Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: Eastern Time on the Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Clovel News. We continue to break um
Speaker 1: or deal with, you know, outbreaks and some progress and
Speaker 1: then some setbacks, Doctor Randa Meadows. Though Tim is present
Speaker 1: population health over at Providence Health System, one of the
Speaker 1: largest nonprofit health systems in the US, and you might
Speaker 1: remember they were home to the first confirmed COVID case
Speaker 1: back in early so we really appreciate their perspective, she
Speaker 1: joins us on the phone and Rent in Washington. Doctor Meadows,
Speaker 1: good to have you back with Tim and myself. How
Speaker 1: are you and what are you guys seeing there out west?
Speaker 1: When it comes to COVID. It's great to be back
Speaker 1: with you. And what we are seeing is we still
Speaker 1: have some areas of spikes. Surge is still occurring, like
Speaker 1: in eastern Washington, Montana, and Alaska. But thankfully we're seeing
Speaker 1: a little bit of plateauing in California as well as
Speaker 1: in parts of our Again, Washington seems to be fairly
Speaker 1: stable as well. We're not over the hump, but it's
Speaker 1: over seeing a little bit Doctor Meadows Daylight coming true.
Speaker 1: Just to confirm are these outbreaks? Are these happening in
Speaker 1: unvaccinated populations? Predominantly unvaccinated or small percent are vaccinated? Is
Speaker 1: that most of the let's can say the few that
Speaker 1: I think our breakthrough vaccinated or usually people don't remune
Speaker 1: compromise or other chronic illnesses behind them, um, but mostly unvaccinated.
Speaker 1: And are you right now? Where are you right now?
Speaker 1: Falling when it comes to to boosters and what you're
Speaker 1: seeing as far as people coming in who want boosters
Speaker 1: or guide it's coming from a doctor's about who should
Speaker 1: get a booster. So we're saying a lot of questions
Speaker 1: and inquiries coming in and we are actually sharing with
Speaker 1: them what we know, UM, including the most recent announcement
Speaker 1: coming about the FDA Panel of Advisors recommending boosters for
Speaker 1: people who are be ncompromised. We're waiting for their final
Speaker 1: word on people who are over the age of sixty
Speaker 1: five getting it, who are otherwise healthy. UM patients are
Speaker 1: asking about it. You know, It's it's kind of a
Speaker 1: mixed bag depending on which community you're in. Some anxious
Speaker 1: to get it and some still are waiting to get
Speaker 1: the first shot. I'm like, poke me as much as
Speaker 1: you want. I got my shot this morning. I'm like,
Speaker 1: um no, but it is. It is important, and I
Speaker 1: do wonder we keep reminding doctor Meadows, you understand this
Speaker 1: so well about the importance of community and so the
Speaker 1: importance of individuals who don't even have a first shot
Speaker 1: of getting a first shot of making sure the developing
Speaker 1: world is getting vaccinated, because we can't move forward as
Speaker 1: a global society and community unless most people get some
Speaker 1: form of vaccination right or some kind of immunity. You
Speaker 1: are absolutely correct. If we leave anybody uncoverage, it becomes
Speaker 1: a hot spot that they convince spread. It's also a
Speaker 1: hot spot for mutations to occur. So everybody needs to
Speaker 1: get it. So I am curious, are we? There was
Speaker 1: something I was reading or listening to this morning that
Speaker 1: I think was looking at China specifically, how maybe they
Speaker 1: are they shut down kind of their cities. I mean,
Speaker 1: are we? I mean, this is it, this is how
Speaker 1: it's going to be moving forward. I mean, you can't
Speaker 1: convince maybe everybody to get a vaccine. We kind of
Speaker 1: know that already. Um So, are we going to be
Speaker 1: constantly in a state of we'll see some COVID outbreaks,
Speaker 1: people would be getting boosters. I don't know. Like that's
Speaker 1: what I'm trying to understand. You know, I think, first
Speaker 1: of all, I think it's too early to tell, but
Speaker 1: I can tell you that I'm going to agree with
Speaker 1: you that I hope certainly not. I think what's going
Speaker 1: to happen as well, we'll slowly but surely convinced more
Speaker 1: people to get the vaccine. Um, the people who actually
Speaker 1: have gotten sick from COVID may now become our best
Speaker 1: folkespeople from encouraging their family and communities to do it. Um.
Speaker 1: But I don't think this is going to continue just
Speaker 1: forever if that's not the way that vaccines and pandemics work.
Speaker 1: Um So, I think what we're going to find is
Speaker 1: that we're going to see the count's starting to go
Speaker 1: down again closer coming into December, unless another new variant
Speaker 1: comes up, UM, and I think eventually over the next
Speaker 1: couple of years it will start to blend in a
Speaker 1: little bit more. So. You just mentioned you got your
Speaker 1: flu vaccine. There may be a time when we're getting
Speaker 1: a flu vaccine and a COVID mixed together combination vaccine yesterday.
Speaker 1: I will do that yesterday. Dr Meadows. As a parent,
Speaker 1: what should we know about or how concerned should we
Speaker 1: be about about kids? What are you seeing in the
Speaker 1: Providence health system when it comes to kids who are
Speaker 1: severely all those who don't even have the chance right
Speaker 1: now to get vaccinated because they're not old enough. We're
Speaker 1: seeing an increase in the number of children who not
Speaker 1: only are testing positive of but even because it's the
Speaker 1: magnitude of the number of people are exposed, including children,
Speaker 1: we're seeing more kids coming into our hospitals and becoming
Speaker 1: more s really ill. Thankfully, Um, the mortality or death
Speaker 1: rates from them is still relatively low. But I gotta
Speaker 1: tell you, if it's just one kid and it's my kid,
Speaker 1: that's way too many. Agreed. To put that out there. Agreed, agreed, Um,
Speaker 1: talk to Meadows. Sit tight. We just have to do
Speaker 1: a little bit of news. But we will come back
Speaker 1: and I would love to continue with you. Dr Ronda
Speaker 1: Meadows is our guest president of Population Health at Providence
Speaker 1: Health System, joining us on the phone from Wenton, Washington.
Speaker 1: Are you just kind of waiting? I mean you have
Speaker 1: a little one. Yeah, we do. So. Part of the
Speaker 1: reason I was off over the last week is because
Speaker 1: he started preschool, so we did. It's like a phase
Speaker 1: and thing all parents are familiar with this when kids
Speaker 1: start preschool. You know they're they're going into an hour
Speaker 1: and a half and eventually you know a few hours
Speaker 1: and then all day. Um. But you know, he's not
Speaker 1: keeping his mask on. He's two and a half. He's
Speaker 1: not he's supposed to wear a mask at school. Not
Speaker 1: keeping his mask on, But who can blame him, he's
Speaker 1: two and a half. He's two and a half. It's
Speaker 1: not required at the school. They's suggested, but you can't
Speaker 1: really require it to an aff yeal to wear masks,
Speaker 1: right exactly right there, little critters, And like, so what
Speaker 1: do you do? So are you kind of bracing? Yeah?
Speaker 1: Well so they do weekly tests, which is great. The kids. Yeah,
Speaker 1: the kids. Yeah, it's very hard to teach it to
Speaker 1: year old how to spit. But then I learned how
Speaker 1: to do it and it just doesn't stop. Yeah. Great,
Speaker 1: Probably stay tuned. All right, folks, we're gonna come back
Speaker 1: with Dr Meadows in just a moment talking about the
Speaker 1: day's latest COVID headlines. You're listening to Bloomberg Business Week.
Speaker 1: I'm Carol Masser, my co host Tim Stanovic. This is
Speaker 1: Bloomberg Radio. You're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio.
Speaker 1: All right, let's get back to Dr Ronda Meadows. She's
Speaker 1: President of Population Health at Providence Health System. Still with
Speaker 1: us on the phone and written Washington. So one of
Speaker 1: the things that we've certainly seen as society stressed, we've
Speaker 1: seen healthcare workers stressed. Uh, Dr Meadows, what are you
Speaker 1: seeing on that front? So absolutely not just stressed, but
Speaker 1: exhausted and um and dismayed by by some of the
Speaker 1: contempt that they feel for the very people they're trying
Speaker 1: to help. UM. So, our cases are increasing, our hospitalizations,
Speaker 1: What do you mean What do you mean by that?
Speaker 1: What do you mean on account you know? Oh, actually
Speaker 1: what I need is UM. Not only are people that
Speaker 1: are on vaccity becoming end to seeking care, but those
Speaker 1: some of those same people are standing outside of our
Speaker 1: hospitals who are protesting against vaccinations. UM. They get letters
Speaker 1: left on the on their car shield when they come
Speaker 1: out from a long shift working the emergency room or
Speaker 1: in the hospital. UM, they see the social media UM
Speaker 1: disparaging comments against them what they're trying to do. So
Speaker 1: it's not just about the vaccine. It's basically about their
Speaker 1: efforts to try to help people and say people and
Speaker 1: promote the science getting a vaccine, reducing the transmission and
Speaker 1: reducing the number of people who need hospital care. On
Speaker 1: the first place, Well, we live in a world of
Speaker 1: scarce resources, and one narrative that has emerged over the
Speaker 1: last few weeks has been the way that I see
Speaker 1: use in certain parts of the country have filled up,
Speaker 1: and you see percentages in the high nineties in some
Speaker 1: places in the past few weeks, and I wonder about
Speaker 1: the decisions that doctors have to make about, Okay, who
Speaker 1: is able to use this scarce resource that we have,
Speaker 1: whether it's UH, you know a certain number of of
Speaker 1: nurses per patient, um or a certain number of patients
Speaker 1: per nurse, And I'm wondering what goes through a doctor's
Speaker 1: head when they have to make those decisions. Well, first,
Speaker 1: I can tell you that the doctors aren't making the
Speaker 1: decisions alone. We are actually actually a well prepared to
Speaker 1: try to make the decision. They're still hard, um. I
Speaker 1: think what you're referring to is will we go to
Speaker 1: a crisis standard of care when we're trying to make
Speaker 1: a decision about what little resources, how will we use
Speaker 1: them as we will we use them for and what so?
Speaker 1: How do we decide that kind of stuff? You know,
Speaker 1: you don't want to be in a position where you're
Speaker 1: having to ration care, but that's where we are in
Speaker 1: some places. And Tim, I want to tell you it's
Speaker 1: not just about rationing care, but people who are being
Speaker 1: treated for COVID's rationing resources for anybody who needs that ventilator,
Speaker 1: oxygen therapy. The doctors are nurses. That's what I mean.
Speaker 1: Frustrating to patients and to caregivers if people who are
Speaker 1: using resources that essentially don't need to be there, People
Speaker 1: who could have been vaccinated and wouldn't even be in
Speaker 1: the hospital and perhaps are making it more difficult on
Speaker 1: patients you have a heart attack or some other emergency condition.
Speaker 1: You're absolutely right, and we see that and we feel it.
Speaker 1: And for the most part, I think our doctors, nurses,
Speaker 1: caregivers that are in the they're trying their best to
Speaker 1: do what they can, but they're only human. Well, we
Speaker 1: wish you luck exactly, um, and that's something we need
Speaker 1: to remember in terms of what's going on today, what's
Speaker 1: going on tomorrow, and we really appreciate getting another glimpse
Speaker 1: of what you are seeing. Dr Rhonda Meadows stay Safety Well,
Speaker 1: President of Population Health at Providence Health System, as you
Speaker 1: might recall, home to the first COVID nineteen case confirmed
Speaker 1: back in January. She joined us on the phone from
Speaker 1: written Washington. That's tough. It's something we're approaching the two
Speaker 1: year mark as to where you know, when COVID was
Speaker 1: circulating around the world in the United States, and it's
Speaker 1: just it's mind boggling to two years. Two years and
Speaker 1: I know, like my daughter's gone back to school, she's
Speaker 1: in college now, and they have a vaccination policy, but
Speaker 1: they gave some leeway of kids to get vaccines after
Speaker 1: they came back to school, and there are cases coming
Speaker 1: out and they're keeping kids in classes, but they're trying to,
Speaker 1: you know, trying to make it work, but it's tough
Speaker 1: in masks and class masks and class many closed place yep, yep.
Speaker 1: And there is a vaccine mandate, but again they were
Speaker 1: allowing kids to kind of get vaccines. So far, so good,
Speaker 1: So far, so good, but there are there are cases
Speaker 1: that that are definitely breaking out. This is Bloomberg Big
Speaker 1: to This Week with Carol Messer and Bloomberg Quick takes
Speaker 1: Tim Stenovic on Bloomberg Radio. Well, the upcoming sooner than
Speaker 1: you think issue Bloomberg Business This Week out later this week.
Speaker 1: Already though on the Bloomberg and at business week dot Com.
Speaker 1: It's a story that takes us Tim inside Amazon's flagship
Speaker 1: fulfillment center outside Seattle, and it's all about algorithms and robots.
Speaker 1: They rule sooner than you think. They're here already. Joe
Speaker 1: Weber is editor at Bloomberg Business Week. He's with us
Speaker 1: in the Bloomberg Interactive Broker Studio. Matt Dave is technology reporter.
Speaker 1: He wrote the story. He's with Bloomberg News and he
Speaker 1: joins us on the phone from Seattle. Uh, Joel, what
Speaker 1: is so special about this one fulfillment center that Matt profiles.
Speaker 1: So it's outside Seattle, and it has the reputation of
Speaker 1: being a flagship sort of almost like a like a
Speaker 1: test lab. I guess you could think of it as
Speaker 1: And I think part of that is just, you know,
Speaker 1: proximity to h Q. You can get those executives, executives
Speaker 1: coming by and saying, hey, in a second, how do
Speaker 1: you guys do things here? But what they've really done,
Speaker 1: you know, the significance of this is that this was
Speaker 1: the first fulfillment sale center that was able to process
Speaker 1: more than a million packages a day, and so obviously
Speaker 1: that you know, once they optimized that, it was like
Speaker 1: what else can we take it? Um And And the
Speaker 1: secret to that, though, as Matt has revealed, is that
Speaker 1: there's a lot of algorithms. There's a few robots, and
Speaker 1: the humans work for all of them, right, Matt, Yeah,
Speaker 1: that's right. Honestly, the starting point for this story, I
Speaker 1: met a guy who used to work at Amazon, went
Speaker 1: and jump somewhere else and he said, Man, I'm doing
Speaker 1: so many things that I never had to do back
Speaker 1: when I was at an Amazon warehouse. They just automated
Speaker 1: all of that for me. Well, tell us more as
Speaker 1: you walk um BF I four, which is this massive
Speaker 1: fulfillment center outside uh Seattle, tell us about it. Did
Speaker 1: you go visit? I did, Yeah, And it's the place
Speaker 1: I've been a couple of times over over the years
Speaker 1: writing about Amazon. You know, as Joel said, they'd love
Speaker 1: to have folks in for tours. They're really proud of
Speaker 1: the facility. It's just a big excurban rectangle beside the
Speaker 1: fifteen football yield. Go in and there's this kind of
Speaker 1: low hum. But the weird thing for me is it's
Speaker 1: kind of quiet. Everybody's sort of in their own station.
Speaker 1: You know, most people, probably by number, are are putting
Speaker 1: something in a shelf um that's brought to them by
Speaker 1: a robot, or recreating something from a shelf and sending
Speaker 1: on down the line. Um. You know, a couple of
Speaker 1: thousand people a day just you know, doing roughly most
Speaker 1: of them the same task over and over again, whether
Speaker 1: it's picking something off the shelf, putting in a package,
Speaker 1: and taking orders from from a smartphone app all time.
Speaker 1: What does your instinct tell you about a facility? Like
Speaker 1: this when you walk inside it and you see it,
Speaker 1: does it seem like, given the number of packages it's
Speaker 1: able to process a day, does it seem like more
Speaker 1: people should be there? You know, it really does. Um
Speaker 1: that the places there's a there's a low hum, but
Speaker 1: it is kind of you really quiet, like you would
Speaker 1: you would assume hearing figures like a million packages the day,
Speaker 1: that there'll be more more frenzy. But Amazon's just got
Speaker 1: it down to such a science that everyone's just sort of,
Speaker 1: you know, quietly going about their business that at their station, um,
Speaker 1: quietly working for algorithms and robots. So what is the
Speaker 1: hue to that they even told that? Well, it's it's
Speaker 1: you know, working an Amazon warehouses often an unpleasant place
Speaker 1: and has been been widely reported. Um. Amazon's productivity tracking
Speaker 1: systems are are real precise, right. They can tell when
Speaker 1: you're working, They can tell when you put down the scanner,
Speaker 1: you know, So if you're in one of these frontline jobs,
Speaker 1: there's always this voice you know sometimes that it's just
Speaker 1: literally account countdown clock on your workstation telling you, um,
Speaker 1: you know, exactly what they expect you to be able
Speaker 1: to do. And Amazon, the very aggressive company sets that
Speaker 1: target real high. Um. So that's that's the life for
Speaker 1: the front line. But one of the things that interested me,
Speaker 1: especially given that that story is so well known, as so,
Speaker 1: what the heck the managers do in this construct? Right,
Speaker 1: if if these people are working kind of self directed,
Speaker 1: what what are the people you know, at the top
Speaker 1: of the pyramid in a building like this, what do
Speaker 1: they all do all day? Well, they get to manage
Speaker 1: a lot more people, right, they do um and and
Speaker 1: a lot of what they do is HR essentially. You know,
Speaker 1: they're they're trying to take it the best set of people.
Speaker 1: They're trying to troubleshoot when something goes wrong, you know,
Speaker 1: just because again all of the soft where whizzes that
Speaker 1: Amazon have taken taken things out of their hands, right,
Speaker 1: they don't do um staffing planning at a at a
Speaker 1: granular way. A lot of you know, warehouses in any
Speaker 1: company will do right. Most places you go to work
Speaker 1: and you know, the boss or the schedule tells you
Speaker 1: where to go here, the schedule gripped up by by algorithm. Right,
Speaker 1: there's just so much that's been taken off their shoulders
Speaker 1: kind of with the aim of getting getting this this
Speaker 1: thin line of managers to effectively manage thousands and thousands
Speaker 1: of people. Um. So when you when you think about this,
Speaker 1: actually just real basic question. What's b F I F
Speaker 1: stand for? What? What is that? So it is a
Speaker 1: reference to uh an airport in Seattle called Boeing Field.
Speaker 1: Every every Amazon building across the country takes its name
Speaker 1: from from whatever the regional airport is. Okay, So that
Speaker 1: was a big question I forgot to ask during the
Speaker 1: edity confessional. But is you get to know how the
Speaker 1: sausages made? The other thing is you know, obviously this
Speaker 1: is somewhat of a secret weapon for Amazon and is
Speaker 1: allowed them to really become such a dominant company. But
Speaker 1: how does this automation compare with you know, the Walmarts
Speaker 1: and the targets of the world that that compete with them.
Speaker 1: Folks are definitely closing the gap. Um. Amazon has you know,
Speaker 1: built a lot of its technology, It's bought a lot
Speaker 1: of its technology. We read about their their similar acquisition
Speaker 1: of a little robot maker called Kiva back in twelve
Speaker 1: that gave him a real big head start. Um. But
Speaker 1: companies you know are imitating what Amazon does and they
Speaker 1: are closing that gap, right Amazon's biggest advantage a few
Speaker 1: years ago was getting things out of these buildings as
Speaker 1: fast as they can. You know today they're looking for
Speaker 1: for secrets also, well, just because you know, the targets
Speaker 1: of the world, the Walmarts of the world are are
Speaker 1: kind of taking their cues from Amazon's robotifizes fulfillment and
Speaker 1: and put it in their own operations. Not from a
Speaker 1: financial perspective, the ultimate goal for for any company that
Speaker 1: has this many employees is to reduce the number of
Speaker 1: employees because they're so expensive. Help us see into the
Speaker 1: future and Amazon's ability to actually automate nearly everything. Amazon
Speaker 1: has a set aside full automation as a long term goal. UM,
Speaker 1: it's something there their technology teams and their roboticists are
Speaker 1: working towards. I think realistically they don't see that as
Speaker 1: practical for a long long time. UM, but that doesn't
Speaker 1: mean they can't get savings along the way, right We
Speaker 1: We talked to some folks who had insight into their
Speaker 1: key acquisition and said they saved something like on labor
Speaker 1: costs in the first implementations of their Their robots come
Speaker 1: to people, um operating methods. So there's there's definitely a
Speaker 1: lot of costs that that Amazon can look to reduce,
Speaker 1: you know, without going kind of that that dream of
Speaker 1: of a fully automated to samably that doesn't require any
Speaker 1: any humans at all. So how much better has this
Speaker 1: stuff gotten with with practice in time? Is there any
Speaker 1: sense of that? We do know that how to call it?
Speaker 1: In a in a five or six year period, they
Speaker 1: were maybe three times as fast, right, it's date of
Speaker 1: the art. Warehouse um, you know, roughly a decade ago
Speaker 1: was doing something like three hundred thousand items a day,
Speaker 1: as you mentioned, kicking us off, this facility can do
Speaker 1: a million plus that that stat though I put an
Speaker 1: afteriston that's getting a couple of years old now out,
Speaker 1: So it would not surprise me at all of Amazon
Speaker 1: is setting a new threshold and just just isn't quite
Speaker 1: ready to brack about it yet. All right, So to
Speaker 1: be feared or imitated or both, oh, certainly both depending
Speaker 1: on depending on your line of work. But yeah, they've
Speaker 1: definitely reshaped warehousing in their image with this kind of technology.
Speaker 1: It's an incredible read. Um that day. Thank you tech
Speaker 1: reporter at Bloomberg News joining us from Seattle, Joe Weber
Speaker 1: in our interactive Broker Studio. But I think it's interesting
Speaker 1: because I think we expect robots and automation to take
Speaker 1: some of the lower level jobs, but it sounds like
Speaker 1: you'll need fewer, maybe higher paying managers also in the
Speaker 1: process if other companies start to follow what Amazon's doing,
Speaker 1: and I think it's like inevitable that other companies will write,
Speaker 1: like if you're three hundred thousand packages a day to
Speaker 1: a million, it's like, how do I get that? How
Speaker 1: do I get that? And how do I reduce costs
Speaker 1: in the process? All right, sound of the future. Alright,
Speaker 1: we gotta run. Joe Webber, thank you so much. Check
Speaker 1: this out sooner than you think. That's the upcoming issue
Speaker 1: of Bloomberg Business Week magazine. You are listening to Bloomberg Radio.
Speaker 1: You're listening to Bloomberg Business Week with Carol Masser and
Speaker 1: Bloomberg Quick Takes. Tim Stinovik on Bloomberg Radio. So the
Speaker 1: f O m C FED will reserve Open Market Committee,
Speaker 1: kicking off its two day meeting today, decision we know
Speaker 1: expected tomorrow. Fed officials Tim expected to hold interest rates
Speaker 1: near zero while telegraphing tapering of the FEDS and twenty
Speaker 1: billion dollars in monthly bond purchases in that policy statement
Speaker 1: that we get at two pm Wall Street time tomorrow.
Speaker 1: But of interest, of course, as always j Pal's press conference,
Speaker 1: what he has to say about some of the concerns
Speaker 1: on investors minds Evergrand COVID, debt ceilings, inflation, jobs que
Speaker 1: on that subject bridge words, Ray Dalio caught up with
Speaker 1: our Tom Keene earlier today and Dahlia saying another round
Speaker 1: of quantitative easy yep, another round none out of the question.
Speaker 1: I think we're going to get another round every another
Speaker 1: round of q QUEI. You're predicting another round of QUEI,
Speaker 1: not immediately. I think that what happens is you get
Speaker 1: a taper. I think like every tightening of interest rates
Speaker 1: has been less than the one before it, since and
Speaker 1: now when we had zero, then we did kwei, and
Speaker 1: every QUEI has been larger than the one before before
Speaker 1: it because we've accumulated so much that and that we're
Speaker 1: now printing. I think that you'll have probably one pull
Speaker 1: back and then you set the markets down because the
Speaker 1: duration of the bond market and the duration of assets
Speaker 1: is longer. That means interest rate sensitivity is greater. You
Speaker 1: have that particular correction, and then you'll have another round
Speaker 1: of that fascinating Bridgewater's ratelio earlier with our Tom Keene.
Speaker 1: Let's get another perspective. So glad to have back with us.
Speaker 1: Steven Skanky, chief economic advisor at Kiel Point, former U S.
Speaker 1: Treasury and White House National Security Council staff member based
Speaker 1: in Washington, d C. And that's where we find him. Steve.
Speaker 1: Good to have you here with Tim and myself, So
Speaker 1: let's get that perspective. What do you think about another
Speaker 1: round of QUEI at some point? Well, Carol, thanks, thanks
Speaker 1: for I mean to be back. It's always a pleasure
Speaker 1: to be with you. It certainly is possible that we'll
Speaker 1: need to have another run of QI, but but that
Speaker 1: isn't going to be. What's out of the gate next.
Speaker 1: The Fed is is looking to start a tapering program.
Speaker 1: The market is expecting that. You know, August showed weak
Speaker 1: employment growth and moderating inflation, so it's not like they
Speaker 1: have to do anything. I think it's fair to say
Speaker 1: that overall the economy hasn't made substantial further progress, which
Speaker 1: is their touchstone. But they they will talk about it.
Speaker 1: They will try to work out a plan I believe
Speaker 1: that they will hint at when it begins. But to
Speaker 1: the point that the radialio made, they could get into
Speaker 1: it and and find out that they have to reverse course.
Speaker 1: Why why do you think that? What tells you what's
Speaker 1: the data that you point to when you say that
Speaker 1: the economy has not made further substantial progress? Well, just
Speaker 1: the August employment numbers. Uh, we're we're far weaker than
Speaker 1: consensus and certainly what the FET is looking for. Um
Speaker 1: and even the expectation of retail sales, which turned out
Speaker 1: to be fine, we're below what. Uh, folks need to
Speaker 1: to see to see that the economy is really getting traction.
Speaker 1: It doesn't look like it's collapsing, but it's it's not
Speaker 1: creating jobs at a at a pace that the bet
Speaker 1: is is needing it to do still millions more to
Speaker 1: get still, millions more steve to get back to work.
Speaker 1: I mean, could we possibly be facing a scenario We're
Speaker 1: not all of those jobs come back and it's a
Speaker 1: different economy post pandemic. I think we're seeing that already, Carrol,
Speaker 1: that it's going to be a different economy. Um. The
Speaker 1: you know that the fact that the unemployment rate is falling,
Speaker 1: but we still have large numbers of people looking for work. Uh.
Speaker 1: You know, the simates as to how many people are
Speaker 1: looking for full time work in jobs that they would
Speaker 1: like to have is way beyond the number of people
Speaker 1: who are listed as unemployed. The fact that we don't
Speaker 1: have any positive movement in the labor force participation rate
Speaker 1: means that the growth opportunity is necessarily constrained. Um. The
Speaker 1: the impact of COVID, particularly in the United States, continues
Speaker 1: to be a big issue, and the government you could
Speaker 1: just see, is is struggling to see how how that's
Speaker 1: going to get worked out. You know, the moves of
Speaker 1: the president made a couple of weeks ago, we're surprising,
Speaker 1: but I think they point to the level of tanks
Speaker 1: and concern about what has to happen to getting people
Speaker 1: back into the labor force and back to work and
Speaker 1: back contributing to productive economic growth. Does that mismatch between
Speaker 1: demand for jobs and supply of jobs is Does that
Speaker 1: tell you that we're going to see serious wage increases
Speaker 1: from employers and that is a sign that inflation will
Speaker 1: be here to stay. We certainly can expect to see
Speaker 1: um significantly meaningful increases in wages to to get the
Speaker 1: people back to work. It seems to be that there's
Speaker 1: a couple of things going on. What is what is
Speaker 1: technical and technology based. There have been some interesting articles
Speaker 1: on it on how the automatic of the automation of
Speaker 1: resume scanning has put a big obstacle in getting resumes
Speaker 1: of people who would like the jobs actually hired into
Speaker 1: the job. You know that the second thing the concerned about,
Speaker 1: COVID has has kept a lot of people whose ballot
Speaker 1: sheets are just fine from going back into the workplace.
Speaker 1: Now we see that, we see that a lot heyt
Speaker 1: just got about seconds here, Um, Steve, I wanted to
Speaker 1: ask you, ever grand or China remaking its economy, are
Speaker 1: we likely to hear anything uh from the FET on that?
Speaker 1: And should we or do you want to hear from
Speaker 1: the FET on that? Well? I certainly don't want to
Speaker 1: hear from the FETE at that about that. If we
Speaker 1: hear from the FET it means it's way worse than
Speaker 1: any of us think it is or ought to be. Uh.
Speaker 1: I think at the end of the day, that's that's
Speaker 1: probably not a big issue for the US economy. Uh.
Speaker 1: It's certainly sparked some here in markets. But I think
Speaker 1: the good news about ever brand is that, uh, that
Speaker 1: negative impact gets worked out pretty quickly. Hey, thirty more seconds,
Speaker 1: really quickly though. But if China's remaking its economy or
Speaker 1: Andy Brown and Bloomberg saying, you know, we may have
Speaker 1: to get accustomed to much lower growth rates in China,
Speaker 1: is that something that would ultimately impact the global economy
Speaker 1: in a big way and possibly the US just quickly. Yes,
Speaker 1: it will have a negative impact on global economic growth,
Speaker 1: but I think not so much on the United States.
Speaker 1: You are a gem, come back soon. Steve Skanky. He
Speaker 1: is chief Economic Advisor at kill Point, former U S.
Speaker 1: Treasury and White House National Security Council staff member based
Speaker 1: in Washington, d C. That's where he found him taking
Speaker 1: lots of notes from that room a journal. Yeah, but
Speaker 1: you let me drive. Oh no, no, no, no home, honey, please,
Speaker 1: I'll do the right drivel. I want to drive all
Speaker 1: drive the questions dry. This is the drive to the
Speaker 1: globe community. Thanks, we'll drying us Dawn on bloom Bird Radio.
Speaker 1: All right, just about ten minutes left in today's trading session.
Speaker 1: We have been bouncing around or offer highs and loads
Speaker 1: of this session. Green on the screen though, with those
Speaker 1: major equity averages, but little changes in particular for the
Speaker 1: TAO and the SMP now stack up four tons of
Speaker 1: a percent, as we heard from Charlie, biggest gain there
Speaker 1: among those major equity averages. Let's get to it. Drive
Speaker 1: to the close with Eric Schoenstein. He is managing director
Speaker 1: portfolio manager Jensen Investment Management. They've got more than thirteen
Speaker 1: point four billion in assets under management. Among the funds
Speaker 1: that he helps manage, the Jensen Quality Growth Fund, which
Speaker 1: TIM is beating most of its peers in the past
Speaker 1: three years, up nearly fourteen percent on average annually according
Speaker 1: to Bloomberg Data. Eric, good to have you here. What's
Speaker 1: front and center for you? Uh? Well, first and foremost,
Speaker 1: thank you for having me um front and center for
Speaker 1: us as an investment team. You know, probably trying to
Speaker 1: parts through, as I'm sure many of your investing folks are,
Speaker 1: is trying to part through all the various risks and
Speaker 1: you know how they're going to impact companies, impact economy
Speaker 1: and what that means for our investment. Investment strategy. The
Speaker 1: good news is for us is our investment strategy has
Speaker 1: always been focused on you know, what we consider to
Speaker 1: be high quality companies that are are frankly resilient in
Speaker 1: the face of risk, and so we think our companies
Speaker 1: are built to handle them. But nonetheless, risk assessment, I
Speaker 1: think is what is front and center right now. Well, yeah,
Speaker 1: and I think China also front and center. I wonder
Speaker 1: these high quality companies, many of them do business I
Speaker 1: assume in China. I mean think about Apple for example,
Speaker 1: and in the kind of business that Apple does in China.
Speaker 1: I'm wondering how how you eric way China risk right now? Well,
Speaker 1: it's certainly one of the elements that needs to be weighed.
Speaker 1: I think we have a um you know, you can
Speaker 1: certainly say we have geopolitical risk as a as a
Speaker 1: as something that needs to be considered now, perhaps in
Speaker 1: ways that it didn't need to be considered a few years.
Speaker 1: Why why do you say that? Because we've gone through
Speaker 1: you know, not eleven, We've gone through some really serious
Speaker 1: UM stuff over the last two decades or so. So
Speaker 1: what's different now? Is it just a China story that's
Speaker 1: the geopolitical I think? But well, yeah, what I was
Speaker 1: referring to really is more of the China story. I
Speaker 1: mean geopolitical in terms of you know, terrorist activity and
Speaker 1: some of the other things that have happened. Yes, and
Speaker 1: those are things that should be considered. But I think
Speaker 1: from the standpoint of how, you know, trading partners in
Speaker 1: China's growth as an economy, growth is as a you know,
Speaker 1: a nation that is more formidable. They're certainly trying to
Speaker 1: play a larger part on the world stage, and that
Speaker 1: that has real impact on on every company that does
Speaker 1: business in China, and certainly the ones we invest in
Speaker 1: are not immune to that. I think that a bit
Speaker 1: of the difference for us from our perspective would be that,
Speaker 1: you know, these are multinational companies and so I don't
Speaker 1: know that we're necessarily in a position where China would be,
Speaker 1: you know, the largest part of any one of these
Speaker 1: businesses or their revenue streams and they so there's some
Speaker 1: level of insulation. But nonetheless it's a it's just one
Speaker 1: of the many things that we have to be thinking about,
Speaker 1: both domestically as well as globally in terms of the
Speaker 1: impact on our business. Well, I take it you're not
Speaker 1: invested in casinos that have a large portion of operations
Speaker 1: in Macau because some of those typically the casino side
Speaker 1: of things doesn't meet our screen. Our you know our
Speaker 1: screen because of the consistency and quality means you know
Speaker 1: that they have two companies for us have to generate
Speaker 1: a fiftcent return on equity every year for ten consecutive
Speaker 1: years at a minimum, which means their business return is
Speaker 1: consistently above their cost to capital. And casinos are a
Speaker 1: lot of fun, but they don't necessarily meet that criteria
Speaker 1: for us. So, Eric, how do you read into what
Speaker 1: happened yesterday in the markets and whether or not we
Speaker 1: see this as a signal or you see this as
Speaker 1: a signal that there could be a further pullback ahead.
Speaker 1: I think what happened yesterday is is emblematic in the
Speaker 1: fact that the markets searching for something to help direct it.
Speaker 1: And you know, we've got a lot of moving parts,
Speaker 1: everything from what is the Fed going to do, to
Speaker 1: what kind of tax legislation is going to be out there,
Speaker 1: to what kind of spending, how are we going to
Speaker 1: treat the fact that we're going to have a fairly
Speaker 1: large gap in terms of you know, economic stimulus from
Speaker 1: what was provided this year to what's provided next year,
Speaker 1: and all of that creates a bit more of a
Speaker 1: troublesome direction in terms of trying to think about where
Speaker 1: things are headed. And so any event like what happened
Speaker 1: yesterday which China, can become a catalyst for volatility. And
Speaker 1: I think that's what we're probably facing in the times
Speaker 1: in there, in the weeks and months ahead, is the
Speaker 1: potential for higher volatility. The anecdote to us for higher
Speaker 1: volatility is to look for companies that are less variable
Speaker 1: in their business performance, and that that speaks to our
Speaker 1: high quality investing style. All right, so you have to
Speaker 1: pick names, and you do pick names for the funds
Speaker 1: that you manage and help manage. I mentioned the Gentsen
Speaker 1: Quality Growth Fund, which is got a bunch of investments
Speaker 1: in names like Apple, Microsoft, PepsiCo. There's a gent and
Speaker 1: quality value fund I think I mentioned in terms of
Speaker 1: the problem the performance um that's invested in the like
Speaker 1: I think Crown and Hasbro, Equifax. Tell me, how are
Speaker 1: you picking names right now? Are you finding lots of opportunities?
Speaker 1: We actually are still finding good opportunities. I think the
Speaker 1: reality is is that you know, everything that happened last
Speaker 1: year from a momentum perspective was really focused on, you know,
Speaker 1: concentrated on very large companies and just a few stocks,
Speaker 1: the average company was mostly left behind. And from evaluation perspective,
Speaker 1: even in the last month or so, you know, we've
Speaker 1: seen the average stock probably dropped in double digits or so,
Speaker 1: and so that's an opportunity from a yeah, from evaluation perspective,
Speaker 1: that presents opportunity. I think the key though for us
Speaker 1: is it's not strictly about valuation discipline. It also has
Speaker 1: to be a very strong fundamental opportunity and that's where
Speaker 1: you can see, you know, in our portfolio. You mentioned
Speaker 1: the Quality Growth fund. For instance, you can see a
Speaker 1: Microsoft alongside of PEPSI. Now, clearly there are different growth rates,
Speaker 1: there are also different valuation opportunities. But our focus is
Speaker 1: to try to find to thirty really great combinations of
Speaker 1: fundamental strength and valuation opportunity to comprise the portfolio. And
Speaker 1: the same thing would be true in the value strategy,
Speaker 1: although it's a little bit larger companies and a little
Speaker 1: bit smaller in cap you know, but in every case,
Speaker 1: the pillar of fundamental fundamental strength based on high business
Speaker 1: returns against across the capital and then the valuation opportunity
Speaker 1: is really what drives us. All right, listen, thanks great
Speaker 1: to check in with you. Eric stones Stone, Managing Director,
Speaker 1: portfolio manager, Jensen Investment Management. I did mention fun performance before.
Speaker 1: It's the Gents and Quality Growth Value Fund which is
Speaker 1: beating most of its peers in the past three years,
Speaker 1: up nearly four on average annually, so I just wanted
Speaker 1: to make sure that I was clear about that. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com, and you can also listen to
Speaker 1: our radio show at two pm Eastern on Bloomberg Radio
Speaker 1: or watch us on YouTube. Search to Bloomberg Global News