Drop sharp criticism from some, especially the former especially her Inspector General for tart. He has a terrible idea that has been circulating among officials in washington the past few weeks. Declaredsentially Mission Accomplished for programs that have attributed to the recovery so far allowed them to expire at the end of the year. Join us is a partner. Lets take the other side. What if its true . Lets take the money and bring it back to congress and reallocated for Small Business. Thanks for having me on. There are couple of problems with that. This is a backstop. The whole point of these programs was to be available in case things get bad again. Ofare seeing this tsunami virus sweeping across the country and the shutdowns are following it, this is exactly the worst time imaginable to pull the plug on these programs which were so important to stability across the country. The idea this is going to be repurposed for Small Business is nonsense. The bottom line is its going to require an act from congress. Its not as if there is a pile of 450 billion sitting in the treasury will get move from one thing to the other. Third, the money isnt slated to be lost. There is no budget impact on it. If Congress Wants to help Small Businesses, this makes no difference from a physical standpoint. It should be a bad justification for what is a political move designed to undermine the incoming administration. Good morning. Brief ripple in the equity market. Credit hardly moved. Are you surprised . Not entirely. You have to understand where this is going to come into play, when things start tightening again, with the ramifications of the shutdown start to continue again. This wouldnt trigger that type of panic. Its going to be something external, something we dont know whats there. Thats why it support to have these programs in the backstop. Its important to be there in case something bad happens, in case panic returns like it did in march and these programs were so helpful in smoothing things over. Away the opportunity for the new administration to use these programs more proactively. Mnuchin decided to take a zero risk approach. Terms tolted in strict dampen the effectiveness of the lending it to mediumsize businesses, the lending to municipalities. It doesnt surprise me that it hasnt hit the markets as far as changing prices and spreads. Thats because we dont have that additional external stock that can trigger the system into panic. You remove the brakes on this, thats the problem. This isnt necessarily a done deal. The Federal Reserve has to agree to give the money back. They havent indicated they will do so. Alix we dont like this plan basically. Let me walk it forward. Lets pretend they do have to give the money back. The narrative is the actual money needs to be used. It was a psychological boost for the market. Toyou walk me forward january 20, testimony have to be there . Can President Biden say this is what we are doing. This is how much. Thats enough to help us through. Its theoblem is Federal Reserve response to mnuchins request and gives the money back, that money will no longer be there for these programs. There needs to be some money from treasury in order to absorb any potential losses that might come from these lending programs. It doesnt feel like its in the position to take its own losses. These are lending to private companies. There is always a risk of private company wont pay the money back. There has to be that taxpayer money as a buffer. This is the form of they picked out in 2008. Back, fed gives the money it will be much more difficult for a biden ministration to restart these programs. It there are other smaller amounts of money available in other funds. There is nothing that comes close to the size and scale of what was previously announced. The economy have a liquidity problem . Tell, there is liquidity everywhere. You can see that in spreads, you can see that in what is happening with the equity markets. Why do we need more liquidity . Why do we need this backstop with the system has so much of it right now . You might have said the same thing in 2020. The thing weve learned from crisis after crisis is there is a ton of liquidity until there isnt. That can happen very quickly, very rapidly when markets lose confidence. We are just a shut down order away from triggering that same level of panic, that level of loss of confidence where liquidity dries up very quickly. Thats when you need a backstop. It doesnt cost anything to keep these programs in place as an insurance policy. Thats why i dont remember ever seeing the extraordinary actions by the Federal Reserve to rebuke the treasury secretary and say this is a bad idea. This type of open split between the treasury and the Federal Reserve because it is so extraordinary. There is no harm in keeping these in place just in case. We are not out of the woods. You cant when you have the virus spiking across the country. Alix who should be treasury secretary . Not steve mnuchin. There are a lot of great candidates out there. It sounded like joe bidens statement points toward janet yellen, who would be an excellent choice. There are a number of names out there who could be terrific. I think we are looking for a significant upgrade. I dont the kitty of those names would ever do such a naked political act as what just happened and put the interest of the people so far below the sort motivatedtty, small issue just to hurt the successor to donald trump. I think we are in for a big upgrade. Guy we live in strange times. We can certainly say that. We really appreciate your input. The atlanta fed president telling bloomberg he was surprised. I was a bit surprised. I have to say right after the announcement, they came out with a statement expressing their interest in extending them, to keep them available. Thats where i am. Given where the economy is, there is so much uncertainty that is still out there, it is proven to keep things open so that when people if they have stress and draw upon it. More reaction and a sense where the market is on this. The market barely budged. There was an initial ripple when this happens. Today is a really quiet session. You would have thought this was a major problem judging by the headlines. Every major newspaper covered this. Its a big deal, not according to the market. Helpful to remove these measures at the current time. Its notrly not helpful to remove these measures at the current time. We cant pretend the sky is falling. The fed has 750 billion of lending authority. Its not clear these will be taken away. Key measures are staying in place the money market facility. Isaac the market is taking it in stride. I think its important to keep in mind the economic recovery is really one that is quite robust. The next couple of months will be difficult. There isnt any question about that. Seen is more targeted then we have in the spring, which should benefit the overall markets. Alix does it change the idea of lets go by value . If anything, if you see weakness over the coming weeks, those are opportunities to add to those. Weve been very consistent on this call about small caps and value and dividend payers. 2021 is going to be a year of economic recovery. Lostded back two thirds of canonic activity. Jobs to themore economy in the last six months than any sixmonth time in history. Housing is at a 14 year high. We dont want to lose sight of that in what is a negative headline today. The market is already priced in their economy. The reason that happened was because the fed stepped in and delivered lots of firepower. Ilook forward to 2021 and wonder what keeps this going. The date it was getting better. That was always going to happen. The market priced in. Lets step back. It wasnt always a given it was going to happen. We werent sure we were going to get a vaccine. There was a lot of uncertainty about that. Forward, economic recoveries are not measured in days and weeks. Becomes recovery expansion. We are at the early stages of an Economic Cycle here with Earnings Growth likely to continue. Year, we willnext get back the 2019 gdp levels by the middle of the year and earnings levels by the end of next year. There is still a lot of growth. There is still more stimulus coming into the economy with the vaccine and the additional stimulus and Earnings Growth will turn positive. There will be plenty of possibilities. What is your topic . How do you deal with your safety at this point . We continue to like small caps. Dividendue to like payers. The market was not interested earlier this year because the economic decline made people think they were going to get cut. I think people have more confidence. In the meantime, we do expect to have some weakness over the next few weeks if the pandemic continues to rage. We would use that as opportunities to buy. Alix thank you very much. Common up, more about the vaccine. For emergencyng use. We will bring down break down the next steps ahead. This is bloomberg. Alix this is bloomberg markets. Pfizer is requesting emergency author a should for their vaccine. That will enable the use by the end of december. Atrofessor at the department Johns Hopkins joins us now. Its good to chat with you. Walk me through the process. They applied for the emergency use authorization. What happens in these next few weeks . There is a rigorous review to check all of the efficacy and safety data. They have applied for emergency authorization. It should be faster. Its good news. We are not there yet. We have to wait longer and once it is authorized, we have a process of rollout, where it takes a while to have enough doses and distribute those doses, to have enough people vaccinated to see protection. We need to monitor and things will get worse before they get better. Guy lets talk about things getting worse. About the casenk count in the United States and the fatalities will look like two weeks after thanksgiving . We are at code red. Things are the worst they have been. The trajectory is bad. It depends on behavior. We can predict. It depends on what people do and how safe they are. Continue to double until we take the right measures to slow. All of the infection we currently see is going to lead to more hospitalizations and deaths, which we have not observed. Any prevention now, we will have increases for the next month or two. Alix part of the story as we now have better drugs to fight it once you do get sick, that could stem the bridge so we can get that vaccine, particularly if it is approved by the end of december. Is that accurate . We have better treatments and we did earlier in the pandemic. Deaths are up 40 in the last two weeks. Are beginning to be overwhelmed in several parts of the country. The next few weeks and months will be very serious. In terms of the timeline, you talk about how serious things will get. Looking forward into next year, and we start to see the positive effects of the weather and the effects of the vaccines kicking then . The beginning of spring . How pivotal will that be in terms of returning life to normality . Weather helps. It affects behavior. This is our behavior and how safe people are being. We can change that by how safe we act or what restrictions are local governments put in place. In terms of when will the vaccine be available at, there are reasons to be hopeful, that we will have the first distribution of vaccine later this winter. Vaccinated toan begin to see the reduction in risk in the general population. We are thinking spring to summer. In terms of your question about whether, it helps when the weather is warmer. It is not too late. We can still prevent a lot of deaths this winter by reducing our risk, from not getting together in large groups. I am going to be on the last rung to get the vaccine. What is my wait time . Vaccines current are asking for two dose vaccines. This is after the second dose. It would have won vaccine and a point vaccine, after that , the data suggest there is high protection it, greater than 90 . Perhaps around 95 . That is great news. All of that data needs to be reviewed before it is approved. If everything looks as good as it suggests, it would be after you get that second dose that you would be protected. Those most at risk are vaccinated, can the rest of the asulation get back to life close to normal as possible . Once weve taken out those most at risk, the elderly, those with preexisting conditions, how big of effect will that have . There is a lot of thought going into who to vaccinate first. Intelligently, those caring for people in nursing homes, we can reduce the risk from those who are most likely to spread the infection of those who will have harmful outcomes. There are serious outcomes with younger people. The risk is lower, but they are occurring. Its a mistake to think once those who are at the highest risk become vaccinated, everybody else doesnt need to worry. The risk is lower, it is therefore all of us to have a serious outcome. Until the majority of the population is vaccinated, we have to maintain vigilance. For your time. We really appreciate it. This is bloomberg. Guy its the end of the week, time for etf friday. Illicit there is a potential collapse on the scale. Funds, wevetraded seen them trading the last five days. It is looking as if they have been softening. They picked up today on some of the comments from nguyen. Minh nguyen. Mnuchin. Alix Goldman Sachs right before we got those reports about the etf selloff, if you have real yields they are still negative. Unless Something Like the 10 year or the money supply, thats going to do it. Guy theres also the fear trade. This is what is been happening with big bitcoin. Some call that digital gold. The relationship is probably not as close to make that claim. Remembero you have to you have countries locking down, they are not going to go by gold. Its a demand story. Thats a little headwind as well. Company is, how the faring amid the Global Pandemic and the rolling shutdowns. Thats coming up next. At is bloomberg. [ sigh ] not gonna happen. Thats it. Im calling kohler about their walkin bath. My name is ken. How may i help you . Hi, im calling about kohlers walkin bath. Excellent happy to help. Huh . Hold one moment please. [ finger snaps ] hmm. The kohler walkinbath features an extrawide opening and a low stepin at three inches, which is 25 to 60 lower than some leading competitors. The bath fills and drains quickly, while the heated seat soothes your back, neck and shoulders. Kohler is an expert in bathing, so you can count on a deep soaking experience. Are you seeing this . The kohler walkinbath comes with fully adjustable hydrotherapy jets and our exclusive bubblemassage. Everything is installed in as little as a day by a kohlercertified installer. And its made by kohler americas leading plumbing brand. We need this bath. Yes. Yes you do. A kohler walkinbath provides independence with peace of mind. Alix live from new york, i am alix steel. This is bloomberg markets. Weve got tougher restrictions across the u. S. , fueling concerns about the economic toll. The surge has creates forced states to close schools and restaurants and indoor gatherings. What does it mean for the Retail Business in particular . We have the ceo of compass diversified. Lets talk about these rolling shutdowns. You are talking about a cliff at the end of january. What does that mean for businesses . Thanks for having me on. Pandemice seen is the changing the way we are going to market. Our businesses have really benefited from the Digital Enablement over the years. The channels we are selling through our shifting. As weve seen a rise in the caseload, we havent seen a measurable decrease in sales, especially at the one business we get the most results from. We have Sales Results of through yesterday. Its holding pretty steady. Businesses grew north of 40 . This is well in advance of what we expected. What we are seeing so far in october and november, these trends are continuing. Negativeot seen the effects of the pandemic with the cases that are rising, with the cliff that is coming at the end of the year. Part of that is because of the orientation is much more outdoor oriented. The specialty nature of the retail that we invest in. Guy good morning. We will get a vaccine it, will behavior in terms of shopping change again . A lot of people bought a lot of stuff for their pardons during the lockdown. Arrives, havene we got enough . That is something we are always asking ourselves. As we look at new investments, we are thinking the same thing. Its the incremental sales we are seeing because of covid. It is transitory as result. To worry about category. Focused outdoors. Brands, those our all have more outdoor orientation. These things as consumers have been embraced with outdoor activities. That is likely to be more durable. When you look at the urban things happening, people are moving it to the suburbs and getting second homes. We think there is more durability. I think there are certain categories that are benefiting spike thatd induced will be more transitory nature. Alix are you talking about the trampoline in your backyard . Guy next summer, that we got what we need . Everybody i know bought a ton of stuff for their gardens. Alix i dont think you need another trampoline. Walk me through how youre going to stock your inventory. What is the supply chain issue like . What is the biggest hurdle . Weve heard that inventories will be lighted we will see a restocking cycle at some point. When do you see that happening . Thats a great question. One of the Biggest Challenges we have is communicating to our shareholders of our outdoor brands. Multiple. Our suppliers are having difficulty ramping up production to the level that we need. We are struggling to get the amount of labor we needed to be able to produce. Right now, we have found that with most of our retail partners, our supplies are starting to dwindle. Working at that capacity in our programs to restore that. We really need to get through the holidays where we are only able to match demand. In the First Quarter, we should be able to start with levelsshing inventory based on the sales data and with the point of sale looks like. I am wondering what companies you were look at right now in terms of where you want to spend money. Youve talked about the trends youre seeing at the moment. Will the outdoor trend carryon . Im assuming the prices are relatively elevated it. Where do you see value elsewhere . Great question. Our Balance Sheet is strong. 2019ld to businesses in and netted almost 1 billion. This is the fastestgrowing business in the baseball boa, ant industry and replacement system for footwear. Both of those in the consumer they were can tell not cheap. These are great businesses. They have strong economic brands. Theyve got great longterm growth drivers. Basis, theyadjusted did well for us. Going forward, with the vaccine on the horizon, we do think there is something in the industrial space. We know aerospace has been hurt. We think that could be an area where we are able to mobilize. There is more upside coming. It has been very compromised. As the vaccine comes, we think those industries will bounce back quickly. We think we have some good Investment Opportunities common around. Do haveu actually exposure to the vaccine. Basically, it helps support and protect vaccine vials. Can you walk me through the demand you are seeing . You have to be coordinated with somebody from the government in terms of rolling out the vaccine. If thanks. We have a Company Phone fabricators. Necessary materials for the flu vaccine. We were in position to help with operation warp speed as the government gets prepared to distribute the Covid Vaccine that is coming up. The Pfizer Vaccine because of the temperature requirements falls outside operation warp speed. The moderna will fall within that. Weve been working with partners through the cdc in order to create the same packaging materials we use for the flu vaccine. Thats with the cdc is looking for. Weve been supplying that now for roughly 30 days. We continue to ramp up production. That, they will launch when the vaccine is approved by the fda. Guy we wish you the best for that. Thank you for your time today. You very much indeed. Coming up, by some are calling this downturn the first female recession. That story is next. This is bloomberg. We are live in the principal room. The saudi arabia finance minister. This is bloomberg. Lets check in on the first word news. If the fda gives a green light, that vaccine from pfizer could be used in the u. S. Month on highrisk populations. The drugmaker says they will file today for an emergency use authorization. They said a final analysis of Clinical Trial data showed it was 95 effective at preventing the disease. Steve mnuchin is going to take another shot at coronavirus stimulus. He is meeting today with Mitch Mcconnell and mark meadows. He says they will come up with a plan to take to democrats. The two sides are far apart on the amount of money they want to spend. The Trump Campaign lost another one last night. A judge refused to block georgia from certifying its per election results. A recount showed joe biden one by more than 12,000 votes. A judge in arizona throughout the suit seeking an audit of the vote in a pivot county. The Trump Campaign pulled the plug on its own lawsuit in michigan. Biggest companies are choosing men to lead them during the pandemic. Executivesthe chief picked by the Largest Companies have been women. Thats according to an executive recruiter. In the six month before that, women were winning four times as many of those jobs. Greater risk for global problems. We are powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Alix lets stick with that. Its interesting because you have to worry if someone might be up for a ceo job is going to get stuck with things like childcare having to keep time in the office, that mean Something Else is going on. Guy i think there is something going on. It is true broadly in terms of female participation in the labor market. I think when it comes to the what themy sense is headhunter was pocket amount talking about, you have companies opting for experience. If youve been a ceo during a doesnt work in this day and age. If we are trying to get more female ceos, they need to a been a ceo before. This doesnt work right now. Seemnuity and experience to count for more. This is crazy. We need to figure this out. We need to have more of these people coming through. Need to get more females into the csuite. Pandemic. E is a no one has been through this. Thent to point out, this is study of 94 countries. Showed women who let it countries did much better in the pandemic. They were more proactive. This was also quite interesting. It was very different from the ceo conversation. There is a lot of crossover in this. I think companies are being not thinking this through. I think they could be reaching into their own companies and bringing females through into the csuite. This the perfect time to recruit from within. Alix team colors. This was flagged to us earlier this morning. Still ahead, a third weekly gain for oil and Energy Stocks trying to hold onto their game. Dont miss that conversation. This is bloomberg. Guy alix steel is over in new york. Lets talk about whats happening in the market. It has been a wild year for crude oil. There are signs that the strength to be returning to this market. Lets ring in abigail doolittle. Fort has been a wild ride crude oil. Consider at the lows, you had the generic contract down 83 of the year. Weve seen quite a recovery. Most of that happened in may and june. We see the signs of strength you were talking about when we use the crude curve relative to the 2021 First Quarter contract. Calledseeing something backward is asian. Contract curve for this year is still in contango. You have the curve rising. It has come. I was speaking to a commodity trader. She doesnt look at the curve, she was telling me she has reason for optimism for next year in terms of the price of crude oil. We could see crude in the mid50s, there could be reason for seasonality. Its good news for oil. To bobby. Ill take it recent strains, you had saudi arabia and opec in what should be more oil in the market. Theres a debate on how much they will be able to rein in. Pushing again. Wheres the strength coming from . Weve been pushing through inventories. Is following the gdp. With expectations around 2021, i thinkin the expectation is oil demand will follow. Here have a slowdown covid, to a new wave of that may call that into question. It may slow down our ability to work through these inventories. At the end of the day, it will probably follow gdp growth. Guy lets talk about what happens over the winter. We talked to a number of doctors who are really painting a grim picture. They are expecting things to get worse for they get better. Do you think the glut could get winter, if that turns out to be the case, what is the downside. Ive got brent at 74. Would you say the nearterm risk on those prices . It is probably evenly balanced both the downside and the outside. A lot of that is going to happen with the vaccine and how quickly all of that comes into effect. Over the course of the next 23 months, sure. We have ourselves nicely through access inventory. Supply is lower. It will likely continue to be relatively flat. Its a question of timing. Our expectation is for the second half of 2021 before a more normalized price of 50. The slowdown in the economy is associated with the new covid wave. That wouldnt be particularly surprising to us if that happened. Some 2020 months are flipping into the back end of the curve. I wonder what that was about. Was that about a lack of demand . Are we expecting more production to come back in the next couple of years . What are the best trades to capitalize off that. You have to distinguish between commodities for starters. We are talking about oil here primarily. That is the primary mobility fuel. To the degree that mobility is restrained both on land and in the air, it seems quite possible we could have downward pressure on oil for some time. Asia as daveen in gotten the pandemic, every thing is back to prepandemic levels. To gettinghly tied things back to normal. Things back tong normal or not, there is a separate question around what secular changes might there be in global oil, particularly mobility and jet fuel. That remains to be seen. Guy how do you think that will play out. Spendingthink they are next year on travel. 30 down . 50 down . Those are not uncommon answers. They think this is structural. They get used to using videoconferencing. Do you think we understand the parameters of whats going to happen here . Is the industry factoring in the changes . Conversations, their expectations are Leisure Travel will rebound nicely through 2021. Business travel may take much longer to get back to prepandemic levels. Fuel is aet relatively small percentage of total global oil demand. Inn if we have weakness Aviation Fuel demand for the next year or two, that by itself is not likely to offset the market. Oil is relevant to so many pieces of our economy. Jet fuel matters. Its an important part of it. Its not the only part of it. Alix what is your topic right now . We love chevron. Its a fantastic company. It is performing particularly well right now, threaded the needle for what their shareholders seem to want, which is to generate cash. At the same time, they provide some level of overall production growth. Its a Great Company and we like it very much. Guy thanks for your time today. We really appreciate it. Thank you very much. Coming up, an interview with the chairman of the european banking authority. We will talked a lot about dividends. When will the european banks be able to pay dividends again . This is bloomberg. Guy from london, im guy johnson. Alix steel is a new york. We are counting you down to the european close on bloomberg markets. Zer and germanys im tech and Germanys Biontech submitting their vaccine for emergency use approval, becoming the first manufacturers to do that. The u. K. And french data showing may be the lockdowns are working. Both sides in the brexit negotiations and the other side must now compromise to ensure a deal. Ursula von der leyen making positive noises a little earlier on about the progress being made. Today in the markets, and some ways a relatively quiet session. European equities are higher. We are seeing some softness in the United States. Considering the volatility we have seen, not much to write home about. Downuro trading at 1. 18, by 0. 2 , so the dollar a little
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