WEBVTT - Surveillance: 2023 Expectations with Knutzen 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.200 --> 0:00:13.160 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.799 Find Bloomberg Surveillance on Apple, podcast, SoundCloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.400 and of course on the Bloomberg Terminal. Will next year 0:00:29.680 --> 0:00:31.479 be the Year of the bond? Eric Knutson joining us 0:00:31.480 --> 0:00:34.159 now multi asset class CIO at new Berger Berman. Eric, 0:00:34.200 --> 0:00:35.600 I want to start there because that seems to be 0:00:35.680 --> 0:00:38.279 one of the consensus is out there that this will 0:00:38.320 --> 0:00:41.080 be a great year, particularly in government debt. Do you 0:00:41.159 --> 0:00:46.040 agree what we do? We do and and two thousand 0:00:46.080 --> 0:00:48.839 twenty three could continue to be pretty challenging for stocks, 0:00:48.840 --> 0:00:50.959 but we do think that we are at a bit 0:00:50.960 --> 0:00:53.640 of a sea change. I've been doing this almost as 0:00:53.640 --> 0:00:56.320 long as Howard Marks, and I would agree that the 0:00:56.360 --> 0:00:59.520 next period of time is going to be quite different 0:00:59.520 --> 0:01:02.000 from the last ten of fifteen years. And one of 0:01:02.040 --> 0:01:04.360 the key elements there is that rates have to be 0:01:04.520 --> 0:01:08.200 in our view, structurally higher, associated with higher structural inflation 0:01:08.560 --> 0:01:11.760 and the FEDS determination and frankly, the capital markets need 0:01:11.880 --> 0:01:15.760 to have a real um positive real yield across the 0:01:16.000 --> 0:01:20.040 government bond curve. The FED is forecasting that rates at 0:01:20.080 --> 0:01:21.679 the end of this year are gonna be five ish 0:01:21.760 --> 0:01:24.000 per cent. Growth is going to be half of a percent, 0:01:24.080 --> 0:01:26.479 inflation is going to be three point two percent. That's 0:01:26.520 --> 0:01:29.160 a real yield of almost two percent. We haven't seen 0:01:29.160 --> 0:01:32.479 a real yield like that consistently for over fifteen years. 0:01:32.840 --> 0:01:35.200 We think you should pay attention to the FED. And 0:01:35.319 --> 0:01:38.319 this is a dramatic change from the environment we've seen 0:01:38.319 --> 0:01:40.400 over the last ten of fifteen years. Do we see 0:01:40.400 --> 0:01:45.880 a pivot eric? That's not our expectation the FED. We 0:01:45.920 --> 0:01:47.960 believe that FED and other central banks are going to 0:01:48.040 --> 0:01:52.120 need to maintain tight financial conditions through two thousand three. 0:01:52.400 --> 0:01:54.800 You see it with the Bank of Japan beginning their 0:01:54.840 --> 0:01:58.480 normalization process even earlier than people expected, and that that 0:01:58.560 --> 0:02:02.280 then encourages the rest of global financial conditions to to 0:02:02.440 --> 0:02:05.560 tighten um And now what appears to be an even 0:02:05.600 --> 0:02:09.760 more rapid and perhaps chaotic and disorderly you know, reopening 0:02:09.800 --> 0:02:13.079 by China, which could lead to more rapid growth, more 0:02:13.200 --> 0:02:15.480 robust growth from China sooner rather than later. That just 0:02:15.639 --> 0:02:18.839 adds to the need for global central banks to keep 0:02:18.880 --> 0:02:22.400 financial conditions. I thought about actually buying my hellcat by 0:02:22.440 --> 0:02:25.959 shorting JGBS, but I can't get a borrow and now 0:02:25.960 --> 0:02:28.360 with the end strengthening, that would kill me. Is there 0:02:28.400 --> 0:02:30.359 anything else you want to went about? Uh? No, No, 0:02:30.600 --> 0:02:34.200 I I just think it's an interesting trade that um 0:02:34.200 --> 0:02:36.280 now I understand really when I look at the end 0:02:36.360 --> 0:02:38.880 right now one thirty one why it's called the widow 0:02:38.880 --> 0:02:42.639 maker in terms of yeah, in terms of what else 0:02:42.680 --> 0:02:47.440 to expect for three? Um, where do you see earnings? 0:02:47.520 --> 0:02:50.480 Because this is uh something that a lot of people 0:02:50.480 --> 0:02:52.280 have flagged to us, is maybe the most important part, 0:02:52.360 --> 0:02:55.480 certainly in the equity space. Right we're still expecting two 0:02:55.560 --> 0:02:58.239 hundred and ten dollars two hundred and twenty dollars a share? 0:02:58.600 --> 0:03:02.399 Does that need to come in absolute? Well, So there's 0:03:02.440 --> 0:03:05.960 a huge difference in opinion between strategists and macro economists 0:03:05.960 --> 0:03:08.920 who are expecting recession and who are protecting earnings anywhere 0:03:08.960 --> 0:03:13.280 from eighty to two ten or dollars, and that assumes 0:03:13.280 --> 0:03:16.280 a recession and that or or even radically slow in growth. 0:03:16.320 --> 0:03:19.720 Even if we avoid recession, that's normally accompanied by earnings 0:03:19.720 --> 0:03:23.760 declines of ten to bottom up consensus Wall Street forecasts 0:03:23.760 --> 0:03:27.160 are still expecting earnings in two thousand twenty three about 0:03:27.160 --> 0:03:29.799 two hundred thirty dollars to share up four is per cent. 0:03:30.400 --> 0:03:32.720 Our view is that earnings have to come down from 0:03:32.760 --> 0:03:36.320 that two thirty dollar target percent um whether they get 0:03:36.360 --> 0:03:38.840 to one eighty were not quite that barage. We think 0:03:38.880 --> 0:03:42.160 that there are corporate management teams at various levers, especially 0:03:42.160 --> 0:03:45.080 in a more inflationary environment, to support earnings, but we 0:03:45.160 --> 0:03:48.960 think they end the year below the current per share 0:03:48.960 --> 0:03:52.040 that we expect for two two and that's the last 0:03:52.120 --> 0:03:54.960 leg down, that's the last source of pressure on equities. 0:03:55.760 --> 0:03:59.000 Is that more on the demand side that that earnings 0:03:59.000 --> 0:04:01.760 pressure is going to come, or on the input cost 0:04:01.840 --> 0:04:06.000 side and supply some of both margins have to come 0:04:06.080 --> 0:04:08.680 under pressure there. It's like there's still almost at secular 0:04:08.800 --> 0:04:12.360 highs um that has to normalize to a certain degree. 0:04:12.400 --> 0:04:14.960 Corporate management teams, particularly in the United States, have gotten 0:04:15.040 --> 0:04:18.200 very good at managing managing margin margins, but they have 0:04:18.279 --> 0:04:20.400 to come down somewhat. So it's going to be a 0:04:20.440 --> 0:04:24.440 mix of both popline pressure as well as pressure on margins. 0:04:24.640 --> 0:04:27.159 When do we start to go back to a new normal, right, 0:04:27.200 --> 0:04:28.880 I mean, at what point we can we reset and 0:04:29.000 --> 0:04:32.039 understand whether we just can expect a lower turns for 0:04:32.080 --> 0:04:36.000 the next decade in equity index indices, or perhaps or 0:04:36.040 --> 0:04:39.120 aversion back to the FED getting to low rates and 0:04:39.320 --> 0:04:43.719 some sort of pre pandemic norm. Well, we don't believe 0:04:43.720 --> 0:04:45.839 we're going back to the new normal of the last 0:04:45.880 --> 0:04:50.279 time of fifteen years with low inflation, low rates, financial repression, etcetera. 0:04:50.320 --> 0:04:53.600 We think we're going to a more normalized rate environment 0:04:53.600 --> 0:04:57.240 with structurally higher inflation, in part because of a fundamental 0:04:57.320 --> 0:04:59.880 change in the relative power of labor versus capital, which 0:05:00.000 --> 0:05:02.839 as we're just talking about, in part because of de globalization, 0:05:02.880 --> 0:05:05.880 in part because of de carbonization, um, in part because 0:05:05.880 --> 0:05:09.280 of changing demographics and the changing role and relationship of 0:05:10.200 --> 0:05:15.120 China with major major trade partners and with their domestic policy. UM. So, 0:05:15.160 --> 0:05:17.480 we don't think we go back to the new normal 0:05:17.560 --> 0:05:19.800 any type. So we're really going back to a more 0:05:19.920 --> 0:05:23.440 or old normal, more typical environment. Doesn't mean there aren't 0:05:23.440 --> 0:05:25.960 going to be interesting opportunities. We see great opportunities in 0:05:25.960 --> 0:05:28.760 short duration fixed income to your treasuries at four point 0:05:28.800 --> 0:05:33.560 three percent yield, they're they're battling with SMP five earnings yield. 0:05:33.560 --> 0:05:36.760 You haven't seen a comparison like that since two thousand seven. 0:05:37.040 --> 0:05:40.920 Short duration treasury, short duration investment grade credit, mortgage backed securities, 0:05:41.160 --> 0:05:43.880 structured product we think will be very interesting this year. 0:05:44.240 --> 0:05:47.719 Within the US. We like, we like value stocks, quality stocks, 0:05:47.800 --> 0:05:51.039 high dividend yielding stocks. Money now as opposed to money 0:05:51.040 --> 0:05:54.560 in the future. But now you've actually got competition from 0:05:54.560 --> 0:05:58.360 the ristory rate um for your capital. Eric Newtson doesn't 0:05:58.360 --> 0:06:01.680 necessarily paint a particularly wonderful picture for returns for equities, 0:06:01.680 --> 0:06:04.120 but certainly the short term of the treasury curve. Eric 0:06:04.279 --> 0:06:06.159 Neutson of new Berger Burman, thank you so much for 0:06:06.240 --> 0:06:19.280 being with us. We have seen such a rapid pace 0:06:19.360 --> 0:06:21.680 of tightening four five basis points in the span of 0:06:21.760 --> 0:06:24.640 nine months. The economy hasn't fully felt the effects of that. 0:06:24.720 --> 0:06:26.680 So I guess if you are on the team recession, 0:06:27.000 --> 0:06:29.640 you're saying, just wait until it hits dies. And that 0:06:29.640 --> 0:06:32.279 would really bring back the idea of credibility for the Fed, 0:06:32.480 --> 0:06:35.800 right that they can essentially shoot down inflation, which brings 0:06:35.880 --> 0:06:38.560 us to our next guest and esteemed member of the 0:06:38.600 --> 0:06:43.279 Bloomberg executive team, Editor in Chief Emeritus for Bloomberg, Matt Winkler. 0:06:43.400 --> 0:06:45.480 You wrote, a column that is fascinating where you basically 0:06:45.560 --> 0:06:47.280 pushed back against all the people who are saying the 0:06:47.279 --> 0:06:51.160 FED is just behind the curve. They're getting it wrong, saying, actually, 0:06:51.360 --> 0:06:54.479 it seems like they're bang on target. Well, thank you, 0:06:54.600 --> 0:06:57.440 great to be with you. Happy New Year. A year 0:06:57.480 --> 0:06:59.960 ago at this time, the prevailing narrative, as you say, 0:07:00.200 --> 0:07:02.159 was the FED was behind the curve. Now, let's just 0:07:02.200 --> 0:07:08.839 go back and remember that inflation was seven uh, and 0:07:08.920 --> 0:07:12.960 that's what prompted the outcry. And we also need to 0:07:13.000 --> 0:07:15.680 be reminded of the fact that the US was making 0:07:15.960 --> 0:07:20.480 the most dramatic recovery from the pandemic recession, which was 0:07:20.520 --> 0:07:25.520 the worst since the global depression eight decades ago, and 0:07:25.560 --> 0:07:28.680 we were getting close to what is now the three 0:07:28.720 --> 0:07:32.040 point seven unemployment, right, So the U s economy was 0:07:32.040 --> 0:07:35.520 actually doing very well, better than any major developed economy 0:07:35.520 --> 0:07:40.200 in the world. And that's when the FED decided, Okay, 0:07:40.240 --> 0:07:43.760 the data is what drives us. We're data dependent. We're 0:07:43.800 --> 0:07:46.760 now going to tighten credit. And everybody said they were 0:07:46.840 --> 0:07:51.720 too late, too little, etcetera. And we know that what happened, 0:07:51.760 --> 0:07:56.080 as you said, an unprecedented tightening, but a tightening that 0:07:56.200 --> 0:07:59.880 came when the U. S. Economy was much stronger resilient 0:08:00.680 --> 0:08:03.040 than it otherwise would have been. And I think that's 0:08:03.080 --> 0:08:05.640 the parenthetical clause that's left out of this, is that 0:08:05.680 --> 0:08:08.440 the U. S. Economy was much stronger when they Fed tightened. 0:08:08.720 --> 0:08:12.480 And so here we are today. Inflation is way below 0:08:12.640 --> 0:08:16.800 the nine point one peak in June, when everybody said 0:08:16.800 --> 0:08:20.680 the FED had lost its way. The bond market never 0:08:21.400 --> 0:08:25.880 gave up on the FED. The bond market was always confident, somehow, 0:08:26.040 --> 0:08:29.920 some way, this inflation problem is going to be resolved. Well, 0:08:29.920 --> 0:08:31.760 but the bond market got the FED wrong at the 0:08:31.840 --> 0:08:34.640 end of right because we looked at a two year 0:08:34.679 --> 0:08:38.120 yield that was zero point seven percent, we looked at 0:08:38.160 --> 0:08:40.280 a ten uere yield at one and a half percent, 0:08:40.520 --> 0:08:43.600 we saw a massive rise. People underestimated how much the 0:08:43.640 --> 0:08:46.960 FED would have to do in order to combat inflation, 0:08:47.240 --> 0:08:50.720 heading into how much credibility do you give the idea 0:08:50.760 --> 0:08:53.640 that we're in a new higher inflation regime that will 0:08:53.679 --> 0:08:56.560 cause a real question mark for the FED in terms 0:08:56.600 --> 0:08:58.240 of how far hard they have to go and how 0:08:58.280 --> 0:08:59.920 much pain they have to I'm not sure the bond 0:09:00.000 --> 0:09:03.640 market actually ever lost its way here that you know, 0:09:03.720 --> 0:09:08.800 we're talking about maybe relative values, but the bond market 0:09:08.960 --> 0:09:13.280 was never convinced that run over inflation was here ever, 0:09:13.640 --> 0:09:17.480 and that appears to be still correct. Okay, what the 0:09:17.520 --> 0:09:19.880 bond market, if you say, got wrong is it didn't 0:09:19.960 --> 0:09:23.000 expect the Fed to tighten to the extent that it 0:09:23.040 --> 0:09:26.599 did to contain inflation. But the bond market always anticipated 0:09:26.840 --> 0:09:29.800 that inflation would be much lower than many of our 0:09:29.920 --> 0:09:32.920 strategists and pundits have predicted. And so that's where we 0:09:32.960 --> 0:09:36.439 are today. The Fed is still going to keep interest 0:09:36.520 --> 0:09:39.559 rates elevated, They've already said that, and so the bond 0:09:39.559 --> 0:09:42.640 market is anticipating that we're still going to see what 0:09:42.840 --> 0:09:46.319 five six percent inflation six months, but a year from 0:09:46.360 --> 0:09:48.280 now it's going to be much closer to the two 0:09:48.280 --> 0:09:53.800 percent target. We talked to Eddie Ardnny yesterday who was saying, um, 0:09:53.840 --> 0:09:58.760 that you haven't really seen anything break. You've seen implosions 0:09:58.800 --> 0:10:01.600 here and there in crypto notably, but there hasn't been 0:10:01.640 --> 0:10:04.640 any contagion across the entire financial system. And he said, 0:10:05.000 --> 0:10:07.720 you know, maybe this Fed has gotten it right there, 0:10:07.720 --> 0:10:11.040 probably closer to a soft landing, and there's a chance 0:10:11.080 --> 0:10:13.960 that there's no landing at all. Um, do you think 0:10:14.000 --> 0:10:17.880 that we're starting to see a growing view that we 0:10:17.960 --> 0:10:21.400 could have a very short and shallow recession or even 0:10:21.520 --> 0:10:24.520 not have a recession. Okay, so here a couple of things. 0:10:24.679 --> 0:10:29.000 A year ago, we were all concerned about supply chain bottlenecks, 0:10:29.040 --> 0:10:32.600 if you recall, and the ships in the Port of 0:10:32.640 --> 0:10:36.600 Los Angeles, the largest port, We're backed up as far 0:10:36.640 --> 0:10:39.680 as the eye could see maybe sixty five ships waiting 0:10:39.960 --> 0:10:43.640 to unload their cargoes. When we caught up with Jeans Sirocco, 0:10:43.679 --> 0:10:46.200 who's the executive director of the Port of Los Angeles 0:10:46.280 --> 0:10:51.600 just a month ago, the whole waterfront was blissfully free 0:10:52.200 --> 0:10:55.280 of any supply chain bottlenecks. So there's an example where 0:10:55.640 --> 0:10:59.800 common prevailing assumptions a year ago turned out to be 0:11:00.559 --> 0:11:04.760 the worst as far as it went, and now it's 0:11:04.760 --> 0:11:07.840 gotten better. So it's very similar with the rest of 0:11:07.880 --> 0:11:12.120 the U. S. Economy, which is everybody you can think 0:11:12.160 --> 0:11:15.280 of was worried about it. Recession in July and paying 0:11:15.320 --> 0:11:18.440 double the price for used cars, right, I mean, prices 0:11:18.520 --> 0:11:22.360 were obviously that's part of inflation, just off the charts, 0:11:22.400 --> 0:11:25.439 and now we're looking at that and that market used cars. 0:11:25.440 --> 0:11:28.200 I've seen it just collapse. Right, We got data out 0:11:28.200 --> 0:11:30.560 of Spain, for example, today that shows inflation is coming 0:11:30.600 --> 0:11:33.679 down much faster than expected. Do we get closer to 0:11:33.679 --> 0:11:35.880 two percent? Are the break evens? Right? You think in 0:11:35.920 --> 0:11:39.559 a year? Well, look, the bond market is a collection 0:11:39.920 --> 0:11:42.439 of everybody with the most at stake, if you want 0:11:42.440 --> 0:11:44.520 to think about it that way. So these are the 0:11:44.559 --> 0:11:48.439 people who have resources everywhere. They're betting their reputations and 0:11:48.480 --> 0:11:51.800 their fortunes, and they're all over the world. And treasuries 0:11:51.840 --> 0:11:55.400 are the most widely held security anywhere in the world 0:11:55.440 --> 0:11:58.920 and the most liquid, and that collectively is, as far 0:11:58.960 --> 0:12:03.120 as I'm concerned, the most uh, if you like evidentiary 0:12:04.080 --> 0:12:06.760 way of looking at this equation, which is these people 0:12:06.760 --> 0:12:11.439 are saying, somehow, some way, just as you said, matt Um, 0:12:11.480 --> 0:12:13.920 the inflation that we've been seeing is not going to 0:12:14.040 --> 0:12:18.920 be runaway. It's going to decelerate um in the months ahead. 0:12:19.040 --> 0:12:23.600 And by the way, the economy still ends two thousand 0:12:23.720 --> 0:12:31.360 twenty two up, not down. Up. Well. Obviously, two thousand 0:12:31.440 --> 0:12:33.640 twenty two was a very hard year to predict, and 0:12:33.800 --> 0:12:37.160 so much has happened, including Elon Musk buying Twitter, which 0:12:37.200 --> 0:12:39.080 is another curveball that I don't think any of us 0:12:39.080 --> 0:12:41.240 saw coming back in April. Another one of your great 0:12:41.240 --> 0:12:45.800 pieces was entitled in defense of Elon Musk's managerial excellence. 0:12:45.920 --> 0:12:48.960 Having seen now eight months later, what has happened to 0:12:49.080 --> 0:12:52.240 Tesla's stock? What has happened inside of Twitter since he 0:12:52.280 --> 0:12:55.400 took over? How, if at all, does your view change 0:12:55.440 --> 0:12:59.839 in hindsight? Well, I never understood the Twitter UH debaccle 0:12:59.840 --> 0:13:01.880 of you want to call it that from the beginning 0:13:01.880 --> 0:13:05.480 and said so at the time. I think what's missing 0:13:05.559 --> 0:13:10.520 in the discussion of Tesla right now, which obviously has 0:13:10.559 --> 0:13:15.800 been the biggest casualty maybe of the tech UH industry, 0:13:16.280 --> 0:13:21.080 is that it's still valued more than Toyota. Okay, if 0:13:21.120 --> 0:13:23.360 you look at and nobody mentions that, if you look 0:13:23.360 --> 0:13:26.240 at the market capitalization of Tesla today, having lost what 0:13:27.720 --> 0:13:32.400 its value in, it's still what three hundred and fifty 0:13:32.600 --> 0:13:37.560 billion dollars in market uh and you know that's worth 0:13:37.559 --> 0:13:42.280 more than Toyota. So it's worth still after all this carnage. Now, 0:13:42.320 --> 0:13:46.400 why is that? I would say partly because the automobile 0:13:46.440 --> 0:13:49.640 itself is way ahead of where the rest of the 0:13:49.640 --> 0:13:53.440 auto industry has been. It is, by far in the 0:13:53.520 --> 0:13:59.000 US the most popular e V still um and you 0:13:59.040 --> 0:14:00.680 know that's the real what do you at the moment? 0:14:00.679 --> 0:14:04.000 Even if you add General Motors market cap to Ford's 0:14:04.080 --> 0:14:08.040 market cap to Toyota's market cap, Tesla is still worth substantially. Yeah, 0:14:08.120 --> 0:14:12.520 and so okay, maybe that's all a mirage, But given 0:14:12.559 --> 0:14:15.800 all the carnage that we've all been talking about, I 0:14:15.840 --> 0:14:19.520 just think it's interesting no one, no one mentions that 0:14:19.640 --> 0:14:23.720 the market cap of Tesla today, okay, in the twenty 0:14:23.760 --> 0:14:27.840 two is still worth more than Toyota. Matt Winkler, Fabulous 0:14:27.880 --> 0:14:30.520 to have you on with your perspective, Matt Winkler, Editor 0:14:30.880 --> 0:14:38.400 emeritus of Bloomberg, Editor in chief Emeritus. This has been 0:14:38.400 --> 0:14:40.680 one of the big questions, not only with respect to 0:14:40.760 --> 0:14:43.160 China and the economy, but also with respect to COVID. 0:14:43.320 --> 0:14:45.560 Do we have to care about coronavirus again? People have 0:14:45.600 --> 0:14:48.600 to start getting tested in more masks. Lawrence Houer, I 0:14:48.720 --> 0:14:51.040 was I loved speaking with you. I saw your name 0:14:51.080 --> 0:14:53.040 pop up and I thought to myself, I really want 0:14:53.040 --> 0:14:54.120 to speak to you, and I hate that I have 0:14:54.160 --> 0:14:55.600 to speak to you, because why do we have the 0:14:55.680 --> 0:14:58.520 reprisal of COVID yet once again, the associate professor at 0:14:58.520 --> 0:15:01.920 the University of Nebraska Medical Center and Special Pathogens Research 0:15:01.960 --> 0:15:04.560 Network Director, Lauren, It is great to see you, and 0:15:04.600 --> 0:15:06.400 it is also terrible to see you because people are 0:15:06.400 --> 0:15:09.240 starting to get worried about a new variant. How much 0:15:09.280 --> 0:15:11.600 are you concerned about this? How much is that tied 0:15:12.000 --> 0:15:14.320 just sort of the mass infection level that we're seeing 0:15:14.320 --> 0:15:18.240 in China. Yeah, that's a great question, and I agree. 0:15:18.280 --> 0:15:20.000 Happy to see you and sad to see you because 0:15:20.000 --> 0:15:23.200 it means we're back to seeing large numbers of COVID. 0:15:23.680 --> 0:15:26.240 So I think for me, one of the biggest concerns 0:15:26.320 --> 0:15:29.360 is less that that a new variants emerging UM and 0:15:29.400 --> 0:15:31.440 more about the just volume of cases that may be 0:15:31.560 --> 0:15:34.760 coming out of China. I mean, we've seen some numbers 0:15:34.800 --> 0:15:37.520 that look like the early days of COVID when we 0:15:37.520 --> 0:15:39.480 were we weren't even calling it COVID and we were 0:15:39.480 --> 0:15:41.760 watching from Afar to see what would happen in China. 0:15:41.880 --> 0:15:44.320 So I think the numbers of cases are what we're 0:15:44.320 --> 0:15:46.760 worried about seeing come into Europe, come into the US, 0:15:46.840 --> 0:15:50.960 come into the global UM environment. And and if we 0:15:51.000 --> 0:15:53.680 do see new variants emerge, I think it'll be important 0:15:53.680 --> 0:15:56.680 to track what they are UM, what what the sub 0:15:56.760 --> 0:15:59.320 variants are and make sure that we can adjust are 0:15:59.600 --> 0:16:03.600 our tools, Lauren, Can China be trusted to reliably do 0:16:03.720 --> 0:16:07.320 that and to count the case this period? I think 0:16:07.320 --> 0:16:09.360 it's it's not what we're seeing right now for sure. 0:16:09.560 --> 0:16:11.440 Um we're not seeing the data we would like to 0:16:11.480 --> 0:16:14.800 see out of China, especially on the deaths, um on, 0:16:14.800 --> 0:16:18.960 on the sequencing that they're doing. Um So they've reduced 0:16:19.120 --> 0:16:21.560 the amount of people that they're even testing. UM So 0:16:21.600 --> 0:16:23.600 we're not seeing testing data. But we also know that 0:16:23.640 --> 0:16:25.480 the testing is much lower than it was just a 0:16:25.480 --> 0:16:28.400 few weeks ago. Um And and so I think the 0:16:28.800 --> 0:16:31.600 pressure has to be on China to share every single 0:16:31.680 --> 0:16:34.600 number they have, right so, what what are the case 0:16:34.680 --> 0:16:37.160 counts that they're aware of, what testing are they doing, 0:16:37.240 --> 0:16:40.840 and importantly, what variants are they seeing? Is it only 0:16:40.880 --> 0:16:43.320 the variants that pose a risk to the rest of 0:16:43.360 --> 0:16:47.080 the world if we are worried about it's spreading once again, 0:16:47.240 --> 0:16:50.000 If no new variants emerge, how much of the population 0:16:50.080 --> 0:16:52.240 is going to be relatively immune or at least not 0:16:52.320 --> 0:16:54.600 have any form of severe disease because we've already had 0:16:54.600 --> 0:16:58.640 so many infections and vaccinations as well. Yeah, that's a 0:16:58.680 --> 0:17:01.960 great question. I think that that large numbers of COVID 0:17:02.040 --> 0:17:05.879 are are problematic and dangerous no matter what, because the 0:17:05.920 --> 0:17:08.280 more COVID cases you have, the more likely you are 0:17:08.320 --> 0:17:12.200 going to see those um those severe cases and the deaths. 0:17:12.240 --> 0:17:15.120 So no matter what, we are going to have large 0:17:15.200 --> 0:17:18.440 numbers of cases coming out of China and impacting the 0:17:18.440 --> 0:17:21.960 global health environment, the global economy, um and and that 0:17:22.000 --> 0:17:25.320 can be really dangerous. I think the anytime you have 0:17:25.480 --> 0:17:30.159 a less immune population, UM, you're going to see the 0:17:30.200 --> 0:17:32.639 potential for variance. So even if we're not seeing variants 0:17:32.720 --> 0:17:36.399 right now, uh, seeing those large numbers come out could 0:17:36.480 --> 0:17:39.040 impact the likelihood that we see a new variant in 0:17:39.040 --> 0:17:43.280 the future. Lauren, how does how does the US situation 0:17:43.400 --> 0:17:48.119 look right now with regards to COVID infection rates, specifically 0:17:48.240 --> 0:17:51.359 New York City around the Madison Square Garden area, because 0:17:51.400 --> 0:17:53.840 I'm going there tonight with my closest friends. Not a 0:17:53.840 --> 0:17:56.840 selfish question at all. Yeah, I would definitely recommend wearing 0:17:56.840 --> 0:17:59.520 a mask in Madison Square Garden. I think COVID rates 0:17:59.560 --> 0:18:02.439 are so high and we're seeing a lot of um 0:18:02.560 --> 0:18:05.200 I l I or influenza like illness all across the 0:18:05.400 --> 0:18:09.040 Northeast and and really all across the US, So it 0:18:09.160 --> 0:18:12.480 is a risky time to be in close quarters with people. 0:18:12.920 --> 0:18:15.720 Um and and we're seeing a lot of illness still 0:18:15.840 --> 0:18:18.640 so UM, I think there's a lot of people who 0:18:18.680 --> 0:18:23.480 are worried about an ongoing COVID surge and um and 0:18:23.640 --> 0:18:26.320 it's coupled with a respiratory virus season like we have 0:18:26.400 --> 0:18:29.480 not seen in several years. So it's not the safest 0:18:29.480 --> 0:18:32.680 time to be out in public. Uh, certainly without a mask. 0:18:33.040 --> 0:18:36.080 But but you know, just in those close quarters. Is 0:18:36.080 --> 0:18:38.200 it ever going to go away? Lauren? I mean, it's 0:18:38.240 --> 0:18:43.080 been almost three years, right, um, and now we're adding 0:18:43.119 --> 0:18:46.359 all of these other You've got the respiratory infection. People 0:18:46.359 --> 0:18:51.080 are worried about fluid pneumonia again, I've had I think 0:18:51.160 --> 0:18:54.240 six shots since March of Are we ever going to 0:18:54.320 --> 0:18:57.840 get over this? I don't think COVID is ever going 0:18:57.880 --> 0:18:59.640 to go away. We're not going to get to zero 0:18:59.680 --> 0:19:02.119 COVID and and and I think that's also part of 0:19:02.160 --> 0:19:04.639 what we're seeing in China right now. Um. One of 0:19:04.640 --> 0:19:07.359 the one of the things that we're hoping to see 0:19:07.440 --> 0:19:09.480 is that we get on a cadence similar to flu 0:19:09.640 --> 0:19:13.040 where UM, where we're getting vaccinated on a regular schedule, 0:19:13.280 --> 0:19:16.280 we're minimizing the impact of the disease on our life um, 0:19:16.320 --> 0:19:20.000 and we're reducing spread wherever possible. So I think we're 0:19:20.040 --> 0:19:22.880 still in this sort of Perry emergency phase where we're 0:19:23.080 --> 0:19:25.960 just figuring out how to live with covid um. It's 0:19:25.960 --> 0:19:28.680 still certainly quite dangerous. But as we get on that 0:19:28.800 --> 0:19:31.600 you know, routine vaccination schedule, as we get more and 0:19:31.600 --> 0:19:34.080 more data on how and when we need to vaccinate people, 0:19:34.400 --> 0:19:36.639 and as we come back to sort of believing in 0:19:36.640 --> 0:19:39.640 the science of vaccines and and all of the other 0:19:39.720 --> 0:19:42.200 tools we've built in a in a very short amount 0:19:42.240 --> 0:19:45.359 of time um that hopefully we will be able to 0:19:45.400 --> 0:19:47.560 live with it in a much less painful way. I 0:19:47.600 --> 0:19:49.359 hope it's not a strategy. And that's this is the 0:19:49.920 --> 0:19:52.560 reason why I say that, is because we're talking about masking. 0:19:52.600 --> 0:19:55.160 We're talking about how you should probably be careful congregating 0:19:55.160 --> 0:19:58.359 with your closest friends, and yet I can pretty much 0:19:58.359 --> 0:20:00.480 guarantee that Matt Miller will still be at that concert. 0:20:00.560 --> 0:20:02.120 You will not be wearing a mask, and neither will 0:20:02.119 --> 0:20:04.119 anybody else in there. I'm just going to suggest that 0:20:04.359 --> 0:20:06.360 if you take a look at a lot of airplanes, 0:20:06.840 --> 0:20:08.960 and you look at that very few people are masked, 0:20:08.960 --> 0:20:11.680 and those that are are given glances of what's wrong 0:20:11.720 --> 0:20:13.199 with you? Do you have the flu? Or? I mean, 0:20:13.240 --> 0:20:15.240 because we all want to get back to normal. So 0:20:15.280 --> 0:20:18.480 how do you change a culture that is absolutely opposed 0:20:18.680 --> 0:20:20.400 to masking and using some of the tools that you're 0:20:20.440 --> 0:20:24.000 talking about. Yeah, I completely agree with you. I think 0:20:24.080 --> 0:20:27.520 that it has become very divisive to even talk about, 0:20:27.600 --> 0:20:30.240 let alone use some of these important public health strategies. 0:20:30.720 --> 0:20:32.639 I think we have to go back to the roots 0:20:32.720 --> 0:20:36.719 of explaining what where the science comes from, why we 0:20:36.840 --> 0:20:39.359 use masks when we use them, and and maybe the 0:20:39.400 --> 0:20:42.720 culture won't change, And unfortunately that that is something we 0:20:42.760 --> 0:20:44.800 may have to deal with. But I think that it 0:20:44.960 --> 0:20:48.359 is it is, it is. It remains an option for 0:20:48.400 --> 0:20:52.320 people UM, and it certainly remains the recommendation UM, at 0:20:52.359 --> 0:20:56.400 least from me. And I think it's important to keep 0:20:56.440 --> 0:20:59.240 making that recommendation, sort of normalizing that this is a 0:20:59.320 --> 0:21:01.679 choice that is saying for people to make and is 0:21:01.720 --> 0:21:04.480 not a political statement. It is a statement where you're saying, 0:21:04.680 --> 0:21:06.399 I need to protect my health or I want to 0:21:06.440 --> 0:21:08.720 help protect the health of others, and I'm going to 0:21:08.840 --> 0:21:10.720 choose to do that. And so the more we can 0:21:10.760 --> 0:21:13.960 normalize that, the easier it gets to make that decision. 0:21:14.040 --> 0:21:16.720 I mean, I know, masks are not you know, they're 0:21:16.760 --> 0:21:18.520 not the place people want to be right now. And 0:21:18.520 --> 0:21:21.760 that's completely reasonable to to feel that way, UM, And 0:21:21.840 --> 0:21:24.560 many people are making that choice. UM. But but it 0:21:24.680 --> 0:21:26.800 certainly shouldn't be that the people who do make the 0:21:26.880 --> 0:21:30.800 choice to mask are judged or are looked upon as 0:21:30.920 --> 0:21:34.040 as making a poor choice. Lauren, just real quick here 0:21:34.160 --> 0:21:36.680 and to finish up, what is the chance in your 0:21:36.760 --> 0:21:39.600 view of our being subjected to a pandemic like the 0:21:39.600 --> 0:21:43.159 one that we just went through with another mutation of 0:21:43.200 --> 0:21:47.040 the COVID of virus. I think our chance of going 0:21:47.080 --> 0:21:50.240 through another pandemic is quite high. I'm not necessarily sure 0:21:50.280 --> 0:21:52.960 that it is it will be with a COVID mutation 0:21:53.080 --> 0:21:56.320