Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring
Speaker 1: you insight from the best and economics, finance, investment and
Speaker 1: international relations. Find Bloomberg Surveillance, an Apple podcast, Suncloud, Bloomberg
Speaker 1: dot Com and of course on the Bloomberg terminal. Let's
Speaker 1: talk about this equity market with Russ Coastrick, the portfolio
Speaker 1: manager for the Global Allocation Fund of black Rock. RUSSI,
Speaker 1: your words are base cases equities and the yea higher.
Speaker 1: What's the base case? Based on Russ and more and John,
Speaker 1: I think the base case is pretty simple. That we're
Speaker 1: in an environment where the economy is slowing. That's one
Speaker 1: of the tricky parts. But nominal GDP real growth plus
Speaker 1: inflation is still likely to be somewhere around seven percent
Speaker 1: this year. And when you look at that and you
Speaker 1: think about the relationship between m g DP revenue earnings,
Speaker 1: you're probably gonna have a stronger year for earnings growth
Speaker 1: that is currently discounted. And yes, as rates back up
Speaker 1: a bit, you may get some multiple compression, but to
Speaker 1: our minds, unless they tighten much more aggressively than we
Speaker 1: think you're probably not gonna have so much multiple compression
Speaker 1: that over up it overtakes the earnings growth. So still
Speaker 1: a year where stocks are positive, although not nearly as
Speaker 1: positive as we were last year or the last few
Speaker 1: years Russ, as we saw from Apple and I guess
Speaker 1: Amazon's on Thursday as well. How does black Rock vailue
Speaker 1: these tech bohemus profiting tons of money? How do you
Speaker 1: value that right now? Well, Tom, this is I think
Speaker 1: part of the bull case that you've got companies like
Speaker 1: Apple that are still cash flow machines, and as large
Speaker 1: as they are, they're still growing their cash flow at
Speaker 1: an incredible rate. They're unbelievably profitable. This is where some
Speaker 1: of the dislocations are probably creating opportunities. We know that
Speaker 1: a lot of the early growth names and names that
Speaker 1: are not gonna have earnings for a decade, they've been hit.
Speaker 1: A lot of that is tied to the bubble coming
Speaker 1: out of speculation, a lot of this type of real
Speaker 1: rates going up. When you have companies like Apple and
Speaker 1: you can pick any other name within that large cap
Speaker 1: tech universe, you know they've come under pressure, but maybe
Speaker 1: for the wrong reason, because these are not companies where
Speaker 1: you're looking at discounting cash flow in ten years as
Speaker 1: we saw last week, of generating from menace cash flow
Speaker 1: in real time. Russ. Given the fact that you are
Speaker 1: constructive on these companies, you've got such positive things to say,
Speaker 1: and black Rock has had a stance of holding a
Speaker 1: bit more cash. When do you know it's time to
Speaker 1: deploy it? Well, you know, the cash is not just
Speaker 1: about trying to time the market. I think part of
Speaker 1: the reason for the cash, and honestly so we're running
Speaker 1: with the high cash balance today as well, is less
Speaker 1: about I'm going to time the market, is more about cash.
Speaker 1: In an environment in which bonds have become the source
Speaker 1: of risk. Cash along with that, say, a long hour
Speaker 1: position has become one of your risk mitigainst And if
Speaker 1: you're running a multi asset portfolio and you're thinking about
Speaker 1: risk and managing that risk and you're not getting the
Speaker 1: same diversification used to get from bombs, you're gonna run
Speaker 1: with a bit more cash, Russ. Just quickly before you
Speaker 1: go Friday, A lot of people expecting a self print,
Speaker 1: maybe even a negative one. How do you think we're
Speaker 1: going to internalize that with the number drops, you know,
Speaker 1: I think we're back in the environment where people are
Speaker 1: gonna get a little bit nervous about strong data because
Speaker 1: obviously the big tears that fans going to be more aggressive.
Speaker 1: That said, you know, there's still some noise in this print.
Speaker 1: We know that the seasonality numbers around the holidays have
Speaker 1: been off really since the financial crisis. They've probably been
Speaker 1: even more off since the pandemic, So I wouldn't base
Speaker 1: too much on one print. Russ Coast of black Rock,
Speaker 1: Russ fantastic as always, sir, Thank you very much joining
Speaker 1: us now. Sarah Hunt, portfolio manager at Alpine Woods Capital Investors. Sarah,
Speaker 1: can we just stop here? You're pull photio manage. How
Speaker 1: active were you this month? Well, we were fairly well
Speaker 1: positioned coming into this month, so we've been active in
Speaker 1: terms of what we're looking for that might have gotten
Speaker 1: hit with the rest of the stocks. So we were
Speaker 1: somewhat active, but it's not like we went much. We
Speaker 1: had a much different activity level than normal because we
Speaker 1: were fairly well positioned coming into this because we were
Speaker 1: concerned about this coming into and the end of last year.
Speaker 1: If someone has a bullish cast, where is the opportunity
Speaker 1: right now? I think there's a lot of opportunity in
Speaker 1: some of the tech stocks that have gotten hit. I mean,
Speaker 1: you saw that rally in the Nastack on Friday. I
Speaker 1: think part of that was Apple coming out and saying
Speaker 1: that some of their supply chains of ease. I think
Speaker 1: that gave people some comfort that some of the issues
Speaker 1: that they were concerned about are getting a little bit better.
Speaker 1: I don't have the numbers in front of me, Sarah,
Speaker 1: but this is really important. Joe Feldman, with Dana Telsea's
Speaker 1: advisory group has operating income at Amazon and again over
Speaker 1: a longer time frame of twenty four months. It's breathtaking
Speaker 1: the growth. When you look at the tech stocks, you're
Speaker 1: not looking at one week performance or one quarter. How
Speaker 1: long is your timeline to judge the value of big tech?
Speaker 1: I think the timeline has to be pretty long because
Speaker 1: some of those companies have grown fairly, fairly well for
Speaker 1: a very long period of time. And when people start
Speaker 1: to talk about the tech issue earlier on with a
Speaker 1: great tightening issue, there is a bifurcation and technology for
Speaker 1: the companies that can grow and grow profitably. And I've
Speaker 1: said this before, and I really think that that's starting
Speaker 1: to really starting to see that. But there are some
Speaker 1: stocks that have gotten hit with all of this that
Speaker 1: I think are decent values here. I mean, you've got
Speaker 1: some fifteen times earning stocks and some of the chip
Speaker 1: makers who've got some of the chip equipment makers that
Speaker 1: are cheaper now too than they were before. And I
Speaker 1: think that there's some real growth ahead because you're going
Speaker 1: to continue to move where we're making semiconductors. If the
Speaker 1: supply chain issues have taught us anything, I think you're
Speaker 1: going to see a different People are going to be
Speaker 1: basing their their production of semi conductors in other places
Speaker 1: than they have been because they don't like the dependency.
Speaker 1: So I think that there's a long runway for some
Speaker 1: of these stocks to grow, and I think that that
Speaker 1: is what people are going to be looking for as
Speaker 1: we go forward. Sarah, it has never been a fundamental issue.
Speaker 1: It's always been a valuation issue at least, and some
Speaker 1: people are looking at the potential for real rates in
Speaker 1: the United States to go to zero. David Costin among them,
Speaker 1: of Goldman Sachs, how much are you including that scenario
Speaker 1: when you say it is time to start going in
Speaker 1: and buying some of these high quality names. Well, I mean,
Speaker 1: if you think about the fact that historically we have
Speaker 1: never seen negative rates before, I think just getting back
Speaker 1: to zero should not be a cause for major concern,
Speaker 1: and I think that growth can still happen under those conditions.
Speaker 1: But the problem with inflation is that it's systemic in
Speaker 1: ways it is very difficult to fight. The energy issue
Speaker 1: is one thing, the housing issue is another thing, and
Speaker 1: those are not that easy to fix. I mean, if
Speaker 1: you've got a global move away from hydrocarbons without a
Speaker 1: lot of non expensive ways to replace them, that's not
Speaker 1: going to be a transitory issue. That's going to be
Speaker 1: a longer term issue. And the housing problem, as rents
Speaker 1: go up, is going to be non transitory as well.
Speaker 1: So I think that just getting back to zero is
Speaker 1: not a tragedy most of this group. But I think
Speaker 1: that the longer term question is going to be what
Speaker 1: does that look like going forward, where do rates go,
Speaker 1: and what happens in the interim to inflation. But there
Speaker 1: are a lot of people are saying that because of
Speaker 1: that inflation story, it's the cyclicals that you should lean
Speaker 1: into and not necessarily the growth names that have benefited
Speaker 1: by low rates. Do you disagree with that are you
Speaker 1: saying that actually, these big names have the greatest capacity
Speaker 1: to grow with inflation. I think some of these big
Speaker 1: names have the biggest capacity to continue to raise prices.
Speaker 1: The problem with the cyclicals is that if you've got
Speaker 1: a slowing economy, then you've got you know, a talent
Speaker 1: on one side and the headmand on the other. And
Speaker 1: I'm not sure that that's going to be the biggest
Speaker 1: place to make money. Although we think some of those
Speaker 1: stocks have come down too, so it's not I wouldn't
Speaker 1: ignore them either. It's really just looking at individually, stock
Speaker 1: by stock, what is this company's what does it look
Speaker 1: like for them in the future for the next two
Speaker 1: or three years, what does it look like for what
Speaker 1: does the interest rate due to them? And what do
Speaker 1: their end markets look like? And I think that's really
Speaker 1: the kind of individual stock by stock analysis that has
Speaker 1: to be done. Sarah Vom palm Wood's Capital Investors. Sarah,
Speaker 1: what a busy month, all that work last week for
Speaker 1: a flat market just unread exhausting stuff. Sarah, thank you,
Speaker 1: thank you very much. We start strong with Lisa Hornby,
Speaker 1: head of the US multisector fixed income at Schroeder's with
Speaker 1: a backdrop out of A. Rutger's economics and the great
Speaker 1: Michael Bordeaux as well. Lisa Hornby, you are grounded in
Speaker 1: economic history with Bordo place. The economic history right now
Speaker 1: is you allocate forward to the market. How do you
Speaker 1: combine all the econo babble into an investment view. I
Speaker 1: think it comes back to Lisa's coming earlier about things
Speaker 1: being corrupted. I mean, I would take that a step.
Speaker 1: It's not yield curve, right, It's not just the yield
Speaker 1: curve that's been corrupted. It's all financial assets. I mean,
Speaker 1: you look at the price appreciation we've had over the
Speaker 1: last couple of years, and you'd say nothing could justify
Speaker 1: that except for the fact that we had literally trillions
Speaker 1: of dollars poured into the economy UM, thanks to both
Speaker 1: FED and and and policymakers and UM. Markets now need
Speaker 1: to correct to some level of normalcy, and that's what
Speaker 1: we're seeing. We're in a transition phase now. UM. So
Speaker 1: you know, our view on risk assets is a little
Speaker 1: bit more cautious. We've probably I think we've spoken about
Speaker 1: that on this show for the last couple of months.
Speaker 1: When you get valuations in the bottom quartile and we
Speaker 1: were in the bottom desile. I think in UH in
Speaker 1: November you have to be a bit more cautious in
Speaker 1: your approach to risk taking. So that's where we are. Um.
Speaker 1: You know, we look at at all in treasury yields
Speaker 1: right now and we say they do offer a little
Speaker 1: bit more value and the market is discounting a lot
Speaker 1: in terms of the FED. Maybe we could go a
Speaker 1: little bit further, but certainly we think we're a lot
Speaker 1: of the way there at this point. Um. And so
Speaker 1: you know, we're we're kind of being cautious and waiting
Speaker 1: for the macro backdrop to stabilize a bit. Hopefully the
Speaker 1: Fed gets this right. I think the chance of that
Speaker 1: is is fairly low. But hopefully the Fed does navigate
Speaker 1: this well and doesn't overtighten into a slowing economy. Um.
Speaker 1: But if they can sort of land this uh land
Speaker 1: this well, then there should be opportunities for more risk
Speaker 1: taking later this years. Unreliing on other programs and other
Speaker 1: networks now for Fed speed because no FED officials coming
Speaker 1: back on this program anytime soon. In the ft Atlanta
Speaker 1: FED President Raphael Bostick just opening South up to maybe
Speaker 1: need to go quicker if they need to. Maybe not.
Speaker 1: If they don't, at least we're still sticking with maybe
Speaker 1: three hikes for twenty two. I'm just wondering in your
Speaker 1: mind where the gap is right now between the communication
Speaker 1: we're getting from the FED and what the market is
Speaker 1: baking game. Do you think that's a widespread would you
Speaker 1: think it really narrows the next time we get the
Speaker 1: dot plots safe from the FED in the middle of March,
Speaker 1: so you know, I've seen some of the street forecasts
Speaker 1: out there as far as high as seven hikes. I
Speaker 1: think that's too much. I don't think the FED gets there.
Speaker 1: I think the market disconnected between the FED in two
Speaker 1: is probably not the material. My base case still at
Speaker 1: this point is that they probably do for basis point
Speaker 1: takes rather than five. I do think inflation peaking will
Speaker 1: give them a chance to pivot office something slightly slightly
Speaker 1: as aggressive as they are now, um so, become a
Speaker 1: little bit less aggressive. I think where the gap is
Speaker 1: is probably next year, Uh, the market is discounting very
Speaker 1: very little. I think you probably need to shift some
Speaker 1: of what's in two into three. Um so. I think
Speaker 1: that's probably where the bigger gap is, and and the
Speaker 1: overall terminal funds rate is still fairly low in the market, UM,
Speaker 1: so you know, between one and three quarter percent and
Speaker 1: two percent, that's still a very very low terminal rate.
Speaker 1: I think there could be a little bit of scope
Speaker 1: for that to move higher as well. Lisie, you said
Speaker 1: something earlier that the chances of the FED actually well
Speaker 1: orchestrating a soft landing is fairly low. Can you walk
Speaker 1: us through what it looks like if they fail to?
Speaker 1: I mean, what you see in your likely scenario in
Speaker 1: terms of tightening and subsequent economic reaction. Yeah, I mean
Speaker 1: I think it looks a lot like what happened in
Speaker 1: where you know, the FED was basically overtightening into a
Speaker 1: slowing economic backdrop UM and they were forced to pivot
Speaker 1: in the first quarter, actually the first month of twenty nineteen.
Speaker 1: I think that's that's the template. Uh, this time, I
Speaker 1: think there's more there's potentially even more danger of that. Right.
Speaker 1: A lot of this, a lot of the market, um,
Speaker 1: at least in financial asset terms, has been predicated off
Speaker 1: the fact that we've had very very negative real yields
Speaker 1: for quite some time. If we continue to see really
Speaker 1: yields normalized, which I think they should, to some degree. Um,
Speaker 1: that should put some pressure on how other financial assets,
Speaker 1: how risk assets are discounted, and that macro you know
Speaker 1: that macroeconomic backdrop. That volatility is a bit concerning. It
Speaker 1: doesn't immediately translate into slower economic activity. But if it
Speaker 1: happens too aggressively and too quickly and we start to
Speaker 1: seek companies question the the backdrop and make different decisions
Speaker 1: based on hiring, um, that could be that could pose
Speaker 1: a challenge. So it's I mean, it is financial conditions
Speaker 1: ultimately that we're watching. I think there's a lot of
Speaker 1: metrics that feed into that. So far they're relatively well contained. UM.
Speaker 1: I think the other part of it is that Pale
Speaker 1: was pretty clear that financial conditions don't matter, and so
Speaker 1: are as the household balance sheet is strong, and so
Speaker 1: that's what they're watching. And I suppose there is a
Speaker 1: there is a potential for a gap there. Right. The
Speaker 1: household balance you can remain strong for some time because
Speaker 1: there is there are still some access savings, people are employed,
Speaker 1: we've seen wage gains, UM, household network is high. That
Speaker 1: could probably remain a little bit stronger than the financial
Speaker 1: asset backdrop for some time. You look across sectors just quickly.
Speaker 1: I want to finish on this. Some people have been
Speaker 1: raising cash and I'm wonder if you look across sectors
Speaker 1: right now, what you'd be using to fund that cash position,
Speaker 1: why you'd completely walk away from in credit right now?
Speaker 1: Can you do that on a sector to sector basis?
Speaker 1: Is it an individual name, single name to single name.
Speaker 1: What's the process you go through to do that? I
Speaker 1: don't think it's as simple as that at the moment.
Speaker 1: I think you have to watch the companies you own.
Speaker 1: I think we're seeing the companies that are doing uh
Speaker 1: M and A get hit a little bit harder um,
Speaker 1: at least at the outset. I think we have to
Speaker 1: be careful on security selection here. I mean, I think
Speaker 1: it's about taking broad data down. But there has been
Speaker 1: sector out performance right Energy has done well, at least
Speaker 1: in credit market so far. Triple B is ab outperformed
Speaker 1: on a beta adjusted basis, So you know, I think
Speaker 1: you have to be more specific than just say cut
Speaker 1: a sector um at this juncture. It's more about the
Speaker 1: individual names and the overall level of data in your portfolios.
Speaker 1: Small as always gonna catch up. Lisa Home be there
Speaker 1: right now. A great honor for Lisa, Bryan Watson and
Speaker 1: I to bring to you on radio and television across
Speaker 1: this nation. Someone who viscerally understands this story. As we
Speaker 1: spoke to the ambassador of France to the United States
Speaker 1: last week and his history of Eastern Europe so too,
Speaker 1: George Friedman of Budapest. He is founder and chairman of
Speaker 1: Geopolitical Futures and has a family that has viscerally lived
Speaker 1: living near Russia. George Freedman, what does the media, what
Speaker 1: does the analysis get on about Vladimir Putin? Well, he
Speaker 1: wants Ukraine, but he did something very strange. Wait, he
Speaker 1: did not attack weeks ago. You don't launch an attack
Speaker 1: without surprise if you can get it. And sitting there
Speaker 1: waiting for the United States to build up at its
Speaker 1: defensive capabilities, which the US has done, just increases the
Speaker 1: chance of losing. So right now he's not going to
Speaker 1: defend in the Ukraine. He's really looking at how to
Speaker 1: split NATO. Within splitting NATO. And this is Angela's stent
Speaker 1: writing in Foreign Affairs this weekend on the Putin doctrine.
Speaker 1: I guess I have to ask, what is the Putin
Speaker 1: doctrine that you see that will allow for a split
Speaker 1: a fracture of NATO natural gas. Russia is supplying almost
Speaker 1: all of Germany's natural gas. The rest of Europe too,
Speaker 1: but Germany is a key it's to be a big player.
Speaker 1: If Germany joins with NATO, it risks having a shouldnt
Speaker 1: cut off a natural gas If, on the other hand,
Speaker 1: it doesn't, Uh, it goes against the grain about the
Speaker 1: United States, the British and other players, particularly Eastern Europeans.
Speaker 1: So what I think Putin is really doing is creating
Speaker 1: a situation with his hammerlock on natural gas where the
Speaker 1: Germans are in an impostible position and are likely to
Speaker 1: go and split from the West in resisting the Russians,
Speaker 1: or at least to the extent of not cooperating in
Speaker 1: Billion events George. In other nations, we might ask about popularity.
Speaker 1: Does it even matter here whether this move that Vladimir
Speaker 1: Putin is embarking on is popular among the rank and
Speaker 1: file Russians. I think at this point, near war situations,
Speaker 1: popularity doesn't matter anywhere. Uh. You notice in the United
Speaker 1: States everybody is quite quiet about it. The Germans are
Speaker 1: I'm the whole opposed to any operation to British, are
Speaker 1: very deep into it. Each one of them is following
Speaker 1: their national interest and the decisions are going to be
Speaker 1: made soon, very quickly, very rapidly, and I don't think
Speaker 1: public interests will affected, except that no one wants to
Speaker 1: come out of this looking like a loser. It's how
Speaker 1: you come out of it. This matters. Well. So how
Speaker 1: does Watiman Putin look like a winner from all this? Well,
Speaker 1: at this point he appears to be a winner because
Speaker 1: the West has grown up and gotten really alarmed. So
Speaker 1: already he shows the Russian people that they've taken us seriously,
Speaker 1: which we really haven't. The second step is, however, he's
Speaker 1: got to do something. An invasion is a very risky thing.
Speaker 1: You can lose, and he cannot afford to lose. On
Speaker 1: the other hand, you're in a situation where if he
Speaker 1: can manage to split NATO, if he creates a crisis
Speaker 1: in NATO, you can do something. Which is why the
Speaker 1: United States right now is scrambling defined a natural gas
Speaker 1: frows is that they could send to Europe to support them,
Speaker 1: because that's where the key is. Uh. If he doesn't
Speaker 1: want NATO to advance in the East, perfect way to
Speaker 1: do that is what NATO wide open on the natural
Speaker 1: gas issue. Well, George, this is important and this goes
Speaker 1: back to your at Stratford, and frankly, your academics are
Speaker 1: Cornell before that, is it feasible to salvage Europe with
Speaker 1: a delivery of hydrocarbons? Have you ever seen a study
Speaker 1: where we can deliver to Germany and the rest enough
Speaker 1: oil gas and the rest. What I have seen is
Speaker 1: that it can't be done. There's not enough bottoms to do.
Speaker 1: But at any rate, the United States has to give
Speaker 1: it a try, has to make it clear to the
Speaker 1: Europeans that we care about this situation, that even if
Speaker 1: there's going to be an interruption, it will be a
Speaker 1: short interruption and we'll be able to handle it and
Speaker 1: so on. But the problem, what Putin has done very
Speaker 1: well is to shift the burden over to the Germans
Speaker 1: in particular to Europeans in general, where the choice between
Speaker 1: defending Ukraine and having their economies wrecked has to be made.
Speaker 1: And whatever public opinion now comes in they're gonna go
Speaker 1: craze is not that important to them. Is it a
Speaker 1: generous is it a generational shift of a new German
Speaker 1: government after miracle? Does that matter in your analysis? Well,
Speaker 1: Germany is built an economy that's really very powerful in Europe.
Speaker 1: It is a leader economically in Europe. Without natural gas,
Speaker 1: that doesn't have that economy, it's built itself into that position.
Speaker 1: The U. S should have perhaps try to build alternatives
Speaker 1: years ago, but it didn't, so let this situation develop,
Speaker 1: and now it's playing out. It's really a reality that
Speaker 1: can't be ignored. George Freeman, thank you so much. Greatly appreciated.
Speaker 1: With geopolitical futures today, just authentic analysis. They're one perspective
Speaker 1: on our international relations right now. Josh ra Charstein with
Speaker 1: US Vice JOHNS Hopkins Bloomberg School of Public Health. Of
Speaker 1: course Michael Bloomberg, h are not an acquaintance with his
Speaker 1: television and radio property as well. Dr Scharstein, it is
Speaker 1: good news, whether it is the thousands assembled in Los
Speaker 1: Angeles and Kansas City for football, or in the walk
Speaker 1: up I live in in the lobby, everybody has to
Speaker 1: wear a mask. There seemed to be great polarities. Here's
Speaker 1: the reality. We see cases rolling over nicely, we see
Speaker 1: hospitalizations rolling over somewhat, we're waiting for deaths to roll over.
Speaker 1: When deaths roll over, how will public policy change. Well,
Speaker 1: I think public policy is changing in places where the
Speaker 1: cases are coming down, in the hospitalizations are coming down now,
Speaker 1: so I think it's going to be a regional phenomenon.
Speaker 1: And then I think, to your point, I think the
Speaker 1: national mood will really start to change as deaths come
Speaker 1: much further down. Um. And this is the you know,
Speaker 1: approaching the moment you know where we are going to
Speaker 1: see COVID start to fade a little bit more into
Speaker 1: the background. Um. I don't think we'll have nearly as
Speaker 1: much disruption in our lives in barring the emergence of
Speaker 1: something that we haven't anticipated, which of course could still happen.
Speaker 1: The vaccine rate, I'm gonna call a amateur an amicron
Speaker 1: from sixty or sixty one out to sixty how critical
Speaker 1: is it to double that out to a sixty eight
Speaker 1: percent statistic? Sorry? That is what's The vaccine rate was
Speaker 1: sixty six it's now sixty according to most the media reports.
Speaker 1: I see, how critical is it to double that out
Speaker 1: to sixty eight percent? Does that mean something? Well, I
Speaker 1: mean with every increase in vaccination, we're gonna get fewer
Speaker 1: hospitalizations and fewer deaths to value of vaccination again, proved
Speaker 1: itself during the amicron wave. So we have tools um
Speaker 1: to protect our cells and we have to keep going.
Speaker 1: So just because it's going to fade into the background
Speaker 1: in our lives, the more we are smart about, you know,
Speaker 1: protecting ourselves, preparing the mortal fade into our lives. It's
Speaker 1: not just by ignoring it all together that we get
Speaker 1: that benefit. Dr Sharfstan. Meanwhile, that's the US, and that's Europe.
Speaker 1: Perhaps over in China they've been trying to pursue as
Speaker 1: euro COVID policy. Uh, and we do have the Olympics
Speaker 1: starting on Friday. Hong Kong is experiencing a pretty big
Speaker 1: upsurge in a macron and one professor at the University
Speaker 1: of Hong Kong who has researched a macron said, the
Speaker 1: horse has bolted, and I don't think that the government
Speaker 1: is going to be able to get on top of this.
Speaker 1: What's the trajectory of COVID cases that you expect over
Speaker 1: in China given the lack of social immunity built up
Speaker 1: by natural infection and just a normal life. Well, it's
Speaker 1: the lack of immunity in part because the vaccines they
Speaker 1: used to have not been the strongest vaccines and so um,
Speaker 1: they are vulnerable to COVID, there's no question about it.
Speaker 1: Um and this virus and some of the amicron variants
Speaker 1: we're seeing are crazy contagious. So that's not a situation
Speaker 1: that's very good. And the idea of persisting in zero
Speaker 1: COVID without the benefit of better vaccines is a real
Speaker 1: challenge for China. And you know, I don't know. It's
Speaker 1: it's hard to believe that they could make it through
Speaker 1: with so many people coming in without it getting out.
Speaker 1: Of course, they have tools and approaches that we would
Speaker 1: find unacceptable in this country to accomplish that, So I
Speaker 1: don't know what's going to happen those tools that we
Speaker 1: would consider unacceptable. Are they even enough though to stave
Speaker 1: off the up surge in likely amicron cases and likely
Speaker 1: COVID cases after the Olympics. Can you game out what
Speaker 1: it might look like in the weeks following well, I mean,
Speaker 1: if the omicron gets out into the Chinese population, it's
Speaker 1: likely to spread very quickly given the fact that the
Speaker 1: vaccines used they are not as effective, and then we'll
Speaker 1: have to see the scale of the reaction from the
Speaker 1: Chinese authorities. You know, I I don't know what's going
Speaker 1: to happen. I'm not someone who's going to be able
Speaker 1: to put together a scenario between the biology and the politics,
Speaker 1: but I don't think it's going to be um, you know,
Speaker 1: very pleasant for people in China if they go for
Speaker 1: a zero COVID approach in the setting of such an
Speaker 1: incredibly infectious variant. So you know, on the other hand,
Speaker 1: they may, you know, have to do some pretty significant
Speaker 1: actions to avoid people so many people getting very sick.
Speaker 1: You surprised these Olympics are ham like from every point
Speaker 1: of view. I love the fact that Vladimir Putin is
Speaker 1: going to be going and helping with the inaucuration of
Speaker 1: this Olympics, just giving you a sense of it. But honestly, John,
Speaker 1: I don't understand how they can pursue a zero COVID
Speaker 1: policy while having individuals from all around the world come
Speaker 1: into their borders and basically celebrate an international kind of
Speaker 1: con fab It doesn't make sense to me. We'll see
Speaker 1: this plays out. Good luck to them. Dor Joshua Shastain
Speaker 1: that of the Johns Helpkins Bloomberg skilled a public half
Speaker 1: thank you said, this is the Bloomberg Surveillance podcast. Thanks
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