Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well, among the COVID stories
Speaker 1: that are catching our attention, we've got one about how
Speaker 1: pharmaceutical exacts are mixing up their own vaccines to get
Speaker 1: at a higher immunity. So maybe think about a drug cocktail.
Speaker 1: And then Tim, of course does Maderna headlines. Yeah, the Maderna.
Speaker 1: The company is saying that it doesn't see signs that
Speaker 1: it's shot causes heart issue. The issue myocarditis, as well
Speaker 1: as a condition called Perry card diitis. The company saying
Speaker 1: it has not established a causual association with its vaccine. Well,
Speaker 1: let's get right into it with Dr Ian LUs Bader,
Speaker 1: clinical Professor of Medicine at n y U Lane Goinges
Speaker 1: Medical Center, joining us this afternoon on the phone from
Speaker 1: Long Island. Dr les Beda, how are you on this
Speaker 1: Friday afternoon? Doing very well? Guys? Hope all is well
Speaker 1: with you. Definitely some interesting stories that doesn't seem to
Speaker 1: end when it comes to COVID and the vaccines. Yeah,
Speaker 1: it does, and well let's get right into it and
Speaker 1: talk about the m R and A vaccines Because the
Speaker 1: Centers for Disease Control and Prevention it's identified a total
Speaker 1: of two hundred and sixteen cases of heart inflammation after
Speaker 1: the first dose of an m R and A shot
Speaker 1: and another five hundred and seventy three cases after the
Speaker 1: second dose. At the same time, Moderna coming out and
Speaker 1: saying that it sees no sign that the shot causes
Speaker 1: heart issues. How are you reading into this, Well, there's
Speaker 1: definitely an increased incidents, right. We certainly know that myocarditis,
Speaker 1: which is inflammation of the heart muscle and perrycarditis, which
Speaker 1: is the sack that the heart sits in, can occur.
Speaker 1: That can occur at any age. We see viral inflammation
Speaker 1: of the heart we see UH, usually viral or other
Speaker 1: infections that caused perrycarditis, but the number of cases, especially
Speaker 1: in young men, those under thirty, is definitely higher than
Speaker 1: one would statistically think of in that population. So there's
Speaker 1: definitely an increased incidence UM, and it seems to be
Speaker 1: associated with the mrn A vaccines. What we don't know
Speaker 1: is are they causing it or how they're causing it. UH.
Speaker 1: The C d C I think is definitely looking into that.
Speaker 1: And this raises the question of as we're getting more data,
Speaker 1: should we be kind of targeting vaccines for certain age groups.
Speaker 1: Maybe young men should be thinking more about the J
Speaker 1: and J vaccine, the single dose, as opposed to young
Speaker 1: women where we were seeing some perhaps increased clots with
Speaker 1: astra zeneca, where this tts syndrome with J and J.
Speaker 1: You know, perhaps young women should be thinking more of
Speaker 1: the m R and A. We're really just sort of
Speaker 1: getting that data and at some point down the line
Speaker 1: of hopefully soon we may be able to say, if
Speaker 1: you're in this group, this would give you the most
Speaker 1: benefit with the least risk. UH. Clearly, these are not
Speaker 1: a huge number of cases, but obviously higher than we
Speaker 1: would expect and you always try and reduce a risk
Speaker 1: whenever you're giving any sort of treatment or prevention. So
Speaker 1: Dr LUs better are we getting to the point. It
Speaker 1: was funny. I was having conversation a little parenthetical here earlier,
Speaker 1: and someone went went to get the vaccine. They're like, well,
Speaker 1: wait a minute, because they were going to be given
Speaker 1: the fires of they can I actually have the J
Speaker 1: and J and they were able to kind of pick
Speaker 1: the vaccine they wanted. On the flip side, are doctors
Speaker 1: getting to appoint the medical community saying, you know what,
Speaker 1: I've looked at your medical history, I've looked at your age,
Speaker 1: I've looked at some other factors. I think you should
Speaker 1: get this vaccine. There are some patients who say what
Speaker 1: should I get, and most don't really check in before
Speaker 1: they get it. And many centers don't have every It's
Speaker 1: not like a restaurant where you can say this one
Speaker 1: or that one. I mean, at some point we may
Speaker 1: get to that, but usually if you go to a
Speaker 1: particular center, whether it's even a local pharmacy, they will
Speaker 1: have a limited number of vaccines, you know, due to
Speaker 1: storage and other and other ushers. And really for the
Speaker 1: majority of people, they're all very effective, very very few
Speaker 1: people actually get COVID. Cleveland clinic study to show that
Speaker 1: they looked at fifty you know, patients not only who
Speaker 1: have had COVID previously, but those with vaccines. So UM,
Speaker 1: for most people it doesn't matter. But if you are
Speaker 1: in one of those groups, a young woman or a
Speaker 1: young man, now that this data is coming through, it
Speaker 1: may be worth talking with your doctor and saying, hey,
Speaker 1: based on the data, is there one that may be
Speaker 1: better for me. Well, let's talk a little bit more
Speaker 1: about that Cleveland clinic study finding. Um, the idea is
Speaker 1: that there's not necessarily proof that we should be vaccinating
Speaker 1: those who have had COVID nineteen take us into it,
Speaker 1: exactly right. So that's study and it's from a very
Speaker 1: reputable institution that Cleveland Clinics looked at about fifty two
Speaker 1: employees and a certain percent had had COVID previously, and
Speaker 1: and they looked at those who were vaccinated and those
Speaker 1: who were not vaccinated, and it turned out that really
Speaker 1: is zero um people who had had the COVID UH
Speaker 1: covid infection, the stars COVID to infection and had a
Speaker 1: proof of having that they did not get a second infection,
Speaker 1: so you can't get better than zero, you know, out
Speaker 1: of fifty two thousands. So that's very reassuring. We have
Speaker 1: been pushing even people who have had UM, the COVID infection,
Speaker 1: to say, hey, you take this. Uh, that's exactly why
Speaker 1: I was so skeptical when I saw this, and they're
Speaker 1: so surprised when I saw this, because it flies in
Speaker 1: the face of what we've heard from the CDC. Well,
Speaker 1: it's an evolving picture, let's put it that way. I
Speaker 1: think for people who have had it, they should be
Speaker 1: very reassured. There's some you know debate, you know, in
Speaker 1: terms of vaccine availability. Should we be using all these
Speaker 1: vaccines when other countries may need them? But I think
Speaker 1: if you've had COVID, your risk of getting it again
Speaker 1: is very low. We certainly know the vaccines really boost
Speaker 1: your antibody response. And for new variants like delta that's uh,
Speaker 1: you know from India, that could be a problem. It
Speaker 1: may be that a vaccine would be very helpful for that.
Speaker 1: I would say, you know, right now, if you've had
Speaker 1: covid um there's no panic to get a booster shot,
Speaker 1: although it probably will provide some benefit. Alright, good stuff Hey,
Speaker 1: we're going to continue this conversation with Dr Ian lust
Speaker 1: bedaor clinical professor of Medicine, n y U Land, going
Speaker 1: with us on the phone in Long Island. Tim listen,
Speaker 1: it's as he said, you know, this is evolving, we're
Speaker 1: finding our way through this. Yeah, I've said it before,
Speaker 1: I'll say it again. It's it's like a science experiment,
Speaker 1: a study playing out in real time. And in a sense,
Speaker 1: all medicine is like that. I've learned, right, looking what
Speaker 1: happened with Alzheimer's in Biogen this week, right exactly, Let's
Speaker 1: get back right to it with Dr Ian lust Beder,
Speaker 1: clinical Professor of Medicine, n y U Langings Medical Center.
Speaker 1: He joins us on the phone from Long Island. Dr
Speaker 1: LUs Beder. A story by our own Todd Gillespie that
Speaker 1: came out earlier today, all about how pharmaceutical executives are
Speaker 1: kind of the way I thought of it was doing
Speaker 1: experiments on themselves in in trying to determine whether or
Speaker 1: not they can get a higher immunity from a mix
Speaker 1: of their own COVID shots, different vaccines. And it's it's
Speaker 1: actually something that it's new to me, but it's not
Speaker 1: new to doctors and people who study this stuff. It's
Speaker 1: called heterologious prime boosting. What exactly is it and what
Speaker 1: are these executives doing and how could it affect the
Speaker 1: way that we receive vaccines in the future. So we've
Speaker 1: known for a long time that the heterologous prime boosting,
Speaker 1: basically giving one vaccine then followed by a different vaccine,
Speaker 1: really gives you a more robust response. All of the
Speaker 1: original studies just looked at individual companies doing their own testing.
Speaker 1: So obviously you know UH Feiser was three weeks apart,
Speaker 1: Madurna four weeks apart, J and J just the single vaccine,
Speaker 1: although there were some studies that show to follow up,
Speaker 1: but it turns out if you combine these, for example,
Speaker 1: there are a number of studies that show UH not
Speaker 1: in UH in a limited number of patients, hundreds of patients.
Speaker 1: The studies have been done, but they show, for example,
Speaker 1: like the astro Zenco which is an ad no virus
Speaker 1: fact or similar to J and J, if you give
Speaker 1: that followed by either the Maderna m RNA or the
Speaker 1: fiser U m RNA vaccine, they had up this seven
Speaker 1: times higher antibodies and longer lasting and the hope. Yeah,
Speaker 1: it's it's quite and that that may be the way
Speaker 1: of the future. That may be UM the standard approach.
Speaker 1: And certainly patients who say, gosh, I missed my follow
Speaker 1: up dose. I was away, I couldn't get it. Can
Speaker 1: I get a different vaccine? I think the answer is yes,
Speaker 1: you can, And that may be a good idea actually,
Speaker 1: But the concern or the reason you may want these
Speaker 1: higher antibody levels is exactly for the delta you know,
Speaker 1: Indian variant, which is more infectious, more deadly. Um, it
Speaker 1: continues to multiply and mutate. I'll be see, You've got
Speaker 1: a billion people as your substrate of viral replications. So
Speaker 1: the thinking is that if we combine these will get
Speaker 1: a more robust response that hopefully would defend the body
Speaker 1: better against any variants that come along. That's not proven,
Speaker 1: but that's the thinking. Yeah, and we continue to find
Speaker 1: out more and more. Hey, listen, before we go, we
Speaker 1: have a couple of minutes left, and we've got to
Speaker 1: ask you about biogen UH and it's Alzheimer's drug. The
Speaker 1: story one of the stories today. A prominent Harvard Medical
Speaker 1: UH School professor has resigned from an FDA advisory panel
Speaker 1: and protest over the agency's decision to improve to approve
Speaker 1: Biogen's Alzheimer's drug, And so he announced his departure. He
Speaker 1: put out a letter, He's the third committee member to
Speaker 1: quit in the wake of this highly controversial approval and
Speaker 1: forgive me, this happened yesterday. How do you feel about
Speaker 1: this or what are you hearing? Well? I think, um,
Speaker 1: they're trying to be ethical about this. And Alzheimer's is
Speaker 1: a very tough disease. It's very tough to really prove
Speaker 1: beneffort from these drugs. That this particular drug was approved
Speaker 1: by the FDA because it lowered the levels of amyloid,
Speaker 1: which is a protein in the brain. Alzheimer's is complicated.
Speaker 1: There are many biochemical and physical changes in the brain.
Speaker 1: Amyloid deposits, neurofibrillary tangles, and so the drug did reduce amyloid,
Speaker 1: but it's very hard to really prove benefit because Alzheimer's
Speaker 1: is a progressive disease typically, so does it slow the progression,
Speaker 1: does it stop the progression? Does it reverse the dementia?
Speaker 1: You know, it's how do you measure it? And more importantly,
Speaker 1: so what if you lower amyloid, are you really clinically
Speaker 1: affecting the outcome of the patient. You know, you may
Speaker 1: be lowering this protein which is associated. And I think
Speaker 1: these three professors resigned because I think they felt unconvinced
Speaker 1: that we're raising hopes of patients that this drug, very
Speaker 1: expensive drug, is going to help them when the actual
Speaker 1: clinical outcome is not well proven. I think that was
Speaker 1: their key complainte ethical dilemma, Yeah, thirty seconds, Dr Lesi,
Speaker 1: or does it set a dangerous precedent for the FDA
Speaker 1: and future approvals. I think you have to listen to
Speaker 1: your advisory committees and and see if you there are
Speaker 1: points are valid and I think in this case it
Speaker 1: probably was valid um and they were going on kind
Speaker 1: of a different metric, maybe a useful metric that I
Speaker 1: think that committee wanted more data. And anybody who's had
Speaker 1: a family member who's had Alzheimer's or even some other illness, UM,
Speaker 1: if you can get a couple of months, a couple
Speaker 1: of weeks, a couple of years out of um A treatment,
Speaker 1: it means an awful lot. And that's where it's really
Speaker 1: great and fuzzy. Tim. I think that's perhaps why despite
Speaker 1: the fact that it's fifty six dollars for treatment plus
Speaker 1: plus more. UM investor saw it as something that is tenable,
Speaker 1: right exactly, And there's a lot of folks out there
Speaker 1: with Alzheimer's as well. Of course Dr Ian lost Better
Speaker 1: the best clinical professor of medicine. And why you land going?
Speaker 1: Joining us on the phone from Long Island. You're listening
Speaker 1: to Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio, the Newishuoe Bloomberg business Week,
Speaker 1: it's in my hands, it's now a news stands, it's
Speaker 1: in Tim's hands, it's online and on the Bloomberg the
Speaker 1: domestic cover asked who needs a margarita? Margarita? After this week?
Speaker 1: I think we all do that story and a bunch more,
Speaker 1: including the international cover China Wolves and the New Age vs. G.
Speaker 1: Let's open up the issue with Bloomberg Business Week editor
Speaker 1: Joe Weber on the access line in Brooklyn. But before
Speaker 1: we do that, Joel, congratulations, Oh thank you. UM and UH,
Speaker 1: you're referencing a national magazine award that Bloomberg Business Week
Speaker 1: one last night for UH, a single topic issue that
Speaker 1: we did last spring called the Last Year. UM which
Speaker 1: if you look at the cover of it, we we
Speaker 1: used that cover line on the issue that shipped March eleventh, UM,
Speaker 1: which was as the world was sort of felt like
Speaker 1: it was falling apart, at least here in New York
Speaker 1: it did. Um. So it was a huge honor, uh
Speaker 1: to accept that on behalf of the staff in Bloomberg. Um,
Speaker 1: and it was I'm just going to say, yeah, it
Speaker 1: definitely feels that way. You know, I think I've fretted
Speaker 1: for most of the year about was it going to
Speaker 1: be less than a year because that would look bad?
Speaker 1: Is it going to be more than a year? But
Speaker 1: it turns out, Um, it was a bold call and
Speaker 1: and and the right one. And you know, I think
Speaker 1: the thing that these are kind of the oscars of
Speaker 1: the magazine world. And um, it means that you know,
Speaker 1: our peers basically said, um, this was you at your best,
Speaker 1: which we felt as well. So again quite an honor. Yeah,
Speaker 1: and Enjoel, one more question on that, because this is
Speaker 1: such a big deal and and as Carol imagined it was,
Speaker 1: it was really impression of you and your team. And
Speaker 1: I'm I'm wondering what it was that that made you realize, Look,
Speaker 1: fifteen months ago at this point that would indeed be
Speaker 1: a last year. Well, I was in a meeting and
Speaker 1: being in that meeting and realizing how, um, how so
Speaker 1: many people were confused and um uh made me realize
Speaker 1: that that same conversation aation was happening in boardrooms across
Speaker 1: the country, in the world, frankly, um and as people
Speaker 1: were just doing complete write offs for what their projections
Speaker 1: would look like, that would be a pretty devastating gear
Speaker 1: for the economy. And so that's that was the kernel
Speaker 1: of the idea. Um. And I remember walking out of
Speaker 1: that meeting and not sure if I wanted to do
Speaker 1: a cover to cover issue. And I walked out of
Speaker 1: that meeting thinking, not only are we doing a cover
Speaker 1: to cover issue, but we're calling it the last year. Well,
Speaker 1: it's kind of a perfect segue into this week's edition,
Speaker 1: which I think in a lot of ways symbolizes the
Speaker 1: reopening of New York City. The cover here in the
Speaker 1: in the it's exactly right. So the cover story is
Speaker 1: about Jimmy Buffett, who most of us know as a musician,
Speaker 1: and I'm quite fine fond of that music for the record, uh,
Speaker 1: And he actually turns out that he has a business
Speaker 1: empire uh that basically has uh been the legacy of
Speaker 1: the song Margharitaville. And and not only has it uh
Speaker 1: just boomed, it's um expanding. And he's just opening a
Speaker 1: New York Times Square extension Margaritaville hotel with restaurants and
Speaker 1: bars and everything. Um. And the timing couldn't be better
Speaker 1: because just as New York coming back to life, you've
Speaker 1: got a place to go have Margarite, Margarite's and dequeries
Speaker 1: in Times Square. We've been planning a road trip class
Speaker 1: just like an offsite broadcasting from there. I mean, why not,
Speaker 1: right yeah? Yeah, or just a meeting even like I'm
Speaker 1: done with the zoom stuff. Let's just go see each
Speaker 1: other face to face. But but it's crazy write a
Speaker 1: song he wrote. It's crazy because it's a song he
Speaker 1: wrote what a few minutes? Yeah, and it actually you know,
Speaker 1: there's so much business wisdom in this story of like
Speaker 1: he realized he had something, but he couldn't do it
Speaker 1: on his own. Uh found somebody who became a great
Speaker 1: partner and realized that they could put their brand on
Speaker 1: a lot of different things. And I think there's still
Speaker 1: are growing out what they can put it on and
Speaker 1: you know, marijuana to dakary machines. They've they've really been
Speaker 1: able to do it all. As I say, I don't
Speaker 1: have a great segue to the next story. But we've
Speaker 1: talked about this story. Another drink of your that's it.
Speaker 1: That's it. Well, maybe the Chinese Wolf Warriors need to
Speaker 1: have among we talk about that one. So so Uh,
Speaker 1: Peter Martin wrote this story. Uh, he's got a book
Speaker 1: coming out, so this is technically an excerpt um and
Speaker 1: so so congrats to Pete on it on this book. Uh.
Speaker 1: We obviously know that the Wolf Warriors have become um
Speaker 1: like a diplomatic strategy of China's and and they're very
Speaker 1: aggressive and um in expanding Chinese influence and and showing
Speaker 1: that there's a lot of bark at least um with
Speaker 1: where China wants to go and and perhaps some bite
Speaker 1: even and as writes, it's it's a it's a bold strategy.
Speaker 1: But despite some rhetoric from um the top in Beijing,
Speaker 1: like we we shouldn't expect any of that to back
Speaker 1: down anytime soon, Joel. There's also a story in this
Speaker 1: week's edition of the magazine Deep Dive into the X
Speaker 1: on activists, victory MARKETI coming of age for E S
Speaker 1: G Investing, Take us into it. Engine Number One. This
Speaker 1: is a Sagel Kashan story. She worked with Joe Caroll
Speaker 1: on about UM. A thing that I don't feel very
Speaker 1: many people saw it coming. I mean I certainly didn't
Speaker 1: when when the name Engine number one was first uttered
Speaker 1: in the meetings that I was in, it was sort
Speaker 1: of like, who who the heck is that? And it
Speaker 1: turns out that not only were they activists investors, but
Speaker 1: it kind of shows a new age of activists investors
Speaker 1: that there, that they're willing not only to take on companies.
Speaker 1: And you know, as we've written in cover stories in
Speaker 1: Business Week, Xon ten years ago was on on top
Speaker 1: of the world. You know, there was no there was
Speaker 1: no more valuable company than Exon. And how the mighty
Speaker 1: have fallen. And as they're falling, we're seeing how activists
Speaker 1: can come in and attempt to probably work for more change.
Speaker 1: So it's it's one to watch UM and and one
Speaker 1: that I think has taken a lot of investors and
Speaker 1: boards by surprise. So I think definitely more to come
Speaker 1: UM in this in this vein going forward. Yeah, massive
Speaker 1: undertaking financially, certainly for Engine number one to take on
Speaker 1: X on Hey uh Star. We've been also referencing, um
Speaker 1: the fomo economy. When Stanley, Druck and Miller gets fomo,
Speaker 1: you gotta sit up and take notice. Yeah, so this
Speaker 1: was one that we ended up doing as the international
Speaker 1: cover story. I thought it was good enough to be global,
Speaker 1: but that I just had to, you know, give everybody
Speaker 1: a margarita. The The idea really came from me from
Speaker 1: just being on the playground and suddenly, you know, watching
Speaker 1: my my son and having all these people interact that
Speaker 1: I interact with telling me about how they've struck it rich.
Speaker 1: And I was like, am I the only one who's
Speaker 1: not rich? Right now we're getting rich? Like what am
Speaker 1: I doing wrong? And and Leone, Leonel Laurent, who's a
Speaker 1: great contribut in Bloomberg Opinion, wrote a story that basically
Speaker 1: helps some all that up, whether it's doage coin or
Speaker 1: housing or meme stocks, and you know, we could go
Speaker 1: right now we're talking about a m C which was
Speaker 1: on fire. You know, all of it just feels like
Speaker 1: a boy. I just feel like I've missed out on everything.
Speaker 1: And um, if you're if you've ever been taught, like,
Speaker 1: you know, sane approaches to investing or index funds. I
Speaker 1: think you probably feel the same way, which is just like, wow,
Speaker 1: what's going on exactly? Yeah, you're not the only one,
Speaker 1: jol Hey, just in fifteen seconds that we have take
Speaker 1: us down to Florida's Trump Coast with Josh Green. Yeah.
Speaker 1: The Josh Green story is an epic one. It was
Speaker 1: just like the moment that we knew mar Lago as
Speaker 1: a destination. We said, Josh, can you go down there
Speaker 1: and just like give us a cultural uh letter from
Speaker 1: from South Florida and he and he did, and I
Speaker 1: think he found some really surprising stuff that was shows
Speaker 1: how strong Trump's hold on the GPS. All right, everybody,
Speaker 1: there's your weekend reading list. Check it out online, on
Speaker 1: newsstands and on the Bloomberg. Joe Weber, thank you so much.
Speaker 1: Congratulations again, it's a great That issue was incredible. I'm
Speaker 1: road a journal now, but you let me drive. Oh no,
Speaker 1: no, no no, no, drive home, honey, please, I'll do the riding.
Speaker 1: Drivel lets me. I want to drive, just drive, baby,
Speaker 1: the questions trying. This is the drive to the Globe community. Thanks,
Speaker 1: We'll drying us down on Bloomberg Radio. What two weeks
Speaker 1: it has been? This past week. I don't even know
Speaker 1: what's compared to It's like every week feels like it's
Speaker 1: kind of wild, but hey, that's why we love what
Speaker 1: we do. And a had a day and a half
Speaker 1: off and it's still feel like two weeks. Let's get
Speaker 1: to a time for the drive to the clothes and back.
Speaker 1: With us is David Deets. He's managing principal, senior portfolio
Speaker 1: strategors are at Peapack Private Wealth Management, nine point four
Speaker 1: billion in assets under management. David with us once again
Speaker 1: on the phone from Summit, New Jersey. David, how do
Speaker 1: you make sense of a week like this past week? Well,
Speaker 1: I mean, the key metric this week has been this
Speaker 1: higher than expected inflation number, the highest in thirteen years.
Speaker 1: Yet you would think that we'd see a big bond tantrum,
Speaker 1: yields racing north, but we're not seeing that at all.
Speaker 1: We're down by about basis points since March, and I
Speaker 1: think Wall Street discretion their heads trying to make sense
Speaker 1: of this higher than expect inflation, yet no reaction to
Speaker 1: bond market. Well wait a minute, wait a minute, we're
Speaker 1: all smart here, and we know we went through a pandemic,
Speaker 1: and we know that everything fell off a cliff and
Speaker 1: we're still bouncing back. These are still post pandemic coming
Speaker 1: back numbers. So we're not like, we get it, don't
Speaker 1: we It was certainly you know, that's one of the
Speaker 1: reasons that people are giving these high inflation numbers the path.
Speaker 1: I mean, we saw twelve percent mark up in terms
Speaker 1: of use car prices and people are saying, well, we're
Speaker 1: not going to see twelve percent each year. Uh? Did
Speaker 1: know when it comes to airfares are not going to
Speaker 1: be keep going up at this rate and some other things.
Speaker 1: Having said that, even when you strip out the food
Speaker 1: and energy, you've got this core CPI. Is that the
Speaker 1: hottest since the ninety nineties. This is the central question, Carol.
Speaker 1: Is this transitory because this is just a bump up
Speaker 1: when you compare it versus very depressed conditions a year
Speaker 1: ago during the pandemic. Or is this something a little
Speaker 1: bit more permanent that the bondmark is going to factor
Speaker 1: in and ultimately the fens going to have to take action. Well,
Speaker 1: I think if you know, when we talked a little
Speaker 1: bit about this yesterday, when we got these figures. The
Speaker 1: headline numbers were certainly hot, but if you took a
Speaker 1: peek under the hood and you saw, actually, you know
Speaker 1: what accounted for those significant changes. A lot of it
Speaker 1: had to do with things that were transitory, especially when
Speaker 1: you take into account the base effect of one year
Speaker 1: ago and what was happening one year ago. But even
Speaker 1: things that were month over a month higher, like car
Speaker 1: rental prices, for example, we know those are things that
Speaker 1: aren't going to come back down as uh, this pent
Speaker 1: up demand kind makes its way throughout the summer in
Speaker 1: the early fall, right, And isn't that what the bond
Speaker 1: market is telling us? Well, I think that's what it's
Speaker 1: telling us. You know. The problem is, of course, is that, um,
Speaker 1: you know, we haven't gotten now to back to full employment.
Speaker 1: We know we're making progress. We're seeing each week better
Speaker 1: or fewer claims for unemployment insurance. Um, we know we're
Speaker 1: going to get back there as the pandemic waynes more
Speaker 1: people have acteen and so forth, So we think ultimately
Speaker 1: there's gonna be some upward pressure on wages and so forth.
Speaker 1: And even some of the sticky items uh in the
Speaker 1: inflation numbers seem to be going up to and we
Speaker 1: know that once wages and some of those sticks had
Speaker 1: to go up, they're not going to come back down.
Speaker 1: So that's what we're bracing for. But you know, again
Speaker 1: with wages, we're seeing a lot of those increases in
Speaker 1: hotel workers, the hospitality industry, restaurants. There are things that
Speaker 1: those kinds of companies and industries are doing to get
Speaker 1: workers back, Um, who maybe a little bit nervous about
Speaker 1: doing so. I mean, to Tim's point, David, the month
Speaker 1: of a month increases came from six components. Use cars,
Speaker 1: rental cars, vehicle insurance, I see a trend lodging, airfares,
Speaker 1: and food away from home. Yeah. Absolutely. So you know,
Speaker 1: every time there's an inflation cycle, people always point to
Speaker 1: a few outlets and say, well that's the problem. But
Speaker 1: but here's what we're up against, Carol, is that, Um,
Speaker 1: you know, your tenure treasury now is at one point
Speaker 1: four five. Yet the implied inflation on tips treasury inflation
Speaker 1: protection securities for next ten years just two and a half,
Speaker 1: so real yields are still negative. We know this economy
Speaker 1: is getting back on its feet. We've got more stimulus
Speaker 1: prepped us away from an infrastructure bill, We've got the
Speaker 1: Federal Reserve twitting money into the system, and so eventually
Speaker 1: interest rate target to go. But isn't it like a pendulum, right?
Speaker 1: We sweet we just swung so dramatically one way when
Speaker 1: everything fell off a cliff. Now we're swinging kind of
Speaker 1: dramatically the back, you know, back. It's going to settle
Speaker 1: at some point. But we really won't know, David, right
Speaker 1: until we are kind of out of this pandemic, what
Speaker 1: really the economic numbers really are and what the real
Speaker 1: inflation is for everybodyer there's a seller. But you know,
Speaker 1: one way I'm looking at it here is that you know,
Speaker 1: we started the year tain here, treasuries were under one percent,
Speaker 1: they got up to one seven five. Now they're one
Speaker 1: four or five. You could still make a case that
Speaker 1: we're trending up here, you know, in two thousand nineteen,
Speaker 1: which will eventually will get back to conditions like that.
Speaker 1: I think ten your treasurers as highest two point nine.
Speaker 1: So the question is what do you do now? Do
Speaker 1: you expect to trace to stay low or do you
Speaker 1: brace for higher rates higher economic growth going ahead? Okay,
Speaker 1: how do you brace for it? What do you pick?
Speaker 1: So we think economically sensitive stocks are the ones that
Speaker 1: you want to tilt your portfolio to. These would be
Speaker 1: financial services. They love higher interest rates, they can charge
Speaker 1: more for their mortgages, get more on their insurance portfolios.
Speaker 1: We think materials energy Ultimately, for example, of this upcoming Thanksgiving,
Speaker 1: people are gonna be hitting the road, people are gonna
Speaker 1: be flying. There's gonna be tremendous demand. No one wants
Speaker 1: to drill anymore, so we think things like that will
Speaker 1: be going up, and that's where you should be tilting. Well,
Speaker 1: things like pieces delivery and so forth. We're not going
Speaker 1: to see that big increase in demand going forward, all right,
Speaker 1: So what would you be buying here? You know, we
Speaker 1: love Intel as a way to play both technology and
Speaker 1: a cyclical upturn. You know, we know there's a chip shortage.
Speaker 1: We know we have to recreate manufacturing here on our
Speaker 1: Shore's uh, Intel's got new management with the engineer from
Speaker 1: Intel returning. Um. There's trading at just twelve times earnings.
Speaker 1: They're still at a cheaper price than they were. But
Speaker 1: when you think of chips, autonomous driving, artificial intelligence, internet
Speaker 1: of things, you've got to think of Intel. We think
Speaker 1: that's a great way to you know, have a secular
Speaker 1: trend but also take advantage of the cyclical upturn. Hey
Speaker 1: what about a T and T. I know that's on
Speaker 1: your list of companies that you're interested in. Why especially
Speaker 1: as they go through the sort of recalibration back to
Speaker 1: a telecom company away from media company. Yeah, so they
Speaker 1: got the new man in there, John Stanky. I think
Speaker 1: he's doing the right thing. He is refocusing the company
Speaker 1: on telecommunications, getting outside of the content. I think that
Speaker 1: their announcement just recently to shed their entertainment Warner Media assets,
Speaker 1: put into a separate company, merge it with Discovery will
Speaker 1: allow them to better focus on the wireless the five
Speaker 1: G opportunity. Let someone else deal with the entertainment assets.
Speaker 1: Of course, they still have something one percent of that,
Speaker 1: but the opportunity here is they're paying a certain percent dividends.
Speaker 1: They have to rationalize that it's going to come back
Speaker 1: down to fourth percent. So you have the stampede of
Speaker 1: people out who wanted the big dividends. I think people
Speaker 1: are gonna come in and say, hey, it makes more
Speaker 1: sense what the company doesn't pay out to me as
Speaker 1: a dividend. They keeping the company that benefits my shares
Speaker 1: That allows them to deleverage. So the start is down,
Speaker 1: now I see it drifting up. Hey just got about
Speaker 1: fifty seconds letter x ON. I'm assuming dividend play is
Speaker 1: part of the reason you like x On, because it's
Speaker 1: also been on quite a run more than this year.
Speaker 1: But the dynamics longer term, most investors would argue it's
Speaker 1: definitely changing. So I think the argument for like any
Speaker 1: energy company here is that the rush to get green
Speaker 1: is happening faster than consumers can actually wean themselves off
Speaker 1: from their automobiles, wean themselves off from gas to heat
Speaker 1: their homes and so forth, and I think ultimately that's
Speaker 1: gonna push prices up dramatically. X is the no brainer
Speaker 1: is the largest publicly treated integrated energy company. I think
Speaker 1: people are also on pause here because they've looked at
Speaker 1: three up board seats which have gone to so called
Speaker 1: um green directors. But guess what those green directors want
Speaker 1: to make money too? And of course why you're waiting
Speaker 1: for things. You got that big six percent David and
Speaker 1: Carol story in the magazine about engine number one. Uh
Speaker 1: that you talk about what a little engine that definitely did.
Speaker 1: David Deeds, thank you so much. Of a good weekend
Speaker 1: managing Principal senior portfolio Strategies at Pepack Private Wealth man
Speaker 1: TM at nine point four billion in assets under management,
Speaker 1: on the phone from summit. Thanks for listening to Bloomberg
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