Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
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Speaker 1: search Bloomberg Global News. Right now, we're gonna head out
Speaker 1: to Davidson, North Carolina covers some of the days COVID headlines,
Speaker 1: which includes deaths in Europe from COVID nineteen expected to
Speaker 1: reach two point two million by March based on current trends.
Speaker 1: That's coming from the World Health Organization putting out a
Speaker 1: warning as I also pushed for more vaccine nation uh Meantime,
Speaker 1: Germany's top health official reiterated that the country cannot rule
Speaker 1: out any measures to contain the fourth wave. So let's
Speaker 1: get to it with Dr Dave Westerner, Professor Biology at
Speaker 1: Davidson College. On the phone from David's in North Carolina.
Speaker 1: Dr Westner and nice to have you here with Ed
Speaker 1: Ludlow and myself. So when you see the days headlines,
Speaker 1: you watch what's going on in Europe, I kind of
Speaker 1: ask all of our guests, is what's going on in
Speaker 1: Europe going to happen here in the United States? Can
Speaker 1: we make that assumption? I think we can, thank you
Speaker 1: having back again. But yeah, I think we're already starting
Speaker 1: to see cases go up throughout the United States. We're
Speaker 1: seeing death scoops at a unlesser rate, but that's going
Speaker 1: up also. So yeah, I think that what's happening in
Speaker 1: Europe now very well could be what we see over
Speaker 1: the next few months here Western. Do you get any
Speaker 1: sense that American officials are sort of complacent? You know,
Speaker 1: you had um Jeff Stains from the White House saying
Speaker 1: that you know, we have vaccines, we have boosters, we
Speaker 1: have the therapeutics if we need them, you won't see
Speaker 1: what's happening in Europe happen here. Why won't we see
Speaker 1: it happen here? Well, I think they have the vaccines,
Speaker 1: they have those those U nctioned belable in Europe as well.
Speaker 1: I think that's a UM on my optic way of
Speaker 1: looking at it. Um, Yes, we have the vaccines, we
Speaker 1: had the boot boosters that we're rolling out. Um but
Speaker 1: all the all the data suggests that we're going to
Speaker 1: see the same kind of of an increase here that
Speaker 1: we're that we're seeing elsewhere. Well, and it's interesting. I
Speaker 1: guess we all have to figure out as we go
Speaker 1: make our way through at this point. Um, It's funny.
Speaker 1: I saw something I was reading in this morning, Dr Wester,
Speaker 1: and it's like, well, wait a minute, you're six months
Speaker 1: after your second vaccine. Does that mean you're not vaccinated anymore?
Speaker 1: Are you not protected? Yeah? I think we should be
Speaker 1: clear about that. These vaccines are are really good vaccines.
Speaker 1: If you go back to a year ago, a year
Speaker 1: and a half ago, a lot of people were saying
Speaker 1: if we had a vaccine that was sixty or seventy
Speaker 1: percent effective, that would be a win. And we've got
Speaker 1: a couple vaccines that are much better than anyone anyone anticipated. Initially,
Speaker 1: the waning immunity that we're seine, but the and Maderna
Speaker 1: vaccines are certainly concerned. But even six months out, we're
Speaker 1: seeing vaccines that are seven effective. So it's certainly not
Speaker 1: the case that six months after your second shot you're
Speaker 1: functionally unvaccinated. Um, there's still even even without the booster,
Speaker 1: there's still a good deal protection six months out. I
Speaker 1: wonder if there's a weak spot though, right, is it
Speaker 1: if you're part of the unvaccinated portion of society that
Speaker 1: you're most at risk. Is it that you know, broadly,
Speaker 1: we should all still be wearing masks. I think that's
Speaker 1: I guess broadley is a is a if the term um.
Speaker 1: I think that a certain circumstances, yes, masks should still
Speaker 1: be worn. If you're in a crowded indoor setting, it's
Speaker 1: probably a good idea to have a mask on, even
Speaker 1: if you have both the two jobs. You've gotten that
Speaker 1: that that booster shot recently. Yeah, I think we're at
Speaker 1: a point now where, yes, we have a lot of
Speaker 1: interventions that are decreased severe disease, decreasing hospitization, decreasing deaths.
Speaker 1: But we're not out of the woods, and we shouldn't
Speaker 1: assume that that we are out of the woods just yet.
Speaker 1: And what about mixing and matching the CDC's recommendations, UM
Speaker 1: allow I guess right for mixing match dosing for booster shots.
Speaker 1: And certainly I think it's safe to say that many
Speaker 1: of coming off the J and J one suggests, you know,
Speaker 1: you get fiser and Maderna. Um, what's your guidance on
Speaker 1: that or your thoughts on that. Yeah, there's there's no
Speaker 1: evidence to suggest that mixing and matching is a bad thing. Um,
Speaker 1: We've seen nothing indicating that if you had two Fiser
Speaker 1: shots initially, the Maderna shot is going to be disadvantageous
Speaker 1: in any way. It appears that mixing matching is perfectly visible.
Speaker 1: Um in either case if you had the same booster
Speaker 1: as your original two shots, or if you have one
Speaker 1: of the others. Um, immunitique goes up dramatically within within
Speaker 1: a week or two of that about booster shots. So
Speaker 1: there doesn't see to be any any any downside to
Speaker 1: mixing and matching the vaccine. Dr Wessner, I'm always curious,
Speaker 1: you know, you teach biology. I love biology. I wasn't
Speaker 1: doing this. I might be a doctor. That was something
Speaker 1: that was certainly on my radar. UM, but I do
Speaker 1: wonder how teaching of biology and against a backdrop of
Speaker 1: the pandemic and the creating of a vaccine, Um, how
Speaker 1: it's changed or what's the interaction with students, what does
Speaker 1: students want to know and understand. It's been really interesting
Speaker 1: for me in that role because you know, we can
Speaker 1: we can talk about biology with a real life example
Speaker 1: that's playing out in real time, which has really been
Speaker 1: been testing, and I think it makes the the topic
Speaker 1: that much more real in both the lots of biology
Speaker 1: we're learning in class and the biology of happening in
Speaker 1: the real world. That makes it more more real, more
Speaker 1: more understandable. Um, I guess. So, yeah, that's really good,
Speaker 1: an interesting situation to talk about something that's that's happened
Speaker 1: in real time as we discussing it. Well, Carol makes
Speaker 1: a good point, which is education essentially right. You know,
Speaker 1: in general population two people understand the science behind the vaccine.
Speaker 1: Have they spent the time researching the reasons for taking
Speaker 1: or whether to wear a mask or not. Are you
Speaker 1: just kind of concerned that people don't take COVID seriously enough?
Speaker 1: I think a lot of people don't. Um, yeah, I
Speaker 1: think a lot of people, you know, will say anecdotally, well,
Speaker 1: I had a friend who was sick for a couple
Speaker 1: of days. But but that was that was it. So
Speaker 1: I think there there has been this um, this attitude
Speaker 1: among a segment of the population that it's something that
Speaker 1: we don't have to really take that that seriously. But
Speaker 1: if you look at the numbers, UM, you all can
Speaker 1: can think back to the big surge UM in New York.
Speaker 1: I mean it was the health care system was overwhelmed,
Speaker 1: UM and we could get to that point again. I
Speaker 1: think it's it's very serious disease. It's much more transmissible
Speaker 1: than the typical insluenda virus is uh. It's a much
Speaker 1: more serious illness than we see typically within sluenza. UM.
Speaker 1: So yeah, I think we have to remember that that
Speaker 1: this is a very serious infectious disease and and we
Speaker 1: we can't we can't forget that at this point in time. Yeah.
Speaker 1: I gotta say, in terms of mask wearing, I feel
Speaker 1: like I will wear one forever. Uh No, just because
Speaker 1: it's it's it's interesting in terms of just basic colds
Speaker 1: and things. Um, I've seen more people getting sick as
Speaker 1: things have ease, and it's it was really nice to
Speaker 1: go through a full year and not even have a
Speaker 1: common cold. Yeah, if you look at the deploya season
Speaker 1: last year, I mean, BLEU was almost non existent throughout
Speaker 1: the High States and a large part of that was
Speaker 1: because we weren't gathering. There weren't large groups of people indoors,
Speaker 1: people were wearing masks when they were out. UM, and
Speaker 1: just generally those precautions are going to prevent the transmission
Speaker 1: of respiratory diseases. Uh. This year, how do you know that, Carol?
Speaker 1: You were more more cases of flu certainly, and we
Speaker 1: had the past couple of couple of years. UM. And
Speaker 1: to a large extent, that's because people are gathering, more
Speaker 1: people are out, more people aren't wearing masks like they
Speaker 1: like they Well, so maybe maybe things will change permanently
Speaker 1: after I mean we've seen that before with infections US,
Speaker 1: that things changed permanently, UM, And maybe some aspect of
Speaker 1: mask wearing or limited gatherings will be a permanent change. Hey, listen,
Speaker 1: I wanted to share with you. A frequent listener and
Speaker 1: watcher of our show on YouTube, Uh shared with me
Speaker 1: a story, UM, Ryan, thank you, Uh, and just took
Speaker 1: a look at what's going on in Michigan right now.
Speaker 1: The Henry Ford Hill System is seeing COVID nineteen cases
Speaker 1: store by fifty percent in three weeks, putting a major
Speaker 1: strain on staff and patients at the Detroit based network
Speaker 1: of five major hospitals in southeast Michigan. It's uh the
Speaker 1: latest US hot spots seven day case rate of more
Speaker 1: than six D per hundred thousand. That's triple the national average,
Speaker 1: you know, And so we see this, we often talk
Speaker 1: about this being a disease of the unvaccinated. UM, what
Speaker 1: do we finally do to get the unvaccinated to believe
Speaker 1: the message? In your view, that's a really good question.
Speaker 1: And there's gonna be some fashion of population that you're
Speaker 1: not going to reach. I think that's that's becoming clear. UM.
Speaker 1: But I think in back the eggs point earlier, the
Speaker 1: education is key. We have to get the word out
Speaker 1: that these vaccinities are safe, they've gone through clinical trials,
Speaker 1: they are extremely effective, UM, and not have people get
Speaker 1: lost in the noise of oh, immunity wanes over time,
Speaker 1: so I shouldn't get a vaccine. UM. I think we
Speaker 1: have to get that that word out to that fague population.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic on Bloomberg Radio All right, So
Speaker 1: let's get to it. Let's see what Dr ellen Wald
Speaker 1: has to say. She's back with US, President of transfer
Speaker 1: All Consulting Senior Fellow at Atlantic Council's Global Energy Center.
Speaker 1: She wrote the book Saudi Inc. On the history of
Speaker 1: a Ramco and Saudi Arabia UH, and she has also
Speaker 1: been a Bloomberg opinion contributor. She's back with us from Jacksonville, Florida. Hey, Ellen,
Speaker 1: so nice to have you here. I have to ask
Speaker 1: you about a couple of things the President said. Um,
Speaker 1: he said that he's making the largest ever release from
Speaker 1: the spr will provide the supply that we need? Will
Speaker 1: it and will it make a difference? Well, that's a
Speaker 1: very interesting question because, Um, part of part of the
Speaker 1: issue is do we really need more supply? Uh? Is
Speaker 1: the reason why prices are higher really due to a
Speaker 1: lack of supply? And it doesn't seem like anyone is
Speaker 1: having trouble getting gasoline or getting crude oil, So it's
Speaker 1: not clear that the issue is really one of supply. Um.
Speaker 1: Perhaps the release will have an effect on the market
Speaker 1: and will encourage the market to to lower prices, although
Speaker 1: we haven't seen that happening yet. The biggest drop in
Speaker 1: oil prices actually happened last week, um, in reaction really
Speaker 1: to the announcement that we were going to see more
Speaker 1: uh COVID lockdowns in Europe. Today, actually prices rose in
Speaker 1: response to the spr release. So, um, why are prices up?
Speaker 1: Why are prices up when we do this release. It's
Speaker 1: been a little bit of a conundrum today. I feel like, yeah, well,
Speaker 1: I think it has to do a lot with market
Speaker 1: perceptions because this release has been telegraphed and a lot
Speaker 1: of people will basically waiting to see, Okay, how much
Speaker 1: is it going to be and what other nations were
Speaker 1: going to be involved in this coordinated release. And it's
Speaker 1: possible that what was announced was not nearly as significant
Speaker 1: as the market was hoping for. And so that's why
Speaker 1: we're seeing this price reaction. Yeah, choreographed, as he said,
Speaker 1: will telegraphed almost because of that curious reaction in the market.
Speaker 1: You remember when something that happens, how deeply political the
Speaker 1: oil market is, you know how sensitive it is domestically
Speaker 1: for voters. But also one thing we haven't talked about
Speaker 1: yet is OPEC plus. You know, they could easily turn
Speaker 1: around and change their existing plan in terms of their
Speaker 1: supply into the market, what should be we'll be looking
Speaker 1: for with OPEC class Oh, absolutely, and and gasoline prices
Speaker 1: are always something that's political, especially in the US. Seems
Speaker 1: always seemed to connect higher gasoline prices with the administration
Speaker 1: that's in office and tend to blame their administration regardless
Speaker 1: of whether they have any role over it at all.
Speaker 1: So it's definitely a political political issue in the United
Speaker 1: States when it comes to PA plus. Though, it's very
Speaker 1: interesting because UM the amount that is being released for
Speaker 1: the amount that has UM that that we've heard as
Speaker 1: being we still haven't heard from China and South Korea
Speaker 1: if they're going to be making any releases, is about
Speaker 1: as much as three months of UM the supply that
Speaker 1: OPEC would be increasing. So OPEC has been increasing its
Speaker 1: production by four thousand barrels a day for several months
Speaker 1: now and plans to continue that. The interesting twist though,
Speaker 1: is that OPEC is supposed to meet next week on
Speaker 1: Thursday to decide if they're going to continue their increases
Speaker 1: for for January. So some people think that this could
Speaker 1: potentially throw OPEC kind of for a loop, and will
Speaker 1: OPEC decide maybe they want to rein it back in.
Speaker 1: I think that OPEC is really going to be looking
Speaker 1: at the market overall. They're going to be looking at
Speaker 1: our oil stock pile starting to build as opposed to
Speaker 1: being drawn down, and they will probably look pretty carefully
Speaker 1: at what's going on in China and um, what Chinese
Speaker 1: industrial production is like, in Chinese demand and is like
Speaker 1: they don't make their decisions just based off of gasoline prices.
Speaker 1: But ellen, if it's not a supply issue, then what's
Speaker 1: going on? And the President talked about taking some action
Speaker 1: on gas gasoline prices unacceptable for gas firms to pocket
Speaker 1: gains that gap between wholesale and retail gas prices. Is
Speaker 1: there something fish going on? Just got about forty five
Speaker 1: seconds or so. Yeah, Yeah, it really doesn't appear to be. Remember,
Speaker 1: there's more that goes into gasoline than just wholesale gasoline prices.
Speaker 1: There's the prices ethanol which has gone up. There are
Speaker 1: the price of other adds which has gone up, and
Speaker 1: there's just general inflation. Plus there's just the price of
Speaker 1: oil which has gone up. So there's a lot that
Speaker 1: goes into this and it doesn't necessarily mean that there's
Speaker 1: some kind of anti competitive collusive behavior going on. And also,
Speaker 1: as Ed pointed out, therey is in London, right, it's expensive.
Speaker 1: We're seeing it as well. This is a just quickly, Ellen,
Speaker 1: it's a global issue. It's not just a US issue. Yeah,
Speaker 1: it's definitely a global issue. And in some areas it's
Speaker 1: even more pernount out US gas and places in the
Speaker 1: US are traditionally much lower than elsewhere in the world,
Speaker 1: so I'm part of It's also taxes, um, A lot
Speaker 1: of states have increased their gasolene taxes over recent years.
Speaker 1: Some really great perspective. Ellen, we knew when we saw
Speaker 1: the story we wanted to reach out to. So thank
Speaker 1: you so much. Have a great and safe Thanksgiving. Dr
Speaker 1: Ellen wal She's president of Transversal Consulting. Check out our
Speaker 1: book Saudi Inc. That deals with Saudi Arabia and Oromco.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So, climate change,
Speaker 1: we know what it's done. It's created flooding, droughts, unusual
Speaker 1: weather patterns and wildfires. It's a story. Uh, And there's
Speaker 1: actually a story that digs into this. It can be
Speaker 1: found at business week dot com. It looks at how
Speaker 1: wildfires are getting worse and then one company that has
Speaker 1: all the chemicals to combat them. That story written by
Speaker 1: Bloomberg News Technology report to Austin car he's on the
Speaker 1: phone in Boston and also joining us of our business.
Speaker 1: We get at a Joel Webber. He's in our Interactive
Speaker 1: Brokers studio, a company I hadn't heard about and yet
Speaker 1: publicly traded and is sort of in a solutions business. Um.
Speaker 1: And you know, of all the places that we're probably
Speaker 1: desperate for solutions, it's with wildfires, which seemed to only
Speaker 1: be getting worse. And here we are in um November
Speaker 1: and California still is that peak peak wildfire fears? And
Speaker 1: so so Austin like, tell us what exactly, uh, this company,
Speaker 1: Perimeter Solutions, is up to. Sure, Yeah, so you've probably
Speaker 1: seen on the news during big wildfires all these planes
Speaker 1: that are making humongous drops of all that red stuff
Speaker 1: that's all retardant made by this one single retardant maker
Speaker 1: at the biggest one of the US UH called Perimeter Solutions.
Speaker 1: And just to give it some context, they actually for
Speaker 1: US agencies alone produced about fifty million gallons of the
Speaker 1: retardants last year. With the fire slaves and booming um,
Speaker 1: the retardants business is booming as well, and that's why
Speaker 1: just two weeks ago they went public in evaluation of
Speaker 1: about two billion dollars UM. So for this story for
Speaker 1: Business Week, we spent a lot of time learning about
Speaker 1: this sole source contractor for the federal government, how they
Speaker 1: got so big in the retardants business, and a new
Speaker 1: Stanford engineered chemical that they're putting out that it might
Speaker 1: end up changing the game for how we address wildfires
Speaker 1: in the country more so. Um So. Yeah. The the
Speaker 1: product that you see dropped out of planes is called
Speaker 1: FoST Check, and it basically boxes all the fires in,
Speaker 1: but it's not as effective. After it reigns a small
Speaker 1: amount or when there are tons of high winds, it
Speaker 1: usually actually goes away and it's not effective after a
Speaker 1: couple of weeks, and at that point, like you've seen
Speaker 1: in California, another big fire can just happen again. Um.
Speaker 1: On the other hand, they have this new chemical called Fortify,
Speaker 1: which again was engineered by Stanford scientists, and it's this
Speaker 1: white gel that's applied before the wildfire season and sticks
Speaker 1: on places where they're really high risks of ignitions. UM.
Speaker 1: We actually have uns of data about where fires originate
Speaker 1: because we happen to have a lot of wildfires now
Speaker 1: in the US and in places like vegetation around utility
Speaker 1: polls or highways or railroad tracks. Um, we can apply
Speaker 1: the solution now with this chemical jael that will last
Speaker 1: for months and ideally prevent those fires from happening. As
Speaker 1: one perimeter UM executive told me, uh, he had said
Speaker 1: that we'd rather be fighting wildfires when they're just four
Speaker 1: inches tall rather than forty feet tall. And I think
Speaker 1: that's the promise that Perimeter is trying to pitch the
Speaker 1: government on going forward. You're in London right now, but
Speaker 1: California's your home. You've seen this. Yeah, this story really
Speaker 1: hit home for me. I enjoyed reading it, not just
Speaker 1: because of the products. You know, I've I've experienced the
Speaker 1: fires and the side effects of the fires. But the
Speaker 1: great thing about your story is you talk about the
Speaker 1: people that are using the product, the farmers, you know,
Speaker 1: the wine growers in Napa Valley. Um. But it seems
Speaker 1: like this company is the only product in town. Is
Speaker 1: this thing affordable? Is it? You know? Is this something
Speaker 1: that everyday landowners can actually get hold of. It is
Speaker 1: something that landowners can get ahold of. But I mean
Speaker 1: it's really a product UM that it's going to take
Speaker 1: some time to get adoption. And I think the larger
Speaker 1: market is actually utility giants like P G and D,
Speaker 1: or insurance companies or railroad companies that you know, they'd
Speaker 1: rather maybe spend a few million dollars up front on
Speaker 1: this product rather than billions of dollars and liabilities later on.
Speaker 1: But in this story, we did interview one local community
Speaker 1: that had used it uh and for one mile stretch
Speaker 1: had cost about thirty thou dollars. Obviously that's an expensive application.
Speaker 1: But when we talked to local fire departments, what they
Speaker 1: said is we'd love to use more of it. I
Speaker 1: talked to one in near San Diego that had seen
Speaker 1: huge ignitions go from a few dozen in the last
Speaker 1: couple of years down to zero after they applied the product.
Speaker 1: But what they basically said is we'd love to use
Speaker 1: more of it, we just can't afford it. So so
Speaker 1: Austin UM, what other products are they? I mean, this
Speaker 1: company just when public, I mean, do they have two products?
Speaker 1: Do they have more? What's under what's in development like
Speaker 1: and and exactly how competitive of the space is this
Speaker 1: at this point, since this problem seems to only get
Speaker 1: worse and worse, So they do this company, Perimeter Solutions,
Speaker 1: does make a ton of different retardants, whether they're gels
Speaker 1: or phones, or powder or liquid concentrations, and and they
Speaker 1: all have different uses by the fire department or private
Speaker 1: companies and homeowners. Um. But to be honest, they're really
Speaker 1: the only game in town. I mean, just to give
Speaker 1: you a sense, they about half per cent or so
Speaker 1: of their fire safety products are consumed by the US
Speaker 1: government in the state of California alone. Um, they're pretty
Speaker 1: much a virtual monopoly. And that's one of the big criticisms. Uh,
Speaker 1: they're the only approved, federally approved product that the US
Speaker 1: Force suit uses for aerial drops those big planes. And
Speaker 1: I only talked to one competitor in the issue that
Speaker 1: they said is it takes so many years to get
Speaker 1: on that retardants list to be approved. That it is
Speaker 1: very advantageous for Perimeter Solutions and their primary flagship product,
Speaker 1: which is that red stuff that drops out of planes,
Speaker 1: and so we haven't seen much competition. It costs about
Speaker 1: three dollars a gallon for that stuff they drop out
Speaker 1: a plane and so far there they continue to be
Speaker 1: the sole source provider to the US government, have been
Speaker 1: for almost two decades. All Right, I gotta ask you
Speaker 1: if you're if you're going to end up spray in
Speaker 1: my vegetables and stuff, is it safe? It's a it's
Speaker 1: a really good question, Carrol, and and and there is
Speaker 1: a lot of environmental concerns. I will also say just
Speaker 1: it's it's kind of very on to watch. I went
Speaker 1: to air bases, I've I've seen this stuff preyed in person.
Speaker 1: And whether it's the red stuff dropping from planes or
Speaker 1: the new white chemical fortify, to just see it doused
Speaker 1: all over the planet, UM, it's pretty eye opening. And
Speaker 1: when I talked to the company, they say, look, the
Speaker 1: stuff that's in here is ammonium phosphate, which is the
Speaker 1: same stuff that's used in fertilizers. UM. So it actually
Speaker 1: might make your garden grow a little bit faster. But
Speaker 1: the downside of it is that it can UH. Studies
Speaker 1: have shown that it's it's if it's dropped in water
Speaker 1: areas that can kill fish. UM. It can also spurn
Speaker 1: algae blooms and invasive plans that can be disruptive to
Speaker 1: the natural environment. But the larger truth is there just
Speaker 1: haven't been enough studies, which is kind of wild. They
Speaker 1: said in their s one statement when that moment, Yeah,
Speaker 1: they're just they said in their um uh, there s
Speaker 1: one statement that the current environmental impact is just current
Speaker 1: is just not known. There's not enough known about it
Speaker 1: because it could have larger toxicity impact on the environment
Speaker 1: or the animal population. But there have just been a
Speaker 1: lack of studies over the years, and they've been limited
Speaker 1: in scope. And so the US government continues to drop
Speaker 1: tens of millions of gallons on the planet just in America,
Speaker 1: and it's become popular worldwide, and so there's a lot
Speaker 1: of questions about environmental impact that still have to be answered.
Speaker 1: So the most important question of all um From the
Speaker 1: photos in the story, it looks like, uh, there's a vehicle.
Speaker 1: This is on a trailer. They spray it from the
Speaker 1: back of the trailer. Did you get to spray the gel?
Speaker 1: You know, I'm not approved yet by the California Fire Department,
Speaker 1: although I did go through the chemical mixing. I did
Speaker 1: get my diploma, Jole, So you'll be happy to hear
Speaker 1: we can add that to my uh my Twitter page.
Speaker 1: But maybe our maths out of business did go for
Speaker 1: after the Daquie specialist dach refecialists comes first. Nice. Nice
Speaker 1: to know if the journalism doesn't work out, you've got
Speaker 1: all these other things that you can fall back on, Austin, Uh. Incredible.
Speaker 1: Read a lot of information in there and check it
Speaker 1: out at Bloomberg dot com. Happy Thanksgiving to you and
Speaker 1: to you as well, Joel Joel Weber, editor of Bloomberg
Speaker 1: Business weekn of course, of course Austin car technology reporter
Speaker 1: and a man of many talents here at Bloomberg News.
Speaker 1: You're listening to Bloomberg Radio. This is Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Stinovic from
Speaker 1: Bloomberg Radio. So we just talked about Best Buy shares
Speaker 1: plummeting uh, and we're gonna get into that a little bit.
Speaker 1: We also see Dollar Tree selling the majority of its
Speaker 1: products for more than a buck. Now there's a lot
Speaker 1: going on when it comes to retail. And then, of
Speaker 1: course there are those supply chain rows that we continually
Speaker 1: talk about. Lots going on. As I mentioned our Bloomberg
Speaker 1: Intelligence Senior Alice Putam Goyle keeping track of it all
Speaker 1: and writing, even with those supply constraints, Americans, they're going
Speaker 1: to be out there shopping this holiday season, she joins,
Speaker 1: edding me on the phone in New Jersey. Put them
Speaker 1: good to have you here first and before we get
Speaker 1: into the holiday season. Any thoughts on best Buy. I
Speaker 1: know you cover a lot of different retail and and
Speaker 1: this maybe doesn't fall right under some of the companies
Speaker 1: that you follow, but those criminal groups like I can't
Speaker 1: you know, it's very odd to have a CEO come
Speaker 1: out and talk about that, right it is. You know,
Speaker 1: it must be a really big problem for them to
Speaker 1: come out and say that. But it's a scary one
Speaker 1: because not only is it bad for them on the
Speaker 1: margin side, but it prevents people from wanting to go
Speaker 1: to the stores, right um, because you're hesitant about what
Speaker 1: you'll have to deal with it should you go into
Speaker 1: the stories, and the employees working there must be scared
Speaker 1: to want to work there. So it has a lot
Speaker 1: to remember. Don't remember what best Buy does as well
Speaker 1: that I wish we discussed the moment, Carol, But they
Speaker 1: sell things that we really needed in the pandemic, and
Speaker 1: we're not buying as much of right now, you know, screens, electronics,
Speaker 1: all these kinds of stuff. It's kind of like a
Speaker 1: one to punch. I feel bad for them. I I guess, Punam.
Speaker 1: You know, broadly, is demand really good right now? You know,
Speaker 1: for for Best Buy electronics, for brick and mortar, well,
Speaker 1: demand is good overall in retail, and we've seen that
Speaker 1: in the retail sales numbers leading up to UM as
Speaker 1: recent as you know, recent earnings results that we've seen
Speaker 1: from the retailers that's said electronics sales, computers, TVs and
Speaker 1: all of that. You have to remember allapping the pandemic
Speaker 1: right when they were mostly at home learning for schools.
Speaker 1: Now kids are back to school, so the demand has
Speaker 1: tapered from last year's levels, but it's still higher than
Speaker 1: it was in No, that's a really good point, I
Speaker 1: have say, even though on my street I've seen some
Speaker 1: boxes for people who have obviously just gone out and
Speaker 1: bought a huge green TV at this point. The other
Speaker 1: thing is Best Buy did talk about spending more on
Speaker 1: promotional activity and that really hid into gross margin. All right,
Speaker 1: so let's talk Punam about retail shopping. You know, my
Speaker 1: daughter has already given me her holiday list. It's a
Speaker 1: little bit toned down, which is kind of nice to
Speaker 1: see that from your kids. UM tell us though, why
Speaker 1: it's going to be off the chart. Is it because
Speaker 1: of higher prices or we're gonna actually be selling more stuff.
Speaker 1: It's going to be a combination of both. So demand
Speaker 1: is higher, especially for categories like Harold and toys, um
Speaker 1: where kids are going out more and people are going
Speaker 1: out more, so they want new things. On the sales side,
Speaker 1: the reason why we're expecting for high single digit or
Speaker 1: even better games is in part through to higher prices. Yes,
Speaker 1: prices will be higher because of inflationary pressures, but also
Speaker 1: discounting will be lower. So while there will be discounts
Speaker 1: over the coming days and even through Christmas, they won't
Speaker 1: be as pronounced as they were in past years. Should
Speaker 1: we should we put everyone in a bad mood and
Speaker 1: talk about supply chains. I mean, is my favorite sweater
Speaker 1: going to be on the shelf this holiday season? The
Speaker 1: things that I want are they actually going to be there?
Speaker 1: They will, but how long they'll be there is a
Speaker 1: bigger question, and that's how us more everyone? Yeah, so
Speaker 1: get what you want now, well, it's funny that you
Speaker 1: say that to go ahead and please, Well, I was
Speaker 1: just gonna say that in your rese'm I'm being cheeky,
Speaker 1: But in your research you point out pretty clearly right
Speaker 1: that the holiday season shopping window is long this year.
Speaker 1: You know, everyone is going to have every opportunity to
Speaker 1: go out. You know, why would that give us a boost?
Speaker 1: Because you get an extra shopping day. So if you
Speaker 1: look at the time frame from when people really, you know,
Speaker 1: spend the most time buying gifts and thinking about the holidays,
Speaker 1: it's between Thanksgiving and Christmas, and this year the calendar
Speaker 1: lenself one extra day. So an extra day is always
Speaker 1: an extra shopping day, means extra dollars for the retailers. Yeah,
Speaker 1: no doubt about it. It makes a difference. I know
Speaker 1: that there's been a time where I've really kind of
Speaker 1: finished my shopping and then all of a sudden, I
Speaker 1: go out because of an extra day, and I pick
Speaker 1: up a couple of little things. What's interesting is, so
Speaker 1: who's going to benefit the most? You you talk about
Speaker 1: Walmart and Amazon in your recent note. What's interesting is
Speaker 1: we just talked with our Augustus Arriva, who's looking at
Speaker 1: the global supply chain, and she's pointing out how everything
Speaker 1: is going wrong at the same time. And yet you
Speaker 1: know there's companies like Amazon that can find alternatives to
Speaker 1: getting their goods here. Walmart can get and can do
Speaker 1: the same thing right, whether they reach out to different
Speaker 1: suppliers or use their own logistical chains to some extent um,
Speaker 1: they've got depockets to be able to do. So you're
Speaker 1: absolutely right on that. You know, the resimplified is the
Speaker 1: bigger the better at this holiday. So the big retailers
Speaker 1: really have a competitive because they can afford to pay
Speaker 1: more to get the goods here. And that also in
Speaker 1: addition to that, Walmart and Amazon specifically don't have an
Speaker 1: inventory issue right now. Walmart's inventories were up about at
Speaker 1: the end of the third quarter, so they've been able
Speaker 1: to bring goods in. The other thing is they have
Speaker 1: a large third party market place, both of them, and
Speaker 1: that helps flow inventory at least online for both tailors
Speaker 1: and very quickly. Pum I mean, foot traffic seems to
Speaker 1: be pretty good, though, doesn't isn't it strong? The number
Speaker 1: of people actually going into a store they just excited
Speaker 1: to be shopping in person? It is strong when you
Speaker 1: look at it versus last year, but the numbers that
Speaker 1: we're looking at against nineteen it's actually still down. Interesting too.
Speaker 1: But you also pointed out an influx of tourists into
Speaker 1: the US over the coming weeks could drive at least
Speaker 1: a high single digit retail sales gain over the holiday period.
Speaker 1: So it's interesting. A lot of different factors that play
Speaker 1: putam always good to get a gut check on what's
Speaker 1: going on in retail, especially as we head into the
Speaker 1: all important holiday shopping season. She is senior analysts for
Speaker 1: e commerce at Leisure off price retail. That means TJ Max,
Speaker 1: which I always love, ed love love. Do you go
Speaker 1: to TJ Max? Oh? I do? I'm roam. Yeah, but
Speaker 1: you let me drive? Oh no, no, no no no, this
Speaker 1: is not a please, I'll do. I want to drive.
Speaker 1: It's a good question. Good drive for the Globe Radio.
Speaker 1: All right, just got about ten minutes left in today's
Speaker 1: trading session. We are driving to the clothes. We're definitely
Speaker 1: off our best levels of the sessional. THEO, I should
Speaker 1: say for the Dow Jones Industrial average kind of hovering, uh,
Speaker 1: just off of it, but certainly little bit different when
Speaker 1: it comes to the SNP and the NASTAC. Let's talk
Speaker 1: about the market trade today. Megan Horneman is director of
Speaker 1: portfolio Strategy at the Wealth Advisory and Multi Family Office
Speaker 1: from Britain's Capital Advisers. She's back with us on the
Speaker 1: phone from Hunt Valley, Maryland. So, Megan, nice to have
Speaker 1: you here, just a few days away from Thanksgiving. We're
Speaker 1: talking inflation, we're talking about supply chains, we're talking about
Speaker 1: a release from the spr What is top of mind
Speaker 1: for you and your clients, So I think it's going
Speaker 1: into your end and you know what's going to happen
Speaker 1: with the rally here. That's I think one of the
Speaker 1: biggest concerns for investors, especially since we're starting to see
Speaker 1: this back up an interest rates and we have seen that,
Speaker 1: you know historically, when we see these kinds of movement
Speaker 1: interest rates, it does challenge the equity market. We're seeing
Speaker 1: that today, um with specifically those expensive tech names, as
Speaker 1: well as seeing the volatility index increased today. Yeah, the
Speaker 1: big news items of the week, of course, the nomination
Speaker 1: to the Federal Reserve. And I know that you wrote
Speaker 1: going into the week that you felt Biden would keep
Speaker 1: a relatively dubbish f O m C because he wanted
Speaker 1: to help his spending agenda. Right, how do you think
Speaker 1: about things now? Yeah, I think you know, obviously, yes,
Speaker 1: he he wanted to have two things that as someone
Speaker 1: who's as a relative dub in the market because of
Speaker 1: the fact that he does have a very aggressive spending agenda.
Speaker 1: And if you just look at estimates for the net
Speaker 1: interest costs for the government or the next decade, they
Speaker 1: are exposed to skyrocket, So it presents a problem for
Speaker 1: any of his priorities. Um. But Pal has also kind
Speaker 1: of been a little bit more towards the center in
Speaker 1: knowing that we do have some inflationary pressures that need
Speaker 1: to be addressed. So you see the market now pricing
Speaker 1: in the potential for two rate hikes in the second
Speaker 1: half of the next year. So I think that the
Speaker 1: other thing that markets like is just a continuity, you know,
Speaker 1: having someone new. Markets have never really liked that. So
Speaker 1: having Pal pal the helm again, I think is as
Speaker 1: keeps that you know, nerves from unrattling. Megan, what's the
Speaker 1: constructive conversation to have around interest rates right now? I mean,
Speaker 1: we did see you know, another pop up right in
Speaker 1: the tenure today and we are seeing certainly coming off
Speaker 1: of that FED nomination. However, it's still a long time
Speaker 1: from here until let's say midyear of next year, when
Speaker 1: we'll we'll see the FED easing off right in terms
Speaker 1: of those asset purchases. But easing off does not necessarily
Speaker 1: automatically guarantee an interest rate hike, especially as we watch
Speaker 1: kind of what's going on around the globe. If China
Speaker 1: slows down, there could be some other issues. If the
Speaker 1: pandemic continues to weigh on the economy. Uh, maybe all
Speaker 1: bets are off. Yes, there's a lot of moving moving
Speaker 1: parts there that that you've outlined, And I think the
Speaker 1: one thing that we believe that interest rates right now
Speaker 1: where they are do not justify not only the economic environment,
Speaker 1: but also the inflation environment. So we do think the
Speaker 1: trajectory is higher for interest rates next year. However, all
Speaker 1: those things that you mentioned are something some of the
Speaker 1: reasons why we don't think you're gonna see, you know,
Speaker 1: a massive, massive spike in interest rates over the next
Speaker 1: twelve months. We still do have a lot of uncertainty
Speaker 1: around the supply chain disruption. We have a lot of
Speaker 1: uncertainty around the labor market. We also have some uncertainty
Speaker 1: around how sustainable this consumer can be in the face
Speaker 1: of rising prices at the pump, rising prices on everyday necessities.
Speaker 1: Can we continue into two thousand to see the sustainability
Speaker 1: of this consumer. So you're gonna have a little give
Speaker 1: and take, I think in the interst rate market. But
Speaker 1: at the end of the day, the FED it should
Speaker 1: is very warranted to paper. It was an emergency measure.
Speaker 1: We're no longer in an emergency situation, and I think
Speaker 1: that the next PHASEE to them is to gradually try
Speaker 1: and normalize interest rates. So we're still calling for that
Speaker 1: in the second half of next Here I wanted to
Speaker 1: ask you about the consumer and not just in the
Speaker 1: context of inflation. How closely are you following the data
Speaker 1: around COVID nineteen, particularly in Europe. You have Goldman, sax JP, Morgan,
Speaker 1: Morgan Stanley all saying the kind of spikes were seeing
Speaker 1: in Europe, they will be temporary and they don't necessarily
Speaker 1: think that will come over to the United States by
Speaker 1: the reopening trade. Is that the way you think about it, Yeah,
Speaker 1: because we've seen spikes and you know you have some
Speaker 1: short term kind of reversal in that reopening trade, but
Speaker 1: then they do tend to to peak and moderate lower.
Speaker 1: It's just we don't know when. And I have seen
Speaker 1: the data out of Europe, specifically in Germany, it's actually
Speaker 1: um I popping if you look at the chart of
Speaker 1: what they're dealing with right now. But keep in mind
Speaker 1: that we are moving closer and closer getting more and
Speaker 1: more people vaccinated. That's a positive. But the biggest part
Speaker 1: of COVID that we're going to look out into is
Speaker 1: the approval of some more therapeutics because those hesitant to
Speaker 1: get a vaccine, which is a buddy's own personal decision.
Speaker 1: If there's a therapeutic that's out there that can reproduce
Speaker 1: the risk of serious infection, that's almost as good as
Speaker 1: the vaccine when it comes to the risks and stream
Speaker 1: we put on the hospitals. And that's what we're concerned
Speaker 1: about right now in Europe. You know, it's interesting too,
Speaker 1: and you you guys deal with highnet wealth individuals, and
Speaker 1: I do wonder you know, we talked about the initial
Speaker 1: part of the conversation about some of the things that
Speaker 1: everybody's talking about, whether it's inflation or supply chain constraints.
Speaker 1: What would you say, is their number one concern right
Speaker 1: now because many of these many it is inflation. Okay,
Speaker 1: because many of these individuals have gotten wealthier, right safe
Speaker 1: to say over the last year or two. M. Yeah, absolutely,
Speaker 1: I still think it's inflation. I can give you the
Speaker 1: second biggest concerns for our high network individuals, but inflation
Speaker 1: is the biggest one because it's now visible across so
Speaker 1: many aspects of the economy. Before when it was just
Speaker 1: lumber prices, or it was just food um or you know,
Speaker 1: some of the COVID related things that that we could
Speaker 1: say may some of that was trans the tree, but
Speaker 1: people don't. The one thing people will remember and realize
Speaker 1: right away is at the gas comp and we've seen
Speaker 1: more than a dollar increase your date in gasoline prices.
Speaker 1: That's a big hit to consumer budgets. So that's going
Speaker 1: to be felt by by all consumers, high networth or not.
Speaker 1: The second biggest thing would be what will happen with taxes,
Speaker 1: And the one thing we do know is that we
Speaker 1: don't think taxes are going to go any lower. It's
Speaker 1: just what magnitude will that hit highwork network individuals as
Speaker 1: well as business owners. How worried or not are we
Speaker 1: about Biden's commitment with infrastructure. How worried or not are
Speaker 1: we about what the President was saying today about his
Speaker 1: you know, efforts in the supply chain. We were speaking
Speaker 1: to a Bloomberg News colleague a little earlier this hour
Speaker 1: that all of the bottlenecks and global supply chains that
Speaker 1: he was saying working to be undone, they're still there.
Speaker 1: You know, what is going to be the impact of
Speaker 1: fiscal policy and government stimulus over the next year. Say so,
Speaker 1: the infrastructure is done, is not that we can do
Speaker 1: about that, But over the next year, you know, this
Speaker 1: is going to be more of an impact into g
Speaker 1: d p U in the longer run, not necessarily for example,
Speaker 1: for next year. But when you're talking about so much money,
Speaker 1: chain thinks, so a few goods because the supply chain
Speaker 1: is disrupted right now, then you know, any additional spending
Speaker 1: is really not needed and the only thing that is
Speaker 1: going to fix the supply chain disruptions. And some of this,
Speaker 1: some of these kind of interconnected inflation and pressures, is
Speaker 1: either a slowdown in demand or an increase in supply.
Speaker 1: And we know that there will be an increase in supply.
Speaker 1: It's just not something that's going to turn turnover overnight.
Speaker 1: I mean, we just understand that there's a lot of
Speaker 1: ships sitting out support. UM, there are some disruptions, but
Speaker 1: with so many different staffes of the supply chain that
Speaker 1: can't be fixed right away. It's going to take time
Speaker 1: to fix that. So we need to see some moderation
Speaker 1: in the demand side. So any additional spending from the
Speaker 1: government that adds to the pent up demand from the
Speaker 1: American and consumer, it's just that is a concern and
Speaker 1: a risk that we see. Hey, Megan, just got about
Speaker 1: thirty seconds here, just quickly, what's one number one investment
Speaker 1: that many of your clients tend to ask about. Um,
Speaker 1: you know, they always want to know about the equity
Speaker 1: market and can we continue with this fool market? We
Speaker 1: do think that is the case, But we would allocate
Speaker 1: outside of the US as well, because I think next
Speaker 1: year two two there could be some rotation there. You know,
Speaker 1: I think the US is going to deliver the same
Speaker 1: types of returns and then trying to find some you know,
Speaker 1: attractively valued inflation hedges. We would lean more towards the infrastructure. UM.
Speaker 1: You know, there's lots of different investments out there in
Speaker 1: the infrastructure front that we think will kind of their
Speaker 1: structure to help you with that as well. All Right,
Speaker 1: great to get that, uh, and thanks so much. Have
Speaker 1: a great Thanksgiving. Megan Horneman, she's Director Portfolio Strategy at
Speaker 1: Verdin's Capital Advisors, joining us on the phone from Hunt Valley, Maryland.
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