Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring
Speaker 1: you insight from the best and economics, finance, investment, and
Speaker 1: international relations. Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg
Speaker 1: dot Com, and of course on the Bloomberg terminal. But
Speaker 1: I'm talking. They just told me what to do. It
Speaker 1: is joining us now market Field Assent Management Chairman and CEO. Michael.
Speaker 1: This from Deutsche Bank. Consumer inflation expectations have now clearly
Speaker 1: moved out of the low inflation ragime. This is important, Michael.
Speaker 1: I'm not talking about hyper inflation. I'm talking about finally
Speaker 1: breaking out of the low inflation ratime that really played
Speaker 1: much of the last decade. Do you think we have yes,
Speaker 1: I mean, straightforwardly, I think you have. I think it
Speaker 1: is really a very different environment to anything we saw
Speaker 1: treat COVID, and I think one of the big changes
Speaker 1: that that is going to represent is consumers now have
Speaker 1: an incentive to buy today rather than wait for tomorrow.
Speaker 1: And I think that itself will intensify consumer demand and
Speaker 1: exacerbate the process. Michael, you are somewhat pessimistic on stocks
Speaker 1: according to your latest note, how much more selling are
Speaker 1: you expecting and why I wasn't that pessimistic. I just
Speaker 1: don't think for sellings you know, totally done. I sort
Speaker 1: of say a worst case scenario. I think the index
Speaker 1: is test their two hundred days. UM. You might not
Speaker 1: need you might not need to go that that far.
Speaker 1: But I think what we're in is this process of realization.
Speaker 1: But the strong growth that we've had comes with persistent
Speaker 1: inflation attached. And more than it being good or bad
Speaker 1: for equities, you know, what it does is favor certain
Speaker 1: sectors and disfavor other sectors. So I mean, you know,
Speaker 1: you've said yourselves, you've had a very strong performance by financials,
Speaker 1: which are very yield curve sensitive. Energy has been you know,
Speaker 1: far more impressive than than financials. UM. I think you're
Speaker 1: gonna start to see materials follow suit once people get
Speaker 1: over their fears about about China. And the losers are
Speaker 1: a combination of very sensitive sectors such as utilities UM.
Speaker 1: And if you know, things do sort of proceed and
Speaker 1: you do start to get yields baking out. I think
Speaker 1: the danger event is that you start to chip away
Speaker 1: the attraction of the very high multiple portions of the
Speaker 1: US equity market. So as they say, it's it's video
Speaker 1: winners a loser scenario, um, you know, but that we
Speaker 1: see ahead of ours, I think it would favor certain
Speaker 1: indexes and hurt ours. Michael, you are expert across all
Speaker 1: that we do, equities, bonds, currencies, commodities fold in this
Speaker 1: commodity moment into the other asset classes in particularly equities.
Speaker 1: Do you believe in the commodities super rarely that we're
Speaker 1: beginning to see? And what does it mean for stocks? Yeah?
Speaker 1: I mean commodity equities look very cheap compared to commodity prices. Um.
Speaker 1: You know, energy equities are nowhere close to where they
Speaker 1: were in two thousand and fourteen, when when trude oil
Speaker 1: places were at current levels. Um. You know, if you
Speaker 1: look at the industrial medals, they again look very cheap.
Speaker 1: You know, have this collapse in iron or the the
Speaker 1: iron ore miners, you know, look look way cheap to
Speaker 1: iron or you know where where it is today. So
Speaker 1: you know, I think the market remains skeptical. I think
Speaker 1: it's viewed commodity equities as excellent trading vehicles. I think
Speaker 1: you know, betther to be large amounts of money have
Speaker 1: been happy to jump into commodities and then jump out
Speaker 1: of them. Um. You know what we haven't yet seen
Speaker 1: is is a sort of moveless, sort of heavy fundamental
Speaker 1: investors back into the commodity space. Now, there's a couple
Speaker 1: of very good recents of that. One is it's been
Speaker 1: a terrible place to be for a decade. And I
Speaker 1: think the other reason is is the E s G
Speaker 1: pressures for a lot of a lot of institutional managers
Speaker 1: on lead them to want to, you know, underplay investment
Speaker 1: in a lot of these areas. Are the over Michael,
Speaker 1: gotta leave it there, thank you, sir, Really good final point,
Speaker 1: Michael Shaw of market Field Asset Management. I know you
Speaker 1: many um an aluminum on the equity markets. Alicia Levine
Speaker 1: b and Y Melon joins us right now, Alicia, to
Speaker 1: the point out there right now, and this is really
Speaker 1: in the zeitgeis this morning. Do you buy on the
Speaker 1: rumor of banks doing better or do you sell on
Speaker 1: the news of their earnings tomorrow? What do you do
Speaker 1: with an overweight in banks? So I think that the
Speaker 1: market is set up for this particular quarter to be
Speaker 1: tilted more towards the reopening and cyclical. So I think
Speaker 1: here you buy the banks, but I think you have
Speaker 1: to be careful because we've already had a huge move
Speaker 1: both in energy and banks coming into the quarter. And
Speaker 1: the key issue, as you've been talking about, is the
Speaker 1: loan book, and we have seen anemic loan growth across
Speaker 1: the banks for for the last few weeks, actually for
Speaker 1: the last few quarters. When you think about it, households
Speaker 1: are still flushed with cash and businesses are flushed with cash.
Speaker 1: So where is that demand for loan loans coming from?
Speaker 1: That's really the next leg of growth here. So I
Speaker 1: would say be long, be strong, but be faded a
Speaker 1: little bit, only because we've had such a strong move here.
Speaker 1: I do think the quarter is going to be a
Speaker 1: higher yield and a cyclical plate for the quarter. I
Speaker 1: think we're set up for that Atlicia. Set me up
Speaker 1: for next year. Then you and I have been talking recently,
Speaker 1: and that's valuable to me because you're constructive next year.
Speaker 1: There's a distinction between the chop you expect into year
Speaker 1: end and what you're looking for through next year through
Speaker 1: its entirety th two. What's the difference here? So I
Speaker 1: think we have we have an issue here where we
Speaker 1: have to get through something of an air pocket, and
Speaker 1: the supply chains turned out to be stickier than expected.
Speaker 1: Inflation higher than expected, and growth came down faster than expected.
Speaker 1: But if you look at the estimates, the estimates are
Speaker 1: actually rising for because the demand is still there. So
Speaker 1: this is still a supply shock to the extent that
Speaker 1: this is still a supply shock and not a buyer's
Speaker 1: strike on on the demand side, growth can be higher
Speaker 1: in two and earnings also, what do we have to
Speaker 1: do to get there? We're sitting on the hundred day
Speaker 1: moving average. We're probably going lower from here. You can
Speaker 1: see how the markets closed for the last few days.
Speaker 1: It just can't rise. We still have overhead on resistance
Speaker 1: above us, so we're probably gonna have to test lower. However,
Speaker 1: I think earning season is going to give us a
Speaker 1: really good clue of where we're going on some of
Speaker 1: these supply issues, which is creating the inflation. So the
Speaker 1: two sectors we worry about are the industrials and retail
Speaker 1: because that's where the companies are not able to pass
Speaker 1: along price as easily. Some of the reason why some
Speaker 1: of these sectors have been stickier and not moving higher.
Speaker 1: If we get through earning season with any comments such
Speaker 1: as in the last two weeks of September saw an
Speaker 1: easing of these issues, then if we're off to the races,
Speaker 1: but we have to hear it well, Alicia, if you
Speaker 1: do believe that this will eventually pass, that we will
Speaker 1: see stronger growth in two Do you buy those retail
Speaker 1: and industrial names when they sell off after reporting stickier
Speaker 1: than some people had expected supply chain issues for this year,
Speaker 1: but perhaps not next. Yeah, I would. I would definitely
Speaker 1: buy because we're still constructive on the reopening and Europe
Speaker 1: is behind us more of a stagflation problem there, but
Speaker 1: on a tactical trade the reopening should work in Europe
Speaker 1: as well, and you can you can do some trades
Speaker 1: in Europe as well to add to sort of the
Speaker 1: value tail. But overall, we don't think you should be
Speaker 1: tilted one way or the other and more of a barbell.
Speaker 1: I hate that we're barbell. Everybody uses it. But the
Speaker 1: truth of the matter is this year the market didn't
Speaker 1: reward you for being overweight value or cyclicals. It really
Speaker 1: was a monthly or even quarterly story. And I think
Speaker 1: as we move into the second quarter of next year,
Speaker 1: those supply chain issues are going to lessen commodity price
Speaker 1: spikes come down, and when that happens, you're going to
Speaker 1: see something of a flattening of the yield curve and
Speaker 1: you're going to see increase in growth and you're going
Speaker 1: to see a lowering of the inflation. So you want
Speaker 1: to be prepared for that. So you have a short
Speaker 1: term where inflation is moving higher, inflation expectations are moving higher.
Speaker 1: You have to get through it. But we think by
Speaker 1: the second quarter these supply issues will start to come down.
Speaker 1: And again, commodity price spikes don't last. So Alicia just quickly,
Speaker 1: if I wanted a call option on a better supply
Speaker 1: side story, what do I want to be doing? Kids
Speaker 1: it through industrials? How do I get that? Where do
Speaker 1: I get that exposure? You can do it through industrials.
Speaker 1: But again I would wait to get through this earning
Speaker 1: seasons because look, it's not it's not it's not a
Speaker 1: short bet, right, it could go either way. You need
Speaker 1: to hear some sort of language that they expect a
Speaker 1: better day going forward. But also I would look at
Speaker 1: some of growth sectors, in particular the more value areas
Speaker 1: of tech where they can earn through it. In the end,
Speaker 1: we like companies that can earn, that can earn through
Speaker 1: this and not be such price takers. It's a stock
Speaker 1: pickers market, as we've talked about, and that means you
Speaker 1: have to really do the fundamental analysis on where the
Speaker 1: supply chains are and how companies can pass price on.
Speaker 1: So I'd look at growth sectors. I'd like it, look
Speaker 1: at companies that can earn through this, and I'd also
Speaker 1: add healthcare here as a bit of a defensive play.
Speaker 1: In fact, we're not right and yeah, I gotta run.
Speaker 1: Sorry cloaks, take in produce a get some my oron
Speaker 1: screams which we have to go. Alicia Levigne almost bullied. Yeah,
Speaker 1: just you know it's abuse right now. We will dive
Speaker 1: into CPI. We can do that with Thomas Purcelli RBC
Speaker 1: Capital Markets usually on the linkage of labor to the economy.
Speaker 1: Today we go price Tom Percelly, which inflation series should
Speaker 1: our listeners and viewers pay attention to. I don't think
Speaker 1: there's any one. I think that it's good to actually
Speaker 1: use all the metrics that are out there. So whether
Speaker 1: it's UM CPI headline, core PC headline, core. I think
Speaker 1: that the role um you know, that's how you sort
Speaker 1: of get this mosaic of what what is happening, because
Speaker 1: they're all constructed slightly different. But as as you and
Speaker 1: I have talked about many times over the years, you know,
Speaker 1: I do like to break down inflation into two components,
Speaker 1: goods and services. I think you got a really great
Speaker 1: sense for what's happening from an underlying flation dynamic perspective.
Speaker 1: And I think, as we all appreciate right now, goods
Speaker 1: prices UM are incredibly elevated, which has been the case
Speaker 1: for a number of months. Service part of it has
Speaker 1: really lacked um uh and and you know, in fairness,
Speaker 1: we thought that it would actually be sort of really
Speaker 1: turning up in earnest sort of right around now. UM.
Speaker 1: But again it's it's it's not for a host of reasons,
Speaker 1: not the east of which is you know, I think
Speaker 1: delta really got in the way of of seeing this shift.
Speaker 1: I mean, we had long thought that there would be
Speaker 1: this good spending shift or spending away from goods to services.
Speaker 1: It hasn't really materialized, um in large part because because
Speaker 1: of delta um and, and there's obviously other factors. I
Speaker 1: mean I think there are supplied controls even in the
Speaker 1: service space, but those are the right ways I think
Speaker 1: of thinking about inflation. To your bigger question, is real
Speaker 1: estate a good or a service? Yeah, so it's going
Speaker 1: to show up in in services, right, so you know,
Speaker 1: in fact it's it's the single biggest component of of
Speaker 1: services and cp I. Uh. And that is one area
Speaker 1: where again we've we've been talking about this for for
Speaker 1: months and months that you would see this this this
Speaker 1: sort of floor put underneath inflation because of real estate, right,
Speaker 1: because of all of the sort of price games that
Speaker 1: we've seen that ultimately bleed into rentals. Um, that would
Speaker 1: put a floor underneath inflation in and look, it's it's
Speaker 1: been more or less happening um. And I think again
Speaker 1: that will take a little bit more time for that
Speaker 1: to really start to um uh sort of feed through
Speaker 1: so or of feeds into price games that we see
Speaker 1: from an inflation perspective feed into the rental component with
Speaker 1: a bit of a lag. Um. So it's something that
Speaker 1: will persist, we think, for many months to come. How
Speaker 1: concerned are you about the idea of a high cp
Speaker 1: I print in a low retail print, this sort of
Speaker 1: combo reading into this whole stag inflationary debate in a
Speaker 1: bad way. Yeah. Yeah, Look, I'm I'm you know, I
Speaker 1: don't know famous least words writing. I don't want to
Speaker 1: just say, I don't want to outright dismiss it, but
Speaker 1: I but I sort of do like the stag flat.
Speaker 1: The stagflation part of this conversation to me is um
Speaker 1: a tricky one. I believe in the flation part of it,
Speaker 1: right because again we've been talking about there'll be more
Speaker 1: persistent inflation than than was appreciated. It's the stag part
Speaker 1: of of it that I have a hard time with.
Speaker 1: The consumers in such fantastic shape right now. Uh you know,
Speaker 1: they're they're sitting on a mountain of cash. Uh. You know,
Speaker 1: you can look at it through the lens of excess saving,
Speaker 1: you can look at it through the lens of um,
Speaker 1: you know, liquid assets, um. But by really almost any measure,
Speaker 1: the consumers looking in really fine shape. So so my
Speaker 1: word of caution is defined stagflation more precisely because if
Speaker 1: you're just talking about growth going from six percent, which
Speaker 1: is roughly what we're gonna have this year, you know,
Speaker 1: down to like three or four percent, which was what
Speaker 1: we expect next year? Is that stagg Is that really
Speaker 1: growth stagnating wildly above potential growth? So um, So I
Speaker 1: have a hard time with that part of it. And
Speaker 1: that's all fair, right, And you sort of put aside
Speaker 1: the controversy over the word and how it's being used,
Speaker 1: And there is this conundrum. You said that the consumers
Speaker 1: are in such a good place, they have so much
Speaker 1: money to spend, and yet consumer sentiment has been declining
Speaker 1: and pretty steadily, and this has raised some concerns and
Speaker 1: the likes of Danny blanche Flower who says this is
Speaker 1: one of the most predictive elements of recession about eighteen
Speaker 1: months before no one else is really talking about recession.
Speaker 1: But how much can you really dismiss consumer sentiment which
Speaker 1: seems to be on a downward trend? Yes, Lisa, what
Speaker 1: I would suggest is in this and you have better
Speaker 1: access to this than me, look at that, Look at
Speaker 1: the languor um confidence measure, right, it actually comes out
Speaker 1: on your Bloomberg is the only place I've ever seen.
Speaker 1: And I think actually Bloomberg may have sort of been
Speaker 1: involved with it at one point, but I think they've
Speaker 1: they've since um um push it off to this, this
Speaker 1: other company Langer. If you look at so again, this
Speaker 1: is what we're talking about inflation measures. I think you
Speaker 1: can look at different confidence measures too. Um. So if
Speaker 1: you look at the University of Michigan, the University of
Speaker 1: Michigan measure is really going to be more influenced by
Speaker 1: things like prices, and so that's down much more prices
Speaker 1: are elevated. People are obviously really feeling the pinch of that.
Speaker 1: If you look at the Conference Boards measure, the Conference
Speaker 1: Boards measure is sort of hanging in there a bit better. Again,
Speaker 1: it's also down a bit, there's no question about that,
Speaker 1: but that's more focused on labor um, so that's remained
Speaker 1: a little bit more buoyant. And then you have something
Speaker 1: like the languor measure um, which is actually done pretty
Speaker 1: well over the course of the last several weeks and months.
Speaker 1: So again it's you know, which measure of of of
Speaker 1: confidence do you really want to look at. I think
Speaker 1: that they're all sort of telling you a story of Look,
Speaker 1: there is some caution out there, there's no question about that.
Speaker 1: I think prices are certainly eroding some element of confidence.
Speaker 1: I think the consumers lack of ability to really go
Speaker 1: out and buy what they want because of lack of inventory.
Speaker 1: I think that's certainly hurting. But if you think about
Speaker 1: the labor backdrop, which is ultimately what is one of
Speaker 1: the key drivers from a confidence perspective, it continues to
Speaker 1: perform pretty pretty well. The words stan inflation, I think
Speaker 1: is just a massive distraction right now, investors an economistic
Speaker 1: they're speaking past each because Tom, you can easily just
Speaker 1: prove that it's not stagflation. I think what market participants
Speaker 1: are looking at, and you know from daddy conversations, they're
Speaker 1: focused on the balance of risks around growth, the balance
Speaker 1: of risk around inflation. They see upside risk to inflation
Speaker 1: and downside risk to growth. And so I guess my
Speaker 1: question is to you next year, how those balance of
Speaker 1: risks evolve as the year grows older. Next year, what
Speaker 1: are you looking for? Yes, so we're looking for slower growth.
Speaker 1: And Jonathan, I think that you've framed it the right way.
Speaker 1: I just forget about these words, right like transitory and
Speaker 1: and stagna. I mean, this is all these words are
Speaker 1: a massive distraction. And so what I would simply say
Speaker 1: is if you're if you're, if you're sort of question
Speaker 1: is simply is growth going to slow next year? The
Speaker 1: answer to that is a resounding yes. I mean, you
Speaker 1: cannot maintain six percent growth. But I think where you're
Speaker 1: going from and where you're going to is critical to
Speaker 1: the conversation. So if you're going to remain north of
Speaker 1: potential growth, which is what we expect, I mean, look,
Speaker 1: I know that you know some uh, there was some
Speaker 1: big down grade of growth or I haven't seen. Just
Speaker 1: someone send me a message at it on it. I
Speaker 1: don't care who downgrades growth. I don't want to know
Speaker 1: where it's going from and where it's going to. Our
Speaker 1: growth is we're looking for just about slightly us than
Speaker 1: four percent growth. I mean, you know, I don't know what.
Speaker 1: I don't know what more to say about that. That That
Speaker 1: is just slowing from what we're witnessing this year next year,
Speaker 1: Is your vector moved down from four percent to something
Speaker 1: lower something your potential? We haven't really yeah, no, we
Speaker 1: haven't really moved our numbers all that much. I mean, look,
Speaker 1: we're always sort of fine tuning our estimates, but we
Speaker 1: haven't made some like wholesale adjustment. I mean we know,
Speaker 1: you know, these are all tents or two on either
Speaker 1: side of what has been our baseline. So no, it's
Speaker 1: not like we're looking for some you know, sort of
Speaker 1: materials slowing. And again, I think it's really hard to
Speaker 1: make the case. Look you have I'll say one more time,
Speaker 1: the consumer setting all that cash. That's great, um, But
Speaker 1: I think you have to keep in mind too, if
Speaker 1: you look at sort of the state of the consumer
Speaker 1: balance sheet, it's in pristine shape. So when when people
Speaker 1: go knocking on the door of banks which are going
Speaker 1: to do ultimate right, because if you look at the
Speaker 1: loans depository issue in the United States, it's it's it's collapsed.
Speaker 1: But at some point people are going to go knocking
Speaker 1: on those doors and guess where they're going to and
Speaker 1: guess what banks are going to find people with really
Speaker 1: really good balance sheets. Right. So I think that that's
Speaker 1: another leg of the conversation, and I think it's being
Speaker 1: completely missed an old the noise of stagnation and transitory
Speaker 1: and all this other nonsense that I think do distract
Speaker 1: I think Jonathan hit the nail on the head. So Tom,
Speaker 1: we are getting a number of analysts coming out including
Speaker 1: Golden Sacks, is Jon Hattias and downgrading the expectation, and
Speaker 1: we're hearing increasingly. The input data shows that some of
Speaker 1: the supply chain disruptions have lasted longer. Why has that
Speaker 1: not materially changed your view? Well, we we expected that
Speaker 1: they would linger for longer. I mean, that's the thing.
Speaker 1: It's like, maybe so I look, we had a pretty
Speaker 1: good call on this, I think for a while now.
Speaker 1: And so again you could to our research anyway you
Speaker 1: want to read it. I mean, we've been saying that
Speaker 1: these issues would linger for longer, so we we never
Speaker 1: really had so we we had it built into our numbers,
Speaker 1: so we never really had to take down our numbers
Speaker 1: in any material way. I mean, it's that's as simple
Speaker 1: as that. You know. For those of you on radio,
Speaker 1: we have Thomas Purcelli today from the offices of RBC
Speaker 1: and John I mean, I'm sorry, this is a Percelli different.
Speaker 1: This is a PERSONI focused without the distractions of children
Speaker 1: and or dog. I mean, yes, I am back in
Speaker 1: the office. It feels, it feels good to be here.
Speaker 1: For you didn't bring the children with the dog with
Speaker 1: you to the office. I didn't and my kids have
Speaker 1: been very upset by this. And actually I think the
Speaker 1: dog is actually taking it worse because you walk in
Speaker 1: and like he looks like a little down, like no
Speaker 1: one's around all day now, Tom, you know a freedom
Speaker 1: as he cashed out that long masknack position. So that's
Speaker 1: what matters a kids. The dog is suffering. Hello pressed
Speaker 1: and who is still long Banessa kid stains. Thank you
Speaker 1: great to have that energy on the writing flowback in
Speaker 1: New York City with humble study that of obvious Canada markets.
Speaker 1: What I want to do right now is a little
Speaker 1: bit of a window into the adult nous of the
Speaker 1: pros we talked to on COVID. We asked media questions,
Speaker 1: they're Germaine to what you believe or worried about it
Speaker 1: that on this terrible pandemic. I'm much adulge is it
Speaker 1: v A Pittsburgh among other hospitals with the Johns Hopkins
Speaker 1: Center for Health Security, and back in October, he and
Speaker 1: a team of people went into the trenches of antibiotic
Speaker 1: consumption wrapped around no sacomial infection, which is infection in
Speaker 1: a hospital and the overlay of that on a viral pandemic.
Speaker 1: We never talked about this stuff. I'm at Dolgia thinks
Speaker 1: about it and publishes on a pro level. I'm sure
Speaker 1: our our, our our hospitals gonna get back to north
Speaker 1: normal or does the linkage of virus and bacteria, I mean,
Speaker 1: our hospitals are forever changed. Hospitals are probably forever changed.
Speaker 1: Because of COVID nineteen. We've not seen an infectious disease
Speaker 1: outbreak really impinge hospital capacity for this long, probably since
Speaker 1: since night, and now hospitals have really reconfigured themselves to
Speaker 1: be able to deal with COVID plus, so COVID plus
Speaker 1: heart attacks, COVID plus strokes, COVID plus all the other
Speaker 1: bacterial infections that we see. So there is been really
Speaker 1: a reconfiguration of how hospitals are. Everything from personal protective
Speaker 1: equipment to visiting hours, all of that has been changed,
Speaker 1: and hospitals are now just much more tuned to the
Speaker 1: threat of infectious diseases because in the past they never
Speaker 1: really cared so much about them because it was kind
Speaker 1: of an afterthought. They were really interested in secretive surgeries.
Speaker 1: And now they realize that that they have to be
Speaker 1: resilient to infectious diseases. I mean microbiology one on one
Speaker 1: on this is stephylacoccus and the worry about you know,
Speaker 1: antibiotics and you know losing the value of antibiotics. How
Speaker 1: does that change within and after a viral pandemic. Well,
Speaker 1: what we what we've seen is that there is still
Speaker 1: a lot of inappropriate antibiotic used for COVID nineteen. So
Speaker 1: somebody might come into the hospital and have pneumonia from
Speaker 1: COVID nineteen, they often get antibiotics started even though they're
Speaker 1: not necessary. So we have seen increases in resistance amongst
Speaker 1: people with COVID nineteen in terms of the bacteria that
Speaker 1: live in their lungs, live on their body because people
Speaker 1: are inappropriately prescribing antibiotics. So when you look at the
Speaker 1: long term public health infectious disease threats, antibiotic resistance is
Speaker 1: probably the biggest one that we face because it threatens
Speaker 1: to pull us to a pre penicillin era. And I
Speaker 1: think that's something that's really important that we that we
Speaker 1: we not take the take our eye off of the
Speaker 1: long game and infectious disease, and there I think bacterial
Speaker 1: resistance has to be considered probably the the top priority
Speaker 1: if there is another pandemic, which a lot of people
Speaker 1: expect there to be. And I know that you particularly
Speaker 1: focus on plague any Buller and all these other issues
Speaker 1: that are percolating around the world. Our hospitals prepared for
Speaker 1: that now, based on the COVID run we've just had,
Speaker 1: they're better prepared than they were in the past. But
Speaker 1: I think this really showed how unprepared they are in general.
Speaker 1: When you look at hospital preparedness, it's something that's often
Speaker 1: an afterthought, something that they do to check a box
Speaker 1: so that they meet their CMS requirement or their Joint
Speaker 1: Commission requirement. And they often focus on mass casualty accidents
Speaker 1: like a shooting or or a fire or something like that,
Speaker 1: not so much on pandemics, not so much on things
Speaker 1: that are a sustained surge of sustained change in the
Speaker 1: way they operate, and that I think has to change.
Speaker 1: You have to have the C suite executives talking to
Speaker 1: the emergency managers. It shouldn't be some kind of afterthought
Speaker 1: that that there that they kind of they basically have
Speaker 1: no communication. This has to be integrated into hospital operations
Speaker 1: if we're going to be prepared even for a for
Speaker 1: a severe flu season in the future. Meanwhile, at the
Speaker 1: state of play right now, a lot of people are
Speaker 1: discounting COVID in terms of the ongoing backdrop it will fade.
Speaker 1: People are counting on that. However, it still is used
Speaker 1: as an explanation for some of the labor market frictions
Speaker 1: that we've seen people saying. Long COVID perhaps or fear
Speaker 1: of COVID is people keeping people out of labor market.
Speaker 1: What's been your experience with the various side effects of
Speaker 1: COVID and how that sort of impinges in people's ability
Speaker 1: to work. There is definitely a small subset of people
Speaker 1: who have a case of COVID and haven't quite got
Speaker 1: back to their baseline. I'm kind of excluding the people
Speaker 1: that were in the ICU because those people are going
Speaker 1: to have post i cu sin their mits, going to
Speaker 1: take them sometime to get to their baseline. But there
Speaker 1: is some group that had mild infection that can't get
Speaker 1: back to it. We don't quite know a lot about
Speaker 1: this other than it happens in older people. It happens
Speaker 1: more likely to happen in females, people with other co
Speaker 1: morbid conditions. But we have bad definitions. We don't know
Speaker 1: exactly what fits into that criteria because some people may
Speaker 1: not have gotten their taste and smell back, whereas other
Speaker 1: people can't walk up the stairs now. So we've got
Speaker 1: to do a lot of science to try and pair
Speaker 1: this down to actually know what's going on, to be
Speaker 1: able to define it and study it and come up
Speaker 1: with treatments. And there are some people coming up with treatments,
Speaker 1: but it's gonna be sometime before we get our hands
Speaker 1: all around long COVID and how likely it is to occur,
Speaker 1: on what treatments may work. Let's get back to the
Speaker 1: mundane doctor adolgef very simply, where are we unmasks? Well,
Speaker 1: we know now during this pandemic that we that masks
Speaker 1: do work, that they do play a major role, especially
Speaker 1: when you're talking about an unvaccinated population. To me, I
Speaker 1: think mask wearing for the for the vaccinated has very
Speaker 1: marginal benefits, maybe for some people who are very risk averse,
Speaker 1: but for the unvaccinated they clearly work, and they also
Speaker 1: work for other respiratory viruses other than COVID nineteen. That's
Speaker 1: why people didn't have that many common colds or didn't
Speaker 1: have influenza. So we may see that become part of
Speaker 1: the culture, not because there's a government recommendation or mandate,
Speaker 1: because people say I'm on a subway or I'm in
Speaker 1: a crowd of congregated place. This is something that I
Speaker 1: think we can um use to blunt in to blunt
Speaker 1: any other respiratory viruses that we may we encounter. Don't
Speaker 1: we have to leave it there. Thank you as always,
Speaker 1: don't hamish it down to that of Jones Helpkins on
Speaker 1: the pandemic. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten a m
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Speaker 1: the terminal. I'm Tom Keane and this is Bloomberg