The Shape of Recovery: How We Bounce Back From the Virus

So, good morning everybody. Thank you for coming to our webinar. We are doing this every Friday, James and I, just to share information and knowledge with anyone in the industry, outside the industry, etc. Etc. So anyone please share this. This is the time to over communicate. And we have so much information coming our direction that we started doing this actually for our company where we were going to communicate with our people. And what we found is that there was such a lack of proper information that the best thing we could do would be to share all of the information with everyone. If you want to start a watch party on the Facebook Live, feel free. If you get this recording after the fact and you want to share it, please do. James, here we are again on a Friday morning here in Northern California.

Hey, James, how are you doing? Week three of our lockdown.

That's right.

I don't even know.

Yeah, I think we're on four in week three of doing this. So. Yeah.

Yeah.

My hair looks the same. Yours looks a little more full.

It's a little, you know, it's a lot of gel to try and make this thing actually look halfway decent for the webinar.

Yeah, me too. Me too. Not really. All right, so let's dive right in and let's just share. We thought it was appropriate to talk about how we come back from this. There's so much. And we'll give you the updates on some of the key numbers and some of those other kinds of things. But it really is important that we start to talk about how we come back, because we do. We have in the past. America is an incredibly resilient country. When we're focused, we can accomplish just about anything. And so we want to spend some time today just talking about how we bounce back. So, James, let's start with the numbers. This is the worldwide daily New Cases post. What you see here.

Yeah, so one of the things that I think is important, we're going to bring a lot of optimism into this because we need some of this stuff. So there will be some things that are a little uncomfortable still, but at the same time, a large portion we're going to talk about is the population. If you look at these charts, you can notice that we're starting to plateau in a lot of areas. Now, a lot of this has to do with the US because obviously we are officially the epicenter of COVID 19. And while we're growing our case numbers, there is a lot of positive signs on how much growth is occurring. We think that number is starting to plateau in the US as well. A lot of other countries have been able to with their there are shutdowns, have been able to start bringing these numbers down. So there is a lot of bright spots in the fact that we're potentially seeing some peaks in a lot of the mainstream countries. There's a lot of third world countries that are going to struggle with this. Their health care systems are not as obviously good as the United States and others. But the trend line isn't quite as bad as what it was.

And there's been so much talk of flattening the curve. Right. Phrase that probably only mathematicians and physicists used to use on a regular basis. Now we all use it in our common communication. And it really looks something like this graph. You see the spike there on or about April 3rd, and then you see it start, it doesn't keep going up and it flattens out. And then it's going to continue along this trend line, hopefully.

And then about 1.6 million cases in the world right now is the current number today that we know of, to be clear. Correct.

And that's the other thing too that I always like to remind people when we're looking at these. Remember, this doesn't mean this many people caught the virus today. It means that many people got tested and tested positive. Some of these people have had it for a while. But we are seeing the curve flatten. That is an important thing. And we're seeing a similar effect here in the United States where no, it hasn't gone down. We had that one day where it had a big drop. And that's one to pay attention to. But you can't take one data point and create a trend line. But it does appear that we have hit a resistance point since on or about 4-4-ish that we haven't exceeded. And the curve could be flattening and it could be this sort of where we're continuing along this level plane before we start to go down.

Yeah. And I want to add a couple points to that, Keith. I think everybody's pretty much on the same page to understand that the testing has been. Has been a difficult spot in our country. We've had a lack of testing everywhere in the US What I want to make a point of when you see a lot of the numbers that is being reported, there is going to continue to be rising numbers in the number of cases because we're testing more. So there's a. I want to make sure people understand that. And then when you talk about the mortality rate, it's not an accurate number because there's probably. It's just a rough guess. From what I've read and just talking to people, there's probably at least a million Americans who've already had COVID 19 and they didn't have enough symptoms or get sick enough to even get tested. So when you see some of these mortality rates of 1 or 2%, truthfully, it's probably a lot less than that, because if we knew who had it and we had been able to test everybody, we would have a very different chart. The number of cases would be higher, but the mortality rate would be a lot lower. That is not to take away from the fact that this is still a very dangerous virus. This is not the flu. It still has 10 times the death rate than the flu. But I just want to put that in context. Right now in the US we're around 500,000 known cases. Unfortunately, around 18,000 people have have passed away. But the bright spot is that we already have had about 26,000 people that have recovered. So the people that have been tested, that were hospitalized or were at least at home being monitored have recovered from that. That's not including all the other people that never got tested, that were never sick enough to get tested. So again, these numbers are important to put into context.

Yeah, most of the people who didn't get sick enough to. They didn't get tested at all. And to James's point, that skews the number heavily and a lot. And this actually is one of the things that I find very encouraging. New York has been the epicenter for the U.S. some of that is because they've been very aggressive about testing and have tested a lot of. And yes, the death rate in New York is going up, and that is a tragedy for sure. But the hospitalization rate is going down and it's gone down for three days in a row, and it seems to be going down somewhat steeply. And that means that it's working and people aren't getting sick. Fewer people are getting sick enough to need to go into the hospital.

And the important part to just one other piece of this, you will continue to see the death rate being unfold, unfortunately high, until we as the hospitalizations come down. Obviously there'll be less people that are severely sick. So there'll still be a trend line here. But as Keith's pointing out, the sheer number of people going into the hospital is significantly less. And that, by the way, applies into most states that have locked down early. So we will talk extensively about policy and economic impact of all of this. But from sheer spread of the virus, the states that have done this early are going to see less of a health issue with its citizens.

And we are starting to see China was the origin of this and they were the first one to deal with it. And now we're going to. This is just a quick peek at the economics of things. What we're seeing is China start to come out of it from an economic standpoint. And that's important as we start to think about how do we rebound and how do we come out of this from an economic standpoint. Because to James's earlier point, this shelter in place for a lot of the states is so important. It's why you see the flattening, it's why you see the hospitalizations going down. And it has had a huge impact on the economy, which we're going to share a little more later. But there is a window here and then you can start to come back out. And China is one of the largest global economies and them being back on their feet from an economic standpoint is important. They buy a lot of stuff and they make a lot of stuff.

Yeah. I want to point out two comments because I just know there's a lot of people that have varying opinions about China's numbers and stuff without debating China's actual coronavirus numbers and whether those numbers are accurate or not. That aside, the sheer economic output numbers are things that we can truthfully monitor and see what's happening. So why we're showing you this slide is while there was a significant drop in economic output, it's now picking back up again. And so if you think about it, they started this. The major problems occurred obviously for China back in December, maybe slightly earlier. Whatever. The point is that the economy started to fail. They had to lock down Wuhan and all these other things. And over a period of a few months after going through that, it starts to come back. This is when Keith and I have been talking about this sort of 60 day pause, this time frame of where things really slow and then start to recover. This is the first trend line you can correlate to that showing in their case, 60 to 90 day pause. But the trend line starts to come back aggressively as they turn manufacturing and things back on. So this is follow this trend line as we talk about a lot of the things today.

Yeah, exactly. James, there's a new test that's come out that is reported to be able to test in as fast as 15 minutes. Tell us why this is so important.

Yeah, so one of the biggest problems so we'll go a little deeper here. The biggest issue we faced as a country, why this turned into an issue, just to give full context, was we were not prepared for testing. If you look at a case study of the United States versus South Korea, it's going to be a case study of how to do it correctly. And unfortunately, the US Is how not to do it. And what happened is South Korea took massive testing and put it in place immediately. They were testing 10,000 people a day. And what ended up happening, the purpose of that is to identify, isolate and trace. So identify who's sick, isolate them, trace who they've been in contact with, isolate them as well so that they're not spreading this out. We didn't have that. So what happened here whenever it started is it went through massive spread, which is what's causing the issues. The biggest reason why the states have decided to shut down the economies is because of the overwhelming. It would overwhelm our healthcare system. Like what you watched in New York is what would happen across the U.S. the debate of whether that's the right approach or not is not the point. The massive testing that we're working on now is going to provide two opportunities. The first is for us to identify, isolate and trace. That will allow us to make sure we're not spreading this from getting out and having to go through what we've just gone through. The second thing is there's this testing is also to determine who's had COVID 19. And to me, so the one side of the equation is making sure we identify who's sick to make sure they don't affect everybody else. We don't have to shut the economy down. Second side of this test is the ability to identify who's already had COVID 19 and has developed the antibodies to basically fend it off. These are people who could go back to work. And there's still more testing to determine whether people will get sick again in the future. But right now, the theory is that you won and those people can go back to work. So if we can do massive testing, this gets the economy kick started much more quickly because we can isolate and know who's already had it and come up with a plan for attacking that. This will absolutely be the thing that changes how fast we come back to a more normal America.

Yeah. And if you were on the other webinars that James and I have done, we've talked about how so much of this shelter in place was to buy time, which James alluded to, so that we could get things like testing, so that we could start to test drugs that have already passed and are in circulation and see how they affect it. And so we could try to develop new drugs for treatment and start the process of a vaccine. So all of this has been going on at the same time. The test was the first piece to come out. You're gonna see more and more of these things start to come out. And every one of those is a tool that we can use to help continue to get back to whatever the new normal will be. And speaking of the new normal, James, share what you think the new normal might look like.

Yeah, so I think. And we're going to go through a few slides on this. If you guys go back even three months ago, four months ago, as Americans, we're not used to seeing people wear masks in public. We're not used to seeing that anywhere. Our first reaction is, why are you wearing a mask? What do you have? You know, in our culture, it's just not normal. But ironically, if you go to a lot of other cultures, people wear masks out of respect. They wear masks when they know they're sick, so they don't spread it. Whereas here, we just cough, sneeze, whatever we want to do. And, you know, as a country, we're not as sanitary as others. I believe that this will be a turning point for. For Americans. I think the government will institute something that helps people realize that we need to approach this differently. The new normal for me, that I think will occur for clarity, we will not have a vaccine for 12 to 18 months that is different than a treatment. The vaccine has to be created, tested, and you have to give it time so that we don't learn. Twelve months later, the vaccine actually kills people. So to be clear, we have, let's just say, 18 months to figure this out. I think you're gonna see masks be common in the workplace, because this virus isn't going away. It's gonna be here for a while. I think that you'll see processes put in place in companies to do janitorial services, clean desks. Companies have hand sanitizer everywhere. There's a way that Americans will learn to adapt to this new invisible enemy. And we'll take it more seriously, because every single person on this webinar knows somebody who's connected to somebody who's either had COVID 19 or unfortunately, has even died from COVID 19. And we'll start to look at it from a different perspective. My hope is this does happen because another thing will occur. We'll have less disease People will get less sick from the flu. We will just learn to do things differently. And one of the positives is that the airlines have already changed their entire sanitation process for planes. And I don't think that's ever going to go back. Meaning they're doing far more deep cleaning of the airplanes on a daily basis now. And I believe that will be a standard process, and I think companies will institute that. I mean, we were doing it in our company for the whole month before we went on lockdown. We had door handles being cleaned daily, desk being cleaned daily. It was just smart thing to do. And I believe this will be part of our new normal.

James, question from the audience. Are they saying this is like the chickenpox, that if you get it once, you won't get it again?

They don't know. There's not enough time to prove that answer yet. But preliminary studies thus far have come up with the theory that you won't get it again. However, I want to preface that this is very early in the process. There needs to be a lot more studies done. I've also read contradictory studies where people have gotten it again just less severely. So I'm going to lean more towards the optimism part that a majority of people will be fine again. But there is always some countering studies to these things.

One of the benefits to the flu historically can mutate a lot easier than this virus seems to point seems it's very early in the scientific and evaluative process, but this seems much less likely to mutate and change. And when you catch something again, you catch it. But it has changed and mutated in some way. This seems to be less likely to do that than, say, the common cold.

Or the common flu thus far. And I want to make one other statement so everybody understands this. There is absolutely no this virus will be with us for a while, like. And there's also a lot of. There's a lot of things going around saying that when the summer heat comes, the virus won't be there. There's not been a single study that's actually proven that in a lot of the places where we've used more countries, more towards the equator where it's warmer and stuff. Those countries are actually having outbreaks right now, too. So what I'm trying to make a point of is I think you should be taking the precautions you are today and still using those precautions until a vaccine is created.

Yeah. And hey, if masks are gonna be the new thing. Yes, yes, maybe I think that's Coco Chanel, but I'll be honest, I don't know. I have no idea. I have no idea. Oh, man. I'm sure someone in the comments is gonna tell me what logo that is, but I'm proud to say I'm not real sure. But it looks expensive and I bet it is.

So.

Yeah.

But in sincerity, like this might be. So we're kind of making fun of it, but we're not. I think that this is a really interesting thing for how to make Americans feel more comfortable with it. Fashion can certainly do it. I know Keith will be wearing a Raiders one because he supports the Raiders for whatever reason.

Born and raised Oakland, can't help it, whatever.

So there may be things like this that are more common. I think everyone now is. If you even think about a week ago you were uncomfortable seeing masks in public and even a week later you're kind of used to seeing everybody wearing masks now, at least in California, we are, because it's a pretty common thing here now. So again, just innovation. Look at business on how it adapts. And we're going to hit a lot of these points during this PowerPoint.

Yeah. And it isn't a bad thing. And I know we're poking a little fun. Right. But it isn't a bad thing if we start thinking of masks as accessories. That's not a bad thing.

Yeah. And let me. I want to add one other part. I didn't even think about this until this moment. One of the reasons why I've never agreed with the CDC or the government thus far on the mask conversation. I realize there's a shortage of PPE for health care workers, and that is a whole separate conversation about the mess that we're in right now. But I've always had the opinion that masks should be worn by all of us for two reasons. The first of which, if doctors are wearing them with patients because they're trying not to get what the patients patient has, that's common sense. But number two, if the virus is asymptomatic for up to 14 days, which has been proven, you could have it. You don't know. And you're running around coughing and things, and you don't realize you're sick. If you wear a mask, you're helping stop spread as well. And so I personally am of the opinion that I think masks should be commonly wear by all Americans until we get to this point to both stop the spread and also not get sick from somebody else sneezing in the grocery store and it gets on something. Plus, masks also keep you from touching your Face quite as much or putting your hands in your nose or your mouth. I think there's a lot of benefits to it.

So it's a good comparative. First of all, let's start with. There's nothing to compare, really, to what we're going through right now. But if you want to take a look at how America responds and changes in behavior and those sorts of things, this is another tragedy. So it's kind of hard to talk about a tragedy on a tragedy. That's hard for me to say for some reason, but 911 was a time where the country went through something as a whole. Talk to us a little bit about some of these comparatives.

Yeah. So I was thinking about how to try to help everyone understand what. What. How we will come out of this. It feels awful right now. I get it. Like, I'm so head deep in articles and content both, and Keith and I study this stuff. So sometimes we have to do a zoom call with a glass of wine in order to, like, you know, have some positivity. But what I will tell you is we were looking at this going, what's a great comparison about a tragedy that happened to the whole country? And then how fast we responded to it and changed and what became the new normal? So here's the analogy. And when 911 happened, obviously the country came completely to a shutdown. Everything shut down, and we were in panic. We didn't know what to do. We didn't know who to trust. We didn't know anything. And for weeks, we were just paralyzed. But if you think about that. And by the way, the other comment is, we also never wanted to get on an airplane again. Over the course of the months following, we rallied. We said, no, we're not gonna live in fear. That's not who we are as Americans. That's not what we're about. We're gonna fly again. We're gonna go back to our lives. We're gonna find a new sense of normal. And we did. And the airlines changed and security protocols changed, and we got back on airplanes, and we dealt with what we were faced as a country and have continued to for years and years and years after with terrorism. But we said, you know what? I'm not gonna live my life in fear. And we figured out how to move forward. I think that's the best analogy I could give us. We are in the part right now where we're in shock and we're scared because it's an invisible enemy we cannot see. But that said, the normalcy will come and I believe we're starting to figure that out. Now we're going, how do we adapt? What chances do I want to take? I made a choice of I'm going to go to the grocery store because I got to get out of my house, but I'm being smart about it. I put on my mask, I put on my gloves, I take my hand sanitizer, I use my gloves, I throw them away, I take my mask, I put it outside for three days. I have another one to use, and I clean all my groceries down. And you know what? I got out of the house, and I'm living my life the way I want to live it. And I think we're going to get there, and I think the next slide will help, sort of help us understand that.

Yeah. Because anytime we go as humans, we tend to be reactive, not proactive. Right. We're going to make sure whatever happened to us last time won't happen again. And that is how we're wired. That's how we're built. And so one of the byproducts is we have TSA forever. Right. And we don't know exactly what the new normal will be like on the other side of this, but there will be, to James's point, there will be a shift in mindset and a shift in approach forever because of this. And that's so that we can make sure that this doesn't ever happen again. And that's not. That's important that we don't lose sight of that.

Yeah. I don't think people are going to be shaking hands anytime in the next 18 months. Not to be. You know, it sounds bad, but I think that that is a new normal. And we're going to be like, I'm going to do it. And you're going to kind of think about it going, no, maybe I'm not. And then in a course of a month or two, it will be known to everybody. It's not disrespectful. It's just. We're just not in a place to be able to do that right now.

Right. Right. Yeah. Look, it taught my 8 year old to wash her hands. So, like, no matter what, there's been changes in behavior.

Yeah. Right.

All right, here's a prediction. There will be a minor baby boom in nine months. And one day in 2033, we will have witnessed the rise of the Quarren teens.

Ha.

Get it? Quarantines. Because there'll be teenagers. Because everybody's stuck at home and there's not a lot to Do.

This is all Keith, by the way. I have nothing to do with this. This is, this is him. It's Friday.

There could also be an increase in breakups on the other side of this because some of y' all are spending more time with your significant other than you ever have.

So maybe there's an. There's. Maybe there's a house buying spree because people need two houses.

Yeah. And a construction spree because they're building in law quarters. So.

All right, let's, let's. We need to stop.

Sorry. Sorry. But I'm getting mad respect from the group on my dad joke game, so I just want to get that out there.

That's true.

Yeah. All right. So now let's talk about recovery while I try to recover from that horrible joke. So there have been. When this first started, most people were saying. And I, even when I very first looked at it, thought, okay, this will be a steep down, but it's happening from outside the economy. The economy's in good shape this deep down, but we should climb right back out. And I've shifted on that. I think it's going to be more of a U shaped recovery. And I think the U, the bottom part of the U, it might be a capital U versus a lowercase you. I do think that we are going to have to go through some things because of the choices that we made as a nation to protect people. And that's not. I personally. The views being expressed are the views of Keith Robinson, not James Duig and Next Home or any of its affiliates. But choosing to save life is important and I think if we have a little bit longer recovery, it's okay. I've read things that say this is going to push us into a depression or something similar to the Great Depression. I simply don't think that's true. I'll keep reading and evaluating, but today I do not believe that to be true, primarily because we were doing so well before. There are some things we need to pay attention to as we come out of this recovery, but we will have a U shaped recovery. We have come back from things like this before. I can already hear some of you like, yeah, the government's been printing money like crazy, what's that going to do, etc. Etc. We're going to talk about that, but there is recovery. Recovery happens. We made it through the depression. It was incredibly painful and we learned a lot. We didn't repeat the same mistakes. In 2008. We added stimulus earlier to get us out of it. We added stimulus even earlier this time to try to help us recover more quickly. So we'll dig in a little more. But this will be a U shaped recovery. This isn't going to be a situation where we just it's 90 days and we're all better.

I want to say, I want to add to this, Keith, that this goes back to our comments we've been making. We've been looking at this as a 60, 90 on the high side day shutdown to get the curve to be flattened, which all the charts are starting to show that. I think that it's important to understand that when we start to come out of it, which we'll get into in a minute on what states come out of it first, it'll be delayed by state and region. Some states haven't even been affected as much as others. But what will happen is it will be that U shape and it's probably going to take a year like it's for us to get kind of really cooking again. It's going to be different based upon markets and where we are. Like I think obviously New York is struggling. It's going to be maybe a little bit longer before a lot of the economy, a lot of local business and things really get cooking there versus other areas. But as you'll see some of the charts that we're going to show you, we really do feel like certain areas are first of all, certain areas are not being affected nearly as much as others. Certain states are. There's two things occurring here. Some of the early states that shut down will probably recover quicker than some of the other states that are just going into the shutdown. Like Florida for example is in for a ride. They just shut down, I think it was last week. And they're on the beginning part of their outbreak due to all the spring breakers versus California. We think right now what we're seeing is our peak truly is going to be in the next week or two and we're already starting to see that come out. And the hope is that sometime in May we're starting to allow businesses back to work with some type of new normal that will help. First of all, California, fifth largest economy in the world. It's a massive economy. It helps the US significantly because 15% of all federal tax revenue comes from California. So the faster we can get some of these big economies back online, the more helpful it is to a lot of the US economy to recover. And that's that U shaped trend line.

That we're talking about and James has mentioned it. But it is important to Remember, I know when you go, when your town, county, city, state goes, shelter in place, that things stop. But we aren't all sheltered in place at the same time. There are some parts of the country where it's still not. That means we're all going to experience this at different times and there will be hotspots that pop up in the future. This isn't like once we make it through it, we're good, we're not going to worry about it anymore. You will see hotspots pop up, which is why that testing that we talked about before and that process of. Yeah, identify, isolate, trace. Right. So that it'll be so much easier to deal with when we can test with more broadly and then react more quickly.

We would never have been in where this place that we are had we had the testing in place from the get go and that we'll talk about this. But this is, this is going to be the big learning lesson for our country. So we're prepared next time. But just a key point, that the entire US is not shut down. So there's economies working, there's places still going. So you have to keep that in mind when you're looking at the overall picture of this on how it operates. It's just right now a couple of the major economies in the US are hurting.

And GDP got socked right in the mouth. Okay, yeah, well, look, you're gonna see some graphs. I am our resident economics nerd for the company. I wake up every day and turn on Bloomberg and have a cup of coffee or three.

Why you have no hair, my friend.

Yeah, no doubt because of my huge brain. Pushed all the hair out of my head. Look, I've never seen a graph like this. I've never seen GDP just get Polaxed like that. So this is uncharted ground. We're sharing with you what we read and what we see and what we think. But this is Q2 is rough. Right? But we do see again, this is impactful. We've never had a thing where it just shuts off. Whole industries like leisure, travel, entertainment, they're done, right? I mean, I'm gonna watch Trolls 2 tonight at home on my television, not in a movie theater. And they're released. It used to be you just released Nicholas Cage movies direct to your television. Now major blockbusters are being released direct to your television. So companies will adapt, companies will find a way to generate revenue and we will see this start to turn going into Q3 and Q4. Another graph. I got nothing. I've never seen Anything like it. It's a little crazy. And it's again, this is just because we are at a place where we've never had this kind of economic pause button hit so quickly. Yes, we have had massive job loss. We had it in the depression. There was 25% unemployment in the depression. We've had it in the financial crisis before. But we just haven't all, haven't had it all happen so quickly. But we also haven't had a government react as quickly and provide as much stimulus as they had as well.

Yeah, and I want to make a point here, you guys, just for clarity. This looks awful and it is, don't get me wrong, but the government to their credit is aware of what's happening here, which we're going to go through. But just, just if you look at this chart, you'll see during the last recession, obviously 08 forward, we were having job loss. It was just over a longer period of time versus this massive spike based upon just like, okay, we're just going to shut everything down until we figure this out because we were dealing with different situations right to the. But, But I want to make a point here. You see these numbers and certainly unemployment is going to be high. It's going to be high because there's not anybody open in a lot of areas. But to Keith's point, we'll go to the next slide on the stimulus.

Let me do two things on this before we go on. One thing to remember, many of these job losses were furloughs, not layoffs.

True. Yeah.

People are still receiving medical benefits. Those jobs are being held for them because most companies believe this is a short period of time, not an extended duration. Very different than 2008. Gig workers and independent contractors for the first time ever have been able to file for unemployment. And many of them have. So that is also putting some upward pressure on this number. So one, yes, it's a massive number. One that I still struggle to wrap my head around. I've never seen a graph like this. But much of that job loss isn't the job loss of 2008. And you have a group, a large population of people who were never able to apply, who are now applying.

And the government, I believe is looking at this the same way. Maybe we're looking at it the same way. The government is in that they see like a 60 day timeframe in there for getting things moving. And that makes sense because the stimulus money which we'll get here soon is designed to put money in people's pockets. Companies believe the same. They're furloughing people for a bit. Even if they had to let them go, as soon as they can get, which we'll talk about some of the stimulus things, they can get people back into their positions, they'll take them back or even the stimulus wasn't there. If the business can get back online, they've got to hire. So there's also this. They realize that they get money in people's pockets, so there's not a lot of loss in revenue or savings. When they get hired again, we can start spending again. So there's this. It's all within the 60 to 90 day timeframe that the government's looking at.

There's an economics question that was asked that I'm going to answer real quick. It's not in the deck. It has to do with oil. As some of you may or may not know, oil has been incredibly tumultuous. Two of the world's largest oil producers have been in a fistfight and that has caused oil to have issues. One of the ways countries fight about oil is they release a lot of it to put downward pressure on price and try to sort of price out their competition. That is currently what we're experiencing. There are some parts of the country that are dealing not if they're very oil dependent. Think West Texas, think parts of North Dakota, et cetera. They're dealing with oil on top of everything else. So, Christy, it is real and I do believe they will work that out because they cannot. You've, if you're in an area where you've done it, you've ridden this boom bust mentality with oil. I don't think they will continue to fight the way they've been fighting because both those countries are in business to.

Make money from oil.

They're just trying to see they're playing king of the mountain right now. And once they work that out, I do think you'll see oil start to come back. There will be job loss in areas where it's heavily dependent on oil. But I don't think it will be again an extra extended job loss because this is more about a fist fight between two countries around who's going to control the oil markets versus some sort of external factor.

And in that same conversation, it's a great lesson on understanding that different economies exist around the country. So for example, if you think of the tech sector, Northern California, Phoenix, Raleigh, North Carolina, Austin, Denver, my point is where a lot of tech hubs are, what's interesting about this whole pandemic that's occurred. We're using Zoom, everybody's using Zoom or GoToMeeting or whatever. And the comment I'm making is businesses right now, there's a stock tip from a non person who studies this very much. But companies like DocuSign or Business Operational Software that allow you to work remotely, those are really good investments because those sectors are not having problems. They're growing right now. And my comment is that areas that are very big on tech and the labor market is big in tech, I think actually will do very well on the other side of this. There'll be some companies that don't make it. Don't get me wrong, a lot of startups will struggle, but I'm talking about some really dominant players in the space will actually have a significant upswing. And of course related to housing, Everything else in the local economy will be affected positively as well.

Yep. So we're going to talk stimulus. I see the question from the audience about where we think we are in the U shaped curve. I'll give you some information on that in a little bit. But the stimulus, the most recent stimulus that was announced there's been a lot is a 2.3 trillion Main street rescue plan. This is just adding into the areas where they see they need more support loans for small businesses, but say 10,000 or less, not the really small businesses that were part of the first stimulus plan, buying up more Treasuries to try to bolster that area, a pool of capital that's available to help lend to states across the country. So there's a lot of those components that are in this. It's the areas where they saw they needed the most support and that are the areas where They've added another 2.3 trillion in stimulus. And then there's the paycheck protection plan. That one came out first. And James, you know more about this than just about anybody I know, so I'm gonna let you run with this one.

Yeah. So the PPP program is 350 billion in the original stimulus package, and it's basically two and a half times your monthly payroll. I'm summarizing here. You need to talk to an SBA banker for all the specifics, which, by the way, changes daily. And we're not accountants and I'm not an accountant. My cpa, I'm not a banker, I'm not an attorney. So talk to one of them. That said, here's what I know and this is just my experience from it. They're still working through some of the guidance they Started taking applications last week. If you were not working with a bank or SBA lender, you will not be able to apply for this. As my understanding, you need an SBA lender to do it. Unfortunately, most of the banks are servicing their existing clients first before they're taking on new clients. So keep that in mind. What I will tell you is this is an important piece, the stimulus package. This is the thing I'm focused on more than anything else. The government is working hard with. Like any new thing, there's a lot of stuff to work through. So I'm not riding on the government they're dealing with. You know, Congress came up with this thing and it's everybody else to try and figure out to implement it. So they're working through that process. 350 billion. It will go quick. They're already talking about another 250 billion. The government is looking to supply money for this two to three month time frame in order to keep people employed. If they keep people employed, it's not a drain on the state's unemployment. It's not a drain on the federal unemployment that they're putting into the same place. This program is two and a half times your payroll and it's up to $10 million. And for businesses under 500 is kind of the general theory. What I will tell you is this could be the thing that also takes that chart Keith and I just showed you of unemployment and brings it back down. If you do the program, they want you to hire the employees back. So that unemployment spike, if this is enacted correctly and deployed correctly, should bring that unemployment spike back down. It gives businesses the Runway they need in order to be able to get through this next 60, 90 days. I just got work today again. I've only confirmed this on one news source, that they just opened it up to sole proprietors and independent contractors. The applications are starting to be accepted now today. I don't know the process for that. You need to contact an SBA lender to figure out how to do it. But as of today, they're now accepting those. Those entities, I guess we could call them, in order to apply for it. The thing that we're making a point of here, I'm trying to show you the bright spot. They see two to three months of Runway needed. They're giving the businesses the money to provide the employees that payroll to weather this so that there isn't a significant effect on it. This, coupled with the stimulus money that's being sent back from the IRS should help weather all of this pain. And it doesn't mean there won't be pain, but it should bring it down some. And that unemployment figure should come down. I would look to see if the government deploys this correctly over the next 30 days, those unemployment numbers should come back down towards the middle to end of May.

This again. And Sasha brings it up. So I'm just going to reframe, put the exclamation point on it. This is designed to keep jobs and bring jobs back with more speed.

Correct.

So they've done other things to try to generate revenue for individuals by just sending all of most of the country some cash. But this is designed to. It's why it's called the payroll paycheck protection plan. It's designed to keep people's paychecks so that the unemployment isn't even worse. And so it comes back more quickly. Correct. And a good analogy is for those of us that were in the industry in 2008, we remember when HARP came out and the affordable Refinance program, and when it first rolled out, it was a mess. Quite candidly, it took time for the government, for lenders, for everyone to understand exactly how to process this. We are seeing. But it did get figured out. And the important thing to remember is the money made it to the people. A bunch of people refinanced through HARP a bunch. And it took time. It took time because it's something new. It took time because there were things that hadn't been thought through and it was a little clunky at first, and then it got better, and then it got better. And then more and more people were helped. And what matters is the money will be deployed. This money will be deployed. We just gotta try to have some patience. And I know it's hard, but we gotta try to have some patience as there's a flood of applications and a flood of companies trying to figure all this out. Flight to quality. Something that's important to remember is there has been a flight to quality. And that turns out even though we're the epicenter of the coronavirus for the world, other countries are investing. Anytime there's fear in the marketplace, you want to go to the most solid investment you can find, the most stable investment you can find. And with everything that's going on here, that's still the United States. We are seeing tons of foreign investment in the US In a myriad of different places, everything from US dollar to bonds, et cetera, et cetera. But the flight to quality has continued to be coming here. And it's just important to remember That I know we're in the midst of it. We're seeing charts that candidly, James and I mentioned a few times we've never seen before. But the rest of the world is still saying, if I feel nervous, I'm investing over there. So important to remember that fact. I was asked earlier about where do I think we are in the U shaped curve? You're actually going to see some green graphs that are heading up. Right. Does that mean I think that we're through the U? No, let me be really clear. No, it does not. Remember, not everywhere is going to go through everything at the same time. But it's sort of this. I think we're at the gradual where it's starting to curve out. Yeah. So yes, we're showing you some good news over the last five days. This is more about capitulation and the market's just feeling like, man, things are really cheap and I think we have a way through this. So I feel a little more confident. So I'm gonna buy back in. I taken my cash off the table. I was sitting on the sidelines. Now it feels like it's time to maybe start to buy back in. You see the S and P, the S and P index up, you see the Dow Jones Industrial Average up and even some of the stocks that have been hardest hit. Right. I just pulled three hotel stocks. Hotel stocks have been getting crushed, understandably. So very few people are staying in hotels right now. But those prices had come down to the point where you almost get to where you're like, well, are people never going to stay in a hotel again? Because if people are going to stay in a hotel again, this is pretty cheap. This is a five day chart for three hotels. But you can really go look at any of them and they are on the comeback from a price point. I don't mean to show you a bunch of green upwards graphs and paint a picture that we're through the hardest part. I still think we got some work to do and it will depend on where you are in the country. I think New York's going to take longer. I think other parts of the country won't take as long. If you were in North Dakota in 2008, you actually didn't experience the Great Recession because of oil and shale and there were tons of jobs there. People were flocking there to go work there. They never experienced much of the Great Recession at all.

So it's cold though.

Yeah, it's very cold. Yeah. Six feet low. They told me when I was there. It gets too Cold to snow. That makes no sense. Okay. So I'm not trying to be all sunshine or rainbows here. We still have pain that we're going to be going through. But it's important to keep in context some of these things.

It's over the next. Keith and I will probably both agree. It's over the next, you know, 30 to 45 days. Is that bottom? It's somewhere in there. And it kind of varies based upon where we are. I think California is going to be coming out of this in early May. We'll start to have a release of our lockdown to some degree. This is just my guess. But that starts to drive things. As I mentioned, it's a big state, it's a huge economy. It starts to move things around the rest of the world.

I see the question about what's all the stimulus going to do to the inflation? I'm going to talk about that in just a minute or two. Yeah, this all you. That's a lot of dang numbers. Tell me what we're looking at.

Well, we got a lot of debt. It's interesting if you have ever seen this before, it's US Debt clock. It's, you know, look here. This is the interesting part about it. Every single administration, Republican or Democrat, the last, you know, 40 years, there's been some improvement on our deficit. There's been a tiny improvement on our debt. But basically they all spend money and a lot of it. This is essentially what we're facing right now as a country. And not to. You have to kind of keep all this in mind. The world trades on the dollar, so we are the benchmark for currency still. And I hope it remains that way. The other thing to keep in mind is most countries have been printing currency to stimulate their economies. So when you see this number and you see the amount of money being thrown into the economy, we're going to talk about inflation. But it's important to remember we're not the only country doing that. So other countries are stimulating their economies as well. So you kind of like think of it sort of on an even playing field to some degree. But do we have a problem? Yeah, we got a problem. This problem's been occurring through this administration, the previous administration. The previous administration. And at some point we have to figure out how as a country, we want to deal with our spending issues. And that is obviously a whole debate on what should be cut and shouldn't. But the reality is, I just want to make a point. We're not the only country that's Been doing this. So it's not like we're printing money. Nobody else is. You have to keep that in perspective.

Yeah, I'm moving off this slide. That one creeps me out. So inflation, and this is something that I've paid a lot of attention to since 2008. I remember sitting and thinking about, man, we pumped a lot of money into our system over the last three years. I better keep an eye on inflation. And inflation kept not happening. I really spent a lot of time, effort and energy trying to figure out why, because it didn't make a ton of sense to me. There were a couple of factors that had a lot to do with why we didn't have massive inflationary pressures. One of them is we forget this sometimes, but in the bailout programs, and there are some that are and some that are not. But like a lot of the. These are loans that the government is making to businesses. Those loans will be paid back, and they will be paid back with some interest. And so long as those companies make it, the government actually profits from some of these stimulus plans. The government made a bunch of money on the decisions that they made in 2007 and 2008. 75 plus billion dollars in profit went to the government. And they, yes, they lost. You know, the GM bailout was probably a bad idea. Okay. But some of the other ones really worked out. And so this helped with inflationary pressure.

And Keith, I want to add a comment to that, everyone. The politics just blow my mind because no one really does the research on this stuff. Like, it's like, well, this one failed. And it's like, okay, when you look at investment portfolios, when you're invested in portfolios, there's tons of things that don't work out, but it's a matter of what's the overall portfolio's growth. It's like venture funds, they invest millions or hundreds of millions of dollars. A lot of the businesses don't make it, but the ones that do create upwards of a 40% return. If you're Andreessen, I was just reading about their return on their investment fund. So the point I'm trying to make here and you're trying to make is, yes, we're stimulating. Yes, there's massive amounts of money being thrown out. What everybody forgot about versus all the political rhetoric you heard was the government actually made money on all of that stuff that they were doing. There were some bad investments and there were also really great ones.

Yeah, that effect was three quarters of a trillion dollars in profit. So that helps with some of these inflationary pressures. It's really important to remember that another component is the speed of recovery. If this was that V shaped recovery that we talked about before with this much stimulus going in, then inflationary pressures are much higher. We had a pretty tepid recovery. We didn't rocket ship right back out from 2007 and 2008 and then it kind of built steam over time in a really healthy, sort of slow, methodical and healthy way. So the thing that I'm paying attention to right now is what everybody forgot.

About versus all the political rhetoric you heard was the government actually made money on all of that stuff that they were doing. There were some bad investments and there were also really great ones.

Yeah, that effect was three quarters of a trillion dollars in profit. So that helps with some of these inflationary pressures. It's really important to remember that another I think this recovery is going to look like. I don't think it's a V shaped recovery. I think it's more of a U shaped recovery. I think that jobs will come back, but not all of them and not as quickly as we want. And if it's happened to one of us, it's terrible. It really, really stinks. But that from an inflationary standpoint, everything not coming back on at the same time helps. And remembering the fact that yes, there's the stimulus, but the stimulus has structures in it where much of it is paid back with interest.

Yeah, there is the loan forgiveness program with PPP just there's a percentage of it that's done that way. But that's a calculated.

The component is the speed of recovery. If this was that V shaped recovery that we talked about before, with this much stimulus going in, then inflationary pressures are much higher. We had a pretty tepid recovery. We didn't rocket ship right back out from 2007.

Risk they're going, if we do this, it's going to cost less than trying to in 2008.

And then it kind of built steam over time in a really healthy sort of slow deal.

With all of the repercussions of unemployment being significantly high. Someone smarter than all of us has done the math equations to figure some of this stuff out basically.

Well, and forgiving some of the debt for people who keep their employees and have kept them employed or hired them back is an inducement to make people hire people. So that's by design to get the economy rolling again. And so that's why you see in that area, it's a methodical and healthy way. So the thing that I'M paying attention to right now is what Grant where it's forgiven, some of the debt is forgiven. And then the other areas, it's more I think this recovery is to going.