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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

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Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring

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Speaker 1: you insight from the best and economics, finance, investment and

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Speaker 1: international relations. Find Bloomberg Surveillance, an Apple podcast, Suncloud, Bloomberg

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Speaker 1: dot Com and of course on the Bloomberg terminal. Let's

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Speaker 1: talk about this equity market with Russ Coastrick, the portfolio

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Speaker 1: manager for the Global Allocation Fund of black Rock. RUSSI,

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Speaker 1: your words are base cases equities and the yea higher.

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Speaker 1: What's the base case? Based on Russ and more and John,

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Speaker 1: I think the base case is pretty simple. That we're

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Speaker 1: in an environment where the economy is slowing. That's one

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Speaker 1: of the tricky parts. But nominal GDP real growth plus

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Speaker 1: inflation is still likely to be somewhere around seven percent

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Speaker 1: this year. And when you look at that and you

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Speaker 1: think about the relationship between m g DP revenue earnings,

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Speaker 1: you're probably gonna have a stronger year for earnings growth

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Speaker 1: that is currently discounted. And yes, as rates back up

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Speaker 1: a bit, you may get some multiple compression, but to

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Speaker 1: our minds, unless they tighten much more aggressively than we

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Speaker 1: think you're probably not gonna have so much multiple compression

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Speaker 1: that over up it overtakes the earnings growth. So still

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Speaker 1: a year where stocks are positive, although not nearly as

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Speaker 1: positive as we were last year or the last few

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Speaker 1: years Russ, as we saw from Apple and I guess

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Speaker 1: Amazon's on Thursday as well. How does black Rock vailue

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Speaker 1: these tech bohemus profiting tons of money? How do you

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Speaker 1: value that right now? Well, Tom, this is I think

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Speaker 1: part of the bull case that you've got companies like

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Speaker 1: Apple that are still cash flow machines, and as large

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Speaker 1: as they are, they're still growing their cash flow at

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Speaker 1: an incredible rate. They're unbelievably profitable. This is where some

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Speaker 1: of the dislocations are probably creating opportunities. We know that

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Speaker 1: a lot of the early growth names and names that

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Speaker 1: are not gonna have earnings for a decade, they've been hit.

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Speaker 1: A lot of that is tied to the bubble coming

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Speaker 1: out of speculation, a lot of this type of real

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Speaker 1: rates going up. When you have companies like Apple and

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Speaker 1: you can pick any other name within that large cap

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Speaker 1: tech universe, you know they've come under pressure, but maybe

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Speaker 1: for the wrong reason, because these are not companies where

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Speaker 1: you're looking at discounting cash flow in ten years as

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Speaker 1: we saw last week, of generating from menace cash flow

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Speaker 1: in real time. Russ. Given the fact that you are

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Speaker 1: constructive on these companies, you've got such positive things to say,

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Speaker 1: and black Rock has had a stance of holding a

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Speaker 1: bit more cash. When do you know it's time to

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Speaker 1: deploy it? Well, you know, the cash is not just

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Speaker 1: about trying to time the market. I think part of

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Speaker 1: the reason for the cash, and honestly so we're running

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Speaker 1: with the high cash balance today as well, is less

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Speaker 1: about I'm going to time the market, is more about cash.

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Speaker 1: In an environment in which bonds have become the source

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Speaker 1: of risk. Cash along with that, say, a long hour

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Speaker 1: position has become one of your risk mitigainst And if

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Speaker 1: you're running a multi asset portfolio and you're thinking about

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Speaker 1: risk and managing that risk and you're not getting the

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Speaker 1: same diversification used to get from bombs, you're gonna run

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Speaker 1: with a bit more cash, Russ. Just quickly before you

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Speaker 1: go Friday, A lot of people expecting a self print,

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Speaker 1: maybe even a negative one. How do you think we're

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Speaker 1: going to internalize that with the number drops, you know,

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Speaker 1: I think we're back in the environment where people are

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Speaker 1: gonna get a little bit nervous about strong data because

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Speaker 1: obviously the big tears that fans going to be more aggressive.

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Speaker 1: That said, you know, there's still some noise in this print.

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Speaker 1: We know that the seasonality numbers around the holidays have

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Speaker 1: been off really since the financial crisis. They've probably been

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Speaker 1: even more off since the pandemic, So I wouldn't base

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Speaker 1: too much on one print. Russ Coast of black Rock,

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Speaker 1: Russ fantastic as always, sir, Thank you very much joining

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Speaker 1: us now. Sarah Hunt, portfolio manager at Alpine Woods Capital Investors. Sarah,

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Speaker 1: can we just stop here? You're pull photio manage. How

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Speaker 1: active were you this month? Well, we were fairly well

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Speaker 1: positioned coming into this month, so we've been active in

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Speaker 1: terms of what we're looking for that might have gotten

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Speaker 1: hit with the rest of the stocks. So we were

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Speaker 1: somewhat active, but it's not like we went much. We

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Speaker 1: had a much different activity level than normal because we

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Speaker 1: were fairly well positioned coming into this because we were

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Speaker 1: concerned about this coming into and the end of last year.

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Speaker 1: If someone has a bullish cast, where is the opportunity

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Speaker 1: right now? I think there's a lot of opportunity in

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Speaker 1: some of the tech stocks that have gotten hit. I mean,

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Speaker 1: you saw that rally in the Nastack on Friday. I

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Speaker 1: think part of that was Apple coming out and saying

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Speaker 1: that some of their supply chains of ease. I think

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Speaker 1: that gave people some comfort that some of the issues

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Speaker 1: that they were concerned about are getting a little bit better.

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Speaker 1: I don't have the numbers in front of me, Sarah,

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Speaker 1: but this is really important. Joe Feldman, with Dana Telsea's

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Speaker 1: advisory group has operating income at Amazon and again over

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Speaker 1: a longer time frame of twenty four months. It's breathtaking

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Speaker 1: the growth. When you look at the tech stocks, you're

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Speaker 1: not looking at one week performance or one quarter. How

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Speaker 1: long is your timeline to judge the value of big tech?

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Speaker 1: I think the timeline has to be pretty long because

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Speaker 1: some of those companies have grown fairly, fairly well for

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Speaker 1: a very long period of time. And when people start

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Speaker 1: to talk about the tech issue earlier on with a

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Speaker 1: great tightening issue, there is a bifurcation and technology for

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Speaker 1: the companies that can grow and grow profitably. And I've

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Speaker 1: said this before, and I really think that that's starting

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Speaker 1: to really starting to see that. But there are some

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Speaker 1: stocks that have gotten hit with all of this that

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Speaker 1: I think are decent values here. I mean, you've got

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Speaker 1: some fifteen times earning stocks and some of the chip

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Speaker 1: makers who've got some of the chip equipment makers that

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Speaker 1: are cheaper now too than they were before. And I

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Speaker 1: think that there's some real growth ahead because you're going

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Speaker 1: to continue to move where we're making semiconductors. If the

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Speaker 1: supply chain issues have taught us anything, I think you're

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Speaker 1: going to see a different People are going to be

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Speaker 1: basing their their production of semi conductors in other places

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Speaker 1: than they have been because they don't like the dependency.

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Speaker 1: So I think that there's a long runway for some

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Speaker 1: of these stocks to grow, and I think that that

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Speaker 1: is what people are going to be looking for as

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Speaker 1: we go forward. Sarah, it has never been a fundamental issue.

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Speaker 1: It's always been a valuation issue at least, and some

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Speaker 1: people are looking at the potential for real rates in

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Speaker 1: the United States to go to zero. David Costin among them,

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Speaker 1: of Goldman Sachs, how much are you including that scenario

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Speaker 1: when you say it is time to start going in

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Speaker 1: and buying some of these high quality names. Well, I mean,

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Speaker 1: if you think about the fact that historically we have

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Speaker 1: never seen negative rates before, I think just getting back

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Speaker 1: to zero should not be a cause for major concern,

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Speaker 1: and I think that growth can still happen under those conditions.

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Speaker 1: But the problem with inflation is that it's systemic in

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Speaker 1: ways it is very difficult to fight. The energy issue

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Speaker 1: is one thing, the housing issue is another thing, and

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Speaker 1: those are not that easy to fix. I mean, if

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Speaker 1: you've got a global move away from hydrocarbons without a

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Speaker 1: lot of non expensive ways to replace them, that's not

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Speaker 1: going to be a transitory issue. That's going to be

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Speaker 1: a longer term issue. And the housing problem, as rents

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Speaker 1: go up, is going to be non transitory as well.

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Speaker 1: So I think that just getting back to zero is

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Speaker 1: not a tragedy most of this group. But I think

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Speaker 1: that the longer term question is going to be what

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Speaker 1: does that look like going forward, where do rates go,

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Speaker 1: and what happens in the interim to inflation. But there

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Speaker 1: are a lot of people are saying that because of

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Speaker 1: that inflation story, it's the cyclicals that you should lean

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Speaker 1: into and not necessarily the growth names that have benefited

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Speaker 1: by low rates. Do you disagree with that are you

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Speaker 1: saying that actually, these big names have the greatest capacity

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Speaker 1: to grow with inflation. I think some of these big

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Speaker 1: names have the biggest capacity to continue to raise prices.

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Speaker 1: The problem with the cyclicals is that if you've got

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Speaker 1: a slowing economy, then you've got you know, a talent

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Speaker 1: on one side and the headmand on the other. And

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Speaker 1: I'm not sure that that's going to be the biggest

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Speaker 1: place to make money. Although we think some of those

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Speaker 1: stocks have come down too, so it's not I wouldn't

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Speaker 1: ignore them either. It's really just looking at individually, stock

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Speaker 1: by stock, what is this company's what does it look

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Speaker 1: like for them in the future for the next two

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Speaker 1: or three years, what does it look like for what

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Speaker 1: does the interest rate due to them? And what do

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Speaker 1: their end markets look like? And I think that's really

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Speaker 1: the kind of individual stock by stock analysis that has

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Speaker 1: to be done. Sarah Vom palm Wood's Capital Investors. Sarah,

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Speaker 1: what a busy month, all that work last week for

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Speaker 1: a flat market just unread exhausting stuff. Sarah, thank you,

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Speaker 1: thank you very much. We start strong with Lisa Hornby,

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Speaker 1: head of the US multisector fixed income at Schroeder's with

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Speaker 1: a backdrop out of A. Rutger's economics and the great

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Speaker 1: Michael Bordeaux as well. Lisa Hornby, you are grounded in

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Speaker 1: economic history with Bordo place. The economic history right now

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Speaker 1: is you allocate forward to the market. How do you

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Speaker 1: combine all the econo babble into an investment view. I

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Speaker 1: think it comes back to Lisa's coming earlier about things

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Speaker 1: being corrupted. I mean, I would take that a step.

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Speaker 1: It's not yield curve, right, It's not just the yield

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Speaker 1: curve that's been corrupted. It's all financial assets. I mean,

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Speaker 1: you look at the price appreciation we've had over the

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Speaker 1: last couple of years, and you'd say nothing could justify

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Speaker 1: that except for the fact that we had literally trillions

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Speaker 1: of dollars poured into the economy UM, thanks to both

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Speaker 1: FED and and and policymakers and UM. Markets now need

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Speaker 1: to correct to some level of normalcy, and that's what

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Speaker 1: we're seeing. We're in a transition phase now. UM. So

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Speaker 1: you know, our view on risk assets is a little

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Speaker 1: bit more cautious. We've probably I think we've spoken about

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Speaker 1: that on this show for the last couple of months.

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Speaker 1: When you get valuations in the bottom quartile and we

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Speaker 1: were in the bottom desile. I think in UH in

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Speaker 1: November you have to be a bit more cautious in

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Speaker 1: your approach to risk taking. So that's where we are. Um.

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Speaker 1: You know, we look at at all in treasury yields

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Speaker 1: right now and we say they do offer a little

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Speaker 1: bit more value and the market is discounting a lot

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Speaker 1: in terms of the FED. Maybe we could go a

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Speaker 1: little bit further, but certainly we think we're a lot

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Speaker 1: of the way there at this point. Um. And so

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Speaker 1: you know, we're we're kind of being cautious and waiting

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Speaker 1: for the macro backdrop to stabilize a bit. Hopefully the

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Speaker 1: Fed gets this right. I think the chance of that

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Speaker 1: is is fairly low. But hopefully the Fed does navigate

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Speaker 1: this well and doesn't overtighten into a slowing economy. Um.

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Speaker 1: But if they can sort of land this uh land

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Speaker 1: this well, then there should be opportunities for more risk

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Speaker 1: taking later this years. Unreliing on other programs and other

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Speaker 1: networks now for Fed speed because no FED officials coming

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Speaker 1: back on this program anytime soon. In the ft Atlanta

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Speaker 1: FED President Raphael Bostick just opening South up to maybe

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Speaker 1: need to go quicker if they need to. Maybe not.

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Speaker 1: If they don't, at least we're still sticking with maybe

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Speaker 1: three hikes for twenty two. I'm just wondering in your

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Speaker 1: mind where the gap is right now between the communication

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Speaker 1: we're getting from the FED and what the market is

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Speaker 1: baking game. Do you think that's a widespread would you

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Speaker 1: think it really narrows the next time we get the

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Speaker 1: dot plots safe from the FED in the middle of March,

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Speaker 1: so you know, I've seen some of the street forecasts

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Speaker 1: out there as far as high as seven hikes. I

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Speaker 1: think that's too much. I don't think the FED gets there.

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Speaker 1: I think the market disconnected between the FED in two

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Speaker 1: is probably not the material. My base case still at

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Speaker 1: this point is that they probably do for basis point

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Speaker 1: takes rather than five. I do think inflation peaking will

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Speaker 1: give them a chance to pivot office something slightly slightly

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Speaker 1: as aggressive as they are now, um so, become a

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Speaker 1: little bit less aggressive. I think where the gap is

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Speaker 1: is probably next year, Uh, the market is discounting very

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Speaker 1: very little. I think you probably need to shift some

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Speaker 1: of what's in two into three. Um so. I think

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Speaker 1: that's probably where the bigger gap is, and and the

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Speaker 1: overall terminal funds rate is still fairly low in the market, UM,

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Speaker 1: so you know, between one and three quarter percent and

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Speaker 1: two percent, that's still a very very low terminal rate.

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Speaker 1: I think there could be a little bit of scope

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Speaker 1: for that to move higher as well. Lisie, you said

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Speaker 1: something earlier that the chances of the FED actually well

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Speaker 1: orchestrating a soft landing is fairly low. Can you walk

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Speaker 1: us through what it looks like if they fail to?

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Speaker 1: I mean, what you see in your likely scenario in

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Speaker 1: terms of tightening and subsequent economic reaction. Yeah, I mean

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Speaker 1: I think it looks a lot like what happened in

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Speaker 1: where you know, the FED was basically overtightening into a

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Speaker 1: slowing economic backdrop UM and they were forced to pivot

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Speaker 1: in the first quarter, actually the first month of twenty nineteen.

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Speaker 1: I think that's that's the template. Uh, this time, I

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Speaker 1: think there's more there's potentially even more danger of that. Right.

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Speaker 1: A lot of this, a lot of the market, um,

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Speaker 1: at least in financial asset terms, has been predicated off

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Speaker 1: the fact that we've had very very negative real yields

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Speaker 1: for quite some time. If we continue to see really

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Speaker 1: yields normalized, which I think they should, to some degree. Um,

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Speaker 1: that should put some pressure on how other financial assets,

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Speaker 1: how risk assets are discounted, and that macro you know

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Speaker 1: that macroeconomic backdrop. That volatility is a bit concerning. It

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Speaker 1: doesn't immediately translate into slower economic activity. But if it

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Speaker 1: happens too aggressively and too quickly and we start to

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Speaker 1: seek companies question the the backdrop and make different decisions

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Speaker 1: based on hiring, um, that could be that could pose

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Speaker 1: a challenge. So it's I mean, it is financial conditions

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Speaker 1: ultimately that we're watching. I think there's a lot of

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Speaker 1: metrics that feed into that. So far they're relatively well contained. UM.

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Speaker 1: I think the other part of it is that Pale

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Speaker 1: was pretty clear that financial conditions don't matter, and so

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Speaker 1: are as the household balance sheet is strong, and so

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Speaker 1: that's what they're watching. And I suppose there is a

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Speaker 1: there is a potential for a gap there. Right. The

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Speaker 1: household balance you can remain strong for some time because

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Speaker 1: there is there are still some access savings, people are employed,

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Speaker 1: we've seen wage gains, UM, household network is high. That

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Speaker 1: could probably remain a little bit stronger than the financial

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Speaker 1: asset backdrop for some time. You look across sectors just quickly.

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Speaker 1: I want to finish on this. Some people have been

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Speaker 1: raising cash and I'm wonder if you look across sectors

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Speaker 1: right now, what you'd be using to fund that cash position,

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Speaker 1: why you'd completely walk away from in credit right now?

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Speaker 1: Can you do that on a sector to sector basis?

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Speaker 1: Is it an individual name, single name to single name.

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Speaker 1: What's the process you go through to do that? I

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Speaker 1: don't think it's as simple as that at the moment.

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Speaker 1: I think you have to watch the companies you own.

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Speaker 1: I think we're seeing the companies that are doing uh

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Speaker 1: M and A get hit a little bit harder um,

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Speaker 1: at least at the outset. I think we have to

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Speaker 1: be careful on security selection here. I mean, I think

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Speaker 1: it's about taking broad data down. But there has been

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Speaker 1: sector out performance right Energy has done well, at least

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Speaker 1: in credit market so far. Triple B is ab outperformed

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Speaker 1: on a beta adjusted basis, So you know, I think

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Speaker 1: you have to be more specific than just say cut

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Speaker 1: a sector um at this juncture. It's more about the

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Speaker 1: individual names and the overall level of data in your portfolios.

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Speaker 1: Small as always gonna catch up. Lisa Home be there

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Speaker 1: right now. A great honor for Lisa, Bryan Watson and

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Speaker 1: I to bring to you on radio and television across

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Speaker 1: this nation. Someone who viscerally understands this story. As we

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Speaker 1: spoke to the ambassador of France to the United States

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Speaker 1: last week and his history of Eastern Europe so too,

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Speaker 1: George Friedman of Budapest. He is founder and chairman of

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Speaker 1: Geopolitical Futures and has a family that has viscerally lived

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Speaker 1: living near Russia. George Freedman, what does the media, what

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Speaker 1: does the analysis get on about Vladimir Putin? Well, he

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Speaker 1: wants Ukraine, but he did something very strange. Wait, he

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Speaker 1: did not attack weeks ago. You don't launch an attack

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Speaker 1: without surprise if you can get it. And sitting there

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Speaker 1: waiting for the United States to build up at its

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Speaker 1: defensive capabilities, which the US has done, just increases the

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Speaker 1: chance of losing. So right now he's not going to

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Speaker 1: defend in the Ukraine. He's really looking at how to

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Speaker 1: split NATO. Within splitting NATO. And this is Angela's stent

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Speaker 1: writing in Foreign Affairs this weekend on the Putin doctrine.

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Speaker 1: I guess I have to ask, what is the Putin

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Speaker 1: doctrine that you see that will allow for a split

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Speaker 1: a fracture of NATO natural gas. Russia is supplying almost

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Speaker 1: all of Germany's natural gas. The rest of Europe too,

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Speaker 1: but Germany is a key it's to be a big player.

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Speaker 1: If Germany joins with NATO, it risks having a shouldnt

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Speaker 1: cut off a natural gas If, on the other hand,

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Speaker 1: it doesn't, Uh, it goes against the grain about the

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Speaker 1: United States, the British and other players, particularly Eastern Europeans.

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Speaker 1: So what I think Putin is really doing is creating

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Speaker 1: a situation with his hammerlock on natural gas where the

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Speaker 1: Germans are in an impostible position and are likely to

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Speaker 1: go and split from the West in resisting the Russians,

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Speaker 1: or at least to the extent of not cooperating in

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Speaker 1: Billion events George. In other nations, we might ask about popularity.

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Speaker 1: Does it even matter here whether this move that Vladimir

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Speaker 1: Putin is embarking on is popular among the rank and

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Speaker 1: file Russians. I think at this point, near war situations,

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Speaker 1: popularity doesn't matter anywhere. Uh. You notice in the United

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Speaker 1: States everybody is quite quiet about it. The Germans are

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Speaker 1: I'm the whole opposed to any operation to British, are

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Speaker 1: very deep into it. Each one of them is following

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Speaker 1: their national interest and the decisions are going to be

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Speaker 1: made soon, very quickly, very rapidly, and I don't think

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Speaker 1: public interests will affected, except that no one wants to

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Speaker 1: come out of this looking like a loser. It's how

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Speaker 1: you come out of it. This matters. Well. So how

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Speaker 1: does Watiman Putin look like a winner from all this? Well,

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Speaker 1: at this point he appears to be a winner because

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Speaker 1: the West has grown up and gotten really alarmed. So

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Speaker 1: already he shows the Russian people that they've taken us seriously,

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Speaker 1: which we really haven't. The second step is, however, he's

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Speaker 1: got to do something. An invasion is a very risky thing.

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Speaker 1: You can lose, and he cannot afford to lose. On

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Speaker 1: the other hand, you're in a situation where if he

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Speaker 1: can manage to split NATO, if he creates a crisis

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Speaker 1: in NATO, you can do something. Which is why the

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Speaker 1: United States right now is scrambling defined a natural gas

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Speaker 1: frows is that they could send to Europe to support them,

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Speaker 1: because that's where the key is. Uh. If he doesn't

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Speaker 1: want NATO to advance in the East, perfect way to

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Speaker 1: do that is what NATO wide open on the natural

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Speaker 1: gas issue. Well, George, this is important and this goes

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Speaker 1: back to your at Stratford, and frankly, your academics are

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Speaker 1: Cornell before that, is it feasible to salvage Europe with

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Speaker 1: a delivery of hydrocarbons? Have you ever seen a study

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Speaker 1: where we can deliver to Germany and the rest enough

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Speaker 1: oil gas and the rest. What I have seen is

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Speaker 1: that it can't be done. There's not enough bottoms to do.

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Speaker 1: But at any rate, the United States has to give

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Speaker 1: it a try, has to make it clear to the

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Speaker 1: Europeans that we care about this situation, that even if

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Speaker 1: there's going to be an interruption, it will be a

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Speaker 1: short interruption and we'll be able to handle it and

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Speaker 1: so on. But the problem, what Putin has done very

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Speaker 1: well is to shift the burden over to the Germans

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Speaker 1: in particular to Europeans in general, where the choice between

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Speaker 1: defending Ukraine and having their economies wrecked has to be made.

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Speaker 1: And whatever public opinion now comes in they're gonna go

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Speaker 1: craze is not that important to them. Is it a

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Speaker 1: generous is it a generational shift of a new German

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Speaker 1: government after miracle? Does that matter in your analysis? Well,

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Speaker 1: Germany is built an economy that's really very powerful in Europe.

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Speaker 1: It is a leader economically in Europe. Without natural gas,

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Speaker 1: that doesn't have that economy, it's built itself into that position.

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Speaker 1: The U. S should have perhaps try to build alternatives

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Speaker 1: years ago, but it didn't, so let this situation develop,

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Speaker 1: and now it's playing out. It's really a reality that

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Speaker 1: can't be ignored. George Freeman, thank you so much. Greatly appreciated.

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Speaker 1: With geopolitical futures today, just authentic analysis. They're one perspective

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Speaker 1: on our international relations right now. Josh ra Charstein with

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Speaker 1: US Vice JOHNS Hopkins Bloomberg School of Public Health. Of

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Speaker 1: course Michael Bloomberg, h are not an acquaintance with his

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Speaker 1: television and radio property as well. Dr Scharstein, it is

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Speaker 1: good news, whether it is the thousands assembled in Los

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Speaker 1: Angeles and Kansas City for football, or in the walk

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Speaker 1: up I live in in the lobby, everybody has to

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Speaker 1: wear a mask. There seemed to be great polarities. Here's

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Speaker 1: the reality. We see cases rolling over nicely, we see

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Speaker 1: hospitalizations rolling over somewhat, we're waiting for deaths to roll over.

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Speaker 1: When deaths roll over, how will public policy change. Well,

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Speaker 1: I think public policy is changing in places where the

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Speaker 1: cases are coming down, in the hospitalizations are coming down now,

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Speaker 1: so I think it's going to be a regional phenomenon.

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Speaker 1: And then I think, to your point, I think the

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Speaker 1: national mood will really start to change as deaths come

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Speaker 1: much further down. Um. And this is the you know,

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Speaker 1: approaching the moment you know where we are going to

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Speaker 1: see COVID start to fade a little bit more into

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Speaker 1: the background. Um. I don't think we'll have nearly as

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Speaker 1: much disruption in our lives in barring the emergence of

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Speaker 1: something that we haven't anticipated, which of course could still happen.

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Speaker 1: The vaccine rate, I'm gonna call a amateur an amicron

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Speaker 1: from sixty or sixty one out to sixty how critical

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Speaker 1: is it to double that out to a sixty eight

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Speaker 1: percent statistic? Sorry? That is what's The vaccine rate was

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Speaker 1: sixty six it's now sixty according to most the media reports.

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Speaker 1: I see, how critical is it to double that out

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Speaker 1: to sixty eight percent? Does that mean something? Well, I

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Speaker 1: mean with every increase in vaccination, we're gonna get fewer

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Speaker 1: hospitalizations and fewer deaths to value of vaccination again, proved

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Speaker 1: itself during the amicron wave. So we have tools um

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Speaker 1: to protect our cells and we have to keep going.

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Speaker 1: So just because it's going to fade into the background

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Speaker 1: in our lives, the more we are smart about, you know,

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Speaker 1: protecting ourselves, preparing the mortal fade into our lives. It's

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Speaker 1: not just by ignoring it all together that we get

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Speaker 1: that benefit. Dr Sharfstan. Meanwhile, that's the US, and that's Europe.

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Speaker 1: Perhaps over in China they've been trying to pursue as

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Speaker 1: euro COVID policy. Uh, and we do have the Olympics

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Speaker 1: starting on Friday. Hong Kong is experiencing a pretty big

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Speaker 1: upsurge in a macron and one professor at the University

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Speaker 1: of Hong Kong who has researched a macron said, the

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Speaker 1: horse has bolted, and I don't think that the government

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Speaker 1: is going to be able to get on top of this.

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Speaker 1: What's the trajectory of COVID cases that you expect over

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Speaker 1: in China given the lack of social immunity built up

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Speaker 1: by natural infection and just a normal life. Well, it's

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Speaker 1: the lack of immunity in part because the vaccines they

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Speaker 1: used to have not been the strongest vaccines and so um,

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Speaker 1: they are vulnerable to COVID, there's no question about it.

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00:23:01,440 --> 00:23:05,680
Speaker 1: Um and this virus and some of the amicron variants

432
00:23:05,680 --> 00:23:11,119
Speaker 1: we're seeing are crazy contagious. So that's not a situation

433
00:23:11,160 --> 00:23:14,560
Speaker 1: that's very good. And the idea of persisting in zero

434
00:23:14,680 --> 00:23:20,120
Speaker 1: COVID without the benefit of better vaccines is a real

435
00:23:20,240 --> 00:23:23,200
Speaker 1: challenge for China. And you know, I don't know. It's

436
00:23:23,240 --> 00:23:25,520
Speaker 1: it's hard to believe that they could make it through

437
00:23:25,560 --> 00:23:28,600
Speaker 1: with so many people coming in without it getting out.

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00:23:28,640 --> 00:23:31,520
Speaker 1: Of course, they have tools and approaches that we would

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00:23:31,520 --> 00:23:34,480
Speaker 1: find unacceptable in this country to accomplish that, So I

440
00:23:34,520 --> 00:23:36,399
Speaker 1: don't know what's going to happen those tools that we

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00:23:36,440 --> 00:23:40,159
Speaker 1: would consider unacceptable. Are they even enough though to stave

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00:23:40,240 --> 00:23:43,680
Speaker 1: off the up surge in likely amicron cases and likely

443
00:23:43,760 --> 00:23:46,960
Speaker 1: COVID cases after the Olympics. Can you game out what

444
00:23:47,040 --> 00:23:51,560
Speaker 1: it might look like in the weeks following well, I mean,

445
00:23:51,920 --> 00:23:55,600
Speaker 1: if the omicron gets out into the Chinese population, it's

446
00:23:55,640 --> 00:23:59,040
Speaker 1: likely to spread very quickly given the fact that the

447
00:23:59,119 --> 00:24:04,119
Speaker 1: vaccines used they are not as effective, and then we'll

448
00:24:04,160 --> 00:24:06,640
Speaker 1: have to see the scale of the reaction from the

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00:24:06,720 --> 00:24:10,040
Speaker 1: Chinese authorities. You know, I I don't know what's going

450
00:24:10,080 --> 00:24:12,400
Speaker 1: to happen. I'm not someone who's going to be able

451
00:24:12,440 --> 00:24:15,800
Speaker 1: to put together a scenario between the biology and the politics,

452
00:24:15,840 --> 00:24:18,480
Speaker 1: but I don't think it's going to be um, you know,

453
00:24:18,680 --> 00:24:21,480
Speaker 1: very pleasant for people in China if they go for

454
00:24:21,680 --> 00:24:24,880
Speaker 1: a zero COVID approach in the setting of such an

455
00:24:24,880 --> 00:24:29,640
Speaker 1: incredibly infectious variant. So you know, on the other hand,

456
00:24:30,080 --> 00:24:33,440
Speaker 1: they may, you know, have to do some pretty significant

457
00:24:33,480 --> 00:24:37,400
Speaker 1: actions to avoid people so many people getting very sick.

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00:24:38,160 --> 00:24:41,560
Speaker 1: You surprised these Olympics are ham like from every point

459
00:24:41,560 --> 00:24:44,520
Speaker 1: of view. I love the fact that Vladimir Putin is

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00:24:44,520 --> 00:24:46,919
Speaker 1: going to be going and helping with the inaucuration of

461
00:24:47,000 --> 00:24:50,320
Speaker 1: this Olympics, just giving you a sense of it. But honestly, John,

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00:24:50,560 --> 00:24:53,320
Speaker 1: I don't understand how they can pursue a zero COVID

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00:24:53,440 --> 00:24:56,640
Speaker 1: policy while having individuals from all around the world come

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00:24:56,680 --> 00:24:59,960
Speaker 1: into their borders and basically celebrate an international kind of

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00:25:00,040 --> 00:25:02,320
Speaker 1: con fab It doesn't make sense to me. We'll see

466
00:25:02,800 --> 00:25:05,680
Speaker 1: this plays out. Good luck to them. Dor Joshua Shastain

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00:25:05,760 --> 00:25:08,680
Speaker 1: that of the Johns Helpkins Bloomberg skilled a public half

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00:25:08,680 --> 00:25:12,639
Speaker 1: thank you said, this is the Bloomberg Surveillance podcast. Thanks

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00:25:12,640 --> 00:25:15,960
Speaker 1: for listening, Join us live weekdays from seven to ten

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00:25:16,040 --> 00:25:20,480
Speaker 1: am Eastern on Bloomberg Radio and on Bloomberg Television each

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00:25:20,600 --> 00:25:24,320
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00:25:24,359 --> 00:25:29,560
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00:25:29,600 --> 00:25:34,520
Speaker 1: to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com,

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00:25:34,600 --> 00:25:37,840
Speaker 1: and of course, on the terminal. I'm Tom Keene, and

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00:25:38,000 --> 00:25:39,840
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