1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,240 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,840 Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 5 00:00:23,920 --> 00:00:30,760 Speaker 1: and of course on the Bloomberg Terminal. Always a joy 6 00:00:30,840 --> 00:00:33,760 Speaker 1: to speak to William Dudley. He's a former president of 7 00:00:33,800 --> 00:00:36,879 Speaker 1: the New York Fellow Reserve, the interesting mandate after New 8 00:00:36,960 --> 00:00:40,120 Speaker 1: York fed Bloomberg opinion columnists and doing so much for 9 00:00:40,159 --> 00:00:45,199 Speaker 1: Bloomberg Economics as a senior advisor. Bill Dudley a virtual 10 00:00:45,360 --> 00:00:48,440 Speaker 1: Jackson Hole. You and I have been there. There's a 11 00:00:48,760 --> 00:00:51,720 Speaker 1: you know, the central bankers go out, they wave at 12 00:00:51,720 --> 00:00:54,320 Speaker 1: the moose, at the split rail fans. They're not going 13 00:00:54,360 --> 00:00:57,520 Speaker 1: to do that this year. How does it change if 14 00:00:57,600 --> 00:01:02,520 Speaker 1: Jackson Hall is virtual, Well, it eliminates all the side 15 00:01:02,560 --> 00:01:06,200 Speaker 1: conversations at the luncheons on the hikes, So there isn't 16 00:01:06,200 --> 00:01:08,560 Speaker 1: a kind of back channel kind of communication that you 17 00:01:08,680 --> 00:01:12,720 Speaker 1: might get otherwise. I mean, there's a number of things 18 00:01:12,720 --> 00:01:15,039 Speaker 1: that I would love to talk to that participants about 19 00:01:15,440 --> 00:01:17,840 Speaker 1: that I have nothing to do with. Entrey policy. You know, 20 00:01:17,920 --> 00:01:20,800 Speaker 1: what do they plan to do on payments and cydewere uh, 21 00:01:21,200 --> 00:01:25,720 Speaker 1: cryptocurrencies and digital currencies? What's their add to about climate change? 22 00:01:26,160 --> 00:01:27,720 Speaker 1: So there's a lot of things to talk about. And 23 00:01:27,760 --> 00:01:31,360 Speaker 1: if you don't have those opportunities at lunch and dinner, 24 00:01:31,560 --> 00:01:33,760 Speaker 1: you don't you can't talk about those things from the 25 00:01:33,800 --> 00:01:36,920 Speaker 1: fractious FED development, you know, not to make it a 26 00:01:37,000 --> 00:01:40,120 Speaker 1: history lesson, but the panic of OH seven out to 27 00:01:40,240 --> 00:01:44,800 Speaker 1: mcchesley Martin in the early nineteen fifties out to now, 28 00:01:44,959 --> 00:01:50,040 Speaker 1: where is the FED mandate to consider climate change? How 29 00:01:50,040 --> 00:01:53,520 Speaker 1: do they do that? How do they affect that? I 30 00:01:53,560 --> 00:01:57,120 Speaker 1: think they certainly have a mandate to consider climate change 31 00:01:57,120 --> 00:01:59,920 Speaker 1: from a financial stability perspective, to the extent that climate 32 00:02:00,080 --> 00:02:05,240 Speaker 1: change induces worst outcomes on the macro economy, it's the 33 00:02:05,360 --> 00:02:09,280 Speaker 1: disasters defect This the extent that affects the value of 34 00:02:10,200 --> 00:02:14,080 Speaker 1: assets that banks lend against that does threaten the individual, 35 00:02:14,280 --> 00:02:17,840 Speaker 1: could potentially threatened individual institutions and the financial system. And 36 00:02:17,840 --> 00:02:20,359 Speaker 1: the FED has responded to that. They've set up two committees, 37 00:02:20,360 --> 00:02:23,080 Speaker 1: one to address the overall financials deblay risk and another 38 00:02:23,160 --> 00:02:26,400 Speaker 1: to address risk at individual institutions and they're pushing these 39 00:02:26,400 --> 00:02:31,040 Speaker 1: individual institutions to develop data uh and processes to evaluate 40 00:02:31,040 --> 00:02:33,200 Speaker 1: climate risk and how they make their lending and other 41 00:02:33,360 --> 00:02:37,160 Speaker 1: business banking decisions. I think it's completely appropriate. Entrey policy 42 00:02:37,200 --> 00:02:40,200 Speaker 1: is a lot more difficult, right, because Entrey policy is 43 00:02:40,240 --> 00:02:41,760 Speaker 1: really about what's going to happen in the next year 44 00:02:41,840 --> 00:02:43,799 Speaker 1: or two, not what's gonna happen in the next one 45 00:02:43,880 --> 00:02:46,600 Speaker 1: year thirty years. So even if you think climate change 46 00:02:46,639 --> 00:02:50,440 Speaker 1: is an existential threat to the US global economy, which 47 00:02:50,480 --> 00:02:52,880 Speaker 1: I think it is, it's not clear how you would 48 00:02:52,880 --> 00:02:57,520 Speaker 1: incorporate climate change risk into the near term monetary policy decisions. 49 00:02:57,560 --> 00:03:00,600 Speaker 1: And that's where the Fed's getting some criticism of from 50 00:03:00,720 --> 00:03:03,160 Speaker 1: people who say that it's not doing enough on climate change. 51 00:03:03,200 --> 00:03:05,880 Speaker 1: I just think it's difficult to take the Monterrey policy 52 00:03:06,000 --> 00:03:08,760 Speaker 1: mandate and say, well, that really expands to the climate 53 00:03:08,840 --> 00:03:10,800 Speaker 1: change issue and bill It also, though, goes to the 54 00:03:10,880 --> 00:03:13,840 Speaker 1: question of policy drift. Has the FED gotten too far 55 00:03:14,080 --> 00:03:17,920 Speaker 1: from their main goals of trying to control inflation and 56 00:03:18,000 --> 00:03:20,519 Speaker 1: support the labor market? I mean, when their labor market 57 00:03:20,520 --> 00:03:24,240 Speaker 1: goals are a lot less defined and perhaps and they 58 00:03:24,240 --> 00:03:26,160 Speaker 1: have been in the past, and then you have also 59 00:03:26,520 --> 00:03:30,000 Speaker 1: other goals like climate change and broader other goals and 60 00:03:30,120 --> 00:03:34,320 Speaker 1: initiatives that feel more like policy. How much is the 61 00:03:34,360 --> 00:03:38,160 Speaker 1: FED risking allowing some of their main goals, namely inflation, 62 00:03:38,280 --> 00:03:41,160 Speaker 1: to get out of control as it focuses on some 63 00:03:41,240 --> 00:03:45,119 Speaker 1: of these other goals. I think this is why Tripole 64 00:03:45,160 --> 00:03:48,960 Speaker 1: hasn't gone that far in the climate change direction from 65 00:03:48,960 --> 00:03:51,960 Speaker 1: the Monterrey policy perspective, compared to say, like the European 66 00:03:52,000 --> 00:03:54,960 Speaker 1: Central Bank. The understands that there is a risk of 67 00:03:54,960 --> 00:03:58,080 Speaker 1: being criticized and going too far. That said, the financial 68 00:03:58,120 --> 00:04:01,080 Speaker 1: stability party is certainly part of the sense mandate because 69 00:04:01,120 --> 00:04:04,400 Speaker 1: without financial stability, the FED can't achieve its goals on 70 00:04:04,480 --> 00:04:08,360 Speaker 1: inflation on employment. So I think that the FED is 71 00:04:08,400 --> 00:04:11,280 Speaker 1: taking the right course. That they're taking climate change seriously, 72 00:04:11,520 --> 00:04:14,600 Speaker 1: but they're focusing on it from a financial stability and 73 00:04:14,640 --> 00:04:19,000 Speaker 1: safety and soundness proposition. Well, you mentioned some of the 74 00:04:19,000 --> 00:04:21,640 Speaker 1: criticism that the FED has not gotten has gotten for 75 00:04:21,680 --> 00:04:23,880 Speaker 1: not acting on this in a more aggressive way. A 76 00:04:23,880 --> 00:04:26,560 Speaker 1: lot of that comes from the progressives who may we 77 00:04:26,600 --> 00:04:28,680 Speaker 1: would like to see someone else at the helm, but 78 00:04:28,720 --> 00:04:31,159 Speaker 1: we had. Janet Yellen reportedly over the weekend telling White 79 00:04:31,160 --> 00:04:34,560 Speaker 1: House advisors that she should supports Powell for a second term. 80 00:04:34,600 --> 00:04:39,640 Speaker 1: Just how significant is that. I think Treasure Secretary Yellen's 81 00:04:39,720 --> 00:04:43,160 Speaker 1: endorsement is important because she knows what is needed to 82 00:04:43,200 --> 00:04:46,080 Speaker 1: be the chair of the Fed Reserve, and she's very 83 00:04:46,080 --> 00:04:49,440 Speaker 1: well respected both inside the administration and outside the administration. 84 00:04:49,480 --> 00:04:51,800 Speaker 1: So I think her endorsement is very, very important. I 85 00:04:51,839 --> 00:04:54,360 Speaker 1: think also, when you think about it, Chair Pole really 86 00:04:54,440 --> 00:04:57,080 Speaker 1: is the path of least resistance. He's already shown that 87 00:04:57,120 --> 00:04:59,839 Speaker 1: he's very capable, and he has support on both sides 88 00:04:59,880 --> 00:05:03,040 Speaker 1: of the political aisle. If you that progressives got their 89 00:05:03,080 --> 00:05:06,320 Speaker 1: way and nominated someone someone that was consistent with what 90 00:05:06,400 --> 00:05:08,640 Speaker 1: they want, then I think it'd be a lot higher 91 00:05:08,680 --> 00:05:12,400 Speaker 1: to get that person confirmed because tony Republican voters, would 92 00:05:12,440 --> 00:05:14,919 Speaker 1: you get you know? Tom asked a question earlier today, 93 00:05:14,920 --> 00:05:17,200 Speaker 1: and given FED share, Powell is likely to remain at 94 00:05:17,200 --> 00:05:20,359 Speaker 1: the HELM. What inflation is he looking at most closely? 95 00:05:20,360 --> 00:05:23,320 Speaker 1: And is it changing in terms of the nature of 96 00:05:23,440 --> 00:05:26,359 Speaker 1: price increases where it is occurring. In terms of how 97 00:05:26,440 --> 00:05:30,000 Speaker 1: they evaluated at the FED, well, I think they've focused 98 00:05:30,040 --> 00:05:32,200 Speaker 1: on the notion of is this transitory or is this 99 00:05:32,320 --> 00:05:35,880 Speaker 1: going to be more persistent? For tamp persistent inflation, Really 100 00:05:35,880 --> 00:05:37,599 Speaker 1: two things have to happen. One you have to have 101 00:05:37,960 --> 00:05:40,440 Speaker 1: you have to run on labor and have pressure on wages, 102 00:05:40,720 --> 00:05:42,920 Speaker 1: and that weight pressure on wages gets into prices, and 103 00:05:43,000 --> 00:05:45,360 Speaker 1: too you have to have a rise in inflation expectations. 104 00:05:45,760 --> 00:05:47,520 Speaker 1: So far it looks like there's still some slack in 105 00:05:47,560 --> 00:05:51,640 Speaker 1: the labor market uh and and inflation expectations they've risen 106 00:05:51,680 --> 00:05:54,400 Speaker 1: a little bit, really two levels more consistent with what 107 00:05:54,440 --> 00:05:56,880 Speaker 1: the Fed wants rather than higher than we So at 108 00:05:56,880 --> 00:06:00,520 Speaker 1: this point, the Fed view is that the inflation pressures 109 00:06:00,560 --> 00:06:05,039 Speaker 1: that we're having our transitory probably they're gonna be uh 110 00:06:05,200 --> 00:06:08,520 Speaker 1: more persistent than one would like for transitory pressures. In otherwise, 111 00:06:08,560 --> 00:06:10,559 Speaker 1: the inflation rate will probably stay above the FEDS target 112 00:06:11,520 --> 00:06:14,279 Speaker 1: for a while. But they're they're really focused on what's 113 00:06:14,279 --> 00:06:16,960 Speaker 1: having the labor market and what's having the inflationations and 114 00:06:17,040 --> 00:06:19,360 Speaker 1: all those things. As as long as those things are 115 00:06:19,360 --> 00:06:22,040 Speaker 1: open in terms of their inflation signal, and the Federal 116 00:06:22,040 --> 00:06:25,720 Speaker 1: Reserve will be pretty comfortable with with where inflation is 117 00:06:25,800 --> 00:06:29,280 Speaker 1: right now. Dr Dudley, as did Secretary Yellen. Can you 118 00:06:29,760 --> 00:06:33,240 Speaker 1: tell us this morning that you would actively support the 119 00:06:33,320 --> 00:06:40,240 Speaker 1: renomination the reappointment of Chairman Powell. Absolutely absolutely, He's a 120 00:06:40,279 --> 00:06:44,120 Speaker 1: done a terrific job. He has the whole EONC behind him. 121 00:06:44,440 --> 00:06:47,280 Speaker 1: I think he's articulated what the feds of policy UH 122 00:06:47,760 --> 00:06:50,960 Speaker 1: is in a very clear, inconsistent way. So I don't 123 00:06:51,000 --> 00:06:53,800 Speaker 1: see any reason why you wouldn't be Really. Bill Dudley, 124 00:06:53,839 --> 00:06:56,279 Speaker 1: thank you so much for joining us this morning, former 125 00:06:56,320 --> 00:06:58,840 Speaker 1: president of the New York Federal Reserve and senior advisor 126 00:06:59,320 --> 00:07:07,839 Speaker 1: to Bloomberg Economics. Right now, Laura Calvacino with us RBC 127 00:07:08,400 --> 00:07:12,280 Speaker 1: Capital Markets. Laurie, it is a resilient market, is it 128 00:07:12,360 --> 00:07:16,680 Speaker 1: a market that can break out to new highs? So 129 00:07:16,760 --> 00:07:19,120 Speaker 1: thanks for having me, Tom, Thanks for having me, Lisa. Look, 130 00:07:19,160 --> 00:07:20,840 Speaker 1: we're still in the camp that things will get a 131 00:07:20,840 --> 00:07:22,960 Speaker 1: decent sized pull back before the end of the year. 132 00:07:23,040 --> 00:07:25,720 Speaker 1: So we've got a target on the S and P 133 00:07:26,480 --> 00:07:28,720 Speaker 1: and Look, I think what was interesting in the price 134 00:07:28,720 --> 00:07:30,640 Speaker 1: action last week it felt like we had a bit 135 00:07:30,640 --> 00:07:33,320 Speaker 1: of a growth skirmish to start the week. We saw 136 00:07:33,360 --> 00:07:36,800 Speaker 1: the index faulter and we saw defensive sectors leading the charge. 137 00:07:37,400 --> 00:07:39,840 Speaker 1: When that ends up happening, the market really can't sustain 138 00:07:39,920 --> 00:07:42,280 Speaker 1: this move um to the upside. Now, what we saw 139 00:07:42,280 --> 00:07:44,040 Speaker 1: towards the end of the week is that those jitters 140 00:07:44,040 --> 00:07:46,760 Speaker 1: did calmed down a little bit, tech started working. We 141 00:07:46,800 --> 00:07:49,400 Speaker 1: started to see just some stability in the index return. 142 00:07:49,720 --> 00:07:53,280 Speaker 1: But when you have fear seep in markets really can't climb. 143 00:07:53,360 --> 00:07:55,360 Speaker 1: When you have sort of that nervousness and that shift 144 00:07:55,360 --> 00:07:57,920 Speaker 1: to high quality, markets can climb that wall of WORI, 145 00:07:58,280 --> 00:08:00,720 Speaker 1: but it's a very delicate balance in front. Didn't work 146 00:08:00,720 --> 00:08:03,280 Speaker 1: for most of last week. Well, but honestly, how big 147 00:08:03,440 --> 00:08:05,640 Speaker 1: is this wall of Rory Laurie. If we have the 148 00:08:05,680 --> 00:08:07,720 Speaker 1: FED that is backing the market, if we have the 149 00:08:07,760 --> 00:08:12,560 Speaker 1: potential a greater potential frankly for federal fiscal stimulus, if 150 00:08:12,600 --> 00:08:16,680 Speaker 1: the slowdown does persist, I mean, doesn't policy support sort 151 00:08:16,680 --> 00:08:20,600 Speaker 1: of completely cancel out slowdowns that might otherwise come up. 152 00:08:21,760 --> 00:08:24,280 Speaker 1: I think that's one of the reasons why over the 153 00:08:24,360 --> 00:08:26,120 Speaker 1: last you know, sort of a few months, we've seen 154 00:08:26,160 --> 00:08:28,200 Speaker 1: a lot of nervousness in the work in the market 155 00:08:28,240 --> 00:08:30,600 Speaker 1: just sort of expressed through well, I'm in certain I'm 156 00:08:30,600 --> 00:08:32,120 Speaker 1: going to go to high quality, I'm not going to 157 00:08:32,200 --> 00:08:34,480 Speaker 1: go to defensives. I think that that, you know, has 158 00:08:34,520 --> 00:08:37,520 Speaker 1: helped bolster that case for moving to the secular growers. 159 00:08:37,679 --> 00:08:39,560 Speaker 1: But we do know that we're starting to wind down 160 00:08:39,600 --> 00:08:41,240 Speaker 1: some of these programs or we can sort of see 161 00:08:41,240 --> 00:08:43,040 Speaker 1: the light at the end of the tunnel. So I 162 00:08:43,080 --> 00:08:45,920 Speaker 1: think the power of that to sort of bolster markets 163 00:08:45,960 --> 00:08:49,040 Speaker 1: going forward at least has a diminished impact, even if 164 00:08:49,040 --> 00:08:50,880 Speaker 1: you're not pulling the rug out from the market all 165 00:08:50,920 --> 00:08:54,000 Speaker 1: at once. But we have seen also under performance of 166 00:08:54,080 --> 00:08:57,359 Speaker 1: small caps. We have seen a rotation out of cyclicals. 167 00:08:57,640 --> 00:09:01,120 Speaker 1: Can we glean any confidence in equity valuations based on 168 00:09:01,200 --> 00:09:05,720 Speaker 1: this discretion that we're seeing on the part of fund managers? Look, 169 00:09:05,760 --> 00:09:07,160 Speaker 1: I think that you know, there are a couple of 170 00:09:07,200 --> 00:09:09,079 Speaker 1: different questions I think baked in there. I think it's 171 00:09:09,080 --> 00:09:11,320 Speaker 1: a great question. But I think in terms of small cap, 172 00:09:11,720 --> 00:09:14,200 Speaker 1: you know, I think that we've seen so many worries 173 00:09:14,280 --> 00:09:17,480 Speaker 1: manifest and the dramatic underperformance of small cap since March. 174 00:09:17,559 --> 00:09:19,640 Speaker 1: I think at first it was the impact of inflation 175 00:09:19,679 --> 00:09:22,760 Speaker 1: on profit margins, which really didn't end up coming through um, 176 00:09:22,760 --> 00:09:25,720 Speaker 1: but I think worries were expressed there. Investors have threaded 177 00:09:25,720 --> 00:09:28,760 Speaker 1: about the negative feedback that you'll get on demand from inflation. 178 00:09:28,840 --> 00:09:31,000 Speaker 1: That's also been expressed in small cap. And now I 179 00:09:31,000 --> 00:09:33,120 Speaker 1: think sort of you mentioned the softening and the high 180 00:09:33,120 --> 00:09:36,240 Speaker 1: frequency indicators. I think some of the short term you know, 181 00:09:36,280 --> 00:09:39,000 Speaker 1: sort of economic damage from the delta variant. I think 182 00:09:39,040 --> 00:09:42,000 Speaker 1: that's manifest in small cap UM. But small caps have 183 00:09:42,559 --> 00:09:44,960 Speaker 1: you know, at the end of the day not completely collapsed. 184 00:09:45,000 --> 00:09:47,400 Speaker 1: We haven't seen them go into bear market territory. So 185 00:09:47,440 --> 00:09:49,280 Speaker 1: there's you know a little bit of that resilience that 186 00:09:49,320 --> 00:09:51,280 Speaker 1: we will be able to turn the corner still showing 187 00:09:51,360 --> 00:09:53,520 Speaker 1: up in that data set. Is it time to get 188 00:09:53,520 --> 00:09:57,520 Speaker 1: more defensive within your equity allocation? Though, Lorie, you know 189 00:09:57,559 --> 00:10:00,360 Speaker 1: we essentially did that, Kaylee. We actually have been aisling 190 00:10:00,400 --> 00:10:03,439 Speaker 1: down the cyclicality. I don't make sector recommendation changes all 191 00:10:03,480 --> 00:10:05,439 Speaker 1: that often, but a few weeks ago we actually did 192 00:10:05,480 --> 00:10:08,600 Speaker 1: pull down materials, which was our least favorite of the cyclicals. 193 00:10:08,600 --> 00:10:11,319 Speaker 1: Were sticking with financials and energy, UM, but we did 194 00:10:11,360 --> 00:10:14,600 Speaker 1: actually boost the tech sector. The proper tech sector doesn't 195 00:10:14,600 --> 00:10:17,160 Speaker 1: include the Internet stuff, UM, but we did pull that 196 00:10:17,360 --> 00:10:19,640 Speaker 1: up to and overweight from a market weight, and we 197 00:10:19,720 --> 00:10:22,040 Speaker 1: basically said, going forward, if we're thinking about the next 198 00:10:22,040 --> 00:10:24,520 Speaker 1: twelve months or so, we want to be very balanced 199 00:10:24,559 --> 00:10:27,200 Speaker 1: between sort of the defensiveness of secular growth and the 200 00:10:27,240 --> 00:10:30,679 Speaker 1: cyclical oriented sectors. So we did actually make that that 201 00:10:30,760 --> 00:10:32,880 Speaker 1: sort of shift on the dial. So you're looking out 202 00:10:32,880 --> 00:10:35,160 Speaker 1: twelve months, I'm looking out the next you know, three 203 00:10:35,160 --> 00:10:38,080 Speaker 1: months in change and wondering if in one we will 204 00:10:38,080 --> 00:10:40,120 Speaker 1: see a five percent draw down at any point in 205 00:10:40,160 --> 00:10:42,160 Speaker 1: this equity market, what would be the catalyst for that. 206 00:10:43,480 --> 00:10:44,760 Speaker 1: So I think we got a little bit of a 207 00:10:44,840 --> 00:10:47,720 Speaker 1: hint of it last week with concerns on the growth outlook. 208 00:10:47,760 --> 00:10:50,240 Speaker 1: And look, I'm not saying that anybody is anticipating we're 209 00:10:50,240 --> 00:10:52,400 Speaker 1: going to have a recession or anything like that, but 210 00:10:52,440 --> 00:10:54,640 Speaker 1: I do think there have been some complacency on the 211 00:10:54,679 --> 00:10:58,120 Speaker 1: economic data that investors had, or some deterioration on the 212 00:10:58,120 --> 00:11:01,480 Speaker 1: economic data, and there have been frankly complacency about the 213 00:11:01,520 --> 00:11:04,200 Speaker 1: impact of this delta variant from market participants. So I 214 00:11:04,200 --> 00:11:05,679 Speaker 1: think that was a little bit of a wake up call, 215 00:11:05,720 --> 00:11:07,679 Speaker 1: a little bit of period of digestion we had to have. 216 00:11:08,280 --> 00:11:10,160 Speaker 1: And but let's just zoom out a little bit. What 217 00:11:10,200 --> 00:11:12,240 Speaker 1: was that, you know, sort of reaction to the delta 218 00:11:12,320 --> 00:11:16,280 Speaker 1: variant all about? It was an unanticipated bit of bad 219 00:11:16,400 --> 00:11:19,679 Speaker 1: news that hit the market and really challenged investors assumptions 220 00:11:19,679 --> 00:11:21,800 Speaker 1: of what they thought going forward. So I think the 221 00:11:21,800 --> 00:11:24,440 Speaker 1: answer in their keylie, it's probably something that the market 222 00:11:24,480 --> 00:11:27,760 Speaker 1: is not able to anticipate with valuations where they are. 223 00:11:27,800 --> 00:11:29,880 Speaker 1: What sentiment is stretched as it is, This is not 224 00:11:29,960 --> 00:11:31,760 Speaker 1: a market that has a lot of room to absorb 225 00:11:31,840 --> 00:11:34,800 Speaker 1: bad news. When we do get it, thank you so much, 226 00:11:34,800 --> 00:11:42,720 Speaker 1: greatly appreciate it. This is a joy. Let's get right 227 00:11:42,760 --> 00:11:47,880 Speaker 1: to it with Michael Dardo with m KM Partners are 228 00:11:47,920 --> 00:11:52,200 Speaker 1: chief economist and market strategy Mark. Michael, you go right 229 00:11:52,320 --> 00:11:55,480 Speaker 1: at the media gloom crew. You just taram shreds in 230 00:11:55,520 --> 00:11:58,040 Speaker 1: your note and you say, look, there's a lot of 231 00:11:58,120 --> 00:12:02,599 Speaker 1: labor data which shows a more employed America. There is 232 00:12:02,679 --> 00:12:06,920 Speaker 1: high frequency data that shows a pretty good, maybe not 233 00:12:07,120 --> 00:12:10,439 Speaker 1: mint set of data as well. What's the gloom crew 234 00:12:10,760 --> 00:12:16,360 Speaker 1: get wrong? Well, Tom, I think that the gloom crew 235 00:12:16,480 --> 00:12:19,600 Speaker 1: is focused on the variant and and that news has 236 00:12:19,640 --> 00:12:23,480 Speaker 1: been bad and there are risks. All of that said, 237 00:12:23,520 --> 00:12:26,800 Speaker 1: if we do look at the highest frequency economic data, 238 00:12:26,920 --> 00:12:29,320 Speaker 1: that should tell us if the economy is rolling over, 239 00:12:30,000 --> 00:12:32,800 Speaker 1: that still looks good for the most part. So this 240 00:12:32,960 --> 00:12:35,960 Speaker 1: past week with such jobless claims hit a new post 241 00:12:35,960 --> 00:12:39,560 Speaker 1: pandemic blow. So at least so far, you know, the 242 00:12:39,640 --> 00:12:44,600 Speaker 1: labor market looks fairly undisturbed and unperturbed um by this 243 00:12:44,760 --> 00:12:48,200 Speaker 1: delta shock that could change in the future. But so far, 244 00:12:48,600 --> 00:12:52,319 Speaker 1: you know, high frequency labor market data looking good. Also, 245 00:12:53,040 --> 00:12:57,520 Speaker 1: your weekly confidence numbers that come out on on Thursday 246 00:12:58,120 --> 00:13:00,720 Speaker 1: have actually held up pretty well. And it's a critical 247 00:13:00,760 --> 00:13:04,440 Speaker 1: point because the University of Michigan data that totally fell 248 00:13:04,440 --> 00:13:07,320 Speaker 1: out of bed in August. I think really scared along 249 00:13:07,360 --> 00:13:11,280 Speaker 1: with people, and in the risk with the variant is 250 00:13:11,320 --> 00:13:15,120 Speaker 1: really twofold. One would be if there are actually explicit 251 00:13:15,360 --> 00:13:18,760 Speaker 1: directed shutdowns, which doesn't seem to be happening on a 252 00:13:18,840 --> 00:13:22,520 Speaker 1: large scale. The other risk would be that households consumers 253 00:13:22,559 --> 00:13:26,440 Speaker 1: just simply get scared and pulled back, and so that's 254 00:13:26,440 --> 00:13:28,559 Speaker 1: why there was a lot of concern with that number. 255 00:13:28,640 --> 00:13:32,440 Speaker 1: Yet the weekly confidence data over the last four weeks 256 00:13:32,520 --> 00:13:35,720 Speaker 1: is increased each week and it's almost back at a 257 00:13:36,160 --> 00:13:40,000 Speaker 1: you know, essentially is matching a post pandemic high. So 258 00:13:40,840 --> 00:13:44,200 Speaker 1: if that continues, I think we're in in pretty good shape. 259 00:13:44,240 --> 00:13:46,400 Speaker 1: If not, then we'll have to worry more. So that's 260 00:13:46,440 --> 00:13:50,360 Speaker 1: my that's my right. Michael Darter SPX level four four 261 00:13:50,440 --> 00:13:55,560 Speaker 1: or five two, DOWT thousand to nineteen. The markets share 262 00:13:55,559 --> 00:13:57,800 Speaker 1: of the streets gloom, don't they? Why is there a bid? 263 00:13:57,880 --> 00:14:04,240 Speaker 1: Two stocks free reasons? Tom Uh, we have high equity prices, 264 00:14:04,320 --> 00:14:07,360 Speaker 1: earnings are very high and have been doing very well 265 00:14:07,480 --> 00:14:11,920 Speaker 1: record sup by hundred earnings and expectations are high. Still 266 00:14:12,000 --> 00:14:14,720 Speaker 1: low discount rates, so the tenure yield is moving up 267 00:14:14,760 --> 00:14:17,280 Speaker 1: a little bit, but very low, lower than most people 268 00:14:17,360 --> 00:14:20,280 Speaker 1: thought at the beginning of the year. And high liquidity, 269 00:14:20,440 --> 00:14:24,080 Speaker 1: so you have to disturb one of those three supports 270 00:14:24,240 --> 00:14:29,080 Speaker 1: or equity prices, high liquidity, high earnings, low discount rates. 271 00:14:29,080 --> 00:14:33,320 Speaker 1: Our view with the strong recovery is that discount rates 272 00:14:33,360 --> 00:14:36,480 Speaker 1: should be moving up over time and and that will 273 00:14:36,520 --> 00:14:39,600 Speaker 1: be a headwind two pe ratios if it plays out. 274 00:14:39,600 --> 00:14:41,760 Speaker 1: It's not really playing out, you know, we've had a 275 00:14:41,800 --> 00:14:45,200 Speaker 1: little bit of a movement northward. Real rates do seem 276 00:14:45,240 --> 00:14:47,640 Speaker 1: like they're starting to move up now, stir up about 277 00:14:47,680 --> 00:14:51,280 Speaker 1: twenty basis points since early August. That will be something 278 00:14:51,320 --> 00:14:53,960 Speaker 1: to keep an eye on, you know, as we move 279 00:14:54,040 --> 00:14:57,560 Speaker 1: into Jackson Hold this week and potentially hear more plans 280 00:14:57,600 --> 00:15:01,240 Speaker 1: about UH potential tapering from the feed mike. We talk 281 00:15:01,320 --> 00:15:03,160 Speaker 1: about Jackson Hole, but we really ought to call it 282 00:15:03,320 --> 00:15:06,000 Speaker 1: a zoom event. I don't know, a zoom fab. It's 283 00:15:06,000 --> 00:15:09,120 Speaker 1: just really kind of an interesting UH shift to all 284 00:15:09,240 --> 00:15:12,720 Speaker 1: remote for a second year. What is a bigger risk 285 00:15:12,800 --> 00:15:15,920 Speaker 1: to markets coming out of the Jackson Hole remote con 286 00:15:16,040 --> 00:15:19,200 Speaker 1: fab Is it the potential for a more hawkish FED 287 00:15:19,280 --> 00:15:22,440 Speaker 1: chair Powell, someone who actually makes news, or perhaps somebody 288 00:15:22,480 --> 00:15:26,040 Speaker 1: who holds the stance and raises the specter of higher 289 00:15:26,040 --> 00:15:29,360 Speaker 1: than expected inflation down the line. Should the delta variant 290 00:15:29,400 --> 00:15:34,000 Speaker 1: prove to be a passing a viral strain, yeah, I 291 00:15:34,040 --> 00:15:36,600 Speaker 1: think you know, Paul is going to try not to 292 00:15:36,760 --> 00:15:40,440 Speaker 1: make big waves on Friday. All of that said, it's 293 00:15:40,480 --> 00:15:43,440 Speaker 1: pretty clear now based on recent speeches in the recent 294 00:15:43,520 --> 00:15:46,560 Speaker 1: Seed minutes at the center of intellectual gravity on the 295 00:15:46,560 --> 00:15:51,480 Speaker 1: Feed is definitely moving towards announcing a taper uh this here, 296 00:15:51,520 --> 00:15:55,800 Speaker 1: and probably commencing the taper before year end provided the 297 00:15:55,880 --> 00:15:58,360 Speaker 1: labor market bold stuff. So this is all going to 298 00:15:58,400 --> 00:16:01,880 Speaker 1: be dated dependent. The BEDS operating assumption at this point 299 00:16:01,960 --> 00:16:05,160 Speaker 1: is that the delta variant is not going to dramatically 300 00:16:05,200 --> 00:16:08,000 Speaker 1: throw the recovery off course. If that proves to be false, 301 00:16:08,080 --> 00:16:11,640 Speaker 1: then they're gonna end up waiting longer. UM. But as 302 00:16:11,680 --> 00:16:16,200 Speaker 1: I mentioned before, with those high frequency indicators UM suggesting 303 00:16:16,240 --> 00:16:18,480 Speaker 1: that we're still in pretty good shape. I think the FED, 304 00:16:18,640 --> 00:16:22,280 Speaker 1: I think what how how will hint at is what 305 00:16:22,320 --> 00:16:24,520 Speaker 1: we already know that you know that the taper will 306 00:16:24,560 --> 00:16:27,400 Speaker 1: be announced likely this fall, and by the winter the 307 00:16:27,400 --> 00:16:29,680 Speaker 1: Fed will be pulling the trigger on it. What high 308 00:16:29,680 --> 00:16:33,560 Speaker 1: frequency data points are you paying the most attention to, Mike, Well, 309 00:16:33,600 --> 00:16:36,640 Speaker 1: aside from claims and confidence to come out weekly, I'm 310 00:16:36,640 --> 00:16:39,800 Speaker 1: really you know, watching the anatomy of this bond market. 311 00:16:39,880 --> 00:16:42,920 Speaker 1: So is yields move up and down? You know, we're 312 00:16:42,960 --> 00:16:45,960 Speaker 1: watching what is driving that? Is it real rates or 313 00:16:46,000 --> 00:16:49,760 Speaker 1: inflation expectations. You also have the estimated term premium in 314 00:16:49,800 --> 00:16:54,440 Speaker 1: there and against that foliage, what's happening in metals market 315 00:16:54,600 --> 00:16:57,680 Speaker 1: and in markets and in risky credit right, So what 316 00:16:57,800 --> 00:17:00,520 Speaker 1: we need to be on the lookout for is if 317 00:17:00,560 --> 00:17:04,280 Speaker 1: real rates start to spike and you have inflation expectations crashing, 318 00:17:04,320 --> 00:17:07,199 Speaker 1: credit spreads blowing out, you know, that would not be 319 00:17:07,320 --> 00:17:10,439 Speaker 1: what we want to see. Uh. So far, that's you know, 320 00:17:10,520 --> 00:17:12,880 Speaker 1: that's not really playing out. We've got a modest correction 321 00:17:12,880 --> 00:17:17,760 Speaker 1: in commodities taking shape, credit spreads have lightened some, um 322 00:17:17,880 --> 00:17:20,480 Speaker 1: but you know, but so far that really doesn't look 323 00:17:20,520 --> 00:17:24,680 Speaker 1: like there's anything malignant taking place in in credit markets, Mike, 324 00:17:24,840 --> 00:17:27,520 Speaker 1: Is this a market that has already positioned for the 325 00:17:27,520 --> 00:17:31,840 Speaker 1: taper and therefore we will get no tantrum. Yeah. I 326 00:17:31,880 --> 00:17:35,000 Speaker 1: think that's a good point. Um. You know, what's happening 327 00:17:35,000 --> 00:17:38,040 Speaker 1: in the bond market doesn't look anything like two thousand 328 00:17:38,119 --> 00:17:41,960 Speaker 1: thirteen so far. So in that episode, we had a 329 00:17:42,080 --> 00:17:46,480 Speaker 1: really big surge in real rates, Inflation expectations fell pretty considerably, 330 00:17:46,960 --> 00:17:49,280 Speaker 1: and at least temporarily, we you know, we had some 331 00:17:49,359 --> 00:17:53,359 Speaker 1: serious upward pressure on credit risk spreads, the big commodity 332 00:17:54,040 --> 00:17:57,560 Speaker 1: uh fall off as well. Um, and then you know, 333 00:17:57,640 --> 00:17:59,520 Speaker 1: in the run up to the two thousand and fifteen 334 00:17:59,640 --> 00:18:03,040 Speaker 1: rate even even more severe on the much more severe 335 00:18:03,040 --> 00:18:06,399 Speaker 1: on the commodity side. UH. So this is not playing 336 00:18:06,400 --> 00:18:08,880 Speaker 1: out in the same way at least so far, and 337 00:18:09,240 --> 00:18:12,639 Speaker 1: it's been very very well telegraphed. And so maybe the 338 00:18:12,720 --> 00:18:16,120 Speaker 1: focus on the potential taper tantrum means that it simply 339 00:18:16,160 --> 00:18:20,240 Speaker 1: doesn't play out in the two thousands thirteen fashion this time. 340 00:18:20,520 --> 00:18:22,959 Speaker 1: So if it's well telegraphed, it maybe doesn't present that 341 00:18:23,080 --> 00:18:25,600 Speaker 1: large of a downside risk. So what could be the 342 00:18:25,600 --> 00:18:31,120 Speaker 1: potential biggest downside catalyst for this market? I I do 343 00:18:31,240 --> 00:18:35,600 Speaker 1: think that the downside catalyst for the market would probably 344 00:18:35,640 --> 00:18:37,840 Speaker 1: be on the valuation side. I don't think we're going 345 00:18:37,880 --> 00:18:40,359 Speaker 1: to see a big liquidity shock, and I think earnings 346 00:18:40,359 --> 00:18:42,400 Speaker 1: are going to be okay as long as the economy 347 00:18:42,840 --> 00:18:46,840 Speaker 1: stays relatively strong. But in a strong economy scenario where 348 00:18:46,880 --> 00:18:51,119 Speaker 1: the Titans you still could have you know, upward pressures 349 00:18:51,160 --> 00:18:54,000 Speaker 1: on on rates. It might not come as a sudden shock, 350 00:18:54,640 --> 00:18:57,399 Speaker 1: but you know, over time, I think, you know, the 351 00:18:57,440 --> 00:19:00,280 Speaker 1: tenure Deald is right, We're gonna be gravitating North word 352 00:19:00,600 --> 00:19:03,280 Speaker 1: and you know, and that should put downward pressure on 353 00:19:04,080 --> 00:19:07,200 Speaker 1: UH stock market multiples. Earnings could make for some of that, 354 00:19:07,240 --> 00:19:10,879 Speaker 1: but you know, we're sort of overdue here with the 355 00:19:10,920 --> 00:19:17,160 Speaker 1: broad into indicies for some kind of at least period. Michael, 356 00:19:17,200 --> 00:19:21,200 Speaker 1: Let's go back to University of Wisconsin microeconomics. One O. One. 357 00:19:21,760 --> 00:19:25,560 Speaker 1: Let's look at the supply curve dynamics. We have a 358 00:19:25,600 --> 00:19:29,960 Speaker 1: supply shock folded into a labor market right now. All 359 00:19:30,040 --> 00:19:33,400 Speaker 1: sorts of theories here shifts this that the other thing. 360 00:19:33,880 --> 00:19:36,520 Speaker 1: Do you believe that there's a suppleness to the American 361 00:19:36,560 --> 00:19:40,080 Speaker 1: economy where we will adapt and adjust and get back 362 00:19:40,119 --> 00:19:46,200 Speaker 1: to normal supply dynamics. I think we are adjusting, h 363 00:19:46,320 --> 00:19:49,800 Speaker 1: Tom It It doesn't happen overnight, UM, But the labor 364 00:19:49,920 --> 00:19:53,120 Speaker 1: market is on the rebound now. Obviously, we still do 365 00:19:53,240 --> 00:19:58,119 Speaker 1: have these supply side dislocations that are ahead wind. You know, 366 00:19:58,160 --> 00:20:00,840 Speaker 1: we can certainly see that anyone that's and out there 367 00:20:00,880 --> 00:20:04,080 Speaker 1: and dealing with the services industries knows that the labor 368 00:20:04,119 --> 00:20:07,760 Speaker 1: shortage problems are still their services flow. And you know 369 00:20:07,760 --> 00:20:10,960 Speaker 1: it's difficult to hold onto employees help wanted signs all 370 00:20:11,000 --> 00:20:14,960 Speaker 1: over the place, UM, and the delta variant certainly does 371 00:20:15,000 --> 00:20:17,640 Speaker 1: not help that. But you know, we're going to get 372 00:20:17,680 --> 00:20:20,200 Speaker 1: to the delta variants and the economy is going to 373 00:20:20,240 --> 00:20:23,919 Speaker 1: stay relatively open. Uh as school starts up. That should 374 00:20:23,920 --> 00:20:28,679 Speaker 1: ease some of these concerns about childcare, the extended jobless benefits. 375 00:20:29,040 --> 00:20:31,480 Speaker 1: I know there's a debate about the impact, but those 376 00:20:31,520 --> 00:20:35,639 Speaker 1: are you going to wrap up this fall? Um? And 377 00:20:36,000 --> 00:20:38,119 Speaker 1: you know that means the labor market is going to 378 00:20:38,200 --> 00:20:40,880 Speaker 1: continue to be on the upswing here, both in terms 379 00:20:40,920 --> 00:20:44,480 Speaker 1: of job games and labor force increases. What's your twelve 380 00:20:44,520 --> 00:20:47,120 Speaker 1: lon's GDP call? I mean, we've got people coming down 381 00:20:47,160 --> 00:20:50,000 Speaker 1: six and a half percent, maybe even some gloomy or 382 00:20:50,040 --> 00:20:53,880 Speaker 1: the Fed obviously much more cautious. What is your call? 383 00:20:54,320 --> 00:20:58,800 Speaker 1: On GDP twelve buns forward. Yeah, our our call is 384 00:20:58,880 --> 00:21:03,320 Speaker 1: solidly above end for next year. So keep in mind that, 385 00:21:03,520 --> 00:21:06,160 Speaker 1: you know, trend growth that the US is fully employed 386 00:21:06,280 --> 00:21:09,360 Speaker 1: is only going to be about two real four nominal, 387 00:21:09,840 --> 00:21:11,760 Speaker 1: So we're gonna we're gonna be at least a few 388 00:21:11,800 --> 00:21:15,000 Speaker 1: inter faces points above that straight in the next year 389 00:21:15,040 --> 00:21:18,240 Speaker 1: and maybe even beyond, depending on, you know, the timing 390 00:21:18,720 --> 00:21:21,639 Speaker 1: magnitude of FED tightening. So above trend growth means the 391 00:21:21,720 --> 00:21:25,200 Speaker 1: labor market continues to tighten, and it likely means some 392 00:21:25,359 --> 00:21:28,800 Speaker 1: upward pressure on long term interest rates, at least from 393 00:21:28,880 --> 00:21:31,120 Speaker 1: from where we are now. So that's that's the call 394 00:21:31,240 --> 00:21:36,440 Speaker 1: without giving you a spastic pointy solidly above trend. Michael Darter, 395 00:21:36,760 --> 00:21:39,280 Speaker 1: stay dry, Michael Darter caught in the rain this weekend? 396 00:21:39,320 --> 00:21:48,840 Speaker 1: Really right in the heart? Is it? Henry or on release? Yeah? Okay, 397 00:21:55,560 --> 00:21:57,879 Speaker 1: right now, she's not a vice ADMOI we'll talk with 398 00:21:58,000 --> 00:22:01,240 Speaker 1: sober Klein. Michael biology us to JOHNS Hopkins in the 399 00:22:01,280 --> 00:22:04,200 Speaker 1: course of the Bloomberg School of Public Health. So we're 400 00:22:04,480 --> 00:22:06,439 Speaker 1: just we're thrilled to have you on today, and I 401 00:22:06,520 --> 00:22:09,880 Speaker 1: need to go to your wheelhouse, which is the differences 402 00:22:09,920 --> 00:22:14,160 Speaker 1: and all these things these bacteria and these viruses between 403 00:22:14,240 --> 00:22:19,280 Speaker 1: male and female. You are world acclaimed on that does 404 00:22:19,400 --> 00:22:25,280 Speaker 1: COVID treat women different than men? It does, so women 405 00:22:25,400 --> 00:22:29,480 Speaker 1: tend to be less likely to be hospitalized and to 406 00:22:29,560 --> 00:22:34,680 Speaker 1: die from COVID nineteen UM, at least among unvaccinated individuals. 407 00:22:35,280 --> 00:22:39,040 Speaker 1: We also have growing bodies of literature showing us that 408 00:22:39,080 --> 00:22:43,200 Speaker 1: women are mounting greater immune responses and may have more 409 00:22:43,320 --> 00:22:48,840 Speaker 1: durable immunity to the COVID nineteen vaccines than men. How 410 00:22:48,960 --> 00:22:51,679 Speaker 1: is delta variant change things? I mean, for everything we 411 00:22:51,760 --> 00:22:55,560 Speaker 1: do in economics, financial investment, it's this huge overlay. But 412 00:22:55,720 --> 00:22:58,879 Speaker 1: over the weekend, how did you settle out where the 413 00:22:58,920 --> 00:23:02,680 Speaker 1: delta variant is is right now? I think where the 414 00:23:02,720 --> 00:23:05,920 Speaker 1: delta variant right now it is spreading and I am 415 00:23:05,960 --> 00:23:10,919 Speaker 1: probably most concerned about pregnant women and children. So if 416 00:23:10,920 --> 00:23:14,600 Speaker 1: we start with pregnant women, there is definitely some vaccine 417 00:23:14,600 --> 00:23:19,960 Speaker 1: hesitancy being reported around the country among women who are 418 00:23:20,000 --> 00:23:24,200 Speaker 1: either trying to get pregnant or who are pregnant. And 419 00:23:24,320 --> 00:23:27,960 Speaker 1: I think the CDC has come out quite clearly that 420 00:23:28,160 --> 00:23:32,960 Speaker 1: all available data suggests that pregnant women are at increased 421 00:23:33,080 --> 00:23:37,840 Speaker 1: risk of miscarriage and preterm birth if they become infected 422 00:23:37,920 --> 00:23:43,680 Speaker 1: with COVID nineteen. There is absolutely no indication that the 423 00:23:43,720 --> 00:23:49,159 Speaker 1: COVID nineteen vaccines, any of the platforms that are being 424 00:23:49,200 --> 00:23:52,280 Speaker 1: approved or already are approved by the FDA in the 425 00:23:52,320 --> 00:23:56,880 Speaker 1: United States, that these vaccines caught have posed any safety 426 00:23:57,160 --> 00:24:00,399 Speaker 1: risk for a pregnant woman or her developing vit us. 427 00:24:00,480 --> 00:24:02,960 Speaker 1: In the meantime, of course, we do have questions around 428 00:24:03,000 --> 00:24:06,919 Speaker 1: the efficacy of the vaccines non presented preventing hospitalizations but 429 00:24:07,000 --> 00:24:11,800 Speaker 1: preventing infection from the delta variant and transmission. Everything I 430 00:24:11,840 --> 00:24:15,359 Speaker 1: read is so confusing. What's the latest on the likelihood 431 00:24:15,400 --> 00:24:19,600 Speaker 1: of contracting the variant if you've been fully vaccinated? So 432 00:24:19,840 --> 00:24:23,560 Speaker 1: we we the likelihood is still low, but there is 433 00:24:23,720 --> 00:24:27,960 Speaker 1: an increased likelihood that we could become infected, meaning people 434 00:24:28,000 --> 00:24:32,000 Speaker 1: who are fully vaccinated can become infected with this delta variant. 435 00:24:32,160 --> 00:24:36,680 Speaker 1: It is more infectious, it's more readily transmissible. But the 436 00:24:36,760 --> 00:24:40,240 Speaker 1: evidence so far suggests that we are still significantly less 437 00:24:40,280 --> 00:24:44,000 Speaker 1: likely to be hospitalized or to die, and that includes 438 00:24:44,119 --> 00:24:50,399 Speaker 1: people who are immunocompromised or ummuno sinest based on age. 439 00:24:51,240 --> 00:24:54,000 Speaker 1: But but but Dr Kleinen and and forgive me for 440 00:24:54,000 --> 00:24:57,159 Speaker 1: for interrupting. There is a question though, from a public 441 00:24:57,200 --> 00:25:00,240 Speaker 1: public health standpoint, and even if you are not going 442 00:25:00,240 --> 00:25:03,280 Speaker 1: to the hospital, you are a note of transmission, even 443 00:25:03,320 --> 00:25:06,520 Speaker 1: as a vaccinating individual, if you contract the virus. And 444 00:25:06,520 --> 00:25:09,040 Speaker 1: so there's a question about booster shots how much my 445 00:25:09,200 --> 00:25:13,400 Speaker 1: public health perspective, do they lower the curve? Do they 446 00:25:13,400 --> 00:25:17,560 Speaker 1: basically bring down the circulating viral load in the community 447 00:25:17,640 --> 00:25:20,360 Speaker 1: and get us out of this pandemic faster. I think 448 00:25:20,359 --> 00:25:22,200 Speaker 1: it's going to be a combination. I think it's gonna 449 00:25:22,200 --> 00:25:26,159 Speaker 1: be a combination of the booster but also interventions like 450 00:25:26,359 --> 00:25:29,920 Speaker 1: mask wearing, like social distancing, so we really can bring 451 00:25:29,960 --> 00:25:33,480 Speaker 1: that number down to zero. As you suggest, I think 452 00:25:33,520 --> 00:25:36,119 Speaker 1: we are asking vaccines to do something that we have 453 00:25:36,200 --> 00:25:39,119 Speaker 1: never asked them to do before. You know, there is 454 00:25:39,160 --> 00:25:44,160 Speaker 1: a distinction between vaccines preventing disease and and protecting us 455 00:25:44,280 --> 00:25:49,760 Speaker 1: from being hospitalized and dying versus protecting us from becoming infected. 456 00:25:50,440 --> 00:25:54,720 Speaker 1: And this this new level of scrutiny and and need 457 00:25:54,920 --> 00:25:59,880 Speaker 1: for reducing infection is really I think what's driving all 458 00:26:00,000 --> 00:26:03,359 Speaker 1: out of the discussion around boosters, which in the United 459 00:26:03,400 --> 00:26:06,439 Speaker 1: States will begin more broadly in September Of course, the 460 00:26:06,480 --> 00:26:09,840 Speaker 1: conversation around boosters really started because it seems at least 461 00:26:09,880 --> 00:26:14,960 Speaker 1: there are in suggestions that you have waning immunity eight 462 00:26:15,000 --> 00:26:16,760 Speaker 1: months out after you get your shot. But we have, 463 00:26:17,160 --> 00:26:18,919 Speaker 1: but we have to consider the people who got their 464 00:26:18,960 --> 00:26:22,480 Speaker 1: shots first, people who already were immuno compromised, the older population. 465 00:26:22,520 --> 00:26:25,080 Speaker 1: Could that be a factor, and why the effect seems 466 00:26:25,080 --> 00:26:29,400 Speaker 1: to be waning? Such a fantastic observation. Yes, that really 467 00:26:29,480 --> 00:26:33,600 Speaker 1: could be. Um Our data thus far suggests that among younger, 468 00:26:33,640 --> 00:26:37,439 Speaker 1: healthy adults, while there is some waning, it's not to 469 00:26:37,520 --> 00:26:41,320 Speaker 1: the degree that we see in either older adults or 470 00:26:41,680 --> 00:26:46,560 Speaker 1: compromised individuals. So yeah, I just want to you know, 471 00:26:46,560 --> 00:26:48,399 Speaker 1: I just want to say, Kaylie, that the reason that 472 00:26:48,520 --> 00:26:51,800 Speaker 1: was a fantastic question is she's playing a Southern card. 473 00:26:51,880 --> 00:26:54,280 Speaker 1: She's out of the Georgia schools. You're out of the 474 00:26:54,320 --> 00:26:58,480 Speaker 1: Virginia schools, and she's treating me in Lisa like garbage. Continue. 475 00:26:59,000 --> 00:27:01,639 Speaker 1: That was not my incenton. Wow, but you had a 476 00:27:01,640 --> 00:27:05,840 Speaker 1: fantastic question, Lisa. I get another fantastic question. Speak to 477 00:27:05,880 --> 00:27:09,959 Speaker 1: the doctor from Georgia. All right, see the doctor from Georgia, 478 00:27:10,040 --> 00:27:12,040 Speaker 1: doctor sopper Clin. My other question is if you have 479 00:27:12,119 --> 00:27:15,640 Speaker 1: already had COVID nineteen if you tested positive, it doesn't 480 00:27:15,680 --> 00:27:17,960 Speaker 1: matter or do the variants mean that you can continue 481 00:27:17,960 --> 00:27:21,399 Speaker 1: to get it again and again and again. So it 482 00:27:21,520 --> 00:27:25,280 Speaker 1: does appear that that this delta variant, we can get 483 00:27:25,280 --> 00:27:28,879 Speaker 1: this delta variant even if we had been infected UM 484 00:27:28,960 --> 00:27:33,400 Speaker 1: with that initial um stars covie too, that that started 485 00:27:33,400 --> 00:27:38,120 Speaker 1: this pandemic. So again, I think even if you've been infected, 486 00:27:38,240 --> 00:27:43,080 Speaker 1: there is some evidence that that immunity does wane UM 487 00:27:43,160 --> 00:27:45,359 Speaker 1: and and much of that will depend on when you 488 00:27:45,440 --> 00:27:49,000 Speaker 1: became infected. But I do think boosters are are going 489 00:27:49,080 --> 00:27:53,480 Speaker 1: to be recommended regardless of whether you have been infected previously. 490 00:27:53,840 --> 00:27:55,840 Speaker 1: Dr Cline, don't be a stranger. Thank you so much 491 00:27:55,880 --> 00:27:58,560 Speaker 1: for joining us today, Superclin. You've got an A plus 492 00:27:58,600 --> 00:28:03,520 Speaker 1: and a CREB cycle. Unlike some of us with Johns Hopkins, 493 00:28:05,240 --> 00:28:07,439 Speaker 1: no I went I took the exam of the crab 494 00:28:07,520 --> 00:28:11,160 Speaker 1: cycle and Lise I went down to the Franks. This 495 00:28:11,200 --> 00:28:15,000 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 496 00:28:15,080 --> 00:28:18,800 Speaker 1: live weekdays from seven to ten am Eastern on Bloomberg 497 00:28:18,920 --> 00:28:22,720 Speaker 1: Radio and on Bloomberg Television each day from six to 498 00:28:22,880 --> 00:28:27,520 Speaker 1: nine am for insight from the best in economics, finance, investment, 499 00:28:27,640 --> 00:28:32,679 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 500 00:28:32,760 --> 00:28:36,600 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course, on 501 00:28:36,680 --> 00:28:40,840 Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg.