Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all purtnising the power of Business
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Speaker 1: analyst in more than one and twenty countries. You can
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Clobal News. Well, fifty seven percent that's
Speaker 1: the increase in new COVID cases here in the United
Speaker 1: States in the last two weeks. That's according to data
Speaker 1: from the New York Times. More than one hundred thousand
Speaker 1: new cases per day. Hospitalizations are also up during the
Speaker 1: same period of time twenty nine percent, again according to
Speaker 1: the Times. Let's get into it with Dr Andy Pekosh,
Speaker 1: Professor of molecular microbiology and Immunology at the Johns Hopkins
Speaker 1: University Bloomberg School of Public Health. The Bloomberg School of
Speaker 1: Public Health that is supported by Michael R. Bloomberg, founder
Speaker 1: of Bloomberg LP and Bloomberg Philanthropy. Dr Pekosh. It's been
Speaker 1: a while since we've spoken, but I think it's a
Speaker 1: good time. Not just anecdotally, A lot of people in
Speaker 1: my circle are are getting COVID. Katie's just recovered. I
Speaker 1: hope you don't mind me saying that. You've talked about it,
Speaker 1: You've tweeted about it. A lot of our colleagues are out,
Speaker 1: why are we seeing this latest spike even among the
Speaker 1: vaccinated the boosted. Yeah, well, I think we're saying the
Speaker 1: main thing here because you know, it's been sometimes since
Speaker 1: we've sort of let up all of our public health interventions,
Speaker 1: so we've now been an extended period of time where
Speaker 1: people have been going about there, they're somewhat normal business
Speaker 1: and you know, putting getting put into situations where they
Speaker 1: could potentially be exposed to the virus. So I think
Speaker 1: that's one aspect of it that's contributing. And then the
Speaker 1: other aspect is UM. You know, you're getting further and
Speaker 1: further from your last boost if you've taken one UM,
Speaker 1: and immunity is going to wane over time. And the
Speaker 1: first thing that you'll see when your immunity wanes, is
Speaker 1: an increase in the number of cases. Um, what we're
Speaker 1: hoping is that that increased number in cases is going
Speaker 1: to lead to a lower amount of hospitalizations and severe cases.
Speaker 1: But that's really wherever the monitoring is happening right now.
Speaker 1: And is that what we're seeing so far that even
Speaker 1: with this surge in cases, it seems like hospitalizations, we
Speaker 1: haven't heard as much about them. Yeah, you know, I
Speaker 1: don't want to say that a surgeon cases is good
Speaker 1: to see, but when you see it with a correspondingly
Speaker 1: smaller surgeon hospitalizations, and when you look at who's getting hospitalized,
Speaker 1: it still tends to be people who are who have
Speaker 1: not been boosted or have not had a COVID infection
Speaker 1: in recent times. So the signs are there that says
Speaker 1: vaccination with a boosting or if you were vaccinated and infected,
Speaker 1: you have at least protection from severe disease and are
Speaker 1: probably seeing some protection from infection as well. And Dr Pekosh,
Speaker 1: I also want to ask about the pill because I've
Speaker 1: been making the joke. You know, I got COVID at
Speaker 1: the beginning of April. I got boosted the hard way,
Speaker 1: but I could not get my hands on any sort
Speaker 1: of treatment, on any sort of pilla exactly tried to,
Speaker 1: could not get there, didn't have an underlying condition, and
Speaker 1: I found that somewhat frustrating. Um, I do want to
Speaker 1: jump in because I wonder if it's a state by
Speaker 1: stately and that's what I wanted to to highlight here. Yeah,
Speaker 1: you know, one of the things that I think people
Speaker 1: should really do right now is be a little proactive,
Speaker 1: particularly if you're in one of the groups that's highly
Speaker 1: vulnerable to severe COVID. You know, go out and find
Speaker 1: the pharmacies that do this test as treat program, because
Speaker 1: not all pharmacies do the program, UM, and not all
Speaker 1: pharmacies have a lot of doses of these drugs in stock.
Speaker 1: So now it's a good time if you if you
Speaker 1: want to pa prepare in some way, go out and
Speaker 1: find those pharmacies so that you know where to go
Speaker 1: in case you get infected. Okay, I'm so frustrated because
Speaker 1: is if we know this is effective, and we knew
Speaker 1: there would be more spikes in cases, why do some
Speaker 1: pharmacies not have sufficient supply. You know, there's a little
Speaker 1: bit of a problem here in terms of being able
Speaker 1: to have the right accreditations to be able to do
Speaker 1: the test and UM and make the prescription at the
Speaker 1: same time. So not all pharmacies are capable or have
Speaker 1: the right accreditation to be able to do that. So
Speaker 1: more and more are doing this, more and more are available.
Speaker 1: I think the flow of the drug into the pharmacies
Speaker 1: is increasing, but I think people still have to do
Speaker 1: a little bit of work to make sure they know
Speaker 1: where to go UM, particularly because the timing of the
Speaker 1: drug is so important. You've got to take it within
Speaker 1: five days or so of symptom onset for it to
Speaker 1: be effective. And dr I mean, like Tim mentioned, we've
Speaker 1: run in a lot of the same circles and in
Speaker 1: those circles at a lot of people in that circle
Speaker 1: UM have gotten COVID just in the last couple of weeks.
Speaker 1: Definitely a wave going on. And I mean in my
Speaker 1: own personal conversations, I've heard a lot of frustration, you know,
Speaker 1: I've been triple vacs, like what what even is the
Speaker 1: point of getting the booster? And I mean, what would
Speaker 1: you say to that if it almost feels inevitable? Again,
Speaker 1: how important is that? Uh? You know, initial booster, that
Speaker 1: second booster yeah, the the second the well at least
Speaker 1: the first booster, so our third mr and A dose
Speaker 1: is very very critical to make sure that your immune
Speaker 1: response recognizes variants like delta and all macron um with
Speaker 1: with a good enough efficacy so that you can stay
Speaker 1: out of the hospital. I think one of the things
Speaker 1: that we have to realize here is is the virus
Speaker 1: has changed an incredible amount since the early days of
Speaker 1: the vaccination roll out. UM, we had incredibly high efficacy
Speaker 1: numbers early for the vaccine. The vaccine hasn't changed. The
Speaker 1: virus has gotten better at infecting us, it's gotten better
Speaker 1: at evading some of immunity. So what we're now seeing
Speaker 1: is that the vaccine it doesn't have that beautifully perfect
Speaker 1: protection that we saw initially. So the vaccines are still good.
Speaker 1: We have to work on getting the right strategy of
Speaker 1: vaccination to maintain protection. But it's really the virus that
Speaker 1: has become so much better at infecting us. Dr Pekosh,
Speaker 1: we only have thirty seconds left. I do want to
Speaker 1: briefly ask you about monkey pox, which is spreading in
Speaker 1: a handful of areas in the UK and in the US.
Speaker 1: What do we need to know, um, monkey pox is
Speaker 1: only transmitted after very close contact with someone who's infected UM.
Speaker 1: It's not very easy to pick up UM. The cases
Speaker 1: in the US are still very low, so for the
Speaker 1: vast majority of people, it's not a concern right now. Okay,
Speaker 1: good to hear. Dr Andy Pecosh, professor of molecular microbiology
Speaker 1: and Immunology at the Johns Hopkins University Bloomberg School of
Speaker 1: Public Health. He joins us on the phone from Baltimore,
Speaker 1: the Bloomberg School of Public Health. It is supported by
Speaker 1: Michael R. Bloomberg, the founder of Bloomberg LP and Bloomberg
Speaker 1: phom Anthropies. You're listening to Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: A benchmark s G index has removed Tesla, sparked a
Speaker 1: debate about which companies do and don't pass muster with
Speaker 1: socially aware investors. We're talking about SMP. Dow Jones Indseeason
Speaker 1: removed Tesla from its SMP five hundred s G index
Speaker 1: because the company scawn environmental, social and government standards. Has
Speaker 1: remained quote fairly stable over the past year, but it's
Speaker 1: slipped down the ranks against improving global peers. Let's get
Speaker 1: into it with Shin contractor e SG analysts for Bloomberg Intelligence.
Speaker 1: She's with us in the Bloomberg Interactive broker's studio. Shaheen.
Speaker 1: What's what's not s G about Tesla? So, Tim sim
Speaker 1: great question. First, I honestly I shake Katy's excitement has
Speaker 1: been waiting to aboutin this morning. So when it comes
Speaker 1: to Tesla, it's really that S and that G that
Speaker 1: it that is the social and the government, sorry that
Speaker 1: it that it is challenged on SMP even cited it's
Speaker 1: relating to some things like racial discrimination, poor working conditions,
Speaker 1: and even on Bloomberg governance scores, for example, our executive
Speaker 1: compensation scores, they're not so great for Tesla. Okay, Shahan,
Speaker 1: you are such a nice person, but I know you
Speaker 1: have a spice to take here. So in the notes
Speaker 1: sent over, you wrote that we believe Tesla's removal from
Speaker 1: the SMP five s G index perhaps overdue. Why overdo
Speaker 1: the million dollar question? Is Tesla e s G um?
Speaker 1: I think that's highly sort of debated. Tesla is a
Speaker 1: very unique company where it's focused on the e UH
Speaker 1: seems to be sort of cater towards this impact theme.
Speaker 1: But when it comes to the S and the G,
Speaker 1: it's it faces challenges. And that's where I think that
Speaker 1: when it comes to a broody as she found E
Speaker 1: s she is at least to us all about risk mitigations.
Speaker 1: So when it comes to a company managing sort of
Speaker 1: the recent opportunities within its regulatory environment or within its
Speaker 1: operating environment, that's why we cannot ignore the S, M,
Speaker 1: the G. And that's where I think, Um, if we
Speaker 1: have to unpack ees she e perhaps fits Tesla. Tesla
Speaker 1: can be in an back found, it can be in
Speaker 1: an environmental fund, but in a broody as she found
Speaker 1: Artaic is perhaps not, and that is debatable. I will
Speaker 1: say that, well, so so what does fit into the
Speaker 1: category B S G if if Tesla doesn't, So it's
Speaker 1: really about companies that are managing their recent opportunities that
Speaker 1: are material I see sort of Tesla is one that
Speaker 1: people confuse the as she with sort of impact, right,
Speaker 1: what is doing good on the world versus E S?
Speaker 1: She is sure within that framework, but more about what
Speaker 1: are the as an opportunities that impact my bottom line
Speaker 1: and how am I managing that? So it's it's it's
Speaker 1: all about fitting within that framework. And there are multiple
Speaker 1: companies that sort of cater to this, but we have
Speaker 1: to separate E S SHE from an impact theme, if
Speaker 1: that makes sense. And so this is the specifically talking
Speaker 1: about the S and P five hundred s G index
Speaker 1: that Tesla was removed from. Do you think that other
Speaker 1: index providers could follow suit? Uh, that's that's a hard one.
Speaker 1: Like I said, you know, Tesla still today is the
Speaker 1: most debated or one of the most debated UH stocks
Speaker 1: out there. So it's this SMP removal I think fuels
Speaker 1: this debate. But according to our analysis, many are the
Speaker 1: E S SHE funds whard it. In fact, it is
Speaker 1: highly included stock in E S SHE funds. And this
Speaker 1: we'll just it's just going to continue that debate. What
Speaker 1: we're investing in audience, What does it need to know
Speaker 1: about investing in E S G companies? I think the
Speaker 1: main thing to understand is labels and what you see king.
Speaker 1: If you're impacting in the SC fund and you're seeking
Speaker 1: some kind of impact investing, that is a little sort
Speaker 1: of divided. So it's understanding what you want and then
Speaker 1: understanding the kind of fund that meets that I call
Speaker 1: it sort of looking under the hood. That makes sense.
Speaker 1: And when I hear you say impact, I mean I
Speaker 1: think disruption. I think disruptive companies. Is that sort of
Speaker 1: the definition that you're using as well? I think if
Speaker 1: it is additionality, what is the additionality in terms of
Speaker 1: either mission reductions, diversity, social governance issues that you're creating
Speaker 1: or is hes? She is more risk mitigation, like are
Speaker 1: you managing the risk that are in front of you
Speaker 1: relating to non financial indicators. At the end of the day,
Speaker 1: does this matter just in the last thirty seconds we
Speaker 1: have for Tesla. Uh, that's a good question. Um, I
Speaker 1: don't know. It's going to continue to fuel this debate.
Speaker 1: That's I think what we've what we sort of settled on.
Speaker 1: Whether you know, the MSCI indices are the broad shared
Speaker 1: with the passive funds and they still hold TESLA so
Speaker 1: in the in the grand scheme things. We just think
Speaker 1: it's going to feel this debate. We know what's going
Speaker 1: to annoy Elon Musk at least tweet. He's tweeted about
Speaker 1: it quite a bit. She can contractor E s G
Speaker 1: analyst for Bloomberg Intelligence within the Bloomberg Interactive Broker Studio.
Speaker 1: But you know he tweets about a lot of stuff.
Speaker 1: He certainly does. He does. This is Bloomberg Business Week
Speaker 1: with Carol Messer and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio. Well, if you've been listening to our program
Speaker 1: over the past ten days or so, you've you've heard
Speaker 1: quite a bit about the collapse of Luna and the
Speaker 1: algorithmic stable coin Terra USD. Terra's coins were supposed to
Speaker 1: be the future of money, but they relied on confidence,
Speaker 1: which can vanish in an instant. Zeke Fox and Shan
Speaker 1: right about the sixty billion dollar collapse in the new
Speaker 1: issue of Business Week magazine. It's available on newsstands, on
Speaker 1: the Bloomberg terminal and at Bloomberg dot com Slash business Week.
Speaker 1: Zeke Fox's financial investigations reporter at Bloomberg News. He's with
Speaker 1: us in the studio in New York. Joe Webber is
Speaker 1: the editor of Bloomberg Business Week. He joins us on
Speaker 1: the access line from Brooklyn. What I really like about
Speaker 1: Zeke and Muya's story is that it focuses not just
Speaker 1: on what happened and what went wrong, but it also
Speaker 1: includes uh, personal stories of people who lost a lot
Speaker 1: of money betting big on crypto in this space. Yeah,
Speaker 1: it's it was kind of shocking because for all of
Speaker 1: the kind of the headlines and all the stories and
Speaker 1: the the stuff of UM of what had gone wrong
Speaker 1: with Tera, which UM you know, taras usd was UM
Speaker 1: a stable coin UM and Luna was attached to it.
Speaker 1: Like for all of that, we had not really got
Speaker 1: to hear from story of stories of like real people
Speaker 1: who had money attached to this stuff and UM. Once
Speaker 1: all of that was vaporized, you know, people were left
Speaker 1: looking at holding paper bags basically UM. And and it's
Speaker 1: sort of an interesting space in general because of UM,
Speaker 1: you know, stable coins being a thing that we've asked
Speaker 1: to write about on on multiple times, uh on multiple occasions.
Speaker 1: And he had an amazing tether odyssey last year, and
Speaker 1: so immediately we're just like, Zeke, can you tell us
Speaker 1: more about the space? So, so, Zeke, would you discover
Speaker 1: as you as you dove into your reporting and some
Speaker 1: of the stories that you found along the way. Yes,
Speaker 1: So if you are not a crypto person, this coin
Speaker 1: that collapsed it would just sound insane. I mean it
Speaker 1: got up to this is a sixty billion dollar collapse,
Speaker 1: which in like traditional finance would be like big news.
Speaker 1: And basically, this was a coin that was supposed to
Speaker 1: always be worth one dollar because you could trade it
Speaker 1: for one dollar worth of a second coin, and you
Speaker 1: might say like, well, why do I want the second coin,
Speaker 1: and to that they would say, don't think about that
Speaker 1: too much. We're gonna pay you interest, and like it
Speaker 1: seems kind of like if it sounds kind of flimsy
Speaker 1: to you, it sounded kind of flimsy to a lot
Speaker 1: of people in crypto, but that didn't stop it from
Speaker 1: amassing like huge amounts of assets. And then last week
Speaker 1: it all like came crashing down. And I spent a
Speaker 1: while trying to talk to regular investors who had sunk
Speaker 1: their savings into this and found that, I mean, people
Speaker 1: really believed in it to the they sunk like their
Speaker 1: whole net worth into this. I know Katie's dying to
Speaker 1: come in on this because you know so much about
Speaker 1: this space, but I do have to ask thank you.
Speaker 1: I do have to ask Zeke, because you mentioned that, um,
Speaker 1: it would sound insane to a lot of people. I
Speaker 1: think one thing that perhaps gave people confidence was some
Speaker 1: of the backers. Right, you had Galaxy Digital Holdings, you
Speaker 1: had Jumped Trading, you had the venture investment arms of
Speaker 1: coin Based Global and Finance. Those are those are real names? Yeah,
Speaker 1: I mean this guy seemed legit. This was one of
Speaker 1: the biggest cryptocurrencies and it's uh creator, Doe Kwan, was
Speaker 1: like a major figure in the crypto world, and he
Speaker 1: was saying that this system he developed was going to
Speaker 1: be the future of finance. And in crypto there are
Speaker 1: a lot of projects that are sort of based on
Speaker 1: this idea of like, I don't know fake it until
Speaker 1: you make it. And there was this idea that if somehow,
Speaker 1: if it got going big enough and it really did
Speaker 1: become the future of finance, then whatever flaws there were
Speaker 1: in the business model could be kind of papered over,
Speaker 1: and that if we could just get it going, then
Speaker 1: the things that seemed maybe a bit ponzi ish about
Speaker 1: the plan would not be catastrophic. And tell us about
Speaker 1: what was happening as this went wrong, because as you
Speaker 1: lay out in your piece, this death spiral that it
Speaker 1: entered into this is something we see in money market
Speaker 1: funds that we see we can see in banks, this
Speaker 1: sort of run that just these these institutions that can't meet. Yeah,
Speaker 1: I mean. The idea was if Terra, the stable coin,
Speaker 1: dropped below a dollar, that arbitrageurs would come in and
Speaker 1: they'd buy Tara because they could trade one Terra for
Speaker 1: one dollar worth of the second coin, Luna. And so
Speaker 1: like if Luna went down to you know, ten cents,
Speaker 1: you would get ten lunas for your Terra and you
Speaker 1: would still be happy. So that would the arbitragures buying
Speaker 1: Terra would push the price of Terra back up to
Speaker 1: a dollar. But the problem was that as people started
Speaker 1: to worry the they bought, they were issued huge amounts
Speaker 1: of Luna, more and more Luna, and even though these
Speaker 1: giant piles of Luna were in theory worth the dollar,
Speaker 1: the selling of the Luna pushed on the price of Luna.
Speaker 1: More and more lunas issued. By the end of the
Speaker 1: week there were like trillions of Lunas out there, and
Speaker 1: basically you couldn't sell Luna at at any price. So
Speaker 1: like this initial problem that the value of the dollar
Speaker 1: coin was based on the second made up coin, like
Speaker 1: it worked great for like a year. In the end
Speaker 1: it was an issue. There was no like fundamental support
Speaker 1: for the value of the second coin, Luna, which led
Speaker 1: to this death spiral. Okay, markets have just been on
Speaker 1: pins and needles of late, and this one really rocked
Speaker 1: sort of the crypto space. And I'm curious how how
Speaker 1: it's reverberating, uh, since since you know, so much of
Speaker 1: uh interest in this space is sort of you know, speculative,
Speaker 1: is there a risk that um, you know, other other
Speaker 1: houses in the crypto space get rocked? Um Still, you know,
Speaker 1: it seems like during the panic that wiped like ten
Speaker 1: or more off the market value of all cryptocurrencies. But
Speaker 1: things seem to have stabilized. And one thing that was
Speaker 1: surprising about talking to people that invested in Terra is
Speaker 1: that most of them weren't like, oh, no, I've been
Speaker 1: I've been had, I'd better, I better stop with this plan.
Speaker 1: They were saying, let me find the next coin that
Speaker 1: is going to be worth you know, gonna go up
Speaker 1: a hundred times, so I can make back whatever. Some
Speaker 1: of them stayed in Terra in Luna because Do Kwan,
Speaker 1: the founder, he was kind of teasing that there was
Speaker 1: going to be some sort of rescue. That hasn't really happened. Yes,
Speaker 1: for during the week, he kept teasing there was a rescue.
Speaker 1: Now he's talking about a plan to revive the whole system,
Speaker 1: which seems really unlikely. But just before I came on here,
Speaker 1: I was looking on Twitter and people were talking about
Speaker 1: Luna going to the moon again. Because in the crypto world,
Speaker 1: you've got a coin that's really close to zero, instead
Speaker 1: of saying wow, that that's yeah, yeah, how far can
Speaker 1: it fall? Yeah, because a lot of rooms to rise. Zeke,
Speaker 1: what does all this mean for for actual stable coins
Speaker 1: like Tether that you've done a lot of reporting on.
Speaker 1: We about thirty seconds left. So Tether is supposedly backed
Speaker 1: by hard assets in the bank, and for a while
Speaker 1: it was getting during this crisis, it got a lot
Speaker 1: of redemption requests. So far it's been able to meet them.
Speaker 1: But definitely like people in Washington and are renewing their
Speaker 1: calls to regulate stable coins because of this collapse, So
Speaker 1: I look like even more likely that's going to happen
Speaker 1: all right, could potentially see regulation around the corner. Zeke
Speaker 1: Fox's financial investigations reporter for Bloomberg News. Zeke story is
Speaker 1: featured in the new issue of Bloomberg Business Week magazine.
Speaker 1: It's available now on news stands, on the Bloomberg terminal
Speaker 1: and at Bloomberg dot com slash business Week. Joe Weber
Speaker 1: is the editor of Bloomberg Business Week. He joined us
Speaker 1: this afternoon on the access line from Brooklyn. You're listening
Speaker 1: to business Week on Bloomberg Radio. I'm room journal. Yeah,
Speaker 1: but you let me drive? Oh no, no, no no, no, honey, please,
Speaker 1: I'll do the bride revels. I want to drive. It's
Speaker 1: good question. This is the drive to the globe. Communing
Speaker 1: don on Bloomberg Radio. Well, it's hard to believe. We
Speaker 1: are already there, just ten minutes a way from the
Speaker 1: close of trading here in New York City. The Dow
Speaker 1: lower by six tenths of one percent, the S four
Speaker 1: tenths of one percent. The NASDAC. We can go ahead
Speaker 1: and call that flatboat is down to point seven five points,
Speaker 1: just three percent. Let's get into it. Cathy ends Whistle
Speaker 1: is a managing director at Morgan Stanley. She joins us
Speaker 1: on the phone from Miami. Kathy, Uh, how are things
Speaker 1: beings far? Volatile? They are uncertain. It's giving everybody a
Speaker 1: little bit of uneasiness and a lot of people asking
Speaker 1: what to do in these markets. Finally, uh, and an
Speaker 1: honest answer when I ask how you're doing? Because I
Speaker 1: ask people all the time, and I'm like, are you
Speaker 1: kidding you? Look at these markets? How are you feeling? Okay?
Speaker 1: Thank you? You ended on a great question. I want
Speaker 1: to ask you that what do you do in these markets?
Speaker 1: Do you hide out or are you looking for opportunities
Speaker 1: amid some of the sell off here, I would say
Speaker 1: a little bit of both. So for the last six
Speaker 1: months or so, our firm has been cautioning against you
Speaker 1: know exactly what's happening now. So we've been helping clients
Speaker 1: move out of growth and into value and trying to
Speaker 1: like reset portfolios where we can take advantage of UM
Speaker 1: volatility and take things that are painful and turn them
Speaker 1: into potential opportunities by like booking losses for things that
Speaker 1: we don't think will recover as well and putting that
Speaker 1: money into areas that we like. One area that, surprisingly
Speaker 1: UM I've been putting money in for clients over the
Speaker 1: last six or eight weeks is municipal bonds, which very
Speaker 1: like seems very like straightforward, very boring. I think they're interesting,
Speaker 1: I think are interesting. Needs have not been interesting for
Speaker 1: what two or three years, we have not put it
Speaker 1: like new money into muni is in years, and now
Speaker 1: there's an opportunity. There was a dislocation, and they're more attractive.
Speaker 1: What's attractive to you about them? Well, first of all,
Speaker 1: means are down right there down here to date, and
Speaker 1: so they're cheaper, so the yields are a little bit better,
Speaker 1: and we're looking at clients, you know, individual clients, particularly
Speaker 1: with their wealth and trying to protect it and also
Speaker 1: give them some tax free benefits, whether that's managing it
Speaker 1: from tax harvesting or giving them investments that will provide
Speaker 1: you know, tax havens, and you needs are one of those. Okay,
Speaker 1: I remain unconvinced that metis are exciting, But what I
Speaker 1: do find exciting is, of course we're just being very
Speaker 1: very honest, and I never said very were exciting. I
Speaker 1: never said just a good option right now? Okay, okay,
Speaker 1: fair enough, But I do want to get your thoughts
Speaker 1: on the U S Treasury market because obviously, I mean,
Speaker 1: we saw the long end back yields really back up,
Speaker 1: cooling off a little bit. Now that sell off. What
Speaker 1: are you thinking there, Well, we we think that actually
Speaker 1: treasuries are probably the most fairly priced um investments in
Speaker 1: the market today. And we also do think that there
Speaker 1: is an opportunity to buy treasuries um and hold them
Speaker 1: for a little bit and we should see a bump
Speaker 1: in them, So we we think that's a buy right now.
Speaker 1: Any part of the curve. What are you thinking on
Speaker 1: duration risk here? So for duration risk, we're thinking more
Speaker 1: actually to go a little bit long because of the
Speaker 1: pricing of where it's that right now you can go
Speaker 1: along and we think there might be a little bit
Speaker 1: of a pull back there which would give it a boost. Interesting. Okay,
Speaker 1: so we've talked Younis, we've talked treasuries. Let's get back
Speaker 1: to equities here and and talk about potential downside and
Speaker 1: when you and the firm see the bottom here. All right,
Speaker 1: So that's a great question. It's definitely tricky. I like
Speaker 1: to follow Mike glism in our firm and Lisa Shallotte.
Speaker 1: I think they're both brilliant. In fact, I'm down in
Speaker 1: Miami with Lisa Shallotte and they just heard her speak
Speaker 1: about her thoughts. But you know what we're trying to
Speaker 1: tell clients is this is a different It is a
Speaker 1: little bit different, right, So in the past, buy on
Speaker 1: the dip, long term hold. Like you know, there's a
Speaker 1: lot of things that used to work might not work
Speaker 1: right now. And also I'm telling my clients to be patient.
Speaker 1: I'm also looking at opportunities to trade out of those
Speaker 1: companies that we think might not do well going forward.
Speaker 1: And and so for example, maybe there's some technology names
Speaker 1: that have run up, or there's areas of the market
Speaker 1: that have run up, the growth areas, and it might
Speaker 1: be a better opportunity to trade out where you can
Speaker 1: when the markets have a pop into things that we
Speaker 1: think have a longer term for you. Yeah, they might
Speaker 1: include financials, healthcare, utilities, energy, um, just areas that you
Speaker 1: might expect that would do well in arising interest rate environment.
Speaker 1: And I mean, I'm curious to get your thoughts on
Speaker 1: staples in particular because I was looking at a chart
Speaker 1: earlier this week. But if you compare staples to you know,
Speaker 1: consumer discretionary stocks for example, staples have really been the
Speaker 1: shining star, uh in that in that sort of sector breakdown.
Speaker 1: What are your thoughts on staples at this moment? Okay,
Speaker 1: so we're talking about individual company staples versus consumers staples,
Speaker 1: consumer staples. I should clarify, Oh, consumer stables. Okay, great,
Speaker 1: thank you. Um. So we have light staples much more
Speaker 1: than discretionary, and we've been very you know, very verbal
Speaker 1: about that in terms of that's an area that listen
Speaker 1: UM customers or clients, individuals. They're starting to pull back,
Speaker 1: their feeling the heat of arising you know, interest rate
Speaker 1: market and also inflation. Things are more expensive. We're starting
Speaker 1: to see the consumer start to pull back. They still
Speaker 1: have to buy toilet paper, to paste and things like that.
Speaker 1: So staples can't go away. Discretionary can, right, right, And
Speaker 1: I mean, Kathy weren't coming off of a very dramatic
Speaker 1: earning season. It's not over yet, I hear. I don't know,
Speaker 1: if you think about what we're hearing from the retailers
Speaker 1: in particular, it felt like for so long, margins, at
Speaker 1: least on the the SMP five hundreds or the big
Speaker 1: index level, they were just teflon. They just we're not
Speaker 1: getting dented at all. Has that narrative started to change, Yes,
Speaker 1: it definitely has changed. We don't expect companies to be
Speaker 1: able to kick out the profits that they were kicking
Speaker 1: out previously because there's a lot of unknowns that are
Speaker 1: hitting their bottom line, which includes rising interest rates, which
Speaker 1: would mean that the cost of borrowing has gone up,
Speaker 1: um you know, supply chain issues, and it's a question
Speaker 1: of are they going to pass this off to the
Speaker 1: consumer or are they going to take the hit in
Speaker 1: their own bottom line? And I think they have to
Speaker 1: take the hit in their own bottom line for the
Speaker 1: most part, because the consumer is not willing to pay
Speaker 1: those dollars anymore. They're worried and they're sort of closing in.
Speaker 1: So the PE or the earnings that the companies are
Speaker 1: going to display going forwards should probably be reduced from
Speaker 1: what we were expecting, and then that brings the price
Speaker 1: of the stock down and also the PE down and
Speaker 1: so bottom line when they get to a certain point
Speaker 1: um in like the SMP five per se, we think
Speaker 1: at that point they're going to have um more like
Speaker 1: you know, sixteen seventeen um PE ratio. That seems a
Speaker 1: lot more reasonable than numbers that we've been seeing in
Speaker 1: the twenties lately. Kathy end Whistle, Managing director at Morgan Stanley,
Speaker 1: joining us live from Miami. Kathy Sink, thanks so much
Speaker 1: for taking the time. Thanks for listening to Bloomberg Business Week,
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