Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're right here every day bringing you the
Speaker 1: latest news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors.
Speaker 1: And of course Carol that's part of a team of
Speaker 1: twenty seven hundred journalists and analysts and more than a
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Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern on Bloomberg Radio every weekday, or watch us on
Speaker 1: YouTube by searching Bloomberg Global News. Let's set the Business
Speaker 1: week agenda. Gina Martin Adams with US chief equity strategist
Speaker 1: at Bloomberg Intelligence on the phone from New Jersey. Also
Speaker 1: from New Jersey, Dave Wilson, our stocks editor at Bloomberg News,
Speaker 1: and Dave just set the trade. As Charlie mentioned, we
Speaker 1: really have seen quite a bounce in the last hour
Speaker 1: or so. Oh, no doubt about it. We're back at
Speaker 1: the highs of the day. If you look at the
Speaker 1: SMP five hundred you know, yesterday we were talking about
Speaker 1: how you technology stocks were not at the forefront of
Speaker 1: the games. In fact, they were trailing the market. Today
Speaker 1: they are right there best performer among the eleven main
Speaker 1: industry groups in the SMP five. In fact, ten the
Speaker 1: eleven are higher. You know, financial shares the only exception
Speaker 1: as far as that goes. So, you know, you put
Speaker 1: this all together, and we're really close to the SMP
Speaker 1: five hundred breaking its record from February, and it's just
Speaker 1: a matter of a few points here or there that
Speaker 1: we'll dictate it. You know, you look across the biggest companies,
Speaker 1: you know, the big tech companies if you like, call
Speaker 1: them what you will, all up at least two percent,
Speaker 1: Apple leading away with a gain of three and a
Speaker 1: half percent. So you know, Tesla really jumps out to
Speaker 1: a thirteen percent after deciding on a five for one
Speaker 1: stock split. That's the sort of thing that happened in
Speaker 1: the nineteen nineties and companies were splitting their shares left,
Speaker 1: right and center, and they're just not doing that anymore.
Speaker 1: And so Tesla really does, you know, kind of look
Speaker 1: like a throwback with with its stock performance today. It's
Speaker 1: like with Apple and that's stock split two m the
Speaker 1: real quick on today. So the narrative was that we
Speaker 1: got higher producer prices and consumer prices over the last
Speaker 1: two days and then we have a reflation slash inflation scenario.
Speaker 1: Do you buy any of that? That narrative um to
Speaker 1: explain why value stocks got a little bit of rotation
Speaker 1: over the last couple of days. But today's trade is
Speaker 1: really driven by grows stocks again. So I think the
Speaker 1: bigger story is we broke out above those July twenty
Speaker 1: two highs and it's been off to the races ever since.
Speaker 1: Where the market breaks through these sort of significant resistance levels,
Speaker 1: it looks for the next level of resistance, which is
Speaker 1: not until the most recent peaks. It's just sort of
Speaker 1: full steam ahead until we get back to those early highs,
Speaker 1: and then we'll probably test those highs. Uh. You know,
Speaker 1: it's tough to say what's really driving the rotation. I
Speaker 1: do think the technicals are a lot of it, because
Speaker 1: from a fundamental perspective, there hasn't been a whole lot
Speaker 1: to hang your hat on. You know, there's still a
Speaker 1: lot of concern about while they are won't they on
Speaker 1: the fiscal policy front, they're still uncertain landscape with respect
Speaker 1: to a vaccine. Certainly, the FED is not adding a
Speaker 1: ton of more firepower to this market, So I think
Speaker 1: it's more technically driven than anything else. Except I do
Speaker 1: want to say on that last point, um, you know
Speaker 1: about the FED, I do feel like and I get people,
Speaker 1: you know, messaging me or tweeting at me, and they're like, listen,
Speaker 1: if anything starts to fall apart, we know the Fed's
Speaker 1: going to be there. I mean, is that kind of
Speaker 1: a given, Gina, Yeah, it is. I mean there's an
Speaker 1: implied FED put for sure. And that change that really
Speaker 1: changed this year, especially in comparison to the last several
Speaker 1: years when there was more focus and back in two
Speaker 1: thousand seventeen two eighteen in particular, recall, we were focused
Speaker 1: more on how much can the FED tightened, which is
Speaker 1: a very different landscape than today, which is really just Okay,
Speaker 1: the Fed's going to remain loose for a very very
Speaker 1: long period of time. But usually what you see is
Speaker 1: not it's not just that FED put. You've already priced
Speaker 1: in the idea that the FED has accelerated the pace
Speaker 1: of liquidity provision to the market. You've already priced in
Speaker 1: the fact that rates are extremely low. You usually need
Speaker 1: to the incrementally more liquidity and incrementally more movement in
Speaker 1: rates to get really excited about stocks. Nonetheless, that's not
Speaker 1: the case today. We're still seeing stock prices rise in
Speaker 1: the vast majority of the rise is driven by valuation expansion. Um.
Speaker 1: So it's pretty clear to me that this is largely
Speaker 1: technically driven. That's not a bad thing, um, It just
Speaker 1: is is what to me is driving the market higher. Dave.
Speaker 1: If you take a look at the value trade, you know,
Speaker 1: the conversation in the market though, is in order to
Speaker 1: have a sustained value rotation and a really move into
Speaker 1: small caps, you need a vaccine full stop. You need
Speaker 1: a recovery. Is that is that true? Well, there are
Speaker 1: certainly those strategists who will say so, and we we've seen,
Speaker 1: you know, if you go back the last few months,
Speaker 1: I mean occasionally you get these sort of two or
Speaker 1: three day moves and valius stocks and people think, oh,
Speaker 1: finally the situation has changed, because value has been trailing
Speaker 1: really ever since the bull market began back in two
Speaker 1: thousand nine. Well, you know, we're looking at another move
Speaker 1: that's fizzled out, just like the earlier ones. Have, and
Speaker 1: it's just a matter of you know, as long as
Speaker 1: those big tech companies kind of stay at the forefront
Speaker 1: of the market, it's like, you know, there's sort of
Speaker 1: like a force field. Everything kind of ends up coming
Speaker 1: back to them in some level, and you know, the
Speaker 1: value stocks just haven't been able to compete. Alright, good stuff.
Speaker 1: Uh And I know, Dave, your chart coming up takes
Speaker 1: a look at fear in the market specifically specifically looking
Speaker 1: at US options, so looking forward to much more specific alright,
Speaker 1: really appreciate it. Dave Wilson our stocks that her Bloomberg News.
Speaker 1: Gina Martin Adams was chief equity strategist at Bloomberg Intelligence.
Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. We know that the world is
Speaker 1: in a race for a vaccine for COVID nineteam more
Speaker 1: likely several vaccines, but in the meantime, testing and tracing
Speaker 1: are key to keeping coronavirus in check. And especially when
Speaker 1: we talk about reopening schools. College in university is our
Speaker 1: next guest has some thoughts on that, especially when it
Speaker 1: comes to tapping into what he sees as the under
Speaker 1: utilization of the nation's test labs. We welcome back Dr
Speaker 1: Eric Shott, founder and CEO at SEMMA for It's a
Speaker 1: patient centric predictive health companies. Also Dean for Precision Medicine
Speaker 1: UH and Mount Sinai Professor in Predictive Health and Computational Biology.
Speaker 1: He's really smart, Alex at the Icon School of Medicine
Speaker 1: at Mount sign Now he joins us once again on
Speaker 1: the phone in Connecticut. Um, Eric's good to have you
Speaker 1: back with us. Tell us a little bit about testing
Speaker 1: and tracing, right. We keep hearing how important this is.
Speaker 1: But as Alex said at the top of the show,
Speaker 1: she recently had to go in for a procedure, got
Speaker 1: her test done, got the results back pretty quickly. But
Speaker 1: she and I've seen this to other people taking tests
Speaker 1: and it takes forever to get the results back. Yeah.
Speaker 1: So there's, you know, a lot of testing capacity out there.
Speaker 1: I think it all comes down to logistics and who
Speaker 1: you know has the right kind of partnerships with the
Speaker 1: different systems to kind of leverage capacity beyond one lab.
Speaker 1: There's no single lab that can handle all of the
Speaker 1: capacity that's coming. Right. We have these fluctuations and episodes
Speaker 1: of intense UM outbreaks where the testing demand gets super high,
Speaker 1: and so it's this it's logistical really the ability to
Speaker 1: manage and leverage multiple partners to be able to leverage
Speaker 1: the capacity that's available without getting too political. I mean
Speaker 1: President Trump talks a lot about how we have the
Speaker 1: best testing system in the world, and we've really done
Speaker 1: a good job with testing UM. So what is he
Speaker 1: talking about, like where do we do well and then
Speaker 1: where do we need to do better. So the the
Speaker 1: technological side of the testing, you know, being able to
Speaker 1: provide highly sensitive, very specific, very accurate tests, the technologies
Speaker 1: those are based on the ability to automate those technologies
Speaker 1: like we do lead in that arena, I think where
Speaker 1: we fall down, uh, and would not say we're the
Speaker 1: best you know in the world, would be again, on
Speaker 1: this logistics side, the ability to manage huge patient flows,
Speaker 1: the collection of samples, the the sending of those samples
Speaker 1: into the major labs to get them processed like that
Speaker 1: requires more of a centralized infrastructure that a few big
Speaker 1: labs have, but they're overwhelmed and can't meet the demands well.
Speaker 1: As we all said at the beginning to and we
Speaker 1: heard this from a lot of our guests early on,
Speaker 1: and UM it was all about kind of a war effort,
Speaker 1: like we needed to think about getting ahead of this
Speaker 1: as if we were fighting. I mean, we were fighting,
Speaker 1: it was a health war, but I mean that's something
Speaker 1: Eric Ween kind of needed to do UM and really
Speaker 1: have federal involvement, national national strategy, but we didn't have it.
Speaker 1: And it sounds like that's what you're talking about. And
Speaker 1: the scale of testing is something no lab in the
Speaker 1: country has had to undertake in the history of the US.
Speaker 1: You know, the ability to run many hundreds of thousands
Speaker 1: into the millions of tests today, that's just a scale
Speaker 1: we've never had to face before. So the kind of
Speaker 1: infrastructure you need to accommodate that, the coordination within the government,
Speaker 1: within the private lab world, that's just not something that existed.
Speaker 1: So talk to us about your own personal ramp up
Speaker 1: that you guys did at Semaphore, because you got involved
Speaker 1: with this pretty quickly and it wasn't what you were
Speaker 1: set up to do initially, right right, it definitely you know,
Speaker 1: we were a state of the art, you know, next
Speaker 1: generation sequencing UM lab and intelligence company, so we have
Speaker 1: again familiarity with the technology and the automation, So that
Speaker 1: part was easy. So what we were able to do
Speaker 1: quickly with stand that technology up, run it through a clear,
Speaker 1: certified UM lab and demonstrate the ability to get highly
Speaker 1: accurate and quick turnaround results. UM. But like everybody else,
Speaker 1: we faced you know, from the crunch on availability of
Speaker 1: re agents and test kids to the logistics of getting
Speaker 1: samples to flow through in a very themeless way. Those
Speaker 1: are some of the obstacles we had to overcome, and
Speaker 1: of course partnered with the state of Connecticut and a
Speaker 1: lot of their resources around you know, bringing in UH
Speaker 1: groups like the National Guard to help and so on.
Speaker 1: So it was it was an interesting effort and it
Speaker 1: was a nice way of putting that. UM. So you
Speaker 1: brought it up sort of the huge effort. Uh, what
Speaker 1: about financial cost for that? Because it's great to want
Speaker 1: to change how we do stuff and do but it
Speaker 1: feel like it's always gonna come down to dollars and cents. Yeah,
Speaker 1: the cost um definitely plays a big role, you know,
Speaker 1: how accommodated you want to be in the test. You know,
Speaker 1: we do have the ability to test in the home
Speaker 1: to do you know, through saliva collection and UH anterior
Speaker 1: nary swabbing of the nose and so on. But those
Speaker 1: kits cost money. The shipping of those kits in a
Speaker 1: timely way cost money. The running up the test costs money.
Speaker 1: And the software to support how you can manage large
Speaker 1: flows of individuals like like consider back to work, back
Speaker 1: to school programs where you know, those systems they don't
Speaker 1: need just a test that they can flip, right, because
Speaker 1: they're not accustomed to testing everybody that way. And and
Speaker 1: say a school or a business they need they need
Speaker 1: help managing that both, um, you know, managing who's eligible
Speaker 1: for testing? What are their results? Are they eligible to
Speaker 1: come back into the workplace or the school? Like So
Speaker 1: there's a lot, a lot of again of infrastructure um
Speaker 1: needed And so the cost varies widely depending on are
Speaker 1: you just running a test that somebody has provided you
Speaker 1: the sample or are you managing the entire flow I do.
Speaker 1: That's why you see no no please finish, no, no,
Speaker 1: please finish. That's why you see the wide variability and um,
Speaker 1: you know in the costs and the accessibility to those
Speaker 1: kinds of services. I mean, what do we need realistically
Speaker 1: in this country to be able to do in the testing.
Speaker 1: That's that's kind of demanded for a comfortable or more
Speaker 1: comfortable reopening. And we just got about a minute. We're
Speaker 1: gonna do some news and then we'll come back there.
Speaker 1: I think it's you need uh, very large scale, very
Speaker 1: low cost sample collection methods, and there are a number
Speaker 1: of very significant efforts under way, you know, funded by
Speaker 1: the Gates Foundation and the National Institutes of Health. Like
Speaker 1: how do we for very low cost enable samples to
Speaker 1: be collected in a home UM environment not have to
Speaker 1: be medically observed? Like that's a big obstacle that UM
Speaker 1: is being overcome. And then I think it's all about
Speaker 1: like how do you enable laughs to handle hundreds of
Speaker 1: thousands of samples coming in in a day. Like again,
Speaker 1: that's just like a logistical like think of your sitting
Speaker 1: in a warehouse and hundreds of thousands of these samples
Speaker 1: are coming at you. They have to be very carefully
Speaker 1: managed and tracked and so on. UM. Doctor, you also
Speaker 1: run a business. You had to deal with the business
Speaker 1: during the pandemic. UM, how did you keep people motivated?
Speaker 1: How did you do it? What did you learn? Well?
Speaker 1: I think, you know, first of all, we're on a
Speaker 1: cool mission that some of more like it is about
Speaker 1: how do we better enabled patients and physicians to uh
Speaker 1: make better decisions around their care. We have Core had
Speaker 1: to stay in full operation while this was going on
Speaker 1: because we provide standard care services and then the COVID testing,
Speaker 1: so it was like putting in place the right kinds
Speaker 1: of protections enabling employees to feel save. We went to
Speaker 1: the labs, went to alternating shifts where you know, we
Speaker 1: had a chance to clean between shifts and and if
Speaker 1: one shift got uh infacted, we you know had another
Speaker 1: shift that could could pick up the ball. So it
Speaker 1: was a lot of again logistical maneuvering and putting in
Speaker 1: place the right protections and we you know, started doing
Speaker 1: testing as well on the employees and um you know,
Speaker 1: symptom tracking and so on to you know, just just
Speaker 1: be as protected as possible. I am curious to dr
Speaker 1: Shot you know, from your channels also at UM the
Speaker 1: Icon School of Medicine at Mount Sinai and just the
Speaker 1: folks that you're talking within your industry, in the medical
Speaker 1: community at large. You know, how do you see playing out,
Speaker 1: Do you have any visibility and what are your expectations. Yeah,
Speaker 1: it's it's one of those times we don't we don't
Speaker 1: have any visibility, so we're we're just asking everybody else
Speaker 1: for it, right, Yeah, you know it's a it's a
Speaker 1: tough one. I think you know, the testing will get
Speaker 1: under more control. Uh, We'll we'll play out whether the
Speaker 1: antibodies are predictive for immunity, uh, some vaccines. Hopefully we'll
Speaker 1: roll onto the scene. Like I think what we'll see
Speaker 1: as increasingly better management, better protection, allowing a more relaxed
Speaker 1: dance given those better protections. Um, so I see thanks
Speaker 1: getting um, you know, more back to normal uh into
Speaker 1: but yeah, but definitely don't see this disappearing. I think
Speaker 1: you know, it's going to stick with us for a while,
Speaker 1: and it's going to really be our ability to better
Speaker 1: manage it and return to as normal as dance as possible. Well,
Speaker 1: I'm glad that you mentioned that because I've been back
Speaker 1: at work for I think this is my fifth week,
Speaker 1: and in the beginning when I came back, it was
Speaker 1: really jarring. Um, and then I got all my systems
Speaker 1: in place, like to sanitize, when to wipe stuff down,
Speaker 1: and then it feels okay. And as I mentioned earlier,
Speaker 1: I had a test last week and I'm negative. I
Speaker 1: mean is this what we're all kind of in for,
Speaker 1: Like we all just have to kind of bite the bullet,
Speaker 1: kind of get back in gear, and then we realize
Speaker 1: it's going to be okay. And the protocols that we've
Speaker 1: been taking or working, I think that's exactly right, Like
Speaker 1: the evidence will build that those kind of protections are
Speaker 1: working and do prevent um spread and new infections, and
Speaker 1: they're not so onerous, and they do enable us to
Speaker 1: get back into a somewhat normal stance and have more
Speaker 1: face to face contact. You know, we are human beings
Speaker 1: where where I don't think we were intended to live
Speaker 1: in a completely digital world. So I think it is
Speaker 1: important to get back to that kind of level. In
Speaker 1: the back to work programs were helping manage we see
Speaker 1: exactly what you mentioned, like if you follow those kind
Speaker 1: of protocols like you can, you can be really well protected.
Speaker 1: It works well. And that's what's interesting because you are
Speaker 1: working with corporations on back to work testing and also
Speaker 1: with schools and colleges, So are you anticipating that that's like,
Speaker 1: as Alex said, that testing becomes more the norm that
Speaker 1: we're all going to be doing it kind of on
Speaker 1: a regular basis or maybe doing it for herselves. I mean,
Speaker 1: is that what's going to be as well? Just quickly,
Speaker 1: just got about a minute left. Yeah, I think, I
Speaker 1: think absolutely. I think testing is going to become a
Speaker 1: very critical component going forward, but it's it's a necessary component,
Speaker 1: but not sufficient. I think a lot of the kind
Speaker 1: of symptom tracking, how people are feeling, even some degree
Speaker 1: of contact tracing, all of that combined will provide a
Speaker 1: robust solution, like we will enter the era of surveillance
Speaker 1: kind of testing like that, will I believe be here
Speaker 1: to stay. That's like people knocking on our doors being
Speaker 1: like are you home? I don't think people knocking on
Speaker 1: your doors. I think it's surveillance from the standpoint of
Speaker 1: are you infected? Is the virus spreading through communities? Like?
Speaker 1: Because if it is, we can take extra protective steps
Speaker 1: to slow it or prevent it. Yeah, it's definitely a
Speaker 1: different new world her um, Eric, thank you so much,
Speaker 1: really appreciate checking in with you again. Dr Eric Shott,
Speaker 1: He's founder and CEO at SEMA, for joining us on
Speaker 1: the phone from Stanford, Connecticut. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Jason Kelly on Bloomberg Radio. We've
Speaker 1: got a special vaccine issue this week. It's all about
Speaker 1: how we got here, the science, manufacturing, politics, and persuasion
Speaker 1: that might just end the pandemic. It is called the
Speaker 1: vaccine issue, and there's a really interesting story, a disturbing
Speaker 1: one too, about how vaccine nationalism is making this deadly
Speaker 1: disease even worse. Let's get into this story. Vernon Silver
Speaker 1: Projects and Investigations Report re Bloomberg News. He joins us
Speaker 1: on the phone from Rome. He wrote it, and also
Speaker 1: with us is the editor of the magazine, Joe Webber
Speaker 1: on the phone from Massachusetts. Joel, you know, just when
Speaker 1: you think this story can't get any worse, you do
Speaker 1: think about the nationalistic issues of this virus. It's right,
Speaker 1: and you know again in one of the defining elements
Speaker 1: of this issue was to sort of take this idea
Speaker 1: of a vaccine and look at it from as many
Speaker 1: different ways and angles as we could think of. And
Speaker 1: it wasn't just about the sort of the horse race,
Speaker 1: if you will, of trying to make this thing. And
Speaker 1: as much as that's an important part, it also had
Speaker 1: there's plenty of other components. And the political one is
Speaker 1: obviously especially important dimension here and when when Arnon Vernon
Speaker 1: sort of roses raised his hand about this idea, I
Speaker 1: think it got to a deeper place because what we're
Speaker 1: seeing is countries really having this in general, just this
Speaker 1: resurgence of nationalism, and that's now manifesting itself um around
Speaker 1: how they're approaching the vaccine, and as countries are digging
Speaker 1: their heels in to sort of do everything by themselves,
Speaker 1: it actually makes the whole situation worse because through collaboration,
Speaker 1: we might have been able to pull resources and maybee
Speaker 1: maybe reach a cure or a vaccine quicker than we
Speaker 1: otherwise might and benefit more people. And what I think
Speaker 1: Vernon really found that was so in thing was being
Speaker 1: in Rome, you know, which was one of the first
Speaker 1: places affected by the pandemic. Uh. It really felt like
Speaker 1: Italy was at sort of the forefront of this conversation.
Speaker 1: So so Vernon, what was the Italian perspective on all
Speaker 1: of this? I mean what we did was started following
Speaker 1: the vial literally of how the vaccine were being produced.
Speaker 1: And the first strand came in just ten little vials
Speaker 1: that were sent from Oxford, uh to Rome to this
Speaker 1: company that was going to make over ten thousand doses
Speaker 1: for the trials, the very first large scale trials of
Speaker 1: a vaccine in the world. Um and by happenstance um,
Speaker 1: the you know, the initial supply of that vaccine was
Speaker 1: within the borders of Italy, and the politicians here latched
Speaker 1: onto it and it kind of it kind of steamed,
Speaker 1: you know, it was a snowball where you had more
Speaker 1: deals being made and more kind of nationalist rhetoric coming
Speaker 1: out of the mouths of the leaders here who needed
Speaker 1: a redemption from having been the worst hit at the
Speaker 1: outset um and the the end result is that we've
Speaker 1: got about, you know, a quarter of the supply of
Speaker 1: the Astra Zeneca Oxford vaccine now being bottled within Italy's borders.
Speaker 1: And how it plays out in the end is one
Speaker 1: of the questions that that's been left open as they balanced,
Speaker 1: you know, let's all cooperate with well, we do have
Speaker 1: it here. Well, I'm glad you brought that part up,
Speaker 1: because I was wondering what the nationalism part means. Does
Speaker 1: it mean that you provide the money to the company
Speaker 1: to make the vaccine, that you then buy all the
Speaker 1: vaccines and have to be a local company that's making
Speaker 1: the vaccine or is it the distribution like the vials
Speaker 1: and the manufacturing part. Like, there are lots of different
Speaker 1: angles to it. Yeah, and the best way to understand
Speaker 1: it is it breaks down into two areas, the bad
Speaker 1: actors and the bad planners. And the bad actors are
Speaker 1: you know, the accusations against the Chinese and Russian governments
Speaker 1: that they've been hacking the Western efforts. The bad actors are.
Speaker 1: We already saw it in March when protective equipment was
Speaker 1: being blocked by different countries. Ninety different countries blocked equipment
Speaker 1: that would have been of use during the pandemic. Those
Speaker 1: are those are the bad actors, and we kind of
Speaker 1: know about those the bad planners. It's sort of just
Speaker 1: the splintering of where, you know, are you going to
Speaker 1: throw a lot of money at it? You know, the
Speaker 1: Trump administration is throwing ten billion dollars at this operation
Speaker 1: warp Speed that sucks up supply poorer countries then you know,
Speaker 1: are trying to pull money to buy their own supplies.
Speaker 1: That drives up prices. And these companies that are trying
Speaker 1: to you know, save the you know, save the world
Speaker 1: and also makes the money or trying to find solutions,
Speaker 1: and Astra Zeneca is a great example because they've decided
Speaker 1: they need to fight the nationalism by creating the supply
Speaker 1: chains on four different continents. If everyone's gonna fight over it,
Speaker 1: give everyone their own darned supply chains. The Russia has
Speaker 1: a supply chain of the Oxford vaccine, and Brazil will
Speaker 1: have one, and there's the one in Italy, and there's
Speaker 1: a billion doses being made in India. So okay, best
Speaker 1: laid plans, right, we create vaccine or vaccines and the
Speaker 1: world has equal access to it, and then there's reality.
Speaker 1: Is there vernon the possibility the likelihood that we're going
Speaker 1: to see people ordering the vaccine, but then there's going
Speaker 1: to be countries who are not going to let it
Speaker 1: cross their borders. Absolutely, that's what That's what the companies
Speaker 1: are planning for. That's what the governments are planning for.
Speaker 1: That's why you try to get a clear idea of
Speaker 1: how these these orders are. Who goes first? You know,
Speaker 1: in the UK said, you know it's been developed at Oxford,
Speaker 1: We're going to get the first doses for our people.
Speaker 1: How does that play out in the end? And that's
Speaker 1: that's sort of what we're looking at next, is that
Speaker 1: borders have become the battle lines in this nationalism of
Speaker 1: the vaccines. Vernon Um. The the other thing that you
Speaker 1: said in here, Um was something about poor countries, and
Speaker 1: I just want to bring that out here because for
Speaker 1: basically everything that we're looking at here, we're basically talking
Speaker 1: about rich nations that have the ability to actually have
Speaker 1: the science and manufacturing in place. Is this yet another
Speaker 1: example of sort of uh, this ongoing conversation that we
Speaker 1: have about inequality and and uh, and here we have
Speaker 1: some countries with many people who will actually have access
Speaker 1: to something first, while probably a greater portion of the
Speaker 1: world has nothing. Yeah. Absolutely, I mean across the board.
Speaker 1: From the beginning, this pandemic has exposed and exacerbated inequality
Speaker 1: of all types. And we're going to see in the
Speaker 1: coming months as the vaccines and there are tons of them,
Speaker 1: as they roll out, that there will be huge inequalities
Speaker 1: and everybody will get hurt by that because the fact
Speaker 1: is that these viruses don't know borders. So if the
Speaker 1: UK or the US or China hords their own supply, well,
Speaker 1: you know, somebody in the poorer parts of the world
Speaker 1: is going to uh not get it, and that's just
Speaker 1: you know, if they if if there were some magic
Speaker 1: way to get everyone spread it around at the same
Speaker 1: time for the people who most needed it, uh, you know,
Speaker 1: healthcare workers, the vulnerable, then we'd be out of this
Speaker 1: mess a lot quicker. But that's not what's happened. Yeah. Um,
Speaker 1: And I do wonder too, because, especially in these emerging markets,
Speaker 1: it's where you're seeing some of the early testing of
Speaker 1: the vaccine happening, and it would be kind of ironic, unfair. Um.
Speaker 1: I don't even know what other words to use about
Speaker 1: it if ultimately these countries then don't have access to
Speaker 1: the vaccine when it's finally confirmed. So it's a deep,
Speaker 1: deep read. Um. The coverage in the magazine about the
Speaker 1: race for a vaccine Isjuel said, it's not just about
Speaker 1: the horse race, but about so many other issues such
Speaker 1: as vaccine nationalism, so it's a must read. Alex. Yeah,
Speaker 1: I think we saw that, um with HIV in Africa,
Speaker 1: that like that that they were that's where they did
Speaker 1: all the early testing, and that's where you're going to
Speaker 1: run into some albums. Yeah, exactly exactly. I feel like, man,
Speaker 1: there's just so many different facets to this story and
Speaker 1: so much more to come. Um our thanks to Joe Webber,
Speaker 1: editor of Bloomberg Business Week, on the phone from Massachusetts.
Speaker 1: Vernon Silver great reporting always projects and investigations reporter at
Speaker 1: Bloomberg News has been watching this virus firsthand from Italy
Speaker 1: and joining us on the phone from Row. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Jason Kelly on
Speaker 1: Bloomberg Radio and Alex we resently noted here at Bloomberg
Speaker 1: you actually brought this up on our planning call. You
Speaker 1: talked about how some companies have been out there to
Speaker 1: kind of the rush, if you will, for sustainable finance.
Speaker 1: I think there's a recent bond steal from Google right
Speaker 1: their parent alphabet, Google Visa. It's sort of like the
Speaker 1: new trend in the middle of the pandemic, and there
Speaker 1: is the demand. I think the question that becomes like
Speaker 1: do you actually make a good enough return on it
Speaker 1: versus blaying something else. Ultimately, it's about the returns. In
Speaker 1: our weekly Bloomberg Green Segment today are Emily Chason, she
Speaker 1: sustainability editor Bloomberg New She's got a look at how
Speaker 1: long term investors now hold more sway when it comes
Speaker 1: to e s G. Environmental. Um, I can't remember what
Speaker 1: that is now, Environmental, Sustainable and Governance. Thank you. A
Speaker 1: momentary break here man, Time has no meaning, thank you, partner.
Speaker 1: Let's get into Emily. She joins us on the phone
Speaker 1: in New York City. Time has no meeting Emily. Thank you,
Speaker 1: thank you, save me, save me. So what's going on? Yeah, well,
Speaker 1: absolutely know. That's a really good start of this conversation,
Speaker 1: that time has no meaning. You know, we're talking a
Speaker 1: lot about short term investors. We talked about long term investors. Um.
Speaker 1: One of the things that's interesting in this pandemic is
Speaker 1: that short term activists have not really been making the
Speaker 1: big bet stay they were right, like, the market is
Speaker 1: pretty volatile, it's pretty risky to take such a big bet.
Speaker 1: So long term investors right now actually have a much
Speaker 1: um at least a big companies have a much larger influence,
Speaker 1: and they've been warning for years about all these stomach
Speaker 1: and workforce issues with diversity and climate change, and so
Speaker 1: this is kind of like help help, This is kind
Speaker 1: of their moment um. So e SC has definitely been stirred.
Speaker 1: Jing and Um. We looked a little bit this week
Speaker 1: about the tools that long term investors actually happen incluce companies.
Speaker 1: So the criticism in terms of say the last six
Speaker 1: months with the s G is that the reason why
Speaker 1: E s G did well is because it's mostly tech
Speaker 1: like E s G is you're not gonna think of
Speaker 1: it as an as an energy, right, and Texas out
Speaker 1: performing energy, So therefore E s G performance better. But
Speaker 1: that's not really because of E s G. Well what
Speaker 1: do you think about that? Well, you know, it's interesting
Speaker 1: because Bloomberg Intelligence did something this week where they looked
Speaker 1: at diversity and like stocked with more women on board,
Speaker 1: and they're actually starting to bee divergent for companies that
Speaker 1: have more woments on board. So it's not um, it's
Speaker 1: not just and um. What a lot of the E
Speaker 1: s G investors have found is that they chose companies
Speaker 1: that had better management and were more able to pivot
Speaker 1: or um rethink what they were doing in the pandemic
Speaker 1: as well. Interesting, So what so what does this mean
Speaker 1: then for kind of the E s G world. I
Speaker 1: do love though that the statistics are showing to show
Speaker 1: because I feel like we went through a period I
Speaker 1: keep kind of going backwards here, but and we went
Speaker 1: through a period where E s G people just wanted
Speaker 1: to do because they felt like it was the right
Speaker 1: thing to do. But now it's become much more mainstream. Yeah,
Speaker 1: E s G I mean after they're just flowing in. UM.
Speaker 1: We looked at ubs this week. They were out with
Speaker 1: a note saying that they had seen seventy one billion
Speaker 1: and infos and E s g F in the second quarter,
Speaker 1: which brought their E s g F to one trillion
Speaker 1: for the first time. Just that U b asked UM
Speaker 1: and they found that fifty of sustainable funds outberform their
Speaker 1: peers in the second quarter, So that definitely is happening
Speaker 1: from there. But then we also looked at UM annual
Speaker 1: meeting practices and just ended. So there's all those environmental
Speaker 1: resolutions that these long term shareholders bring. UM, we're actually
Speaker 1: getting more support as well well. Yeah, and then to
Speaker 1: that so let's get to it. So these proposals, whether
Speaker 1: they're social, environmental, or governance, et cetera. UM, what what
Speaker 1: kind of support are they getting, are they being implemented,
Speaker 1: et cetera. Yeah, it was a really long term process.
Speaker 1: It's more sort of the direction of travel and where
Speaker 1: things are going. UM, and you know what issues investors
Speaker 1: want to flag to companies because these are mostly non
Speaker 1: binding proposals and then the company probably takes a year
Speaker 1: or so to implement them, if they do at all.
Speaker 1: But um, anyway, the votes are coming back stronger this
Speaker 1: year even though it was all virtual and your leading seasons,
Speaker 1: so there weren't any climate protests or um gad by
Speaker 1: and executive facts like they usually aren't in your leading season.
Speaker 1: So UM, we looked at environmental resolutions and there were
Speaker 1: four climate child reposals at wrestles three thousand companies that
Speaker 1: received majority support this year. Um. There were none last
Speaker 1: year that did, so that was a big change. And
Speaker 1: then the diversity proposals also got a lot more UM
Speaker 1: passing rates this year than they had previously. Yeah, I
Speaker 1: do wonder what initiative when it comes to the E
Speaker 1: s G space has just gotten you know, the most um,
Speaker 1: I guess resulted in the most changes, if you will,
Speaker 1: And it's really brought about changes at companies. Is it
Speaker 1: is it diversity is an environment? What have we seen? Emily, Well,
Speaker 1: that is a million dollar question, I think for sure. Um.
Speaker 1: You know one thing that has interesting about that is that, um,
Speaker 1: these social issues often have a bigger impact on stocks
Speaker 1: going So if your company has take issue or a
Speaker 1: diversity issue, UM or me two issue, that can have
Speaker 1: a much bigger impact on your stock price than environmental issues,
Speaker 1: which are sort of slow and steady and it's sort
Speaker 1: of feels further out to the market. So that's definitely
Speaker 1: one thing to watch for. I'm really upset that we
Speaker 1: didn't talk about. Oh go ahead, Alex, what we're gonna
Speaker 1: do you? Its right, yes, Tom you first suptus its
Speaker 1: like you missed it, mansues institutes, um you only about
Speaker 1: three seconds left. I just wanted to get your take
Speaker 1: on the fact that even the environmental proposals, I mean,
Speaker 1: does it mean that it's more it's more less cost
Speaker 1: effective for companies because I want to having to put
Speaker 1: up money to change stuff, and maybe that's why it
Speaker 1: doesn't get as much traction. Just got about thirty seconds. Um. Yeah,
Speaker 1: environmental proposals are actually down this year. But what it
Speaker 1: means is that companies are being more preemptive with their
Speaker 1: shareholders and they're trying to um negotiate, and they've been
Speaker 1: more willing to issue sustainable finance things themselves on their
Speaker 1: own accord. Without so much pressure from child as not
Speaker 1: having to like get all the way to a proposal.
Speaker 1: Interesting stuff. I love that stat though, that the Morning
Speaker 1: Star finding that of sustainable funds outperform their peers in
Speaker 1: the second quarters. That's pretty cool Tuesday, right. I was
Speaker 1: gonna let it go, but I'm glad you brought it
Speaker 1: up again. Exactly. Not so good though for the environment.
Speaker 1: Emily Chason, Sustainability editor up Bloomberg News on the phone
Speaker 1: from n y C mac Journal. Yeah, but you let
Speaker 1: me drive. No, no home, honey, please, I'll do the
Speaker 1: right lt me. I want to drive, just drive, baby.
Speaker 1: The questions drying yea, this is the drive to the globe.
Speaker 1: Give me thanks, We'll drying up Dawn on Bloomberg Radio.
Speaker 1: It is time for the drive to the clothes. Joining
Speaker 1: us once again, Brian Yatman. He's Chief Investment Officer, portfolio
Speaker 1: manager and lead manager of the y CG Enhanced Fund.
Speaker 1: The fund, by the way, in the nineties six percent
Speaker 1: all over the past five years, returning nearly twelve percent
Speaker 1: on average annually. Brian based in Austin, Texas, and that's
Speaker 1: where we find him on this Wednesday. Brian, great to
Speaker 1: have you here. Have you back on Bloomberg Radio? How
Speaker 1: are you? How are your how's your family doing? How's
Speaker 1: your work family doing? Man, We're doing great, Um, both
Speaker 1: family and work family. Um. You know, I feel a
Speaker 1: little bit bad to say that, but during such difficult times,
Speaker 1: I'm actually really enjoying the family time and just being
Speaker 1: around my my wife and children more. Yeah, I've heard
Speaker 1: that a lot, Alex. I don't know how you you know,
Speaker 1: like it's just I know you're back at work, but
Speaker 1: that kind of bubble feeling a little bit, It's cute.
Speaker 1: I had mixed feeling, um about all those things. Um, Brian,
Speaker 1: do you have mixed feelings about the market at record Nize? Oh? Well, yeah,
Speaker 1: I mean it's this is crazy time. I mean I've
Speaker 1: never seen anything like it, nor has anyone. I'm sure
Speaker 1: you keep hearing that a lot, um, And I'd say
Speaker 1: it's definitely a time to invest with care and and not.
Speaker 1: I'm not saying it's dangerous just because there's so much
Speaker 1: economic and political uncertainty, but just the fact that there's
Speaker 1: so much speculative fever running rampants out there. I mean,
Speaker 1: it's it is a casino out there. God, that doesn't
Speaker 1: sound too good because we know, we know the house
Speaker 1: always wins. I'm refering to like the robin Hood effect, right, Like,
Speaker 1: so robin Hood, they went to free trading, and then
Speaker 1: it led to free trading at all these other online
Speaker 1: brokerages to be competitive, and there's you know what gambling
Speaker 1: and sports down where do you turn to? Well, this
Speaker 1: is this seems to be the the most popular place
Speaker 1: to now gamble. You look at Charles Schwab as an example,
Speaker 1: there's six times larger in assets than robin Hood, but
Speaker 1: robin Hood has twice as many trades on a daily
Speaker 1: basis than Schwab. Yeah, but isn't this a little isn't
Speaker 1: a little simplistic? Because I look at the SMP and
Speaker 1: I look at the last leg of the rally that
Speaker 1: we've seen in the last six weeks. It's been led
Speaker 1: by industrials, materials, and financials, and that's a pure recovery trade.
Speaker 1: I mean, that's, ah, we're going to get a vaccine
Speaker 1: and or we're combating the virus in an efficient way.
Speaker 1: We're gonna buy the recovery stocks the reflation stocks. Yeah,
Speaker 1: and that and that's true. But the thing that I
Speaker 1: guess keeps happening is just so unpredictable that it's risk on,
Speaker 1: risk risk off, and it just keeps going back and
Speaker 1: forth because the reality is nobody really knows how this
Speaker 1: will shake out in the next few weeks, months, and
Speaker 1: even in the next year. You know, the reality is
Speaker 1: there's still fear out there. The virus is still out there,
Speaker 1: and so is there's fear. It's leading to a whole
Speaker 1: different dynamics of the marketplace. Right, But then I think
Speaker 1: the problem is if you just invested with fear that
Speaker 1: you'd missed the rally that we saw, because then you'd
Speaker 1: be buying big tech. Um, well, I guess you'd be
Speaker 1: buying gold, so you might have a nice run of it,
Speaker 1: but you'd be buying you know, treasuries, and you'll be
Speaker 1: buying big tech. And that's what got shaken out. So
Speaker 1: how do you as an investor deal with um the
Speaker 1: macro versus the reality what we're seeing in the market. Well,
Speaker 1: rather than trying to predict the directions, I think the
Speaker 1: key is as an investor, you are buying ownership in
Speaker 1: the business. So the key is to focus on businesses
Speaker 1: with proven business models, and particularly they need to be
Speaker 1: conservatively capitalized so that you know that they'll survive. You
Speaker 1: don't want to buy into something where the bondholders of
Speaker 1: today become the shareholders of tomorrow, right, So you just
Speaker 1: want to make sure that things are going to work
Speaker 1: out over the long term. On the businesses you choose
Speaker 1: to own, well, let's talk about some of the names
Speaker 1: you're always so good about because you guys are buying
Speaker 1: names and you know, putting names into your portfolio. Let's
Speaker 1: talk about some of the names that you like. And
Speaker 1: I know one of the bigger holdings UM is St Lauder.
Speaker 1: Talk to us about that brand. As you know, we're
Speaker 1: always looking for global champions and Stay Lauders is certainly
Speaker 1: one of those. They have the number one or number
Speaker 1: two spot and Prestige Beauty in over forty countries, so
Speaker 1: huge market share in the Prestige beauty UM. And you
Speaker 1: know this is they're right in the fire as well
Speaker 1: because obviously they're being affected. Uh you pointed out the
Speaker 1: software side or some of these other businesses that have
Speaker 1: this recurring revenue stream being more protected. Of course, Est
Speaker 1: Lauders being hit. But you know this is a selfie
Speaker 1: generation and people are still getting on zoom calls and
Speaker 1: they're still they're taking photos, posting on social media. People
Speaker 1: want to be at their best and look their best,
Speaker 1: and so traditionally what's been the challenge for St. Lauder
Speaker 1: was they were primarily coming through the partment store channel.
Speaker 1: Over the years, they've declined from over fifty in the
Speaker 1: department store channel to under and what happened was airports
Speaker 1: became the new malls. Well, obviously it's a ghost town
Speaker 1: in both those places, department stores and airports, but the
Speaker 1: management smart. I mean, they're they're dedicating their budget towards
Speaker 1: digital marketing, so they're adapting and online sales are growing
Speaker 1: super rapidly. It's over now. So that I think the
Speaker 1: point is is whether it's directed consumer or whatever channel
Speaker 1: it is, this is a disposable good that's a short
Speaker 1: repurchase cycle and people are going to seek out their
Speaker 1: their desirable brands. I'm just gonna say I had an
Speaker 1: who worked at St. Latter for a long time. They
Speaker 1: have become brilliant and have been for years now of
Speaker 1: buying up smaller and really popular kind of in brands.
Speaker 1: And so it's not just about the St. Lauter you
Speaker 1: know brands, but it's about Bobby Brown and everybody else
Speaker 1: that they bought, um, and that has helped them tap
Speaker 1: into a younger generation. And let's not for get Brian.
Speaker 1: I mean the margins on some of that stuff, it's unbelievable. Yeah,
Speaker 1: you're actually reminding me of when we first bought a
Speaker 1: Sta Lauder several years ago when it was getting hit hard.
Speaker 1: And I remember coming home to the family dinner table
Speaker 1: and I told my my children bought some Sta Lauder
Speaker 1: stock today, and my teenage daughter's Tally and Sky. They
Speaker 1: said to me, You're like, why are you buying s
Speaker 1: DA Lauder. That's a terrible makeup brand, which I thought
Speaker 1: it was funny to hear from them. They're like, you
Speaker 1: should be buying into Mac. Was like, well, that's done
Speaker 1: by Lauder exactly. Oh and Dad just crushes the teenagers.
Speaker 1: But my question is who's going to come up with
Speaker 1: the mask resistant foundation, because if you can do that,
Speaker 1: you win everything. My mask is full of makeup stuff.
Speaker 1: Yeah no, I mean That's what I'm saying, Like, if
Speaker 1: you can make a MAC resistant foundation, like you know,
Speaker 1: they should get on that. The whole thing. Um. But
Speaker 1: what I think is interesting is that if you look
Speaker 1: at the track record. Uh, you know, over the last
Speaker 1: month that fund is up by about three point four
Speaker 1: percent and heard a day they're pretty much flat. And
Speaker 1: then the last year, uh, they're up by about twelve
Speaker 1: So you know, there are opportunities that don't have to
Speaker 1: be Facebook, right, And they've been really you know, pretty
Speaker 1: open Alex about kind of their more recent performance and
Speaker 1: no longer term they've done. They've done well, but it's
Speaker 1: been tougher, you know, in this environment right where people
Speaker 1: are just chasing some of those big tech names. So
Speaker 1: um good, good good to check in with him. Um
Speaker 1: mask resistant foundations. Seriously, I mean that that's an end lipstick.
Speaker 1: If that could happen, you'd be a bazillionaire. Something called
Speaker 1: waterproof kind of mish. I don't know, not so much.
Speaker 1: I know, think yeah, maybe to discuss it. Thanks to
Speaker 1: Brian Yakman over at Yakman and Company. Thanks so much
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, Southcloud,
Speaker 1: Blomberg dot com, but wherever you get your podcasts, And
Speaker 1: of course you can always listen to our radio show
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Speaker 1: YouTube by searching Bloomberg Global News,