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Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm

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Speaker 1: Jason Kelly. We're right here every day bringing you the

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Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,

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Speaker 1: all harnessing the power of Business Week reporters and editors.

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Speaker 1: And of course Carol that's part of a team of

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Speaker 1: twenty seven hundred journalists and analysts and more than a

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Speaker 1: hundred and twenty countries and Jason. You can download Bloomberg

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Speaker 1: Business Week on iTunes, SoundCloud, bl Bloomberg dot com. You

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Speaker 1: can also listen to our radio show at two pm

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Speaker 1: Eastern on Bloomberg Radio every weekday, or watch us on

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Speaker 1: YouTube by searching Bloomberg Global News. Let's set the Business

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Speaker 1: week agenda. Gina Martin Adams with US chief equity strategist

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Speaker 1: at Bloomberg Intelligence on the phone from New Jersey. Also

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Speaker 1: from New Jersey, Dave Wilson, our stocks editor at Bloomberg News,

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Speaker 1: and Dave just set the trade. As Charlie mentioned, we

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Speaker 1: really have seen quite a bounce in the last hour

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Speaker 1: or so. Oh, no doubt about it. We're back at

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Speaker 1: the highs of the day. If you look at the

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Speaker 1: SMP five hundred you know, yesterday we were talking about

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Speaker 1: how you technology stocks were not at the forefront of

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Speaker 1: the games. In fact, they were trailing the market. Today

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Speaker 1: they are right there best performer among the eleven main

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Speaker 1: industry groups in the SMP five. In fact, ten the

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Speaker 1: eleven are higher. You know, financial shares the only exception

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Speaker 1: as far as that goes. So, you know, you put

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Speaker 1: this all together, and we're really close to the SMP

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Speaker 1: five hundred breaking its record from February, and it's just

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Speaker 1: a matter of a few points here or there that

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Speaker 1: we'll dictate it. You know, you look across the biggest companies,

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Speaker 1: you know, the big tech companies if you like, call

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Speaker 1: them what you will, all up at least two percent,

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Speaker 1: Apple leading away with a gain of three and a

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Speaker 1: half percent. So you know, Tesla really jumps out to

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Speaker 1: a thirteen percent after deciding on a five for one

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Speaker 1: stock split. That's the sort of thing that happened in

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Speaker 1: the nineteen nineties and companies were splitting their shares left,

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Speaker 1: right and center, and they're just not doing that anymore.

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Speaker 1: And so Tesla really does, you know, kind of look

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Speaker 1: like a throwback with with its stock performance today. It's

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Speaker 1: like with Apple and that's stock split two m the

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Speaker 1: real quick on today. So the narrative was that we

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Speaker 1: got higher producer prices and consumer prices over the last

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Speaker 1: two days and then we have a reflation slash inflation scenario.

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Speaker 1: Do you buy any of that? That narrative um to

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Speaker 1: explain why value stocks got a little bit of rotation

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Speaker 1: over the last couple of days. But today's trade is

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Speaker 1: really driven by grows stocks again. So I think the

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Speaker 1: bigger story is we broke out above those July twenty

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Speaker 1: two highs and it's been off to the races ever since.

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Speaker 1: Where the market breaks through these sort of significant resistance levels,

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Speaker 1: it looks for the next level of resistance, which is

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Speaker 1: not until the most recent peaks. It's just sort of

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Speaker 1: full steam ahead until we get back to those early highs,

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Speaker 1: and then we'll probably test those highs. Uh. You know,

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Speaker 1: it's tough to say what's really driving the rotation. I

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Speaker 1: do think the technicals are a lot of it, because

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Speaker 1: from a fundamental perspective, there hasn't been a whole lot

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Speaker 1: to hang your hat on. You know, there's still a

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Speaker 1: lot of concern about while they are won't they on

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Speaker 1: the fiscal policy front, they're still uncertain landscape with respect

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Speaker 1: to a vaccine. Certainly, the FED is not adding a

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Speaker 1: ton of more firepower to this market, So I think

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Speaker 1: it's more technically driven than anything else. Except I do

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Speaker 1: want to say on that last point, um, you know

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Speaker 1: about the FED, I do feel like and I get people,

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Speaker 1: you know, messaging me or tweeting at me, and they're like, listen,

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Speaker 1: if anything starts to fall apart, we know the Fed's

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Speaker 1: going to be there. I mean, is that kind of

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Speaker 1: a given, Gina, Yeah, it is. I mean there's an

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Speaker 1: implied FED put for sure. And that change that really

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Speaker 1: changed this year, especially in comparison to the last several

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Speaker 1: years when there was more focus and back in two

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Speaker 1: thousand seventeen two eighteen in particular, recall, we were focused

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Speaker 1: more on how much can the FED tightened, which is

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Speaker 1: a very different landscape than today, which is really just Okay,

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Speaker 1: the Fed's going to remain loose for a very very

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Speaker 1: long period of time. But usually what you see is

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Speaker 1: not it's not just that FED put. You've already priced

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Speaker 1: in the idea that the FED has accelerated the pace

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Speaker 1: of liquidity provision to the market. You've already priced in

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Speaker 1: the fact that rates are extremely low. You usually need

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Speaker 1: to the incrementally more liquidity and incrementally more movement in

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Speaker 1: rates to get really excited about stocks. Nonetheless, that's not

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Speaker 1: the case today. We're still seeing stock prices rise in

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Speaker 1: the vast majority of the rise is driven by valuation expansion. Um.

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Speaker 1: So it's pretty clear to me that this is largely

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Speaker 1: technically driven. That's not a bad thing, um, It just

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Speaker 1: is is what to me is driving the market higher. Dave.

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Speaker 1: If you take a look at the value trade, you know,

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Speaker 1: the conversation in the market though, is in order to

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Speaker 1: have a sustained value rotation and a really move into

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Speaker 1: small caps, you need a vaccine full stop. You need

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Speaker 1: a recovery. Is that is that true? Well, there are

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Speaker 1: certainly those strategists who will say so, and we we've seen,

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Speaker 1: you know, if you go back the last few months,

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Speaker 1: I mean occasionally you get these sort of two or

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Speaker 1: three day moves and valius stocks and people think, oh,

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Speaker 1: finally the situation has changed, because value has been trailing

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Speaker 1: really ever since the bull market began back in two

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Speaker 1: thousand nine. Well, you know, we're looking at another move

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Speaker 1: that's fizzled out, just like the earlier ones. Have, and

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Speaker 1: it's just a matter of you know, as long as

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Speaker 1: those big tech companies kind of stay at the forefront

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Speaker 1: of the market, it's like, you know, there's sort of

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Speaker 1: like a force field. Everything kind of ends up coming

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Speaker 1: back to them in some level, and you know, the

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Speaker 1: value stocks just haven't been able to compete. Alright, good stuff.

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Speaker 1: Uh And I know, Dave, your chart coming up takes

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Speaker 1: a look at fear in the market specifically specifically looking

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Speaker 1: at US options, so looking forward to much more specific alright,

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Speaker 1: really appreciate it. Dave Wilson our stocks that her Bloomberg News.

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Speaker 1: Gina Martin Adams was chief equity strategist at Bloomberg Intelligence.

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Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason

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Speaker 1: Kelly on Bloomberg Radio. We know that the world is

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Speaker 1: in a race for a vaccine for COVID nineteam more

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Speaker 1: likely several vaccines, but in the meantime, testing and tracing

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Speaker 1: are key to keeping coronavirus in check. And especially when

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Speaker 1: we talk about reopening schools. College in university is our

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Speaker 1: next guest has some thoughts on that, especially when it

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Speaker 1: comes to tapping into what he sees as the under

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Speaker 1: utilization of the nation's test labs. We welcome back Dr

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Speaker 1: Eric Shott, founder and CEO at SEMMA for It's a

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Speaker 1: patient centric predictive health companies. Also Dean for Precision Medicine

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Speaker 1: UH and Mount Sinai Professor in Predictive Health and Computational Biology.

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Speaker 1: He's really smart, Alex at the Icon School of Medicine

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Speaker 1: at Mount sign Now he joins us once again on

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Speaker 1: the phone in Connecticut. Um, Eric's good to have you

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Speaker 1: back with us. Tell us a little bit about testing

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Speaker 1: and tracing, right. We keep hearing how important this is.

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Speaker 1: But as Alex said at the top of the show,

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Speaker 1: she recently had to go in for a procedure, got

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Speaker 1: her test done, got the results back pretty quickly. But

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Speaker 1: she and I've seen this to other people taking tests

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Speaker 1: and it takes forever to get the results back. Yeah.

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Speaker 1: So there's, you know, a lot of testing capacity out there.

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Speaker 1: I think it all comes down to logistics and who

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Speaker 1: you know has the right kind of partnerships with the

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Speaker 1: different systems to kind of leverage capacity beyond one lab.

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Speaker 1: There's no single lab that can handle all of the

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Speaker 1: capacity that's coming. Right. We have these fluctuations and episodes

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Speaker 1: of intense UM outbreaks where the testing demand gets super high,

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Speaker 1: and so it's this it's logistical really the ability to

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Speaker 1: manage and leverage multiple partners to be able to leverage

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Speaker 1: the capacity that's available without getting too political. I mean

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Speaker 1: President Trump talks a lot about how we have the

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Speaker 1: best testing system in the world, and we've really done

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Speaker 1: a good job with testing UM. So what is he

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Speaker 1: talking about, like where do we do well and then

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Speaker 1: where do we need to do better. So the the

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Speaker 1: technological side of the testing, you know, being able to

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Speaker 1: provide highly sensitive, very specific, very accurate tests, the technologies

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Speaker 1: those are based on the ability to automate those technologies

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Speaker 1: like we do lead in that arena, I think where

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Speaker 1: we fall down, uh, and would not say we're the

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Speaker 1: best you know in the world, would be again, on

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Speaker 1: this logistics side, the ability to manage huge patient flows,

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Speaker 1: the collection of samples, the the sending of those samples

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Speaker 1: into the major labs to get them processed like that

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Speaker 1: requires more of a centralized infrastructure that a few big

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Speaker 1: labs have, but they're overwhelmed and can't meet the demands well.

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Speaker 1: As we all said at the beginning to and we

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Speaker 1: heard this from a lot of our guests early on,

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Speaker 1: and UM it was all about kind of a war effort,

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Speaker 1: like we needed to think about getting ahead of this

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Speaker 1: as if we were fighting. I mean, we were fighting,

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Speaker 1: it was a health war, but I mean that's something

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Speaker 1: Eric Ween kind of needed to do UM and really

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Speaker 1: have federal involvement, national national strategy, but we didn't have it.

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Speaker 1: And it sounds like that's what you're talking about. And

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Speaker 1: the scale of testing is something no lab in the

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Speaker 1: country has had to undertake in the history of the US.

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Speaker 1: You know, the ability to run many hundreds of thousands

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Speaker 1: into the millions of tests today, that's just a scale

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Speaker 1: we've never had to face before. So the kind of

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Speaker 1: infrastructure you need to accommodate that, the coordination within the government,

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Speaker 1: within the private lab world, that's just not something that existed.

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Speaker 1: So talk to us about your own personal ramp up

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Speaker 1: that you guys did at Semaphore, because you got involved

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Speaker 1: with this pretty quickly and it wasn't what you were

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Speaker 1: set up to do initially, right right, it definitely you know,

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Speaker 1: we were a state of the art, you know, next

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Speaker 1: generation sequencing UM lab and intelligence company, so we have

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Speaker 1: again familiarity with the technology and the automation, So that

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Speaker 1: part was easy. So what we were able to do

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Speaker 1: quickly with stand that technology up, run it through a clear,

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Speaker 1: certified UM lab and demonstrate the ability to get highly

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Speaker 1: accurate and quick turnaround results. UM. But like everybody else,

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Speaker 1: we faced you know, from the crunch on availability of

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Speaker 1: re agents and test kids to the logistics of getting

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Speaker 1: samples to flow through in a very themeless way. Those

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Speaker 1: are some of the obstacles we had to overcome, and

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Speaker 1: of course partnered with the state of Connecticut and a

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Speaker 1: lot of their resources around you know, bringing in UH

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Speaker 1: groups like the National Guard to help and so on.

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Speaker 1: So it was it was an interesting effort and it

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Speaker 1: was a nice way of putting that. UM. So you

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Speaker 1: brought it up sort of the huge effort. Uh, what

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Speaker 1: about financial cost for that? Because it's great to want

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Speaker 1: to change how we do stuff and do but it

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Speaker 1: feel like it's always gonna come down to dollars and cents. Yeah,

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Speaker 1: the cost um definitely plays a big role, you know,

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Speaker 1: how accommodated you want to be in the test. You know,

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Speaker 1: we do have the ability to test in the home

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Speaker 1: to do you know, through saliva collection and UH anterior

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Speaker 1: nary swabbing of the nose and so on. But those

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Speaker 1: kits cost money. The shipping of those kits in a

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Speaker 1: timely way cost money. The running up the test costs money.

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Speaker 1: And the software to support how you can manage large

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Speaker 1: flows of individuals like like consider back to work, back

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Speaker 1: to school programs where you know, those systems they don't

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Speaker 1: need just a test that they can flip, right, because

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Speaker 1: they're not accustomed to testing everybody that way. And and

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Speaker 1: say a school or a business they need they need

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Speaker 1: help managing that both, um, you know, managing who's eligible

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Speaker 1: for testing? What are their results? Are they eligible to

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Speaker 1: come back into the workplace or the school? Like So

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Speaker 1: there's a lot, a lot of again of infrastructure um

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Speaker 1: needed And so the cost varies widely depending on are

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Speaker 1: you just running a test that somebody has provided you

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Speaker 1: the sample or are you managing the entire flow I do.

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Speaker 1: That's why you see no no please finish, no, no,

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Speaker 1: please finish. That's why you see the wide variability and um,

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Speaker 1: you know in the costs and the accessibility to those

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Speaker 1: kinds of services. I mean, what do we need realistically

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Speaker 1: in this country to be able to do in the testing.

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Speaker 1: That's that's kind of demanded for a comfortable or more

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Speaker 1: comfortable reopening. And we just got about a minute. We're

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Speaker 1: gonna do some news and then we'll come back there.

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Speaker 1: I think it's you need uh, very large scale, very

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Speaker 1: low cost sample collection methods, and there are a number

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Speaker 1: of very significant efforts under way, you know, funded by

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Speaker 1: the Gates Foundation and the National Institutes of Health. Like

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Speaker 1: how do we for very low cost enable samples to

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Speaker 1: be collected in a home UM environment not have to

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Speaker 1: be medically observed? Like that's a big obstacle that UM

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Speaker 1: is being overcome. And then I think it's all about

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Speaker 1: like how do you enable laughs to handle hundreds of

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Speaker 1: thousands of samples coming in in a day. Like again,

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Speaker 1: that's just like a logistical like think of your sitting

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Speaker 1: in a warehouse and hundreds of thousands of these samples

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Speaker 1: are coming at you. They have to be very carefully

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Speaker 1: managed and tracked and so on. UM. Doctor, you also

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Speaker 1: run a business. You had to deal with the business

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Speaker 1: during the pandemic. UM, how did you keep people motivated?

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Speaker 1: How did you do it? What did you learn? Well?

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Speaker 1: I think, you know, first of all, we're on a

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Speaker 1: cool mission that some of more like it is about

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Speaker 1: how do we better enabled patients and physicians to uh

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Speaker 1: make better decisions around their care. We have Core had

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Speaker 1: to stay in full operation while this was going on

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Speaker 1: because we provide standard care services and then the COVID testing,

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Speaker 1: so it was like putting in place the right kinds

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Speaker 1: of protections enabling employees to feel save. We went to

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Speaker 1: the labs, went to alternating shifts where you know, we

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Speaker 1: had a chance to clean between shifts and and if

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Speaker 1: one shift got uh infacted, we you know had another

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Speaker 1: shift that could could pick up the ball. So it

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Speaker 1: was a lot of again logistical maneuvering and putting in

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Speaker 1: place the right protections and we you know, started doing

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Speaker 1: testing as well on the employees and um you know,

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Speaker 1: symptom tracking and so on to you know, just just

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Speaker 1: be as protected as possible. I am curious to dr

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Speaker 1: Shot you know, from your channels also at UM the

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Speaker 1: Icon School of Medicine at Mount Sinai and just the

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Speaker 1: folks that you're talking within your industry, in the medical

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Speaker 1: community at large. You know, how do you see playing out,

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Speaker 1: Do you have any visibility and what are your expectations. Yeah,

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Speaker 1: it's it's one of those times we don't we don't

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Speaker 1: have any visibility, so we're we're just asking everybody else

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Speaker 1: for it, right, Yeah, you know it's a it's a

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Speaker 1: tough one. I think you know, the testing will get

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Speaker 1: under more control. Uh, We'll we'll play out whether the

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Speaker 1: antibodies are predictive for immunity, uh, some vaccines. Hopefully we'll

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Speaker 1: roll onto the scene. Like I think what we'll see

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Speaker 1: as increasingly better management, better protection, allowing a more relaxed

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Speaker 1: dance given those better protections. Um, so I see thanks

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Speaker 1: getting um, you know, more back to normal uh into

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Speaker 1: but yeah, but definitely don't see this disappearing. I think

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Speaker 1: you know, it's going to stick with us for a while,

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Speaker 1: and it's going to really be our ability to better

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Speaker 1: manage it and return to as normal as dance as possible. Well,

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Speaker 1: I'm glad that you mentioned that because I've been back

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Speaker 1: at work for I think this is my fifth week,

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Speaker 1: and in the beginning when I came back, it was

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Speaker 1: really jarring. Um, and then I got all my systems

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Speaker 1: in place, like to sanitize, when to wipe stuff down,

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Speaker 1: and then it feels okay. And as I mentioned earlier,

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Speaker 1: I had a test last week and I'm negative. I

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Speaker 1: mean is this what we're all kind of in for,

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Speaker 1: Like we all just have to kind of bite the bullet,

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Speaker 1: kind of get back in gear, and then we realize

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Speaker 1: it's going to be okay. And the protocols that we've

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Speaker 1: been taking or working, I think that's exactly right, Like

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Speaker 1: the evidence will build that those kind of protections are

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Speaker 1: working and do prevent um spread and new infections, and

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Speaker 1: they're not so onerous, and they do enable us to

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Speaker 1: get back into a somewhat normal stance and have more

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Speaker 1: face to face contact. You know, we are human beings

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Speaker 1: where where I don't think we were intended to live

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Speaker 1: in a completely digital world. So I think it is

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Speaker 1: important to get back to that kind of level. In

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Speaker 1: the back to work programs were helping manage we see

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Speaker 1: exactly what you mentioned, like if you follow those kind

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Speaker 1: of protocols like you can, you can be really well protected.

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Speaker 1: It works well. And that's what's interesting because you are

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Speaker 1: working with corporations on back to work testing and also

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Speaker 1: with schools and colleges, So are you anticipating that that's like,

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Speaker 1: as Alex said, that testing becomes more the norm that

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Speaker 1: we're all going to be doing it kind of on

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Speaker 1: a regular basis or maybe doing it for herselves. I mean,

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Speaker 1: is that what's going to be as well? Just quickly,

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Speaker 1: just got about a minute left. Yeah, I think, I

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Speaker 1: think absolutely. I think testing is going to become a

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Speaker 1: very critical component going forward, but it's it's a necessary component,

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Speaker 1: but not sufficient. I think a lot of the kind

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Speaker 1: of symptom tracking, how people are feeling, even some degree

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Speaker 1: of contact tracing, all of that combined will provide a

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Speaker 1: robust solution, like we will enter the era of surveillance

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Speaker 1: kind of testing like that, will I believe be here

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Speaker 1: to stay. That's like people knocking on our doors being

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Speaker 1: like are you home? I don't think people knocking on

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Speaker 1: your doors. I think it's surveillance from the standpoint of

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Speaker 1: are you infected? Is the virus spreading through communities? Like?

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Speaker 1: Because if it is, we can take extra protective steps

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Speaker 1: to slow it or prevent it. Yeah, it's definitely a

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Speaker 1: different new world her um, Eric, thank you so much,

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Speaker 1: really appreciate checking in with you again. Dr Eric Shott,

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Speaker 1: He's founder and CEO at SEMA, for joining us on

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Speaker 1: the phone from Stanford, Connecticut. This is Bloomberg Business Week

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Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. We've

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Speaker 1: got a special vaccine issue this week. It's all about

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Speaker 1: how we got here, the science, manufacturing, politics, and persuasion

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Speaker 1: that might just end the pandemic. It is called the

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Speaker 1: vaccine issue, and there's a really interesting story, a disturbing

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Speaker 1: one too, about how vaccine nationalism is making this deadly

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Speaker 1: disease even worse. Let's get into this story. Vernon Silver

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Speaker 1: Projects and Investigations Report re Bloomberg News. He joins us

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Speaker 1: on the phone from Rome. He wrote it, and also

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Speaker 1: with us is the editor of the magazine, Joe Webber

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Speaker 1: on the phone from Massachusetts. Joel, you know, just when

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Speaker 1: you think this story can't get any worse, you do

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Speaker 1: think about the nationalistic issues of this virus. It's right,

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Speaker 1: and you know again in one of the defining elements

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Speaker 1: of this issue was to sort of take this idea

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Speaker 1: of a vaccine and look at it from as many

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Speaker 1: different ways and angles as we could think of. And

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Speaker 1: it wasn't just about the sort of the horse race,

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Speaker 1: if you will, of trying to make this thing. And

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Speaker 1: as much as that's an important part, it also had

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Speaker 1: there's plenty of other components. And the political one is

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Speaker 1: obviously especially important dimension here and when when Arnon Vernon

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Speaker 1: sort of roses raised his hand about this idea, I

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Speaker 1: think it got to a deeper place because what we're

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Speaker 1: seeing is countries really having this in general, just this

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Speaker 1: resurgence of nationalism, and that's now manifesting itself um around

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Speaker 1: how they're approaching the vaccine, and as countries are digging

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Speaker 1: their heels in to sort of do everything by themselves,

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Speaker 1: it actually makes the whole situation worse because through collaboration,

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Speaker 1: we might have been able to pull resources and maybee

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Speaker 1: maybe reach a cure or a vaccine quicker than we

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Speaker 1: otherwise might and benefit more people. And what I think

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Speaker 1: Vernon really found that was so in thing was being

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Speaker 1: in Rome, you know, which was one of the first

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Speaker 1: places affected by the pandemic. Uh. It really felt like

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Speaker 1: Italy was at sort of the forefront of this conversation.

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Speaker 1: So so Vernon, what was the Italian perspective on all

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Speaker 1: of this? I mean what we did was started following

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Speaker 1: the vial literally of how the vaccine were being produced.

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Speaker 1: And the first strand came in just ten little vials

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Speaker 1: that were sent from Oxford, uh to Rome to this

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Speaker 1: company that was going to make over ten thousand doses

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Speaker 1: for the trials, the very first large scale trials of

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Speaker 1: a vaccine in the world. Um and by happenstance um,

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Speaker 1: the you know, the initial supply of that vaccine was

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Speaker 1: within the borders of Italy, and the politicians here latched

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Speaker 1: onto it and it kind of it kind of steamed,

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Speaker 1: you know, it was a snowball where you had more

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Speaker 1: deals being made and more kind of nationalist rhetoric coming

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Speaker 1: out of the mouths of the leaders here who needed

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Speaker 1: a redemption from having been the worst hit at the

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Speaker 1: outset um and the the end result is that we've

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Speaker 1: got about, you know, a quarter of the supply of

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Speaker 1: the Astra Zeneca Oxford vaccine now being bottled within Italy's borders.

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Speaker 1: And how it plays out in the end is one

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Speaker 1: of the questions that that's been left open as they balanced,

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Speaker 1: you know, let's all cooperate with well, we do have

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Speaker 1: it here. Well, I'm glad you brought that part up,

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Speaker 1: because I was wondering what the nationalism part means. Does

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Speaker 1: it mean that you provide the money to the company

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Speaker 1: to make the vaccine, that you then buy all the

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Speaker 1: vaccines and have to be a local company that's making

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Speaker 1: the vaccine or is it the distribution like the vials

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Speaker 1: and the manufacturing part. Like, there are lots of different

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Speaker 1: angles to it. Yeah, and the best way to understand

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Speaker 1: it is it breaks down into two areas, the bad

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Speaker 1: actors and the bad planners. And the bad actors are

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Speaker 1: you know, the accusations against the Chinese and Russian governments

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Speaker 1: that they've been hacking the Western efforts. The bad actors are.

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Speaker 1: We already saw it in March when protective equipment was

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Speaker 1: being blocked by different countries. Ninety different countries blocked equipment

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Speaker 1: that would have been of use during the pandemic. Those

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Speaker 1: are those are the bad actors, and we kind of

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Speaker 1: know about those the bad planners. It's sort of just

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Speaker 1: the splintering of where, you know, are you going to

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Speaker 1: throw a lot of money at it? You know, the

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Speaker 1: Trump administration is throwing ten billion dollars at this operation

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Speaker 1: warp Speed that sucks up supply poorer countries then you know,

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Speaker 1: are trying to pull money to buy their own supplies.

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Speaker 1: That drives up prices. And these companies that are trying

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Speaker 1: to you know, save the you know, save the world

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Speaker 1: and also makes the money or trying to find solutions,

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Speaker 1: and Astra Zeneca is a great example because they've decided

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Speaker 1: they need to fight the nationalism by creating the supply

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Speaker 1: chains on four different continents. If everyone's gonna fight over it,

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Speaker 1: give everyone their own darned supply chains. The Russia has

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Speaker 1: a supply chain of the Oxford vaccine, and Brazil will

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Speaker 1: have one, and there's the one in Italy, and there's

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Speaker 1: a billion doses being made in India. So okay, best

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Speaker 1: laid plans, right, we create vaccine or vaccines and the

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Speaker 1: world has equal access to it, and then there's reality.

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Speaker 1: Is there vernon the possibility the likelihood that we're going

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Speaker 1: to see people ordering the vaccine, but then there's going

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Speaker 1: to be countries who are not going to let it

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Speaker 1: cross their borders. Absolutely, that's what That's what the companies

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Speaker 1: are planning for. That's what the governments are planning for.

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Speaker 1: That's why you try to get a clear idea of

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Speaker 1: how these these orders are. Who goes first? You know,

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Speaker 1: in the UK said, you know it's been developed at Oxford,

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Speaker 1: We're going to get the first doses for our people.

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Speaker 1: How does that play out in the end? And that's

431
00:22:39,520 --> 00:22:41,919
Speaker 1: that's sort of what we're looking at next, is that

432
00:22:42,080 --> 00:22:46,159
Speaker 1: borders have become the battle lines in this nationalism of

433
00:22:46,520 --> 00:22:52,280
Speaker 1: the vaccines. Vernon Um. The the other thing that you

434
00:22:52,320 --> 00:22:55,919
Speaker 1: said in here, Um was something about poor countries, and

435
00:22:55,960 --> 00:22:59,200
Speaker 1: I just want to bring that out here because for

436
00:22:59,600 --> 00:23:03,320
Speaker 1: basically everything that we're looking at here, we're basically talking

437
00:23:03,359 --> 00:23:07,280
Speaker 1: about rich nations that have the ability to actually have

438
00:23:07,400 --> 00:23:11,879
Speaker 1: the science and manufacturing in place. Is this yet another

439
00:23:11,920 --> 00:23:15,679
Speaker 1: example of sort of uh, this ongoing conversation that we

440
00:23:15,720 --> 00:23:19,959
Speaker 1: have about inequality and and uh, and here we have

441
00:23:20,560 --> 00:23:24,679
Speaker 1: some countries with many people who will actually have access

442
00:23:24,720 --> 00:23:27,960
Speaker 1: to something first, while probably a greater portion of the

443
00:23:27,960 --> 00:23:32,760
Speaker 1: world has nothing. Yeah. Absolutely, I mean across the board.

444
00:23:32,800 --> 00:23:37,080
Speaker 1: From the beginning, this pandemic has exposed and exacerbated inequality

445
00:23:37,080 --> 00:23:39,280
Speaker 1: of all types. And we're going to see in the

446
00:23:39,280 --> 00:23:42,320
Speaker 1: coming months as the vaccines and there are tons of them,

447
00:23:42,359 --> 00:23:45,760
Speaker 1: as they roll out, that there will be huge inequalities

448
00:23:46,040 --> 00:23:48,720
Speaker 1: and everybody will get hurt by that because the fact

449
00:23:48,800 --> 00:23:54,159
Speaker 1: is that these viruses don't know borders. So if the

450
00:23:54,280 --> 00:23:59,120
Speaker 1: UK or the US or China hords their own supply, well,

451
00:23:59,359 --> 00:24:01,679
Speaker 1: you know, somebody in the poorer parts of the world

452
00:24:01,800 --> 00:24:05,280
Speaker 1: is going to uh not get it, and that's just

453
00:24:05,480 --> 00:24:07,440
Speaker 1: you know, if they if if there were some magic

454
00:24:07,480 --> 00:24:09,560
Speaker 1: way to get everyone spread it around at the same

455
00:24:09,600 --> 00:24:12,879
Speaker 1: time for the people who most needed it, uh, you know,

456
00:24:12,960 --> 00:24:16,920
Speaker 1: healthcare workers, the vulnerable, then we'd be out of this

457
00:24:17,000 --> 00:24:20,800
Speaker 1: mess a lot quicker. But that's not what's happened. Yeah. Um,

458
00:24:20,840 --> 00:24:23,479
Speaker 1: And I do wonder too, because, especially in these emerging markets,

459
00:24:23,480 --> 00:24:26,280
Speaker 1: it's where you're seeing some of the early testing of

460
00:24:26,320 --> 00:24:30,240
Speaker 1: the vaccine happening, and it would be kind of ironic, unfair. Um.

461
00:24:30,280 --> 00:24:32,160
Speaker 1: I don't even know what other words to use about

462
00:24:32,200 --> 00:24:35,080
Speaker 1: it if ultimately these countries then don't have access to

463
00:24:35,160 --> 00:24:38,440
Speaker 1: the vaccine when it's finally confirmed. So it's a deep,

464
00:24:38,480 --> 00:24:41,919
Speaker 1: deep read. Um. The coverage in the magazine about the

465
00:24:42,000 --> 00:24:44,960
Speaker 1: race for a vaccine Isjuel said, it's not just about

466
00:24:45,000 --> 00:24:47,400
Speaker 1: the horse race, but about so many other issues such

467
00:24:47,480 --> 00:24:50,640
Speaker 1: as vaccine nationalism, so it's a must read. Alex. Yeah,

468
00:24:50,680 --> 00:24:54,400
Speaker 1: I think we saw that, um with HIV in Africa,

469
00:24:54,920 --> 00:24:57,080
Speaker 1: that like that that they were that's where they did

470
00:24:57,080 --> 00:24:58,680
Speaker 1: all the early testing, and that's where you're going to

471
00:24:58,800 --> 00:25:03,000
Speaker 1: run into some albums. Yeah, exactly exactly. I feel like, man,

472
00:25:03,080 --> 00:25:05,520
Speaker 1: there's just so many different facets to this story and

473
00:25:05,560 --> 00:25:08,359
Speaker 1: so much more to come. Um our thanks to Joe Webber,

474
00:25:08,480 --> 00:25:11,360
Speaker 1: editor of Bloomberg Business Week, on the phone from Massachusetts.

475
00:25:11,440 --> 00:25:15,600
Speaker 1: Vernon Silver great reporting always projects and investigations reporter at

476
00:25:15,640 --> 00:25:19,560
Speaker 1: Bloomberg News has been watching this virus firsthand from Italy

477
00:25:19,600 --> 00:25:21,639
Speaker 1: and joining us on the phone from Row. This is

478
00:25:21,680 --> 00:25:25,520
Speaker 1: Bloomberg Business Week with Carol Masser and Jason Kelly on

479
00:25:25,760 --> 00:25:29,320
Speaker 1: Bloomberg Radio and Alex we resently noted here at Bloomberg

480
00:25:29,320 --> 00:25:31,760
Speaker 1: you actually brought this up on our planning call. You

481
00:25:31,800 --> 00:25:35,280
Speaker 1: talked about how some companies have been out there to

482
00:25:36,320 --> 00:25:39,000
Speaker 1: kind of the rush, if you will, for sustainable finance.

483
00:25:39,040 --> 00:25:40,800
Speaker 1: I think there's a recent bond steal from Google right

484
00:25:40,840 --> 00:25:44,240
Speaker 1: their parent alphabet, Google Visa. It's sort of like the

485
00:25:44,320 --> 00:25:46,680
Speaker 1: new trend in the middle of the pandemic, and there

486
00:25:46,720 --> 00:25:48,520
Speaker 1: is the demand. I think the question that becomes like

487
00:25:48,560 --> 00:25:50,719
Speaker 1: do you actually make a good enough return on it

488
00:25:51,200 --> 00:25:53,680
Speaker 1: versus blaying something else. Ultimately, it's about the returns. In

489
00:25:53,720 --> 00:25:57,240
Speaker 1: our weekly Bloomberg Green Segment today are Emily Chason, she

490
00:25:57,359 --> 00:25:59,919
Speaker 1: sustainability editor Bloomberg New She's got a look at how

491
00:26:00,040 --> 00:26:02,240
Speaker 1: long term investors now hold more sway when it comes

492
00:26:02,280 --> 00:26:06,600
Speaker 1: to e s G. Environmental. Um, I can't remember what

493
00:26:06,640 --> 00:26:10,919
Speaker 1: that is now, Environmental, Sustainable and Governance. Thank you. A

494
00:26:11,040 --> 00:26:14,520
Speaker 1: momentary break here man, Time has no meaning, thank you, partner.

495
00:26:15,000 --> 00:26:17,000
Speaker 1: Let's get into Emily. She joins us on the phone

496
00:26:17,000 --> 00:26:19,439
Speaker 1: in New York City. Time has no meeting Emily. Thank you,

497
00:26:19,480 --> 00:26:23,560
Speaker 1: thank you, save me, save me. So what's going on? Yeah, well,

498
00:26:23,560 --> 00:26:25,760
Speaker 1: absolutely know. That's a really good start of this conversation,

499
00:26:25,840 --> 00:26:27,560
Speaker 1: that time has no meaning. You know, we're talking a

500
00:26:27,600 --> 00:26:30,800
Speaker 1: lot about short term investors. We talked about long term investors. Um.

501
00:26:30,920 --> 00:26:34,000
Speaker 1: One of the things that's interesting in this pandemic is

502
00:26:34,040 --> 00:26:36,960
Speaker 1: that short term activists have not really been making the

503
00:26:37,000 --> 00:26:39,520
Speaker 1: big bet stay they were right, like, the market is

504
00:26:39,520 --> 00:26:41,960
Speaker 1: pretty volatile, it's pretty risky to take such a big bet.

505
00:26:42,240 --> 00:26:44,880
Speaker 1: So long term investors right now actually have a much

506
00:26:45,359 --> 00:26:48,280
Speaker 1: um at least a big companies have a much larger influence,

507
00:26:48,320 --> 00:26:50,680
Speaker 1: and they've been warning for years about all these stomach

508
00:26:50,720 --> 00:26:54,639
Speaker 1: and workforce issues with diversity and climate change, and so

509
00:26:54,920 --> 00:26:57,000
Speaker 1: this is kind of like help help, This is kind

510
00:26:57,000 --> 00:27:00,000
Speaker 1: of their moment um. So e SC has definitely been stirred.

511
00:27:00,080 --> 00:27:02,240
Speaker 1: Jing and Um. We looked a little bit this week

512
00:27:02,280 --> 00:27:05,520
Speaker 1: about the tools that long term investors actually happen incluce companies.

513
00:27:06,000 --> 00:27:08,640
Speaker 1: So the criticism in terms of say the last six

514
00:27:08,640 --> 00:27:10,400
Speaker 1: months with the s G is that the reason why

515
00:27:10,400 --> 00:27:12,920
Speaker 1: E s G did well is because it's mostly tech

516
00:27:13,320 --> 00:27:14,879
Speaker 1: like E s G is you're not gonna think of

517
00:27:14,880 --> 00:27:16,840
Speaker 1: it as an as an energy, right, and Texas out

518
00:27:16,840 --> 00:27:19,399
Speaker 1: performing energy, So therefore E s G performance better. But

519
00:27:19,440 --> 00:27:23,240
Speaker 1: that's not really because of E s G. Well what

520
00:27:23,320 --> 00:27:26,520
Speaker 1: do you think about that? Well, you know, it's interesting

521
00:27:26,520 --> 00:27:29,639
Speaker 1: because Bloomberg Intelligence did something this week where they looked

522
00:27:29,680 --> 00:27:33,160
Speaker 1: at diversity and like stocked with more women on board,

523
00:27:33,200 --> 00:27:36,280
Speaker 1: and they're actually starting to bee divergent for companies that

524
00:27:36,359 --> 00:27:39,200
Speaker 1: have more woments on board. So it's not um, it's

525
00:27:39,200 --> 00:27:42,520
Speaker 1: not just and um. What a lot of the E

526
00:27:42,600 --> 00:27:46,080
Speaker 1: s G investors have found is that they chose companies

527
00:27:46,200 --> 00:27:50,280
Speaker 1: that had better management and were more able to pivot

528
00:27:50,480 --> 00:27:53,840
Speaker 1: or um rethink what they were doing in the pandemic

529
00:27:53,880 --> 00:27:57,960
Speaker 1: as well. Interesting, So what so what does this mean

530
00:27:58,000 --> 00:28:00,080
Speaker 1: then for kind of the E s G world. I

531
00:28:00,119 --> 00:28:01,920
Speaker 1: do love though that the statistics are showing to show

532
00:28:01,960 --> 00:28:03,679
Speaker 1: because I feel like we went through a period I

533
00:28:03,720 --> 00:28:05,359
Speaker 1: keep kind of going backwards here, but and we went

534
00:28:05,359 --> 00:28:08,359
Speaker 1: through a period where E s G people just wanted

535
00:28:08,359 --> 00:28:09,680
Speaker 1: to do because they felt like it was the right

536
00:28:09,720 --> 00:28:14,000
Speaker 1: thing to do. But now it's become much more mainstream. Yeah,

537
00:28:14,080 --> 00:28:16,639
Speaker 1: E s G I mean after they're just flowing in. UM.

538
00:28:16,680 --> 00:28:18,720
Speaker 1: We looked at ubs this week. They were out with

539
00:28:18,800 --> 00:28:22,919
Speaker 1: a note saying that they had seen seventy one billion

540
00:28:22,960 --> 00:28:25,040
Speaker 1: and infos and E s g F in the second quarter,

541
00:28:25,080 --> 00:28:27,119
Speaker 1: which brought their E s g F to one trillion

542
00:28:27,200 --> 00:28:29,680
Speaker 1: for the first time. Just that U b asked UM

543
00:28:29,760 --> 00:28:32,679
Speaker 1: and they found that fifty of sustainable funds outberform their

544
00:28:32,720 --> 00:28:36,320
Speaker 1: peers in the second quarter, So that definitely is happening

545
00:28:36,359 --> 00:28:39,920
Speaker 1: from there. But then we also looked at UM annual

546
00:28:40,120 --> 00:28:43,160
Speaker 1: meeting practices and just ended. So there's all those environmental

547
00:28:43,200 --> 00:28:46,760
Speaker 1: resolutions that these long term shareholders bring. UM, we're actually

548
00:28:46,760 --> 00:28:48,720
Speaker 1: getting more support as well well. Yeah, and then to

549
00:28:48,840 --> 00:28:50,880
Speaker 1: that so let's get to it. So these proposals, whether

550
00:28:50,880 --> 00:28:55,000
Speaker 1: they're social, environmental, or governance, et cetera. UM, what what

551
00:28:55,080 --> 00:28:57,280
Speaker 1: kind of support are they getting, are they being implemented,

552
00:28:57,360 --> 00:29:00,960
Speaker 1: et cetera. Yeah, it was a really long term process.

553
00:29:00,960 --> 00:29:03,240
Speaker 1: It's more sort of the direction of travel and where

554
00:29:03,280 --> 00:29:06,840
Speaker 1: things are going. UM, and you know what issues investors

555
00:29:06,880 --> 00:29:09,120
Speaker 1: want to flag to companies because these are mostly non

556
00:29:09,160 --> 00:29:11,280
Speaker 1: binding proposals and then the company probably takes a year

557
00:29:11,360 --> 00:29:13,640
Speaker 1: or so to implement them, if they do at all.

558
00:29:13,720 --> 00:29:16,959
Speaker 1: But um, anyway, the votes are coming back stronger this

559
00:29:17,040 --> 00:29:19,520
Speaker 1: year even though it was all virtual and your leading seasons,

560
00:29:19,520 --> 00:29:22,640
Speaker 1: so there weren't any climate protests or um gad by

561
00:29:22,840 --> 00:29:25,720
Speaker 1: and executive facts like they usually aren't in your leading season.

562
00:29:25,880 --> 00:29:30,280
Speaker 1: So UM, we looked at environmental resolutions and there were

563
00:29:30,280 --> 00:29:33,040
Speaker 1: four climate child reposals at wrestles three thousand companies that

564
00:29:33,080 --> 00:29:36,200
Speaker 1: received majority support this year. Um. There were none last

565
00:29:36,280 --> 00:29:38,480
Speaker 1: year that did, so that was a big change. And

566
00:29:38,520 --> 00:29:42,360
Speaker 1: then the diversity proposals also got a lot more UM

567
00:29:42,560 --> 00:29:45,480
Speaker 1: passing rates this year than they had previously. Yeah, I

568
00:29:45,480 --> 00:29:47,240
Speaker 1: do wonder what initiative when it comes to the E

569
00:29:47,360 --> 00:29:51,360
Speaker 1: s G space has just gotten you know, the most um,

570
00:29:51,400 --> 00:29:53,720
Speaker 1: I guess resulted in the most changes, if you will,

571
00:29:53,760 --> 00:29:56,400
Speaker 1: And it's really brought about changes at companies. Is it

572
00:29:56,440 --> 00:30:01,480
Speaker 1: is it diversity is an environment? What have we seen? Emily, Well,

573
00:30:01,520 --> 00:30:05,200
Speaker 1: that is a million dollar question, I think for sure. Um.

574
00:30:05,240 --> 00:30:08,560
Speaker 1: You know one thing that has interesting about that is that, um,

575
00:30:08,600 --> 00:30:11,360
Speaker 1: these social issues often have a bigger impact on stocks

576
00:30:11,480 --> 00:30:14,240
Speaker 1: going So if your company has take issue or a

577
00:30:14,360 --> 00:30:17,560
Speaker 1: diversity issue, UM or me two issue, that can have

578
00:30:17,600 --> 00:30:20,600
Speaker 1: a much bigger impact on your stock price than environmental issues,

579
00:30:20,600 --> 00:30:22,160
Speaker 1: which are sort of slow and steady and it's sort

580
00:30:22,200 --> 00:30:24,920
Speaker 1: of feels further out to the market. So that's definitely

581
00:30:24,960 --> 00:30:26,960
Speaker 1: one thing to watch for. I'm really upset that we

582
00:30:27,000 --> 00:30:28,800
Speaker 1: didn't talk about. Oh go ahead, Alex, what we're gonna

583
00:30:28,840 --> 00:30:35,480
Speaker 1: do you? Its right, yes, Tom you first suptus its

584
00:30:35,520 --> 00:30:39,280
Speaker 1: like you missed it, mansues institutes, um you only about

585
00:30:39,280 --> 00:30:41,280
Speaker 1: three seconds left. I just wanted to get your take

586
00:30:41,360 --> 00:30:43,640
Speaker 1: on the fact that even the environmental proposals, I mean,

587
00:30:43,680 --> 00:30:45,960
Speaker 1: does it mean that it's more it's more less cost

588
00:30:46,000 --> 00:30:47,760
Speaker 1: effective for companies because I want to having to put

589
00:30:47,840 --> 00:30:50,040
Speaker 1: up money to change stuff, and maybe that's why it

590
00:30:50,040 --> 00:30:53,360
Speaker 1: doesn't get as much traction. Just got about thirty seconds. Um. Yeah,

591
00:30:53,400 --> 00:30:56,200
Speaker 1: environmental proposals are actually down this year. But what it

592
00:30:56,240 --> 00:30:58,520
Speaker 1: means is that companies are being more preemptive with their

593
00:30:58,520 --> 00:31:01,600
Speaker 1: shareholders and they're trying to um negotiate, and they've been

594
00:31:01,640 --> 00:31:04,720
Speaker 1: more willing to issue sustainable finance things themselves on their

595
00:31:04,720 --> 00:31:07,040
Speaker 1: own accord. Without so much pressure from child as not

596
00:31:07,080 --> 00:31:09,400
Speaker 1: having to like get all the way to a proposal.

597
00:31:10,240 --> 00:31:13,320
Speaker 1: Interesting stuff. I love that stat though, that the Morning

598
00:31:13,320 --> 00:31:16,640
Speaker 1: Star finding that of sustainable funds outperform their peers in

599
00:31:16,680 --> 00:31:21,520
Speaker 1: the second quarters. That's pretty cool Tuesday, right. I was

600
00:31:21,520 --> 00:31:23,120
Speaker 1: gonna let it go, but I'm glad you brought it

601
00:31:23,200 --> 00:31:28,120
Speaker 1: up again. Exactly. Not so good though for the environment.

602
00:31:28,400 --> 00:31:31,600
Speaker 1: Emily Chason, Sustainability editor up Bloomberg News on the phone

603
00:31:31,840 --> 00:31:40,120
Speaker 1: from n y C mac Journal. Yeah, but you let

604
00:31:40,120 --> 00:31:45,200
Speaker 1: me drive. No, no home, honey, please, I'll do the

605
00:31:45,320 --> 00:31:51,960
Speaker 1: right lt me. I want to drive, just drive, baby.

606
00:31:54,760 --> 00:32:04,719
Speaker 1: The questions drying yea, this is the drive to the globe.

607
00:32:05,480 --> 00:32:09,080
Speaker 1: Give me thanks, We'll drying up Dawn on Bloomberg Radio.

608
00:32:09,560 --> 00:32:11,520
Speaker 1: It is time for the drive to the clothes. Joining

609
00:32:11,560 --> 00:32:14,520
Speaker 1: us once again, Brian Yatman. He's Chief Investment Officer, portfolio

610
00:32:14,600 --> 00:32:18,240
Speaker 1: manager and lead manager of the y CG Enhanced Fund.

611
00:32:18,240 --> 00:32:20,080
Speaker 1: The fund, by the way, in the nineties six percent

612
00:32:20,120 --> 00:32:22,520
Speaker 1: all over the past five years, returning nearly twelve percent

613
00:32:23,000 --> 00:32:26,480
Speaker 1: on average annually. Brian based in Austin, Texas, and that's

614
00:32:26,480 --> 00:32:29,400
Speaker 1: where we find him on this Wednesday. Brian, great to

615
00:32:29,440 --> 00:32:32,080
Speaker 1: have you here. Have you back on Bloomberg Radio? How

616
00:32:32,120 --> 00:32:34,600
Speaker 1: are you? How are your how's your family doing? How's

617
00:32:34,640 --> 00:32:39,240
Speaker 1: your work family doing? Man, We're doing great, Um, both

618
00:32:39,640 --> 00:32:43,520
Speaker 1: family and work family. Um. You know, I feel a

619
00:32:43,560 --> 00:32:46,200
Speaker 1: little bit bad to say that, but during such difficult times,

620
00:32:46,200 --> 00:32:48,360
Speaker 1: I'm actually really enjoying the family time and just being

621
00:32:48,400 --> 00:32:51,200
Speaker 1: around my my wife and children more. Yeah, I've heard

622
00:32:51,200 --> 00:32:52,719
Speaker 1: that a lot, Alex. I don't know how you you know,

623
00:32:52,800 --> 00:32:54,680
Speaker 1: like it's just I know you're back at work, but

624
00:32:54,840 --> 00:32:58,840
Speaker 1: that kind of bubble feeling a little bit, It's cute.

625
00:32:58,240 --> 00:33:03,240
Speaker 1: I had mixed feeling, um about all those things. Um, Brian,

626
00:33:03,320 --> 00:33:08,520
Speaker 1: do you have mixed feelings about the market at record Nize? Oh? Well, yeah,

627
00:33:08,560 --> 00:33:11,880
Speaker 1: I mean it's this is crazy time. I mean I've

628
00:33:11,880 --> 00:33:14,320
Speaker 1: never seen anything like it, nor has anyone. I'm sure

629
00:33:14,360 --> 00:33:18,080
Speaker 1: you keep hearing that a lot, um, And I'd say

630
00:33:18,080 --> 00:33:21,560
Speaker 1: it's definitely a time to invest with care and and not.

631
00:33:21,640 --> 00:33:24,400
Speaker 1: I'm not saying it's dangerous just because there's so much

632
00:33:24,400 --> 00:33:28,000
Speaker 1: economic and political uncertainty, but just the fact that there's

633
00:33:28,040 --> 00:33:31,920
Speaker 1: so much speculative fever running rampants out there. I mean,

634
00:33:31,920 --> 00:33:36,080
Speaker 1: it's it is a casino out there. God, that doesn't

635
00:33:36,120 --> 00:33:39,560
Speaker 1: sound too good because we know, we know the house

636
00:33:39,560 --> 00:33:43,960
Speaker 1: always wins. I'm refering to like the robin Hood effect, right, Like,

637
00:33:44,000 --> 00:33:47,080
Speaker 1: so robin Hood, they went to free trading, and then

638
00:33:47,120 --> 00:33:49,840
Speaker 1: it led to free trading at all these other online

639
00:33:49,840 --> 00:33:54,320
Speaker 1: brokerages to be competitive, and there's you know what gambling

640
00:33:54,320 --> 00:33:57,000
Speaker 1: and sports down where do you turn to? Well, this

641
00:33:57,040 --> 00:34:00,240
Speaker 1: is this seems to be the the most popular place

642
00:34:00,280 --> 00:34:03,480
Speaker 1: to now gamble. You look at Charles Schwab as an example,

643
00:34:03,800 --> 00:34:07,360
Speaker 1: there's six times larger in assets than robin Hood, but

644
00:34:07,520 --> 00:34:10,720
Speaker 1: robin Hood has twice as many trades on a daily

645
00:34:10,760 --> 00:34:13,919
Speaker 1: basis than Schwab. Yeah, but isn't this a little isn't

646
00:34:13,920 --> 00:34:16,799
Speaker 1: a little simplistic? Because I look at the SMP and

647
00:34:16,840 --> 00:34:18,560
Speaker 1: I look at the last leg of the rally that

648
00:34:18,600 --> 00:34:20,919
Speaker 1: we've seen in the last six weeks. It's been led

649
00:34:20,920 --> 00:34:26,000
Speaker 1: by industrials, materials, and financials, and that's a pure recovery trade.

650
00:34:26,040 --> 00:34:28,280
Speaker 1: I mean, that's, ah, we're going to get a vaccine

651
00:34:28,400 --> 00:34:31,480
Speaker 1: and or we're combating the virus in an efficient way.

652
00:34:31,920 --> 00:34:36,600
Speaker 1: We're gonna buy the recovery stocks the reflation stocks. Yeah,

653
00:34:36,640 --> 00:34:38,920
Speaker 1: and that and that's true. But the thing that I

654
00:34:38,920 --> 00:34:42,719
Speaker 1: guess keeps happening is just so unpredictable that it's risk on,

655
00:34:43,200 --> 00:34:45,839
Speaker 1: risk risk off, and it just keeps going back and

656
00:34:45,880 --> 00:34:49,080
Speaker 1: forth because the reality is nobody really knows how this

657
00:34:49,120 --> 00:34:52,880
Speaker 1: will shake out in the next few weeks, months, and

658
00:34:52,960 --> 00:34:55,800
Speaker 1: even in the next year. You know, the reality is

659
00:34:56,239 --> 00:34:58,839
Speaker 1: there's still fear out there. The virus is still out there,

660
00:34:59,400 --> 00:35:01,719
Speaker 1: and so is there's fear. It's leading to a whole

661
00:35:01,760 --> 00:35:04,560
Speaker 1: different dynamics of the marketplace. Right, But then I think

662
00:35:04,560 --> 00:35:08,239
Speaker 1: the problem is if you just invested with fear that

663
00:35:08,280 --> 00:35:10,839
Speaker 1: you'd missed the rally that we saw, because then you'd

664
00:35:10,880 --> 00:35:13,160
Speaker 1: be buying big tech. Um, well, I guess you'd be

665
00:35:13,200 --> 00:35:14,960
Speaker 1: buying gold, so you might have a nice run of it,

666
00:35:15,000 --> 00:35:16,680
Speaker 1: but you'd be buying you know, treasuries, and you'll be

667
00:35:16,680 --> 00:35:19,279
Speaker 1: buying big tech. And that's what got shaken out. So

668
00:35:19,320 --> 00:35:22,200
Speaker 1: how do you as an investor deal with um the

669
00:35:22,320 --> 00:35:26,080
Speaker 1: macro versus the reality what we're seeing in the market. Well,

670
00:35:26,200 --> 00:35:29,000
Speaker 1: rather than trying to predict the directions, I think the

671
00:35:29,080 --> 00:35:32,799
Speaker 1: key is as an investor, you are buying ownership in

672
00:35:32,800 --> 00:35:35,600
Speaker 1: the business. So the key is to focus on businesses

673
00:35:35,680 --> 00:35:39,319
Speaker 1: with proven business models, and particularly they need to be

674
00:35:39,320 --> 00:35:42,920
Speaker 1: conservatively capitalized so that you know that they'll survive. You

675
00:35:42,960 --> 00:35:45,400
Speaker 1: don't want to buy into something where the bondholders of

676
00:35:45,440 --> 00:35:50,040
Speaker 1: today become the shareholders of tomorrow, right, So you just

677
00:35:50,040 --> 00:35:51,560
Speaker 1: want to make sure that things are going to work

678
00:35:51,560 --> 00:35:54,440
Speaker 1: out over the long term. On the businesses you choose

679
00:35:54,480 --> 00:35:57,120
Speaker 1: to own, well, let's talk about some of the names

680
00:35:57,120 --> 00:35:59,200
Speaker 1: you're always so good about because you guys are buying

681
00:35:59,320 --> 00:36:02,080
Speaker 1: names and you know, putting names into your portfolio. Let's

682
00:36:02,080 --> 00:36:03,440
Speaker 1: talk about some of the names that you like. And

683
00:36:03,440 --> 00:36:07,280
Speaker 1: I know one of the bigger holdings UM is St Lauder.

684
00:36:07,480 --> 00:36:12,719
Speaker 1: Talk to us about that brand. As you know, we're

685
00:36:12,719 --> 00:36:16,520
Speaker 1: always looking for global champions and Stay Lauders is certainly

686
00:36:16,560 --> 00:36:19,280
Speaker 1: one of those. They have the number one or number

687
00:36:19,280 --> 00:36:24,080
Speaker 1: two spot and Prestige Beauty in over forty countries, so

688
00:36:24,360 --> 00:36:27,960
Speaker 1: huge market share in the Prestige beauty UM. And you

689
00:36:28,000 --> 00:36:30,880
Speaker 1: know this is they're right in the fire as well

690
00:36:30,920 --> 00:36:34,960
Speaker 1: because obviously they're being affected. Uh you pointed out the

691
00:36:35,040 --> 00:36:37,719
Speaker 1: software side or some of these other businesses that have

692
00:36:37,800 --> 00:36:41,680
Speaker 1: this recurring revenue stream being more protected. Of course, Est

693
00:36:41,800 --> 00:36:44,640
Speaker 1: Lauders being hit. But you know this is a selfie

694
00:36:44,640 --> 00:36:47,840
Speaker 1: generation and people are still getting on zoom calls and

695
00:36:47,880 --> 00:36:51,520
Speaker 1: they're still they're taking photos, posting on social media. People

696
00:36:51,560 --> 00:36:53,239
Speaker 1: want to be at their best and look their best,

697
00:36:54,080 --> 00:36:58,040
Speaker 1: and so traditionally what's been the challenge for St. Lauder

698
00:36:58,120 --> 00:37:00,920
Speaker 1: was they were primarily coming through the partment store channel.

699
00:37:01,680 --> 00:37:04,440
Speaker 1: Over the years, they've declined from over fifty in the

700
00:37:04,480 --> 00:37:09,160
Speaker 1: department store channel to under and what happened was airports

701
00:37:09,239 --> 00:37:12,200
Speaker 1: became the new malls. Well, obviously it's a ghost town

702
00:37:12,200 --> 00:37:15,279
Speaker 1: in both those places, department stores and airports, but the

703
00:37:15,320 --> 00:37:19,720
Speaker 1: management smart. I mean, they're they're dedicating their budget towards

704
00:37:19,800 --> 00:37:23,120
Speaker 1: digital marketing, so they're adapting and online sales are growing

705
00:37:23,160 --> 00:37:27,640
Speaker 1: super rapidly. It's over now. So that I think the

706
00:37:27,640 --> 00:37:30,040
Speaker 1: point is is whether it's directed consumer or whatever channel

707
00:37:30,080 --> 00:37:33,439
Speaker 1: it is, this is a disposable good that's a short

708
00:37:33,480 --> 00:37:37,320
Speaker 1: repurchase cycle and people are going to seek out their

709
00:37:37,360 --> 00:37:39,920
Speaker 1: their desirable brands. I'm just gonna say I had an

710
00:37:40,080 --> 00:37:41,560
Speaker 1: who worked at St. Latter for a long time. They

711
00:37:41,600 --> 00:37:44,719
Speaker 1: have become brilliant and have been for years now of

712
00:37:44,840 --> 00:37:49,400
Speaker 1: buying up smaller and really popular kind of in brands.

713
00:37:49,800 --> 00:37:52,080
Speaker 1: And so it's not just about the St. Lauter you

714
00:37:52,120 --> 00:37:55,719
Speaker 1: know brands, but it's about Bobby Brown and everybody else

715
00:37:55,719 --> 00:37:58,160
Speaker 1: that they bought, um, and that has helped them tap

716
00:37:58,200 --> 00:38:00,520
Speaker 1: into a younger generation. And let's not for get Brian.

717
00:38:00,560 --> 00:38:05,040
Speaker 1: I mean the margins on some of that stuff, it's unbelievable. Yeah,

718
00:38:05,239 --> 00:38:07,480
Speaker 1: you're actually reminding me of when we first bought a

719
00:38:07,560 --> 00:38:11,120
Speaker 1: Sta Lauder several years ago when it was getting hit hard.

720
00:38:11,480 --> 00:38:15,279
Speaker 1: And I remember coming home to the family dinner table

721
00:38:15,320 --> 00:38:18,040
Speaker 1: and I told my my children bought some Sta Lauder

722
00:38:18,080 --> 00:38:21,560
Speaker 1: stock today, and my teenage daughter's Tally and Sky. They

723
00:38:21,600 --> 00:38:24,160
Speaker 1: said to me, You're like, why are you buying s

724
00:38:24,239 --> 00:38:26,399
Speaker 1: DA Lauder. That's a terrible makeup brand, which I thought

725
00:38:26,400 --> 00:38:27,520
Speaker 1: it was funny to hear from them. They're like, you

726
00:38:27,560 --> 00:38:30,200
Speaker 1: should be buying into Mac. Was like, well, that's done

727
00:38:30,239 --> 00:38:35,680
Speaker 1: by Lauder exactly. Oh and Dad just crushes the teenagers.

728
00:38:35,680 --> 00:38:37,440
Speaker 1: But my question is who's going to come up with

729
00:38:37,480 --> 00:38:41,319
Speaker 1: the mask resistant foundation, because if you can do that,

730
00:38:41,880 --> 00:38:45,320
Speaker 1: you win everything. My mask is full of makeup stuff.

731
00:38:45,560 --> 00:38:47,000
Speaker 1: Yeah no, I mean That's what I'm saying, Like, if

732
00:38:47,000 --> 00:38:49,040
Speaker 1: you can make a MAC resistant foundation, like you know,

733
00:38:49,080 --> 00:38:52,799
Speaker 1: they should get on that. The whole thing. Um. But

734
00:38:52,840 --> 00:38:54,399
Speaker 1: what I think is interesting is that if you look

735
00:38:54,400 --> 00:38:56,799
Speaker 1: at the track record. Uh, you know, over the last

736
00:38:56,840 --> 00:38:58,680
Speaker 1: month that fund is up by about three point four

737
00:38:58,719 --> 00:39:01,080
Speaker 1: percent and heard a day they're pretty much flat. And

738
00:39:01,080 --> 00:39:03,760
Speaker 1: then the last year, uh, they're up by about twelve

739
00:39:04,280 --> 00:39:07,560
Speaker 1: So you know, there are opportunities that don't have to

740
00:39:07,600 --> 00:39:10,560
Speaker 1: be Facebook, right, And they've been really you know, pretty

741
00:39:10,560 --> 00:39:13,080
Speaker 1: open Alex about kind of their more recent performance and

742
00:39:13,160 --> 00:39:16,239
Speaker 1: no longer term they've done. They've done well, but it's

743
00:39:16,280 --> 00:39:19,279
Speaker 1: been tougher, you know, in this environment right where people

744
00:39:19,320 --> 00:39:21,480
Speaker 1: are just chasing some of those big tech names. So

745
00:39:22,200 --> 00:39:24,960
Speaker 1: um good, good good to check in with him. Um

746
00:39:25,160 --> 00:39:29,320
Speaker 1: mask resistant foundations. Seriously, I mean that that's an end lipstick.

747
00:39:29,360 --> 00:39:31,680
Speaker 1: If that could happen, you'd be a bazillionaire. Something called

748
00:39:31,719 --> 00:39:34,839
Speaker 1: waterproof kind of mish. I don't know, not so much.

749
00:39:34,840 --> 00:39:37,840
Speaker 1: I know, think yeah, maybe to discuss it. Thanks to

750
00:39:37,880 --> 00:39:41,640
Speaker 1: Brian Yakman over at Yakman and Company. Thanks so much

751
00:39:41,640 --> 00:39:45,040
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, Southcloud,

752
00:39:45,040 --> 00:39:47,839
Speaker 1: Blomberg dot com, but wherever you get your podcasts, And

753
00:39:47,840 --> 00:39:49,799
Speaker 1: of course you can always listen to our radio show

754
00:39:49,800 --> 00:39:52,640
Speaker 1: at two pm Eastern Bloomberg Radio, or watch us on

755
00:39:52,680 --> 00:39:54,880
Speaker 1: YouTube by searching Bloomberg Global News,