WEBVTT - Surveillance: The Transitory Debate 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.520 and of course on the Bloomberg Terminal. Sarah House has 0:00:30.560 --> 0:00:32.560 no idea what we're talking about. She'll save us with 0:00:32.640 --> 0:00:37.320 Wells Fargo, their senior economists. Sarah, this is an exceptional 0:00:37.479 --> 0:00:42.640 statement and report for Jerome Powell. I think this is 0:00:42.880 --> 0:00:45.239 another report for a second month in a row that 0:00:45.320 --> 0:00:48.280 does give a lot of credence to that transitory debate. 0:00:48.640 --> 0:00:50.760 So I think we still see some quite a bit 0:00:50.800 --> 0:00:52.919 of pressure coming through the pipeline if you look at 0:00:52.960 --> 0:00:55.240 what's happening, both in terms of supply change on the 0:00:55.280 --> 0:00:58.800 good side, what's happening with labor and wages. But I 0:00:58.840 --> 0:01:01.680 think what we're seeing is at most eye popping rate 0:01:01.720 --> 0:01:04.880 of inflation we saw this spring is coming off the boil, 0:01:04.959 --> 0:01:07.040 and I do think that gives the Fed a little 0:01:07.040 --> 0:01:09.319 bit more time to wait some progress in the labor market. 0:01:11.440 --> 0:01:14.240 I look, Sarah at the labor market and ties and 0:01:14.280 --> 0:01:18.720 how does this inflation report tie into wage inflation? Are 0:01:18.720 --> 0:01:22.560 they linked well? I think where you're seeing some of 0:01:22.560 --> 0:01:25.000 the some of the give back in things like used 0:01:25.040 --> 0:01:27.399 cars prices, I think that is somewhat divorced from what 0:01:27.440 --> 0:01:30.120 we're actually seeing in the labor market. So even as 0:01:30.160 --> 0:01:32.040 we did see a little bit of soft mean in 0:01:32.280 --> 0:01:34.720 the rate of food inflation, we're still seeing quite a 0:01:34.720 --> 0:01:37.880 bit of pressure in the restaurant sector, even in in 0:01:37.920 --> 0:01:39.760 grocery stores. And I think if you look at the 0:01:40.319 --> 0:01:42.360 run rate there and in terms of the monthly print, 0:01:42.400 --> 0:01:45.399 you're you're still seeing strong numbers. And so I think, um, 0:01:45.480 --> 0:01:48.040 we are seeing some of that wage pressure begin to 0:01:48.080 --> 0:01:50.880 filter through, and I think in many areas it's it's 0:01:50.920 --> 0:01:54.480 just beginning to start, particularly in the service side, where 0:01:54.480 --> 0:01:56.720 it does take longer to show up in the inflation numbers. 0:01:56.880 --> 0:01:58.280 What kind of number do you think would make the 0:01:58.320 --> 0:02:00.560 FED comfortable at the town of the year, Sarah, What 0:02:00.600 --> 0:02:02.320 do you think they need to see? Does a three 0:02:02.320 --> 0:02:03.840 handle get it down? Do they give them the comfort 0:02:03.880 --> 0:02:08.040 to say, yes, it's transitree, let's stick with this. I 0:02:08.080 --> 0:02:10.080 think it's more about the numbers you're seeing in an 0:02:10.080 --> 0:02:13.799 inflation expectation. So Yes, we had a very hot consumer 0:02:13.800 --> 0:02:17.200 inflation expectations number coming from the New York Siety yesterday. 0:02:17.520 --> 0:02:19.480 But if you look at the FEDS preferred measure, that 0:02:19.520 --> 0:02:23.120 Common Inflation Index, it's still well within its historic range. 0:02:23.160 --> 0:02:26.440 So that's taking into account what's happening in tips markets, 0:02:26.480 --> 0:02:29.440 what's happening with the Michigan numbers, and well, you've seen 0:02:29.520 --> 0:02:33.560 inflation expectations pick up, there's still at levels that are 0:02:33.600 --> 0:02:37.160 overall consistent with the FEDS, with the FEDS target, and 0:02:37.200 --> 0:02:39.120 so I think that buys them time no matter what 0:02:39.160 --> 0:02:41.720 you're seeing in terms of the CORPC tof later even 0:02:42.200 --> 0:02:44.280 or headline inflation at the end of the year. So 0:02:44.280 --> 0:02:46.480 if you're just chanting to get on READYO on CVS downside, 0:02:46.480 --> 0:02:49.720 surprise time on the inflation print team transit treat getting 0:02:49.720 --> 0:02:51.760 a win hit scoring a girl future is positive full 0:02:51.800 --> 0:02:54.840 tenth of one percent on the SMP advancing, there's seventeen 0:02:55.000 --> 0:02:57.600 points on a SMP yields not doing much off the 0:02:57.639 --> 0:03:00.120 back of this number. Later this comes down to oneing 0:03:00.120 --> 0:03:02.359 now reachs house sales print, then SA to the Fed 0:03:02.639 --> 0:03:04.359 next week. Yeah, I mean, there's a couple of ways 0:03:04.400 --> 0:03:06.160 to read this, and one hand it could be transitory 0:03:06.200 --> 0:03:07.880 the Fed's getting what they want. In the other hand, 0:03:07.919 --> 0:03:10.680 this could be that perhaps the economy is softening more 0:03:10.680 --> 0:03:14.080 than expected at a time when we have a prolonged pandemic. Sarah, 0:03:14.160 --> 0:03:16.400 can you weigh in on what this means? If the 0:03:16.480 --> 0:03:18.679 FED is not getting what they want, if you don't 0:03:18.720 --> 0:03:22.079 see necessarily material labor market improvement like we didn't necessarily 0:03:22.240 --> 0:03:25.640 with a disappointing previous report, what do they do? Do 0:03:25.720 --> 0:03:28.080 they just keep printing money? I mean, do they just 0:03:28.160 --> 0:03:31.280 keep buying bonds? Or they have to change their guidance 0:03:31.320 --> 0:03:35.400 in an additional way. I think they you continue to 0:03:35.400 --> 0:03:37.960 see the status quo, so I think you just get taper. 0:03:38.480 --> 0:03:41.280 The taper gets pushed off further. Um. So I think 0:03:41.280 --> 0:03:44.680 this print suggests that maybe tips the scales a little 0:03:44.680 --> 0:03:48.400 bit more in favor of December rather than a November announcement. 0:03:48.520 --> 0:03:52.400 But I think they keep the current policy in place 0:03:52.480 --> 0:03:54.080 for a little bit longer. You know, I think it's 0:03:54.120 --> 0:03:56.240 important to remember that while yes, we did get a 0:03:56.240 --> 0:03:59.720 disappointing employment report in August, we're still adding jobs. We're 0:03:59.720 --> 0:04:02.480 still seeing the unemployment rate decline. You shall seeing at 0:04:02.520 --> 0:04:05.920 least some movement in terms of labor force participation and 0:04:05.920 --> 0:04:10.000 and the supply, even if it is slow, but accumulatively, accumulatively, 0:04:10.120 --> 0:04:12.920 you're still seeing things move in the right direction. You 0:04:12.920 --> 0:04:16.240 are getting closer to to the feds um to the 0:04:16.240 --> 0:04:18.760 Fed's goals. It's just maybe taken a little bit longer, 0:04:18.800 --> 0:04:21.320 and so that's gonna have them keep policy in place longer. 0:04:21.400 --> 0:04:24.159 Will we look forward to that retail sales figure later 0:04:24.200 --> 0:04:26.960 in the week, Sarah, what is the consumer able to 0:04:27.000 --> 0:04:29.240 do at this point given the roll off of some 0:04:29.320 --> 0:04:31.720 of the stimulus checks and the fact that people still 0:04:31.760 --> 0:04:34.520 are not necessarily getting back into a labor market still 0:04:34.560 --> 0:04:39.360 hobbled in parts by COVID, Right, So I think we're 0:04:39.360 --> 0:04:41.600 going to see a pretty weak number. And when it 0:04:41.600 --> 0:04:43.640 comes to the retail sales, part of that has to 0:04:43.680 --> 0:04:45.760 do with the fact of what we're seeing in terms 0:04:45.760 --> 0:04:48.719 of autos, just where how much we saw sales plummet. 0:04:48.800 --> 0:04:50.640 But I think if you look at the overall position 0:04:50.720 --> 0:04:54.120 of consumers, so we are seeing it weaken a little bit. 0:04:54.240 --> 0:04:57.040 So balance sheets are still good, you shtill have access savings, 0:04:57.040 --> 0:05:00.760 but given the run rate of inflation of late, even 0:05:00.800 --> 0:05:04.359 with today's softer number, it's woodling a way of ethose savings. 0:05:04.520 --> 0:05:07.880 So when you factor in also the unemployment benefits rolling off, 0:05:08.160 --> 0:05:11.000 that that buying power of consumers is weakening. And so 0:05:11.080 --> 0:05:14.680 that does suggest that you are at least getting somewhat 0:05:14.680 --> 0:05:19.520 closer to the supplying demand uh imbalance coming coming better aligned. 0:05:19.800 --> 0:05:22.039 But it's going to take some time, Sarah. Let me 0:05:22.200 --> 0:05:25.039 talk the unspeakable here, which I believe I haven't heard 0:05:25.120 --> 0:05:28.160 come up. What if this is a FED. I'm looking here, 0:05:28.200 --> 0:05:31.320 folks at the wonderful f O m C function on 0:05:31.400 --> 0:05:35.440 the Bloomberg. What if this is a FED that's not September, 0:05:35.720 --> 0:05:39.479 not December, but has to stagger to the decision tree 0:05:39.520 --> 0:05:44.120 of January of next year. What is its signal if 0:05:44.160 --> 0:05:47.720 they have to wait, wait, wait, Well, I think it 0:05:47.800 --> 0:05:50.640 suggests that to some extent the virus is still very 0:05:50.720 --> 0:05:54.080 much in control. So I don't think it's completely out 0:05:54.120 --> 0:05:57.160 of out of the room possibility that even as we're 0:05:57.160 --> 0:05:59.719 seeing delta cases level off, you get another way of 0:05:59.720 --> 0:06:02.359 calm from the winter. And so I think it suggests 0:06:02.400 --> 0:06:06.480 that this is not the necessarily the rapid immediate rebound 0:06:06.800 --> 0:06:09.839 a lot of folks were looking for earlier earlier this spring. 0:06:09.839 --> 0:06:12.240 But there's still a lot to work through both in 0:06:12.320 --> 0:06:14.720 terms of the virus. There's still a lot of frictions 0:06:14.720 --> 0:06:17.320 in the economy, whether it's to the labor market or 0:06:17.760 --> 0:06:20.000 supply chains, and those are going to take some time 0:06:20.040 --> 0:06:22.279 to work out, and so the FED might might have 0:06:22.440 --> 0:06:26.279 to to hold hold course for for someone longer. Sarah, 0:06:26.279 --> 0:06:28.080 thank you. Always go to hit from you Santa House 0:06:28.120 --> 0:06:37.479 West founda security senior economists also associated with US as 0:06:37.520 --> 0:06:42.119 Barry Dholtz, Bloomerg opinion columnists D Holts Wealth Management. Barry, 0:06:42.160 --> 0:06:44.440 thank you so much for joining. I love your essay 0:06:44.520 --> 0:06:48.640 this weekend Housing. We need a new dishwasher. The some 0:06:48.839 --> 0:06:52.680 pump has been used in Hurricane Ida. I love home ownership. 0:06:52.800 --> 0:06:56.080 Is it worth it? You've got to live somewhere a right, 0:06:56.360 --> 0:06:59.880 And as someone who's lived in rentals and owned conda 0:07:00.400 --> 0:07:04.120 and my own house, it's nice not to live in 0:07:04.200 --> 0:07:11.320 a off white no change to any of the living circumstances. 0:07:11.680 --> 0:07:14.760 The old joke is no one washes a rented car, 0:07:15.320 --> 0:07:19.320 nobody improves a rented apartment. So if you want an 0:07:19.400 --> 0:07:22.760 updated kitchen, if you want to paint your house a 0:07:22.840 --> 0:07:26.240 different color or put in new carpet of stuff, ownership 0:07:26.440 --> 0:07:29.200 is how you manage to do that. A lot of 0:07:29.240 --> 0:07:31.920 the metrics that show that real estate is a bad 0:07:32.000 --> 0:07:37.240 investment kind of ignore the fact that as an owner occupier, 0:07:37.440 --> 0:07:41.120 you gotta live somewhere, and that's where homeowners came well. 0:07:41.360 --> 0:07:43.640 But you know, I mean the home renovation A Brando said, 0:07:43.680 --> 0:07:45.800 a renovation it was a quarter of a million dollars. 0:07:45.880 --> 0:07:48.040 But you know, Barry, when you when you look at 0:07:48.120 --> 0:07:52.440 home ownership, what's the actual phenominal or real return of 0:07:52.520 --> 0:07:58.040 home ownership versus owning the standard? In real terms, it's 0:07:58.080 --> 0:08:01.680 probably flat to negative. Once you work in, you gotta 0:08:01.720 --> 0:08:05.360 pay taxes, there's a ton of maintenance and upkeep um 0:08:06.520 --> 0:08:09.880 net relative to inflation. You're lucky if it's a break 0:08:09.920 --> 0:08:13.120 even if not worse, but it keeps coming back to 0:08:13.920 --> 0:08:16.240 what you pay is a key issue. And the thing 0:08:16.280 --> 0:08:19.960 to remember is if you're putting ten percent down and 0:08:20.000 --> 0:08:23.720 you're not buying the property out right, um, it's a 0:08:24.000 --> 0:08:26.000 there's a lot of leverage in that, and so those 0:08:26.080 --> 0:08:30.320 return characteristics are different than let's say black Stone running 0:08:30.320 --> 0:08:34.880 around and buying up multifamily units and farmland and everything else. Um. 0:08:35.000 --> 0:08:37.560 Just to be very clear, the quarter a million dollar 0:08:37.640 --> 0:08:40.840 right and renovation really accounts for basically putting in a 0:08:40.920 --> 0:08:44.360 new divider for my silverware. So it's not exactly the 0:08:44.360 --> 0:08:46.440 same scale. I will just say that just to set 0:08:46.480 --> 0:08:49.280 the scale straight. Very just sort of follow on though 0:08:49.280 --> 0:08:51.720 with this idea we started talking about banks. We moved 0:08:51.760 --> 0:08:55.440 the real estate market a pivotal moment for urban areas 0:08:55.440 --> 0:08:57.160 as we try to get back to the office at 0:08:57.160 --> 0:08:59.120 a time where the variant is really delaying a lot 0:08:59.120 --> 0:09:02.160 of those plans to get back to the office. How 0:09:02.240 --> 0:09:04.679 significant is it the longer that some of these two 0:09:04.720 --> 0:09:09.479 lays go on for property values in urban centers. So 0:09:09.480 --> 0:09:12.320 so it's that's a really complex question. And I'll give 0:09:12.360 --> 0:09:17.040 you like a thirty thousand foot view. When you look 0:09:17.080 --> 0:09:20.960 around places like San Francisco, in Manhattan, there's a ton 0:09:21.080 --> 0:09:24.320 of new office space that has gone up to meet 0:09:24.600 --> 0:09:29.600 the pre pandemic demand. Suddenly, the pandemic has taught us, hey, 0:09:29.720 --> 0:09:32.439 we've really been inefficient in how we use our time, 0:09:32.920 --> 0:09:37.120 both going to the office, commuting, etcetera. And so it 0:09:37.240 --> 0:09:41.200 appears that there's now an excess of office space and 0:09:41.760 --> 0:09:44.119 a shortage of I don't even want to say affordable 0:09:44.160 --> 0:09:48.480 house and just reasonably priced housing in major cities and 0:09:48.520 --> 0:09:50.680 if you remember, we we just went through the twenty 0:09:50.720 --> 0:09:54.640 year anniversary of No. Eleven Post No eleven Lower Manhattan 0:09:54.760 --> 0:09:59.160 converted to a very residential area, lots and lots of 0:09:59.160 --> 0:10:03.520 office buildings converted. I wouldn't be surprised to see something 0:10:03.600 --> 0:10:06.040 like that take place over the next couple of years 0:10:06.480 --> 0:10:11.880 in major urban centers to adjust that that imbalance between 0:10:11.920 --> 0:10:15.040 supply and demand for both too much office space and 0:10:15.040 --> 0:10:18.480 too little residential space. So going forward, are you going 0:10:18.520 --> 0:10:20.480 back to the office And we talked a lot about 0:10:20.480 --> 0:10:23.160 this back in the day, and I'm wondering, given your 0:10:23.200 --> 0:10:25.160 read on the breath of Wall Street in terms of 0:10:25.200 --> 0:10:27.880 what they're doing, where they are working for, what's the 0:10:28.000 --> 0:10:31.599 zeitgeist right now on that front. So a handful of 0:10:31.640 --> 0:10:35.480 companies originally had September fifteenth as their target. A bunch 0:10:35.520 --> 0:10:38.679 has been pushed pushed back to October fift I've been 0:10:38.679 --> 0:10:41.960 trying to get into the city at least once a week, um, 0:10:42.040 --> 0:10:46.520 and as has all my colleagues in the office. UM. Now, 0:10:46.679 --> 0:10:49.480 the there's a chicken and egg issue in that a 0:10:49.520 --> 0:10:52.360 lot of mass transit has been running on weekend schedules, 0:10:52.360 --> 0:10:56.480 not normal peak commute schedules. I think a bunch of 0:10:56.480 --> 0:11:00.280 that along railroad Metro North. I think that return earns 0:11:00.320 --> 0:11:02.959 back to its normal schedule, or it was scheduled to 0:11:03.120 --> 0:11:07.160 September fift so once you can. I was at a 0:11:07.160 --> 0:11:10.040 conference yesterday at the Javit Center, at the SALT Conference, 0:11:10.440 --> 0:11:13.160 and on the way home yesterday at to thirty, it 0:11:13.200 --> 0:11:16.360 was bumped upumper traffic in a car, and I think 0:11:16.400 --> 0:11:20.439 that's because people are uncomfortable either riding the trains or 0:11:20.480 --> 0:11:23.560 they're just running to and frequently. Once things get back 0:11:23.559 --> 0:11:26.520 to normal on the commuter rails and other forms of 0:11:26.559 --> 0:11:29.520 mass transit, you're gonna start to see people move back 0:11:29.520 --> 0:11:32.200 into the office a little more regularly. Very thank you. 0:11:32.280 --> 0:11:35.480 How is the SALT conference? It was interesting. I sat 0:11:35.520 --> 0:11:39.960 down with Steve Cohen of Points seventy two and Dmitri Blisanis, 0:11:40.240 --> 0:11:46.160 Mike Rockefeller of um Woodbine and Alana um Gold. Seemed fascinating, 0:11:46.160 --> 0:11:49.520 fascinating conversation. Nobody cares. What did say about the Mets. 0:11:51.000 --> 0:11:52.760 He's having a lot of fun with the team, he's 0:11:52.800 --> 0:11:57.160 excited about upcoming changes, and he thinks they are going 0:11:57.200 --> 0:11:59.880 to be a contender sooner rather than later. It was 0:12:00.040 --> 0:12:04.800 really interesting discussion. What was fascinating about walking around the 0:12:04.840 --> 0:12:08.120 event with him, is people stopping him to talk about 0:12:08.120 --> 0:12:11.280 the Mets. No one wants to talk about exactly. That's 0:12:10.400 --> 0:12:15.520 why they want to talk about. I mean, Barry, when 0:12:15.559 --> 0:12:16.920 you buy the Knicks, it will be the same way, 0:12:16.920 --> 0:12:20.040 Barry Redhold. Thank you so much, Opinion dot com. This 0:12:24.880 --> 0:12:28.760 is a really really important conversation. Is my head your had? 0:12:28.760 --> 0:12:32.240 Everybody else has had swirls on the pandemic. Amish Adalgia 0:12:32.720 --> 0:12:38.480 has been extremely competent in engaging the debate worldwide over 0:12:38.559 --> 0:12:43.000 a perfect solution to pandemic to virology. He is with 0:12:43.080 --> 0:12:46.280 Johns Hopkins Center for Health Security and joins US right now. 0:12:46.679 --> 0:12:51.040 Dr Delja I was thunderstruck that Auckland looks for perfection. 0:12:51.600 --> 0:12:55.160 They have thirty three new cases one point seven million people. 0:12:55.640 --> 0:12:58.720 And you know, I'm gonna dazzle you. Now, Amish two 0:12:58.760 --> 0:13:03.320 times ten to the minor six scientific notation. We got 0:13:03.320 --> 0:13:06.000 to go to folks. It's a tenC weed see amount 0:13:06.080 --> 0:13:09.320 that's ill. How do you respond to their attempt to 0:13:09.480 --> 0:13:12.880 be perfect? I don't think it's the right approach. I 0:13:12.920 --> 0:13:15.120 think that this is something that's popular in New Zealand, 0:13:15.160 --> 0:13:17.440 but it doesn't really justify what they do. Their level 0:13:17.480 --> 0:13:21.560 three and level four lockdowns are really borrowing from the 0:13:21.640 --> 0:13:25.200 Chinese playbook. And I don't think that they're the way 0:13:25.200 --> 0:13:28.000 that they're so blanket they they pick up so many 0:13:28.040 --> 0:13:31.240 activities that aren't leading to spread, that don't allow people 0:13:31.280 --> 0:13:33.520 to do things and a safer manner, for example, go 0:13:33.600 --> 0:13:35.920 outside or not have to wear a mask when they're outside, 0:13:36.120 --> 0:13:37.880 or even be able to get take out dining when 0:13:37.880 --> 0:13:41.040 they're under level for lockdown. So I don't necessarily think 0:13:41.080 --> 0:13:44.000 what they've done is correct, but they are vociferous defenders 0:13:44.000 --> 0:13:45.920 of it, as I found out when you criticize them. 0:13:45.960 --> 0:13:48.240 But it is something that I think really needs to 0:13:48.280 --> 0:13:51.800 be examined because it's not sustainable. And they have about 0:13:51.840 --> 0:13:54.640 thirty percent of their population fully vaccinated. That's that's not 0:13:54.679 --> 0:13:57.040 a lot, and that their rates are going up, but 0:13:57.240 --> 0:13:58.600 they don't think we need to do this in the 0:13:58.640 --> 0:14:01.520 in the post vaccine era. And also we've got rapid tests, 0:14:01.520 --> 0:14:03.600 we've got so much technology to allow people to do 0:14:03.679 --> 0:14:07.040 things safely that this absinence only approach, even if it's popular, 0:14:07.600 --> 0:14:10.480 shouldn't be what's done and definitely shouldn't be enforced with 0:14:10.480 --> 0:14:12.920 with police the way they do in New Zealand. I 0:14:12.960 --> 0:14:16.520 don't sense it in America, but maybe I'm uninformed. Do 0:14:16.600 --> 0:14:20.400 we have elements of New Zealand from sea to Shining Sea. 0:14:22.160 --> 0:14:24.920 We don't. We've had some aspects of it, For example, 0:14:24.920 --> 0:14:27.480 when you look at California, which had a very strict 0:14:27.880 --> 0:14:31.120 restriction on indoor dining or an outdoor dining as well, 0:14:31.200 --> 0:14:33.640 and you still saw cases really going up in California 0:14:33.680 --> 0:14:35.920 because what that was doing, that absence only approach in 0:14:36.000 --> 0:14:39.560 California was driving behavior underground where it was more risky. 0:14:39.640 --> 0:14:41.560 And I think the lesson from this pandemic is that 0:14:41.640 --> 0:14:44.560 harm reduction something that we do with HIV was sexually 0:14:44.560 --> 0:14:47.200 transmitted infections. That's the way we want to approach public 0:14:47.240 --> 0:14:50.280 health with voluntary means, trying to give people tools to 0:14:50.280 --> 0:14:52.280 make better risk calculations. No one we're never going to 0:14:52.360 --> 0:14:53.840 get cases to ze or that there's going to be 0:14:53.840 --> 0:14:56.920 a baseline number of cases hospitalizations invest but just trying 0:14:56.920 --> 0:14:59.360 to keep our hospitals from going into crisis. And I 0:14:59.400 --> 0:15:01.960 think we should have of doing that back from January. 0:15:01.960 --> 0:15:03.440 And I don't think that the US is a good 0:15:03.480 --> 0:15:06.200 example here. I think they're both false alternatives New Zealand 0:15:06.240 --> 0:15:07.800 And in the United States and there is a better 0:15:07.800 --> 0:15:11.400 way away like countries like Taiwan, followed Dr ADLTA. In 0:15:11.400 --> 0:15:14.520 the meantime, the debate over booster shots continues to heat up, 0:15:14.520 --> 0:15:17.240 and just on a Arrival Network, Dr Fauci has been 0:15:17.280 --> 0:15:19.400 speaking and he's saying that he does expect the FDA 0:15:19.680 --> 0:15:24.680 to decide to give boosters. Meanwhile, several FDA members have resigned, 0:15:24.720 --> 0:15:28.240 saying that it's unnecessary or perhaps scientifically unpacked. Where do 0:15:28.280 --> 0:15:30.960 you fit into this in terms of the need or 0:15:31.080 --> 0:15:34.800 lack there of of boosters? To meet the threshold for 0:15:34.800 --> 0:15:37.720 needing a booster would have be someone that's fully vaccinated 0:15:37.920 --> 0:15:40.120 getting a breakthrough infection that lands them in the hospital. 0:15:40.400 --> 0:15:43.360 That's just not happening. There's definitely probably going to be 0:15:43.520 --> 0:15:46.120 some need for boosters down the road, but I don't 0:15:46.120 --> 0:15:48.160 think it's going to be on September twenty or six 0:15:48.160 --> 0:15:50.120 months or eight months post to your second does. It's 0:15:50.120 --> 0:15:52.000 something we need to be proactive about, but I don't 0:15:52.000 --> 0:15:54.000 think we're ready to pull the trigger for healthy people. 0:15:54.160 --> 0:15:56.280 There may be an argument to be made for the 0:15:56.320 --> 0:15:59.160 elderly people in nursing homes, but that also needs to 0:15:59.200 --> 0:16:01.640 be driven by clinical data, not just looking at antibody 0:16:01.680 --> 0:16:05.080 levels coming down, but actually seeing do people get severe 0:16:05.160 --> 0:16:08.280 infections this this many months out from their vaccination, and 0:16:08.360 --> 0:16:10.960 does a third dose not only boost their antibodies but 0:16:11.000 --> 0:16:14.480 doesn't actually protect them against that. So we want clinical data. 0:16:14.520 --> 0:16:16.880 We want this to be driven by the usual process 0:16:16.920 --> 0:16:18.760 of the CDC, the f d A and all that 0:16:18.880 --> 0:16:21.200 data being published so that people can actually look through 0:16:21.240 --> 0:16:23.200 it and sift through it. Not something that's get that's 0:16:23.200 --> 0:16:25.920 primarily being announced by the White House. That's that's triggering 0:16:26.080 --> 0:16:28.880 people at the FDA to announce their retirement into writing 0:16:28.920 --> 0:16:32.760 medical journals opposing it. Dr Adlgia. What's the potential concern 0:16:32.880 --> 0:16:35.960 here about giving boosters? Is there any scientific evidence of 0:16:36.040 --> 0:16:39.280 harm or that it doesn't really affect things at all, 0:16:39.520 --> 0:16:41.880 or is it simply a matter of distribution of vaccine 0:16:41.880 --> 0:16:44.960 and trying to get unvaccinated vaccinated throughout the world as 0:16:45.000 --> 0:16:49.160 quickly as possible. There's probably not a major harm signal. 0:16:49.200 --> 0:16:51.760 But again, if you read what the FDA, the departing 0:16:51.760 --> 0:16:54.920 FDA members wrote, they're worried about side effects that might 0:16:54.920 --> 0:16:56.800 occur if that third dose is too close to the 0:16:56.840 --> 0:16:59.040 second dose, or or what that might do to the 0:16:59.040 --> 0:17:01.520 reacting genicity of the vaccine. But again, this is something 0:17:01.560 --> 0:17:03.640 that can be solved and answered with clinical data, just 0:17:03.640 --> 0:17:05.359 to look and see what happens to people who get 0:17:05.400 --> 0:17:07.480 a third dose. And that's what's really missing, or at 0:17:07.520 --> 0:17:09.720 least hasn't been presented publicly, and and that's why I 0:17:09.720 --> 0:17:13.080 think you've seen such a backlash against this plan from 0:17:13.160 --> 0:17:16.080 the infectious disease community. With a few few notable exceptions, 0:17:16.080 --> 0:17:18.480 but in general, most of us don't think, for healthy 0:17:18.520 --> 0:17:21.880 people that we're ready to recommend boosters in the absence 0:17:21.880 --> 0:17:24.240 of data. And it's important to remember what's happening in 0:17:24.240 --> 0:17:27.000 the United States with with the number of hospitalizations and 0:17:27.040 --> 0:17:30.000 worries about crisis and places like Idaho and Kentucky. That's 0:17:30.040 --> 0:17:32.320 not going to be solved by third doses. It's first 0:17:32.359 --> 0:17:34.080 and second doses that solved that. And I think that's 0:17:34.119 --> 0:17:36.240 where the focus needs to be. And I think that 0:17:36.680 --> 0:17:38.520 we can prepare for boosters, get ready, but make sure 0:17:38.520 --> 0:17:40.360 that we do this right so that people have confidence 0:17:40.359 --> 0:17:43.879 that the process actually was scientifically driven and not driven 0:17:43.920 --> 0:17:47.200 by any other considerations. Don't to thank you for it's 0:17:47.240 --> 0:17:48.840 on this small and I guess O wise, don't hamish 0:17:48.840 --> 0:17:51.760 it down to that of Jones Hopkin's sense of house security. 0:17:52.000 --> 0:18:00.880 They seen the Escala on the equity market. Christopher Gercanti 0:18:01.000 --> 0:18:04.280 joins us right now with m Ai Capital a droid. 0:18:04.600 --> 0:18:07.040 US usually start with a general phrase, Chris, but I 0:18:07.080 --> 0:18:08.880 know you're gonna be hanging on every word at one 0:18:08.920 --> 0:18:12.199 pm on Apple? Can you own Apple here? You've been 0:18:12.240 --> 0:18:16.160 a long term affiliate of Apple. Can you go long 0:18:16.200 --> 0:18:19.480 Apple right now? Sure? Tom, I think if you're a 0:18:19.520 --> 0:18:22.160 long term investor, you know there's there's hardly a better 0:18:23.080 --> 0:18:26.720 run company, hardly better company with market position. Having said that, 0:18:27.080 --> 0:18:30.399 we don't currently own Apple. We prefer some of the 0:18:30.440 --> 0:18:35.920 other fang stocks, mostly because it's, uh, it's a combination evaluation. 0:18:36.040 --> 0:18:39.439 Plus they've almost outdone themselves. I mean, the iPhone is 0:18:39.480 --> 0:18:42.399 so good that we're not expecting much from today's launch. 0:18:42.440 --> 0:18:45.240 I think a few incremental changes, a better camera. So 0:18:45.720 --> 0:18:48.399 you know, I'm a little afraid that at this lofty 0:18:48.480 --> 0:18:51.560 valuation of thirty times, that's gonna that's gonna disappoint. Can 0:18:51.600 --> 0:18:53.639 we get to the story over Amazon, Chris, it's not 0:18:53.680 --> 0:18:57.600 a stokey hold it is. Can you tell me why 0:18:57.600 --> 0:18:59.119 in a world where they might have to pay up 0:18:59.160 --> 0:19:00.959 a lot more for light. But this is a big 0:19:01.000 --> 0:19:05.800 employer in America. Now, sure, well, Jonathan, there are so 0:19:05.840 --> 0:19:09.080 many ways to win. I mean, clearly this is old news. 0:19:09.160 --> 0:19:11.960 But but just point to a WS a Amazon Web 0:19:12.000 --> 0:19:15.480 Services where they created, you know, a multi billion dollar 0:19:15.560 --> 0:19:18.359 company out of nothing, and that that we estimate is 0:19:18.400 --> 0:19:21.880 now worth about four hundred billion dollars. So there's that, 0:19:22.000 --> 0:19:26.160 there's prime um, there's the international growth. So sure, just 0:19:26.240 --> 0:19:28.639 like every other corporation in America, they're going to have 0:19:28.680 --> 0:19:31.679 to pay more for labor. That doesn't uh mess up 0:19:31.680 --> 0:19:34.000 our investment thesis. Maybe it cuts the margin of per 0:19:34.000 --> 0:19:36.440 cent or two, but I think long term, I'm pleased 0:19:36.480 --> 0:19:38.439 to be a holder of Amazon. Chris, So, you've been 0:19:38.480 --> 0:19:40.760 a bull, and you've been an unapologetic bull, and you're 0:19:40.760 --> 0:19:42.840 saying that all of the pessimists right now want to 0:19:43.000 --> 0:19:45.960 sound smart. However, that has not been a good way 0:19:46.080 --> 0:19:48.760 to make money. When you talk about making money, why 0:19:48.760 --> 0:19:50.840 do you like Boeing? Why do you like some of 0:19:50.880 --> 0:19:54.360 the outliers that frankly continued to be souring in many 0:19:54.359 --> 0:19:56.800 people's fears are well, as Tom always teases me, you know, 0:19:56.840 --> 0:20:01.480 I'm a contrarian. So it's very hard. Buying stocks today 0:20:01.520 --> 0:20:04.119 is like going to the produce department in the market 0:20:04.200 --> 0:20:07.120 at six o'clock at night. Everything is picked over. It's 0:20:07.320 --> 0:20:10.280 really hard to find something good. So Bowing has a 0:20:10.280 --> 0:20:12.320 lot of hair on it. But believe me, okay, it's 0:20:12.359 --> 0:20:16.080 sasquatch basically. But if you look three to five years 0:20:16.080 --> 0:20:19.639 out from now, when COVID is a grim memory, where 0:20:20.000 --> 0:20:21.879 the middle class all over the world is looking for 0:20:21.920 --> 0:20:24.440 more airline seats and there's only two companies that can 0:20:24.440 --> 0:20:28.240 satisfy them, I think Bowing, which is selling for half 0:20:28.320 --> 0:20:31.119 the price it was two years ago, is one of 0:20:31.119 --> 0:20:33.880 the few attractive things in the market today. Well, let's 0:20:33.880 --> 0:20:37.840 talk about Bowing. Is it a cyclical? You know, it 0:20:37.880 --> 0:20:39.560 didn't used to be. Tom. It's funny if you do 0:20:39.600 --> 0:20:42.600 a regression analysis, and you'll love this, your stat guy, 0:20:42.720 --> 0:20:44.800 If you do a regression analysis against Bowing in the 0:20:44.880 --> 0:20:47.640 last two years, it correlates very closely with the airlines, 0:20:47.920 --> 0:20:50.359 But for the five or six years before that it 0:20:50.440 --> 0:20:53.680 does not. And in other words, in good times when 0:20:53.720 --> 0:20:57.000 we don't have a worldwide pandemic, Bowing is not a cyclical. 0:20:57.080 --> 0:21:00.359 It's a worldwide It's a world leading manufacturing company that 0:21:00.440 --> 0:21:03.960 has terrific margins and terrific returns on equity. So it 0:21:04.119 --> 0:21:06.520 is it. I think it's a chance to buy a 0:21:06.560 --> 0:21:10.200