Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanobek. We're here every day bringing
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Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. So earning season, as we
Speaker 1: know kicking off with the batch of big bank earning
Speaker 1: shpmorgan Chase making more money in the fourth quarter than
Speaker 1: it ever has. It also signal more optimism about burs
Speaker 1: being able to repay their loans. The biggest US bank
Speaker 1: posted a jump in trading and investment banking fees. Wells Fargo, meantime,
Speaker 1: posted worse than expected expenses in the fourth quarter, took
Speaker 1: some charges and more than a billion for restructuring and
Speaker 1: a few other things, some of those old account scandals,
Speaker 1: and then city groups fixed in come traders who propped
Speaker 1: up the banks earnings throughout much of the pandemic. They
Speaker 1: missed endless estimates for the final amounts of There is
Speaker 1: a lot to get to, so let's bring in, first
Speaker 1: of all, our Michelle Davis Financial port at Bloomberg News.
Speaker 1: She covers JP Morgan specifically, and tim safe to say,
Speaker 1: as the biggest US bank, we care what's going on
Speaker 1: with them, in particular, we care what they're CEO Jamie
Speaker 1: Diamond has to say he is one of the long
Speaker 1: running CEOs on Wall Street. So Michelle, good to have
Speaker 1: you here. First of all, cap recap for me what
Speaker 1: we got from JP Morgan, if you would so. JP
Speaker 1: Morgan's earnings were definitely the standout. They generated a record
Speaker 1: amount of revenue and profit in the fourth quarter twelve
Speaker 1: point two billion, and that capped off a year in
Speaker 1: which they made billion, which is more than any other
Speaker 1: major bank has ever earned in a year. UM. Not
Speaker 1: more than they have ever earned in a year. They
Speaker 1: had the most profitable year in banking history in nineteen
Speaker 1: UM but still a time, especially given that we're in
Speaker 1: a pandemic. Jump and tree eating helped that. But they
Speaker 1: also released nearly three billion dollars in reserves, which is uh,
Speaker 1: it came as a surprise. You know, analysts were expecting
Speaker 1: them to to maybe released two million, So three billion
Speaker 1: is a lot and signals that you know, they feel
Speaker 1: that they are well prepared to kind of withstand whatever
Speaker 1: is coming, and it means that maybe the outlook for
Speaker 1: for low losses isn't as bad as they were expecting
Speaker 1: or thinking earlier on. That's a lot, man, three billion,
Speaker 1: I'm just going to say, yeah, it feels like a lot. Well,
Speaker 1: what was the commentary that we heard from the bank
Speaker 1: about uncertainty about customers being able to pay their credit
Speaker 1: card bills, about when fiscal stimulus will actually hit customers,
Speaker 1: those sorts of things. So, you know, they struck a
Speaker 1: bit more of an upbeat tone than they have in
Speaker 1: past quarters, but they did mention multiple times that you know,
Speaker 1: they're still uncertainty. There are a few things that are
Speaker 1: are leading some of this optimism. You know, one is
Speaker 1: obviously that there's a vaccine that you know, according to
Speaker 1: CEO Jamie Diamond, could mean that you know, people are
Speaker 1: going back to work as early as a September, you know,
Speaker 1: like enforced um. And also the fact that there's you know,
Speaker 1: perhaps certainty on the change in administration and the fact
Speaker 1: that stimulus has been fast and there could be more coming.
Speaker 1: These are all things that are led to the optimism
Speaker 1: on the consumer side. The one area of I guess
Speaker 1: uncertainty that they really called out was on the credit
Speaker 1: card side. Um. They didn't release any reserves there, and
Speaker 1: they pointed to a possibility of a payment shock coming
Speaker 1: if and when uh, you know, benefits expire. Um. But
Speaker 1: so far, you know, there haven't been any delinquencies, Like
Speaker 1: there have some delinquencies, but nothing that you'd expect from
Speaker 1: you know, millions of people unemployed. Uh, the their net
Speaker 1: charge jobs actually went down from the crisis quarter and
Speaker 1: from from last year. So they're saying that, you know,
Speaker 1: they they could start to see losses starting in the
Speaker 1: second half of this year or even later. So well
Speaker 1: knit NT listen you know this, Michelle, We go to Jamie.
Speaker 1: We like to hear what he has to say because he's,
Speaker 1: you know, kind of one of those elder sorry Jamie elder,
Speaker 1: but you know, in good shape from what I understand. Um,
Speaker 1: you know statesman out there that has seen a lot
Speaker 1: of crises, you know, was really you know key through
Speaker 1: the financial crisis. This is a different crisis. Fair to say, um,
Speaker 1: but we care what he has to say about the bigger,
Speaker 1: broader picture. Was he more optimistic or was he more cautious?
Speaker 1: He was definitely more optimistic. They spent a ton of
Speaker 1: time on on the analyst and the media called talking
Speaker 1: about investments that they're going to be making. And actually,
Speaker 1: you know, their shares last time I look, we're down.
Speaker 1: And one of the reasons that you know, could have
Speaker 1: they could have been done it because they announced this
Speaker 1: big twelve point four billion investment initiative, which is it's
Speaker 1: a couple of billion more than they normally spend on,
Speaker 1: you know, new things. And and Jamie, you know, he
Speaker 1: was just talking about how they had so much capital,
Speaker 1: more capital than they can do anything with. Yeah, they're
Speaker 1: gonna buyback stock, but also he wants to do some
Speaker 1: M and A. So he was optimistic. Yeah, I mean
Speaker 1: he said, yeah, like they're still uncertainty, and we have
Speaker 1: to get through this pandemic first. And there's gonna be
Speaker 1: a ton of questions later on about how we fix
Speaker 1: you know that the US deficit. But for now, let's
Speaker 1: get through this. And like I'm gonna do some deals
Speaker 1: in the meantime hopefully. Right Capital Interesting stacks down about
Speaker 1: one point two percent, but let me remind everybody it's
Speaker 1: still up almost ten percent so far this year, and
Speaker 1: that's after our gain actually was down a little bit
Speaker 1: in a UM. Anton Switz is also with US president
Speaker 1: chief investment officer at Mandon Capital Visors on the phone
Speaker 1: in Florida. Anton, Good to have you here, Happy new year.
Speaker 1: Nice to have you here with Tim and myself and Michelle.
Speaker 1: Michelle has been kind of running down JP Morgan's quarter
Speaker 1: and what Jamie Diamond had to say, What do you
Speaker 1: make of JP Morgan's results specifically? I think the numbers
Speaker 1: were pretty strong across the Ford. You know clearly the
Speaker 1: KAPA markets were great. UM reserve releases you have really
Speaker 1: become formulaic. I mean, there's there's a new accounting system
Speaker 1: that went into place UM last year called CECIL, and
Speaker 1: a lot of the reserves depend upon the modeling, and
Speaker 1: a lot of consultants come in and model. I know
Speaker 1: Moody is much is much more optimistic. Got it, got it?
Speaker 1: Got it? Hey, Michelle, I know you're going to leave
Speaker 1: us in Anton's going to come back. UM just thirty
Speaker 1: seconds here. The key takeaway then from JP Morgan, because
Speaker 1: we're gonna still get a few more bank big bank
Speaker 1: earnings next week, just quickly. Yeah, key takeaway would be
Speaker 1: UH most profitable quarter ever UH reserve releases. There, there's optims.
Speaker 1: You know, they're optimistic, and actually all the banks are optimistic,
Speaker 1: more optimistic than they have been. So it's probably good
Speaker 1: well for next week. All right, we'll see what I'll happen. Michelle,
Speaker 1: thank you so much. Appreciate the breakdown of a good weekend.
Speaker 1: Michelle Davis Financial report at Bloomberg News with us on
Speaker 1: the phone from Vermont. Anton Schitz is going to come
Speaker 1: back with US President and chief investment officer at MEN
Speaker 1: and Capital Advisors. His MEN and Financial Services fun up
Speaker 1: more than nine percent so far this year, putting it
Speaker 1: in the eightie percentile at least according to Bloomberg data.
Speaker 1: He's very much into regional, so we'll get into that.
Speaker 1: Sounds good. Also, nice time with optimism. This is Bloomberg
Speaker 1: Business Week with Carol Masser and Bloomberg Quick Takes. Tim
Speaker 1: Stinovich from Bloomberg Radio. This story definitely caught our attention.
Speaker 1: It's in Bloomberg Business Week magazine This week, it's about
Speaker 1: something we hear a lot from our medical guest him
Speaker 1: when it comes to COVID nineteen. We know vaccines are important,
Speaker 1: but so too is more testing. Test, test, test, That's
Speaker 1: what it's about. That's what's one of the things that's
Speaker 1: going to get us out of this pandemic exactly. And
Speaker 1: forgottence on that, just look to Minnesota. Let's get into
Speaker 1: that story. Susan Burfield, she has Projects and Investigations report
Speaker 1: at Bloomberg News. She's reporting with Bloomberg's Michelle Cortez, who's
Speaker 1: with us on the phone from Brooklyn, and also with
Speaker 1: us is Bloomberg Business wee get it or Joe Webber
Speaker 1: on the remote access from Brooklyn as well. Joel. We're
Speaker 1: also consumed by the vaccine, getting it out, rolling it out,
Speaker 1: but let's not forget we've got to continue testing as well. Yeah,
Speaker 1: and you undersold ay a key cell of this story,
Speaker 1: which was Minnesota, and the Minnesota part of the story
Speaker 1: is is really an interesting one because this is the
Speaker 1: state that actually had a budget surplus and was able
Speaker 1: to kind of you know, so this is in praise
Speaker 1: of fiscal responsibility. They were able to basically take that
Speaker 1: budget and just immediately pour it into testing. And as
Speaker 1: Susan UM will tell us more about, the state has
Speaker 1: basically made it its mission to test everyone in the state.
Speaker 1: UM Man, woman child, do it relentlessly, make it free
Speaker 1: and so simple that all you have to do is
Speaker 1: spit in the tube and put it in the mail. Um, Susan,
Speaker 1: Why isn't everyone following Minnesota's lead here? Yeah? Thanks everybody. So,
Speaker 1: you know, as you mentioned Joelic, Minnesota had a few
Speaker 1: advantages UM, it had a budget surplus, but it also
Speaker 1: did direct a lot of the money it received from
Speaker 1: the federal government to testing. Just early on made UM
Speaker 1: the decision, you know, informed both by its relationships with
Speaker 1: the Mayo Clinic UM and the University of Minnesota, great
Speaker 1: research institution, that testing was going to be crucial UM.
Speaker 1: And you know, as the summer went on, it became
Speaker 1: obvious that it didn't just have to be you know,
Speaker 1: easy and convenient, It had to be free and wildely available,
Speaker 1: and they had to use you know, the version of
Speaker 1: testing that UM is the easiest for everybody really, which
Speaker 1: is as you mentioned that the saliva test UM. And
Speaker 1: so you know what Minnesota did is actually a UH
Speaker 1: work with UM the company that oversees the Salibery test
Speaker 1: and the lab that processes those samples to build its
Speaker 1: own lab. And I think that was really crucial because
Speaker 1: that lab is dedicated to Minnesota residents and it can
Speaker 1: process up to thirty thousand tests a day, jeez, Louise,
Speaker 1: which you know begs the question like if if you
Speaker 1: were doing thirty those swabs, Like, I think that gets
Speaker 1: kind of kind of tiring. But the fact that it's
Speaker 1: you know, you're able to spit in the tube UM
Speaker 1: takes so much of the workout. And as I understand,
Speaker 1: the test is exactly the same effectively in terms of
Speaker 1: its results. So so what about like why was the
Speaker 1: spit quotient so so useful in Minnesota and why why
Speaker 1: aren't more people able to use it? Yeah? So UM, yeah,
Speaker 1: so you're right, it's it's UM. It is the same
Speaker 1: test you know as nasal slobs UM that some of
Speaker 1: us have had, which are pretty uncomfortable, UM also have
Speaker 1: to be done, you know, with a medical professional right
Speaker 1: there with you. So one advantage of the saliva test,
Speaker 1: of course is that you UM can do it at home. UM.
Speaker 1: So that means fewer medical professionals. That means less of
Speaker 1: the protective equipment is required. Um, the tests can be
Speaker 1: processed as quickly. UM. And I guess what's holding back
Speaker 1: other states from being able to do this is in
Speaker 1: part you know, the tests are more expensive, and so
Speaker 1: Minnesota decided that you know, it was going to pay
Speaker 1: for the test when it couldn't get reimbursed by insurance companies.
Speaker 1: So the state made a pretty big commitment to make
Speaker 1: those tests in particular free to everybody. And so you know,
Speaker 1: anyone in Minnesota can sign up UM and receive a
Speaker 1: kit at home, I mean more than one UM and
Speaker 1: you know take the has to get the results um
Speaker 1: within uh, within seventy two hours. So UM. You know
Speaker 1: there's there's um only a couple of these labs around
Speaker 1: the country. UM the company and the company has been
Speaker 1: talking to other states, but UM, you know it, you know,
Speaker 1: as everyone knows, it's really every state for itself, or
Speaker 1: at least it has been. You know, if you want
Speaker 1: a lab, you have to build it and you have
Speaker 1: to pay for it. Susan, I gotta say, I wish
Speaker 1: I had read this story like months ago, because I've
Speaker 1: done the SPIT test and it's kind kind of easy,
Speaker 1: but it's actually it wasn't so easy, kind of working
Speaker 1: up all the spit to be quite honest. And you
Speaker 1: have actually a piece of advice that or that you
Speaker 1: learned about and how to do that. That's right. The secret.
Speaker 1: The secret apparently is um to smell, not eat, because
Speaker 1: you can't eat for thirty minutes before you take the test. Right,
Speaker 1: But if you smell pickles or even lemon, apparently that
Speaker 1: helps you produce UM more surviva than normal. And then
Speaker 1: I guess afterwards, if you consider it a treat, you
Speaker 1: could eat either of them. Who. Well, we do know
Speaker 1: that the testing is key to getting us out of
Speaker 1: this pandemic. So so where does the States stand with
Speaker 1: getting things under control? How how is the testing actually
Speaker 1: manifested when it comes to positivity rates and in the
Speaker 1: status of of how people are faring? Yeah, so you know, Joel, Um,
Speaker 1: Joel joked but not really joking, m jokingly, you know,
Speaker 1: asked like why Minnesota, and um, you know, one of
Speaker 1: one of the reasons I think that made Minnesota up
Speaker 1: particularly compelling case study, if you will, is that, uh,
Speaker 1: you know, as we know, over the summer in the fall,
Speaker 1: most every state that surrounded Minnesota, the Dakota, Dakota is
Speaker 1: Wisconsin were having a terrible time of it, you know,
Speaker 1: some of the worst worst case rates in the country.
Speaker 1: And so Minnesota of course is not um you know,
Speaker 1: cannot separate itself from its neighbors. UM. But when the
Speaker 1: Dakotas were the first and second basically were you know,
Speaker 1: had the highest positivity rates in the nation, UM, Minnesota's
Speaker 1: never rose above one. So, you know, as even the
Speaker 1: governor said, like it was a very effective program, UM.
Speaker 1: But the sheer magnitude of the cases in the country,
Speaker 1: you know, of course, you know, works against any state's efforts.
Speaker 1: You know, what one state can only do so much,
Speaker 1: and yet every state has been asked to fend for itself. Well,
Speaker 1: this is where we've seen, certainly the problem, and we'll
Speaker 1: see what happens under a new administration where we start,
Speaker 1: you know, whether or not, Susan we start to see
Speaker 1: some cord coordination. This is a great deep dive into
Speaker 1: what Minnesota is going and as Joel said, Minnesota knew. Susan.
Speaker 1: Thanks so much of a great week in Susan Burfield.
Speaker 1: She's projects and investigations are port at Bloomberg Busines this
Speaker 1: week on the phone from Brooklyn. If you got some
Speaker 1: time over the weekend, check out our book to the
Speaker 1: Hour of Fate Theodore Roosevelt, JP Morgan and the Battle
Speaker 1: to Transform American Capitalism. Jill Weber, thank you as well,
Speaker 1: editor of Bloomberg Business Week. Bloomberg Business Week, by the way,
Speaker 1: on newsstands, online at Bloomberg dot com and also always
Speaker 1: on the Bloomberg terminal. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stenovy on Bloomberg Radio.
Speaker 1: So you are listening to Bloomberg Business Week Carol Master
Speaker 1: along with Tim Stanovic. Let's get right to it because
Speaker 1: with us back with us in our Friday check when
Speaker 1: it comes to COVID nineteen. Is Dr Ian las Bader,
Speaker 1: Clinical Associate Professor Medicine at n y U Lango Medical Center.
Speaker 1: This on a day where we've seen deaths from COVID
Speaker 1: nineteen globally top two million. We've got approaching about four
Speaker 1: hundred thousand deaths in the US alone. A lot going
Speaker 1: on right now. Uh. I so good to have you here.
Speaker 1: How are you? Dooan Weill? Carol? Thanks, I head and
Speaker 1: tim Happy Friday. I did have my second shot earlier
Speaker 1: this week, so I'm I'm certainly feeling safer. The second
Speaker 1: shot definitely hip pecs a little more punch, and some
Speaker 1: people do have a little fatigue a little aches, which
Speaker 1: I experienced, but I was able to keep working through.
Speaker 1: So we definitely want to encourage everyone to do it.
Speaker 1: And uh, there is some vaccine hesitancy, which I'm sure
Speaker 1: we'll talk about, but uh, it does feel good to
Speaker 1: get both shots, and I know a lot of people
Speaker 1: want them and are trying to figure out how to
Speaker 1: get that. We were curious because we had a story
Speaker 1: yesterday that yu Len Going was telling its doctors it
Speaker 1: may not get new vaccines next week and that they
Speaker 1: were I think running out of supply. So that's not
Speaker 1: the case. That is exactly the case. Ye know. We
Speaker 1: had a conference call today and the conference call really
Speaker 1: illustrates the number of, you know, the issues of getting
Speaker 1: the vaccine into people's arms. One is the good news
Speaker 1: is that we can do at our multiple sites somewhere
Speaker 1: between five and seven thousand vaccines a day. We're getting
Speaker 1: about five thousand vaccine doses per week, so really there
Speaker 1: is a big gap between what we could administer and
Speaker 1: what's being delivered from the state. I just want to
Speaker 1: get these numbers right. You're getting fewer in one week
Speaker 1: than you could actually be able to deliver in one day.
Speaker 1: That is correct, That is correct. What is the what
Speaker 1: are you hearing about that increasing? Well, you know, we
Speaker 1: really rely on the state and as of the Friday
Speaker 1: conference call by one of our you know leaders, um,
Speaker 1: they will not know until I think Sunday night whether
Speaker 1: or not the number and when they will be delivery
Speaker 1: of vaccine for next week. So many patients are frustrated.
Speaker 1: You know, they're calling when can I come in? Uh,
Speaker 1: those are the ones without vaccine hesitancy. But a number
Speaker 1: of patients are calling. They may have underlying littal immune
Speaker 1: disease or other issues, and they may not fit the
Speaker 1: exact criteria and they want to know can I get
Speaker 1: it sooner? Um? But we are not being booked until
Speaker 1: the vaccine is president president. So that's been the at
Speaker 1: least the ny U policy, which is you don't want
Speaker 1: to give people dates unless you really know that you
Speaker 1: have vaccine to give them. So in part the hold
Speaker 1: up is certainly getting it from New York State, and
Speaker 1: I assume New York State is having some problem getting
Speaker 1: it delivered as well. So when does this get better?
Speaker 1: I mean, what are you telling patients and what you
Speaker 1: can tell our listeners about when these bumps could be
Speaker 1: ironed out? Well, I wish I knew, uh, you know,
Speaker 1: I I think we did not. Um, this should have
Speaker 1: been better anticipated. Really you know this, We're we're do
Speaker 1: pretty well with the flu shot and that's really given
Speaker 1: out over several months. We do that to a hundred
Speaker 1: fifty million people. But this mass vaccination really, in my opinion,
Speaker 1: should have been handled by central authorities, the military, you know,
Speaker 1: drive through There should be vaccine that's available at you know, pharmacies.
Speaker 1: We really should have, I think, had a better execution
Speaker 1: of not only delivery of the vaccines, but exactly you know,
Speaker 1: down to the patient, how it would be administered. So
Speaker 1: I think we're coping as best as we can. We're
Speaker 1: trying to give it out as best as we can,
Speaker 1: but the supplies are limited, and of course, um every center,
Speaker 1: you know, the local doctor's office don't have this because
Speaker 1: at least for the visor and really for the maderna,
Speaker 1: which is are the most widely available at this point,
Speaker 1: they do need special refrigeration, much more so for viser
Speaker 1: of course, So you're literally waiting for a styrofoam box
Speaker 1: of frozen vaccine to be brought into the UH Vaccine
Speaker 1: Center to be given out to people. Uh, it could
Speaker 1: be more efficient, Let's put it that way. Are there
Speaker 1: any hopes, any signs that you're seeing that once we
Speaker 1: get a new administration place it's just around the corner
Speaker 1: next week, that things will change. I'm just curious if
Speaker 1: if your team there at n y U and go
Speaker 1: to is hearing anything about that. You know, I think
Speaker 1: there's a lag. I think everyone wants to do the
Speaker 1: right thing. I think a new administrat ration needs a
Speaker 1: ramp up time to kind of get a feel for exactly,
Speaker 1: you know, the distribution that's present and perhaps how it
Speaker 1: can be improved. I'm very confident that there are a
Speaker 1: number of vaccines, you know, the astra zeneca and J
Speaker 1: and J, which is one shot which will make life easier.
Speaker 1: That a game changer potentially in I think, so you
Speaker 1: know that the data is that you really have to
Speaker 1: wait like six to eight weeks to really get full efficacy,
Speaker 1: but not having to bring people back is really that's
Speaker 1: really part of the other problem that you give people
Speaker 1: the shot and you have to get them in the
Speaker 1: computer to schedule. From maximum efficacy, you know, you need
Speaker 1: to book the second shot really at the time of
Speaker 1: the first shot ideally. So I think that J and
Speaker 1: J will make it a lot easier to do more
Speaker 1: widespread vaccination, which I think is the only hope really
Speaker 1: bend the curve here with the you know, with the
Speaker 1: deaths and disability. I feel sad for I've had a
Speaker 1: couple of patients UM die who literally are probably just
Speaker 1: weeks away from if they were able to get the vaccine.
Speaker 1: So it's very sad, it is. And we're getting sort
Speaker 1: of conflicting news today. Right on the one hand, we're
Speaker 1: seeing COVID hospitalizations drop in in thirties six states, But
Speaker 1: at the same time we're hearing this new report UM
Speaker 1: from the CDC about a faster spreading variant that could
Speaker 1: overwhelm the US just like it has in the UK.
Speaker 1: How do you sort of bring those two things together?
Speaker 1: So all viruses mutate is sort of selection pressure, and
Speaker 1: UM viruses do better the easier they spread UM and
Speaker 1: the less lethal they are is typically what happens. So
Speaker 1: UM so The bad news is it it spreads more easily.
Speaker 1: It appears that it's less lethal or comparably lethal. But
Speaker 1: I think the vaccines, because they're polyclonal, meaning multiple antibodies
Speaker 1: to the spike protein, I do think the vaccines will
Speaker 1: be very helpful in reducing all of the variants we've
Speaker 1: seen so far. So I think that's encouraging. I think
Speaker 1: we can expect further mutation. Will really have to see. Hopefully.
Speaker 1: What won't happen is that the virus will mutate so sufficiently,
Speaker 1: say by next fall, that the vaccines will become ineffective.
Speaker 1: That would really be terrible because then you need another
Speaker 1: mass vaccination program. I don't think that's going to happen.
Speaker 1: You don't, how come no really quickly, because that spike
Speaker 1: protein is really how the virus attaches to ourselves. Uh,
Speaker 1: that is preserved, and the antibodies hit various parts of it.
Speaker 1: So I think even if one part mutates, probably the
Speaker 1: antibodies will work on the other part. All right, here's
Speaker 1: such a gem. Alright, Ian, have a good weekend. Dr
Speaker 1: Ian last bid Our, Clinical Associate Professor Medicine at n
Speaker 1: y U Landgown Medical Center. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Stinovic from
Speaker 1: Bloomberg Radio. Well, this story's headlined, Tim says it all
Speaker 1: the Fed wakes up to race. The mighty Federal Reserve
Speaker 1: wants to level the playing field. Is it up to
Speaker 1: the task. That's the big question. It is a big question,
Speaker 1: and it's really topical. So let's get into this story. Uh,
Speaker 1: it's a deep dive by Bloomberg's top notch economic team.
Speaker 1: Bloomberg News Federal Reserve and economics reporter Katarina Surviva is
Speaker 1: with us. She's on the phone in Houston. Katarina, Um,
Speaker 1: this is a must read for everyone, So I highly
Speaker 1: recommend people go to Bloomberg dot com or pick it
Speaker 1: up on the Bloomberg terminal. Tell us what you guys
Speaker 1: set out to do? Yeah, thank you. Um. So, I mean,
Speaker 1: we really felt like was kind of a civital year
Speaker 1: for the said. I mean in terms of, um, people's
Speaker 1: awareness of wealth and equality and just the racial disparities
Speaker 1: in our economy. It really was a pivotal year for
Speaker 1: all of us. I think it's fair to say, but um,
Speaker 1: the said, uh, you know, really started being quite vocal
Speaker 1: about this. We saw quite a few said presidents coming
Speaker 1: out to talk about it. Indeed, Share Powell talk to
Speaker 1: about it UM several times throughout the year. And then
Speaker 1: of course they had this big change to their UH,
Speaker 1: to their policy strategy. UM, so they are now really
Speaker 1: focusing on UM, you know, making sure uh they're correcting
Speaker 1: for employment shortfalls. And it was just kind of like
Speaker 1: a much bigger expansion of how they look at UM
Speaker 1: their one of their goals, which is maximum employment. So
Speaker 1: we wanted to really you know, take a look at
Speaker 1: that and kind of kind of do a big, you know,
Speaker 1: big step back look at what this year meant for
Speaker 1: the Federal Reserve. I'm really glad you brought up the
Speaker 1: dual mandate already, right, this idea of maximum employment and
Speaker 1: stable prices, and the maximum employment element of this, What
Speaker 1: is the power that the FED actually has. What are
Speaker 1: the tools that FED has at their disposal to sort
Speaker 1: of target monetary policy in a way that that can
Speaker 1: affect the racial disparities? Yeah, So, I mean, you know,
Speaker 1: I think lot of people in the past have argued
Speaker 1: that the sens tools are blunt UM in this case,
Speaker 1: and and to you know, in some cases they are.
Speaker 1: Of course, they can't um do things that Congress can,
Speaker 1: like with actual fiscal policy, right like targeted programs, But
Speaker 1: they can, um you know, they can adjust their interest
Speaker 1: rates and and decide when they're going to do that.
Speaker 1: So you know, one of the big lessons kind of
Speaker 1: that they will tell you that they learned from the
Speaker 1: last five years is that if they keep interest rates
Speaker 1: low for long and let the economy you know what
Speaker 1: they call run hot, which means that they let the
Speaker 1: unemployment rate get a lot lower than they previously thought
Speaker 1: would be good for the economy, that brings a lot
Speaker 1: of marginalized workers into the labor market and that really
Speaker 1: helps people that in the past were excluded from full employment.
Speaker 1: Based on some of the comments that that is made,
Speaker 1: and particularly J Powell, how is he of balancing this?
Speaker 1: As we know, the Fed always tries to be like,
Speaker 1: you know, a political or you know, and stay out
Speaker 1: of politics. So what are we hearing from J Powell
Speaker 1: and team? Yeah? I mean I think you know, um,
Speaker 1: we certainly saw Janet Yellen when she was FED chair
Speaker 1: um talk a bit about inequality on this was you know,
Speaker 1: five six years ago, and she got criticized for it.
Speaker 1: I mean by politicians. She got called out by leaders
Speaker 1: in Congress for being you know, getting into a political debate. Um.
Speaker 1: But I really think that they now feel that this
Speaker 1: isn't really political anymore, or rather it's you know, perhaps bipartisan. Right,
Speaker 1: It's something that we can all agree on is a
Speaker 1: problem in our economy, you know, in equality along racial lines, um,
Speaker 1: and is something that you know, talking about that shouldn't
Speaker 1: be seen as political. It's it's part of their economic mandate. Well,
Speaker 1: and I do wonder ify having I largely white fed um,
Speaker 1: you know, at various levels too, but obviously at the
Speaker 1: top positions, and it's not completely but you know, you
Speaker 1: just don't have diverse views there or diversity of thought
Speaker 1: and how that might hold it back. Yeah, exactly, And
Speaker 1: this continues to be a problem, especially at the top
Speaker 1: levels and especially within their economists cohort um. It is
Speaker 1: not very diverse. I think only about a quarter of
Speaker 1: the economists are women and only a quarter are um
Speaker 1: people of color. Um. So they definitely have a lot
Speaker 1: of ground to make up there, um And And yeah,
Speaker 1: I mean that can contribute to you know what economists
Speaker 1: like the called group think, right, Like it's this kind
Speaker 1: of creates this echo chamber where you don't take into
Speaker 1: account um, different views and you are more likely to
Speaker 1: kind of UM have blinders on. And you know, I
Speaker 1: think we've seen evidence of this. UM. We we have.
Speaker 1: You know, we talked to um Seth Carpenter, who's an
Speaker 1: economist at UBS. He was at the Fete for many
Speaker 1: years and he is black, and he talked about his
Speaker 1: experience with this. You know, he in the early two
Speaker 1: thousands who was looking at how defense policies impacted different
Speaker 1: race groups and UM, you know, he found that there
Speaker 1: were disparate impacts on unemployment. UM. And he you know,
Speaker 1: as he told us, like no one would really showed
Speaker 1: much interest except for Roger Ferguson, who was at the
Speaker 1: time the only um set black governor at the at
Speaker 1: a board of governors. So you know, you you see
Speaker 1: kind of the limitations that this imposes. So we only
Speaker 1: have about fifteen seconds left. But the question that you
Speaker 1: ask in this piece is is the FED up to
Speaker 1: the task? Based on your reporting? Can they pull it off? Well,
Speaker 1: I mean the proof will be in the pudding, right,
Speaker 1: We'll have to see what happened. I think it is
Speaker 1: far too early to say that we have any victories,
Speaker 1: but um, we'll see. It's safe to say it seems
Speaker 1: like gets more on their radar than ever before, which
Speaker 1: sometimes is the first big step, right, Yeah, I mean
Speaker 1: the recognition of it is a big deal. Yeah. Katerina Survivah,
Speaker 1: she has Federal Reserve and economics reporter at Bloomberg News
Speaker 1: on the phone from Houston, and you can find her
Speaker 1: story at Bloomberg dot com if you're listening to Bloomberg
Speaker 1: Business Week. Karl Master along with Tim Stanovich at Bloomberg
Speaker 1: Quick Take, my co host in our interactive broker studio.
Speaker 1: We do have about nineteen minutes left at today's trading session.
Speaker 1: We do want to bring in j. J. Kinahan's chief
Speaker 1: market strategist over at t D and Marriage Trade, joining
Speaker 1: us once again on the phone from Chicago. JJ, nice
Speaker 1: to have you back with us. We're a little I'm
Speaker 1: definitely exhausted. Tim's doing really great, but I'm like off
Speaker 1: my game. It's just been you know, it's already been
Speaker 1: a one. Um, how do you see it? First of all,
Speaker 1: take me back to last week. Where were you when
Speaker 1: everything was unfolding? And how do you see it? How
Speaker 1: does it make you kind of think about what might
Speaker 1: be to come this year. You know, last week obviously
Speaker 1: was a black eye for the nation. Um it's and
Speaker 1: any impeachment proceedings, etcetera. It's just it's just bad for
Speaker 1: the country in general. Hopefully with next weekend going forward
Speaker 1: forward from there, we you know, come together. I think
Speaker 1: sometimes people forget that almost half the country voted for
Speaker 1: the losing candidates, so hopefully what you know, you let's
Speaker 1: put it this way. There are crazy people everywhere, but
Speaker 1: unfortunately most people are very centrist and very reasonable people. Unfortunately,
Speaker 1: the reasonable people aren't as exciting stories the crazy people.
Speaker 1: So crazy people tend to make the news. Well wait
Speaker 1: a minute, well they had to make I was just
Speaker 1: gonna say they had to make the news last week. Wrong,
Speaker 1: they had to. It's not a criticism of covering that,
Speaker 1: of course, I'm just saying in general, you know, and
Speaker 1: really it's not a statement against I didn't mean that
Speaker 1: maybe as it came off. All I'm saying is I
Speaker 1: think most of us are reasonable people. Win or lose,
Speaker 1: you you know, it is what it is, and your
Speaker 1: march on and you figure a way to go forward. Unfortunately,
Speaker 1: throughout the last you know, a few years, and because
Speaker 1: of social media, I think often crazy people are hugging
Speaker 1: the news cycle. How and and thank you, But and
Speaker 1: what I will say to your point is that and
Speaker 1: we Tim and I have talked about this a lot,
Speaker 1: is that we had a great story on and I
Speaker 1: keep going back to it on the terminal about the
Speaker 1: Capital rioter. You know, one of our reporters talked to
Speaker 1: one of them who went there, you know, in you know,
Speaker 1: in supportive Donald Trump, just planned to protest and then
Speaker 1: all of a sudden was in the capital, you know,
Speaker 1: and kind of understanding his story. And I do think
Speaker 1: it is important, as you said, a lot of Americans
Speaker 1: voted for the current president, to kind of understand what
Speaker 1: is on the minds of these voters, and even those
Speaker 1: that got pretty angry and stormed the capital, to understand
Speaker 1: what's on their minds because they're Americans too. We've got
Speaker 1: to kind of understand where that anger is coming from,
Speaker 1: or where maybe that displacement is coming from. There. Yeah,
Speaker 1: I think you said it much more eloquently than I think.
Speaker 1: The good news is if you look at what's going
Speaker 1: on in the market, not only with that, but with COVID,
Speaker 1: with everything the way things are being priced as we
Speaker 1: are looking forward and out, you know, a few months
Speaker 1: past some of the problems. So uh yeah, we're you know,
Speaker 1: we're selling off a bit today. We've come back, of course,
Speaker 1: quite a bit from the lows, and I think a
Speaker 1: lot of that has to do with the fact that
Speaker 1: we are heading into this three day weekend where we
Speaker 1: come out of it to Inauguration Day, and we've all
Speaker 1: seen the warnings about capitol buildings around you know, in
Speaker 1: every state, so not necessarily a big surprise that after
Speaker 1: this nice grown up people are like, why don't I
Speaker 1: think maybe some profits or take some risk off the
Speaker 1: table as we head into or buy some risk through
Speaker 1: options or whatever as we head into this weekend. So
Speaker 1: today's trading cycle makes a little bit of sense to
Speaker 1: see that we did bounce off the lows pretty well,
Speaker 1: just for those reasons that it's not an overwhelming sense
Speaker 1: of fear, if you will, and I think certainly as
Speaker 1: reflected in the mix, you're not seeing a crazy amount
Speaker 1: of fear out there either. Well, I should I should
Speaker 1: note that we are awaiting President elect Biden, who is
Speaker 1: planning to deliver marks soon on his plan to deliver
Speaker 1: COVID nineteen vaccines will bring those to you live when
Speaker 1: we get them. But I'm wondering if you think back
Speaker 1: to last night about the one point nine trillion dollar
Speaker 1: stimulus plan that Biden unveiled and the details that that
Speaker 1: we got, Um, what do you make of it and
Speaker 1: how it could affect the trade? Yeah, you know, it's interesting, Tim.
Speaker 1: I understand why rates are a little bit lower today,
Speaker 1: obviously because when we're down, people go towards fixed income.
Speaker 1: But what I'm watching uh is going to be when
Speaker 1: when that money is money starts to continue to hit
Speaker 1: the system. At some point, you would think there would
Speaker 1: be some inflation. And so I'm not saying it's happening tomorrow,
Speaker 1: and you know you have to hide that, hide behind
Speaker 1: that or anything like that. It was interesting that Mr
Speaker 1: Kashtarian today came out and said no inflation. You know,
Speaker 1: I don't see it much more than two percent. But
Speaker 1: I do think that with so much money in the
Speaker 1: system would certainly lead you to believe that that Russure
Speaker 1: is going to happen more and more. Maybe it will
Speaker 1: take until the second half of the year when things
Speaker 1: are back. And I'm using air quotes when I say
Speaker 1: this to normal in terms of people, you know, traveling
Speaker 1: people back at their offices and having an opportunity to
Speaker 1: go out and spend money a little bit more than
Speaker 1: we do is in many states. I know New York
Speaker 1: is similar to Illinois. We're still in a state of lockdown.
Speaker 1: So even your opportunity to go out and spend money
Speaker 1: is a little bit well, and I don't know, JJ,
Speaker 1: do you have any clues from what we got from
Speaker 1: the big banks so far? Well's far ago City and
Speaker 1: JP Morgan in terms of especially Jamie Diamond talked a
Speaker 1: lot about kind of bigger macro issues, but did you
Speaker 1: get any kind of clue about maybe where we are
Speaker 1: in the economy, the outlook, and how the rest of
Speaker 1: the year mate might play out. I thought Mr Diamond said,
Speaker 1: actually is kind of what the market wanted to hear,
Speaker 1: even though you know, those banks have had a little
Speaker 1: bit of a tougher day and that the next few
Speaker 1: months continue to look rocky, but much more optimistic as
Speaker 1: we get to the second half of the year. And
Speaker 1: I think that that's been a viewpoint, uh many of
Speaker 1: us have had. And you know, as we just got
Speaker 1: done talking about the logistics around the vaccines, is still
Speaker 1: I think something that's a bit more concerning. We all
Speaker 1: know we're a little bit behind plan etcetera. So that's
Speaker 1: I think where the volatility continues, because if we don't
Speaker 1: continue to get people vacimated, Uh, it just prolongs our
Speaker 1: opportunity to get back on a more normalized schedule. Which
Speaker 1: so interesting that you say that, because we did get
Speaker 1: sort of a slew of bad news this this afternoon
Speaker 1: and we didn't see a major action in the markets
Speaker 1: as a result of that. UM, we learned that New
Speaker 1: York City is close to running out of vaccine. We
Speaker 1: learned that two million people globally had had died from
Speaker 1: this UM. What is it going to take for a
Speaker 1: headline to actually move markets when it comes to COVID, Well,
Speaker 1: I think that there's still so much hope that the
Speaker 1: vaccine is going to be good that maybe people are
Speaker 1: looking at it as a little bit of a blip
Speaker 1: in the road, if you will time I agree on
Speaker 1: and I hope that's the case. Yeah, I hope so too.
Speaker 1: I was surprised that we didn't get that. But at
Speaker 1: the other end of it is you look around where
Speaker 1: you're gonna put your money right now, it's still the
Speaker 1: best place in town, so to speak. There's nothing else
Speaker 1: that's really competing with the security and particularly the returns
Speaker 1: we've seen over the last seven eight weeks. It's been outstanding,
Speaker 1: and you know, in some ways you scratch your head,
Speaker 1: like how can we possibly be going up today? But
Speaker 1: the fact of the matter is there is lot of
Speaker 1: money still coming after these stocks because they're just an't
Speaker 1: many great alternatives right now. Hey, so I think and
Speaker 1: refresh my memory, but I think you've liked Maderna in
Speaker 1: the past, and I'm just curious if so, if that's
Speaker 1: still the case, or are you starting to look at
Speaker 1: something like a J and J, which you know, if
Speaker 1: it's a one shot vaccine that could be a game change,
Speaker 1: as we heard from Dr Ian lost paid or earlier
Speaker 1: over at n y U land Gown. UM, that could
Speaker 1: be a game changer in terms of demand for vaccines
Speaker 1: and kind of making the whole process easier. How do
Speaker 1: you see that? Is there a play there? Well? I
Speaker 1: think that, you know, if I had to look at
Speaker 1: those one versus the other. The one thing I think
Speaker 1: that gives Johnson Johnson a little bit more of an
Speaker 1: advantage is this um. If something happens with the MODERNA vaccine, etcetera.
Speaker 1: Or if for some you know, God forbid reason, we've
Speaker 1: realized over time things aren't as successful, or logistics take longer.
Speaker 1: Johnson and Johnson has a whole lot of other products
Speaker 1: that still give revenue. And I just think that if
Speaker 1: you look at again MODERNA maybe at a shorter time frame.
Speaker 1: If you have that, you want to take a little
Speaker 1: bit more of a shop. But I think if you're
Speaker 1: a longer term investor, you know Johnson and Johnson just
Speaker 1: because it J J. We need to run. Have a
Speaker 1: good weekend. J J. Kinnahan. Thanks for listening to Bloomberg
Speaker 1: Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg
Speaker 1: dot com, and you can also listen to our radio
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