Speaker 1: This is Bloomberg Business Week. I'm Carol Masser. Every day
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Speaker 1: Global News. You are listening to Bloomberg Business Week. I'm
Speaker 1: Carol Master along with Tim Stanovic a Bloomberg quicktake, and
Speaker 1: we got to talk about the virus. You and I
Speaker 1: just kind of rehash some of the headlines, but one
Speaker 1: of the big ones is the Maderna news. Today. It
Speaker 1: seems like every Monday we're getting some big vaccine news,
Speaker 1: doesn't It does seem like every mondy. It's like everybody
Speaker 1: working over the weekend, like we gotta get it out.
Speaker 1: It's like a deal right now, like we gotta get
Speaker 1: it out. Let's get into it, because we do still
Speaker 1: continue to see cases soaring globally we see a pullback,
Speaker 1: shutdown of economies. Let's bring in someone who has been
Speaker 1: a friend of our show, Dr Sandra Galia. He's Dina
Speaker 1: Professor at Boston University School of Public Health. His author
Speaker 1: pained uncomfortable conversations about the public's health, and he joins
Speaker 1: us once again on the phone from Boston toctical A
Speaker 1: great to have you here with Tim and myself. How
Speaker 1: are you I am? I am very well all things considered, Carol.
Speaker 1: Thank you for having me and thank you for having
Speaker 1: me on your show. We'll tell me how Boston is.
Speaker 1: I mean, I think you know, we're all like, wait,
Speaker 1: we've seen this movie before. Here we go again. I
Speaker 1: think it's fair to say Boston is a bit on
Speaker 1: the edge of its seat that we have had, like
Speaker 1: the rest of the country, another wave for Boston's probably
Speaker 1: the second wave. It's been a very attenuated compared to
Speaker 1: the first way which we had in March, April and May,
Speaker 1: and it has stayed relatively lower than it was then.
Speaker 1: And but I think everybody is anxious, everybody is nervous,
Speaker 1: and I think the mayor and the Governor have been
Speaker 1: suitably cautious taking steps to try to contain the epidemic.
Speaker 1: As of right now, touch Wood, I think things remain
Speaker 1: relatively contained here, but I think everybody, like myself is
Speaker 1: sort of holding their breath and waiting for tomorrow and
Speaker 1: the day after tomorrow. Yeah, and toctically. I wondered too,
Speaker 1: what you were thinking. What was going through your head
Speaker 1: when you saw those images of people in the airport
Speaker 1: last week. We had more people check into T s
Speaker 1: A last week than at any point since March before
Speaker 1: the pandemic hit, traveling despite what they heard from public
Speaker 1: health officials. What were you thinking? Terrifying? I'm going to
Speaker 1: tell you that's what I was thinking. What were you thinking? Well,
Speaker 1: it's you know, it really really depends. It depends on
Speaker 1: what people were doing. The we we know that air
Speaker 1: travel in and of itself is relatively safe. In fact,
Speaker 1: the number of cases spread through our travel are very few.
Speaker 1: There really are at the level of case studies. It
Speaker 1: really depends on where people were going, and the concern
Speaker 1: was I think the concern was that they were going
Speaker 1: to travel to spend time with their family during the holidays,
Speaker 1: which we were told not to do. Well, that's well,
Speaker 1: that's the issue. The issue is the issue is our
Speaker 1: people spending a lot of time in large groups without
Speaker 1: taking precautions about wearing masks, being indoors. And that's what
Speaker 1: we know is fueling spread. Was feeling spread is large
Speaker 1: gatherings indoors. The travel in and of itself is is
Speaker 1: perhaps an indicator of the But I would like to
Speaker 1: give people benefit of the doubt that that everybody was
Speaker 1: being careful and being suitably responsible. Of course, time will tell.
Speaker 1: We shall see whether there are suitable where there are
Speaker 1: spikes that follow the Thanksgiving weekends. Well, so I wonder,
Speaker 1: you know, sounder, do you anticipate that you know, I
Speaker 1: don't know. Is it a week from now ten days
Speaker 1: where we'll get an idea if we see that Thanksgiving bump,
Speaker 1: we shall, yeah, we should. We should know that if
Speaker 1: there is thingsgiving bump, we should know in about the
Speaker 1: week to ten days. You know, we have to be
Speaker 1: very careful about interpreting these data. For example, there's been
Speaker 1: a lot of written the American media about the Canadian
Speaker 1: things giving bump, but if you look at the Canada,
Speaker 1: but if you look at the Candian data, that's not accurate.
Speaker 1: In fact, the Canadian data where there was a steep
Speaker 1: acceleration before things giving. Things giving happened and acceleration continued,
Speaker 1: so there really was no clear evidence of a Thanksgiving
Speaker 1: bump in Canada. So I I think we need to
Speaker 1: be I think we need to be very clear in
Speaker 1: our public health messaging that that we spread the virus
Speaker 1: by being indoors and untemplated areas with a lot of
Speaker 1: people coming from all over the place, hanging out together
Speaker 1: like radio station. Long as we have well I'm not
Speaker 1: I'm asking how many how many of you there are there? Well,
Speaker 1: we are socially distanced and they're very clean us. There
Speaker 1: you go. But if people if people are careful for that,
Speaker 1: if people are careful for that, I think we we
Speaker 1: should be able to get through this without seeing unnecessary increases.
Speaker 1: I do think there is a danger. There's a danger
Speaker 1: to telling people that they should not do things that
Speaker 1: are fundamentally natural, that are that are essential for people
Speaker 1: to go on with a semblance of daily life. So
Speaker 1: I think the message has to be nuanced, and we
Speaker 1: have been failing at providing a nuanced message in this country. Well,
Speaker 1: you know, it's interesting. I feel like that there's been
Speaker 1: a lot of momentum and tim I don't know if
Speaker 1: you're hearing this too bad about education, that we've maybe
Speaker 1: made some mistakes that the you know, education, I don't
Speaker 1: know how you see it. I think we've made I
Speaker 1: think we've made bigness education. And then there have been
Speaker 1: and there have been, and we've discussed this on your show, Carol.
Speaker 1: I've said constantly that that the schools should be open,
Speaker 1: that the evidence that children transmit coronavirus is very low.
Speaker 1: Children do not really get sick from coronavirus. And there
Speaker 1: have been new analysis coming out now, for example, that
Speaker 1: the number of years of lives that will life, what
Speaker 1: that will be lost eventually due to the lower educational
Speaker 1: attainment of of children now probably dwarfs the number of
Speaker 1: years of lives lost due to coronavirus. And and these
Speaker 1: are kind of analysis that we can do. So so
Speaker 1: we have Look, when COVID hit, coronavirus hit in March
Speaker 1: of twenty we were all an enormous panic, and we
Speaker 1: did everything that we could think of, essentially shut down
Speaker 1: the world to protect ourselves. And that was reasonable. That
Speaker 1: was a crisis. But it's now December. We're no longer
Speaker 1: in a crisis. We need to be approaching this judiciously,
Speaker 1: carefully and thoughtfully, and say, we know how this disease
Speaker 1: is spread, how do we minimize the ways the disease spread?
Speaker 1: And how do we reopen parts of society that we
Speaker 1: can reopen safely? Well? Does seem like public health officials
Speaker 1: and government leaders are starting to change the way they're
Speaker 1: thinking as we do get more information. We saw build
Speaker 1: a Bladio over the weekend say wait a second, we
Speaker 1: can reopen schools. I mean, how did you read into that, doctor?
Speaker 1: I I thought it was exactly what you have said him,
Speaker 1: that that we are beginning to get. Why is there
Speaker 1: and smart about this build a Blasio ahead? Of course,
Speaker 1: the three percent Kese positivity line red line that he
Speaker 1: had drawn because of negotiations with the unions as our understanding, Well,
Speaker 1: hard to know where three percent comes from? Whose five percent?
Speaker 1: There's no magic number, of course, and it was it
Speaker 1: was a line of convenience. And I think what he
Speaker 1: came to is evidence is so overwhelming that children are
Speaker 1: missing out by not going to school, particularly poor and
Speaker 1: disadvantaged children, that there really should be the burden, the
Speaker 1: overwhelming burden of proof should be on something extraordinary that
Speaker 1: makes us close schools, not closing schools by default, and
Speaker 1: I think he's right. I think he's right in changing
Speaker 1: his mind, and I think we collectively This is why
Speaker 1: I pushed back about the Thanksgiving I think we have
Speaker 1: to be careful about saying, well, what what is the
Speaker 1: high risk activity? Flying is not really high risk activity.
Speaker 1: The high risk activity is gathering indoors unmasked without being careful.
Speaker 1: He had to gather in it, and that's what we
Speaker 1: should minimize. It is Bloomberg Business Week Master Tim Stanivic
Speaker 1: Bloomberg Cricktakes. So we are talking with Garna. Yeah, I
Speaker 1: mean you heard Charlie just now saying as a Maderna
Speaker 1: hired by sevent on this, Yeah, investor is pretty enthusiastic
Speaker 1: about it. Um, So Dr Galaa. So here we are
Speaker 1: Maderna a second press release. Someone said to me, are
Speaker 1: listening to an interview earlier, second press release in two weeks,
Speaker 1: but they've still not released some really key data point. Um,
Speaker 1: tell me how you read the Maderna Maderna news. Well,
Speaker 1: I think there's no there's no way of reading it.
Speaker 1: But there's very good news and of course we still
Speaker 1: need to know some of the fine print. But MODERNA
Speaker 1: and fires, they're both use similar approaches to come up
Speaker 1: with very similar answers in terms of effectiveness. This is
Speaker 1: a really dramatically good news. Who uses and marone technology
Speaker 1: which didn't exist for a vaccine as recently as a
Speaker 1: year ago. So I do think that it makes COVID
Speaker 1: a triumph of biomedical science. Of course, it leaves COVID
Speaker 1: a utter failure of a lot of other forms of science,
Speaker 1: social sciences, and a lot of ways in which we've
Speaker 1: controlled it, but that's another discussion. But from a vaccine
Speaker 1: point of view, the fact that we are this close
Speaker 1: to having a vaccine that can be why distributed is
Speaker 1: remarkable in such a short period of time, and I
Speaker 1: do think it creates an opportunity for there to be
Speaker 1: rapid vaccine development and future. So this is very good. Now,
Speaker 1: there are details that still need to come out. Obviously
Speaker 1: there needs to be FDA approval, but there is no
Speaker 1: indication that the FDA process has been corrupted by political interference.
Speaker 1: All indications to my mind are that this will be
Speaker 1: a rigorous, fair, robust process, one that we can all trust. Well,
Speaker 1: it does seem like the vaccine development process here has
Speaker 1: just been nothing short of incredible from many different companies.
Speaker 1: But I wonder about the actual distribution and delivery of
Speaker 1: the vaccine. We saw a lot of stories, including in
Speaker 1: Bloomberg over the weekend, about what airlines are doing around
Speaker 1: the world to to try to be ready for those vaccines,
Speaker 1: to bring them to far flung parts of the world.
Speaker 1: When do we get this vaccine? As a question that
Speaker 1: keeps coming up, when does that happen? Dr well, when
Speaker 1: when when you heard the chair of Operation Works being speaking,
Speaker 1: I think was today or yesterday, he said that the
Speaker 1: first he anticipates the first people to getacinated December nine, tortent.
Speaker 1: That is essentially a week and a half, And that
Speaker 1: doesn't seem unreasonable. Now that that, of course is quite
Speaker 1: different than tim than when you and Caroline be getting it.
Speaker 1: But I think it's reasonable to say that, assuming that
Speaker 1: there are no unanticipated hurdles, that there will be widespread
Speaker 1: vaccination by Q two of so that means in spring one.
Speaker 1: Now the question is when do we get to a
Speaker 1: functional normal, And the functional normal means enough of our
Speaker 1: are vaccinated to get to her immunity, and her immunity
Speaker 1: probably means about us, and that we're looking at maybe
Speaker 1: the summer, maybe summer. What about when it comes to
Speaker 1: two kids, Because one issue that these trials have is
Speaker 1: is who is in the trials and who's not in
Speaker 1: these clinical trials, right, like not pregnant women, uh and
Speaker 1: and not kids? So so when do kids? What does
Speaker 1: the vaccine development process like in distribution process? When when
Speaker 1: kids start getting new vaccines? And and these are some
Speaker 1: of the questions that the FDA will will have to
Speaker 1: be addressing, and we will see, We'll see what emerges
Speaker 1: from that. I I don't all the details of the
Speaker 1: data are collected. My anticipation is that there will be
Speaker 1: guidance on that and that there will be groups like
Speaker 1: pregnant women for example, But the FDA will have to
Speaker 1: look at the side effect profile and make a determination
Speaker 1: about about for whom is the vaccine? Is the vaccine
Speaker 1: is safe tactically. I'm amazed at the amount of people
Speaker 1: who are smart, educated to come up to me and
Speaker 1: like will you take the vaccine? Like there's a lot
Speaker 1: of nervousness. I was having conversations this morning like right,
Speaker 1: not the typical anti vax or crowd. How these questions? Right?
Speaker 1: So are you worried about that, Yeah, it's worried. It
Speaker 1: worries me. I suppose my hope, Carol, is that is
Speaker 1: that once the vaccine is no longer sort of this
Speaker 1: this mythical, mythical object clouds, once it becomes concrete, once
Speaker 1: once we start seeing people taking once you start seeing
Speaker 1: the once you see the president elect or president take it,
Speaker 1: then it will remove a lot of that fear, a
Speaker 1: lot of the stigma. Now, will there be some segment
Speaker 1: of the population that will not take it yet, But remember,
Speaker 1: we don't need everybody to take it. We really need
Speaker 1: their immunity. Maybe people be nicer of its higher so
Speaker 1: we do not need everybody speak. So I'm on the
Speaker 1: National Endowment for the Arts and Health, and I should
Speaker 1: stay National Endowment for the Humanities. And because I googled
Speaker 1: Elvis Presley polio shot, remember that iconic shot of getting
Speaker 1: a polio vaccine. I imagine right now we're gonna have
Speaker 1: like Instagram influencers who are actually getting the vaccine. And
Speaker 1: I think that would actually go a long way. And
Speaker 1: I think we need public health officials thinking about how
Speaker 1: we can get this message out to the grand general public,
Speaker 1: right and getting communities go ahead. I agree, I agree completely.
Speaker 1: I actually think that's exactly what will happen when you
Speaker 1: look at when you look at social change of public
Speaker 1: health interventions and upstake of interventions. That's what happens. You
Speaker 1: have whatever the social media of the time is, you
Speaker 1: have influence, serious, you have politicians, have celebrities, have campaigns,
Speaker 1: and all of those will make a big difference. Right.
Speaker 1: We've heard that about like politicians going out, like local
Speaker 1: politicians going out to communities. You know, when people trust
Speaker 1: different individuals. Sandra, always always wonderful to check in with you.
Speaker 1: Stay safe, uh, and we'll be in touch soon. Dr
Speaker 1: Sandracla Dina, Professor at Boston University School of Public Health.
Speaker 1: Check out his book Pained Uncomfortable Conversations about the Public South.
Speaker 1: That's a really keepful point. I think there's going to
Speaker 1: be huge influencers like showing I got the vaccine. There
Speaker 1: needs to be, and there there also needs to be
Speaker 1: politicians and members of Congress doing this too because there's
Speaker 1: so much skepticism. Yeah, I agree with you. This is
Speaker 1: Bloomberg Business Week with Carol Messer from Bloomberg Radio. You're
Speaker 1: listening to Bloomberg Business Week. Karl Masser along with Tim
Speaker 1: Stanovic Bloomberg Quicktake, and so, Tim, it sounded like a
Speaker 1: good idea, maybe even a great idea back in the
Speaker 1: spring when the FED kind of came out with this
Speaker 1: bowl plan they were going to save midsized firms that
Speaker 1: we're getting kind of lost in the cracks caused by COVID.
Speaker 1: Great idea, but as it turned out, not a great reality. Right. Yes,
Speaker 1: so says Christopher Condon on our colleagues at Bloomberg business Week,
Speaker 1: who have a new article out called the fed effort
Speaker 1: to save midsized firms isn't working and here's why. Chris
Speaker 1: Condon is Federal Reserve and US Economy reporter. He joins
Speaker 1: a sell the phone in Virginia along with Bloomberg business
Speaker 1: Week editor Jie Webber on the Access line in Brooklyn. Joel,
Speaker 1: great idea, but not so when you take a look
Speaker 1: at how it played out. Well, I gotta just start with,
Speaker 1: you know, like, of all the of the of all
Speaker 1: the people and organizations who have been heroes this year,
Speaker 1: I think the FED goes right near to the top.
Speaker 1: So that's really important to start with. Let's preface with that.
Speaker 1: But do you think Jake Pale is listening is that
Speaker 1: what's going on here? I mean, he's always listening, whether
Speaker 1: or not he wants to acknowledge us as a different matter,
Speaker 1: But um, you know the I think the thing that
Speaker 1: Chris really hit on here is that, you know, they
Speaker 1: did an enormous amount of good, but there's also sort
Speaker 1: of a size of company that the FED has effectively
Speaker 1: not been able to help as much, and that's the
Speaker 1: midsize company. Um So, Chris, what what did you guys
Speaker 1: discover as you dug into this line of reporting? Right, Joel,
Speaker 1: You're right, this was kind of the bridge too far
Speaker 1: for a central bank during a crisis. Um. I think
Speaker 1: what it really comes down to is it gets very
Speaker 1: difficult when you ask a central bank to extend emergency
Speaker 1: credit outside of capital markets. Capital mar gets have their
Speaker 1: own established structures and commoditized instruments that the FED can
Speaker 1: simply step into and act like a safety net, and
Speaker 1: they reassure all of the normal participants to get going
Speaker 1: again and do what they normally do. But if you're working,
Speaker 1: if you're trying to extend credit outside capital markets, you
Speaker 1: have to do it one by one. So the FED
Speaker 1: in this case does not obviously have the personnel or
Speaker 1: systems to do one by one loan underwriting, so they
Speaker 1: had to turn to banks, and to make the bank
Speaker 1: underwriting reliable, they had to make sure the banks had
Speaker 1: skin in every loan. And if you make the banks
Speaker 1: have skin and every loan, that means they have risk
Speaker 1: and they want a certain reward. And now you're getting
Speaker 1: into a situation of tension between how much reward does
Speaker 1: the lender get and how attractive is it also to
Speaker 1: the bar work. And despite all their efforts, the FED
Speaker 1: really just could never find a formula for this program
Speaker 1: that would make the lending attractive both for the banks
Speaker 1: that were trying to cover some risk. And don't forget this,
Speaker 1: this this program had a big backstop provided by the treashury,
Speaker 1: but that back stop was there only for the FED,
Speaker 1: not for the banks. And the people would say, well,
Speaker 1: the FED was buying out of the loans, but in
Speaker 1: doing so, they didn't really change the risk to reward
Speaker 1: calculus on each dollar of loans from the bank. And
Speaker 1: only I'd like to say it would take a twenty
Speaker 1: million dollar crappy loan and turn it into a one
Speaker 1: million dollar crappy loans. Banks didn't want to happen so
Speaker 1: they never really were able to thread the needle and
Speaker 1: get all the parties into something that felt attractive. So
Speaker 1: so what ends up happening to these small and medium
Speaker 1: medium sized businesses that needed this money, Well, many of
Speaker 1: them have just either limped on UM so I'm sure
Speaker 1: have gone out of business, many have laid off people.
Speaker 1: There's just a lot of economic suffering that is happening here,
Speaker 1: a lot of UH and just what the Fed is
Speaker 1: trying to avoid, the long term scarring of the economy,
Speaker 1: of the labor market, UM and the Unfortunately, you know
Speaker 1: this is a lot of people will say this was
Speaker 1: avoidable if folks had realized right at the beginning that
Speaker 1: what this layer of the economy needed was was not lending,
Speaker 1: because let's face it, were you're talking about companies that
Speaker 1: could not get access to regular bank loans. There they
Speaker 1: were struggling too much. But they did not need was
Speaker 1: more debt. What they needed was transfers from the government
Speaker 1: to help them bridge a stressful period. So if you
Speaker 1: you can't convince Congress to appropriate tax marrier money helped
Speaker 1: bridge these companies through the way they did for small
Speaker 1: companies with the paycheck Protection program, then your it looks.
Speaker 1: This shows that you're not going to get very far,
Speaker 1: uh if you try to rope in the Federal Reserve,
Speaker 1: which of course cannot give away money, it can only
Speaker 1: lend money. Right, So let's Chris, let's let's go into
Speaker 1: kind of fantasy mode here, um and and talk about
Speaker 1: you know, there's some changes that are going to happen
Speaker 1: at Treasury. Um. There's been conversations already about, you know,
Speaker 1: the Treasury's claw back of that FED money, How could
Speaker 1: how could the Fed effectively sort of attempt to address
Speaker 1: this midsize company as we look ahead to well, there
Speaker 1: are a couple of different avenues that have been suggested
Speaker 1: if it still involves the Fed. Eric Rose and Grant,
Speaker 1: who is president of the Boston Fed, which is the
Speaker 1: portion of the FED that administered this program, that suggested
Speaker 1: that that Congress needs to be very explicit in telling
Speaker 1: both the Treasury and Fed that it can lose money
Speaker 1: with this program, that they need to take more risk.
Speaker 1: Not the banks involved, but they need to take more risk,
Speaker 1: and they're that Congress would be willing to back them
Speaker 1: up and cover them. But that's you know, again, we're
Speaker 1: talking about a fiscal policy decision from elected officials is
Speaker 1: required others. We also talked to barad Rama Morty, who
Speaker 1: was a democratically appointed member of the commission that Congress
Speaker 1: created to oversee cares expending, and he really thinks that
Speaker 1: they should just throw in the towel on the Main
Speaker 1: Street program and Congress should come together and appropriate a
Speaker 1: certain amount of money into a grant program, a grant
Speaker 1: making program. Maybe it would be a guaranteed loan program,
Speaker 1: which some of it would would morph into grants. Um.
Speaker 1: But something that's that's more congressional transfers directly to companies
Speaker 1: that are struggling through this what's obviously going to be
Speaker 1: a continued tough period until the vaccines are available. So
Speaker 1: in many ways it circles back over and over the Congress,
Speaker 1: and then they shouldn't be dazzled by the idea of
Speaker 1: levering up money with the Fed. They should realize that
Speaker 1: what is much more effective, perhaps a smaller amount transferred
Speaker 1: directly to companies. Um. Yeah, direct cast always is kind
Speaker 1: of a good thing. We're hearing that a lot. Now.
Speaker 1: I'm up for it. Um, Chris, We're gonna leave it there.
Speaker 1: It's a great read, and it's just a reminder. I mean,
Speaker 1: we didn't have the playbook, but you really do wonder
Speaker 1: about um. We know, small business important to the economy,
Speaker 1: mid sized businesses important probably to the economy as well, right,
Speaker 1: absolutely important, and they just don't have the same tools
Speaker 1: that the large, huge companies we talked about each day have,
Speaker 1: right exactly, And I've really been forgotten in this. And
Speaker 1: you do wonder the next round of stimulus, whether it
Speaker 1: or aid helps them out. All Right, We're gonna leave
Speaker 1: it there, Chris, and thank you so much of Bloomberg
Speaker 1: News along with Till Webber, editor of Bloomberg Business Week.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer on
Speaker 1: Bloomberg Radios, indeed, Bloomberg Business Week on this Monday, Carol
Speaker 1: Master along with Tim Stanovic of Bloomberg Quicktake here in
Speaker 1: our Bloomberg Interactive Broker Studio. So, Tim, we recently heard
Speaker 1: about a new position in the upcoming Biden administration. It
Speaker 1: is the first climate star in the US. We're talking
Speaker 1: about President Electo Biden naming John Kerry. This is a
Speaker 1: big deal. It's a big deal, and it's a big
Speaker 1: name for the position, exactly, and it brings to him.
Speaker 1: I mean he several positions Secretary of State, UH, senator,
Speaker 1: almost president UM. So there's a lot in terms of
Speaker 1: his own experience that he brings to this position. Well,
Speaker 1: it's totally a global issue, so it makes sense to
Speaker 1: have a resume like his, totally along with somebody who
Speaker 1: takes the job, which is exactly what our Bloomberg New
Speaker 1: Economy editorial director Andy Brown writes about in his column
Speaker 1: this week, and he joins us on the phone in
Speaker 1: New York City. Andy, nice to have you here with
Speaker 1: Tim and myself. Tell us about your thinking about John
Speaker 1: Kerry and in what kind of message this is sending,
Speaker 1: perhaps to China as well. Yes, so everybody has focused
Speaker 1: on the idea that you know that climate has been
Speaker 1: elevated to a national security issue, given the fact that
Speaker 1: John Kerry is going to sit in the National Security
Speaker 1: Council as climates are UM. But there's also another really
Speaker 1: important message that it sends, and it's a message to
Speaker 1: China UM. John Terry has been very clear that he
Speaker 1: thinks that the US and China need to figure out
Speaker 1: some area on which they can cooperate UM and climate
Speaker 1: UM is is a promising area. He wrote a piece
Speaker 1: just a couple of weeks ago for The New York
Speaker 1: Times saying that US and China need to work together
Speaker 1: to preserve the Southern Ocean, to save the Southern Ocean
Speaker 1: in Antarctica. And he has a long track record of
Speaker 1: hands on engagement with China to fix problems, and it
Speaker 1: dates all the way back to at least the most notable,
Speaker 1: most notable recent episode was in two thousand and fourteen
Speaker 1: when he figured out a way to get China and
Speaker 1: the US to sign an agreement to limit their carbon emissions.
Speaker 1: And that was the deal that paved the way for
Speaker 1: the two thousand and fifteen Paris Agreements. So he has
Speaker 1: a track record of success in this area. Well, it
Speaker 1: does seem like the Biden administration. One thing is for
Speaker 1: certain that they will inherit a lot to do with
Speaker 1: China in the sense of a trade war that we've
Speaker 1: been in for years at this point. How does John
Speaker 1: Kerry help ease the tension with it on a trade
Speaker 1: war by using climate discussions? Yet, so, I think the
Speaker 1: assumption is that, um the tensions that have bedeviled the
Speaker 1: U S. China relationship under Donald Trump are not going
Speaker 1: to go away under a Biden presidency, and in fact,
Speaker 1: UH they may actually be exacerbated, particularly in the area
Speaker 1: of human rights as it relates to Hong Kong and
Speaker 1: the National Security Law and the detention camps in Shinjiang
Speaker 1: and so on. And in order to prevent these problems
Speaker 1: spiraling into a crisis, into confrontation, potentially even military confrontation, UM,
Speaker 1: you need to figure out how you can mitigate some
Speaker 1: of those tensions by working together in discrete areas. And
Speaker 1: the climate, of course, is hardly a discrete area, given
Speaker 1: that it crosses almost every other area of policy and
Speaker 1: arguably is the greatest threat to UH, to humanity. So
Speaker 1: you know, it is a big project working with China,
Speaker 1: but it's not the only area. I mean, there's pandemics, UH,
Speaker 1: there's mass migration. But you know, a lot of people
Speaker 1: are suggesting that climate is the most fruitful area that
Speaker 1: the two countries to work together, and particularly since they're
Speaker 1: now both aligned, the US under a Biden presidency and
Speaker 1: China on the need to get to to carbon neutrality.
Speaker 1: She jumping the China Chinese president has promised to do
Speaker 1: that by two thousand and sixty. Biden talks about doing
Speaker 1: it by two thousand and fifty. Well, you know, and
Speaker 1: that's what I think, you know, Andy, just coming off
Speaker 1: the Bloomberg New Economy Forum, which you know, you and
Speaker 1: your team put together. It was incredible aroundup of of
Speaker 1: global speakers, you know, and one of the pillars was
Speaker 1: all about climate. Like it feels like something is different
Speaker 1: from even the Obama administration the few years that have
Speaker 1: passed that we are seeing increasingly the impact of climate
Speaker 1: change in our environment and it's hard for global leaders
Speaker 1: to ignore. And so you do wonder China and the
Speaker 1: United States where they can really step up on the
Speaker 1: global stage and really make a difference here. Yeah, well,
Speaker 1: you now have this alignment, as you say, with between
Speaker 1: the US and China, but also Europe. You've got large
Speaker 1: parts of the planet that are pulling together on you know,
Speaker 1: to towards common neutrality and and all of them putting
Speaker 1: in place programs for a green recovery, uh from the pandemic.
Speaker 1: Even though, as we did discuss in the New Economy Forum,
Speaker 1: China is worryingly in the short term trying to juice
Speaker 1: growth by building coal fire power stations. Nevertheless, it's also
Speaker 1: installing at an incredibly rapid rate solar and wind You
Speaker 1: know and and uh and doubling down on on renewable
Speaker 1: energy technologies. Well, and I do wonder, you know, how
Speaker 1: they will use business policy, trade policy, the US, maybe
Speaker 1: the world to get China to do what they need
Speaker 1: to do when it comes to climate. Yeah, I'm not
Speaker 1: I'm not surely. I'm not sure that leverage works in
Speaker 1: that direction. I really do think it's more a question
Speaker 1: of we know that we are going to have these problems,
Speaker 1: and and and as we heard in the New Economy
Speaker 1: Form Henry Kissinger warning that unless we can figure out
Speaker 1: how to collaborate, you know, we we could we could
Speaker 1: be looking at a World War one situation. More a
Speaker 1: question of we know we've got problems, let's work on something,
Speaker 1: whether where there is a potential joint solution. What about
Speaker 1: the critics who say that carry is during his time
Speaker 1: as senator, Yeah exactly, what about them? Uh? Yeah, well,
Speaker 1: you know the clearly clearly there is there's a great
Speaker 1: deal of skepticism within the political establishment, both both on
Speaker 1: the Democrat and the Republican side, on on on working
Speaker 1: with China. Um and it's not it's it's it's not
Speaker 1: going to be easy. And from the Chinese side, um,
Speaker 1: you know, but Biden in many ways is their worst
Speaker 1: nightmare because what he what he promises to do is
Speaker 1: bring together US allies and friends to confront China. So
Speaker 1: we've already's seen he said, you know, he wants a
Speaker 1: Summit of Democracy sometime next year. The EU has just
Speaker 1: written to Biden proposing his summit in the first half
Speaker 1: of the year. Upbringing together, it says, a once in
Speaker 1: the once in a generation opportunity to build a coalition
Speaker 1: with with the United States, a sort of Transatlantic access
Speaker 1: And although they say they don't mention China, it's very
Speaker 1: clear that this is that, this this access um and
Speaker 1: indeed Biden's council, the Summit of Democracies, is intended to
Speaker 1: counter the threat from China. Right, Yeah, so much. And
Speaker 1: it'll be interesting to watch in terms of how this
Speaker 1: policy ultimately works its way through in the new administration. Hey, Andy,
Speaker 1: thank you so much. Bloomberg New Economy editorial director Andy
Speaker 1: Brown with us on the phone in New York City,
Speaker 1: Romco a journal Now, but you let me drive. Oh no,
Speaker 1: no, no no, no, honey, please, I'll do the writing drivel.
Speaker 1: Let me I want to drive, Just drive, baby. The
Speaker 1: questions trying. This is the Drive to the Globe that funk. Thanks,
Speaker 1: we'll try us John on radios. All right, so it
Speaker 1: is time for the Drive to the close. I'm Karl
Speaker 1: Master with Tim Stanevik Bloomberg, Quietake, and we want to
Speaker 1: bring in JJ Kinahan, whose chief market strategies at t
Speaker 1: d A marriage trade. JJ back with us, joining us
Speaker 1: on the phone from Chicago, j J. Nice to have
Speaker 1: you here. How's it going in Chicago? Always a pleasure.
Speaker 1: I saw some great pictures of your turkey on Thanksgiving
Speaker 1: movie Delicious. It was really good. My husband's an incredible cook.
Speaker 1: It was a great turkey. We also did a picnic
Speaker 1: table for the squirrel. We had a little bit too
Speaker 1: much time on our hand. We're a little crazy. No
Speaker 1: wine involved. I'm just gonna tell you that. Um Chicago
Speaker 1: though virus. I'm just curious how your world and what's
Speaker 1: around you is kind of impacting how you think about
Speaker 1: the financial markets. Well, you know, I think it's very
Speaker 1: interesting right now in the fact that it feels like
Speaker 1: it's always, uh, vaccine Monday. Every Monday, we seemed to
Speaker 1: be getting some news one way or the other on
Speaker 1: which is good. But yeah, we're saying you gonna illinoisan
Speaker 1: in Chicago that the cases are coming down a little bit.
Speaker 1: But as we know, God bless the healthcare workers have
Speaker 1: been really overworked over the last few months, and you're
Speaker 1: just hopening, hoping a planting out was really all we
Speaker 1: need to see. I think if you get a flattening
Speaker 1: out for the holidays, that's a victory, very honest with you.
Speaker 1: And so if we can get that, and you know,
Speaker 1: clearly the market has looked beyond the vaccine onto all
Speaker 1: the great things that can happen. The thing that makes
Speaker 1: me nervous about doing so is we know that it's
Speaker 1: going to be a logistical circus to get things where
Speaker 1: they need to be. And so I just warned people
Speaker 1: not to get caught up too much into euphoria. It's
Speaker 1: wonderful we have these vaccines, and I hope they can
Speaker 1: get out as quickly as possible, but we all know
Speaker 1: that the logistics are usually where the true test will
Speaker 1: will come. Yeah, I mean, and I wonder too, just
Speaker 1: about because we've seen this year and be really the
Speaker 1: year of the retail investor j J. If we're seeing
Speaker 1: retail investors stay in the market despite not having the
Speaker 1: stimulus payments and get in on the vaccine run up
Speaker 1: that we've seen in the month November. You know what's interesting, Tim,
Speaker 1: Obviously we've had as you said, it's been an incredible
Speaker 1: year in terms of volume and interest for the retail investor.
Speaker 1: What was really interesting to me was when I looked
Speaker 1: at Friday and the week that I'm calling out Friday
Speaker 1: specifically is because this tends to be a slow week
Speaker 1: in every area of the of the market, and you know,
Speaker 1: obviously you would expect some fall off throughout the week.
Speaker 1: We saw it fairly busy all week, So interesting, and
Speaker 1: we saw people. Yeah, it was so strange. When I
Speaker 1: saw the numbers at the end of the day, I
Speaker 1: thought we'd made a mispace. I wonder if this is
Speaker 1: because well, I wonder if this is because people weren't
Speaker 1: out shopping at Black Friday. And it was sort of
Speaker 1: similar to the narrative that we saw a play out
Speaker 1: over the summer. Right, people are stuck at home, they
Speaker 1: have stimulus payments, trade checks, and they're trading, they're not
Speaker 1: watching sports. Is that what you think happened? That could
Speaker 1: be part of it. But this is one of the
Speaker 1: first times when we've actually compete didn't with sports because
Speaker 1: it was sports ide during the day Friday, which you
Speaker 1: normally don't have, so uh, they can play draftings or whatever,
Speaker 1: you know, a sporting site they may want to go to.
Speaker 1: So I actually think that's a good sign going forward
Speaker 1: that people continue to have an interested in this market overall,
Speaker 1: and it's not you know, there's been so much made
Speaker 1: in the media of it being people just come in
Speaker 1: and take just day trading. I think we're seeing much
Speaker 1: beyond that. In fact, as I look at some of
Speaker 1: the you know stocks that people who bought last week,
Speaker 1: Apple leading the way Tesla was, our clients have been
Speaker 1: buying for years now. You do have MODERNA and Paliper,
Speaker 1: which you know, you could argue haven't been as much
Speaker 1: uh over years, but their technology is also a little
Speaker 1: bit newer in both cases. So I think there is
Speaker 1: a very healthy mix of people who are in it
Speaker 1: for shorter term and longer term investors. I think the
Speaker 1: longer term investor has been sort of ignored in all
Speaker 1: of this because it's not as sexiest story. So that's
Speaker 1: really interesting. So that's what your clients are buying on
Speaker 1: Black Friday, Palentteer, Tesla Maderna and Apple. That's where you
Speaker 1: saw action. Yeah, that's just really fascinating. I feel like
Speaker 1: that's kind of our world in a nutshell, to be
Speaker 1: quite honest, Yeah it is. I mean, if there are
Speaker 1: companies that we've been talking about for years, of course Apple,
Speaker 1: but Tesla has been the name for November exactly. And
Speaker 1: to be quite honest, I mean that's really fast good
Speaker 1: as say an Apple remains still the number one held
Speaker 1: s thoughts at our firm. Parents started to jump in there,
Speaker 1: but I think you're making a really important point, right
Speaker 1: and palant here right, that's the Teal company, right, Peter Teal, Like,
Speaker 1: it's just kind of fascinating. Well, okay, So Dave Wilson
Speaker 1: was on earlier. He talked about his chart of the
Speaker 1: day and talked specifically about the SMP five twenty year
Speaker 1: old valuation peak. Uh. And we're talking about price to sales.
Speaker 1: I mean, do you get a little concerned when you
Speaker 1: start to look at the valuations of the marketplace. Yeah,
Speaker 1: I think you have to be a little bit concerned. Uh.
Speaker 1: But and here's why I think you saw reflected a
Speaker 1: little bit in this earning season. And what I mean
Speaker 1: by that exactly is think about the stocks that were
Speaker 1: considered essential businesses, the home depots, the walmarts of the world.
Speaker 1: Their numbers were absolutely monstrous again this quarter, but their
Speaker 1: stocks sold off on that. I think we may come
Speaker 1: to a point where we see a similar thing in
Speaker 1: the entire SMP five hundred, where yes, these these stocks
Speaker 1: that when people get back to work, when we go
Speaker 1: back to you know, air quotes normal world, uh, that
Speaker 1: things are going well, But can we keep can can
Speaker 1: the reality meet the expectation? Because I think at some point,
Speaker 1: even though the numbers might be great, and they might
Speaker 1: have great sales, etcetera, at that point people might say, well, yeah,
Speaker 1: but I already expected this to beat this is in
Speaker 1: order for me to want to buy more. And I
Speaker 1: think that's one of the bigger risks as we head
Speaker 1: into this spring in early summer of next year, is
Speaker 1: that the reality won't be able to keep up with
Speaker 1: the expectation. I want to talk Slack here. It's a
Speaker 1: it's one of the stocks that you mentioned in your
Speaker 1: recent article. Um of course, CNBC is reporting that a
Speaker 1: deal force Slack from Salesforce could come as soon as Tuesday,
Speaker 1: after the clothes were also expecting earnings. What are you
Speaker 1: keeping an eye on when you see this type of
Speaker 1: M and A. I think it's actually great, you know
Speaker 1: we saw I feel like it's kind of shift. It's
Speaker 1: still in the technology sector. Think about it. We just
Speaker 1: had the chips all go through a wards that a
Speaker 1: month and a half two months ago. Now we're going
Speaker 1: to other areas of technology where people are sitting on cash,
Speaker 1: they're not quite sure what to do with it. It
Speaker 1: may be okay, we've invested all we can and what
Speaker 1: we do, well, are there businesses which fit into what
Speaker 1: we do? We can continue with our scale of distribution,
Speaker 1: cut some costs out of and really make our offering
Speaker 1: one that's very well rounded. So in this case, on
Speaker 1: its surface, it certainly does seem to make a lot
Speaker 1: of sense that that is exactly the model that Salesforce
Speaker 1: would be following with slack. And as I said, it
Speaker 1: know it was all well received when it happened in
Speaker 1: the chip sector. I think this is just a natural
Speaker 1: extension and I would think that maybe you'll see more
Speaker 1: of it in different parts of the technology stuff. Well,
Speaker 1: we know Salesforce is inquisitive and the other thing is
Speaker 1: our Bloomberg intelligence. Alice saying that, listen, there's stocks, they
Speaker 1: do a stock deal, it's pretty easy for them to do, right,
Speaker 1: I mean in terms of the run up that they've seen.
Speaker 1: What does it mean for those two of us who
Speaker 1: use slack changes always when there's a deal? All right?
Speaker 1: J J? Thanks so much. J. J. Knham, Chief Market Strategy,
Speaker 1: a t D Merriage trade on the phone from Chicago,
Speaker 1: checking out my turkey while my husband's turkey. Thanks so
Speaker 1: much for listening to Bloomberg Business Week. Download the podcast
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