Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com,
Speaker 1: and of course on the Bloomberg Terminal. Coming to us,
Speaker 1: Mr Brady of Texas, Kevin Brady, of course a Republican
Speaker 1: from Texas and farmer that far more than that, I
Speaker 1: should say, one of the clearest thinkers on the Republican
Speaker 1: side on what is correct away from the federalism of
Speaker 1: this nation. Kevin Brady, I want to take you down
Speaker 1: to your woodlands, down to Houston Methodist Hospital and Kelty Baker,
Speaker 1: the head of medicine at that wonderful institution. I want
Speaker 1: you to explain how you dovetail Dr Baker's aients with
Speaker 1: the tony or not of anti science, but the tone
Speaker 1: of doubt that we see nationwide among the unvaccinated. You know,
Speaker 1: I know this is this is frustrating. I am vaccinated,
Speaker 1: have been urging my constituents and neighbors to do the same.
Speaker 1: It is uh, it is a difficult argument to win. Frankly,
Speaker 1: with those thrown vaccine. I think at the end of
Speaker 1: the day, it comes down to genuinely for most you know,
Speaker 1: they don't know that this is safe yet. I think
Speaker 1: many of them are telling me, you know, get out
Speaker 1: of the emergency authorization, make that a permanent safety decision.
Speaker 1: I think that will help some, if not all. Convis
Speaker 1: of Brady, you were at great support for Donald Trump.
Speaker 1: He got vaccinated quietly, without fanfare. What do you need
Speaker 1: from your guy right now to change the trend of
Speaker 1: the unvaccinated. Yeah, I think the key thing here obviously
Speaker 1: reward people for being vaccinated. We're seeing in places like
Speaker 1: Houston where actually asking the vaccinated to mask up to
Speaker 1: protect the unmasked unvaccinated that I think that's probably wrong incentive. Secondly,
Speaker 1: I think we need a permanent authorization for those vaccines
Speaker 1: and a lot more consumer education. Uh, certainly in our area,
Speaker 1: I think that would be key. So we're seeing, you know,
Speaker 1: more of this delta in some of the land the variant.
Speaker 1: We're also unforcedly seeing that coming across the southern border,
Speaker 1: which is troubling people in a big way as well.
Speaker 1: So I'm hopeful we can keep making progress but but
Speaker 1: I will tell you too, I think I think President
Speaker 1: Biden vice President Harris did the country disservice during the campaign,
Speaker 1: essencially planning the seeds of doubt on the vaccines developed
Speaker 1: under President Trump. And I think that that Okay, please,
Speaker 1: I'm gonna give you that idea that they planted the
Speaker 1: seeds of doubt and it was part of the campaign
Speaker 1: as well. But you didn't answer my question, what does
Speaker 1: this nation need from the former president right now to
Speaker 1: explain to the jackson Ian unvaccinated that they need to
Speaker 1: be vaccinated. Well, I think the president President Trump has
Speaker 1: been clear about this that he has talked about the
Speaker 1: need to be vaccines, talked about the remarkable success in
Speaker 1: bringing these vaccines to market in record times. So I
Speaker 1: will tell you I think it is this president and
Speaker 1: vice president who bear the burden right now. And I'll
Speaker 1: tell I'm willing to help, an eager to help. I've
Speaker 1: been preaching this back home in a in a big way,
Speaker 1: especially as we see these new variants coming forward. Representative,
Speaker 1: there is a huge delta, and I'd forgive me for
Speaker 1: the pun between Republicans and Democrats when it comes to
Speaker 1: the vaccination rates and actually in more heavily democratic areas,
Speaker 1: the vaccination rates tend to be much higher and people
Speaker 1: tend to be more open to getting vaccinated. How is
Speaker 1: it that you see President Biden playing a big role
Speaker 1: in shoring up confidence and vaccines. If it's largely the
Speaker 1: Republican regions that still show down out well, I'll tell
Speaker 1: you it was early on. It was the Democratic regions
Speaker 1: where the problems were at Everyone criticized President Trump for that.
Speaker 1: I think, frankly, to be fair, the president, this president
Speaker 1: now in the administration bears the responsibility and certainly, you know,
Speaker 1: perhaps for the first time, bring both parties together on
Speaker 1: this mission, because I think it is so important right now.
Speaker 1: Again it is. It's frustrating for us of us who
Speaker 1: think we should find common ground here to have this
Speaker 1: just go at a loan mentality. I'm a little frustrated
Speaker 1: with it. But we have to keep making progress and
Speaker 1: it's not going door to door, not mandating. I think
Speaker 1: we can do more of that. I think we can
Speaker 1: do better. All right, Just a forty five seconds left. Congressman,
Speaker 1: I'm wondering you talk about bipartisanship and bringing people together
Speaker 1: in Washington. What's your chance in your opinion based on
Speaker 1: your Republican colleagues of having a bipartisan agreement in a
Speaker 1: very near term on this one trillion dollar infrastructure spending
Speaker 1: package that so many people uh seemed to support whatever
Speaker 1: side of the aisle that they are on. Yeah, I
Speaker 1: think I think we're all hopeful that they can find
Speaker 1: common ground here. We haven't seen munch of details, but
Speaker 1: I think we're we're encouraging people to find common grounds.
Speaker 1: I'm left optimistic about the votes for because clearly the Speaker,
Speaker 1: Clothy and leaders Humor want this to be the pilot
Speaker 1: shoot that pulls along that three and a half trillion
Speaker 1: dollar massive expansion of the welfare state. There won't be
Speaker 1: Republican and support that if they were truly separate. If
Speaker 1: one went forward period, I think there'd be song support
Speaker 1: from structure. We all to get it done. Kevin, Thank
Speaker 1: you so much. Kevin Ready with US of Texas greatly
Speaker 1: appreciated the Congressman from the Woodlands. Right now, off of
Speaker 1: Dr Bremer's comments, Dr emsh adalgia with JOHNS. Hopkins Center
Speaker 1: for Health Security, I need to talk to you doctor
Speaker 1: about the medicine realities within democracy and liberty. Ian Bremer
Speaker 1: is talking from a political aspect, you represent the medical aspect.
Speaker 1: Can you succeed that your medicine amid American democracy and
Speaker 1: our definition of American liberty? Yes, I think we can.
Speaker 1: And I think if you're talking about vaccine mandates, I
Speaker 1: think it's one thing for the government to mandate, and
Speaker 1: I think that's very difficult and doesn't usually happen. But
Speaker 1: we've got so many private organizations, employers, schools, or things
Speaker 1: that are transportation companies where I do think it's justified
Speaker 1: for mandates, including in my own industry where we're struggling
Speaker 1: to get nurses, for example vaccine. And so I do
Speaker 1: think that when we institute mandates, you see vaccination rates
Speaker 1: go up, and I think it illustrates confidence in the
Speaker 1: vaccines because they are safe and effective. This you should
Speaker 1: be a non controversial vaccine. Why are selected nurses afraid
Speaker 1: to be vaccinated. It's unclear to me, because plus of
Speaker 1: doctors are vaccinated, But when you go to nurses, it's
Speaker 1: maybe in some hospitals fift and it's likely because they've
Speaker 1: swall of misinformation, At least from my personal experience talking
Speaker 1: to some of these nurses, they've seen something on Facebook
Speaker 1: specifically things about fertility, things about this being experimental. Uh.
Speaker 1: And there are some people who believe these ideas about
Speaker 1: microchips and five G as well, which is kind of surprising,
Speaker 1: but it's taken hold, and I think the nursing unions
Speaker 1: have kind of given them cover and have blocked administrators
Speaker 1: from or at least scared off administrators from mandating the vaccines,
Speaker 1: but more and more of them are going to do it,
Speaker 1: and I think once we get full left approval, I
Speaker 1: think it's really going to be universal. I think the
Speaker 1: VA steps yesterday as well as other organizations, are going
Speaker 1: to make it the norm that health care workers should
Speaker 1: be vaccinated. And I think that's what it should be
Speaker 1: because it's it's a professional obligation and I was one
Speaker 1: of the first people to get vaccinated the minute I
Speaker 1: could before Christmas amish. Some people might say this is
Speaker 1: an overly narrow or complicated issue at this time of
Speaker 1: the day, but I feel like this goes to the
Speaker 1: heart of the issue, and that is the Department of
Speaker 1: Justice and the memo that they put out yesterday basically
Speaker 1: saying that even though this vaccine only has emergency authorization,
Speaker 1: that doesn't necessarily mean that employers and that universities cannot
Speaker 1: mandate that people get vaccinated. This sort of goes to
Speaker 1: the heart of the issue of legal immunity for entities
Speaker 1: that decide to create some sort of vaccination mandates. How
Speaker 1: important is it for the government to lead on this issue.
Speaker 1: It's important that the government give these companies assurance because
Speaker 1: they were kind of brought into this by the government's
Speaker 1: request through Operation Warp Speed. And often during pandemics, when
Speaker 1: there's a public health emergency, there are indemnifications done for
Speaker 1: those companies in order to get them to make this
Speaker 1: vaccine because they have to do it quickly, they have
Speaker 1: to do it uh in an expeditious manner, and there
Speaker 1: is some uncertainty, and this is what happened during the
Speaker 1: seventy six wine fluid, happened during two thousand and one pandemic.
Speaker 1: So I think it is important that the government say
Speaker 1: that these companies are going to be um indemnified because
Speaker 1: we're in a we're in it. Basically, this is a
Speaker 1: government run program in order to curtail this pandemic. I
Speaker 1: don't think that there's going to be that many losses.
Speaker 1: So because when you look at the safety and efficacy
Speaker 1: of these vaccines. They're really off the charts when it
Speaker 1: comes to any vaccines that humans have ever created. So
Speaker 1: then why haven't they Why haven't these vaccines gotten full authorization?
Speaker 1: Why do we still have an asterisk around them at
Speaker 1: a time when there is such efficacy rates? And why
Speaker 1: is it that kids under the age of twelve cannot
Speaker 1: get vaccinated? So the emergency use authorization was necessary because
Speaker 1: in order for the f DAY to approve a vaccine,
Speaker 1: they need six months of data. That's just sort of
Speaker 1: what they do. So I fiser recently crossed that threshold.
Speaker 1: They've applied now for priority review. It's likely to happen
Speaker 1: faster than than the six months that they have during
Speaker 1: a priority review, but it is something that I think
Speaker 1: we should do faster and quicker because we know that
Speaker 1: this is holding up many places for mandating the vaccines,
Speaker 1: and it's giving anti vaccine activists a talking point calling
Speaker 1: an experimental even though emergency use authorizations have been around
Speaker 1: for a long time, when we use them during H
Speaker 1: one N one and doing PICA, I think that we're
Speaker 1: gonna see children approved below the age of twelve. But
Speaker 1: it's in iportant that we do the studies because we're
Speaker 1: trying to make sure that this is safe and effective
Speaker 1: at the risk benefit ratio favors the vaccine in that
Speaker 1: age group because remember, as you get to those younger
Speaker 1: age groups, the risk of severe disease falls to very
Speaker 1: low levels, lower than influenza for a child less than
Speaker 1: twelve years of age. So we want to get it right,
Speaker 1: want to get the dosing right. Hopefully this will be
Speaker 1: something that we see probably in late fall early winter.
Speaker 1: Dr Deult join a game theory basis, It seems to
Speaker 1: be that the medical community is drowning in success. It's
Speaker 1: a miracle that we got the mRNA vaccines done so quickly.
Speaker 1: Is most of the angst right now, because this is
Speaker 1: all happening so fast, unlike a slower process of previous pandemics.
Speaker 1: It may be part of it because m RNA vaccines
Speaker 1: do give you that great advantage to make a vaccine
Speaker 1: candidate within hours or weeks and then move into clinical
Speaker 1: trials quickly. And I think that the lightning speed of this,
Speaker 1: which was one of the advantages of m r and
Speaker 1: A vaccines, has been something that people have exploited to
Speaker 1: say this happened too quickly, But you imagine if we
Speaker 1: were still waiting the old way for a new vaccine,
Speaker 1: how many more hundreds of thousands of people would have
Speaker 1: died United, how many illnesses would have happened. So I
Speaker 1: think that the speed of the MR and A vaccines
Speaker 1: is what makes them the most attractive thing about them,
Speaker 1: and it's probably going to change the way we face
Speaker 1: infectious disease outbreaks in the future forever. It's it's a
Speaker 1: huge advantage and we now have as humans against the
Speaker 1: viral kingdom. Doctor. We appreciate your time and thank you
Speaker 1: very much for your heart works joining us at the
Speaker 1: end of a very long shift. I'm sure doctor amish
Speaker 1: it down to the John's Hopkins Center for how Security,
Speaker 1: senior scholar. Most people in this building would call me
Speaker 1: a humble guy, extremely humble and always willing to listen
Speaker 1: to really smart people. And here's the first line in
Speaker 1: the note that I got from Jude to Immanuel his guests. No,
Speaker 1: it's just the first line, Tom, Johnny is right, So
Speaker 1: let's start there. Judemanuel bt I g chief for a
Speaker 1: derivative strategist. J Let's stop that. Why is John Wright?
Speaker 1: Because John, You've been saying this for quite some time
Speaker 1: now that you know, just asking the question, why can't
Speaker 1: you just be a passive S and P index investor
Speaker 1: in a world where, if you look at one, active management,
Speaker 1: as we heard from guests earlier in the show, has
Speaker 1: been giving you headaches for the most part, at least
Speaker 1: the last several months. The answer is to us, because
Speaker 1: if you're just simply a passive investor, you sort of
Speaker 1: are open to this range of emotions that frankly, if
Speaker 1: you look at the course of investing over the last
Speaker 1: twelve or thirteen years, certainly since the bottom of the
Speaker 1: financial crisis, you have to be in the psychological mode
Speaker 1: to where you're buying the dips. It's very difficult to
Speaker 1: say I'm going to commit cash in March of last year.
Speaker 1: Very difficult to say I'm going to commit cash in
Speaker 1: March of two thousand and nine, the times when you
Speaker 1: really wanted to do it. So either having something that
Speaker 1: causes you to outperform to the upside or outperformed of
Speaker 1: the downside gives you that psychological edge to do what
Speaker 1: we think you're gonna need to do and want to
Speaker 1: do for a number of years to come. I should
Speaker 1: be very careful here I'm not making a trade recommendation,
Speaker 1: want to be clear about that, Julian. You're the man
Speaker 1: who's got to do that for me. Work through it
Speaker 1: now then with me. I got all these issues on
Speaker 1: the horizon at the moment. How COVID cases play out.
Speaker 1: Do they translate into higher depths, increased hospitalizations, maybe more
Speaker 1: restrictions on the economy that just turned down the dial
Speaker 1: on mobility. Then you've got the China factor as well.
Speaker 1: It's just worry after worry, Julian, just parting up as always,
Speaker 1: and this market keeps climbing that wall of worry to
Speaker 1: all time highs. How do you navigate those issues? So again, look,
Speaker 1: the price action tells all right now. And the price action,
Speaker 1: even though it is telling all, is telling us somewhat
Speaker 1: contradictory message that at the headline, the S and P
Speaker 1: five continues to rise, very much propelled by the NAZAC
Speaker 1: within the NASDA, very much propelled by a number of stocks,
Speaker 1: all of whom we're gonna hear about earnings over the
Speaker 1: next two to three days. Um, but you, there is
Speaker 1: starting to be a diminution amongst the rest of the troops.
Speaker 1: Breath has turned a little bit soft that can continue.
Speaker 1: But frankly, from our point of view, when you look
Speaker 1: at the bigger picture, when you've seen the kind of
Speaker 1: economic strength that we have seen build over the course
Speaker 1: of the year, whether this is the peak growth or not,
Speaker 1: the implication is stocks are likely moving higher over a
Speaker 1: multi year period. From Julie, you look at the dynamics
Speaker 1: that are out there, the derivatives and all that. Let's
Speaker 1: look at the one derivative, which is cash on the
Speaker 1: balance sheet today this afternoon. The three big ones Microsoft, Apple,
Speaker 1: the other one Google hundred thirty five plus plus two
Speaker 1: hundred and four kazillion dollars. These guys could top trick
Speaker 1: half a trillion dollars cash in their report worth this afternoon.
Speaker 1: What's the social good of all that money? Should they
Speaker 1: return it to shareholders? Well, look, they are for the
Speaker 1: most part slowly through buy backs. Um, you know, the
Speaker 1: signaling of sort of a special dividend or something like
Speaker 1: that from companies like that that are poised for continuous growth.
Speaker 1: Secular growers has tended over time not to be good.
Speaker 1: You can argue about the social good, but I think frankly,
Speaker 1: what you're going to hear from them is, you know,
Speaker 1: ways of getting stakeholders more included in the debate rather
Speaker 1: than just shareholders. So talking about wages, talking about employment
Speaker 1: programs in an economy that frankly confounds people because of
Speaker 1: the lack of the return of the participation rate in
Speaker 1: a in a market where there are jobs incredibly plentiful. Julian,
Speaker 1: what's signaling power does the bond market have for equities
Speaker 1: at this point? Lisa, that is the I don't know,
Speaker 1: twenty trillion dollar question the size of the U S economy.
Speaker 1: From our point of view, Uh, it's really rather limited. Look. Obviously,
Speaker 1: we know that the Fed has, as you said earlier,
Speaker 1: put their thumb on the bond market. Um. But also
Speaker 1: when you think about it, all the extraordinary monetary and
Speaker 1: fiscal stimulus has come together to chase asset prices higher
Speaker 1: across the entire range, whether it's commodities earlier in the year, obviously, stocks,
Speaker 1: goods prices i e. Inflation, or the bond market. To us,
Speaker 1: it's all the wall of money. And the question is
Speaker 1: is policy or perceptional likely to change? And our view
Speaker 1: is that you could get to a point where if
Speaker 1: the labor market does sort of uh, remove the logjam
Speaker 1: that we have come the fall, which is the Fed's expectation.
Speaker 1: UH in an environment where the FED is not likely
Speaker 1: to advance the taper conversation materially, this week you could
Speaker 1: see yields start to rise in the long end, Julian,
Speaker 1: just quickly, you still at full pans and dr end
Speaker 1: on SMP. We are, and and here's here's the reasoning. John. Again,
Speaker 1: as I said earlier, this kind of economic strength, while
Speaker 1: it bodes very very well on a multi year period,
Speaker 1: doesn't necessarily mean that corrections don't happen. We've gone quite
Speaker 1: some time without a correction, and frankly, we're concerned about
Speaker 1: some of those internals, the lack of breath um and
Speaker 1: we think, actually, if you look at it, this be
Speaker 1: a week where there's a potential for a surprise in
Speaker 1: terms of reaction from the large cap tex stocks, which
Speaker 1: have been doing all the heavy lifting. Interesting they started
Speaker 1: reporting in earnest a little bit later after the close, Julian,
Speaker 1: thank you, sir, Jenny Emanuel Ba, chief equity and derivative
Speaker 1: strategist Judian love catching up these sur and so White
Speaker 1: we're gonna start stop now and look at Apple will
Speaker 1: power with us with Bear the senior research analysts with
Speaker 1: a terrific note, and what's so great about will power?
Speaker 1: At the bottom of his note he shows you his
Speaker 1: belief and his track record from another time. This is
Speaker 1: a guy who just before COVID, just before the pandemic,
Speaker 1: was outperformed on ninety and will power sustain that outperform
Speaker 1: through thick and thin? Will power you sustain your outperformed today? Simply?
Speaker 1: Can Beijing upset the Apple Apple cart? Can Beijing all
Speaker 1: this upset in China derail your outperform? Well, Tom, that's
Speaker 1: a great question. Good morning. Thanks, there's always for having me.
Speaker 1: Great great to be on on the on the show. Here.
Speaker 1: Look at China is always a big wild card, and
Speaker 1: you know, at least at this point has still been
Speaker 1: a big driver of Apples and results, and we're still
Speaker 1: expecting that to change near term. But it's certainly something
Speaker 1: we keep an eye on with all the tumult that's
Speaker 1: that's underway in that country with respect to you know,
Speaker 1: other other tech companies, But at this point Apples be
Speaker 1: able to navigate that market fairless successfully. Of course, that's
Speaker 1: just one piece of the puzzle for Apple. As you
Speaker 1: think about the broad based drink we expect again you
Speaker 1: know this quarter. Well, as you know, the cheap guide
Speaker 1: to Apple over the last decade is just to buy it,
Speaker 1: to keep buying it, and then to keep buying it.
Speaker 1: It's complex on one front, though, and I've always struggled
Speaker 1: with it, and I'd love you to guide me through it.
Speaker 1: What multiple do you put on a name like Apple
Speaker 1: given the evolution of this company over the last ten years. Well,
Speaker 1: it's a great question. It's been one of the central questions,
Speaker 1: and I think you know, lunch panel probably if there's
Speaker 1: a bare thesis is probably on the valuation, decreation and
Speaker 1: multiple expansion. You know that that's occurred here over time. Look,
Speaker 1: we played a long game with Apple, right, and our
Speaker 1: view over a long pretty time has been it will
Speaker 1: continue to grow into valuation and you're betting on their
Speaker 1: ability to continue to add new value added you know,
Speaker 1: services and solution you know, for in customers, and that
Speaker 1: in turn continues to drive you know more, you know,
Speaker 1: shareholder value. Our view is that increasingly you know, falls
Speaker 1: into the consumer staples camp, right, so that it's not
Speaker 1: a name that you can like cop against traditional big
Speaker 1: cap tech you know, per se. If you start to
Speaker 1: look at consumer stables names it's you know, we think
Speaker 1: you can justify multiple and get your closer to thirty times,
Speaker 1: which ultimately is what we're currently using to get to
Speaker 1: our hundred sixty dollar target price. Well, this is an
Speaker 1: important point, the idea that you emphasize services. Does that
Speaker 1: mean that at this point people are basically not looking
Speaker 1: for Apple to necessarily innovate with the Apple Watch or
Speaker 1: some other product that really it has to do with
Speaker 1: ongoing revenues from either iPhone sales or from the services
Speaker 1: that you can get on the iPhone that will determine
Speaker 1: the future revenues. Well, I think that's a great point,
Speaker 1: and look at me services now is of revenue, it's
Speaker 1: growing north of has a much higher than average who's
Speaker 1: margin and close to se and that's that's a big
Speaker 1: part of the story in terms of driving higher higher
Speaker 1: multiple than what it traded at historically. And our expectation
Speaker 1: is that can tanna look at me they I think
Speaker 1: just last quarter reported of course, the six D sixty
Speaker 1: million paid subscriptions you know on the platform. That's the
Speaker 1: number that continues to rise by forty million, you know,
Speaker 1: every quarter, and that's why it's critical that that services
Speaker 1: like Apple TV Plus and things down the road continue
Speaker 1: um to take off because that helps that helps strive
Speaker 1: that line of business for them. Of course, that's just
Speaker 1: one piece of it, right The key to the story
Speaker 1: has been the consistent diversification beyond iPhone, which is now
Speaker 1: a little underfif of revenue, but still of course the
Speaker 1: lynchpin to the story and a big driver near a
Speaker 1: medium term. Still, would you like to see Apple become
Speaker 1: a media company? I mean, there's been so much speculation
Speaker 1: about their buying let's say, a Netflix or some other
Speaker 1: big service provider that way to enhance their Apple TV.
Speaker 1: Is that still on the table? Well, I think Apple
Speaker 1: TV Plus is very much on the table as you
Speaker 1: know right, Ted Lasso of course has been a great show,
Speaker 1: but they need a few more hits like that. I
Speaker 1: think at this point it doesn't appear they plan to
Speaker 1: buy a major media company. I'm kind of jump start
Speaker 1: that effort. I mean, what kinds that's always twenty Perhaps
Speaker 1: they should have done that, Perhaps they should have looked
Speaker 1: at something in the Tontom Hiss viah Gole market. I
Speaker 1: think these are all things of intense interests as you
Speaker 1: go forward. Look at the end of the day. Part
Speaker 1: of the bet on this and the bet on the
Speaker 1: valuation is that this is a true platform that they
Speaker 1: can build off right and services and media are key
Speaker 1: elements that. And now for William Power. For those of
Speaker 1: you on radio, we get out the HP twelve c Okay,
Speaker 1: you don't do with some of the parts on Apple,
Speaker 1: but you do extrapolate out to some form of estimate
Speaker 1: off of five dollars ten cents. If I'm the gloomiest
Speaker 1: Lisa Bramo, it's gloomy on Apple that I could gloomily
Speaker 1: possibly be, I would do a fifteen percent gross up
Speaker 1: on this. If I do that twenty four months out,
Speaker 1: will Power, I'm at two hundred and two dollars a
Speaker 1: share with a three point four trillion dollar market cap?
Speaker 1: Is that feasible? Look? I I think that's possible. I
Speaker 1: mean the day, I think part of what's gonna happen
Speaker 1: here on Thomas. As I said earlier, they're gonna continue
Speaker 1: to grow into the multiple and that my expectation is
Speaker 1: what we While we may not have the level of
Speaker 1: beat we had this Passporter, I think there's still nice
Speaker 1: upside the current estimates, both this quarter and as you
Speaker 1: move into the fiscal queue four and look, one of
Speaker 1: the key things to keep in mind, we haven't really
Speaker 1: touched on this five G cycle is still super early,
Speaker 1: and it may not be the passive super cycle in
Speaker 1: year one. But if they just sold over, you know,
Speaker 1: a hundred million iPhones that are five G a capable
Speaker 1: against a mobile base as close to a billion iPhones,
Speaker 1: that's a big upgrade opportunities still for multiple years. John,
Speaker 1: that pause that will Power gave you when I asked
Speaker 1: him that question is known as the General Council pause.
Speaker 1: That's because he's really not supposed to interpot extrapolate out
Speaker 1: twenty four months in the night? Is my badge? And
Speaker 1: Baard gonna work to respond him? What to respond to him?
Speaker 1: What Swignalas gonna got in the house? Bats Well, great
Speaker 1: to catch up, appreciate time, said William pat of Bad
Speaker 1: Looking for one sixty. That's the price target from Bad
Speaker 1: on Apple right now. For Global Wall Street, Ian Lincoln
Speaker 1: joins with Female Capital Markets. How do the US rate
Speaker 1: strategy is a hyperdense morning note always read worldwide and
Speaker 1: I'm gonna go right to a single sentence you have
Speaker 1: which suggests the demand for bills notes and bonds and
Speaker 1: that is the backstop of demand you see out there.
Speaker 1: Define that backstop well, Tom, I certainly think that if
Speaker 1: we look at the primary takedown of treasury supply via
Speaker 1: the auctions, we continue to see a willingness to underwrite treasuries,
Speaker 1: whether it's from domestic accounts primarily banks and investment firms,
Speaker 1: or overseas central banks in particular. These auctions continue to
Speaker 1: see strong sponsorship, and that at a minimum suggests that
Speaker 1: they will continue to be a backstop of demand that
Speaker 1: is a really going away anytime soon. It's less about
Speaker 1: whether or not there's a willingness to absorb supply and
Speaker 1: more a function of what levels will we see these takedowns,
Speaker 1: And with ten year yields at it's very difficult to
Speaker 1: argue it's not a strong market for us dead and
Speaker 1: one needs to go right oh wrong for that matter
Speaker 1: to get ten years to one eighty from eighty by
Speaker 1: year end. That was a code from Morgan Stanley. What
Speaker 1: would need to happen for that to happen? And you'll mind,
Speaker 1: at least well, in my mind, I don't think that
Speaker 1: it is as simple as passing, for example, the infrastructure build,
Speaker 1: because that will be staged in over time and not
Speaker 1: actually lead to the type of wage inflation that the
Speaker 1: market would need to see for inflation in and of
Speaker 1: itself to become self fulfilling. The one key aspect of
Speaker 1: this recovery that has been missing thus far has been
Speaker 1: wage inflation. If we see the labor market participation rate
Speaker 1: continue to be low and our pockets of labor scarcity
Speaker 1: over the course of the next few months, we might
Speaker 1: see spikes in wages, which would then get the market
Speaker 1: excited about the idea that inflation could be self fulfilling,
Speaker 1: but argue even that would fall into the FEDS characterization
Speaker 1: as transitory. We really are coming out of a massive
Speaker 1: shift in the real economy, and there's a lot of
Speaker 1: different moving pieces yet to be resettled where they will
Speaker 1: be going forward. And this is really important Tom and Lace,
Speaker 1: who were discussing it a little bit earlier. The failure
Speaker 1: to see real continued improvement in things like the employment
Speaker 1: to population ratio, the participation rate in America. If we
Speaker 1: don't get that improvement, if we don't get back to
Speaker 1: where we were saying, how much would that complicate the
Speaker 1: outlook for this federal reserve, which, to be fair is
Speaker 1: pinning its forecasts on the idea that we do fully
Speaker 1: recover on those aspects. Well, I think it will very
Speaker 1: much complicate the FEDS path for rates going forward, because
Speaker 1: on the one hand, they've acknowledged that in relation has
Speaker 1: come in stronger than even they were expecting. But on
Speaker 1: the other hand, under their new framework, the FED needs
Speaker 1: to remain accommodative for frankly the foreseeable future, until the
Speaker 1: unemployment rate gets to the lows that we've already seen,
Speaker 1: and within that we are assuming, and so is the FED,
Speaker 1: that the labor market participation rates slowly starts to increase.
Speaker 1: If you don't see labor market participation increase, then you'll
Speaker 1: continue to have this surplus supply of workers that if
Speaker 1: they if there isn't enough incentive for them to slowly
Speaker 1: come back into market, will really leave the FED at
Speaker 1: a loss in their new framework. At this point, given
Speaker 1: the Fed's intervention, is the bond market accurately reflecting the fundamentals?
Speaker 1: I think that this moment, the bond market is reflecting
Speaker 1: the realities of the delta variant, not so much that
Speaker 1: it's going to lead to increased lockdowns or revival restrictions
Speaker 1: in the US, but rather it's a reminder that these variances,
Speaker 1: the potential for these variants are going to be with
Speaker 1: the real economy for a while. And so while we
Speaker 1: might have brought into the beginning of this year the
Speaker 1: assumption that after Labor Day we'd be in the new normal,
Speaker 1: the reality is we're going to continue as an economy
Speaker 1: and globally and domestically UH to to deal with the pandemics.
Speaker 1: That it's extended the timeline out of the pandemic. I
Speaker 1: think that's why rates are where they are at this moment.
Speaker 1: Just real quick, do you expect negative real yields to
Speaker 1: go even more negative as inflation expectations continue to pick up?
Speaker 1: As long as nominals are contained, inflation is drifting its direction,
Speaker 1: and the Fed doesn't hasten the departure from que, there's
Speaker 1: no reason to expect that we couldn't see real yields
Speaker 1: continue continue to drift. Flower. I think tenure breaking or
Speaker 1: tin tips yields at negative one, which would be another
Speaker 1: fifteen plus basis points from year, is something that the
Speaker 1: market needs to have on the radar as a risk.
Speaker 1: And thank you, I'm gonna get you a view on
Speaker 1: this market that's for sure, handling in the female capitol
Speaker 1: market's head. If us right strategy. This is the Bloomberg
Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from
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Speaker 1: Tom Keene, and this is Bloomberg