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. Daily 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 --> 00:00:29,320 Speaker 1: and of course on the Bloomberg Terminal. Coming to us, 6 00:00:30,320 --> 00:00:33,640 Speaker 1: Mr Brady of Texas, Kevin Brady, of course a Republican 7 00:00:33,720 --> 00:00:36,400 Speaker 1: from Texas and farmer that far more than that, I 8 00:00:36,400 --> 00:00:39,200 Speaker 1: should say, one of the clearest thinkers on the Republican 9 00:00:39,320 --> 00:00:43,000 Speaker 1: side on what is correct away from the federalism of 10 00:00:43,080 --> 00:00:46,200 Speaker 1: this nation. Kevin Brady, I want to take you down 11 00:00:46,200 --> 00:00:51,519 Speaker 1: to your woodlands, down to Houston Methodist Hospital and Kelty Baker, 12 00:00:51,640 --> 00:00:55,760 Speaker 1: the head of medicine at that wonderful institution. I want 13 00:00:55,800 --> 00:01:01,160 Speaker 1: you to explain how you dovetail Dr Baker's aients with 14 00:01:01,400 --> 00:01:04,520 Speaker 1: the tony or not of anti science, but the tone 15 00:01:04,520 --> 00:01:09,800 Speaker 1: of doubt that we see nationwide among the unvaccinated. You know, 16 00:01:09,880 --> 00:01:12,880 Speaker 1: I know this is this is frustrating. I am vaccinated, 17 00:01:12,959 --> 00:01:16,479 Speaker 1: have been urging my constituents and neighbors to do the same. 18 00:01:16,600 --> 00:01:20,480 Speaker 1: It is uh, it is a difficult argument to win. Frankly, 19 00:01:20,520 --> 00:01:22,240 Speaker 1: with those thrown vaccine. I think at the end of 20 00:01:22,240 --> 00:01:27,280 Speaker 1: the day, it comes down to genuinely for most you know, 21 00:01:27,360 --> 00:01:30,480 Speaker 1: they don't know that this is safe yet. I think 22 00:01:30,520 --> 00:01:32,759 Speaker 1: many of them are telling me, you know, get out 23 00:01:32,800 --> 00:01:36,800 Speaker 1: of the emergency authorization, make that a permanent safety decision. 24 00:01:37,120 --> 00:01:40,160 Speaker 1: I think that will help some, if not all. Convis 25 00:01:40,160 --> 00:01:43,200 Speaker 1: of Brady, you were at great support for Donald Trump. 26 00:01:43,360 --> 00:01:47,440 Speaker 1: He got vaccinated quietly, without fanfare. What do you need 27 00:01:47,560 --> 00:01:51,040 Speaker 1: from your guy right now to change the trend of 28 00:01:51,080 --> 00:01:55,160 Speaker 1: the unvaccinated. Yeah, I think the key thing here obviously 29 00:01:55,480 --> 00:01:58,800 Speaker 1: reward people for being vaccinated. We're seeing in places like 30 00:01:58,880 --> 00:02:02,880 Speaker 1: Houston where actually asking the vaccinated to mask up to 31 00:02:02,960 --> 00:02:08,720 Speaker 1: protect the unmasked unvaccinated that I think that's probably wrong incentive. Secondly, 32 00:02:08,880 --> 00:02:12,200 Speaker 1: I think we need a permanent authorization for those vaccines 33 00:02:12,240 --> 00:02:16,800 Speaker 1: and a lot more consumer education. Uh, certainly in our area, 34 00:02:17,520 --> 00:02:19,920 Speaker 1: I think that would be key. So we're seeing, you know, 35 00:02:20,000 --> 00:02:23,440 Speaker 1: more of this delta in some of the land the variant. 36 00:02:23,639 --> 00:02:27,040 Speaker 1: We're also unforcedly seeing that coming across the southern border, 37 00:02:27,360 --> 00:02:29,799 Speaker 1: which is troubling people in a big way as well. 38 00:02:29,880 --> 00:02:33,080 Speaker 1: So I'm hopeful we can keep making progress but but 39 00:02:33,080 --> 00:02:35,720 Speaker 1: I will tell you too, I think I think President 40 00:02:35,720 --> 00:02:40,160 Speaker 1: Biden vice President Harris did the country disservice during the campaign, 41 00:02:40,600 --> 00:02:44,919 Speaker 1: essencially planning the seeds of doubt on the vaccines developed 42 00:02:45,000 --> 00:02:50,280 Speaker 1: under President Trump. And I think that that Okay, please, 43 00:02:50,520 --> 00:02:52,720 Speaker 1: I'm gonna give you that idea that they planted the 44 00:02:52,720 --> 00:02:54,800 Speaker 1: seeds of doubt and it was part of the campaign 45 00:02:54,800 --> 00:02:57,920 Speaker 1: as well. But you didn't answer my question, what does 46 00:02:57,960 --> 00:03:01,520 Speaker 1: this nation need from the former president right now to 47 00:03:01,639 --> 00:03:05,760 Speaker 1: explain to the jackson Ian unvaccinated that they need to 48 00:03:05,800 --> 00:03:09,600 Speaker 1: be vaccinated. Well, I think the president President Trump has 49 00:03:09,639 --> 00:03:12,880 Speaker 1: been clear about this that he has talked about the 50 00:03:12,960 --> 00:03:16,959 Speaker 1: need to be vaccines, talked about the remarkable success in 51 00:03:17,040 --> 00:03:20,760 Speaker 1: bringing these vaccines to market in record times. So I 52 00:03:20,800 --> 00:03:23,360 Speaker 1: will tell you I think it is this president and 53 00:03:23,520 --> 00:03:26,079 Speaker 1: vice president who bear the burden right now. And I'll 54 00:03:26,080 --> 00:03:29,000 Speaker 1: tell I'm willing to help, an eager to help. I've 55 00:03:29,000 --> 00:03:31,560 Speaker 1: been preaching this back home in a in a big way, 56 00:03:31,840 --> 00:03:36,080 Speaker 1: especially as we see these new variants coming forward. Representative, 57 00:03:36,440 --> 00:03:39,120 Speaker 1: there is a huge delta, and I'd forgive me for 58 00:03:39,120 --> 00:03:41,520 Speaker 1: the pun between Republicans and Democrats when it comes to 59 00:03:41,520 --> 00:03:44,640 Speaker 1: the vaccination rates and actually in more heavily democratic areas, 60 00:03:44,960 --> 00:03:48,040 Speaker 1: the vaccination rates tend to be much higher and people 61 00:03:48,080 --> 00:03:51,960 Speaker 1: tend to be more open to getting vaccinated. How is 62 00:03:52,000 --> 00:03:54,600 Speaker 1: it that you see President Biden playing a big role 63 00:03:54,680 --> 00:03:57,760 Speaker 1: in shoring up confidence and vaccines. If it's largely the 64 00:03:57,800 --> 00:04:01,680 Speaker 1: Republican regions that still show down out well, I'll tell 65 00:04:01,720 --> 00:04:04,400 Speaker 1: you it was early on. It was the Democratic regions 66 00:04:04,400 --> 00:04:08,480 Speaker 1: where the problems were at Everyone criticized President Trump for that. 67 00:04:08,640 --> 00:04:12,960 Speaker 1: I think, frankly, to be fair, the president, this president 68 00:04:13,120 --> 00:04:17,880 Speaker 1: now in the administration bears the responsibility and certainly, you know, 69 00:04:18,000 --> 00:04:22,000 Speaker 1: perhaps for the first time, bring both parties together on 70 00:04:22,040 --> 00:04:25,120 Speaker 1: this mission, because I think it is so important right now. 71 00:04:25,160 --> 00:04:29,360 Speaker 1: Again it is. It's frustrating for us of us who 72 00:04:29,400 --> 00:04:32,320 Speaker 1: think we should find common ground here to have this 73 00:04:32,480 --> 00:04:35,760 Speaker 1: just go at a loan mentality. I'm a little frustrated 74 00:04:35,800 --> 00:04:38,000 Speaker 1: with it. But we have to keep making progress and 75 00:04:38,000 --> 00:04:41,080 Speaker 1: it's not going door to door, not mandating. I think 76 00:04:41,120 --> 00:04:42,520 Speaker 1: we can do more of that. I think we can 77 00:04:42,520 --> 00:04:45,560 Speaker 1: do better. All right, Just a forty five seconds left. Congressman, 78 00:04:45,600 --> 00:04:48,600 Speaker 1: I'm wondering you talk about bipartisanship and bringing people together 79 00:04:48,680 --> 00:04:52,320 Speaker 1: in Washington. What's your chance in your opinion based on 80 00:04:52,360 --> 00:04:55,279 Speaker 1: your Republican colleagues of having a bipartisan agreement in a 81 00:04:55,400 --> 00:04:58,719 Speaker 1: very near term on this one trillion dollar infrastructure spending 82 00:04:58,760 --> 00:05:01,560 Speaker 1: package that so many people uh seemed to support whatever 83 00:05:01,560 --> 00:05:04,080 Speaker 1: side of the aisle that they are on. Yeah, I 84 00:05:04,120 --> 00:05:06,440 Speaker 1: think I think we're all hopeful that they can find 85 00:05:06,480 --> 00:05:08,960 Speaker 1: common ground here. We haven't seen munch of details, but 86 00:05:09,000 --> 00:05:12,640 Speaker 1: I think we're we're encouraging people to find common grounds. 87 00:05:12,720 --> 00:05:16,680 Speaker 1: I'm left optimistic about the votes for because clearly the Speaker, 88 00:05:16,880 --> 00:05:20,039 Speaker 1: Clothy and leaders Humor want this to be the pilot 89 00:05:20,120 --> 00:05:22,760 Speaker 1: shoot that pulls along that three and a half trillion 90 00:05:22,760 --> 00:05:26,680 Speaker 1: dollar massive expansion of the welfare state. There won't be 91 00:05:26,760 --> 00:05:29,920 Speaker 1: Republican and support that if they were truly separate. If 92 00:05:29,920 --> 00:05:33,440 Speaker 1: one went forward period, I think there'd be song support 93 00:05:33,480 --> 00:05:37,479 Speaker 1: from structure. We all to get it done. Kevin, Thank 94 00:05:37,480 --> 00:05:39,880 Speaker 1: you so much. Kevin Ready with US of Texas greatly 95 00:05:39,880 --> 00:05:47,960 Speaker 1: appreciated the Congressman from the Woodlands. Right now, off of 96 00:05:48,040 --> 00:05:51,919 Speaker 1: Dr Bremer's comments, Dr emsh adalgia with JOHNS. Hopkins Center 97 00:05:52,240 --> 00:05:55,440 Speaker 1: for Health Security, I need to talk to you doctor 98 00:05:55,520 --> 00:06:00,720 Speaker 1: about the medicine realities within democracy and liberty. Ian Bremer 99 00:06:00,880 --> 00:06:05,480 Speaker 1: is talking from a political aspect, you represent the medical aspect. 100 00:06:05,560 --> 00:06:10,159 Speaker 1: Can you succeed that your medicine amid American democracy and 101 00:06:10,240 --> 00:06:14,760 Speaker 1: our definition of American liberty? Yes, I think we can. 102 00:06:14,839 --> 00:06:17,200 Speaker 1: And I think if you're talking about vaccine mandates, I 103 00:06:17,200 --> 00:06:19,400 Speaker 1: think it's one thing for the government to mandate, and 104 00:06:19,440 --> 00:06:22,520 Speaker 1: I think that's very difficult and doesn't usually happen. But 105 00:06:22,640 --> 00:06:26,640 Speaker 1: we've got so many private organizations, employers, schools, or things 106 00:06:26,640 --> 00:06:30,120 Speaker 1: that are transportation companies where I do think it's justified 107 00:06:30,320 --> 00:06:33,039 Speaker 1: for mandates, including in my own industry where we're struggling 108 00:06:33,120 --> 00:06:35,279 Speaker 1: to get nurses, for example vaccine. And so I do 109 00:06:35,400 --> 00:06:39,440 Speaker 1: think that when we institute mandates, you see vaccination rates 110 00:06:39,480 --> 00:06:41,960 Speaker 1: go up, and I think it illustrates confidence in the 111 00:06:42,040 --> 00:06:44,640 Speaker 1: vaccines because they are safe and effective. This you should 112 00:06:44,640 --> 00:06:49,279 Speaker 1: be a non controversial vaccine. Why are selected nurses afraid 113 00:06:49,360 --> 00:06:54,039 Speaker 1: to be vaccinated. It's unclear to me, because plus of 114 00:06:54,080 --> 00:06:56,320 Speaker 1: doctors are vaccinated, But when you go to nurses, it's 115 00:06:56,360 --> 00:06:59,720 Speaker 1: maybe in some hospitals fift and it's likely because they've 116 00:06:59,720 --> 00:07:03,159 Speaker 1: swall of misinformation, At least from my personal experience talking 117 00:07:03,160 --> 00:07:05,520 Speaker 1: to some of these nurses, they've seen something on Facebook 118 00:07:05,880 --> 00:07:10,520 Speaker 1: specifically things about fertility, things about this being experimental. Uh. 119 00:07:10,520 --> 00:07:12,920 Speaker 1: And there are some people who believe these ideas about 120 00:07:13,000 --> 00:07:16,280 Speaker 1: microchips and five G as well, which is kind of surprising, 121 00:07:16,560 --> 00:07:19,679 Speaker 1: but it's taken hold, and I think the nursing unions 122 00:07:19,680 --> 00:07:22,800 Speaker 1: have kind of given them cover and have blocked administrators 123 00:07:22,800 --> 00:07:26,160 Speaker 1: from or at least scared off administrators from mandating the vaccines, 124 00:07:26,200 --> 00:07:27,680 Speaker 1: but more and more of them are going to do it, 125 00:07:27,680 --> 00:07:30,000 Speaker 1: and I think once we get full left approval, I 126 00:07:30,000 --> 00:07:32,400 Speaker 1: think it's really going to be universal. I think the 127 00:07:32,480 --> 00:07:36,040 Speaker 1: VA steps yesterday as well as other organizations, are going 128 00:07:36,080 --> 00:07:38,400 Speaker 1: to make it the norm that health care workers should 129 00:07:38,400 --> 00:07:40,800 Speaker 1: be vaccinated. And I think that's what it should be 130 00:07:40,800 --> 00:07:43,720 Speaker 1: because it's it's a professional obligation and I was one 131 00:07:43,760 --> 00:07:45,640 Speaker 1: of the first people to get vaccinated the minute I 132 00:07:45,680 --> 00:07:48,600 Speaker 1: could before Christmas amish. Some people might say this is 133 00:07:48,600 --> 00:07:51,400 Speaker 1: an overly narrow or complicated issue at this time of 134 00:07:51,440 --> 00:07:52,960 Speaker 1: the day, but I feel like this goes to the 135 00:07:53,000 --> 00:07:55,160 Speaker 1: heart of the issue, and that is the Department of 136 00:07:55,200 --> 00:07:57,640 Speaker 1: Justice and the memo that they put out yesterday basically 137 00:07:57,680 --> 00:08:01,480 Speaker 1: saying that even though this vaccine only has emergency authorization, 138 00:08:01,800 --> 00:08:06,160 Speaker 1: that doesn't necessarily mean that employers and that universities cannot 139 00:08:06,240 --> 00:08:09,600 Speaker 1: mandate that people get vaccinated. This sort of goes to 140 00:08:09,680 --> 00:08:12,880 Speaker 1: the heart of the issue of legal immunity for entities 141 00:08:12,880 --> 00:08:15,920 Speaker 1: that decide to create some sort of vaccination mandates. How 142 00:08:15,960 --> 00:08:20,400 Speaker 1: important is it for the government to lead on this issue. 143 00:08:20,800 --> 00:08:23,880 Speaker 1: It's important that the government give these companies assurance because 144 00:08:23,920 --> 00:08:26,239 Speaker 1: they were kind of brought into this by the government's 145 00:08:26,240 --> 00:08:30,000 Speaker 1: request through Operation Warp Speed. And often during pandemics, when 146 00:08:30,000 --> 00:08:33,080 Speaker 1: there's a public health emergency, there are indemnifications done for 147 00:08:33,120 --> 00:08:35,960 Speaker 1: those companies in order to get them to make this 148 00:08:36,080 --> 00:08:37,800 Speaker 1: vaccine because they have to do it quickly, they have 149 00:08:37,920 --> 00:08:40,920 Speaker 1: to do it uh in an expeditious manner, and there 150 00:08:40,960 --> 00:08:43,120 Speaker 1: is some uncertainty, and this is what happened during the 151 00:08:44,120 --> 00:08:47,280 Speaker 1: seventy six wine fluid, happened during two thousand and one pandemic. 152 00:08:47,480 --> 00:08:49,560 Speaker 1: So I think it is important that the government say 153 00:08:49,679 --> 00:08:53,760 Speaker 1: that these companies are going to be um indemnified because 154 00:08:53,800 --> 00:08:55,319 Speaker 1: we're in a we're in it. Basically, this is a 155 00:08:55,360 --> 00:08:59,440 Speaker 1: government run program in order to curtail this pandemic. I 156 00:08:59,520 --> 00:09:01,600 Speaker 1: don't think that there's going to be that many losses. 157 00:09:01,600 --> 00:09:03,880 Speaker 1: So because when you look at the safety and efficacy 158 00:09:03,880 --> 00:09:06,160 Speaker 1: of these vaccines. They're really off the charts when it 159 00:09:06,200 --> 00:09:09,600 Speaker 1: comes to any vaccines that humans have ever created. So 160 00:09:09,640 --> 00:09:13,520 Speaker 1: then why haven't they Why haven't these vaccines gotten full authorization? 161 00:09:13,559 --> 00:09:15,960 Speaker 1: Why do we still have an asterisk around them at 162 00:09:16,000 --> 00:09:18,400 Speaker 1: a time when there is such efficacy rates? And why 163 00:09:18,520 --> 00:09:20,679 Speaker 1: is it that kids under the age of twelve cannot 164 00:09:20,679 --> 00:09:25,320 Speaker 1: get vaccinated? So the emergency use authorization was necessary because 165 00:09:25,600 --> 00:09:27,320 Speaker 1: in order for the f DAY to approve a vaccine, 166 00:09:27,320 --> 00:09:29,080 Speaker 1: they need six months of data. That's just sort of 167 00:09:29,080 --> 00:09:32,439 Speaker 1: what they do. So I fiser recently crossed that threshold. 168 00:09:32,600 --> 00:09:36,120 Speaker 1: They've applied now for priority review. It's likely to happen 169 00:09:36,200 --> 00:09:38,640 Speaker 1: faster than than the six months that they have during 170 00:09:38,640 --> 00:09:40,640 Speaker 1: a priority review, but it is something that I think 171 00:09:40,679 --> 00:09:43,160 Speaker 1: we should do faster and quicker because we know that 172 00:09:43,200 --> 00:09:45,600 Speaker 1: this is holding up many places for mandating the vaccines, 173 00:09:45,640 --> 00:09:48,520 Speaker 1: and it's giving anti vaccine activists a talking point calling 174 00:09:48,520 --> 00:09:51,600 Speaker 1: an experimental even though emergency use authorizations have been around 175 00:09:51,800 --> 00:09:53,560 Speaker 1: for a long time, when we use them during H 176 00:09:53,559 --> 00:09:55,880 Speaker 1: one N one and doing PICA, I think that we're 177 00:09:55,880 --> 00:09:59,679 Speaker 1: gonna see children approved below the age of twelve. But 178 00:09:59,720 --> 00:10:01,719 Speaker 1: it's in iportant that we do the studies because we're 179 00:10:01,720 --> 00:10:03,560 Speaker 1: trying to make sure that this is safe and effective 180 00:10:03,559 --> 00:10:06,600 Speaker 1: at the risk benefit ratio favors the vaccine in that 181 00:10:06,679 --> 00:10:08,960 Speaker 1: age group because remember, as you get to those younger 182 00:10:09,000 --> 00:10:12,800 Speaker 1: age groups, the risk of severe disease falls to very 183 00:10:12,840 --> 00:10:15,280 Speaker 1: low levels, lower than influenza for a child less than 184 00:10:15,280 --> 00:10:17,120 Speaker 1: twelve years of age. So we want to get it right, 185 00:10:17,200 --> 00:10:19,320 Speaker 1: want to get the dosing right. Hopefully this will be 186 00:10:19,360 --> 00:10:22,640 Speaker 1: something that we see probably in late fall early winter. 187 00:10:23,040 --> 00:10:26,120 Speaker 1: Dr Deult join a game theory basis, It seems to 188 00:10:26,120 --> 00:10:29,680 Speaker 1: be that the medical community is drowning in success. It's 189 00:10:29,720 --> 00:10:34,320 Speaker 1: a miracle that we got the mRNA vaccines done so quickly. 190 00:10:34,960 --> 00:10:38,280 Speaker 1: Is most of the angst right now, because this is 191 00:10:38,360 --> 00:10:43,480 Speaker 1: all happening so fast, unlike a slower process of previous pandemics. 192 00:10:44,960 --> 00:10:47,360 Speaker 1: It may be part of it because m RNA vaccines 193 00:10:47,600 --> 00:10:50,520 Speaker 1: do give you that great advantage to make a vaccine 194 00:10:50,559 --> 00:10:54,079 Speaker 1: candidate within hours or weeks and then move into clinical 195 00:10:54,080 --> 00:10:56,680 Speaker 1: trials quickly. And I think that the lightning speed of this, 196 00:10:56,800 --> 00:10:58,520 Speaker 1: which was one of the advantages of m r and 197 00:10:58,600 --> 00:11:02,439 Speaker 1: A vaccines, has been something that people have exploited to 198 00:11:02,480 --> 00:11:05,520 Speaker 1: say this happened too quickly, But you imagine if we 199 00:11:05,520 --> 00:11:08,079 Speaker 1: were still waiting the old way for a new vaccine, 200 00:11:08,640 --> 00:11:10,800 Speaker 1: how many more hundreds of thousands of people would have 201 00:11:10,840 --> 00:11:13,440 Speaker 1: died United, how many illnesses would have happened. So I 202 00:11:13,520 --> 00:11:16,360 Speaker 1: think that the speed of the MR and A vaccines 203 00:11:16,440 --> 00:11:18,959 Speaker 1: is what makes them the most attractive thing about them, 204 00:11:19,000 --> 00:11:21,200 Speaker 1: and it's probably going to change the way we face 205 00:11:21,280 --> 00:11:24,400 Speaker 1: infectious disease outbreaks in the future forever. It's it's a 206 00:11:24,480 --> 00:11:27,520 Speaker 1: huge advantage and we now have as humans against the 207 00:11:27,600 --> 00:11:30,160 Speaker 1: viral kingdom. Doctor. We appreciate your time and thank you 208 00:11:30,280 --> 00:11:32,360 Speaker 1: very much for your heart works joining us at the 209 00:11:32,440 --> 00:11:34,600 Speaker 1: end of a very long shift. I'm sure doctor amish 210 00:11:34,600 --> 00:11:37,160 Speaker 1: it down to the John's Hopkins Center for how Security, 211 00:11:37,160 --> 00:11:46,160 Speaker 1: senior scholar. Most people in this building would call me 212 00:11:46,200 --> 00:11:49,320 Speaker 1: a humble guy, extremely humble and always willing to listen 213 00:11:49,360 --> 00:11:51,880 Speaker 1: to really smart people. And here's the first line in 214 00:11:51,880 --> 00:11:54,319 Speaker 1: the note that I got from Jude to Immanuel his guests. No, 215 00:11:54,440 --> 00:11:57,120 Speaker 1: it's just the first line, Tom, Johnny is right, So 216 00:11:57,200 --> 00:12:00,079 Speaker 1: let's start there. Judemanuel bt I g chief for a 217 00:12:00,400 --> 00:12:03,480 Speaker 1: derivative strategist. J Let's stop that. Why is John Wright? 218 00:12:05,240 --> 00:12:07,800 Speaker 1: Because John, You've been saying this for quite some time 219 00:12:07,840 --> 00:12:10,720 Speaker 1: now that you know, just asking the question, why can't 220 00:12:10,760 --> 00:12:14,160 Speaker 1: you just be a passive S and P index investor 221 00:12:14,840 --> 00:12:18,760 Speaker 1: in a world where, if you look at one, active management, 222 00:12:18,800 --> 00:12:21,840 Speaker 1: as we heard from guests earlier in the show, has 223 00:12:21,880 --> 00:12:24,480 Speaker 1: been giving you headaches for the most part, at least 224 00:12:24,480 --> 00:12:28,640 Speaker 1: the last several months. The answer is to us, because 225 00:12:29,080 --> 00:12:33,400 Speaker 1: if you're just simply a passive investor, you sort of 226 00:12:33,440 --> 00:12:36,559 Speaker 1: are open to this range of emotions that frankly, if 227 00:12:36,559 --> 00:12:38,680 Speaker 1: you look at the course of investing over the last 228 00:12:38,679 --> 00:12:41,080 Speaker 1: twelve or thirteen years, certainly since the bottom of the 229 00:12:41,080 --> 00:12:44,520 Speaker 1: financial crisis, you have to be in the psychological mode 230 00:12:45,000 --> 00:12:48,440 Speaker 1: to where you're buying the dips. It's very difficult to 231 00:12:48,600 --> 00:12:52,000 Speaker 1: say I'm going to commit cash in March of last year. 232 00:12:52,400 --> 00:12:55,120 Speaker 1: Very difficult to say I'm going to commit cash in 233 00:12:55,200 --> 00:12:57,560 Speaker 1: March of two thousand and nine, the times when you 234 00:12:57,640 --> 00:13:01,040 Speaker 1: really wanted to do it. So either having something that 235 00:13:01,120 --> 00:13:04,520 Speaker 1: causes you to outperform to the upside or outperformed of 236 00:13:04,600 --> 00:13:08,720 Speaker 1: the downside gives you that psychological edge to do what 237 00:13:09,000 --> 00:13:11,520 Speaker 1: we think you're gonna need to do and want to 238 00:13:11,559 --> 00:13:13,679 Speaker 1: do for a number of years to come. I should 239 00:13:13,679 --> 00:13:15,800 Speaker 1: be very careful here I'm not making a trade recommendation, 240 00:13:15,880 --> 00:13:17,560 Speaker 1: want to be clear about that, Julian. You're the man 241 00:13:17,600 --> 00:13:19,720 Speaker 1: who's got to do that for me. Work through it 242 00:13:19,760 --> 00:13:21,880 Speaker 1: now then with me. I got all these issues on 243 00:13:21,920 --> 00:13:24,439 Speaker 1: the horizon at the moment. How COVID cases play out. 244 00:13:24,480 --> 00:13:28,240 Speaker 1: Do they translate into higher depths, increased hospitalizations, maybe more 245 00:13:28,280 --> 00:13:31,000 Speaker 1: restrictions on the economy that just turned down the dial 246 00:13:31,040 --> 00:13:33,160 Speaker 1: on mobility. Then you've got the China factor as well. 247 00:13:33,400 --> 00:13:36,439 Speaker 1: It's just worry after worry, Julian, just parting up as always, 248 00:13:36,440 --> 00:13:39,079 Speaker 1: and this market keeps climbing that wall of worry to 249 00:13:39,200 --> 00:13:43,160 Speaker 1: all time highs. How do you navigate those issues? So again, look, 250 00:13:43,400 --> 00:13:46,840 Speaker 1: the price action tells all right now. And the price action, 251 00:13:48,360 --> 00:13:51,040 Speaker 1: even though it is telling all, is telling us somewhat 252 00:13:51,080 --> 00:13:54,559 Speaker 1: contradictory message that at the headline, the S and P 253 00:13:54,679 --> 00:13:58,760 Speaker 1: five continues to rise, very much propelled by the NAZAC 254 00:13:59,000 --> 00:14:02,480 Speaker 1: within the NASDA, very much propelled by a number of stocks, 255 00:14:02,720 --> 00:14:05,040 Speaker 1: all of whom we're gonna hear about earnings over the 256 00:14:05,080 --> 00:14:08,440 Speaker 1: next two to three days. Um, but you, there is 257 00:14:08,520 --> 00:14:13,560 Speaker 1: starting to be a diminution amongst the rest of the troops. 258 00:14:14,120 --> 00:14:18,760 Speaker 1: Breath has turned a little bit soft that can continue. 259 00:14:19,560 --> 00:14:22,280 Speaker 1: But frankly, from our point of view, when you look 260 00:14:22,320 --> 00:14:24,720 Speaker 1: at the bigger picture, when you've seen the kind of 261 00:14:24,760 --> 00:14:28,320 Speaker 1: economic strength that we have seen build over the course 262 00:14:28,360 --> 00:14:31,560 Speaker 1: of the year, whether this is the peak growth or not, 263 00:14:32,120 --> 00:14:35,560 Speaker 1: the implication is stocks are likely moving higher over a 264 00:14:35,680 --> 00:14:38,640 Speaker 1: multi year period. From Julie, you look at the dynamics 265 00:14:38,800 --> 00:14:40,960 Speaker 1: that are out there, the derivatives and all that. Let's 266 00:14:40,960 --> 00:14:42,960 Speaker 1: look at the one derivative, which is cash on the 267 00:14:43,040 --> 00:14:47,880 Speaker 1: balance sheet today this afternoon. The three big ones Microsoft, Apple, 268 00:14:48,400 --> 00:14:52,920 Speaker 1: the other one Google hundred thirty five plus plus two 269 00:14:53,000 --> 00:14:56,600 Speaker 1: hundred and four kazillion dollars. These guys could top trick 270 00:14:56,840 --> 00:15:01,000 Speaker 1: half a trillion dollars cash in their report worth this afternoon. 271 00:15:01,560 --> 00:15:04,280 Speaker 1: What's the social good of all that money? Should they 272 00:15:04,320 --> 00:15:09,280 Speaker 1: return it to shareholders? Well, look, they are for the 273 00:15:09,320 --> 00:15:14,720 Speaker 1: most part slowly through buy backs. Um, you know, the 274 00:15:15,400 --> 00:15:18,640 Speaker 1: signaling of sort of a special dividend or something like 275 00:15:18,680 --> 00:15:23,240 Speaker 1: that from companies like that that are poised for continuous growth. 276 00:15:23,280 --> 00:15:27,040 Speaker 1: Secular growers has tended over time not to be good. 277 00:15:27,200 --> 00:15:30,720 Speaker 1: You can argue about the social good, but I think frankly, 278 00:15:30,920 --> 00:15:33,120 Speaker 1: what you're going to hear from them is, you know, 279 00:15:33,400 --> 00:15:39,280 Speaker 1: ways of getting stakeholders more included in the debate rather 280 00:15:39,320 --> 00:15:43,560 Speaker 1: than just shareholders. So talking about wages, talking about employment 281 00:15:43,560 --> 00:15:48,920 Speaker 1: programs in an economy that frankly confounds people because of 282 00:15:49,640 --> 00:15:53,600 Speaker 1: the lack of the return of the participation rate in 283 00:15:53,640 --> 00:15:58,080 Speaker 1: a in a market where there are jobs incredibly plentiful. Julian, 284 00:15:58,120 --> 00:16:00,480 Speaker 1: what's signaling power does the bond market have for equities 285 00:16:00,480 --> 00:16:04,720 Speaker 1: at this point? Lisa, that is the I don't know, 286 00:16:05,160 --> 00:16:09,160 Speaker 1: twenty trillion dollar question the size of the U S economy. 287 00:16:09,280 --> 00:16:14,320 Speaker 1: From our point of view, Uh, it's really rather limited. Look. Obviously, 288 00:16:14,360 --> 00:16:16,840 Speaker 1: we know that the Fed has, as you said earlier, 289 00:16:17,160 --> 00:16:20,760 Speaker 1: put their thumb on the bond market. Um. But also 290 00:16:20,880 --> 00:16:24,440 Speaker 1: when you think about it, all the extraordinary monetary and 291 00:16:24,560 --> 00:16:28,720 Speaker 1: fiscal stimulus has come together to chase asset prices higher 292 00:16:29,000 --> 00:16:34,520 Speaker 1: across the entire range, whether it's commodities earlier in the year, obviously, stocks, 293 00:16:35,200 --> 00:16:39,360 Speaker 1: goods prices i e. Inflation, or the bond market. To us, 294 00:16:39,480 --> 00:16:42,160 Speaker 1: it's all the wall of money. And the question is 295 00:16:42,360 --> 00:16:46,440 Speaker 1: is policy or perceptional likely to change? And our view 296 00:16:46,600 --> 00:16:49,040 Speaker 1: is that you could get to a point where if 297 00:16:49,080 --> 00:16:53,960 Speaker 1: the labor market does sort of uh, remove the logjam 298 00:16:54,080 --> 00:16:57,080 Speaker 1: that we have come the fall, which is the Fed's expectation. 299 00:16:57,600 --> 00:16:59,800 Speaker 1: UH in an environment where the FED is not likely 300 00:16:59,800 --> 00:17:03,840 Speaker 1: to advance the taper conversation materially, this week you could 301 00:17:03,880 --> 00:17:06,679 Speaker 1: see yields start to rise in the long end, Julian, 302 00:17:06,720 --> 00:17:08,880 Speaker 1: just quickly, you still at full pans and dr end 303 00:17:09,040 --> 00:17:13,480 Speaker 1: on SMP. We are, and and here's here's the reasoning. John. Again, 304 00:17:13,520 --> 00:17:17,440 Speaker 1: as I said earlier, this kind of economic strength, while 305 00:17:17,480 --> 00:17:20,840 Speaker 1: it bodes very very well on a multi year period, 306 00:17:21,280 --> 00:17:25,720 Speaker 1: doesn't necessarily mean that corrections don't happen. We've gone quite 307 00:17:25,760 --> 00:17:29,320 Speaker 1: some time without a correction, and frankly, we're concerned about 308 00:17:29,400 --> 00:17:33,040 Speaker 1: some of those internals, the lack of breath um and 309 00:17:33,080 --> 00:17:35,480 Speaker 1: we think, actually, if you look at it, this be 310 00:17:35,520 --> 00:17:38,760 Speaker 1: a week where there's a potential for a surprise in 311 00:17:38,840 --> 00:17:41,800 Speaker 1: terms of reaction from the large cap tex stocks, which 312 00:17:41,800 --> 00:17:44,679 Speaker 1: have been doing all the heavy lifting. Interesting they started 313 00:17:44,680 --> 00:17:47,600 Speaker 1: reporting in earnest a little bit later after the close, Julian, 314 00:17:47,600 --> 00:17:50,480 Speaker 1: thank you, sir, Jenny Emanuel Ba, chief equity and derivative 315 00:17:50,480 --> 00:17:57,240 Speaker 1: strategist Judian love catching up these sur and so White 316 00:17:59,200 --> 00:18:01,720 Speaker 1: we're gonna start stop now and look at Apple will 317 00:18:01,760 --> 00:18:04,520 Speaker 1: power with us with Bear the senior research analysts with 318 00:18:04,560 --> 00:18:06,879 Speaker 1: a terrific note, and what's so great about will power? 319 00:18:06,960 --> 00:18:10,159 Speaker 1: At the bottom of his note he shows you his 320 00:18:10,280 --> 00:18:13,600 Speaker 1: belief and his track record from another time. This is 321 00:18:13,640 --> 00:18:17,879 Speaker 1: a guy who just before COVID, just before the pandemic, 322 00:18:18,440 --> 00:18:23,439 Speaker 1: was outperformed on ninety and will power sustain that outperform 323 00:18:23,440 --> 00:18:28,000 Speaker 1: through thick and thin? Will power you sustain your outperformed today? Simply? 324 00:18:28,080 --> 00:18:32,640 Speaker 1: Can Beijing upset the Apple Apple cart? Can Beijing all 325 00:18:32,720 --> 00:18:38,160 Speaker 1: this upset in China derail your outperform? Well, Tom, that's 326 00:18:38,160 --> 00:18:41,040 Speaker 1: a great question. Good morning. Thanks, there's always for having me. 327 00:18:41,240 --> 00:18:43,840 Speaker 1: Great great to be on on the on the show. Here. 328 00:18:44,119 --> 00:18:46,360 Speaker 1: Look at China is always a big wild card, and 329 00:18:46,520 --> 00:18:49,160 Speaker 1: you know, at least at this point has still been 330 00:18:49,760 --> 00:18:52,240 Speaker 1: a big driver of Apples and results, and we're still 331 00:18:52,400 --> 00:18:54,680 Speaker 1: expecting that to change near term. But it's certainly something 332 00:18:54,680 --> 00:18:57,600 Speaker 1: we keep an eye on with all the tumult that's 333 00:18:57,640 --> 00:18:59,879 Speaker 1: that's underway in that country with respect to you know, 334 00:19:00,119 --> 00:19:02,680 Speaker 1: other other tech companies, But at this point Apples be 335 00:19:02,760 --> 00:19:06,280 Speaker 1: able to navigate that market fairless successfully. Of course, that's 336 00:19:06,320 --> 00:19:08,040 Speaker 1: just one piece of the puzzle for Apple. As you 337 00:19:08,080 --> 00:19:10,560 Speaker 1: think about the broad based drink we expect again you 338 00:19:10,600 --> 00:19:13,160 Speaker 1: know this quarter. Well, as you know, the cheap guide 339 00:19:13,160 --> 00:19:15,320 Speaker 1: to Apple over the last decade is just to buy it, 340 00:19:15,520 --> 00:19:18,000 Speaker 1: to keep buying it, and then to keep buying it. 341 00:19:18,000 --> 00:19:20,320 Speaker 1: It's complex on one front, though, and I've always struggled 342 00:19:20,359 --> 00:19:21,800 Speaker 1: with it, and I'd love you to guide me through it. 343 00:19:22,000 --> 00:19:25,040 Speaker 1: What multiple do you put on a name like Apple 344 00:19:25,119 --> 00:19:29,120 Speaker 1: given the evolution of this company over the last ten years. Well, 345 00:19:29,119 --> 00:19:31,360 Speaker 1: it's a great question. It's been one of the central questions, 346 00:19:31,359 --> 00:19:33,840 Speaker 1: and I think you know, lunch panel probably if there's 347 00:19:33,840 --> 00:19:37,399 Speaker 1: a bare thesis is probably on the valuation, decreation and 348 00:19:37,640 --> 00:19:41,200 Speaker 1: multiple expansion. You know that that's occurred here over time. Look, 349 00:19:41,480 --> 00:19:43,520 Speaker 1: we played a long game with Apple, right, and our 350 00:19:43,600 --> 00:19:45,600 Speaker 1: view over a long pretty time has been it will 351 00:19:45,600 --> 00:19:49,400 Speaker 1: continue to grow into valuation and you're betting on their 352 00:19:49,440 --> 00:19:52,720 Speaker 1: ability to continue to add new value added you know, 353 00:19:52,840 --> 00:19:56,400 Speaker 1: services and solution you know, for in customers, and that 354 00:19:56,560 --> 00:19:59,280 Speaker 1: in turn continues to drive you know more, you know, 355 00:19:59,359 --> 00:20:03,399 Speaker 1: shareholder value. Our view is that increasingly you know, falls 356 00:20:03,440 --> 00:20:05,639 Speaker 1: into the consumer staples camp, right, so that it's not 357 00:20:05,720 --> 00:20:08,280 Speaker 1: a name that you can like cop against traditional big 358 00:20:08,320 --> 00:20:10,520 Speaker 1: cap tech you know, per se. If you start to 359 00:20:10,520 --> 00:20:13,320 Speaker 1: look at consumer stables names it's you know, we think 360 00:20:13,359 --> 00:20:16,560 Speaker 1: you can justify multiple and get your closer to thirty times, 361 00:20:16,600 --> 00:20:18,480 Speaker 1: which ultimately is what we're currently using to get to 362 00:20:18,520 --> 00:20:20,600 Speaker 1: our hundred sixty dollar target price. Well, this is an 363 00:20:20,640 --> 00:20:23,320 Speaker 1: important point, the idea that you emphasize services. Does that 364 00:20:23,359 --> 00:20:26,600 Speaker 1: mean that at this point people are basically not looking 365 00:20:26,640 --> 00:20:29,919 Speaker 1: for Apple to necessarily innovate with the Apple Watch or 366 00:20:29,960 --> 00:20:32,320 Speaker 1: some other product that really it has to do with 367 00:20:32,400 --> 00:20:35,960 Speaker 1: ongoing revenues from either iPhone sales or from the services 368 00:20:36,160 --> 00:20:38,160 Speaker 1: that you can get on the iPhone that will determine 369 00:20:38,280 --> 00:20:41,080 Speaker 1: the future revenues. Well, I think that's a great point, 370 00:20:41,160 --> 00:20:44,880 Speaker 1: and look at me services now is of revenue, it's 371 00:20:44,920 --> 00:20:48,800 Speaker 1: growing north of has a much higher than average who's 372 00:20:48,840 --> 00:20:52,280 Speaker 1: margin and close to se and that's that's a big 373 00:20:52,320 --> 00:20:55,840 Speaker 1: part of the story in terms of driving higher higher 374 00:20:55,920 --> 00:20:59,119 Speaker 1: multiple than what it traded at historically. And our expectation 375 00:20:59,200 --> 00:21:01,240 Speaker 1: is that can tanna look at me they I think 376 00:21:01,320 --> 00:21:04,520 Speaker 1: just last quarter reported of course, the six D sixty 377 00:21:04,560 --> 00:21:07,920 Speaker 1: million paid subscriptions you know on the platform. That's the 378 00:21:07,960 --> 00:21:10,960 Speaker 1: number that continues to rise by forty million, you know, 379 00:21:11,040 --> 00:21:13,760 Speaker 1: every quarter, and that's why it's critical that that services 380 00:21:13,760 --> 00:21:16,240 Speaker 1: like Apple TV Plus and things down the road continue 381 00:21:16,880 --> 00:21:19,440 Speaker 1: um to take off because that helps that helps strive 382 00:21:19,520 --> 00:21:21,840 Speaker 1: that line of business for them. Of course, that's just 383 00:21:21,880 --> 00:21:23,399 Speaker 1: one piece of it, right The key to the story 384 00:21:23,400 --> 00:21:27,080 Speaker 1: has been the consistent diversification beyond iPhone, which is now 385 00:21:27,200 --> 00:21:29,440 Speaker 1: a little underfif of revenue, but still of course the 386 00:21:29,560 --> 00:21:31,879 Speaker 1: lynchpin to the story and a big driver near a 387 00:21:31,920 --> 00:21:34,160 Speaker 1: medium term. Still, would you like to see Apple become 388 00:21:34,200 --> 00:21:36,440 Speaker 1: a media company? I mean, there's been so much speculation 389 00:21:36,680 --> 00:21:39,800 Speaker 1: about their buying let's say, a Netflix or some other 390 00:21:39,880 --> 00:21:44,080 Speaker 1: big service provider that way to enhance their Apple TV. 391 00:21:44,600 --> 00:21:47,800 Speaker 1: Is that still on the table? Well, I think Apple 392 00:21:47,840 --> 00:21:49,919 Speaker 1: TV Plus is very much on the table as you 393 00:21:49,960 --> 00:21:52,280 Speaker 1: know right, Ted Lasso of course has been a great show, 394 00:21:52,920 --> 00:21:55,000 Speaker 1: but they need a few more hits like that. I 395 00:21:55,040 --> 00:21:58,159 Speaker 1: think at this point it doesn't appear they plan to 396 00:21:58,200 --> 00:22:01,200 Speaker 1: buy a major media company. I'm kind of jump start 397 00:22:01,240 --> 00:22:03,879 Speaker 1: that effort. I mean, what kinds that's always twenty Perhaps 398 00:22:03,960 --> 00:22:06,120 Speaker 1: they should have done that, Perhaps they should have looked 399 00:22:06,119 --> 00:22:08,240 Speaker 1: at something in the Tontom Hiss viah Gole market. I 400 00:22:08,280 --> 00:22:10,480 Speaker 1: think these are all things of intense interests as you 401 00:22:10,640 --> 00:22:12,280 Speaker 1: go forward. Look at the end of the day. Part 402 00:22:12,280 --> 00:22:14,040 Speaker 1: of the bet on this and the bet on the 403 00:22:14,119 --> 00:22:16,800 Speaker 1: valuation is that this is a true platform that they 404 00:22:16,800 --> 00:22:20,600 Speaker 1: can build off right and services and media are key 405 00:22:20,640 --> 00:22:23,440 Speaker 1: elements that. And now for William Power. For those of 406 00:22:23,520 --> 00:22:27,880 Speaker 1: you on radio, we get out the HP twelve c Okay, 407 00:22:27,960 --> 00:22:29,959 Speaker 1: you don't do with some of the parts on Apple, 408 00:22:30,480 --> 00:22:34,120 Speaker 1: but you do extrapolate out to some form of estimate 409 00:22:34,440 --> 00:22:38,240 Speaker 1: off of five dollars ten cents. If I'm the gloomiest 410 00:22:38,359 --> 00:22:41,800 Speaker 1: Lisa Bramo, it's gloomy on Apple that I could gloomily 411 00:22:41,960 --> 00:22:45,840 Speaker 1: possibly be, I would do a fifteen percent gross up 412 00:22:45,920 --> 00:22:48,800 Speaker 1: on this. If I do that twenty four months out, 413 00:22:48,840 --> 00:22:51,480 Speaker 1: will Power, I'm at two hundred and two dollars a 414 00:22:51,600 --> 00:22:55,200 Speaker 1: share with a three point four trillion dollar market cap? 415 00:22:55,600 --> 00:23:01,359 Speaker 1: Is that feasible? Look? I I think that's possible. I 416 00:23:01,359 --> 00:23:03,679 Speaker 1: mean the day, I think part of what's gonna happen 417 00:23:03,760 --> 00:23:06,080 Speaker 1: here on Thomas. As I said earlier, they're gonna continue 418 00:23:06,080 --> 00:23:08,840 Speaker 1: to grow into the multiple and that my expectation is 419 00:23:08,880 --> 00:23:10,920 Speaker 1: what we While we may not have the level of 420 00:23:10,960 --> 00:23:13,760 Speaker 1: beat we had this Passporter, I think there's still nice 421 00:23:13,840 --> 00:23:16,240 Speaker 1: upside the current estimates, both this quarter and as you 422 00:23:16,320 --> 00:23:18,679 Speaker 1: move into the fiscal queue four and look, one of 423 00:23:18,680 --> 00:23:20,160 Speaker 1: the key things to keep in mind, we haven't really 424 00:23:20,240 --> 00:23:22,879 Speaker 1: touched on this five G cycle is still super early, 425 00:23:22,920 --> 00:23:25,520 Speaker 1: and it may not be the passive super cycle in 426 00:23:25,680 --> 00:23:28,200 Speaker 1: year one. But if they just sold over, you know, 427 00:23:28,240 --> 00:23:31,480 Speaker 1: a hundred million iPhones that are five G a capable 428 00:23:31,560 --> 00:23:34,440 Speaker 1: against a mobile base as close to a billion iPhones, 429 00:23:34,640 --> 00:23:37,960 Speaker 1: that's a big upgrade opportunities still for multiple years. John, 430 00:23:38,040 --> 00:23:40,640 Speaker 1: that pause that will Power gave you when I asked 431 00:23:40,720 --> 00:23:43,439 Speaker 1: him that question is known as the General Council pause. 432 00:23:43,960 --> 00:23:47,240 Speaker 1: That's because he's really not supposed to interpot extrapolate out 433 00:23:47,480 --> 00:23:50,440 Speaker 1: twenty four months in the night? Is my badge? And 434 00:23:50,560 --> 00:23:52,919 Speaker 1: Baard gonna work to respond him? What to respond to him? 435 00:23:52,960 --> 00:23:56,880 Speaker 1: What Swignalas gonna got in the house? Bats Well, great 436 00:23:56,880 --> 00:23:59,840 Speaker 1: to catch up, appreciate time, said William pat of Bad 437 00:24:00,240 --> 00:24:02,600 Speaker 1: Looking for one sixty. That's the price target from Bad 438 00:24:02,680 --> 00:24:10,600 Speaker 1: on Apple right now. For Global Wall Street, Ian Lincoln 439 00:24:10,680 --> 00:24:13,439 Speaker 1: joins with Female Capital Markets. How do the US rate 440 00:24:13,520 --> 00:24:18,320 Speaker 1: strategy is a hyperdense morning note always read worldwide and 441 00:24:18,400 --> 00:24:20,520 Speaker 1: I'm gonna go right to a single sentence you have 442 00:24:21,160 --> 00:24:25,800 Speaker 1: which suggests the demand for bills notes and bonds and 443 00:24:25,840 --> 00:24:29,080 Speaker 1: that is the backstop of demand you see out there. 444 00:24:29,760 --> 00:24:34,320 Speaker 1: Define that backstop well, Tom, I certainly think that if 445 00:24:34,359 --> 00:24:38,160 Speaker 1: we look at the primary takedown of treasury supply via 446 00:24:38,240 --> 00:24:42,920 Speaker 1: the auctions, we continue to see a willingness to underwrite treasuries, 447 00:24:43,040 --> 00:24:47,600 Speaker 1: whether it's from domestic accounts primarily banks and investment firms, 448 00:24:47,800 --> 00:24:52,520 Speaker 1: or overseas central banks in particular. These auctions continue to 449 00:24:52,600 --> 00:24:56,679 Speaker 1: see strong sponsorship, and that at a minimum suggests that 450 00:24:56,720 --> 00:24:59,639 Speaker 1: they will continue to be a backstop of demand that 451 00:24:59,800 --> 00:25:03,159 Speaker 1: is a really going away anytime soon. It's less about 452 00:25:03,280 --> 00:25:06,199 Speaker 1: whether or not there's a willingness to absorb supply and 453 00:25:06,280 --> 00:25:09,920 Speaker 1: more a function of what levels will we see these takedowns, 454 00:25:09,920 --> 00:25:13,280 Speaker 1: And with ten year yields at it's very difficult to 455 00:25:13,359 --> 00:25:16,520 Speaker 1: argue it's not a strong market for us dead and 456 00:25:16,600 --> 00:25:18,760 Speaker 1: one needs to go right oh wrong for that matter 457 00:25:18,760 --> 00:25:23,040 Speaker 1: to get ten years to one eighty from eighty by 458 00:25:23,119 --> 00:25:24,840 Speaker 1: year end. That was a code from Morgan Stanley. What 459 00:25:24,840 --> 00:25:27,480 Speaker 1: would need to happen for that to happen? And you'll mind, 460 00:25:27,480 --> 00:25:30,800 Speaker 1: at least well, in my mind, I don't think that 461 00:25:30,880 --> 00:25:35,280 Speaker 1: it is as simple as passing, for example, the infrastructure build, 462 00:25:35,520 --> 00:25:38,679 Speaker 1: because that will be staged in over time and not 463 00:25:38,840 --> 00:25:42,639 Speaker 1: actually lead to the type of wage inflation that the 464 00:25:42,680 --> 00:25:45,840 Speaker 1: market would need to see for inflation in and of 465 00:25:45,880 --> 00:25:50,000 Speaker 1: itself to become self fulfilling. The one key aspect of 466 00:25:50,080 --> 00:25:53,200 Speaker 1: this recovery that has been missing thus far has been 467 00:25:53,480 --> 00:25:57,720 Speaker 1: wage inflation. If we see the labor market participation rate 468 00:25:57,960 --> 00:26:01,960 Speaker 1: continue to be low and our pockets of labor scarcity 469 00:26:02,040 --> 00:26:04,760 Speaker 1: over the course of the next few months, we might 470 00:26:04,800 --> 00:26:08,399 Speaker 1: see spikes in wages, which would then get the market 471 00:26:08,440 --> 00:26:11,320 Speaker 1: excited about the idea that inflation could be self fulfilling, 472 00:26:11,520 --> 00:26:15,800 Speaker 1: but argue even that would fall into the FEDS characterization 473 00:26:16,040 --> 00:26:19,720 Speaker 1: as transitory. We really are coming out of a massive 474 00:26:19,800 --> 00:26:22,720 Speaker 1: shift in the real economy, and there's a lot of 475 00:26:22,760 --> 00:26:26,360 Speaker 1: different moving pieces yet to be resettled where they will 476 00:26:26,400 --> 00:26:28,479 Speaker 1: be going forward. And this is really important Tom and Lace, 477 00:26:28,520 --> 00:26:31,320 Speaker 1: who were discussing it a little bit earlier. The failure 478 00:26:31,720 --> 00:26:35,080 Speaker 1: to see real continued improvement in things like the employment 479 00:26:35,160 --> 00:26:39,000 Speaker 1: to population ratio, the participation rate in America. If we 480 00:26:39,040 --> 00:26:41,560 Speaker 1: don't get that improvement, if we don't get back to 481 00:26:41,840 --> 00:26:44,000 Speaker 1: where we were saying, how much would that complicate the 482 00:26:44,000 --> 00:26:46,680 Speaker 1: outlook for this federal reserve, which, to be fair is 483 00:26:46,720 --> 00:26:48,960 Speaker 1: pinning its forecasts on the idea that we do fully 484 00:26:49,000 --> 00:26:53,119 Speaker 1: recover on those aspects. Well, I think it will very 485 00:26:53,200 --> 00:26:57,639 Speaker 1: much complicate the FEDS path for rates going forward, because 486 00:26:57,640 --> 00:27:00,479 Speaker 1: on the one hand, they've acknowledged that in relation has 487 00:27:00,560 --> 00:27:03,439 Speaker 1: come in stronger than even they were expecting. But on 488 00:27:03,480 --> 00:27:07,000 Speaker 1: the other hand, under their new framework, the FED needs 489 00:27:07,000 --> 00:27:11,480 Speaker 1: to remain accommodative for frankly the foreseeable future, until the 490 00:27:11,560 --> 00:27:14,399 Speaker 1: unemployment rate gets to the lows that we've already seen, 491 00:27:14,720 --> 00:27:17,800 Speaker 1: and within that we are assuming, and so is the FED, 492 00:27:18,160 --> 00:27:21,920 Speaker 1: that the labor market participation rates slowly starts to increase. 493 00:27:22,200 --> 00:27:25,520 Speaker 1: If you don't see labor market participation increase, then you'll 494 00:27:25,560 --> 00:27:30,240 Speaker 1: continue to have this surplus supply of workers that if 495 00:27:30,320 --> 00:27:33,320 Speaker 1: they if there isn't enough incentive for them to slowly 496 00:27:33,320 --> 00:27:36,920 Speaker 1: come back into market, will really leave the FED at 497 00:27:36,920 --> 00:27:39,240 Speaker 1: a loss in their new framework. At this point, given 498 00:27:39,240 --> 00:27:43,640 Speaker 1: the Fed's intervention, is the bond market accurately reflecting the fundamentals? 499 00:27:45,320 --> 00:27:49,679 Speaker 1: I think that this moment, the bond market is reflecting 500 00:27:49,720 --> 00:27:52,919 Speaker 1: the realities of the delta variant, not so much that 501 00:27:52,960 --> 00:27:58,159 Speaker 1: it's going to lead to increased lockdowns or revival restrictions 502 00:27:58,200 --> 00:28:02,840 Speaker 1: in the US, but rather it's a reminder that these variances, 503 00:28:03,080 --> 00:28:05,080 Speaker 1: the potential for these variants are going to be with 504 00:28:05,160 --> 00:28:07,560 Speaker 1: the real economy for a while. And so while we 505 00:28:07,680 --> 00:28:09,960 Speaker 1: might have brought into the beginning of this year the 506 00:28:10,000 --> 00:28:13,479 Speaker 1: assumption that after Labor Day we'd be in the new normal, 507 00:28:13,920 --> 00:28:17,280 Speaker 1: the reality is we're going to continue as an economy 508 00:28:17,400 --> 00:28:21,440 Speaker 1: and globally and domestically UH to to deal with the pandemics. 509 00:28:21,440 --> 00:28:24,439 Speaker 1: That it's extended the timeline out of the pandemic. I 510 00:28:24,440 --> 00:28:27,080 Speaker 1: think that's why rates are where they are at this moment. 511 00:28:27,240 --> 00:28:29,439 Speaker 1: Just real quick, do you expect negative real yields to 512 00:28:29,440 --> 00:28:32,960 Speaker 1: go even more negative as inflation expectations continue to pick up? 513 00:28:34,760 --> 00:28:39,200 Speaker 1: As long as nominals are contained, inflation is drifting its direction, 514 00:28:39,320 --> 00:28:43,440 Speaker 1: and the Fed doesn't hasten the departure from que, there's 515 00:28:43,480 --> 00:28:47,080 Speaker 1: no reason to expect that we couldn't see real yields 516 00:28:47,080 --> 00:28:51,440 Speaker 1: continue continue to drift. Flower. I think tenure breaking or 517 00:28:51,640 --> 00:28:58,080 Speaker 1: tin tips yields at negative one, which would be another 518 00:28:58,280 --> 00:29:00,840 Speaker 1: fifteen plus basis points from year, is something that the 519 00:29:00,880 --> 00:29:03,120 Speaker 1: market needs to have on the radar as a risk. 520 00:29:03,400 --> 00:29:05,000 Speaker 1: And thank you, I'm gonna get you a view on 521 00:29:05,000 --> 00:29:07,360 Speaker 1: this market that's for sure, handling in the female capitol 522 00:29:07,400 --> 00:29:10,200 Speaker 1: market's head. If us right strategy. This is the Bloomberg 523 00:29:10,280 --> 00:29:14,640 Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from 524 00:29:14,680 --> 00:29:18,040 Speaker 1: seven to ten am Eastern on Bloomberg Radio and on 525 00:29:18,120 --> 00:29:22,400 Speaker 1: Bloomberg Television each day from six to nine am for 526 00:29:22,640 --> 00:29:27,600 Speaker 1: insight from the best in economics, finance, investment, and international relations. 527 00:29:28,040 --> 00:29:32,720 Speaker 1: And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, 528 00:29:32,880 --> 00:29:36,480 Speaker 1: Bloomberg dot com, and of course on the terminal. I'm 529 00:29:36,520 --> 00:29:39,200 Speaker 1: Tom Keene, and this is Bloomberg