normally in a downturn you see a drop in incomes. We haven't seen that here. Uh. It's still my view that in some form will get an extension of unemployment benefits. So I'm

quite hopeful that that will continue. But if it didn't, uh, yeah, you would see a further weakening in the economy. And uh, in particular because consumers wouldn't have as much money in their pocket to spend any business people telling you that six dollar bonus was keeping people from coming back to the labor force. Uh. A lot of business people were telling me that, honestly were they were telling me that, Uh, it was challenging to hire people. UH. We've looked at

a number of studies, We've done our own work. We don't see it as much in the data, but I can tell you I'm hearing it from business people. UH. And So, however, whatever the right answer is, I think you still are going to need to see extension of unemployment. It may be restructured to some extent from the six hundred dollars, but I think it's important that we see

an extension of it. And I think the increased incomes while it may have While it may have made it hard for certain individual businesses to hire, it's helped create jobs because it's helped bolster consumer spending. So the net effect still has probably been positive for the economy and

for employment. A number of your colleagues, at least number of epidemiologists joined by your colleague Neil cash Kari of Minneapolis UH say that we need another nationwide lockdown for about four weeks to defeat the virus and that that should be job one over reopening the economy. What do you think of that? UH? I probably have a somewhat different view based on my conversations again with epidemiologists locally

and through the country in that UH. The epidemiologist I've spoken with, which has been been widespread conversations, believe we could manage UH this economy and the virus and have the economy open if all of us wore mass. That's first and foremost, and then we need a good testing

and contact tracing regime. But in particular, if we all wore mass, they believe it would substantially mute the transmission of the virus and you would not need to do widespread lockdown, And in fact, many of them fear if you did. If you did more lockdowns, if you still don't have good following of the healthcare protocols, the lockdown

to some extent would be wasted. And so I think their advice is as UH, be very careful about the reopening enforced a widespread UH practice of wearing mass social distancing. Now there might be isolated or localized areas in the United States where the virus is become unmanageable and they're gonna have to take far more extremee steps like lockdowns. But I think we're gonna have to learn to live

with this virus. Um. We're gonna have to learn to re engage in our daily activities but still control the virus. But widespread mask wearing is essential to that, and I think it's probably the most important practice that maybe has been done unevenly, and we've we've lost an opportunity to to recover and control the virus and grow faster. We're speaking with Dallas FED President Robert Kaplan on Bloomberg Television

and Radio. Do you anticipate, President Kaplan, the FED will change its forward guidance, perhaps as early as September and tie it to inflation running a little bit above two percent for a while. Um. I'll speak for myself. I would not do that. Um Uh. We've already given uh fairly specific forward guidance in the form of our Summary of Economic Projections the SEP, where we've made clear that rates are going to stay around the current levels for

the next couple of years. I would I would far prefer when we do give forward guidance in the future that we tie it to our dual mandate uh and and particularly tie it to the unemployment along with making progress on inflation. But I myself would not be in favor of tying forward guidance specifically to inflation. I would not want to see us do that. Old guys like you and me. Remember we last time the Fed traded a little bit of inflation for lower unemployment. Uh, the

Arthur Burns era. Are you worried at all that that might be a mistake? Uh? The the inflation dynamic is different now. Uh. Meaning used to be as in the in the old days, as you say, UH, when you had a very tight labor market and you were at or pass full employment, you would see inflation. But the world has changed. The structure environment of the of the economy has changed with technology, technology enabled disruption, which is

limited pricing power businesses. That along with globalization, has meant that the FED has been able to run the economy hotter with more muted inflation. And so we've had to change the way we think about inflation unemployment. And we've also and I've also been much more cognizant of underrepresentative groups uh, lower educated UH, Blacks, Hispanics, women with a

high school education are less. By running hotter, we've been able to get these underrepresented groups back into the economy, back into the workforce, and I think that's been very valuable. The primary and secondary credit market facilities have up to seven and fifty billion dollars available, yet you've bought only twelve point three billion in bonds. The main Street program you can buy up to six hundred billion, but you've bought only eighty two million so far. Why doesn't anybody

want your money? Yeah, so, I've spent a good amount of time. For example, I've got a key role in the municipal finance program where we we have a five it's a five hundred billion dollar program, and we've put out, as you noted, a very small fraction of that. I think one of the features of the municipal program, the corporate bond program is usage is not an indicator of

the power of the program. Just by announcing these programs and making clear that we would help provide a backstop to these markets, you've seen a substantial rally and flow of funds into these markets to where the FED pricing is less attractive the market than market price. Seene and the FED hasn't had to actually purchase securities the way we might have thought. I think that's a good outcome. UH And I think the programs have served their purpose.

On programs on the other hand, like p p P, I think it's very critical that those programs got used, and on the Main Street program, I think over time, I think we will want to keep getting feedback and looking at ways that that program can get more fully used, because I do worry as as healthy as the financial markets are and as loose as financial conditions are right now, one place they're not loose is for small and mid sized companies, particularly if they're in person to person contact

industries and the Main Street program and if there's another round of the p p P, those programs are critical to helping those small mid sized companies get credit UH and so I I do think usage is important to look at their One visible aspect of what the FED has done, at least according to investors, is the stock market. Do you worry that you're creating a bubble however necessary your actions maybe, but that it might pop and take

the economy down with it. I do think it's wise for us whenever we're doing UH asset purchases, and we've done something I think even more extraordinary in this downturn, and that we've done these thirteen three programs which have held backstop these financial markets. Yeah, I think we'd be wise to be cognizant and concerned about the impact we

have on risk assets. I think it's necessary, but I think it's very important that these programs have a sunset date, that the markets understand they're not going to go on indefinitely. I know we we've just extended our thirteen three programs to December thirty one, but but I do think it's important that we emphasize these programs will sunset, they will lapse laps, because I think it's very important that these

markets are able to function without FED support. And I think the FED support creates its own UH fragilities in the markets, and I think we should be very cognizant of that. UH. Can't let you go without asking about oil. Bankruptcies are spreading throughout the industry. Prices started to recover but now seem to be rolling over a bit. Gasoline

demand is falling. What is the outlook? Well, so, actually gasoline demand the United States has has recovered now to again in the neighborhood Hi eighties nine of a year ago. I've actually been surprised how strong demand has been even with the resurgence of the virus. People are driving. They're not taking mass transit, and they're not flying, but they

are driving their cars. Uh. I think to your point, though, with the resurgence of the virus, the recovery in in demand has stalled a little bit and is hovering around. And at the same time, we've got all this excess inventory. You know, we had all this over supply that have been built up because of the drop in demand earlier this year, and I think it's gonna take till middle of one for that excess inventory to be worked off.

So you're gonna have a very challenging energy industry and oil market probably for the next six twelve months, depending on how the virus proceeds and how demand recovers, because we've got a lot of excess inventory and oversupply. I think it will begin to firm later next year. But in the meantime, you're seeing shut ins, I mean people

who are producing who shut in their wells. You're seeing recount drop, precipitous lee and I think you'll see US production fall from about twelve point eight million barrels a day at the end of two will end this year around ten point eight million barrels a day, a big drop. And and that's even with reversal of most of the shut ends. We're just seeing less drilling activity. And you're gonna see and you are seen lots of bankruptcies, restructurings,

and stress in the energy sector. You're the markets guy at the FED. You worked at Goldman Sex for a long time. The enormous volatility in the treasury market we saw back in March. Did that have to happen? Reports are it was caused in part by huge levered bets by hedge funds. Do we need significant changes? Do we

need uh supervision of the shadow banking system? Yeah? So I do think part of what's what happened in March, which maybe hasn't been talked about enough, is is you had in March and in part of April a a force selling wave through many financial markets. There was a substantial amount of embedded leverage, whether people were leveraging treasuries as part of risk parity trades or other strategies. And part of what the FED did is facilitate that de leveraging.

But I think now we've been through it, I do think it would be worth doing more study as as to what what what was the role of embedded leverage in these markets, um, and what are the implications? And I think again it means the FED dis needs to be cognizant that financial stability considerations are sometimes hard to see and they can build up, uh and then when you have a stress event like we had this year,

you see it manifest itself. UM. I'm also very aware when you mentioned the treasury market, treasury is not the natural uh component of a portfolio that maybe it was because rates are so low. Uh. You might find that that many people used to buy treasuries naturally as part of a portfolio will be buying other assets gold, maybe other assets. So that will have also have an effect on the treasury market that I think we're gonna have

to spend more time trying to understand. Well, we'll check back with you and see what you've learned in a couple of months. Robert Cappel, President of the Dallas FT, thank you very much for joining us today on Blueberg Radio and television worldwide Right now, to begin, are we of economic coverage? Here on the simulcast on radio and

TV worldwide is Ethan Harris. He's a Bank of America with authority on the transfer from Greenspan to Bernick with this wonderful book, and also on absolutely nailing the non V shaped recovery of two thousand seven two thousand and eight, No major house did better than Bank of America on that call, Ethan, once again, we don't have a V shaped recovery. What kind is it? Well, we have a two month V followed probably by three months of l That's what it looks like, and then hopefully from there

we start picking up again. But I mean, if you look broadly at the data, clearly the resurgence and the virus caused the UH a little bit of pulling back in the economy, and July and week affect things to be kind of flattish for the next few months. What is your unemployment statistic for Friday? I mean people are verbaling a tennish percent. How much of a mystery is that statistic? Well, I mean the employment report is going

to be could be anything. As we know, economists have done a terrible job of forecasting in the last couple of months, and that's because there's so much cross currents in terms of firing and hiring in the labor market. I mean, our guests at this point, is the unemployment A dips below eleven, so it comes down to ten seven. But to put that in perspective, that would be worse than any month during the Great recession of two thousand and eight two thousand nine. So it's great that it's

coming down, but there's still a long way to go. Ethan, did you ever think that you'd have a Pyrose guest of positive one million, but then also right in the line afterwards there's a risk of a negative print. I mean, just how unprecedented is this monument pulled this Friday? Yeah, I mean it is a product of the unprecedented nature of the crisis you have, uh, you know, companies that laid off you know, twenty million people and now they're

hiring some of them back. Uh. And the data we look at, the commist look at that's supposed to tell us what these numbers are going to be just doesn't really tell the whole story. And so we you know, we try hard. I mean, every comes just looking at these numbers over time, and we're still getting big forecast errors. So it's it's just an unprecedented time and so unprecedented volatility ethanannic seasonal quocks that we should be coming into this print. Well, you do have a little bit of that.

You've got, um, you know, you don't have the usual shutdown of the auto sector and uh so that that could help a little bit. We we've got payrolls coming in at a million. I think the consensus is a little higher than that, but it but those kind of smaller seasonal stories are overshadowed by you know, like I said, all the volatility of the number, I would view a millions. Okay, I mean this is remember payroll survey has taken fairly early in the month, so it's reflecting how the economy

is doing in late June and early July. Things have weakened since then, So it's believing or not. It's slightly old news. Uh this this July payroll number. It's quite clear that the labor market is weakening, and there's faith at Washington will come to some sort of deal to extend the enhance unemployment benefits. Let's just assume that they will come to a deal does it matter if they don't come to a deal in the next two weeks or three weeks, if it takes them a month, how

big will the impact be on the economy? Yeah, I mean every week of delay it gets a lot worse. I mean, these are not you know, the people are getting unemployment benefits are on life support here. Their benefits don't expire entirely. It's just this the six dollar bonus. But that's been a lifeline for the unemployed and for

the retail sector, which is done pretty well. Um. Every week that passes that there's no extension is another week where they're cutting back on spending, getting a little more desperate. So uh, the timing is very important. Uh. And UM, I would hope that they don't cut them too much, that they cut them moderately. And I hope that there's more in the package than just that the economy needs a lot of support right now. We're only halfway back

to normal. We need a package. It's about half as big as what we got in the spring, So it's got to be like one and a half trillion nut one trillion, and and it needs to be targeted well to the people who are most distressed. They're the ones who are going to spend money. So the size, the speed, the targeted nature of the package, they're all important. And

right now I'm quite worried. Well, so you have fiscal hawks kind of coming back among some of the Republicans, and I have to wonder not all deficits are the same. We're gonna get a sense of how deep the deficit is going to be getting today when the Treasury Department releases their financing needs over the next three months. Can you give us a sense of how much lower the deficit will be, how much shallower it will be if there is a successful stimulus versus say, not having a

stimulus now and a slower growth trajectory going forward. Well, I mean, you have to pick your poison here. We're not gonna we're not going to solve the budget deficit by cutting spending now. I mean, that's just risking driving the economy back into collapse. So there's a balancing act here. There's no choice. We either going to have a bigger deficit because the economy is terrible. We're gonna have a bigger deficit because we're spending more money to support vulnerable

parts of the economy. Um, you know, you can, on the margin, maybe reduce the deficit a little bit by by cutting the corners. You certainly can can reduce the impact on the deficit if you're smart about the way you distribute money. So, for example, these checks that they're being sent to households, these stimulus checks, most people get those checks unless they're unemployed. They're putting them in the bank.

That's just a handoff from the government to the private sector. Um, if you really want to stimulate activity and get a good bang for the buck, send it to the parts of the economy that needed give it. Send it to the unemployed, state and local governments. Uh, you know, um, small businesses that are in distress. But these broader stimulus programs just don't work very well. We know from history that most of that money doesn't make it into the economy.

It just goes into people's savings accounts. Ethan was sitting here talking about policy risk. Argiably, we've already seen a policy mistake. These enhanced unemployment benefits have expired. What's the damage that will do to the early August data that we've got to see in the next countle of weeks. Yeah, I mean, it's gonna take a while to see it in the numbers, um and each week that passes, it's

going to get a lot more noticeable. Presumably people have been getting this money because a lot of them are getting more in unemployment than they would have even working. Hopefully they've saved a small amount of it so they can kind of survive a week or two. So I don't think things that I don't think you fall off a cliff in terms of spending. I think it just kind of gradually a weekend, and by the end of August, if they still haven't passed it, you're seeing a substantially

slower consumer. We're talking about a weekly benefit of about ten billion dollars. That's even for a big economy like the US, that's a big number. Uh So it's going to be a kind of a sliding down in terms of activity. And those retail sales numbers that look so fantastic and really weathered the crisis well because the stimulus has been so strong for households, those numbers will start to fade just as the month goes on, And ethan

if is the month goes on is frankly unimaginable. Whatever anybody's politics, is as well, how do you adjust Q three in particularly, how will you just que four g d P if we go along? Yeah, well, um, well, first of all, we don't think there's gonna be any real growth in the third quarter. Now everyone's got a high GDP growth number for the third quarter, but that's

because we ended the second quarter so strong. We had huge growth in May and June, and so the launching off point for the quarter looks high relative the prior quarter. But we don't have any growth in our forecast during the quarter. We've just got basically flat activity with as we see a small pickup in jobs. So what you're gonna do then is you're gonna cut into that even more. Um, it's almost impossible to get a to get a negative GDP number for the third quarter, given that we start

off at a higher level. But um, but yeah, I mean, as you get into the fourth quarter, you know, you're hoping that you know, you get a third quarter maybe pick up because of that effective June on the data, you're hoping in the fourth quarter you get like a five or ten percent growth rate. But you know you could in the fourth quarter get a zero if you or even a negative number if you don't deliver at all in fiscal policy. Now I think they'll deliver. We've

seen this game. We've seen this, uh, this soap opera before, and you know, once people start crying and really hurting and then they come to a decision and uh, you know, maybe it requires that the markets get a little bit upset because it takes too long. But eventually I think they'll come to a deal. I just worry that they'll wait too long and it won't be well targeted. Ethan great to catch up with the big wake ahead. Ethan has that at Bank Formata Security. We turned now after

Mr Kaplan to Catherine Mant. Catherine Man is at City Group. She is one of our most distinguished international economists and what has been wonderful about her work from her days at M I T is she is someone with a sense of history. Dr Man. The simple reality for all of the FED, all of the academics, and all of our viewers and listeners is we've never seen yields at this level. Do they damage the economy and do they damage confidence at these low levels? Well, there are a

number of different factors here. I think that you know, the bifurcation between the asset side of the economy and the real side of the economy is accentuated at very low yields because you have the asset side searching for any different, any strategy in order to to get the return on the assets. That's where the leverage comes from. That's where the reach for yield comes from. And yet

that doesn't translate. That financial market um ooth that comes to the fet is not translating into the real economy. And that bifurcation is even more apparent now than it's been ever. And what is so important about this, folks? If you look at within the theoretical model dcor Man, the Hicksie and I SL model, the LM curve benefits the haves does all the fancy mumbo jumbo doesn't benefit. They have knots of American society. There's always bringing in

the I S l M model on Bloomberg. That's you know, you're expecting your your your viewers to be pretty checked up. But um so, you know there are channels through which the you know, low interest rates, etcetera. Do benefit. The quote have knots. I mean, anybody who owns a house is actually benefiting right now. And you know, that still is a widespread asset holding in the United States. It is not everybody, There's no doubt about that, um so.

But but that is an important channel. And of course to the extent that the FED is supporting companies uh that are still you know, are still wearing a life preserver because we're only in life preserver mode at this point. Everybody's trading water hoping that that the virus is going to go away or there's a vaccine. Um the FED is providing a backstop for those companies and they are still in the business of of employing people. So that is also something that is that is the role that

the Federal Reserve place. But there can be no doubt, there can be no doubt that the concentration of wealth, uh, you know, the Federal reserves policies does benefit those who hold wealth and that is very concentrated in the United States. But it's not it doesn't have no effect on the have nots. I mean, I think we have to be

fair about that. Catherine rates have remained incredibly load, your record lows at the same time that you see inflation expectations ticking up, and Mike Wilson of Morgan Stanley over the weekend saying that that could actually continue to increase over time. Just to quote from him, he quoted Milton Friedman famously saying nothing is so permanent as a temporary government program. This is potentially more inflationary than appreciated, which

means that back and rates can rise. Portfolios are not positioned for this. Do you agree, Well, I agree that um, that rates could rise, UM, but I don't. I don't think that. I don't agree with Milton Friedman. UM. The other quote that he's very well known for is, of course that inflation is always an everywhere a monetary phenomenon.

In other words, the size of the balance sheet, the credit growth that we've been seeing around the world, that that that is assumed by the Freedman nights, that that this is going to be inflationary ultimately, however, UM and the markets are not positioned for that. But the way the markets are not positioned, I think is not so much that there's going to be inflation that's out of control, but there will be more inflation than the markets expect.

There is a big gap between inflation expectations as measured by the market and inflation expectations that is measured by the way the market, the um labor market, and the product market work. In other words, Milton Friedman's view of the world is very macro. The way we think inflation works these days is about can workers get get wage increases in tight labor markets? The answer is pretty much no.

Do firms feel like they can raise prices? The answer is pretty much no. So you don't have any inflationary impetus coming through those kinds of micro foundations of it. But the market pricing, the financial market pricing of inflation is way below doctor Man. I've got to get in a question here on international economics, and I note you're wonderful map behind you with Latin America over your right shoulder.

What is the fragility right now of e M and particularly commodity based and virus affected e M. Do you find it to be early nineties critical condition or is it better than we perceive? There are a couple of different cross currents on the commodity market, uh the exposed commodity market economies. One of course, is the domestic COVID crisis, which is quite apparent in a number of countries in Latin America, and that's very negative for for their economies

and of course the death toll in the individuals. On the other hand, the dollar weakness is supportive of commodity pricing, and we have seen some improvement in commodity pricing, and that is at the margin beneficial for the Latin economies

in particular. Now we have to overlay on top of that, of course that within these economies, even pre COVID, there was quite a lot of differentiation in terms of the sort of the status and stability of both the political systems as well as the as the quality of economic policy. So there are really three factors that you do not have to wait when we look at at Latin American economies.

The domestic policy environment, political and political and policy environment number two, the COVID and then three dollar weakness educations for commodity prices. Doctor Man, thank you so much, very valuable after comments and Mr Kaplan, Catherine Man. Of course, with city, let's get back to the moment at hand for this nation, which is thirty million people unemployment checks aid. However you want to put an income substitution, it's evaporated.

Lessie Vinjamury joins us with Chatham House out of London, with a huge focus on the United States and the rest of the America's as well. Dr Vinjamury framed for us the urgency now for any in all, there just seems to be we'll get through this in a week or two. Do they have a week or two? No? I mean, you know, you think about a hot August summer in the United States, thirty million people out of work, a lot of people still engaging in those protests um

and looking for that check and watching the numbers. Right the big story is the virus. Watching over one tho Americans dying every day and no sign of relief, no sign of schools reopening. Hard to imagine going back to work, even if their work job. There's going to be very little sympathy on the streets of America for a Congress that can't get its act together and agree and new fiscal stimulus plan that includes a very substantial commitment to

sustaining those unemployment benefits. But partisanship is the name of the game. It's come back. That bipartisan consensus that we saw initially it's gone and so you know, but but making there's a lot of pressure on both sides right now to firm up some sort of package, Leslie. History is just littered with this. Whenever the crisis fate, the collective will to do more fate with it. We're experiencing that at the moment, except the crisis hasn't really faded

much at all, has it, Leslie? And this is the issue. What is Plan B down in d C. And how close are way to them actually talking about it? Well, I mean, I think you can't stress enough. There is no sign and this is you know, watching this from London, it is extraordinary to watch America really drive itself down the rabbit hole of this crisis. Um m B is you know, we're hearing some reports that maybe the White House has a plan to step in um to not clear what that would be. It clearly has to work

with Congress. But the Democrats have a strong incentive to hold firm, to ask for more, to ask for a bigger package, especially as they can see right Donald Trump's polling, you know, not holding holding up against his his vice presidential contender. Um. And so I think it's difficult to see the end in sight, but there's tremendous pressure to U to at least have a temporary measure and that's

what we may well see soon, Leslie. There's the potential policy failure on not passing necessarily an extension to the enhanced unemployment benefits. There's also policy failure that I think is incredibly important to focus on. One that you focused on that is the lack of a virus policy. And you said that the bottom line is there still is no national plan for the virus for fighting it, so we need to stimulus. How expensive is it that the United States does not not have a cohesive policy on

fighting the virus. We're seeing the numbers, right, You've seen the number of fiscal stimulus, you see the debates going on in Congress. But the story of ongoing death, ongoing and rising infection in so many states, um and people just not being able to function right, not being able to leave their daily lives. I think there was a period in which there was something novel about it. There

was really a rally around the flag. And then we had a moment of you know, the George Floyd moment, which really out there in some in some senses, galvanized Americans, brought them together, gave them a focus. And now it's getting long, it's getting expensive, and people are looking at September, right, they were things to begin in September. John, this is so important. You have Dr Vinjamuri with us from London. It works, and John, you're nodding acquaintance with the city

and it's just real simple. Mr Slack, representing the Prime Minister, begins to suggest a barckdown of London. John, that's that's first of all, is a doable, John, this is a worse case option. It was reported by the Sunday Times newspaper to a plan to seal off London. And let's be clear, we're not there yet. I want to emphasize that.

But there's a narrative doing the round that the United States has a higher tolerance for infections than say the continent, and I think that narrative is just too broad for what is actually happening in Europe at the moment. On the continant, you might be thinking about Europe the mainland in the UK, Leslie, that does seem to be just as higher tolerance for some of this and to reopen and push further, the Prime ministers backed away from that

in the last week or so. Can you speak to what is happening in the United Kingdom at the moment. You know, there's a lot of pragmatism amongst the British population. You see some of the images of you know, people flocking to the beaches, whether it's in Kent or whether it's in Cornwall. But the reality is that most people

are quite cautious. They're seeing that there might be more pressure, more shuddering, that there might be reversals that there and I think that the one thing that's good is that there is now some competence, that there's actually careful planning a, B and c. You know, if that infection rate rises

above a certain level, that there will be shuddering. Uh that there's still a lot of uncertainty I think around schools that said that schools are opening in September, that people are going back to work, a lot of uncertainty about how that actually works and what it will mean, especially in London where you have so many people reliant on the underground, on public transportation to make that happen,

a lot of people planning to stay at home. But it really, I would say, is a very different context from what we're seeing in the United States. People largely feel that the viruses out of their daily life obviously, with the exception of the most vulnerable populations are people and elderly care facilities. Um, but life is, you know, not normal, but it's it's acclimatized to a new kind of normal, learning to live with it. Let's try to catch up with these stay safe wi Let's let's lea

Vinjamini there of Channam House. Thanks for listen 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.