Good morning and welcome to this Tuesday, April 14th edition of insights from Northern Trust. IMac McClellan, president of North Central Region. I'm pleased to be back for today's presentation to serve as the moderator of this morning's program. While the economy remains on an extended sick leave due to the coronavirus, the Fed and the government officials continue to work overtime. To assist the patient with heavy doses of monetary and fiscal stimulus in order to stabilize the capital markets and to help explain it all to us and to share their latest views on the economy. In the market with me by flowing, and I assume from their homes in Chicago, this morning is Northern Trust chief economist Carl Cannon, Bon, an organ trust chief investment strategist Jim McDonald. After we hear from Carlin gym, we will go to a Q and a discussion and we encourage you to participate in that. You can submit a question in the Q and a box on your screen if you with this by Webex or you can send your question by email to contact northern at northerntrust.com. So that one more time contact northernandnortherntrust.com and contact northerners. All one word. Carl on let me hand it over to you to get started today. Thanks for being looked. Well, thank you Mac and good morning everybody before beginning I want to express A wish that all of you who are joining us today are safe and well. And for those who are observing a holiday over the weekend, we hope it very much was a pleasant one. This is my fourth week working from home which I am sharing with my wife and my youngest a 21 year old who was sent home from her college campus to finish the semester remotely. To show you how well we're all getting along Mac, my wife has been disconnecting the cable from the router in the hope that that will prompt me to get out of the house just as soon as possible so there is no one on this call who is rooting for return to normal. Patterns more than I am. All facetiousness aside, though, one of the things I think we have learned and it's generally positive, is that we can stay in touch fairly well even from remote locations, and so for better or worse, the technology has allowed me to keep up with everything that's been going on in the markets and the economy. Although I can't say that it's been entirely uplifting, but I know that you've got many questions, and so let's dive right in to trying to provide you some answers for where things might go from here. If we go to my first slide entitled following the curves. There are really three progressions that will be essential to getting back to something that even remotely resembles the normalcy that we all enjoyed earlier this year. The first of course, is the progress of the coronavirus itself on the left, you see the Gnarl of curves that describes the course of the outbreak across countries. China is really the only market that seems to have bent the curve and there are certainly. Questions about the veracity of some of their reporting. We have other areas in the world that are reaching the apex where the pace of disease spread is beginning to slow down. This is very important from a public health perspective. Everybody simply because it respects the capacity of our medical personnel and our facilities to handle the patient inflow. and I I'm sure you would agree that those who are treating those patients are really the real heroes in this current situation. But once that curve begins to bend and the rate of infection begins to slow. That really turns it over to a second progression curve if you will, which is the decisions that will be taken first by public health officials who will decide you know how quickly we can get back to doing different kinds of things, and then what numbers and then private companies who will then have to make decisions on who comes back to work where they work, how they work given the new reality, which will likely include some enhanced screening to make sure that everybody is safe and well, additional cleaning and distancing in many cases, and continued restrictions on certain types. Of activities and interactions I think based on what I'm reading, and certainly the conversations that we've had inside the bank, it is going to be a gradual resumption of normal levels of activity, and I think the other thing would be pointed out about the virus. and I know that Jim is going to cover this at some length in his presentation is that you don't just have one curve even within the United States, there are localized curves where the outbreaks have been more intense but are are reaching their Crest sooner, and until you have. All of those curves really bending. You can't get back to a normal supply chains Mac or even normal levels of travel as we used to know them. And then finally, once those two first 2 hurdles are cleared, consumers and businesses will have choices to make about how fast a resume their normal levels of activity. In here ioffer a Harris poll on the right of this slide that essentially asked participants if the public health sector agreed that it was relatively safe to go back and resume normal activity. How long would it be before you would start doing some of the things that you did before the crisis emerged? And you can see that across the board on activities that contribute importantly to the service sector of the United States and globally, that there is very much they phased in feeling of how long it will take to get back to normal levels of activity. In addition, I do need to point out that there may be casualties of this. There are small businesses that report that they can only make it through 30 or 90 days without the substantial assistance. There are consumers that have had to file for unemployment insurance. That may not be called back. For a long period of time, and so there May. It appears that we may have lost Carl. Hopefully he'll be able to dial back in gym. Are you available to move to your slides? And then maybe we can go back to Carl when he's able to come back again? Sure, make you happy to do it, so let's go to my first slide which is entitled progress on health policy, fiscal and the slide 7. Yeah, so I'm gonna cover volatility in the markets. What we're watching in our outlook. So First off, the volatility that we've been experiencing is clearly been of a historic level. It only took one month for the S&P to fall 35%, and now in the last three weeks we have gained. Twenty 7% would still leaves us down about 16% from the highs, but back to levels where the S&P was nine months ago. Last week and I heard this statistic yesterday and sounded pretty astonishing. Last week was the best week in 45 years and that was accomplished in only four days of trading. So the volatility has been unbelievable in the last five weeks. The average daily move in the S&P 500 has been just shy of 5% and we've had 24 out of 25 days with greater than one percent moves. So that's Great Depression level volatility. That we've been experienced. I think it's time to the high level of uncertainty, but I think it's also been exacerbated by computer based trading. In this environment we have been saying that we felt the market has been very risky to make a big bets and you can see evidence of that and how quickly it declined, and then how quickly recovered you had to get both of those trades. I pretty much exactly correct for that to have worked well, especially for dealing with taxes. We felt that it's been hard to forecast the markets have been very illiquid, which makes trading I expensive. But also importantly, we've been highlighting two things. An expectation of a big policy response, which I'll cover and then Secondly, our expectation that's been in place for a while. That's cases we're going to peak across Western Europe in the US in late March and early April, and that has come to pass. So the policies and the punch lines before I get into the detail we've been talking about health policy, fiscal policy and monetary policy on the health policy side. The punch line is there is good progress, but much more is needed. On the fiscal side, it is strongly underway and there will be more if it is needed and monetary policy has definitely been better than expectations fast out of the gates and innovative. So from a health policy standpoint on the left side of the charge, what you'll see is a couple of key areas that we've been focusing on for the peaks. Spain in Italy because they led the US and they have clearly peaked and are declining and then New York State. Which is also a peaked in his declining if you look at the US collectively, it is now estimated by the University of Washington that the US in aggregate is 4 days past the peak utilization of hospital resources. So it seems like the very strict social distancing is having its intended effect and his lead to a decline in new cases across most important regions. But we also were very clear that we don't expect a silver bullet from either treatments or vaccines over the next 6 to 12 months, and so that that means that the recovery is going to be slow. It is gonna be U shaped that the fact of containment is worked is clearly a constructive development and has been an important catalyst. I think to the markets. So I think we're going to be facing a gradual reopening through the fourth quarter and beyond the governor's, in my opinion, will be the ones controlling this, and you're already started to see some coalitions being built between the North East governors and then separately the West Coast governors to address this. The second topic from policy standpoint is the fiscal policy, and that's the right hand side of the chart. What we've been focusing on is 2 things income replacement. And credit back stopping. So what this chart illustrates is the importance of income replacement, because looking at the March jobs report which showed it's terriblr Los of jobs during the month and that will continue for the next couple of months, 80% of the people who said that they lost their job described it as being on temporary layoff. Now that's not going to be able to persist for several months, but it does give an indication that if funds are available. New things like the payroll protection program that there is a chance to bridge the income to reduce the pain and the unemployment benefits which are available are being supplemented by an extra $600 a week. And there are actually press reports out that 10s of millions of workers might actually make more money during this unemployment period and then they had been making a previously. The payroll protection plan appears to be off to a slow start. The interest has been extremely high, but you're asking banks to do things and volumes that they've never done before. I answer, that means that it has been slow to get the funds out. If the story start to accumulate that the bags are at risk of running out of funding, I am confident that more funding will be available from Congress. One of the key decisions we've made is that we felt it was a losing. Political issue for either party to stand in the way of income substitution here, and that seems to be the case. So the second part of the fiscal is the credit back stop and we have felt that the Fed wants to make sure that the liquidity crisis in the market does not turn into a credit crisis. So let's go to the second slide, which is entitled expect the highest number of phone Angels in 10 years. So the monetary policy response gets to the issue of not just. Interest rates which were important but really a small part of the solution, but really to the liquidity because there has been a huge increase in credit cost during this sell off. So for example, in the credit markets, investment grade credit spreads or the extra interest costs that investment grade companies pay over, the government is gone from zero point 9%. So just under a 1% premium up to 3.4% and is now come down to 2.0 five. And why that is so important is what the chart shows you is the expectation of investment grade companies that are going to lose their investment grade rating. So that has been a big concern about a wave of downgrades that will overwhelm the high yield market. The fact that investment grade spreads have come down is a sign that gives some hope to contain the level of that downgrade, and on the high yield market the increases, then even more significant spreads were just a little above 3% at their lows. They peaked at 11 and there all the way down to Seven and a half. So we have been indicating that we felt that a majority of the increase in spreads has been tide to illiquidity. That is what the Fed is targeting, and so far they're having some success, so I'm sure will go through some of this. But the breadth of programs the Fed has put into place has been a dramatic, including adding. In some programs that they have not done before, such as buying high yield bonds. Five fixed income ETF's buying non investment grade bonds, fallen Angels, so it forward, for example was downgraded from investment grade to high yield if they have investment grade rating at a certain previous date, the Fed is allowing themselves to go in and support that. That is led to a rally in those kind of bonds. So it's an interesting transformation that is happened. The illiquidity in the bond market several weeks ago was an illiquidity where you could not sell. The illiquidity today is actually becoming more that it's hard to buy because there is such a demand, and we're seeing that in the new issue market Switcher, restarting there was over 400 billion of new issues and investment grades since the crisis. At about 1/3 of that we would say is tide to companies building their finances, tide to what's going on with the cobins crisis, so the new issue market is an important signal about the appetite that's out there. And if you look at the church, what we indicate is that an expectation that about 3.7% of investment grade bonds will be downgraded to high yield. Yeah, in this current fiscal year, and what that means is that while that is elevated, it certainly below what we've seen in some prior cycles. So monetary policy has been very effective. Let's rap up with where we go from here with our third slide called our current outlook. So we have maintained during this environment of modern overweight to risk we have been having frequent strategy meetings. We've been including our health care analyst, who is done an excellent job keeping us up to speed on the progress of the virus and the progress of treatments. We've made two small moves during the last three months, but on balance we've retained the overweight 2US equities underway to emerging market equities. The overweight too high yield bonds and both of those have rally back. Image recovery are reasonably nicely so our base case is we look forward is a policy versus pandemic and structural monetary accommodation. What we mean by that is the policy versus pandemic. Is the markets looking through the terrible economic data we're going to have awful data for the next several months. We're going to have bad corporate earnings. The market knows that with the markets focused on is 2021, so we think investors are. Increasingly accepting of the big fiscal stimulus that talking to stabilize the outlook, structural monetary accommodation is a theme that's been in place even before the Co bid development, and that is a view that central bank policy is going to say very easy for a very long time. The market volatility that we've experienced has started to come down. The VIX index is a measure of volatility expected in the equity markets. It averaged in 2019, a level of between 15 and 20. It increased nearly over 5 full 283 and is now come down by about 1/2 to about 30 eight. We can't blew out another bouts of selling and more downside here, but. What was the catalyst for that big? If it was to happen, those who are too risk cases number one insufficient fiscal backstop. That is a view that either the coronavirus deteriorates again and re emerges and big economies and the fiscal backstop isn't sufficient to offset it. Or Secondly, the flip side is that the fiscal response is so sufficient that it actually starts to create an inflationary shift. Upward in the long-term expectations for inflation, which hurts interest rates and would hurt valuations in risk assets. But on balance, these are risk cases, not our base cases and our base cases are such that we continue to be comfortable being moderately overweight. Risk in this environment. The final comment I would offer is we're being very deliberate about not trying to immediately draw big long term conclusions in the midst of this chaos. So the perfect example would be. Are we going to have a long-term structural inflation surge over the next five years because of what's going on with the pandemic? Thankfully, we have our annual five year outlook capital markets work which starts to take place in May and those results will be published in July and that will give us a chance to take a very deliberate look at some of these longer term issues and see how this development may change those prospects. So Mac with that I will throw it back to you. OK, thank you Jim. I'm and Carl I believe is back on the line iCarly. Note that was an example of Karol your wife shutting off your Internet service again. But sorry we lost you there. I think you were just finishing up in your first slide and we're getting ready to go to your second slide, which I believe is number 4. For those of you that are advancing the slides for us, so Carl, I'll go back to you to finish up your prepared comments. Yeah, I'm sorry everybody. I didn't know that my wife would choose this particular moment to their displeasure at my being in the house, but hopefully you can hear me clearly and will soldier on through the end. So if we can go back then to the slide, that's entitled the race between policy in the pandemic. Which gym is already alluded to. Again, art central thesis is that it is going to take time to re normalize, and the risk that we could lose some households in some businesses in the process who are either outside the bounds of the supporter. The support doesn't get to them is something that will be a limitation, but. I think policy after a bit of a slow start is making every effort to try and make up the ground Jim alluded to the feds are interventions which are were intended initially to settle some of the corners of the financial market they were experiencing the most dislocation in the data show us that it has been successful the spreads on certain types of fixed income instruments have come down by quite a bit as we monitor short-term money markets it's clear that conditions have improved In addition one of the things that I remember talking about. With clients was a concern and there was a hypothetical one as recently as 4 months ago about what would happen if we re entered recession anytime soon and we were a little worried that the fed's ability to move with speed and creativity had been limited by some of the post crisis regulation as the Fed took a little bit of criticism for offering the assistance that it did in 2008 and 2009 all everyone that has gone out the window and I would say that the line between fiscal and monetary policy has gotten very blurry inappropriately so. First of all, the Treasury has decided to cede some funds for the Fed, providing capital that the Fed will then leverage to offer support is Jim highlighted to municipal governments, to small businesses and to certain companies that have found themselves in financial duress. Those monies can be leveraged up to a total of four trillion dollars at the maximum, and so the Fed's balance sheet is expected to expand. In fact, perhaps more than double over the course of the next 12 months, which is very, very substantial. In addition, the Fed has announced what it calls open ended quantitative easing and everybody. All that means is that they're going to be buying a great deal more, US Treasury NUS mortgage backed security essentially not taking down a lot of the debt that will be needed to fund some of the programs that have been announced to by the Congress. As you can see on the right, the speed and size of the efforts here in the United States are far in excess of what we had before in his gym highlighted. I think we're already learning that there may be need for even more given the scale of the problem in the need to move with speed. So I'm not saying that policies exactly in the right place, but certainly they have recognized the pace of this and tried to stay out in front of it before we leave this slide. Though, I do want to note that the pandemic is a global phenomenon, and if there are areas that continue to concern. Me, it said not all areas of the world had this kind of policy response. While some markets have moved with sense and speed, others have been a little slower. Europe in particular. And then there are emerging markets that are a little bit outside of some of the international programs that have been announced, or keeping a very close eye on how they fare, as sometimes their problems can work their way over through the markets into developed countries. And if we go to my last slide. Which entitled the elevator in the stairs that pattern there were expecting for economic activity is not this similar to what we have seen during the past several business cycles? When trouble emerges, businesses move fairly quickly to rationalize their operations, their Staffs and their expenses, which gives you the pattern of a very quick descent from which recovery is often fairly slow and for employment. That is particularly true, as firms place a higher bar on bringing people back to work. Then sometimes they do. In trying to pair them back. I think Jim highlighted something that's important. I mean the the unemployment benefits that are available to our citizens who are displaced have been made more generous. Some of those additional supports of temporary, but I would agree with him that they are likely to be sustained, but we could have quite a number of people on the unemployment rolls for an extended period of time as companies feel most comfortable that they can bring them back to work and there are industry sectors that are highlighted on the first page which may take even longer to come back. In Commerce in general, and so the forecast that we published last week has that very similar pattern, although sharper, and that simply reflection of the object shut down that the pandemic has brought to so many locations as we exercise social distancing in an effort to contain the spread of the virus, we will regain a lot of the economic activity Los this summer in the quarters that follow. But as I highlighted before, it may be a very long time before things feel. Normal from an economic in a social sense, at least compared to where we were in January. So in closing Mac, as I was going to observe, I am very anxious for things to return back to normal so that I am not at the whim of the household Internet. However, it might be operating and for our clients I think Jim would agree that one of the things we very much enjoyed doing is getting out and actually seeing you in person. We look forward to that day and I hope it comes soon where we can take our blows in your questions as we normally do. That's view from here, Mac. Yeah, OK, excellent Carl. Thanks for getting back on with us and we're now at that portion where we're going to go to a little bit of a brief Q&A session and you could advance the slides to slide number 10. You will see that you can submit your questions in the Q and a box on your screen, or send us an email to contact northern at northerntrust.com. And we have received some questions and. Let me let me go to those right now and Jim. Uh, you were addressed this. I think even in your closing comments earlier, just around, I think the importance of you know so much staying the course. And not making any rash moves in an environment with so much uncertainty and so there is a question here about could you discuss your thoughts on Northern Trust? You know position. Around staying the course as it relates to your asset allocation and risk management procedures. And maybe you can just expand upon some of the comments you made earlier, Jim. Well, I think that's, uh, it's been critical for me in helping to lead this effort is the bring it together of all the internal experts we've got who are in the market every single day. So caring for them not only how difficult things were being from a liquidity standpoint from a trading standpoint, but then also having the macro discussions where we're able to say, Well, there will be a policy response. And what will the progress be? And what will the hurdles being what are the odds that something significant gets done? So our focus is has been on making sure we know what is going on and then we what we think the response to that will be. And then how that will be reflected in the financial markets. and I would have to say that we've been surprised both on the downside and the upside. The downside decline was certainly faster and quicker than we would have expected and the recovery has been has been very sharp. Also, so it is an example of the challenge sometimes in tactical asset allocation, it's been something that we've been talking about for 15 years. It's it's an effort that I spend a lot of time on. This has been probably one of the most challenging periods because of how rapid it's been, and so one of the key lessons that gets reiterated through this is having sufficient liquidity in place to ride through the period so that you're not one of the people that's forced. Or makes the voluntary choice at 2D risk at the wrong time when right not only are prices down, but the cost of execution is so high. Yeah, just to underscore that the average move in the S&P 500 and the month of March was 5% per day and that is the highest volatility of any month that we've ever seen recorded in stock market history in the country itself. It really wasn't unprecedented, period. Karl moving over to you and you both you and Jim talked about the feds again. Also the governments. The unprecedented moves in what they were doing to help bridge the gap between when you know where we are now and when, hopefully things that move back towards some level of normalcy, even though it's going to take a period of time. Let's start with the fact that they really stepped in about a month ago with. We will do whatever we need to do attitude. But is there a limit to how much money can? Be created and thrown at this other longer term. Consequences of printing money in an unlimited way in this period were now which is now called QE Infinity. Fed chairman Jay Powell is asked the first part of that question back and responded that there really are no limits to what the Fed can do, at least from a mechanical perspective. I know he offered that response in part to provide the measure of reassurance that he has been trying. I think very well to provide to the markets at the moment. To the Fed is continuing to expand insights, trying to find those areas where the money is needed the most. I would say that given what is happening happening with global economic activity, Mac. Not to mention the energy price slump that has coordinated with this deflation is much more of a risk than excessive inflation at the moment, and so the Fed actually could justify a lot of what it's doing based on its mandate of trying to get to a 2% inflation rate now down the road. There may be some questions for the Fed to answer it. Could I having put so much credit out into circulation, overheat, economic activity? I think that's a problem that we welcome at that point. It certainly seems a remote possibility. At least in the short term as well the Fed has received a questions and justifiably so as to exactly who they're going to help how they're going to help them and why others are not direct beneficiaries I think the way that they'll respond to that Mac is it by restoring demand which has been destroyed by the social distancing there helping everybody In other words if they create more economic activity that should filter down to additional revenue at 2 additional hiring and so where it all starts it becomes less important in the long run. So I think there may come a day where we worry a little bit about extra inflation or the Fed trying to remove itself very carefully but will answer and ask and answer those questions at a later date for now I think they're doing the right thing. And going from a fed to from a monetary to fiscal policy question Jim the various federal government programs to get money into the hands of unemployed workers and business owners you mentioned it in your comments but. It's been really slow down somewhat because of outdated technology just overwhelming demand specially the PPP program and confusion even over the application process itself. And there are questions rather the government really is equipped to quickly establish or manage complex funding programs like these how important is it to get money in the hands of the people and the businesses that needed the most as soon as possible. But it definitely is important the markets will have some patience so where the pain point will be is definitely much more at the business owner and if the worker level to your question of is the government organized and facilitating quick disbursement of these monies the answer is no this is something that is in many respects brand new and so if you think about the normal volumes that banks process from alone standpoint. And the requirements they've got to know their customers and and have data on those fronts especially with changing requirements from the Small Business Administration. It's not a surprise that it has been a. Funky to get these funds distributed the market is viewing this as something that will work and the size will be increased if it's necessary. And then for both of you there's a question regarding the program announced by the Fed last week I think it was $2.3 trillion to purchas. Municipal bonds more corporate bond buying including some fallen Angels in the high yield market that's something Jim and Carol that the Fed specifically avoided doing in the 0809. Down turn out of concern of picking winners and losers so-called moral hazard. What change their mind this time around and will that prove to be useful or dangerous or or box or possibly both? So I'll start in gym feel free to chime in afterwards I think the speed of the decline really dictated that breadth of the response. I don't think that traditional bond buying of treasurys in and expecting the government to then move to get the Rite Aid to the right places was going to work this time around the fat I think is uniquely positioned to solve dislocations in financial markets and I think the data have proven that assumption correct as I highlighted earlier the entry point to certainly can generate controversy but ultimately the idea is is to prevent economic destruction and replace. Ilost demand the only thing I will mention is that the Fed is going to become one of the biggest portfolio managers in the world and how other central banks are around the world do own a variety of assets the Bank of Japan the Swiss National Bank but this is the first time the Fed is going to have the kind of diversified portfolio to manage in its in its history they've made loans before but and so I think one of the things that I'm hoping that they're taking steps doing and having having worked there through 8 or 9 I know that those conversations were active back then. How are they gonna manage the assets how are they going to make sure that uh there's adequate oversight and reporting and transparency so that the public does not become suspicious that there's any favoritism involved? So I did the gym before I have no mega mega 2 comments uh 2 comments to that the Fed may find in certain areas that they end up not buying as much as they were authorized to because to a certain extent the benefit of these programs is to give the investment community confidence that the Fed will be a backstop and so I think that a traditional investors to some extent are stepping into these markets ahead of the Fed and the feds intended purchases. Or having the benefit of giving confidence to those buyers I would say this uh another reason that this is happening now and it didn't happen during the financial crisis is that the markets are less liquid today the traditional investment banks who made markets in some of these assets have been precluded from doing that in today's world because of legislation like Dodd Frank in the Volcker rule and that has made the markets much thinner. And harder to trade and so to some extent the Fed is having to step in to provide that liquidity because of the regulatory changes put in after the financial crisis. And along those lines of regarding liquidity and things have certainly stabilized in the corporate media bond markets over the last couple of weeks compared to where they were in early March. But do you think that the Fed will have to increase their asset purchases and even. Begin buying riskier debt and there's even been talk that at some point in time I guess depending on the severity of the downturn and hopefully we've seen the worst of it. Uh of purchasing stocks and we have had an example with the Bank of Japan doing that through ET FS would have to be pretty severe downturns though for the Fed to that step further wouldn't it. I think so Mac I think that would be a really big bridge for them to cross whether they increase the size the purchase programs for the existing assets I'm not sure they're gonna need to it's hard to be too specific or confident in that but just remember my prior comment that their ability and willingness to buy will give the private investors the confidence to step in ahead of the Fed. OK the time we have left we know covered asset allocation covered the not the monetary and fiscal response which has been historic by all measures I just like to bring up to both the some questions around the lasting impacts. Of what we're going through right now once things again are moving towards the sense of normalcy. And are there lasting impacts Carl in your mind from the pandemic crisis and the impact it's had on the economy on the markets as it relates to. Consumer business and investor behavior in the years ahead. Well I think Jim said it well I think we're I'm hesitant to identify long-term themes while we're still in the middle of it is there still emerging certainly there has been discussion about you know things like the way people work and where they work that might undergo fundamental change to the way that we try and keep track of diseases and one another in these situations or their contingencies that we could try and put into place but ultimately what is enveloped the world in the last 3 months with something that was largely unanticipated in while. We've had threats of pandemic before we've never really seen an actual one in practice in many cases what I have found is that people and companies have adapted very well on the fly there are always going to be things as you can imagine an II have space that whatever the new normal looks like Mac that American consumers global consumers and businesses will figure out a way to make the best of whatever constraints and limitations that there are I don't think. Well that it is likely that we will be back to let's say the world that we knew last December by anytime very soon simply be cause there is a psychology that's enveloped around the pandemic among public health officials businesses and consumers that's going to take a little while to lift and so I think patience is just something that needs to be applied in great measure in a lot of areas of our economy. And if you have anything to add to that particularly as it relates to topics like the globalization of supply change and the markets and. You know maybe even a little bit as it relates to demographics where we could be seeing for the first time in our history of decline in US population sometime in the next couple of years. Yeah so America interesting though things that I wrote down when you first ask the question where supply chains and nationalism so I do think that this will accelerate somewhat the globalization trend that's been underway no major elected official across the world is going to want to be vulnerable to having insufficient medical supplies on hand and be vulnerable to a foreign countries control of that so I do think they'll be some some major changes on that front. The demographic question I don't see this changing that much. The demographic picture is is well known, has been built into the markets built into our forecasts, so I think it would be more that the globalization theme and then the the one that will really be debating this spring and early summer is the inflation picture. Will there be a jump in demand offsetting the supply situation that leads at the structural inflation going forward? My bias right now is probably not. But that's gonna get a lot of robust discussion at the bank, because that would be the thing that would really potentially change the valuation picture that we're looking at today. OK, last question for both of you and will wrap up here in just a few minutes and this goes back to the comment or I think earlier around what the feds done, what the Treasury Department's done, the unprecedented monetary fiscal response to this has absolutely been necessary. To help bridge this gap, but we still don't know whether it's sufficient because we don't know how long this pandemic is gonna go on, so it is still safe to say. That our ability to reopen the economy depends primarily on our ability to. Understand the spread and the risk of the virus, the Fed and the Treasury. You need to be there to help bridge the gap, but the number one. Uh, thing that's out there that we need to have done is just to have people feel comfortable going about their business without a high risk of getting sick. Is that still the biggest issue that the economy faces today, Carl? I think that's a central ingredient, and I've read reports that we might not be able to get that comfort until there's a a vaccine that's been developed that is a minimum of 12 to 15 months off. From what I read. Certainly the development of better therapies could help, but I think when risk presents itself to people, they tend to run away from it, at least initially, and so getting comfortable doing even normal things like going to the supermarket. And many of you have had that experience recently, very different from. What it used to be, it's just gonna take a little while for us to to feel comfortable going about our daily business. And Jim, the last word to you, anything to add said what Karl said. No back, I would agree with that my punchline on health policy was there has been much progress, but much more is needed. I think that they are the markets have confidence that fiscal and monetary policy will expand if needed. The hardest thing to control is the health policy front now. You also can't get blinds and the fact that we do have the potential for innovation over the next 12 to 15 months that would lead to greater confidence on this front events, the level of greatest uncertainty. Is around health policy. OK, Jim and Carl. Thank you so much for joining us for today's insights presentation. If we could move on to slide 11 now. Uh, I just a reminder that if you missed the part of today's remarks that you can access the reply tomorrow. And that's April 15th at northerntrust.com/financial market updates. And for any further information. That you have that was discussed on today's webinar. Please contact your relationship manager. And if we could go to the next slide it. Will tell you that our next the insights event schedule for this Friday April the 17th? I want to thank everybody for listening in today's presentation. The health and welfare of our clients are professional partners that we work with every day. Our employees at their greatest concern while we continue to work through this period. Now then, certainty and along those lines we continue to pay heed at Northern Trust to all of what we're hearing from public health officials in the municipalities in which we operate and to engage in all social distancing best practices, including. And as having many of our relationship managers that we can and other personnel work from home. Therefore, our interactions with clients have temporarily changed. By becoming more telephonic use the video conferencing by email as we avoid business travel and reduce the number of in person meetings through this period. But it's very important for you to know that we're very much open for business were very engaged. We're here to support you and your families until things move back to a more normal working environment. With that time happens sooner rather than later. Again, the next insights program is on Friday, April 17th at 10:00 o'clock. We hope you'll join us then. And in the interim, please remain safes in good health and good spirits, and thank you for your trust and confidence in Northern Trust. Enjoy the rest of your day. Time. _1590644727731
Title:Insights From Northern Trust
Date: Tuesday, April 14, 2020
Time: 10 AM CT
Duration: 45 Minutes
Northern Trust’s unique perspective on the markets and economy provide clarity and understanding to help you take action and identify opportunities.