Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanabek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all furnishing the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analysts in more than one twenty countries. You can download
Speaker 1: Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot Com. You
Speaker 1: can also listen to our radio show at two pm
Speaker 1: Eastern Time on Bloomberg Radio or watch us on YouTube
Speaker 1: search Bloomberg Global News. We talked about You've been hearing
Speaker 1: from Nancy Lions and our team about US health officials
Speaker 1: expected to talk about tighter guidelines for the use of masks,
Speaker 1: especially in indoor settings and places where that delta variant
Speaker 1: is spreading rapidly and increasing cases of COVID. There's a
Speaker 1: lot going on, Maderna saying it's COVID nineteen. Vaccine manufacturing
Speaker 1: partners outside the US TIM are facing delays due to
Speaker 1: lab testing issues that occurred in recent days, and in
Speaker 1: some places we see cases come down, other places we
Speaker 1: see them go out. Yeah, we do like to do
Speaker 1: a periodic check of the numbers cases globally topping a
Speaker 1: hundred and ninety four point eight million deaths, surpassing four
Speaker 1: point one seven million vaccine tracker from Bloomberg News, more
Speaker 1: than three point eight nine billion doses have been administered.
Speaker 1: Keep in mind that many of these doses require two
Speaker 1: shots in order for someone to be fully vaccinated, and
Speaker 1: the UK reported the highest number of Kevin nineteen death
Speaker 1: since March, prompting a top government official to warn the
Speaker 1: pandemic is not over yet. That is the subject of
Speaker 1: a Bloomberg story will dig into later. Let's get to
Speaker 1: our guest, Dr David Levy, the CEO of the healthcare
Speaker 1: provider e h E Health. He's an epidemiologist. He's based
Speaker 1: in New York City. That's exactly where we find him
Speaker 1: on the phone on this Tuesday. Dr Levy, So nice
Speaker 1: to have you here with Tim and myself. How are
Speaker 1: you doing? What are you seeing when it comes to
Speaker 1: COVID and particularly the delta variant, well obviously around the well.
Speaker 1: First of all, thanks for tasking, nice to speak with you. Uh, look,
Speaker 1: I'm seeing what we're all saying, which is we're basically
Speaker 1: living in a tale of two cities. You have a
Speaker 1: cities and communities where there's high immunization rates and relatively
Speaker 1: low impact, and you have cities and communities with low
Speaker 1: immunization rates and relatively high impact. And that's the world
Speaker 1: we're living in today. And I'm very happy to say
Speaker 1: that New York is one of those cities where we're
Speaker 1: having relatively low impact because we're in a high immunization
Speaker 1: city right now. That said, we are expecting to hear
Speaker 1: from the CDC just in about forty minutes. We do
Speaker 1: expect health officials in the US to return to tighter
Speaker 1: guidelines for the use of masks. How are you reading
Speaker 1: into this given that we were told weeks ago that
Speaker 1: fully vaccinated individuals don't have to be wearing masks indoors. Well,
Speaker 1: I think I said a few months ago on this
Speaker 1: program that epidemiology is the exact science of probabilities. And
Speaker 1: as the environment changes and we're dealing with, you know,
Speaker 1: a contagious and mutating virus, that the facts on the
Speaker 1: ground and the recommendations will have to change. I mean
Speaker 1: that that's absolutely normal. I will tell you when the
Speaker 1: first recommendations came out, I didn't interpret them that said
Speaker 1: that I should never have to wear a mask again.
Speaker 1: I mean even in New York City when I go
Speaker 1: if I went into a venuehere there are five or
Speaker 1: ten thousand people and fully vaccinated, I would still wear
Speaker 1: a mask. And I am going to suggest, I don't
Speaker 1: know exactly what they'll say, that they will make recommendations
Speaker 1: based on the level of community spread in whatever community
Speaker 1: you happen to be living in, and certainly not going
Speaker 1: to be the same in a highly immunized community versus
Speaker 1: a lowly a low immunized community. So I think you
Speaker 1: have to uh, you know, like everything else, there's recommendations
Speaker 1: and you have to use your own personal judgment and
Speaker 1: with respect to local circumstances. Yeah, and when in doubt,
Speaker 1: maybe just throwing a mask. The headline just crossing the
Speaker 1: Bloomberg terminal. This is coming from the ft the Financial
Speaker 1: Times England set to allow double vaccinated US and EU tourists.
Speaker 1: What do you believe is the right thing when it
Speaker 1: comes to cross border travel? Dr Levy Um, Well, I
Speaker 1: think in general, I don't think there's a big risk
Speaker 1: with respect to people who are fully immunized. I think
Speaker 1: the issues and in fact I gave a talk about
Speaker 1: this a couple of weeks ago. I don't think the
Speaker 1: issues are as much science based as they are politically based.
Speaker 1: I mean, fully immunized people ought not be precluded in
Speaker 1: my view, from international travel, the risk is more um uh,
Speaker 1: you know, when they go from place to place, they
Speaker 1: ought to be cognizant of the community spread and choose
Speaker 1: when and where to uh to wear masks. So I
Speaker 1: I don't think that fully immunized people are are at
Speaker 1: particular risk moving across the boarders. Personally, I'm now involved
Speaker 1: in situations with both the UK and Canada being fully immunized.
Speaker 1: I really don't have concerns from my own personal travel.
Speaker 1: What about people who are fully immunized getting a breakthrough
Speaker 1: infection and then perhaps even unwillingly or unknowingly passing that
Speaker 1: to somebody who hasn't been vaccinated. What do we know
Speaker 1: about the ability of somebody who has been fully vaccinated
Speaker 1: to spread COVID. Well, we don't know a lot about
Speaker 1: that in fact, and this is one of the issues
Speaker 1: people always want an answer to an evolving scientific situation.
Speaker 1: We don't clearly know the answer to that. There's some
Speaker 1: early studies that should suggest that in fact, there may
Speaker 1: be as high a viral load and people who have
Speaker 1: been immunized and who have gotten COVID as those who
Speaker 1: have in fact not been immunized. But we don't know
Speaker 1: the extent to which that will spread. And men, as
Speaker 1: you well know, many of these cases are asymptomatic. But
Speaker 1: the best defense against any kind of spread is getting
Speaker 1: as many people immunized as possible. That creates the greatest wall.
Speaker 1: And I think people have to be reminded that nobody
Speaker 1: ever said these vaccines were a hundred percent effective, thecent effective.
Speaker 1: We live in a city of eight million people. If
Speaker 1: everybody was exposed to this new DEBTA variant, you would
Speaker 1: as you'd expect five percent of the people to to
Speaker 1: to become infected, which is three fifty people. And we're
Speaker 1: nowhere near any kind those kind of numbers. So the
Speaker 1: vaccines continue to be very, very effective. And you know,
Speaker 1: rather than picking out, you know, one or two given
Speaker 1: situations in a given person in a given venue, the
Speaker 1: idea here is to look at the overall macro public
Speaker 1: health you and get people immunize. It's the most effective
Speaker 1: way to lower the lease value. The lethality. This this
Speaker 1: pandemic and the more, the faster, the better. It's as
Speaker 1: simple as that. Dr Leaving one thing Tim and I
Speaker 1: wanted to ask you, is are we in a better
Speaker 1: place than we were a year ago, six months ago,
Speaker 1: a month ago. We are absolutely in a better place
Speaker 1: and from any point in the past with respect to
Speaker 1: our immunization status. And even though it's slowed down, it
Speaker 1: gets better and better and better. I think that you
Speaker 1: could say that we're in a difficult spot in the
Speaker 1: past month because of the rise of this current variant.
Speaker 1: But that being said, it's giving pointing us to a
Speaker 1: really strong lesson which is the best that we can
Speaker 1: deal The best weapon to deal with these variants, not
Speaker 1: just today with this variant, but variants in the future,
Speaker 1: providing the variants don't circumvent the vaccine is to keep
Speaker 1: getting vaccinated. You know, for people like myself who look
Speaker 1: every day at the statistics in New York City, uh,
Speaker 1: you know, we have about a thousand cases now versus
Speaker 1: the bottom of a trough of about a hundred hundred
Speaker 1: and fifty a few weeks ago. The hospitalization rate has
Speaker 1: stayed pretty much the same, hasn't ticked up yet, and
Speaker 1: the death rate is still at record low. So the
Speaker 1: lethality this epidemic in New York City is very very
Speaker 1: low compared to where we have been in the past,
Speaker 1: and people should keep their eyes out on what the
Speaker 1: total lethality of this epidemic is and how immunization can
Speaker 1: improve that, you know, month day, day by day, week
Speaker 1: by week, and month by one, month by one. And
Speaker 1: the single best weapon I can't stress this enough is
Speaker 1: getting immunized. Yeah, the numbers are there. I mean CDC
Speaker 1: has said that of people who are hospitalized with this
Speaker 1: are people who have not been vaccinated. Um. Dr Levy,
Speaker 1: I'm wondering about getting the next portion of Americans vaccinated.
Speaker 1: You have New York City in California talking about and indeed,
Speaker 1: UH implementing vaccine mandates are starting at different times for
Speaker 1: people who work in respective areas. Are vaccine mandates a
Speaker 1: good thing? Well, I personally believe in vaccine mandates. Uh.
Speaker 1: All of us went to school with vaccines, otherwise we
Speaker 1: couldn't go to school. Nobody told me, or nobody told
Speaker 1: me to with respect to my kids, that you had
Speaker 1: a choice to wear a mask or to get a
Speaker 1: measles vaccine. You had to get a Measles vaccine um.
Speaker 1: Obviously today is a much more complicated social environment around
Speaker 1: the issue. But I think there's a point, and we've
Speaker 1: could to jold our own employees, and we've gotten to
Speaker 1: very high vaccination rates on a voluntary base. Is but
Speaker 1: I think that for many people, this idea of vaccine,
Speaker 1: it's and it's impact with respect to the disease, is
Speaker 1: still an intellectual construct. And somebody we were talking this
Speaker 1: morning amongst a few of us about this idea about
Speaker 1: a mandate. Uh. Thereby making people give something up if
Speaker 1: they in fact don't get the vaccine is powerful. Not
Speaker 1: necessarily your job, but the ability to go to a
Speaker 1: show or the ability to go to a restaurant. This
Speaker 1: idea of finally having to confront that if you're not vaccinated,
Speaker 1: your life will meaningfully change. By having some sort of
Speaker 1: a restriction, I think can be a positive effect to
Speaker 1: getting more and more people. Uh. Somebody said this morning,
Speaker 1: you know, there's nobody writing emails that they're withdrawing from
Speaker 1: college because their college happened to mandate vaccines. Nobody's pulling
Speaker 1: out of college because of that. And I think that
Speaker 1: the same thing is going to be seen as a
Speaker 1: private institutions mandate vaccines. I think, you know, there's a
Speaker 1: lot of a threat about it, but I don't think
Speaker 1: that there's going to be a real withdrawal from from
Speaker 1: those institutions. I really don't. It's funny that you said
Speaker 1: that my daughter starts college in the fall and her
Speaker 1: school just sent out a note saying that the vaccination
Speaker 1: rates aren't high enough. I guess they're asking for evidence,
Speaker 1: and they're basically, I think, kind of pushing people saying,
Speaker 1: you know, please get it. We're not making it mandatory,
Speaker 1: at least not yet um, but we'll see what happens.
Speaker 1: Dr David Levy, CEO of E H E Health, thank
Speaker 1: you so much. It's so interesting, Dr David Levy, just
Speaker 1: now talking about the idea of taking something away or
Speaker 1: you're not getting access to something because you're not vaccinated.
Speaker 1: For for me and for so many people, I know,
Speaker 1: the idea of just being safer and being able to
Speaker 1: kind of face the world, getting rid of the stress
Speaker 1: of being concerned that you can't get the virus. That
Speaker 1: was enough for me. You're listening to Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes, Tim Stinovic on
Speaker 1: Bloomberg Radio. All Right, well, this week's cover story Bloomberg
Speaker 1: Business Week magazine happens to be among our most read
Speaker 1: stories today on the Bloomberg You'll understand why in just
Speaker 1: a moment. It's about Beijing's crackdown on its big tech companies,
Speaker 1: how it is ushering a new era. So let's get
Speaker 1: to it. It's something we've talked about already a lot.
Speaker 1: Joel Lebbers, editor at Bloomberg Business Week. He joins us
Speaker 1: in the Bloomberg Interactive Broker studio. Also, Austin Carr, technology
Speaker 1: reporter for Bloomberg News, joins us on the phone from
Speaker 1: l A. My biggest question, Joel, with this story is
Speaker 1: did Austin get to go to Grand Cayman to actually
Speaker 1: report it, because that's how the story opens. Yeah, not
Speaker 1: not to my knowledge, But you haven't got any expenses
Speaker 1: for July. I haven't got those expenses. And I was
Speaker 1: thinking as you said that that, you know, he just
Speaker 1: did that cover story not that long ago about Margaritaville,
Speaker 1: which maybe maybe that did take him to the islands,
Speaker 1: and I just didn't put two and you together. But uh,
Speaker 1: you know, I think this story is super significant. When
Speaker 1: I think about the storyline through the year, this one
Speaker 1: is increasingly feeling like the story of the year, which
Speaker 1: is China crackdown and and and what it really means
Speaker 1: because I think forever investors especially, I've always felt like,
Speaker 1: oh wow, this is trying, this is a growth story,
Speaker 1: and like the tech versions of companies coming from China
Speaker 1: can be very different than American versions. And you know,
Speaker 1: just seemed like that the guy was the limit. And
Speaker 1: then this guy has basically been brought down, um and
Speaker 1: especially just then of the last week, so we felt
Speaker 1: like that was uh, you know, especially irrelevant for the
Speaker 1: cover this week. So so Austin, can you can you
Speaker 1: tell me, like, you know, we we set you loose
Speaker 1: on this story and what really stands out to you
Speaker 1: about what China is doing right now, because there's a
Speaker 1: term that you dropping the story, that China model that
Speaker 1: I'd like you to explain to Sure. Yeah, And and
Speaker 1: just up top, I I should note that I am
Speaker 1: in Los Angeles reporting, not in the Cayman Islands on
Speaker 1: the beach anymore. How don't we know that? Sounds like
Speaker 1: can either confirm nor no that, But I do agree
Speaker 1: this is one of the big stories of the year
Speaker 1: that we're really eager to focus on when it comes
Speaker 1: to Silicon Valley versus China, because for so long they
Speaker 1: were sort of emulating the model that the US had
Speaker 1: done with their industry. For every you know version of Facebook,
Speaker 1: there was a version of that in China, or there
Speaker 1: was buy You the Google of China, or d D
Speaker 1: the Uber of China, And until just you know, about
Speaker 1: October or so, that model had just continued growing and
Speaker 1: growing and they were becoming more global competitors. But what
Speaker 1: with these recent crackdowns on d D, on Ali Baba,
Speaker 1: on the education industry, on Matuan, we're seeing a very
Speaker 1: a lot of up people in that model where China
Speaker 1: is basically saying to its entrepreneurs, no, this has got
Speaker 1: to stop no more, you know, freewheeling capitalism. We're going
Speaker 1: to rein you in a bit, and we're going to
Speaker 1: do a lot faster than the U S regulators can
Speaker 1: do it in the US. And I think the big
Speaker 1: standout thing for me, and we can talk more about
Speaker 1: the new model for China, but the big standout thing
Speaker 1: is that going into this, I assumed we'd feel here
Speaker 1: a lot of negative reactions of the government intervention in China,
Speaker 1: and it was actually quite the opposite. We actually heard
Speaker 1: a lot of positive reactions, especially from the startup in
Speaker 1: VC community, that felt like this was going to level
Speaker 1: the playing field in the China texting in a way
Speaker 1: that won't happen in the the U s texting for
Speaker 1: many years. So why is the Chinese government no longer
Speaker 1: taking a permissive approach Austin When it comes to big
Speaker 1: Chinese tech companies, You know, there's definitely a sense that
Speaker 1: these companies were getting too powerful, um Ali Babba being
Speaker 1: a prime example, where it was acting with a lot
Speaker 1: of monopolistic behavior, alleged monopolistic behavior towards some of the startups,
Speaker 1: forcing them on their platform, forcing smaller players to sell out,
Speaker 1: taking advantage of their data, and really behaving in a
Speaker 1: way that was in the corporate interests but not necessarily
Speaker 1: in China's national interests. And I think that's really where
Speaker 1: the big pivot is happening in China right now. When
Speaker 1: we think about anti trust cases in the US, that's
Speaker 1: often to protect the consumer, but in China it's increasingly
Speaker 1: to protect national policy. And so when these companies were
Speaker 1: vieering off track, not behaving in a way that was
Speaker 1: in the in China's national interest. That's when the government
Speaker 1: has stepped in and say Ali Baba or two d
Speaker 1: D or may twin that they have to behave differently,
Speaker 1: you know. Reading the story Austin and in just hearing
Speaker 1: you describe it like that, I think some some critics
Speaker 1: of US tech companies could say, hey, wait a second,
Speaker 1: this is what we see US tech companies doing to
Speaker 1: to their smaller competition, correct, I mean we we did
Speaker 1: hear that. I mean one person had told me that, uh,
Speaker 1: you know, China was able to reign in Ali Baba
Speaker 1: within four months, whereas it's going to take US regulators,
Speaker 1: you know, years and years, if not longer, to rain
Speaker 1: in a company like Facebook or Google about their alleged
Speaker 1: you know, privacy issues. Um. And So basically what we
Speaker 1: have to look at is what is the outcome of
Speaker 1: these two different approaches to regulation. On the one hand,
Speaker 1: critics and observers believe that US tech companies might have
Speaker 1: a bit more of an edge in the global theme.
Speaker 1: They will Facebook the same companies will continue to grow
Speaker 1: at a more global scale, where China's model is now
Speaker 1: becoming increasingly China centric. And also less founder centric. In
Speaker 1: other words, sort of the sort of heroes of the
Speaker 1: tech industry and Silicon Valley like Ali Baba co founder
Speaker 1: Jack Ma might not be as vocal or as present
Speaker 1: as sort of their counterparts in the US, like Elon
Speaker 1: Musk will continue to be um and so there's just
Speaker 1: a give and take there. On the one hand, China
Speaker 1: might have less global champions, but perhaps they they that
Speaker 1: sort of braining in the top players allows a new
Speaker 1: generation of startups to grow, whereas in the US startups
Speaker 1: are finding it difficult to grow without being swallowed up
Speaker 1: by the bigger players. Austin, what have you not said
Speaker 1: that you needed to say? I have not. I have
Speaker 1: not said that I will be filing an expense report.
Speaker 1: You like, I better get to the grand game? Is
Speaker 1: just to do some last minute fact checking? Okay, Well,
Speaker 1: you know it's interesting. I read your story and I
Speaker 1: was thinking, Okay, the EU is leading when it comes
Speaker 1: to climate change regulatory moves. I feel like China is
Speaker 1: now leading the way when it comes to big tech oversight.
Speaker 1: You know, what's the US role in all of this
Speaker 1: and what it mean for US big tech companies. I
Speaker 1: think the US is still figuring that out. I mean,
Speaker 1: we we we've seen so many hearings. We've seen sort
Speaker 1: of fines levied in the EU and the US towards
Speaker 1: certain companies, but it has not played out as aggressively
Speaker 1: UH in the U S as it has in UM
Speaker 1: the in in China markets. UH, we are seeing sort
Speaker 1: of U S companies having to you know, one sort
Speaker 1: of interesting juxtaposition was on July four, This is days
Speaker 1: after Facebook has been dealing with UH, you know, issues
Speaker 1: around government intervention, what's going to happen with some of
Speaker 1: the antitrust suits against them? And you have Mark Zuckerberg
Speaker 1: gliding on that that hydro surfboard on July fourth, an
Speaker 1: Independence Day, carrying the American flag. Compare that to someone
Speaker 1: like Jack Ma who has basically disappeared in recent months.
Speaker 1: We haven't seen them, and you can really see the
Speaker 1: stark difference between how much pressure of the U S
Speaker 1: tech companies, the largest giants are facing verse is UH
Speaker 1: for versus the Chinese tech companies. But I would really
Speaker 1: stress at this is a nuance complicated issue, and the
Speaker 1: idea from a Western perspective that the China is just
Speaker 1: breaking down their big text team not correct. They're just
Speaker 1: trying to tell them what they can know no longer do.
Speaker 1: It's the perfect read right now, investors, US investors are
Speaker 1: gonna love the American tech companies even more though as
Speaker 1: a result. The big one, big take away, Well, it's
Speaker 1: a must read and check it out. It's the cover.
Speaker 1: Joe Weber, Editor Bloomberg Business Week, Austin car Uh, technology
Speaker 1: reporter Here at Bloomberg News. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic
Speaker 1: on Bloomberg Radio. TikTok, everybody. We are waiting from the
Speaker 1: CDC a bit of an update when it comes to
Speaker 1: COVID and mask wearing. So as soon as that begins,
Speaker 1: we will take you there live. In the meantime, you know,
Speaker 1: it also got underway today the Federal Reserve today meeting busy. Yeah,
Speaker 1: and we're gonna get that decision tomorrow. Let's find out
Speaker 1: what we should be watching out for. We've got dynamic
Speaker 1: duo Steve Skanky back with US Chief Economic Advisor at
Speaker 1: Kiel Point, former U S Treasury and White House National
Speaker 1: Security Council staff member based in Washington, d C. That's
Speaker 1: where we find him on the phone and also with
Speaker 1: us Francis Donald. She is global chief economist and head
Speaker 1: of macro strategy at Manual Life Investment Management. She too
Speaker 1: back with us on the phone from Montreal. Francis, Uh, Steve,
Speaker 1: so nice to have you here with us. Francis, let
Speaker 1: me kick it off with you. What is it? I mean?
Speaker 1: Is it gonna be a boring meeting? Can I just
Speaker 1: go out for a like a three martini lunch and
Speaker 1: then come back when it's all over? Or do what
Speaker 1: do I? Or should I be closely listening and watching?
Speaker 1: Sometimes it's better. I'm not a Martini kind of gal either,
Speaker 1: so I don't even know why I said, Martiniz, go ahead. Well,
Speaker 1: you may have the right strategy, because there's always an
Speaker 1: emphasis on trying to parcel out word by word. I
Speaker 1: think they can probably get away with not doing much tomorrow.
Speaker 1: But the question, of course, when is this paper coming?
Speaker 1: Is it going to be MBS the US focused? How
Speaker 1: much warning are we gonna get? But mon view is
Speaker 1: it actually doesn't really matter whether we get a September
Speaker 1: taper or December taper. That's not the underlying question that
Speaker 1: has spooked markets here. The question is did the set
Speaker 1: really have a change in their policy making reaction function
Speaker 1: with average in flintship targeting. They're focused on broadways and
Speaker 1: inclusive employment. Do those two rate hype dots really matter?
Speaker 1: Are we just going back to pre COVID style monetary policy?
Speaker 1: So the most important question I'm looking for is does
Speaker 1: Powell in some way push back against those dots, push
Speaker 1: back on the idea that a I T was just
Speaker 1: with service and give us some indication that yes, people
Speaker 1: on notepaper, they will be very patient on rate hikes.
Speaker 1: Two has to get priced out a little bit more.
Speaker 1: I think for this curve to start re speepening. Steve
Speaker 1: Skankey come on in here and weigh in on this.
Speaker 1: Do you agree with Francis that that is the most
Speaker 1: important thing we should be keeping an eye on when
Speaker 1: it comes to what we hear from J. Powell and
Speaker 1: the Fed tomorrow, Well, it certainly is something that we well,
Speaker 1: thanks for inviting me. Certainly is something that we want
Speaker 1: to be paying attention to. I think the big challenge
Speaker 1: for tomorrow is is for the Fed to uh uh
Speaker 1: not walk back from it's it's somewhat hot um uh
Speaker 1: outcome with the change in the dot plot from its
Speaker 1: meeting a month ago, and at the same time to
Speaker 1: acknowledge that the COVID nineteen delta variant UH could become
Speaker 1: an issue. We see some of the indicators of of
Speaker 1: economic growth slacking a little bit. UH. The FED hasn't
Speaker 1: seen its employment growth numbers achieved yet, and so it
Speaker 1: it wants to keep the stimulus on, but at the
Speaker 1: same time doesn't want to disappoint the market that it
Speaker 1: is giving up its vigilance on inflation. You know, the
Speaker 1: inflation is the numbers are really a conundrum for the
Speaker 1: FED because when you drill down into it, UH, you know,
Speaker 1: numbers like like housing or um shelter, which is thirty
Speaker 1: three percent of the CPI basket, only a two and
Speaker 1: a half percent um over the last twelve months through
Speaker 1: the end of June. And for for anything really to
Speaker 1: happen that's not transitory and inflation, you have to see
Speaker 1: some basic shift in something you know, in shelter, medical services,
Speaker 1: food at home, and they're just haven't been that there yet,
Speaker 1: so that the FED needs to assure markets, but yet
Speaker 1: at the same time acknowledge what it always acknowledges about.
Speaker 1: We haven't seen substantial progress yet toward our goals. Right
Speaker 1: the bondom market, we tell you that, Yeah, we're in
Speaker 1: on that narrative. We've got the tenure note all right
Speaker 1: now at one three Frances, What about the financial markets?
Speaker 1: We are seeing some pressure today because of the big
Speaker 1: tech names, although we're coming off our lows, concerns about earnings,
Speaker 1: concerns about outlook. It be interesting to see what these
Speaker 1: big companies what do we have to We have Apple,
Speaker 1: we have Google, Microsoft, Right what they say about you
Speaker 1: know the variant that you know Delta and COVID. How
Speaker 1: much do you think we know? The FED watches financial markets?
Speaker 1: How much do they watch earnings as well in terms
Speaker 1: of figuring out what the growth and inflationary trajectory might be. Well,
Speaker 1: I always think of the said like macro strategists. Maybe
Speaker 1: that's my own bias. But if they're like me, and
Speaker 1: I think sometimes they are, maybe I'm like them. What
Speaker 1: they're probably looking for clues within those statements regarding a
Speaker 1: few key issues that are really a creating massive uncertainty
Speaker 1: for the outlook want to supply change disruption. We think
Speaker 1: that that shows up and maybe tech earnings to the
Speaker 1: same extent. But any invocation that those are either falling
Speaker 1: back the baiting or persistent problem does change not just
Speaker 1: the inflation outlook, but the growth outlook, and likely going
Speaker 1: to be listening for for comments about labor shortages and
Speaker 1: any indication that maybe some of that labor force participation
Speaker 1: rates coming back and how that's going to be impacting wages.
Speaker 1: And then if they're like, we're also looking in earnings
Speaker 1: for any indication about how government spending ahead might change
Speaker 1: the outlook. These are three huge uncertainties that aren't just
Speaker 1: weighing on central bank reaction function or the way we
Speaker 1: can construct asked allocation portfolios, but individual companies in America
Speaker 1: as well. They're creating this breadth of uncertainty that means
Speaker 1: we don't have career vision on what growth, inflation, or
Speaker 1: policymakers are going to be doing ahead. And that's the
Speaker 1: underlying problem. That's the nerves you're seeing in this market,
Speaker 1: is this complete lack of visibility. Uh, Stephen, we only
Speaker 1: have about a minute left, But I'm gonna ask you
Speaker 1: the question we ask each and every time there is
Speaker 1: a FED meeting. What's what's the question that you ask
Speaker 1: FED share Powell tomorrow? If you were given the chance
Speaker 1: and just got about forty twonds. Sure. Well, at cal point,
Speaker 1: we're watching for any indication that's going to drive markets
Speaker 1: one way or the other. So I guess my my
Speaker 1: main question for him to be would be, Okay, so
Speaker 1: you you talked about talking about papering, so this time
Speaker 1: did you actually talk about it? And do you have
Speaker 1: a plan and when will we expect to see that plan?
Speaker 1: We have to wait till after August. We have to
Speaker 1: wait till September. And while I agree that it doesn't
Speaker 1: matter so much as to when it starts, markets would
Speaker 1: like to know, uh, when they're going to get on
Speaker 1: with it, Steve really quickly. Do we hear more about
Speaker 1: Do we hear Delta being said more tomorrow or Transitory?
Speaker 1: I think probably Delta Moore tomorrow, although this is their
Speaker 1: first meeting since the June and Place and cp I,
Speaker 1: so probably Transitory is going to be at two francs
Speaker 1: five seconds, Delta Transcharactor. What is going on in the
Speaker 1: housing market? Are they afraid that it has bubble components?
Speaker 1: That's my question. Francis Donald evert Man, you life and
Speaker 1: Steve Skanky over kill point the journal. Yeah, but you
Speaker 1: let me drive oh no, no, no no, no, drive home
Speaker 1: all night, please, I'll do the ravel. I want to
Speaker 1: drive drive question ring, This is the drive to the globe.
Speaker 1: Give me thanks. We'll drying us down on Bloomberg Radio.
Speaker 1: All right, just about ten and a half minutes left
Speaker 1: in today's trading session. I'm kind of setting up my
Speaker 1: four screens of the Bloomberg terminal so that I can track, uh,
Speaker 1: the dump of earnings that we're going to get from
Speaker 1: big tech names TIMM and Microsoft, Apple all set to report,
Speaker 1: among many other Starbucks too. These are big ones. They
Speaker 1: have provided a lot of momentum, certainly to the trade
Speaker 1: over the last year or so. Let's see what Hillary
Speaker 1: Kramer has to say when it comes to today's market
Speaker 1: trade and those earnings yet to come. Hillary Kramer is President,
Speaker 1: chief investment Officer at a G Capital Research, author of
Speaker 1: Game Change. You're Investing How a profit from tomorrow's billion
Speaker 1: dollar trend. She's on the phone in New York City.
Speaker 1: Good to have you back with us. What's on your
Speaker 1: radar today? Because we've talked a lot about big tech earnings,
Speaker 1: Chinese oversight, Chinese big text selling off, We've talked about
Speaker 1: the delta variant. What really matters to the equity trade
Speaker 1: near view. All of the above is okay too. It's
Speaker 1: everything that you mentioned. But in the market's very nervous
Speaker 1: here for sure, and that's what those those variants are.
Speaker 1: But you have, right, you have China, the valuations are
Speaker 1: high and overstretched. But then we have these like brutal
Speaker 1: fell offs, right with these sharp sell offs, and then
Speaker 1: like everyone gets kind of shaken out, and then you know,
Speaker 1: and then everyone comes back in um. But I think
Speaker 1: that I really do think that COVID with the delta
Speaker 1: variant is an issue. The FED stopping with tapering could
Speaker 1: really be a concern because next could be, you know,
Speaker 1: raising rates and no one's really talking about taxes. And
Speaker 1: at three point five trillion dollar in for structure deal,
Speaker 1: human infrastructure deal that needs to be paid for, and
Speaker 1: that's concerning everybody from the far left to the far right.
Speaker 1: You know, ordinarily it's something that you know, we all
Speaker 1: want and we you know, we we recognize the importance.
Speaker 1: But when you're talking three point five trillion, the markets
Speaker 1: very nervous. Now in terms of specifics, Carol, Apple is tricky.
Speaker 1: Let's talk about earnings, like like in a few minutes
Speaker 1: from now what's it? What's on my radar? Apple is
Speaker 1: really tricky because five G I think is already built in.
Speaker 1: You know, it's not Apple is not a top line grower.
Speaker 1: They don't have all that cash that they used to have.
Speaker 1: Everyone thinks of Apple is like you rich in cash,
Speaker 1: but they block back so much stock. And then I
Speaker 1: was looking today at the operating income. In two thousand
Speaker 1: and sixteen, Apple's operating income was sixty nine billion. Last
Speaker 1: year it was seventy seven billion. It is not a
Speaker 1: big growing company. I do think Microsoft is going to
Speaker 1: be great. I think that they're they just continue, you know,
Speaker 1: on all cylinders to grow and everything for um, you
Speaker 1: know gaming, uh, to their web services and cloud computing,
Speaker 1: so they're very strong and uh and to those those
Speaker 1: That's really what's on the radar. UM. My other concern,
Speaker 1: of course, is what we're going to hear in terms
Speaker 1: of like, for example, Caterpillar on Friday, you know reporting
Speaker 1: we have Ford. Now Ford doesn't matter a lot, but
Speaker 1: Ford on Wednesday is going to matter to me because
Speaker 1: we want to hear what more what Ford has to
Speaker 1: say to the to the minute about difficulty with the
Speaker 1: supply chain. Right, you know, we keep hearing that everyone
Speaker 1: knows that my conductors are a problem, but okays just
Speaker 1: have to do it all yourself. Huh, well you have
Speaker 1: the problem is that's just it. Nobody really can And
Speaker 1: I think that one of the reasons we see a
Speaker 1: lot of these um engineering and infrastructure companies not really
Speaker 1: like catching a bid even with a one point five
Speaker 1: chillion dollar you know, like actual infrastructure coming. That's not
Speaker 1: the human infrastructure bill that we're going to see. But
Speaker 1: the concern is how are they going to really be
Speaker 1: able to build? You know, they're really backed up because
Speaker 1: of that. And so what I am advising and what
Speaker 1: we're writing about is that we think that the banks,
Speaker 1: you know, there's a sort of built an expectation of recession,
Speaker 1: so we think the banks are the best opportunity here,
Speaker 1: and the banks are also a great proxy for for
Speaker 1: having Hilary, I want to go back to something that
Speaker 1: you said a couple of minutes ago, was regard to
Speaker 1: the delta variant. Did you say that it is of
Speaker 1: a concern or is not a concern for markets right now?
Speaker 1: It's it's it's becoming it's becoming a yawn, right It's
Speaker 1: not as much of a concern as it had been. However,
Speaker 1: it's a kind of thing that can you know, that
Speaker 1: can bite us, you know, that can just you know,
Speaker 1: get us really quick, and especially when you see the
Speaker 1: numbers and how fast COVID can Why is it? Why
Speaker 1: is it a yawn If the cdc IS is changing
Speaker 1: its guidance. If we saw the sell off a week
Speaker 1: ago Monday, the narrative around that was because of concerns
Speaker 1: about the delta variant, Why is it a yawned? To you?
Speaker 1: Because the market worries about the unknown, what it absolutely
Speaker 1: doesn't understand that could hit it, you know, like you know,
Speaker 1: a chair, like you couldn't hit over the head to
Speaker 1: the stock market worries, but everyone has sort of this
Speaker 1: built an expectation. We're no longer in March April of
Speaker 1: where we're wearing, you know, two pairs of gloves and
Speaker 1: we're stripping down when we get home. That the concept
Speaker 1: now is okay, COVID is bad now. I'm saying what
Speaker 1: the sentiment is in my opinion. Living in New York City,
Speaker 1: Midtown Manhattan, across from n YU Medical Center, Lane Gone,
Speaker 1: I can tell you it is real. It was real.
Speaker 1: I thought dozens of medical examiner trucks, you know, refrigerated
Speaker 1: morgues and it's real, but the market isn't really paying
Speaker 1: attention to it. Instead, the markets more concerned really about
Speaker 1: China right now, which should I think be the least
Speaker 1: of our concern is accepted. We have a lot of
Speaker 1: investments or some of the funds that are highly invested
Speaker 1: in China. You're not so, but wait, so explain that.
Speaker 1: What does our audience. I mean, we've talked about that
Speaker 1: a lot in the last couple of days and certainly
Speaker 1: this week and over the last couple of weeks, and
Speaker 1: I really it's going to be when we get to December,
Speaker 1: this is going to be one of our big stories
Speaker 1: of the year, no doubt about it. What is it
Speaker 1: that our audience needs to you know, continue to pay
Speaker 1: attention to when it comes to China? Uh? That it
Speaker 1: had to do with really more than Cathy Wood type funds.
Speaker 1: The funds that are she's getting out of Chinese tech company.
Speaker 1: I know, I saw that. So she's starting to dump
Speaker 1: and leave those Why would she do that because she
Speaker 1: sees that that her return, her alpha's slipping because of China,
Speaker 1: And that's where one needs to be concerned. To me,
Speaker 1: it reminds me of like year two thousand with internet
Speaker 1: stocks starting to fall, but the greater market really didn't
Speaker 1: have much concern at the same time, though of course,
Speaker 1: you know there could be some spill over. But these
Speaker 1: Chinese stocks, right Ali Baba keeps sitting fifty two week lows.
Speaker 1: Is Ali Baba bargain right now? I don't think so.
Speaker 1: At this point. I wouldn't touch it because we don't
Speaker 1: really know exactly what's happening in China. But we have
Speaker 1: enough strength and understanding and transparency in the US market
Speaker 1: that we can we don't have to really worry that.
Speaker 1: I'm not really focused on China. I mean again, my
Speaker 1: sea concern is inflation. My big concern is we we
Speaker 1: have these unemployment benefits are expiring, the last of them
Speaker 1: September three, So we have unemployment and you have this
Speaker 1: extra three dollars which some states have already eradicated. But um,
Speaker 1: you know, we could we could see that could be
Speaker 1: the big hipping point. Listen, I want to think is
Speaker 1: remnning that time. And but one of the things you
Speaker 1: say is avoid big tech until after earnings. These stocks
Speaker 1: will get cheaper if you say you're worried about a bubble.
Speaker 1: This is where the bubble is. But potentially there could
Speaker 1: be some opportunities after we get this this dump of
Speaker 1: big tech earnings. Yeah, and the reason is simply that
Speaker 1: people go back into it. So it's almost it's always
Speaker 1: more of a trade at this point. But you're looking
Speaker 1: at valuations that are overstretched. But at the same time,
Speaker 1: I will say Apple is trading at times or next
Speaker 1: year's earnings. That still isn't horrible. But Microsoft, which I love,
Speaker 1: and I think that they're going to be the one
Speaker 1: that we're going to see up, you know, in in
Speaker 1: in trade, in after market trading. Tomorrow morning, we're gonna
Speaker 1: see up it's it's Microsoft. I never thought I would
Speaker 1: see it thirty trading at thirty four times June earnings. So,
Speaker 1: M Carol, it's a worry, it's a concern. So we
Speaker 1: all have forgotten the fact that you know, these were
Speaker 1: stocks that were all trading below a hundred dollars, you know,
Speaker 1: and that are Yes, it's very different overstretched. Everyone's looking
Speaker 1: for yield, everyone's looking for return. There's two much of
Speaker 1: liquidity out there. The set has done us absolutely no favors.
Speaker 1: They've made billionaires out of some and there are lots
Speaker 1: of people that don't have it. Hillary. We've got to run,
Speaker 1: but thank you so much. You covered so much ground,
Speaker 1: like you always do. Hillary Kramer, she's ever at A
Speaker 1: and G Capital Research, joining us on the phone. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two pm Eastern on Bloomberg Radio
Speaker 1: or watch us on YouTube search Bloomberg Global News