Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Just about an hour ago,
Speaker 1: at crossed about the CDC to say, vaccinated people can
Speaker 1: often dish, ditch, ditch, yeah, masks indoors. That is a
Speaker 1: big deal and listen. This could potentially be a game
Speaker 1: changer in terms of maybe how people think about getting
Speaker 1: the vaccine because it does potentially significantly change your world,
Speaker 1: and how do you go about it. Say that, hey,
Speaker 1: there's a big point in getting the vaccine. I don't
Speaker 1: have to wear this mask anymore. Well, let's get right
Speaker 1: to it with a Dr Bill Moss, Professor Epidemiology at
Speaker 1: the Johns Hopkins at Bloomberg School Public Health, also executive
Speaker 1: director of the International Vaccine Access Center, joining us now
Speaker 1: on the phone from Baltimore. The Bloomberg School of Public
Speaker 1: Health is supported by Michael R. Bloomberg, founder of Bloomberg
Speaker 1: LP and Bloomberg Philanthropies. Dr Moss, it's great to have
Speaker 1: you with us, especially on a day when we learned
Speaker 1: this striking news from the CDC. Uh, I'm I'm wondering
Speaker 1: what your reaction was when you saw it. Yes, thanks
Speaker 1: to him for thanks him for having me and uh,
Speaker 1: you know, I think this is really big news. And uh,
Speaker 1: Rochette Lonski, the director of the CDC, was talking updated
Speaker 1: guidance ently, this is it. I think this is really important.
Speaker 1: As Carol said, you can really help motivate people to
Speaker 1: get back to it. It's not going to motivate everyone, um,
Speaker 1: and we still have a ways to go in improving
Speaker 1: access and addressing other causes of concerns for getting vaccines,
Speaker 1: but being able to shed your mask indoors is a
Speaker 1: real motivator. Hey Bill, Dr males Is, does it make
Speaker 1: you though a little apprehensive that maybe we're doing it
Speaker 1: a little early. Well, it's a tough balance. You know,
Speaker 1: I would say, you know, there are still some communities
Speaker 1: in the United States where there's a lot of virus transmission,
Speaker 1: and so the risk maybe higher. It will be higher
Speaker 1: in those communities, But the fact that we're seeing cases
Speaker 1: come down, Uh, we still want to see them come
Speaker 1: down much further. Um as vaccination levels going up, although
Speaker 1: the pace has slowed. UM that combination really makes us safer.
Speaker 1: And I think people needed a motivating factor. They needed
Speaker 1: to see some of the real tangible benefits of getting
Speaker 1: back to So does this get us President Biden's goal
Speaker 1: by the fourth of July American adults getting a shot.
Speaker 1: I hope. I think it will contribute him, But I
Speaker 1: think there's still more to do. We know that there
Speaker 1: are some Americans who want to get back to native
Speaker 1: and they're just having trouble doing it for for a
Speaker 1: variety of reasons. And so we need to do have
Speaker 1: greater efforts to bring vaccines to people um. And we
Speaker 1: also need to do more to try to address the
Speaker 1: various concerns, whether it's about you know, the safety of
Speaker 1: the vaccine, or or people just underestimating the risk of
Speaker 1: COVID nineteen to themselves, to their family we still have
Speaker 1: more work to do, but I think this, this will help.
Speaker 1: So how does this play out? Because here's what Dr
Speaker 1: Rochelle Willinsky just said. The CDC is updating our guidance
Speaker 1: for fully vaccinated people. Anyone who is fully vaccinated can
Speaker 1: participate in indoor air act or activities large or small
Speaker 1: without wearing a mask or physical distancing. If you are
Speaker 1: fully vaccinated, you can start doing the things that you
Speaker 1: would stop doing because of the pandemic. Once you're fully
Speaker 1: vaccinated two weeks after your last DOST, you can shed
Speaker 1: your masks. So does that mean we should just be
Speaker 1: going to the grocery store and taking our masks off
Speaker 1: in the grocery store. I think this is this will
Speaker 1: still be a personal decision. I mean that they're Uh.
Speaker 1: Dr Willens is really trying to normalize the lives of
Speaker 1: people who are fully vaccinated, bring us back really to
Speaker 1: pre pandemic situation. Uh. Again for those who are fully vaccinated.
Speaker 1: But we we know the vaccines are protective at least
Speaker 1: the instant section of mild. Least, we still have to
Speaker 1: monitor for variants that may tape some of some of
Speaker 1: the immunity conferred by the vaccine. That's still a concern.
Speaker 1: We haven't seen real solid evidence that that's happening yet. Um,
Speaker 1: but I think I think people will make of a
Speaker 1: personal decision about their risk. You know. One other, one
Speaker 1: other thing that we should talk about is, you know,
Speaker 1: this past year we've seen the lowest levels of influenza
Speaker 1: virus infection storys insitial virus infections, and that's because of
Speaker 1: the masking and and public health precautions that we've taken.
Speaker 1: So I think we as a society can look hardest
Speaker 1: to w that we want to continue some of the
Speaker 1: particularly different influenza season or other restiry disease seasons, which
Speaker 1: are largely in the winter time. Yeah. No, it's it's
Speaker 1: interesting that you say that, and I thought about it,
Speaker 1: uh as I am, you know, walking a little bit
Speaker 1: more around the city and just thinking about this past
Speaker 1: year and thinking about how none of us really in
Speaker 1: our family got any kind of serious colds or or
Speaker 1: or flu that that's true. Um. Having said that, you
Speaker 1: made the point that the vaccines are not a hundred
Speaker 1: percent effective, and we're figuring it out when to the
Speaker 1: immunity goes away. So I don't know whether it's in
Speaker 1: a few months we're gonna have to think about boosters. Correct,
Speaker 1: just got about forty seconds. Then we'll come back and
Speaker 1: talk some more. Yes, Uh, we still don't know yet,
Speaker 1: Uh the duration of the protection exactly as you said,
Speaker 1: but we are going to start having to think about boosters,
Speaker 1: either because of waning immunity or because of the emergence
Speaker 1: and widespread transmission of variant. So yesterday we got some
Speaker 1: more on twelve to fifteen year olds that a group
Speaker 1: of medical experts saying children in that age group can
Speaker 1: safely take the COVED nineteen vaccine made by Fiser and
Speaker 1: by in Tech. How important is it, though, Bill, to
Speaker 1: getting kids vaccinated, to us getting to her immunity, or
Speaker 1: at least closer to it, or more her immunity than less. Yes,
Speaker 1: but it's certainly Carol gets us closer to her immunity.
Speaker 1: There are approximate seventeen million children in that age group
Speaker 1: in the United States, and you're exactly right. Food and
Speaker 1: Drug Administration issued an emergency Youth authorization and then we
Speaker 1: got the CDC approval and pushman to go Sason. Why
Speaker 1: it's important for children to be vaccinated first, it's to
Speaker 1: protect the child. We we know children have our lower
Speaker 1: risk of severe disease, but sillions of children have been
Speaker 1: effective the United States, thousands hospitalized, even hundreds died, and
Speaker 1: some children are at risk for an inflammatory or syndrome
Speaker 1: even if they've had very mild covide. The second reason
Speaker 1: is just to help our children get back to normal lots,
Speaker 1: summer camp, get to school, um and then lastly, really
Speaker 1: protect our families and friends and communities, because really anyone
Speaker 1: susceptible to infection as a potential transmitter of infection. Dr Moss,
Speaker 1: what's a realistic way for us to think about how
Speaker 1: even younger age groups can get access to the vaccine?
Speaker 1: Is it pretty typical that if something is safe for
Speaker 1: twelve to fifteen year olds, it can be safe for
Speaker 1: eight to eleven year olds and safe for two to
Speaker 1: seven year old Is that a realistic way to think
Speaker 1: about it. That's that's the reasonable assumption to him. But
Speaker 1: it still needs to be studied, and so the vaccine
Speaker 1: manufacturers fies them with Derna, Dunson, and Johnson are all
Speaker 1: studying the safety and efficacy of these vacts in the
Speaker 1: younger and younger children. This is a typical way that
Speaker 1: vaccines are studied. You start in uh in adults, and
Speaker 1: you kind of work your way down in in groups
Speaker 1: of children. So we're seeing studies in children five to
Speaker 1: eleven years of age and then uh, you know, younger
Speaker 1: ages two years to uh to four years of age
Speaker 1: and even under two six months two years of age. So, UM,
Speaker 1: what we have to what has to be looked at
Speaker 1: you very carefully though, is we get to younger children.
Speaker 1: Is the dosing, and so all the vaccine manufacturers look
Speaker 1: to see whether a smaller dose of the vaccine will
Speaker 1: will also be safe and effective. Vaccinating the world is
Speaker 1: proving to be a lot more difficult, and maybe not
Speaker 1: as a surprise. Um, why is it important, Bill that
Speaker 1: the US turn its attention to vaccinating the world and
Speaker 1: what does the US need to be doing? Yes, girl,
Speaker 1: I think this is the most important question facing the
Speaker 1: United States right now. Uh. It's understandable that we're focused
Speaker 1: on our own population. We had a terrible pandemic uh
Speaker 1: in the United States, but I think we're reaching a
Speaker 1: point we really need to focus on the world. You know.
Speaker 1: The bottom line, it's simple, We're not safe here in
Speaker 1: the United States until this pandemic is controlled, and it's
Speaker 1: a global pandemic. The more the virus is transmitted UH,
Speaker 1: particularly at the levels like we're seeing in countries like
Speaker 1: India or Brazil, the more chances it has to mutate.
Speaker 1: And this is the time for the United States to
Speaker 1: step up really be a leader in the global fight
Speaker 1: against the pandemic. And that includes you know, donating excess
Speaker 1: vaccine doses UM, allowing you know, materials to go to
Speaker 1: other countries to manufacture vaccines, supporting the Kovacs facility, which
Speaker 1: is the the UH the basically the mechanism to get
Speaker 1: vaccines to low and middle income countries. I'm I'm wondering
Speaker 1: about variants and vaccines because the narrative has has been
Speaker 1: for for months now. One way to think about the
Speaker 1: us is responsibility in getting vaccine or control around the
Speaker 1: world is to think about it from a selfish perspective
Speaker 1: and make sure that variance and variants that can't penetrate
Speaker 1: vaccines don't come here. Is there any evidence that that
Speaker 1: could or will happen. Well, what we've seen so far,
Speaker 1: Tim is you know, basically the studies are supporting the
Speaker 1: fact that our currents of vaccines authorized for u C
Speaker 1: United States are effective against the kind of current panel
Speaker 1: of of their there is some reduced UH protection um
Speaker 1: or or you know, they require higher levels of our
Speaker 1: protective bodies for some of the variants, for example, the
Speaker 1: variant that was first identified in South Africa, the B
Speaker 1: one three five one variant. But in general, all the
Speaker 1: all the current vaccines are UH effective, particularly against the
Speaker 1: here disease, against these variants. So we don't have to
Speaker 1: panic yet, we need to be very diligent in the situation. Alright,
Speaker 1: We're gonna leave it on that note. Thank you so
Speaker 1: much for your time. Really appreciated. Dr Bill Moss, Professor
Speaker 1: of Epidemiology at Johns Hopkins Bloomberg School of Public Health,
Speaker 1: Executive director of the International Vaccine Access Center, and of
Speaker 1: course the Bloomberg School of Public Health supporting my Michael R. Bloomberg,
Speaker 1: founder of Bloomberg LP and Bloomberg Philanthropies. Are you gonna
Speaker 1: wear your mask now? I'm kind of comfortable with it.
Speaker 1: I will say that when I was walking the streets
Speaker 1: and I had a bag of potato chips, I was
Speaker 1: kind of munching on it, kind of had the mask
Speaker 1: back outside. It's a different story. But my daughter, who
Speaker 1: they teach like put the mask back on Okay, it's
Speaker 1: like rough, okay not this is Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: the Bloomberg Big Take also happens to be the cover
Speaker 1: story of this week's magazine. The cover image is pretty incredible.
Speaker 1: Um My producer Paul Brennan talking about it earlier, I mean,
Speaker 1: it was just it's amazing. You gotta check it out.
Speaker 1: It's also the most read story on the Bloomberg Today.
Speaker 1: And Tim, it's about the former immigrant kid who is
Speaker 1: now worth billions, the so called pie piper of the
Speaker 1: recent link check Craze. We're talking about Chamath Polyopatia. Yeah,
Speaker 1: if you're on Twitter and you you know, follow Chamath much.
Speaker 1: He doesn't need any introduction. As we talked about earlier,
Speaker 1: he's kind of like a one named person at this point.
Speaker 1: Joe Weber's editor of Bloomberg Business Week. He joins us
Speaker 1: live here, and Zeke Fox is finance reporter for Bloomberg News,
Speaker 1: joins us on the phone, but he is right here
Speaker 1: at our New York City bureau. Joel, this is just
Speaker 1: a fantastic read and and and my big takeaway is
Speaker 1: that even though Chamath's UH spacks have really struggled this year,
Speaker 1: Chamath is going to be totally fine. Yeah. I mean
Speaker 1: that's sort of been the real kind of the kernel
Speaker 1: of the story that UM uh that Zeke I think
Speaker 1: hit on UM. You know, banks for a lot of people,
Speaker 1: UM came out of nowhere and have become just a
Speaker 1: theme of the past year one for just years of
Speaker 1: our lives, and acts were one of the things that
Speaker 1: UM at least became watching. And Chamath obviously and a
Speaker 1: huge proponent of them. He says he wants to do
Speaker 1: as many as UM. And you know, I think that
Speaker 1: there's a thing that I'm going to ask you about here,
Speaker 1: which is looked like spacts can be really lucrative for
Speaker 1: the sponsors, but Zeke, how do they how does it
Speaker 1: look like they end up working up for for the
Speaker 1: rest of us. So I looked into one spect that
Speaker 1: Tremas promoted this year called Clover, and when he was
Speaker 1: taking it public, he was pitching it sort of to
Speaker 1: the everyday investor as I can't miss I'm gonna ten
Speaker 1: ext your money kind of thing. And since then if
Speaker 1: you bought it on the day that he pitched it.
Speaker 1: Since then it's dropped by about a quarter. Of course,
Speaker 1: you have to wait and see how it works out
Speaker 1: in the long run. But the real thing that with
Speaker 1: SPACs is that as a sponsor, Tamas gets of the
Speaker 1: spack as a kind of fee called the promote um.
Speaker 1: So he's out there saying, I've kind of discovered the
Speaker 1: secret to being rich. I'm gonna let the little guy
Speaker 1: into these private deals that have gotten me with where
Speaker 1: I am um and my interests are aligned with yours.
Speaker 1: But meanwhile, really he's making his money off these fees,
Speaker 1: and the stock would really have to crash very low
Speaker 1: before he would be in the red. Well, Zeke, what
Speaker 1: did you find out about Clover Health when you were
Speaker 1: doing this recording? So the pitch for Clover Health is
Speaker 1: that it was a tech company that was going to
Speaker 1: revolutionize healthcare, and if you weren't listening that closely, you
Speaker 1: might not even really pick up that it was really
Speaker 1: a health insurance company. And of course you can find
Speaker 1: this all out from its securities filings if you're the
Speaker 1: kind of person who reads those. But really, it's a
Speaker 1: Medicare advantage plan that almost exclusively operates in New Jersey.
Speaker 1: Not really a very big company, and from talking to
Speaker 1: former employees, one that's had a lot of trouble hitting
Speaker 1: its growth targets in the past expanding the way it
Speaker 1: wanted to. Now, of course, they have this pitch now
Speaker 1: that they've invented uh tech tool that's sort of the
Speaker 1: culmination of you know, a decade of their existence that's
Speaker 1: really going to bring together all their machine learning technology
Speaker 1: to analyze patient data and recommend treatments, and that this
Speaker 1: is what's really going to make the company take off. Um.
Speaker 1: But I hope that the investors that are buying it
Speaker 1: understand that, you know, this is a pretty risky new
Speaker 1: business rather than something that is you know, guaranteed to
Speaker 1: go up and you say, decade in business still losing money.
Speaker 1: So that if it was being taken public, you know,
Speaker 1: and it was going on a road show, you would
Speaker 1: certainly see zeke it become under a lot of scrutiny. Yeah,
Speaker 1: that's sort of the appeal of SPACs for a lot
Speaker 1: of companies is when you go public, the underwriters are
Speaker 1: worried about getting sued if they make projections that are wrong.
Speaker 1: So you're almost forced to dwell on your recent results.
Speaker 1: So if you're a company with like Clover that's losing
Speaker 1: huge amounts of money every year, but you're on the
Speaker 1: verge of a turnaround. You say, Um, when you do
Speaker 1: a SPAC, you can talk more about your great future
Speaker 1: prospects and you can hopefully investors won't dwell on your
Speaker 1: recent losses. And there's been just like a huge wave
Speaker 1: of these unprofitable UH companies with big dreams going public
Speaker 1: through spacts this year, and for a while, it just
Speaker 1: seems like all of them went up. I mean almost
Speaker 1: people were talking about it like it was almost a
Speaker 1: new asset class. You could just invest in spacts and
Speaker 1: get great returns well. And then um, gravity kind of
Speaker 1: came in and and things have changed a little bit.
Speaker 1: Um and hence the spacticost flat cover. Um zeke though,
Speaker 1: I wanted to ask because despite what what we'll publish
Speaker 1: in the magazine, and um, despite maybe that data, it
Speaker 1: doesn't seem like it might stop Jams, right, And even
Speaker 1: as you were working on this story, he announced that
Speaker 1: there was another one coming with a certain gym chain.
Speaker 1: So how do you how do you make sense of
Speaker 1: of of where Jamas could go with his vision of SPACs.
Speaker 1: So he has turned himself into kind of a brand
Speaker 1: name like Goldman Sachs. And if you're a company that
Speaker 1: wants to go public, maybe you hire a bank to
Speaker 1: do an I p O. And now people are aware
Speaker 1: that there's another option that you could merge with one
Speaker 1: of Polhopatia's SPACs. And my big question is whether the
Speaker 1: brand name can survive one or two bad deals. Um,
Speaker 1: if it was it was built on just sort of
Speaker 1: this to the moon idea, Um, is he gonna lose
Speaker 1: his appeal if he has a mixed track record like
Speaker 1: anyone who's bringing companies public is likely to have. In
Speaker 1: the long run, you can't all be winners. But you're right,
Speaker 1: he's just the other day Bloomberg News broke that he
Speaker 1: is planning to bring the Jim Chain Equinox public um.
Speaker 1: But well, he hasn't raised any new blank check companies
Speaker 1: for a while, so that's something to keep an eye
Speaker 1: on if he's uh raises more gets closer to his
Speaker 1: goal of six. Like he said, it's kind of like,
Speaker 1: you know, SPACs, are they a venture capital pool where
Speaker 1: you're playing around? You know what you mean? Like that
Speaker 1: maybe a lot of them will ultimately play out, But
Speaker 1: do investors kind of totally get that versus if you
Speaker 1: go through the I P O traditional route, you're vetted
Speaker 1: a lot differently. One point like how many people get
Speaker 1: hurt along the way, and what does that do for
Speaker 1: future interest in the same things? Right, Yeah, exactly. It's
Speaker 1: a great read and it is a great cover. We've
Speaker 1: been talking about in the news room. Joel. Well, it
Speaker 1: started with me saying, SPACs go splat, and then I
Speaker 1: think we proceeded to look at as many possible versions
Speaker 1: of the same idea as possible until we got it right.
Speaker 1: So the one you settled on is awesome. It's really
Speaker 1: really wonderful, all right. Joe Weber, of course, editor of
Speaker 1: Bloomberg Business Week. That is the cover story. It's also
Speaker 1: the Bloomberg Big Take. Seek Fox wrote it Finance reporter
Speaker 1: at Bloomberg News. This is Bloomberg Business Week with Carol
Speaker 1: Messer and Bloomberg Quick Takes, Tim Stinovic on Bloomberg Radio.
Speaker 1: Hey in the magazine this week and the new issue,
Speaker 1: as we mentioned, it is online on the Bloomberg and
Speaker 1: on newstands. It includes Business Week Economics editor Peter Koy
Speaker 1: writing about how to make sense of the surprising inflation signals.
Speaker 1: And I gotta say, Tim, this is kind of just
Speaker 1: what the doctor ordered after this week's inflation data and
Speaker 1: market reaction. Yesterday, markets were freaked out. Today, maybe not
Speaker 1: someone not so much. Yeah. I think those numbers that
Speaker 1: we got about employment continuing employment claims actually throwing some
Speaker 1: throwing some water on that idea. Let's get right into
Speaker 1: it with Peter Koy, economics editor at Bloomberg business Week.
Speaker 1: He joins us on the phone from New Jersey. So, Peter,
Speaker 1: what's real what's transitory? Yeah, this is a debate, and
Speaker 1: we tried to go right down the middle on this
Speaker 1: one and give both sides and will let people judge
Speaker 1: for themselves. But it's the Fed, of course, is on
Speaker 1: the transitory side of the argument. And uh, Steve Matthews,
Speaker 1: my Bloomberg colleague, is a good story about that today.
Speaker 1: In six reasons that the Fed is um still fairly calm,
Speaker 1: I would say the number one reason the Fed is
Speaker 1: calm is that it looks at expectations of inflation, which
Speaker 1: have been anchored for up until really just about now.
Speaker 1: The Fed was worried that people would expect too low inflation.
Speaker 1: That's why it's constantly laboring to get inflation higher. Now
Speaker 1: that it's finally succeeding, instead of being patted on the back,
Speaker 1: it's getting criticized for letting inflation get out of control.
Speaker 1: So you can imagine be a little frustrating j polo
Speaker 1: these days. Well wait, so because we're expecting more and
Speaker 1: you know, help me out here, I expect you, Peter Coy,
Speaker 1: to set it straight and make some sense out of it.
Speaker 1: So right, I mean some things are transitory. You and
Speaker 1: I have talked a million times about folks were bouncing
Speaker 1: back from the economy being shut down a year ago,
Speaker 1: and so right, like some of this is normal, when
Speaker 1: does it become abnormal? Help us make sense of the
Speaker 1: data points that we're seeing there? There are some there's
Speaker 1: some inflation that's caused by just pent up demand pouring
Speaker 1: onto the market. So uh Richard Clara To, the Vice
Speaker 1: chair of the Fed, made the point yesterday this is
Speaker 1: one data point to April uh CPI number, and that
Speaker 1: you you're gonna expect volatility in the important data series
Speaker 1: at times like this, when the economy is recovering from
Speaker 1: a major, major dislocation. And just because the price goes
Speaker 1: up in one month doesn't mean it's going to keep
Speaker 1: going up. After that, it could either stabilize as this
Speaker 1: new higher level, or it could go back down, which
Speaker 1: means it's subtracting from the CPI in future months. And
Speaker 1: I guess um, I tend to lean against the new
Speaker 1: conventional wisdom, which seems to me that inflation is really
Speaker 1: totally fearsome and scary as heck uh, lean more in
Speaker 1: the direction of saying, come on, calm down a little bit,
Speaker 1: this is not such a dissaster. And I see that's
Speaker 1: the way the markets are reacting today, right, Hey, folks,
Speaker 1: I've seen a few cycles before. Um No, But Peter,
Speaker 1: what's interesting is though here you have a day McDonald's
Speaker 1: boosting average US wages to over thirteen an hour. They're
Speaker 1: hiring ten thousand workers to Potle also raised its average
Speaker 1: hourly waged to fifteen dollars an hour. Amazon hiring and
Speaker 1: they're also paying more workers wage. Inflation is something we
Speaker 1: watch very closely, and we've had folks on air our
Speaker 1: own I think Carl Rickadonna, maybe Mike McKee saying that
Speaker 1: unless something has changed structurally in the ability of workers
Speaker 1: to demand higher wager wages, you know, longer term you know,
Speaker 1: that's when we start to run into trouble. So like
Speaker 1: if wages notch upward by say two dollars an hour,
Speaker 1: and then that becomes the new normal, that's my definition transitory.
Speaker 1: That's a reset to a kind of maybe more appropriate level.
Speaker 1: Maybe workers were getting underpaid UM unless it gets to
Speaker 1: the point where it's going up and up and up,
Speaker 1: and that in the companies are raising prices to compensate
Speaker 1: for it, and then workers demand higher wages comes to
Speaker 1: have a higher prices. That's that's a wage price spiral,
Speaker 1: which is scary and and that is something to watch
Speaker 1: out for for sure, but we're not seeing evidence of
Speaker 1: it yet. And that's why the set is like for now,
Speaker 1: we're still on hold. So what's the important data point
Speaker 1: for for us to keep an eye on? No, I
Speaker 1: would keep paying attention to UM wages. My story includes
Speaker 1: the Employment cost intext, which is a better measure of
Speaker 1: inflation and wage wages than you get in the average
Speaker 1: hour learnings figure in it comes with the jobs report
Speaker 1: last friday. Uh so yeah, watch that and and that's
Speaker 1: high not not denying it. UM. I would pay more
Speaker 1: attention to that than I would just say, um, what
Speaker 1: we're seeing in commodities. You know, gasolene is gonna bounce around.
Speaker 1: It does. It always has the same with iron, copper, lumber, cotton.
Speaker 1: These are things that are inherently volatile, and the closer
Speaker 1: you get to the consumer, the less volatile prices tend
Speaker 1: to be. So that's why the CPI is more important
Speaker 1: to look at than, say, for example, today's PPR, which
Speaker 1: is also on the high side good stuff being producer
Speaker 1: Price Index of courts. Yeah right, I'm still scratching my
Speaker 1: head a little bit because I feel like it's it's
Speaker 1: the conversation Peter. We have we haven't like about twenty seconds,
Speaker 1: but we have it every day, and I know, and
Speaker 1: I guess we have to have not just one month,
Speaker 1: but more months, right exactly. Let's let's wait, Let's watch
Speaker 1: a few more months and see what happens, and then
Speaker 1: we can make more of a decision. Peter Cole, I
Speaker 1: thank you so much, economics editor at Bloomberg Business Week.
Speaker 1: I want the data now, though, Patience, patience, my son,
Speaker 1: this is Bloomberg the journal now. But you let me drive.
Speaker 1: Oh no, no, no no, job home, honey, please, I'll do velt.
Speaker 1: I want to drive, just drive the question trying. This
Speaker 1: is the drive to the globe. Commun Thanks, we'll drying
Speaker 1: us to dawn on Bloomberg Radio. All right, just about
Speaker 1: ten and a half minutes left in today's trading session.
Speaker 1: We've got a few earnings coming your way. Disney will
Speaker 1: be breaking them down with our Beyond the Bell team
Speaker 1: in just a moment when they come out after the
Speaker 1: closing bell. In the meantime, we're pretty much at our
Speaker 1: best levels of the session when it comes to the
Speaker 1: SMP and DOWD. We just heard Doug breaking down those numbers.
Speaker 1: Nastack still having a tougher time, but it too has
Speaker 1: bounced back more than one percentage point exactly, much different
Speaker 1: than we were a little bit earlier today. So let's
Speaker 1: get into it with Mira pound it Uh. She's Global
Speaker 1: Market Strategies at JPMorgan Asset Management, joining us on the
Speaker 1: phone in New York City. Mere good to have you
Speaker 1: here with Tim and myself. So, how do you distinguish
Speaker 1: today's trade where we got a hot inflation numbers producer
Speaker 1: prices versus yesterday's trade where we got a hot inflation
Speaker 1: number which was consumer prices. Well, thanks for having me,
Speaker 1: and I think that Ultimately, investors are nervous that higher
Speaker 1: inflation means higher rates. Well, look at the Seed is
Speaker 1: willing to stay the course on rates, and higher inflation
Speaker 1: that's coupled with higher growth doesn't need to be a
Speaker 1: bad thing. And I think that markets are waking up
Speaker 1: to that today. In fact, it can be a sign
Speaker 1: of of healing and recovery. And I think, so, why
Speaker 1: didn't we see that way yesterday? Why didn't we feel
Speaker 1: that way? Our Peter Coy making the distinction that when
Speaker 1: it's closer to the consumer, higher prices maybe than mean
Speaker 1: higher wages, which means higher prices, which means higher wages,
Speaker 1: and you get into basically a wage price spiral. Well,
Speaker 1: I think that while we are seeing some legitimate wage pressure, overall,
Speaker 1: the FED still looks like it wants to remain on target.
Speaker 1: And I think that the gut reaction yesterday was this
Speaker 1: is going to go off into an environment. We're going
Speaker 1: to see higher rates right away that's going to hurt
Speaker 1: things like the text sector, and that's going to become
Speaker 1: a bigger market headwind to today. Realizing, look, some of
Speaker 1: this is really just friction from the fact that the
Speaker 1: economy is reopening. You know, last year we turned the
Speaker 1: economy off with the life which you can't turn it
Speaker 1: back on without a bit of an adjustment period. We're
Speaker 1: seeing that in supply chains UM and I think that
Speaker 1: a lot of that is going to work itself out
Speaker 1: throughout the course of the year. But to Carrol's point,
Speaker 1: it is today the difference between yesterday and today, those
Speaker 1: initial jobless claims that seem to be showing a strengthening
Speaker 1: labor market falling this morning to a pandemic low. Absolutely.
Speaker 1: I think that plays into it where a lot of
Speaker 1: investors were rattled by the job's report last week coming
Speaker 1: in weaker than expected. Are people going to come off
Speaker 1: the sidelines without a bit of wage pressure. But when
Speaker 1: we look at the body of the different UM jobs indicators,
Speaker 1: we have jobless claims as one of them, we're seeing
Speaker 1: that there still is some strength in the labor market overall.
Speaker 1: So we can't take one report and extrapolate too much
Speaker 1: off of that, especially when there's so much real time
Speaker 1: change going on. Yeah, exactly, Like, let's remember where we
Speaker 1: were roughly a year ago, right, we have to kind
Speaker 1: of put it into perspective. We fell off a cliff,
Speaker 1: I know, I say this a million times, but we
Speaker 1: fell off a cliff and now we have, you know,
Speaker 1: found our way back. Is part of a two mira
Speaker 1: that the FED has to be and they've said this,
Speaker 1: I think time and time again that they are willing
Speaker 1: to risk having a little bit of inflation going a
Speaker 1: little bit hot to make sure that we don't fall
Speaker 1: back when it comes to economic growth, because building or
Speaker 1: getting ourselves out of the hole is tougher than getting
Speaker 1: in the hole in the first place. That's right. You know,
Speaker 1: the FED has said we are willing to on average
Speaker 1: get to two percent inflation, but we're willing to overshoot
Speaker 1: that a little bit because remember that inflation was incredibly
Speaker 1: subdued over the last decade UM. You know, from a
Speaker 1: labor market perspective, not everybody in the labor market weekally
Speaker 1: felt that healing UM, so perhaps the end stages of
Speaker 1: the recovery. So I think that the FED really wants
Speaker 1: to make sure that there's a proper healing from this
Speaker 1: pandemic before they make too many moves in terms of rate.
Speaker 1: I'm wondering about wage pressures. It's something that people we
Speaker 1: talked you over and over again, tell us to keep
Speaker 1: an eye on and I thought of it this morning
Speaker 1: when I saw the news from McDonald's that they're raising
Speaker 1: wages for the employees and company owned stores Mira and
Speaker 1: and also Amazon saying they're gonna hire seventy five people
Speaker 1: in those wages will be higher than they've been in
Speaker 1: the past. Is that a sign of wage of of
Speaker 1: wage inflation? Sure, I do think we are going to
Speaker 1: see a little bit of wage inflation. I mean, what
Speaker 1: we saw on the jobs report too, is that actually
Speaker 1: some of this is a bit more sticky than perhaps
Speaker 1: people originally thought. You know, we've been talking a lot
Speaker 1: about various compositional effects, but really when you strip those
Speaker 1: out and control for that kind of pre pandemic, we
Speaker 1: are seeing a bit of an acceleration in wages. But
Speaker 1: similar to inflation, you have to compare it to the
Speaker 1: fact that wage inflation has been very subdued over the
Speaker 1: last ten years, so we are recovering in that sense
Speaker 1: as well. What do you make when stocks and bonds
Speaker 1: are going up together? We don't necessarily necessarily see that correlation,
Speaker 1: but you know, yields we kind of settled down, We
Speaker 1: actually moved down today. I think when we see stocks
Speaker 1: and bonds moving together. It is this sign of recovery
Speaker 1: and that the stock market is feeling a lot of
Speaker 1: optimism about accelerating growth, really robust profits, and equally that's
Speaker 1: being reflected in yields as inflation and growth gets stronger.
Speaker 1: I think it's kind of an early cycle indicator that
Speaker 1: things are moving in the right direction. All right, so
Speaker 1: let's let's put all of these macro ideas to work.
Speaker 1: You've got to do it over there at JPMorgan Asset Management.
Speaker 1: So clients come in, big institutional clients come in, Uh,
Speaker 1: you know, high net well worth individuals, Like, what do
Speaker 1: you say, where is it that we want to be
Speaker 1: allocating new money at this point? I think from an
Speaker 1: investment standpoint, from an inflationary picture, when we're seeing higher
Speaker 1: inflation and higher growth coupled together, we are still leaning
Speaker 1: into some of the more cyclical or more value you
Speaker 1: oriented areas of the stock market. We've seen a robust
Speaker 1: recovery and particularly some of those cyclical areas, and there's
Speaker 1: more to go. From an earning standpoint, we're really focusing
Speaker 1: on quality companies with good earning um. If the dollar
Speaker 1: continues to weaken, international stocks, particularly because people haven't quite
Speaker 1: priced in their recovery yet is UM I think has
Speaker 1: a lot of room to run. And then some of
Speaker 1: those classic inflation hedges areas like commodities, real assets, you know,
Speaker 1: res infrastructure can also provide a lot of value to
Speaker 1: clients and also kind of help them sleep at night
Speaker 1: if they are worried about inflation pressures the infrastructure play.
Speaker 1: How are you kind of strategizing around that when it
Speaker 1: comes to political action or policy action. So what we're
Speaker 1: thinking of in terms of how the policy implications are
Speaker 1: likely to take place, is that we're going to see
Speaker 1: a lot of negotiations over the next month and probably
Speaker 1: throughout the summer. If any part of the infrastructure bill
Speaker 1: is going to pass through budget reconciliation, which just requires
Speaker 1: that simple majority so effectively only Democrats to support UM,
Speaker 1: that can happen any time before release September thirty. So
Speaker 1: I think we're gonna have a long lead time in
Speaker 1: which there could be some bipartisan agreement, or there could
Speaker 1: be you know, portions pass through reconciliation. Either way, it
Speaker 1: stands to reason that a lot of these initiatives m
Speaker 1: are likely to to play out and pass ultimately in
Speaker 1: one form or the other. Are you. Are you recommending
Speaker 1: that clients keep cash on the sidelines right now, like
Speaker 1: there's going to be some sort of further dip at
Speaker 1: least inequities where things will be less expensive if they
Speaker 1: want to get in. Look, I think that yesterday, today,
Speaker 1: the last couple of days when we had seen a correction,
Speaker 1: represents a good time to get in. I wouldn't recommend
Speaker 1: being in cash right now, just because of all the
Speaker 1: momentum we're seeing um within the economy, and the fact
Speaker 1: that even if we do see a bit of a
Speaker 1: dip or a bit of volatility, the fundamental backdrop is
Speaker 1: still so strong that I don't think it's worth trying
Speaker 1: to time in and out of the market and get
Speaker 1: the timing right. It's better to just get in sooner
Speaker 1: um and reach the benefits, even if there is a
Speaker 1: bit of choppiness just quickly twenty seconds. Where don't you
Speaker 1: want to be in this market environment right now? Just quickly?
Speaker 1: I think we want to pay attention within fixed income
Speaker 1: to some of those longer duration bonds as we do
Speaker 1: see yields rising, so we really want to head towards
Speaker 1: the shorter end of the curve and shorten up in duration.
Speaker 1: That's really one of the areas where UM investors are
Speaker 1: going to want to be a little bit careful, all right,
Speaker 1: really appreciate your thoughts, the macro ideas and then putting
Speaker 1: it to work. Mirapond It. She's Global Markets stadgist Over
Speaker 1: JP Morgan Asset Management. Thanks for listening to Bloomberg Business Week.
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