1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along 2 00:00:09,240 --> 00:00:13,080 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leie. We bring 3 00:00:13,119 --> 00:00:17,159 Speaker 1: you insight from the best and economics, finance, investment, and 4 00:00:17,280 --> 00:00:23,280 Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg 5 00:00:23,360 --> 00:00:29,840 Speaker 1: dot Com, and of course, on the Bloomberg Tournament. John 6 00:00:30,000 --> 00:00:33,519 Speaker 1: us now mana chan senior investment strategist at Edward Jones 7 00:00:33,560 --> 00:00:36,280 Speaker 1: Minor move on and move on quickly. Ben Laidler of 8 00:00:36,360 --> 00:00:39,559 Speaker 1: Vitro joined us the kickoff two. He's looking for a 9 00:00:39,640 --> 00:00:43,880 Speaker 1: fourth straight year of double digit gains after three of them, 10 00:00:43,920 --> 00:00:47,560 Speaker 1: after a gain of on the SMP last year. Mona, 11 00:00:47,640 --> 00:00:49,960 Speaker 1: I understand you're looking for gains, but not more of 12 00:00:49,960 --> 00:00:55,080 Speaker 1: the same. Yeah, Yeah, absolutely, and thanks John. Happy new year. Um. Look, 13 00:00:55,120 --> 00:00:57,720 Speaker 1: I think the good news for investors is this BOOL 14 00:00:57,760 --> 00:01:01,080 Speaker 1: market probably does have some legs, but what we're calling 15 00:01:01,120 --> 00:01:05,240 Speaker 1: for is an era of moderation in two. So for US, 16 00:01:05,280 --> 00:01:09,720 Speaker 1: that means not only moderating economic and earnings growth, moderating 17 00:01:09,800 --> 00:01:14,160 Speaker 1: inflation to some extent, moderating FED policy support, but it 18 00:01:14,200 --> 00:01:18,520 Speaker 1: also means moderating returns. So we do expect SMP returns 19 00:01:18,600 --> 00:01:21,320 Speaker 1: to be more in line with earnings growth, which we 20 00:01:21,440 --> 00:01:25,160 Speaker 1: see as single digits this year UM. But expect a 21 00:01:25,160 --> 00:01:27,720 Speaker 1: little bit more volatility, you know, as we get as 22 00:01:27,760 --> 00:01:30,680 Speaker 1: you noted in the fourth year of this tremendous will 23 00:01:30,760 --> 00:01:34,640 Speaker 1: run for the SMP, we probably will get more normal 24 00:01:34,800 --> 00:01:39,080 Speaker 1: levels of volatility pull backs. Historically that's meant one to 25 00:01:39,200 --> 00:01:42,360 Speaker 1: three corrections in the five to ten percent range UM. 26 00:01:42,400 --> 00:01:45,360 Speaker 1: But the good news again is that those bouts of 27 00:01:45,440 --> 00:01:49,320 Speaker 1: volatility or pullbacks could actually offer opportunities to maybe add 28 00:01:49,360 --> 00:01:55,240 Speaker 1: to or diversify risk. I'm on a very important question here, 29 00:01:55,240 --> 00:01:59,680 Speaker 1: As you mentioned return total return lesson total return. Is 30 00:01:59,720 --> 00:02:02,960 Speaker 1: that aspersion of return that we saw in two thousand 31 00:02:03,000 --> 00:02:06,760 Speaker 1: twenty one the Financial Times with a superb summary of 32 00:02:06,880 --> 00:02:11,480 Speaker 1: hedge fund under performance that we've seen, does the dispersion 33 00:02:11,480 --> 00:02:15,560 Speaker 1: of return continue? Yeah? You know, look, if you look 34 00:02:15,560 --> 00:02:18,600 Speaker 1: at the SMP five, uh, the the top line or 35 00:02:18,600 --> 00:02:20,800 Speaker 1: the headline doesn't really tell the full story of what's 36 00:02:20,840 --> 00:02:24,480 Speaker 1: happening underneath the surface. One was a great example of that. 37 00:02:25,000 --> 00:02:27,160 Speaker 1: We had a rotation into value, as you know, the 38 00:02:27,240 --> 00:02:30,400 Speaker 1: vaccine rollout happened earlier in the year, but then after 39 00:02:30,440 --> 00:02:33,840 Speaker 1: that we saw a rotation back into growth, a rotation 40 00:02:33,960 --> 00:02:37,480 Speaker 1: perhaps back into value as as the delta variant waned. 41 00:02:37,720 --> 00:02:39,480 Speaker 1: But towards the end of the year we actually saw 42 00:02:39,520 --> 00:02:42,320 Speaker 1: a little bit of defensive moves. We saw defensive sectors 43 00:02:42,360 --> 00:02:45,880 Speaker 1: like healthcare and staples take a leadership role in the 44 00:02:45,960 --> 00:02:49,240 Speaker 1: last month. We expect a little bit more of the 45 00:02:49,320 --> 00:02:51,560 Speaker 1: same this year. You know, we do expect the year 46 00:02:51,600 --> 00:02:55,640 Speaker 1: to begin perhaps a little bit more strongly, driven by 47 00:02:55,680 --> 00:02:58,680 Speaker 1: the value cyclical rotation. We do expect at some point 48 00:02:58,919 --> 00:03:01,040 Speaker 1: we will get another re opening two point oh a 49 00:03:01,080 --> 00:03:03,640 Speaker 1: little softer than what we saw last year. But as 50 00:03:03,680 --> 00:03:07,120 Speaker 1: the ear progresses, we would definitely recommend um having a 51 00:03:07,120 --> 00:03:10,000 Speaker 1: more balanced portfolio. You know, as as your progresses and 52 00:03:10,040 --> 00:03:13,520 Speaker 1: comps get harder for value uh and growth slows a 53 00:03:13,520 --> 00:03:17,360 Speaker 1: little bit, perhaps still above trend, we would expect areas 54 00:03:17,400 --> 00:03:20,960 Speaker 1: like growth, like defensives like those quality names to really 55 00:03:21,000 --> 00:03:23,360 Speaker 1: pick up the mantle, and so a more balanced approach 56 00:03:23,400 --> 00:03:26,400 Speaker 1: to portfolio management this year we think makes a lot 57 00:03:26,440 --> 00:03:29,760 Speaker 1: of sense. Keep in mind, you know, our old friend 58 00:03:29,840 --> 00:03:33,359 Speaker 1: Tina does come back into play. There is no alternative UM. 59 00:03:33,480 --> 00:03:36,040 Speaker 1: You know, investors as always are putting new money to work. 60 00:03:36,120 --> 00:03:39,120 Speaker 1: Where do they go UM, While an environment where liquidity 61 00:03:39,200 --> 00:03:42,680 Speaker 1: is waning, they're looking for large liquid markets, and the 62 00:03:42,800 --> 00:03:46,120 Speaker 1: US equity market does come front and center once again, 63 00:03:46,200 --> 00:03:51,640 Speaker 1: at least for now until the global story picks up. Mona, 64 00:03:51,920 --> 00:03:54,720 Speaker 1: do you get the sense that basically a balanced portfolio 65 00:03:54,800 --> 00:03:56,720 Speaker 1: is the way to go And frankly, just owning the 66 00:03:56,760 --> 00:03:59,720 Speaker 1: index continues to be the best bet at a time 67 00:03:59,760 --> 00:04:04,440 Speaker 1: when rotations happen. Uh, and it's unpredictable when you know, 68 00:04:04,600 --> 00:04:07,760 Speaker 1: I think investors that have owned the index have done 69 00:04:07,760 --> 00:04:10,000 Speaker 1: well over the last three years and will continue to 70 00:04:10,040 --> 00:04:13,000 Speaker 1: do well this year. To Tom's point on active management, 71 00:04:13,160 --> 00:04:16,320 Speaker 1: you know hasn't panned out. You know, it hasn't outperformed, 72 00:04:16,360 --> 00:04:19,520 Speaker 1: and all investors are looking for some alpha and so yeah, 73 00:04:19,560 --> 00:04:23,159 Speaker 1: in our view, owning an SMPI index is part of 74 00:04:23,160 --> 00:04:27,120 Speaker 1: a strong balanced portfolio. And certainly that UM index ownership 75 00:04:27,760 --> 00:04:30,719 Speaker 1: will help you outperform over the long run. And so 76 00:04:30,760 --> 00:04:34,279 Speaker 1: certainly that's part of a portfolio. This can be you know, 77 00:04:34,920 --> 00:04:39,039 Speaker 1: complemented by certainly parts of active management that that perhaps 78 00:04:39,080 --> 00:04:42,080 Speaker 1: do give you outside exposure to a value set sector 79 00:04:42,200 --> 00:04:44,839 Speaker 1: or a growth sector, depending on where you're you know, 80 00:04:44,920 --> 00:04:47,520 Speaker 1: underweights and overweights are so it's important to have a 81 00:04:47,520 --> 00:04:51,160 Speaker 1: combination of both, Um, but you know, certainly we are 82 00:04:51,200 --> 00:04:54,799 Speaker 1: in favor of having some exposure to index UH index 83 00:04:54,880 --> 00:04:58,520 Speaker 1: ETFs index management as well. Not always awesome to hear 84 00:04:58,560 --> 00:05:00,360 Speaker 1: from you as we kick up one too and look 85 00:05:00,400 --> 00:05:02,880 Speaker 1: ahead to the year ahead, Madam john that of Edward 86 00:05:02,920 --> 00:05:11,279 Speaker 1: Johns on the equity market from Harvard University in Krall, 87 00:05:11,400 --> 00:05:14,239 Speaker 1: Megan Green joins us UH to give us a first 88 00:05:14,279 --> 00:05:17,120 Speaker 1: look into two thousand twenty two. Megan, thank you so 89 00:05:17,200 --> 00:05:19,479 Speaker 1: much for joining. I want to frame out the many 90 00:05:19,560 --> 00:05:24,800 Speaker 1: uncertainties we have into the boom economy of the United 91 00:05:24,880 --> 00:05:29,040 Speaker 1: States of America. Greg Vllier quotes Atlanta g d P 92 00:05:29,240 --> 00:05:33,960 Speaker 1: now six seven buoyant g d P in America. What 93 00:05:34,160 --> 00:05:37,480 Speaker 1: is your belief in our ability to sustain and to 94 00:05:37,680 --> 00:05:43,680 Speaker 1: surprise a better economy than many people predict. Yeah, so 95 00:05:43,800 --> 00:05:46,880 Speaker 1: on that, friend, Tom, I actually think our conversation around 96 00:05:46,920 --> 00:05:50,320 Speaker 1: growth and inflation in the US will look fundamentally different 97 00:05:50,360 --> 00:05:53,160 Speaker 1: in nine months from now from how it looks right 98 00:05:53,200 --> 00:05:55,440 Speaker 1: now and from how it looks towards the end of 99 00:05:55,520 --> 00:05:58,240 Speaker 1: last year, as everyone seemed to be jumping down the 100 00:05:58,279 --> 00:06:01,799 Speaker 1: Fed's throat for being behind the all allowing the economy 101 00:06:01,800 --> 00:06:05,920 Speaker 1: to overheat driving up sustained inflation. I think that could 102 00:06:05,920 --> 00:06:09,359 Speaker 1: be exacerbated in the short term because of the omicron variant. 103 00:06:09,400 --> 00:06:13,400 Speaker 1: I think supply chain chain disruptions could be exacerbated. But 104 00:06:13,480 --> 00:06:15,880 Speaker 1: looking over the next six to nine months, actually I 105 00:06:16,240 --> 00:06:18,719 Speaker 1: see a number of risks to growth in the US, 106 00:06:19,200 --> 00:06:22,360 Speaker 1: whereby will still be growing by well above potential, but 107 00:06:22,360 --> 00:06:25,320 Speaker 1: but growth should look weaker this year than it did 108 00:06:25,440 --> 00:06:28,640 Speaker 1: last year. Certainly, one reason is that we're facing into 109 00:06:28,680 --> 00:06:31,560 Speaker 1: a significant fiscal drag that was already going to be 110 00:06:31,600 --> 00:06:34,240 Speaker 1: the case if we had passed build back Better for 111 00:06:34,360 --> 00:06:36,640 Speaker 1: next year, in particular because a lot of build back 112 00:06:36,680 --> 00:06:40,080 Speaker 1: Better is is backloaded, not frontloaded, and even if we 113 00:06:40,160 --> 00:06:44,479 Speaker 1: get individual pieces of legislation passing pieces of build back 114 00:06:44,560 --> 00:06:48,040 Speaker 1: Better again, that will be backloaded. So we'll see a 115 00:06:48,279 --> 00:06:52,839 Speaker 1: fiscal drag going into this year. Also, I think a 116 00:06:52,839 --> 00:06:54,839 Speaker 1: lot of our growth in the second half of last 117 00:06:54,920 --> 00:06:58,840 Speaker 1: year was driven by inventories as companies were restocking. They're 118 00:06:58,839 --> 00:07:00,920 Speaker 1: only going to do that for along and I think 119 00:07:00,920 --> 00:07:03,039 Speaker 1: that this year we'll see de stocking, which is a 120 00:07:03,080 --> 00:07:06,560 Speaker 1: headwind for growth. And then, finally linking it to Ian 121 00:07:06,600 --> 00:07:09,640 Speaker 1: Bremer's top risks, I think a Chinese slowdown it's a 122 00:07:09,640 --> 00:07:12,840 Speaker 1: pretty significant risk, not at least of all because China 123 00:07:12,920 --> 00:07:15,120 Speaker 1: has a zero COVID policy that I think will be 124 00:07:15,200 --> 00:07:18,400 Speaker 1: really difficult to pull off in the face of more 125 00:07:18,480 --> 00:07:23,160 Speaker 1: transmissive variants like the Omicron variant, and so Chinese authorities 126 00:07:23,200 --> 00:07:25,640 Speaker 1: are certainly pressing on the gas pedal in terms of 127 00:07:25,640 --> 00:07:29,200 Speaker 1: Slo monetary policy. But I think there is a fundamental 128 00:07:29,240 --> 00:07:33,280 Speaker 1: commitment to things like common prosperity, taking moral hazard out 129 00:07:33,280 --> 00:07:35,760 Speaker 1: of the property market, and so I don't think that 130 00:07:35,880 --> 00:07:41,440 Speaker 1: authorities are going to fundamentally reverse those those two priorities 131 00:07:41,880 --> 00:07:43,880 Speaker 1: and and go ahead and pull on the same lever 132 00:07:44,040 --> 00:07:45,840 Speaker 1: as they have in the past to prop up growth, 133 00:07:45,960 --> 00:07:49,720 Speaker 1: namely fixed acid investment in the property market. So well, 134 00:07:49,760 --> 00:07:51,960 Speaker 1: I think China will stop slowing down as much as 135 00:07:51,960 --> 00:07:54,920 Speaker 1: it did last year. I think a slower China poses 136 00:07:55,040 --> 00:07:58,000 Speaker 1: risks for demand not only for the US, but also 137 00:07:58,080 --> 00:08:03,040 Speaker 1: for emerging markets. Megan, you have an earned expertise at 138 00:08:03,040 --> 00:08:06,960 Speaker 1: the transatlantic view, your academics in England, your academics here 139 00:08:07,600 --> 00:08:12,400 Speaker 1: as well. How much right now is Jerome Powell central 140 00:08:12,400 --> 00:08:17,080 Speaker 1: banker to the world, and much more specifically central banker 141 00:08:17,280 --> 00:08:21,840 Speaker 1: to the EU in the United Kingdom? I think that J. 142 00:08:22,000 --> 00:08:24,000 Speaker 1: Powell and the rest of the f O m C 143 00:08:24,320 --> 00:08:28,000 Speaker 1: are really primarily focused on what's going on domestically, and 144 00:08:28,080 --> 00:08:31,600 Speaker 1: so while there are repercussions of course for FED policy elsewhere, 145 00:08:32,240 --> 00:08:36,480 Speaker 1: they're not taking into account much what's happening in Europe 146 00:08:36,880 --> 00:08:39,760 Speaker 1: UH and also in the u k UM. That being said, 147 00:08:39,800 --> 00:08:42,720 Speaker 1: there will be repercussions, and so while the FED is 148 00:08:42,760 --> 00:08:48,120 Speaker 1: going ahead and tightening UH and and tapering already, the 149 00:08:48,120 --> 00:08:51,400 Speaker 1: Bank of England might also see some tightening. The e 150 00:08:51,480 --> 00:08:54,280 Speaker 1: c B, on the other hand, will probably keep policy 151 00:08:54,360 --> 00:08:57,160 Speaker 1: loose for much longer. So there will be some monetary 152 00:08:57,200 --> 00:09:00,920 Speaker 1: policy divergence with implications not just for inflation but for 153 00:09:01,000 --> 00:09:03,760 Speaker 1: currencies as well. The dollars should strengthen relative to new 154 00:09:03,840 --> 00:09:09,560 Speaker 1: euro um and and the EU will be importing disinflationary 155 00:09:09,640 --> 00:09:13,240 Speaker 1: pressures if if FED policy is tightening faster than the 156 00:09:13,240 --> 00:09:17,880 Speaker 1: ECB is megan. There's an idea right now in markets 157 00:09:18,040 --> 00:09:20,880 Speaker 1: that the omicron variant will accelerate inflation and will actually 158 00:09:20,920 --> 00:09:23,920 Speaker 1: accelerate Fed FED rate hikes. How much do you buy 159 00:09:24,080 --> 00:09:27,440 Speaker 1: into that given that it will also likely slow growth 160 00:09:27,480 --> 00:09:31,840 Speaker 1: at least on the margins. Yeah, So it all depends 161 00:09:31,840 --> 00:09:34,520 Speaker 1: on how long this like lasts. If it's actually going 162 00:09:34,559 --> 00:09:37,760 Speaker 1: to be as short as as a South African data suggests, 163 00:09:37,800 --> 00:09:40,160 Speaker 1: then I don't think that the FED will end up 164 00:09:40,320 --> 00:09:45,360 Speaker 1: accelerating policy in order to address the omicron variant. Um Yesterday, 165 00:09:45,400 --> 00:09:47,920 Speaker 1: I looked at a bunch of the high frequency data 166 00:09:48,360 --> 00:09:52,520 Speaker 1: that comes out looking at Apple mobility data, open table bookings, 167 00:09:53,000 --> 00:09:56,640 Speaker 1: uh T s, A security spreadings, and actually it looks 168 00:09:56,679 --> 00:10:00,440 Speaker 1: like the impact of omicron on demand has been fairly mild. 169 00:10:00,520 --> 00:10:04,800 Speaker 1: That being said, it's only been dominating for about a month, 170 00:10:04,840 --> 00:10:07,520 Speaker 1: and that was of course over the holiday period uh 171 00:10:07,559 --> 00:10:10,040 Speaker 1: and so people could have decided, you know what, we're 172 00:10:10,080 --> 00:10:12,719 Speaker 1: just going to have a better Christmas than we had 173 00:10:12,720 --> 00:10:15,760 Speaker 1: the previous year and ignore this, and the demand hit 174 00:10:15,800 --> 00:10:19,079 Speaker 1: could could come from now on that's yet to be seen. 175 00:10:19,559 --> 00:10:22,199 Speaker 1: On the inflation front, I do think that the omicron 176 00:10:22,280 --> 00:10:27,360 Speaker 1: variant will affect supply chains, not only because workers won't 177 00:10:27,400 --> 00:10:29,240 Speaker 1: be able to go to work in the US and 178 00:10:29,280 --> 00:10:32,000 Speaker 1: also along the entire supply chain. But we've already seen 179 00:10:32,040 --> 00:10:36,120 Speaker 1: factory closures in China with a zero COVID policy off 180 00:10:36,120 --> 00:10:38,559 Speaker 1: the back of the omicron variant, and so in the 181 00:10:38,600 --> 00:10:42,240 Speaker 1: first quarter, I think we could see inflation continue to rise. 182 00:10:42,440 --> 00:10:46,040 Speaker 1: But but going beyond that, I think not only because 183 00:10:46,320 --> 00:10:49,520 Speaker 1: of the fistical drag the de stocking slowdown in China 184 00:10:49,600 --> 00:10:52,360 Speaker 1: that I mentioned suggests that growth should be lower this year, 185 00:10:52,880 --> 00:10:56,920 Speaker 1: but also just statistics the base effects suggests that inflation 186 00:10:57,240 --> 00:10:59,839 Speaker 1: should be a bit lower as well. And I think 187 00:10:59,840 --> 00:11:03,959 Speaker 1: the supply chain insruptions should start to alleviate towards the 188 00:11:04,040 --> 00:11:06,320 Speaker 1: second half of this year, and and so in in 189 00:11:06,440 --> 00:11:08,800 Speaker 1: nine months from now, I think, well the FED might 190 00:11:08,840 --> 00:11:12,600 Speaker 1: see more alarming inflation data coming out in the first quarder. 191 00:11:13,040 --> 00:11:15,520 Speaker 1: By the second half of this year, I think inflation 192 00:11:15,559 --> 00:11:18,319 Speaker 1: should abate. I should confess I'm a paid up member 193 00:11:18,320 --> 00:11:21,240 Speaker 1: of team Transitory on this front. Even if the FED 194 00:11:21,280 --> 00:11:24,600 Speaker 1: has dropped that term, I don't think towards the end 195 00:11:24,640 --> 00:11:26,920 Speaker 1: of this year that will continue to be so alarmed 196 00:11:26,960 --> 00:11:30,840 Speaker 1: about higher inflation. Well, it does matter though where the 197 00:11:30,840 --> 00:11:33,840 Speaker 1: inflation comes from, and there's this idea that perhaps it's 198 00:11:33,840 --> 00:11:36,520 Speaker 1: going to shift from supply chain disruptions and labor market 199 00:11:36,520 --> 00:11:41,599 Speaker 1: disruptions to a wage driven, a rent driven type of inflation, 200 00:11:41,760 --> 00:11:44,840 Speaker 1: which will be really exemplified by the savings rates going 201 00:11:44,880 --> 00:11:47,240 Speaker 1: down and people having to go out and get a job. 202 00:11:47,360 --> 00:11:49,520 Speaker 1: How much do you expect that to be the dynamic 203 00:11:49,520 --> 00:11:53,080 Speaker 1: of inflation and actually encourage the Fed to raise rates 204 00:11:53,080 --> 00:11:57,120 Speaker 1: more heading into your end. So I think that there 205 00:11:57,160 --> 00:12:00,600 Speaker 1: are legitimate concerns to worry that higher rents will reset 206 00:12:00,640 --> 00:12:03,200 Speaker 1: this year and feeded through into inflation. But when it 207 00:12:03,240 --> 00:12:05,880 Speaker 1: comes to the labor market and a wage price spiral, 208 00:12:06,559 --> 00:12:08,920 Speaker 1: I actually think part of the reason the labor force 209 00:12:08,960 --> 00:12:12,360 Speaker 1: participation rate is lower now than it was before the 210 00:12:12,400 --> 00:12:16,240 Speaker 1: pandemic is that a number of hourly service workers are 211 00:12:16,280 --> 00:12:19,559 Speaker 1: are waiting to figure out They're waiting on the sidelines 212 00:12:19,600 --> 00:12:22,000 Speaker 1: to figure out how they can get into higher wage, 213 00:12:22,120 --> 00:12:25,760 Speaker 1: higher our jobs um. And at a certain point, uh, 214 00:12:25,800 --> 00:12:29,480 Speaker 1: they they'll have burned through their savings cushion and will 215 00:12:29,600 --> 00:12:32,000 Speaker 1: end up having to capitulate and jump back into the 216 00:12:32,040 --> 00:12:36,760 Speaker 1: labor market. Debit Card data from JP Morgan, for example, 217 00:12:36,840 --> 00:12:39,360 Speaker 1: suggests that might start to happen in the next couple 218 00:12:39,400 --> 00:12:42,080 Speaker 1: of months. UM, So we'll wait and see. But if 219 00:12:42,120 --> 00:12:45,600 Speaker 1: that does happen, then actually, even with the omicron variant, 220 00:12:46,240 --> 00:12:48,400 Speaker 1: keeping some people home because they're a freight going to 221 00:12:48,400 --> 00:12:51,199 Speaker 1: work will get them sick. Others will end up having 222 00:12:51,200 --> 00:12:53,560 Speaker 1: to jump back into the labor market, and that should 223 00:12:54,160 --> 00:12:58,560 Speaker 1: should alleviate some of the labor supply shortages that we've had. 224 00:12:59,000 --> 00:13:01,680 Speaker 1: Um I also think we've seen wage hikes over the 225 00:13:01,720 --> 00:13:04,880 Speaker 1: past year. So there have been wage pressures, but that 226 00:13:05,000 --> 00:13:08,280 Speaker 1: needn't be inflationary if we also see productivity growth, and 227 00:13:08,320 --> 00:13:10,400 Speaker 1: so that is one of the upside risks I see 228 00:13:11,120 --> 00:13:13,319 Speaker 1: for the outlook actually is that we've had even more 229 00:13:13,320 --> 00:13:16,959 Speaker 1: productivity growth than we expected because companies have taken the 230 00:13:17,000 --> 00:13:21,560 Speaker 1: opportunity to automates and digitalized, and therefore, even with higher wages, 231 00:13:21,960 --> 00:13:24,959 Speaker 1: you won't drive inflation higher. Mike and Green of the 232 00:13:25,040 --> 00:13:32,120 Speaker 1: calls you and of course the Hamma Kennedy School as well. 233 00:13:34,440 --> 00:13:37,400 Speaker 1: Something's out front and center. And our next guest, of course, 234 00:13:37,559 --> 00:13:40,240 Speaker 1: leading to charge. We've been thrilled at the support we've 235 00:13:40,240 --> 00:13:45,199 Speaker 1: had from viologists, epidemiologists and outright just playing doctors during 236 00:13:45,200 --> 00:13:48,920 Speaker 1: this pandemic and giving us great leadership is Amashdalgo the 237 00:13:49,000 --> 00:13:52,560 Speaker 1: Johns Hopkins at University. Dr Dolgo, I want to talk 238 00:13:52,600 --> 00:13:54,640 Speaker 1: about the mystery of the moment. It's a mystery for 239 00:13:54,760 --> 00:13:57,360 Speaker 1: Mayor Adams of New York, it is a mystery for 240 00:13:57,400 --> 00:13:59,920 Speaker 1: the President of the United States, and it's a miss 241 00:14:00,040 --> 00:14:02,640 Speaker 1: three for the woman that lives three doors down from 242 00:14:02,840 --> 00:14:05,160 Speaker 1: Lisa A. Bramo. It's trying to figure out what to 243 00:14:05,240 --> 00:14:09,920 Speaker 1: do next on COVID. What is the timeline forward of 244 00:14:10,040 --> 00:14:14,080 Speaker 1: this variant. What does the research show of what to 245 00:14:14,240 --> 00:14:17,280 Speaker 1: expect one week out, in three weeks out and the 246 00:14:17,320 --> 00:14:23,320 Speaker 1: glide pass of cases, hospitalizations, and deaths. What we've seen 247 00:14:23,360 --> 00:14:25,040 Speaker 1: from other countries and we have to see if this 248 00:14:25,120 --> 00:14:28,440 Speaker 1: is extrapolable to the US, is that the omicron variant 249 00:14:28,440 --> 00:14:32,440 Speaker 1: takes a very quick, a very quick tour through a country. 250 00:14:32,480 --> 00:14:35,480 Speaker 1: It's not something that lasts for months the way delta does. 251 00:14:35,520 --> 00:14:38,840 Speaker 1: That it comes in week intervals rather than in months. 252 00:14:38,840 --> 00:14:41,320 Speaker 1: So two to three weeks seems to be what it 253 00:14:41,320 --> 00:14:43,800 Speaker 1: takes for it to peak and then to rapidly decline, 254 00:14:44,000 --> 00:14:46,920 Speaker 1: maybe because not not because it's infecting everyone, but because 255 00:14:46,960 --> 00:14:49,760 Speaker 1: it's infecting those people who are most susceptible to get infected, 256 00:14:49,800 --> 00:14:52,120 Speaker 1: those people that are out there, and then everybody else 257 00:14:52,160 --> 00:14:55,560 Speaker 1: starts to change their behavior and then it collapses. That's 258 00:14:55,560 --> 00:14:58,200 Speaker 1: how people are predicting will happen. Maybe by maybe the 259 00:14:58,240 --> 00:15:01,520 Speaker 1: next couple of days two weeks, we should be able 260 00:15:01,560 --> 00:15:04,000 Speaker 1: to see if that pattern holds. But it is going 261 00:15:04,040 --> 00:15:06,120 Speaker 1: to cause a lot of disruption in its wake because 262 00:15:06,120 --> 00:15:08,800 Speaker 1: many people get infected, and we have to worry about 263 00:15:08,840 --> 00:15:12,320 Speaker 1: hospitalizations even if they're lower, with a macron being at 264 00:15:12,400 --> 00:15:14,760 Speaker 1: least of a magnitude big enough for some hospitals that 265 00:15:14,800 --> 00:15:17,800 Speaker 1: are already kind of act capacity to get pushed over 266 00:15:17,840 --> 00:15:23,800 Speaker 1: the edge. Speak of our understanding of its virulence. If 267 00:15:23,840 --> 00:15:27,240 Speaker 1: I do the easy mass of three hundred thousand dead 268 00:15:27,280 --> 00:15:30,320 Speaker 1: at a given rate, or I look at a normal 269 00:15:30,440 --> 00:15:34,400 Speaker 1: flu of forty or fifty thousand a year dead, speak 270 00:15:34,480 --> 00:15:38,520 Speaker 1: of the relative virulence of a macron. So it's probably 271 00:15:38,520 --> 00:15:40,920 Speaker 1: about half of what delta was in terms of its 272 00:15:40,920 --> 00:15:43,520 Speaker 1: ability to hospitalize and kill based on what we're seeing 273 00:15:43,520 --> 00:15:47,640 Speaker 1: from other countries, but it still is likely a little 274 00:15:47,640 --> 00:15:50,720 Speaker 1: bit higher than influenza. And you have to also take 275 00:15:50,720 --> 00:15:54,440 Speaker 1: into account than the transmissibility, because O macron is much 276 00:15:54,440 --> 00:15:59,040 Speaker 1: more transmissible. Even if it has a lower case fatality ratio, 277 00:15:59,080 --> 00:16:01,880 Speaker 1: if it infects more people quickly, that could still end 278 00:16:01,960 --> 00:16:04,120 Speaker 1: up being awash in the end that the same amount 279 00:16:04,160 --> 00:16:06,600 Speaker 1: of people get infected because the attack rate is so 280 00:16:06,680 --> 00:16:09,640 Speaker 1: much higher. But what we do know is that yes, 281 00:16:09,720 --> 00:16:13,040 Speaker 1: people tend to be hospitalized less, less oxygen less. I 282 00:16:13,120 --> 00:16:15,360 Speaker 1: see you use, and I think that's good, but it's 283 00:16:15,400 --> 00:16:19,560 Speaker 1: still maybe too much for the system to handle. Dr Adlga. 284 00:16:19,720 --> 00:16:24,440 Speaker 1: How long are people contagious? Most people are contagious for 285 00:16:25,080 --> 00:16:27,720 Speaker 1: maybe about five five or so days. That's the average 286 00:16:27,760 --> 00:16:30,440 Speaker 1: of the median contagiousness of time period. So there are 287 00:16:30,480 --> 00:16:32,640 Speaker 1: some people that are contagious US for less contagious for 288 00:16:32,720 --> 00:16:34,880 Speaker 1: less maybe two or three days, and some people more 289 00:16:35,000 --> 00:16:37,680 Speaker 1: maybe ten days. And that's what we were trying to 290 00:16:37,720 --> 00:16:42,040 Speaker 1: do with changing the guidelines for isolation and quarantine, realizing 291 00:16:42,040 --> 00:16:44,400 Speaker 1: that the one size fits all way of thinking about 292 00:16:44,400 --> 00:16:47,600 Speaker 1: this doesn't actually work, and you could precision guide by 293 00:16:47,640 --> 00:16:50,200 Speaker 1: using anagen tests to see when someone goes negative. But 294 00:16:50,280 --> 00:16:54,160 Speaker 1: the contagiousness is clustered in the very first part of infection. 295 00:16:54,360 --> 00:16:56,760 Speaker 1: We knew that from case control studies looking at contact 296 00:16:57,160 --> 00:17:00,600 Speaker 1: contact tracing, seeing when people got infected in was always 297 00:17:00,600 --> 00:17:05,480 Speaker 1: clustered in the first half of illness. Dr Dalgo. Let's 298 00:17:05,480 --> 00:17:08,760 Speaker 1: say we are moving into an endemic phase of the pandemic, 299 00:17:08,760 --> 00:17:12,200 Speaker 1: which you said probably happened a while back. What should 300 00:17:12,200 --> 00:17:15,040 Speaker 1: the guide be for workplaces in order to get people 301 00:17:15,119 --> 00:17:19,280 Speaker 1: back into the office and back into rotation, Which aspect, 302 00:17:19,359 --> 00:17:23,040 Speaker 1: which tests, which quarantine period should they really be looking 303 00:17:23,080 --> 00:17:26,640 Speaker 1: at for organizations, I think that they could use ANAGIN 304 00:17:26,680 --> 00:17:29,240 Speaker 1: tests because they're trying to make sure that it's not 305 00:17:29,280 --> 00:17:32,640 Speaker 1: transmission in their workplace, so that means trying to exclude 306 00:17:32,640 --> 00:17:34,600 Speaker 1: people who are contagious. So I think they could do 307 00:17:34,920 --> 00:17:38,480 Speaker 1: daily ANAGIN testing for people, and when people get infected, 308 00:17:38,840 --> 00:17:42,639 Speaker 1: stick with maybe a five day default isolation period, and 309 00:17:42,680 --> 00:17:45,440 Speaker 1: then have rapid tests to kind of precision guide when 310 00:17:45,440 --> 00:17:47,480 Speaker 1: that can come off, and then you can use masks 311 00:17:47,520 --> 00:17:50,080 Speaker 1: as you need to in that situation. But if you're 312 00:17:50,119 --> 00:17:51,760 Speaker 1: using a lot of rapid tests, if you've got a 313 00:17:51,760 --> 00:17:54,360 Speaker 1: fully vaccinated workforce, I think you're in a good position. 314 00:17:54,400 --> 00:17:57,960 Speaker 1: But what's happening is many organizations have zero tolerance for cases. 315 00:17:58,200 --> 00:18:00,920 Speaker 1: And if you have zero tolerance for cases of COVID nineteen, 316 00:18:01,040 --> 00:18:03,840 Speaker 1: there's no path into opening your office because there's always 317 00:18:03,880 --> 00:18:06,000 Speaker 1: going to be cases there. So you've got to find 318 00:18:06,000 --> 00:18:08,000 Speaker 1: a way to come over with a sustainable approach that 319 00:18:08,119 --> 00:18:10,800 Speaker 1: you're not getting outbreaks in your office, but that you 320 00:18:10,840 --> 00:18:12,960 Speaker 1: know that there's gonna be cases and you can't shut 321 00:18:12,960 --> 00:18:14,960 Speaker 1: down go to virtual every time. Just like schools and 322 00:18:15,040 --> 00:18:17,280 Speaker 1: universities have to do the very same thing, don't do. 323 00:18:17,359 --> 00:18:19,760 Speaker 1: They them just have zero tolerance for cases. They also 324 00:18:19,840 --> 00:18:23,120 Speaker 1: have requirements, right, PCR test not just a rapid test. 325 00:18:23,160 --> 00:18:25,640 Speaker 1: Can you explain to us the usefulness of that after 326 00:18:25,760 --> 00:18:29,080 Speaker 1: someone has been isolating for five days they've had a 327 00:18:29,080 --> 00:18:33,560 Speaker 1: positive case. Is a PCR test useful in the weeks afterwards? 328 00:18:34,280 --> 00:18:37,040 Speaker 1: Absolutely not. It's actually the wrong test to be using. 329 00:18:37,200 --> 00:18:40,320 Speaker 1: They should be using anagen tests because PCR positivity can 330 00:18:40,320 --> 00:18:42,920 Speaker 1: go on for maybe twelve weeks, and it doesn't correlate 331 00:18:42,960 --> 00:18:46,440 Speaker 1: with anybody's contagiousness because there may be viral debris that's 332 00:18:46,440 --> 00:18:49,200 Speaker 1: taking some time to clear, and someone who's fully recovered 333 00:18:49,400 --> 00:18:52,240 Speaker 1: not contagious, and the PCR is going to continue testing positive. 334 00:18:52,440 --> 00:18:54,720 Speaker 1: So that's an incorrect way to do it, and it's 335 00:18:54,720 --> 00:18:59,399 Speaker 1: going to artificially disrupt your office workplace much more than 336 00:18:59,440 --> 00:19:01,879 Speaker 1: if you actually use anagen tests or use time based 337 00:19:02,240 --> 00:19:04,280 Speaker 1: saying maybe ten days or just ten days with out 338 00:19:04,280 --> 00:19:06,480 Speaker 1: of the tests. That would also be better than using 339 00:19:06,520 --> 00:19:08,960 Speaker 1: PCR test. PCR tests should not be used for a 340 00:19:09,040 --> 00:19:11,959 Speaker 1: screening of asymptomatic individuals. That's not what they were designed for. 341 00:19:12,240 --> 00:19:14,280 Speaker 1: It's the wrong test that's giving you the wrong answer. 342 00:19:14,520 --> 00:19:17,119 Speaker 1: Don't thank you Sir, that's exactly what they've been used 343 00:19:17,160 --> 00:19:18,680 Speaker 1: for in some casis right now with you know, he 344 00:19:18,760 --> 00:19:25,760 Speaker 1: thought to Amada of John's help kids right now and 345 00:19:25,800 --> 00:19:28,400 Speaker 1: as well understood as we saw Ian Bremmer with Elizabeth 346 00:19:28,440 --> 00:19:32,760 Speaker 1: Economy yesterday in China that Dr Bremer like a magnet, 347 00:19:33,520 --> 00:19:38,000 Speaker 1: attracts qualified people to the Eurasia Group to generate their 348 00:19:38,080 --> 00:19:42,080 Speaker 1: top ten risks for any given year. This year's Nuanced 349 00:19:42,200 --> 00:19:47,000 Speaker 1: Brilliant list includes around We get an update from Henry Rome, 350 00:19:47,119 --> 00:19:50,760 Speaker 1: who was with Eurasia Group, Henry Rome of Cambridge. Henry 351 00:19:50,800 --> 00:19:54,360 Speaker 1: Rome of his journalism at the Jerusalem Post, gives us 352 00:19:54,440 --> 00:19:58,159 Speaker 1: the immediacy of the moment. Henry Rome, what I know 353 00:19:58,760 --> 00:20:03,240 Speaker 1: is there's worries about drones in the air flying in 354 00:20:03,320 --> 00:20:06,720 Speaker 1: I believe it's to Baghdad in danger. Give us the 355 00:20:06,800 --> 00:20:11,560 Speaker 1: immediate right now of drones in the danger of drones 356 00:20:11,680 --> 00:20:15,520 Speaker 1: from Tehran. Sure, well, good morning and great great to 357 00:20:15,560 --> 00:20:17,840 Speaker 1: be here again. I think what what we've seen over 358 00:20:17,880 --> 00:20:20,919 Speaker 1: the past day or so with the anniversary of the 359 00:20:20,920 --> 00:20:24,040 Speaker 1: assassination of customs Sulamani. Of course from a couple of 360 00:20:24,080 --> 00:20:29,200 Speaker 1: years ago, UH the Iran backed militias in in Iraq 361 00:20:29,320 --> 00:20:34,600 Speaker 1: flying these explosive drones at at bases that house US forces. Now, 362 00:20:34,640 --> 00:20:37,359 Speaker 1: I think the real kind of risk here is is 363 00:20:37,800 --> 00:20:39,800 Speaker 1: is the kind of ever present one that that you 364 00:20:39,840 --> 00:20:43,359 Speaker 1: get US forces killed or or or injured in some 365 00:20:43,440 --> 00:20:46,840 Speaker 1: of these attacks, and then pressure on the Biden administration 366 00:20:47,000 --> 00:20:50,080 Speaker 1: to retaliate, to try to show that there's a cost 367 00:20:50,160 --> 00:20:53,080 Speaker 1: for this kind of activity. Now, there's there's a lot 368 00:20:53,119 --> 00:20:56,520 Speaker 1: of ambiguity with drones like these about whether they're ordered 369 00:20:56,520 --> 00:20:59,840 Speaker 1: from Iran or whether these are the actions of the 370 00:21:00,040 --> 00:21:03,000 Speaker 1: kind of local militias. But I think the concern overall 371 00:21:03,119 --> 00:21:08,479 Speaker 1: is real. Henrit help us with our stereotypes. We are 372 00:21:08,520 --> 00:21:13,600 Speaker 1: all molded, certainly of my generation by nine nine and 373 00:21:13,760 --> 00:21:17,680 Speaker 1: permanent damage of our relationship with Iran. Give us the update. 374 00:21:18,000 --> 00:21:22,320 Speaker 1: What is the number one thing Americans get wrong about 375 00:21:22,640 --> 00:21:26,480 Speaker 1: Tehran and all of Iran? You know? I think the 376 00:21:27,160 --> 00:21:30,199 Speaker 1: number one thing is that, you know, despite that image 377 00:21:30,240 --> 00:21:33,200 Speaker 1: kind of seared in in our collective memory, the Iranian 378 00:21:33,280 --> 00:21:37,840 Speaker 1: leadership today UH is quite rational in the sense of 379 00:21:37,920 --> 00:21:42,120 Speaker 1: making cost benefit calculations when pursuing its policies. They might 380 00:21:42,160 --> 00:21:44,520 Speaker 1: not have the same kind of way of looking at 381 00:21:44,560 --> 00:21:47,080 Speaker 1: things that that we do, certainly in different ways of 382 00:21:47,119 --> 00:21:50,199 Speaker 1: assessing costs and benefits. But when you ask questions like 383 00:21:50,920 --> 00:21:54,680 Speaker 1: why and under what circumstances would they ramp up their 384 00:21:54,840 --> 00:21:59,240 Speaker 1: nuclear program? Why or under what circumstances would they seek 385 00:21:59,359 --> 00:22:02,600 Speaker 1: a nuclear weapon? What is their policy around the region? 386 00:22:02,960 --> 00:22:04,879 Speaker 1: You know, I think it's easy to get caught up 387 00:22:04,920 --> 00:22:08,480 Speaker 1: in a lot of the rhetoric, which is fiery, is explosive, 388 00:22:08,520 --> 00:22:10,639 Speaker 1: But I think when you look at the actions at 389 00:22:10,680 --> 00:22:12,919 Speaker 1: least over the past several decades here, you see a 390 00:22:12,920 --> 00:22:16,440 Speaker 1: pretty consistent through line of of of a fairly sober 391 00:22:16,480 --> 00:22:19,760 Speaker 1: weighing of costs and benefits. And I think we're seeing 392 00:22:19,800 --> 00:22:23,000 Speaker 1: that today with with the ramp up on the nuclear 393 00:22:23,040 --> 00:22:27,959 Speaker 1: program and the fairly imperiled nuclear talks andry. There's an 394 00:22:28,000 --> 00:22:31,080 Speaker 1: issue of this being a regional up problem. And then 395 00:22:31,119 --> 00:22:34,280 Speaker 1: there is the more geopolitical risk that your Asia groups 396 00:22:34,280 --> 00:22:38,320 Speaker 1: seem to identify in their latest report of risks when 397 00:22:38,359 --> 00:22:41,439 Speaker 1: you talk about it, potentially less come year for Iran, 398 00:22:41,520 --> 00:22:44,320 Speaker 1: where there can be a conflagration of some of these tensions. 399 00:22:44,359 --> 00:22:49,640 Speaker 1: What's the broader read through the geopolitics of two yeah, 400 00:22:49,680 --> 00:22:52,320 Speaker 1: so so so. I think we were a bit lulled 401 00:22:52,840 --> 00:22:55,600 Speaker 1: to a false sense of security last year given the 402 00:22:55,680 --> 00:22:58,680 Speaker 1: kind of on again, off again nuclear talks, I think 403 00:22:58,760 --> 00:23:03,159 Speaker 1: the real key to stability in in in the region 404 00:23:03,240 --> 00:23:07,360 Speaker 1: are these negotiations, and the negotiations aren't aren't going well, 405 00:23:07,400 --> 00:23:10,440 Speaker 1: and I think the kind of real pivot point here 406 00:23:10,480 --> 00:23:13,320 Speaker 1: will be likely over the next month or two when 407 00:23:13,320 --> 00:23:16,520 Speaker 1: it most likely becomes clear that a deal is is 408 00:23:16,560 --> 00:23:19,320 Speaker 1: out of reach. You have the US, you have Israel, 409 00:23:19,359 --> 00:23:21,679 Speaker 1: the Gulf States, and of course Iran, all kind of 410 00:23:21,720 --> 00:23:24,520 Speaker 1: pivoting to their respective plan bs, and those plan b 411 00:23:24,640 --> 00:23:26,800 Speaker 1: s are all different, and I think that as you 412 00:23:26,880 --> 00:23:30,919 Speaker 1: see Iran start to realize it's it's its goals of 413 00:23:31,000 --> 00:23:35,280 Speaker 1: increasing leverage against the US, the israelis increasingly concerned about 414 00:23:35,440 --> 00:23:39,080 Speaker 1: what is an unconstrained Iranian nuclear program, as well as 415 00:23:39,119 --> 00:23:42,000 Speaker 1: concerned from the US. I think all of those pressures 416 00:23:42,040 --> 00:23:45,040 Speaker 1: collide uh this year and that's why that's why it 417 00:23:45,080 --> 00:23:48,600 Speaker 1: made it onto our list. Henry, how much does this 418 00:23:48,720 --> 00:23:50,879 Speaker 1: lead to higher oil prices? I know you're not an 419 00:23:50,880 --> 00:23:54,600 Speaker 1: oil strategist, but usually that's the direct market read through 420 00:23:54,640 --> 00:23:57,480 Speaker 1: from this type of tension. Yeah, you know, I think 421 00:23:57,520 --> 00:24:00,119 Speaker 1: that's right. I mean, over over time, I think this 422 00:24:00,320 --> 00:24:04,040 Speaker 1: is a kind of factor that that that will push 423 00:24:04,040 --> 00:24:06,920 Speaker 1: oil prices higher. Of course, there's there's a whole number 424 00:24:06,920 --> 00:24:08,880 Speaker 1: of factors that that go into that, but I think 425 00:24:09,000 --> 00:24:12,040 Speaker 1: on the kind of bullish side, this is certainly one 426 00:24:12,080 --> 00:24:15,720 Speaker 1: of them, especially if you get into a scenario that 427 00:24:15,720 --> 00:24:17,760 Speaker 1: that that we talk about, that starts to look like 428 00:24:17,800 --> 00:24:21,920 Speaker 1: a conflict that I think we're going to have conversations 429 00:24:21,960 --> 00:24:24,600 Speaker 1: like this again and again about will the Israeli's attack 430 00:24:24,720 --> 00:24:27,240 Speaker 1: or won't they attack? Will there be air strikes on 431 00:24:27,359 --> 00:24:30,159 Speaker 1: Irani nuclear facilities or won't they And if that sounds 432 00:24:30,200 --> 00:24:34,760 Speaker 1: a lot like conversations, that's because it is. We're essentially 433 00:24:35,040 --> 00:24:39,320 Speaker 1: back to a position where where it appears diplomacy is 434 00:24:39,359 --> 00:24:42,119 Speaker 1: not going to succeed at this present time, and that 435 00:24:42,400 --> 00:24:45,520 Speaker 1: they're more aggressive options are being contemplated. And and anytime 436 00:24:45,560 --> 00:24:49,879 Speaker 1: you talk about military action in the Gulf region, I 437 00:24:49,920 --> 00:24:52,840 Speaker 1: think that that immediately has a pass through two concerns 438 00:24:52,920 --> 00:24:56,199 Speaker 1: about the stability of supply. Henry Rhyme, Henry, thank you 439 00:24:56,320 --> 00:24:57,960 Speaker 1: if you write your group, thank you very much and 440 00:24:58,000 --> 00:25:00,080 Speaker 1: thank you to you right a gree putting imprema over 441 00:25:00,119 --> 00:25:02,240 Speaker 1: the last twenty four hours working through those talp risks 442 00:25:02,280 --> 00:25:12,000 Speaker 1: again this time, it has been extraordinary what we've seen 443 00:25:12,480 --> 00:25:16,640 Speaker 1: in terms of action and particularly in electronic vehicles. Electric vehicles, 444 00:25:16,680 --> 00:25:21,000 Speaker 1: I should say in response a competitive response to Tesla 445 00:25:21,200 --> 00:25:23,680 Speaker 1: joining us now from dearborn, and that can only mean 446 00:25:23,720 --> 00:25:27,920 Speaker 1: the Ford Motor Company Kamagalatro joins us right now. Thank 447 00:25:27,960 --> 00:25:30,640 Speaker 1: you so much, sir for joining us with your leadership 448 00:25:31,080 --> 00:25:36,000 Speaker 1: at Ford Motor on electric vehicles. I am thunderstruck by 449 00:25:36,000 --> 00:25:40,000 Speaker 1: the response to the manly F one fifty pickup truck. 450 00:25:40,520 --> 00:25:44,240 Speaker 1: It does appear at two hundred thousand units. People want 451 00:25:44,240 --> 00:25:48,439 Speaker 1: to buy an electric F one fifty. Tell us how 452 00:25:48,440 --> 00:25:54,119 Speaker 1: important price is to that decision? At thirty nine thousand plus? 453 00:25:54,320 --> 00:25:57,480 Speaker 1: Has that been the trick to get that preorder? You've got? 454 00:26:01,400 --> 00:26:05,359 Speaker 1: Good morning and thanks for having me. Um prices one factor, 455 00:26:05,520 --> 00:26:08,840 Speaker 1: I would say, But I think it's the compelling nature 456 00:26:08,920 --> 00:26:13,400 Speaker 1: of the product. Uh that's really important here. Uh this 457 00:26:13,480 --> 00:26:17,720 Speaker 1: product has when we were doing research with our customers, UH, 458 00:26:17,840 --> 00:26:20,840 Speaker 1: they love the acceleration of it, they love the torque 459 00:26:20,840 --> 00:26:25,200 Speaker 1: it brings in. They love the payload of two thousand pounds. Uh, 460 00:26:25,320 --> 00:26:28,520 Speaker 1: it's it's great driving truck. It's credibly fast. You know, 461 00:26:28,520 --> 00:26:33,160 Speaker 1: truck owners love torque, and torque is what this electric 462 00:26:33,240 --> 00:26:36,440 Speaker 1: vehicle brings. It's more than seventy seven hundred seventy feet 463 00:26:36,440 --> 00:26:40,600 Speaker 1: pound of torque. All of that capability, it's for built 464 00:26:40,640 --> 00:26:43,160 Speaker 1: for tough. UH. You know, it's one of the vehicles 465 00:26:43,160 --> 00:26:46,399 Speaker 1: that's been in a leading high selling vehicle for US, 466 00:26:46,520 --> 00:26:48,520 Speaker 1: you know, more than more than forty five years in 467 00:26:48,560 --> 00:26:52,239 Speaker 1: a row, UH, leading its segment. So combine all that 468 00:26:52,280 --> 00:26:56,240 Speaker 1: into a very compelling product proposition with a starting price 469 00:26:56,280 --> 00:27:00,520 Speaker 1: of under forty thousand, nine hundred seventy four is what's 470 00:27:00,560 --> 00:27:03,879 Speaker 1: made this uh such a compelling proposition for our customers. 471 00:27:04,359 --> 00:27:07,720 Speaker 1: I am I'm so glad, Kumar you brought up the 472 00:27:07,760 --> 00:27:10,920 Speaker 1: physics of this. The first time I felt the modern 473 00:27:11,080 --> 00:27:15,280 Speaker 1: torque of electric vehicles was an electric cab Chinese made 474 00:27:15,320 --> 00:27:18,119 Speaker 1: I believe in London and I the pull down the 475 00:27:18,200 --> 00:27:24,440 Speaker 1: road was absolutely extraordinary. Explained the new torque. The physics 476 00:27:24,480 --> 00:27:29,160 Speaker 1: of a new torque versus our stereotype view of a tesla. 477 00:27:32,440 --> 00:27:35,600 Speaker 1: So the torque, uh, you know, especially for truck buyers, 478 00:27:35,680 --> 00:27:38,320 Speaker 1: is incredibly important. And if you start with an internal 479 00:27:38,359 --> 00:27:41,240 Speaker 1: combustion engine, we're all used to what's what's the traditional 480 00:27:41,280 --> 00:27:44,119 Speaker 1: torque curve? As you start pushing on the gas pedal, 481 00:27:44,520 --> 00:27:47,359 Speaker 1: the torque starts building up and eventually piques at some 482 00:27:47,440 --> 00:27:51,560 Speaker 1: point and then sort of stabilizes at that point. In 483 00:27:52,080 --> 00:27:54,720 Speaker 1: electric vehicles, there are two key things that are different. 484 00:27:54,760 --> 00:27:58,199 Speaker 1: The torque is instantaneous the moment, so that build up 485 00:27:58,240 --> 00:28:01,280 Speaker 1: that's in the elect in the s vehicles is not there. 486 00:28:01,600 --> 00:28:06,560 Speaker 1: It's almost instantaneously. You push on the the pedal, accelerator, 487 00:28:06,600 --> 00:28:10,560 Speaker 1: pedal and it's instantaneously there. The second is the amount 488 00:28:10,680 --> 00:28:14,080 Speaker 1: of torque that's available is incredible. Uh. For for this 489 00:28:14,119 --> 00:28:17,800 Speaker 1: weekle it's going to be over seven pound feet, which 490 00:28:17,880 --> 00:28:20,920 Speaker 1: is just just an incredible number. And that's really important 491 00:28:21,000 --> 00:28:24,600 Speaker 1: for our customers for not only for driving dynamics as 492 00:28:24,600 --> 00:28:30,199 Speaker 1: well as for towing. UH. And go ahead, Well, no, Kumar, 493 00:28:30,440 --> 00:28:32,800 Speaker 1: is is the issue here selling it to consumers or 494 00:28:32,880 --> 00:28:36,280 Speaker 1: is it actually producing enough to sell to consumers? Because 495 00:28:36,320 --> 00:28:38,600 Speaker 1: that's been the real hang up when it's come to 496 00:28:38,640 --> 00:28:45,680 Speaker 1: auto sales over the past twenty four months. Yeah. You know, 497 00:28:45,760 --> 00:28:49,840 Speaker 1: between the COVID crisis the chip crisis, UH, the entire 498 00:28:49,880 --> 00:28:53,440 Speaker 1: industry has struggled to produce that at the levels that 499 00:28:53,480 --> 00:28:57,640 Speaker 1: we were producing U. So you take that crisis, those 500 00:28:57,640 --> 00:29:01,560 Speaker 1: two twin crisis and then as we're transforming the company 501 00:29:01,600 --> 00:29:05,719 Speaker 1: to go from internal combustion engines to battery electric vehicles. Uh. 502 00:29:06,240 --> 00:29:09,720 Speaker 1: Changing the demand has been a real trick. We thought 503 00:29:10,240 --> 00:29:13,080 Speaker 1: we were setting up our factories appropriately for the demand, 504 00:29:13,160 --> 00:29:16,000 Speaker 1: but as soon as we revealed the vehicle, we had 505 00:29:16,040 --> 00:29:19,480 Speaker 1: to nearly double the capacity to eighty And that's why 506 00:29:19,520 --> 00:29:23,160 Speaker 1: today's announcement is so important, because even after we increased 507 00:29:23,200 --> 00:29:27,040 Speaker 1: capacity for this vehicle to eighty thousand Lightnings, that the 508 00:29:27,280 --> 00:29:31,320 Speaker 1: reservations continue to come in at record pace. And today 509 00:29:31,320 --> 00:29:34,040 Speaker 1: that's why we're announcing that we're going to now increase 510 00:29:34,080 --> 00:29:39,560 Speaker 1: capacity in this plant, Lightnings, and that involves then you know, 511 00:29:39,680 --> 00:29:45,880 Speaker 1: all the entire supply chain, the batteries that motors, the controllers. So, 512 00:29:46,000 --> 00:29:49,040 Speaker 1: given the fact that you have increased production, that you 513 00:29:49,120 --> 00:29:52,640 Speaker 1: have seen such robust demand, and that the potential of 514 00:29:52,960 --> 00:29:55,880 Speaker 1: additional stimulus from the federal government in a broader base 515 00:29:56,120 --> 00:29:59,960 Speaker 1: of electric vehicle manufacturers, do you think the electric vehicle 516 00:30:00,200 --> 00:30:03,280 Speaker 1: could reach ten of the American market by the end 517 00:30:03,320 --> 00:30:10,160 Speaker 1: of this year. That's that's difficult to say, like you said, 518 00:30:10,720 --> 00:30:14,640 Speaker 1: because it will be both not only demand based on 519 00:30:14,760 --> 00:30:17,720 Speaker 1: the demand are we are seeing for our vehicles and 520 00:30:17,720 --> 00:30:20,520 Speaker 1: and the rest of the industry is seeing. It feels 521 00:30:20,520 --> 00:30:23,600 Speaker 1: like the demand is certainly there, but the question will 522 00:30:23,640 --> 00:30:26,440 Speaker 1: be how quickly can we all of us execute to 523 00:30:26,600 --> 00:30:30,280 Speaker 1: build capacity to meet that demand. And that's what we 524 00:30:30,400 --> 00:30:33,360 Speaker 1: are very busy doing. By the next twenty four months, 525 00:30:33,720 --> 00:30:38,320 Speaker 1: we expect to get to about six hundred thousand battery 526 00:30:38,320 --> 00:30:43,400 Speaker 1: electric units globally, and that's before our bigger investments that 527 00:30:43,440 --> 00:30:47,400 Speaker 1: we're making in Kentucky and Tennessee. Votes for barried batteries 528 00:30:47,440 --> 00:30:50,040 Speaker 1: as well as assembly come online, because they don't come 529 00:30:50,040 --> 00:30:54,840 Speaker 1: on line until about Kamar, thank you so much. I've 530 00:30:54,840 --> 00:30:58,360 Speaker 1: got about fourteen more questions, including charging stations, but we'll 531 00:30:58,400 --> 00:31:01,360 Speaker 1: do that another time. And and Comar, I just gotta 532 00:31:01,440 --> 00:31:05,040 Speaker 1: tell you, Lisa Bramowitz looks good on the streets of 533 00:31:05,120 --> 00:31:08,360 Speaker 1: Manhattan in a Ford F one fifty pickup truck. I 534 00:31:08,440 --> 00:31:11,560 Speaker 1: just think that's that's a natural there as well. Camar 535 00:31:11,600 --> 00:31:14,480 Speaker 1: Galatra with us of course running the shop for Ford 536 00:31:14,520 --> 00:31:18,840 Speaker 1: Motor Company Dearborn, Michigan as well. This is the Bloomberg 537 00:31:18,840 --> 00:31:23,200 Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from 538 00:31:23,240 --> 00:31:26,600 Speaker 1: seven to ten am Eastern on Bloomberg Radio and on 539 00:31:26,680 --> 00:31:31,000 Speaker 1: Bloomberg Television each day from six to nine am for 540 00:31:31,240 --> 00:31:36,160 Speaker 1: insight from the best in economics, finance, investment, and international relations. 541 00:31:36,640 --> 00:31:41,320 Speaker 1: And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, 542 00:31:41,440 --> 00:31:45,040 Speaker 1: Bloomberg dot com, and of course, on the terminal. I'm 543 00:31:45,080 --> 00:31:47,760 Speaker 1: Tom Keene, and this is Bloomberg.