WEBVTT - Surveillance: Uber CEO Watching Delta Variant Closely 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:30.720 and of course, on the Bloomberg terminal. We are thrilled 0:00:30.720 --> 0:00:33.120 to bring you the former Governor of the Federal Reserve System, 0:00:33.200 --> 0:00:36.839 Randall Krosner, of the University of Chicago Boost School, Holding 0:00:36.880 --> 0:00:41.760 Court in London as well. Randy, we are staggering step 0:00:41.840 --> 0:00:45.800 by step through the tangible data through a new FED 0:00:45.920 --> 0:00:50.680 policy dovetail the mystery around the table at the Eccles building. 0:00:51.000 --> 0:00:54.880 They have a new FED theory, a new FED construction, 0:00:55.520 --> 0:00:58.240 but we've got the same old data. How do they fit? 0:00:59.680 --> 0:01:02.800 Uh yeah, same old data, but but a new framework 0:01:02.800 --> 0:01:06.080 that's exactly right. So we have this uh average inflation 0:01:06.080 --> 0:01:10.080 targeting framework that says, rather than well, when we see 0:01:10.120 --> 0:01:13.960 inflation coming, we're gonna act now proactively, it says, no, No, 0:01:14.000 --> 0:01:15.960 we're not going to do that. We're gonna wait until 0:01:16.120 --> 0:01:19.000 inflation gets to at least to our target or maybe 0:01:19.000 --> 0:01:22.280 moving above, before we start to Act, and obviously we've 0:01:22.319 --> 0:01:24.560 seen that because inflation has been very high over the 0:01:24.680 --> 0:01:27.479 last few months. But the feed is said, hey, we're 0:01:27.520 --> 0:01:32.280 not moving until Randy. Are there any hulks left at 0:01:32.280 --> 0:01:35.640 the Federal Reserve? Oh? Yes, I think you see some 0:01:35.680 --> 0:01:38.399 of them, because it sounds like to me there are 0:01:38.440 --> 0:01:41.760 doves and then there are super doves, doves and super doves, 0:01:41.959 --> 0:01:45.280 and I see no hulks right now. Who are they? Well, 0:01:45.319 --> 0:01:47.840 I guess that also changes in context too. So you 0:01:47.880 --> 0:01:51.400 have someone like Governor Waller who just spoke recently, we 0:01:51.480 --> 0:01:53.920 said we've got to get moving, We got to start 0:01:53.960 --> 0:01:58.720 to to start tapering a little bit more rapidly because 0:01:58.720 --> 0:02:01.920 we see the economy coming back. Rich Clarada had a 0:02:01.960 --> 0:02:05.520 fairly optimistic view of where the economy was going, seemed 0:02:05.560 --> 0:02:09.880 to be discounting the role of the delta variant, although 0:02:09.919 --> 0:02:11.800 he is certainly much more on the wish side of 0:02:11.840 --> 0:02:14.800 waiting til end of two before starting to raise rates. 0:02:15.440 --> 0:02:17.120 Do you agree with Eddie Blanche Flower, who was on 0:02:17.120 --> 0:02:20.000 the show earlier today, who is basically saying it's correct 0:02:20.080 --> 0:02:22.240 for all of these doves to be dove and dovish 0:02:22.320 --> 0:02:24.959 because basically the fact that we have this very low 0:02:25.000 --> 0:02:28.880 participation rate in the US labor market is really a 0:02:28.880 --> 0:02:32.040 result of failed policy. Do you agree with that assessment. 0:02:33.080 --> 0:02:35.720 I'm not so sure it's exactly the results of failed policy. 0:02:35.760 --> 0:02:37.000 I mean, I think there are a lot of people 0:02:37.040 --> 0:02:40.000 who have decided that that, especially the older people who 0:02:40.040 --> 0:02:42.560 had come back into the labor market, who said, gosh, 0:02:42.560 --> 0:02:45.679 with all these uncertainties around health, maybe this is a 0:02:45.680 --> 0:02:47.520 good time for me to stay out of the labor market, 0:02:47.720 --> 0:02:50.200 to to retire. So I'm not quite sure that it's 0:02:50.240 --> 0:02:52.079 just policy. I think there are a lot of other things, 0:02:52.120 --> 0:02:54.640 like the pandemic that you know, it's just a shock 0:02:54.720 --> 0:02:56.760 that we really can't do. I mean, we can, we 0:02:56.800 --> 0:02:59.680 can respond with vaccines and such, but it just fundamentally 0:02:59.760 --> 0:03:02.239 changed is the way people think about going to work, 0:03:02.480 --> 0:03:06.840 going going shopping. Professor Krausner, you you represent the land 0:03:06.880 --> 0:03:12.880 of microeconomics. Macro is just more microeconomics of Chicago. Professor Krausner. 0:03:13.040 --> 0:03:17.160 How do you address the dynamics forward of our immense 0:03:17.360 --> 0:03:22.799 demand and supply imbalance. So this is a really interesting 0:03:22.840 --> 0:03:26.000 question where policy has a very large role to play. Obviously, 0:03:26.040 --> 0:03:30.160 we've seen extraordinarily easy monetary policy and a commitment for 0:03:30.200 --> 0:03:34.680 that for a long time. Unbelievable fiscal policy, just unprecedented 0:03:34.720 --> 0:03:37.360 for the term a billion times, but it really is true. 0:03:37.560 --> 0:03:40.120 Or either have spent or planning to spend on the 0:03:40.240 --> 0:03:43.680 order fift of GDP within an eighteen month time period. 0:03:43.800 --> 0:03:47.120 That's just absolutely extraordinary. Plus you had all the pent 0:03:47.240 --> 0:03:50.560 up demand, high savings of people or the savings that 0:03:50.640 --> 0:03:52.960 people have built up when they could go out, So 0:03:53.120 --> 0:03:55.960 that's all being unleashed. And so obviously we're seeing that 0:03:56.520 --> 0:03:59.920 in terms of lots of lots of price pressure combined 0:04:00.160 --> 0:04:02.920 with someone off factors like the chip shortage that we're 0:04:02.920 --> 0:04:06.400 talking about, like other supply chain disruptions. So we're going 0:04:06.440 --> 0:04:09.880 to see a lot of a lot of price increases 0:04:10.400 --> 0:04:12.920 in the short run. The key question is are those 0:04:12.960 --> 0:04:16.160 transitory or are those sustained? Um. I think we're gonna 0:04:16.200 --> 0:04:18.719 see them transitory for a while. I don't think they're 0:04:18.760 --> 0:04:21.040 necessarily going to be sustained over the year to two 0:04:21.120 --> 0:04:24.400 year horizon, But over six months horizon, I think certainly. Randy, 0:04:24.440 --> 0:04:25.960 I don't want to talk about projections. I want to 0:04:25.960 --> 0:04:28.320 talk about how we'd respond to outcomes. So help me 0:04:28.400 --> 0:04:31.240 understand this from a Federal Reserve perspective. If a higher 0:04:31.320 --> 0:04:35.160 rate of inflation persists, and it's primarily attributed to supply 0:04:35.200 --> 0:04:39.599 side constraints, but those supply side constraints also persist, how 0:04:39.640 --> 0:04:43.320 long before you have to take notice of that? Yeah, 0:04:43.320 --> 0:04:46.080 that's exactly. That's a very important issue because now it's 0:04:46.120 --> 0:04:49.159 sort of described as one off. You know, there's some 0:04:49.360 --> 0:04:52.200 supply chain disruptions, but within six months to a year 0:04:52.200 --> 0:04:55.159 they will be eased. High demand for used cars. There 0:04:55.200 --> 0:04:58.839 are a lot of particular explanations each each month, But 0:04:58.920 --> 0:05:02.440 if those accumulate over time, and in particular, if those 0:05:02.520 --> 0:05:06.720 start to change people's expectations so that people are expecting that, well, 0:05:06.800 --> 0:05:09.120 g I need to get paid more in order to 0:05:09.600 --> 0:05:14.120 UM in order to UH consume, And companies say, well, 0:05:14.200 --> 0:05:16.359 I can push price increases in a way that I 0:05:16.360 --> 0:05:17.960 haven't been able to do in a decade or two 0:05:18.240 --> 0:05:22.320 to accommodate this higher wage increases. UM, you can get 0:05:22.360 --> 0:05:25.360 into this this cycle where inflation starts to to take 0:05:25.400 --> 0:05:28.720 off and become become more permanent. That's really the key. 0:05:28.880 --> 0:05:35.520 Can they keep inflation expectations well anchored. We'll see Randy 0:05:35.600 --> 0:05:37.719 gotta leave it that Randy Croys and now University Chicago, 0:05:37.800 --> 0:05:45.920 both school economics professor and former Fed Convernor. We need 0:05:45.960 --> 0:05:48.440 to stop the show, I said last night, and you know, 0:05:48.440 --> 0:05:51.200 as we put the show together, I said, stop, We 0:05:51.240 --> 0:05:54.760 need to talk to somebody and calm down about what 0:05:54.839 --> 0:05:58.160 to do into September and for that matter, into September 0:05:58.200 --> 0:06:01.440 of two thousand twenty two. See, Misha is perfect with 0:06:01.520 --> 0:06:05.600 principal global investors their chief strategies today seem it can 0:06:05.640 --> 0:06:11.320 you own banns. Well, Look, it's so challenging right now. 0:06:11.360 --> 0:06:13.720 I mean, you know one eighteen whatever it is now, 0:06:13.880 --> 0:06:18.200 it's it's it's very difficult to go long bonds at 0:06:18.200 --> 0:06:20.560 this kind of level now looks of course, momentum can 0:06:20.560 --> 0:06:23.240 take you lower. But if we're looking at the fundamental 0:06:23.320 --> 0:06:27.000 story with strong growth, strong earnings um and affect, which 0:06:27.000 --> 0:06:28.840 you know, I agree, it's it's hardly you can hardly 0:06:28.839 --> 0:06:30.800 call it a hawk ish but also me, they're moving 0:06:30.800 --> 0:06:32.920 to a point that they can start normalizing. I think 0:06:32.920 --> 0:06:36.240 it's a really difficult argument make to own treasury seem 0:06:36.279 --> 0:06:40.159 a global opportunities Beckon heard that a few times over 0:06:40.160 --> 0:06:41.640 the last few months. In fact, to be fair, I've 0:06:41.680 --> 0:06:43.360 heard it throughout the whole of this year. Why do 0:06:43.440 --> 0:06:48.160 they beckon now? Well, I mean there's a couple of reasons. 0:06:48.200 --> 0:06:50.000 You've got a global recovery and play. I think the 0:06:50.040 --> 0:06:52.239 most interesting part of this, though, is that you've seen 0:06:52.240 --> 0:06:54.640 it kind of a move from region to region to 0:06:54.720 --> 0:06:58.240 region through the progress of the vaccination um So we 0:06:58.240 --> 0:07:01.400 started for the US, you're how had a fantastic couple 0:07:01.400 --> 0:07:03.960 of months and to what Although em is looking really 0:07:04.040 --> 0:07:07.000 dice at the moment, there are still opportunities going forward. 0:07:07.040 --> 0:07:08.760 And then in this kind of environment where it's really 0:07:08.800 --> 0:07:11.560 difficult to make any decent return, you need to be 0:07:11.600 --> 0:07:13.840 looking at where's the next thing which hasn't yet been 0:07:13.840 --> 0:07:16.480 tapped for that vaccine progress. I've heard it from US 0:07:16.520 --> 0:07:19.040 based investors they're like the UK, the foot seas up 0:07:19.040 --> 0:07:21.800 ten percent this year, I'm told They're like Japan. Japan 0:07:21.800 --> 0:07:23.559 has done nothing for me this year. It's up about 0:07:23.560 --> 0:07:25.200 one percent on the n K. Do you like those 0:07:25.240 --> 0:07:27.680 markets too? Right now? See, there's a reason to pivot 0:07:27.680 --> 0:07:30.320 away from the wonderfulness of the USA COUDI market that 0:07:30.320 --> 0:07:32.640 we're seeen for the year so far, towards the UK 0:07:32.760 --> 0:07:36.600 towards Japan. Yeah, And it gives a really good question. 0:07:36.640 --> 0:07:38.840 I think, like you said Japan has been such a 0:07:38.880 --> 0:07:42.840 disappointment with the global recovery. Typically Japan should do well, 0:07:42.880 --> 0:07:45.320 it just doesn't seem to perform. But we do think 0:07:45.320 --> 0:07:48.240 that those again as opportunities there for vaccine progress, a 0:07:48.360 --> 0:07:50.560 kind of a jump start again in Japan. But you know, 0:07:50.640 --> 0:07:54.520 I agree, it's it's difficult to stay excited about Japan. 0:07:54.880 --> 0:07:56.600 With the UK, I do wonder if they've had a 0:07:56.600 --> 0:07:59.720 bit of their heyday already over the last six months. Um, 0:08:00.000 --> 0:08:01.680 we need to see more actions from the government. Was 0:08:01.840 --> 0:08:03.480 stimulus plans? What are they going to do from the 0:08:03.480 --> 0:08:06.800 fiscal side to keep this rally going? But certainly, you know, 0:08:07.120 --> 0:08:10.040 the US does look good, but there are always opportunities globally, 0:08:10.120 --> 0:08:12.440 you know, we know you need to be diversified, and 0:08:12.480 --> 0:08:16.000 there are other opportunities, UM, Europe, e M which is 0:08:16.000 --> 0:08:17.920 still beckoning for US. We're talking about the US. Do 0:08:17.960 --> 0:08:20.200 you agree with David Carston's view over a Goldman Sachs 0:08:20.280 --> 0:08:22.480 that we're looking at a fort on the SMP at 0:08:22.480 --> 0:08:24.880 the end of the year and are by year end 0:08:25.680 --> 0:08:29.560 two we are still very much risk on. We still 0:08:29.560 --> 0:08:31.920 think there's a lot to play for with within excuse 0:08:32.040 --> 0:08:34.079 and for the same reason that that David's been pointing out, 0:08:34.120 --> 0:08:36.480 which is you look at the fundamentals, earning scross has 0:08:36.520 --> 0:08:39.920 been fantastic. UM. You know, we're seeing companies showing real 0:08:40.000 --> 0:08:45.120 pricing power, which does fill off with some positivity going forward. UM. 0:08:45.160 --> 0:08:46.800 I think the big question marks I said, there is 0:08:46.800 --> 0:08:49.120 a correspond deals, UM, and if we're going to get 0:08:49.120 --> 0:08:51.680 to that two percent level that some people still um 0:08:51.679 --> 0:08:53.760 pinning down for the end of the year, that's going 0:08:53.800 --> 0:08:56.320 to make it much more difficult. We we don't think 0:08:56.360 --> 0:08:59.360 two percent is likely. It's a slightly lower level. UM. 0:08:59.400 --> 0:09:02.160 And in that kind of environment, yes, uf excs can 0:09:02.200 --> 0:09:04.959 continue to perform well. Seem can you walk us through 0:09:05.120 --> 0:09:07.840 a scenario in which bond yields get two percent and 0:09:07.880 --> 0:09:11.160 the reaction function in equities? I mean, I'm personally confused 0:09:11.400 --> 0:09:14.000 by the scenario that will lead to two percent yields 0:09:14.040 --> 0:09:17.719 and then how that will trickle into equities. Yeah. Look, 0:09:17.800 --> 0:09:20.600 if if put like this two months ago, if we've 0:09:20.640 --> 0:09:23.760 then seen US yields need two that would have been 0:09:23.760 --> 0:09:26.080 a steady rise through the rest of the year, and 0:09:26.080 --> 0:09:28.960 I think exles could have digested that at this point 0:09:28.960 --> 0:09:30.960 where yields are for them to hit two percent now 0:09:31.000 --> 0:09:32.480 by the end of the year. That would be a 0:09:32.600 --> 0:09:34.959 very very sharp move. It would be very disruptive and 0:09:35.000 --> 0:09:37.120 I don't think XS could cope with it. But to 0:09:37.200 --> 0:09:40.000 get us there, you need to have the growth boom 0:09:40.040 --> 0:09:42.680 really once again taking off. You need to have the 0:09:42.760 --> 0:09:45.960 FED clearly indicating that tapering is on the agenda, and 0:09:46.000 --> 0:09:48.280 you just need that momentum to be there now. Positioning 0:09:48.559 --> 0:09:51.679 to ask tells us that it could. It could shift right, 0:09:51.720 --> 0:09:53.840 that momentum could come through where you get a huge 0:09:53.840 --> 0:09:58.320 overshooting of on whatever your fair value perspective is. But 0:09:58.400 --> 0:10:00.199 we need a lot of the start to align. It 0:10:00.320 --> 0:10:04.240 seem that the challenge here is our history of e 0:10:04.440 --> 0:10:09.439 M is the history of I'm guessing Ecuador, Mexico came 0:10:09.480 --> 0:10:12.439 along in ninety four and on and on. Is the 0:10:12.600 --> 0:10:17.600 great surprise out there that e M falls apart is 0:10:17.640 --> 0:10:20.800 the developed countries are just over the next twenty four months, 0:10:22.880 --> 0:10:25.040 I think. So, you know, I think a lot of investors, 0:10:25.080 --> 0:10:27.160 including US, we look at it as look at the 0:10:27.360 --> 0:10:29.839 M as a long term opportunity to where your long 0:10:29.920 --> 0:10:33.080 term growth forecasts are going to come through. And once 0:10:33.160 --> 0:10:35.440 you know we've got COVID behind us, especially for those 0:10:35.440 --> 0:10:38.280 countries and then we would expect a lot of those 0:10:38.320 --> 0:10:42.199 benefits to come through so um. But you know, particularly 0:10:42.200 --> 0:10:45.200 with themergy market, it's simply it's just not a homogeneous market. 0:10:45.320 --> 0:10:48.360 You have to be picking your country, is yourffective very 0:10:48.440 --> 0:10:51.160 very carefully because there is a lot of differences, and 0:10:51.200 --> 0:10:54.400 as we'll know, policy politics becomes really a far more 0:10:54.440 --> 0:10:57.920 important issue for E. M. SEA. We've gotta leave it there. 0:10:57.920 --> 0:11:01.240 It's gonna catch up. Appreciate principal Globe and Investors, chief 0:11:01.240 --> 0:11:10.440 strategists out of London. What's more important? Que or race? 0:11:10.520 --> 0:11:12.040 Let's bring it Steve a studio for more on that 0:11:12.080 --> 0:11:14.720 from a zoo. Security is the chief US economists, Steve, 0:11:14.800 --> 0:11:17.400 let's start there. You think that QUI is actually the 0:11:17.440 --> 0:11:20.000 more important tool here? When someone and I sit, someone 0:11:20.080 --> 0:11:22.320 like I sit to myself, sits here and says, you 0:11:22.360 --> 0:11:24.800 know what, I think, QUI doesn't really matter. A hundred 0:11:24.840 --> 0:11:27.040 twenty billion, a hundred eighty that doesn't make a difference. 0:11:27.040 --> 0:11:28.800 Do you think it does make a difference, Steve White? 0:11:29.880 --> 0:11:31.400 Do you think it does? Because I believe you know 0:11:31.440 --> 0:11:33.920 you're living in a world of excess supply and therefore 0:11:33.960 --> 0:11:36.320 what you need to do is you need to create 0:11:36.360 --> 0:11:40.800 the liquidity that allows inflation rate to actually not get 0:11:40.880 --> 0:11:44.280 sucked into a deflationary bias. And this has been the 0:11:44.320 --> 0:11:48.400 feds ongoing risk by continuing to fall back into their 0:11:48.440 --> 0:11:51.480 preemptive ways. And this is the thing that worries me 0:11:51.640 --> 0:11:54.200 the most. You know, the interest rate dynamic, how it 0:11:54.200 --> 0:11:57.400 affects the currency is not having any impact whatsoever on 0:11:57.440 --> 0:12:00.600 the currency. You know, a difference between a year zero 0:12:00.679 --> 0:12:03.079 interest rate level or you know, a five to ten 0:12:03.120 --> 0:12:05.959 basis point negative isn't going to cause people to move 0:12:06.360 --> 0:12:10.240 assets around globally and therefore affect the currency and then 0:12:10.280 --> 0:12:15.080 expose US global import prices. But que does QUE one 0:12:15.160 --> 0:12:18.800 worked very very well at avoiding the deflation initially during 0:12:18.840 --> 0:12:21.800 the financial crisis. Q E two worked very very well 0:12:21.840 --> 0:12:24.760 to do exactly the same thing. And it worked very 0:12:24.840 --> 0:12:27.640 very well. And here until the FED began the process 0:12:27.720 --> 0:12:31.280 of backing away from being preemptive, backing away from being 0:12:31.320 --> 0:12:34.880 reactive to being preemptive, by laying out forecasts of when 0:12:34.880 --> 0:12:37.120 they thought it would be appropriate to exe q E. 0:12:37.559 --> 0:12:39.880 I don't think they should ever exec QI. I think 0:12:39.920 --> 0:12:41.680 they have to trim it back to the pace of 0:12:41.760 --> 0:12:44.880 nominal GDP growth and leave it an automatic pilot. This 0:12:44.960 --> 0:12:48.120 is a huge call. They should never exit que and 0:12:48.280 --> 0:12:51.079 the follow on here is they should never shrink their 0:12:51.120 --> 0:12:53.760 balance sheet. The idea here that an a point two 0:12:53.840 --> 0:12:57.200 trillion dollar FED balance sheet is not big enough. How 0:12:57.240 --> 0:13:00.840 big should it be? Steve Well, I don't think there's 0:13:00.840 --> 0:13:02.720 an answer to how big it should be. Let's take 0:13:02.760 --> 0:13:05.840 a look. Five point four trillion of the big expansion 0:13:05.880 --> 0:13:09.800 here was done under the environment of offsetting the huge 0:13:09.920 --> 0:13:12.560 drag on the economy as a result of the COVID 0:13:12.640 --> 0:13:16.679 nineteen lockdown mitigation strategy. That is, a one time, permanent 0:13:16.760 --> 0:13:19.959 increase in the balance sheet, allowing the balance sheet to 0:13:20.040 --> 0:13:22.800 then continue to grow at the pace of nominal GDP 0:13:23.520 --> 0:13:27.600 suggests primarily that you're continuing to support the economy. You 0:13:27.679 --> 0:13:31.079 want that level of nominal GDP to be consistent with 0:13:31.160 --> 0:13:34.319 let's say a five percent nominal GDP growth, so you 0:13:34.360 --> 0:13:36.439 can get a growth rate that's somewhere between two and 0:13:36.520 --> 0:13:38.880 a half percent and an inflation of two to two 0:13:38.920 --> 0:13:41.240 and a half percent, and therefore it gives you an 0:13:41.280 --> 0:13:45.599 environment where you're supporting that inflationary bias in the economy 0:13:45.720 --> 0:13:48.800 to avoid the bigger risk of falling into deflation, which 0:13:48.880 --> 0:13:52.120 Japan has been done in for thirty years. Europe is 0:13:52.240 --> 0:13:55.400 arguably in there now with thirty year ones trading in 0:13:55.440 --> 0:13:57.959 the negative territory ten year ones down a mine is 0:13:58.040 --> 0:14:01.320 fifty uh. Europe has gone on the deflation path. There's 0:14:01.440 --> 0:14:04.200 arguments that China has gone down the deflation path or 0:14:04.320 --> 0:14:07.240 is going down the deflation path. That's thirty percent of 0:14:07.280 --> 0:14:10.880 global g d P A. They're all net creditors. We're 0:14:10.920 --> 0:14:14.080 a net debtor. If we have deflation, it's a real problem. 0:14:14.559 --> 0:14:19.440 Stephen Shuto, have you extended out this glide path from 0:14:19.440 --> 0:14:23.320 a boom economy back to some form of normal? Have you, 0:14:23.400 --> 0:14:27.400 in the last weeks, even the months, extended that out 0:14:27.440 --> 0:14:32.920 into and indeed even twenty four Well, I mean you have. 0:14:33.080 --> 0:14:35.880 I mean the reality is the stimulus that we're providing 0:14:36.000 --> 0:14:38.960 is transfer me and to to a great extent, has 0:14:38.960 --> 0:14:41.640 been a one sign transfer of wealth because households have 0:14:41.640 --> 0:14:45.160 been allowed de leverage, which is good, increase their savings, 0:14:45.400 --> 0:14:48.240 which is good. So we've taken wealth from the public 0:14:48.280 --> 0:14:51.360 sector and we've given it to the private sector. That's 0:14:51.360 --> 0:14:55.600 good as sure as you a longer sustained expansionary environment. 0:14:56.080 --> 0:14:58.160 It doesn't tell you the rate of growth that you're 0:14:58.160 --> 0:15:00.840 going to get. And I think in a globe deflationary 0:15:00.920 --> 0:15:03.880 world where we have a trade deficit of seventy five 0:15:03.960 --> 0:15:08.120 point seven billion dollars, where basically we've leaked a lot 0:15:08.160 --> 0:15:12.280 of the stimulus transfer payments, the demand that was created overseas, 0:15:12.600 --> 0:15:15.680 and yet they still can't get out of a deflationary bias. 0:15:15.720 --> 0:15:18.360 You know, we're in an environment where we're gonna rapidly 0:15:18.480 --> 0:15:20.520 turn back to that two to two and a quarter 0:15:20.560 --> 0:15:22.960 percent growth rate in our forecast, or we get there 0:15:22.960 --> 0:15:27.200 by stay just quickly plain rolls tomorrow seven see the estimate? 0:15:27.280 --> 0:15:30.080 What are you looking for? Well, I'm slightly below that. 0:15:30.120 --> 0:15:32.880 I'm in the seven fifty area. The reason for it, look, 0:15:32.920 --> 0:15:35.760 even one of those numbers is great. Um. I just 0:15:35.800 --> 0:15:38.560 think the seasonal factors are probably a little bit screwed 0:15:38.640 --> 0:15:42.360 up given the volatility last year. And again, I don't 0:15:42.400 --> 0:15:45.760 know how many of the seasonal workers relating to education 0:15:46.280 --> 0:15:48.680 because a lot of the southern schools have already gone 0:15:48.720 --> 0:15:51.200 back to uh to the classroom. Whether or not that 0:15:51.280 --> 0:15:54.920 athmatic and manifests itself, especially in the Northeast area where 0:15:54.920 --> 0:15:57.320 people are being a little bit more reluctant to start 0:15:57.360 --> 0:15:59.800 bringing people back, not knowing what's gonna happen. Is we 0:15:59.880 --> 0:16:03.160 go into the September school year, Steve, gotta cash up. 0:16:03.200 --> 0:16:05.720 Let's get your thoughts, especially going into tomorrow, Steve, a 0:16:05.720 --> 0:16:09.600 shoot out like that looking for eight seventy that's yourmmedian estimate. 0:16:09.680 --> 0:16:12.120 The range is wide, wide, wide. It is always wide, 0:16:12.120 --> 0:16:20.440 white white, these tys right now what I'm hearing from 0:16:20.480 --> 0:16:23.080 so many people anecdotally thank you for the tweets and 0:16:23.120 --> 0:16:26.240 the emails. We love getting them in. Is you really 0:16:26.280 --> 0:16:29.800 like that we talked to experts on your fears of 0:16:29.880 --> 0:16:34.040 the variants? Gig Gronville, Senior scholar at Johns Hopkins Center 0:16:34.080 --> 0:16:36.880 for Health Security, and what are some so important to 0:16:36.920 --> 0:16:39.280 your folks is? Dr Gronville is one of the nation's 0:16:39.360 --> 0:16:43.600 leading protein chemists, where they work at Memorial Sloane Cuttering 0:16:44.000 --> 0:16:45.960 over the years. G g I'm gonna cut to the chase. 0:16:46.000 --> 0:16:49.280 We're not gonna make this leningers one oh one. There's 0:16:49.320 --> 0:16:54.160 delta variant, there's lambda variant, and there's the spike protein. 0:16:54.680 --> 0:16:59.760 What do our listeners and viewers need to fear, Well, 0:17:00.280 --> 0:17:04.160 they don't need to fear variants. They're not magic. Um, 0:17:04.400 --> 0:17:08.000 it's they from a from a broader perspective, from public health, 0:17:08.160 --> 0:17:11.680 and these variants are making the disease harder to to end, 0:17:11.800 --> 0:17:15.160 just making the pandemic harder to end. But all the 0:17:15.200 --> 0:17:18.960 things that you can do for DELTA, all the things 0:17:18.960 --> 0:17:21.840 that you should have been doing for alpha, they still work. 0:17:22.200 --> 0:17:25.399 You still need to get vaccinated, UM, use a mask 0:17:25.640 --> 0:17:29.600 of in areas of high transmission. UM, really pay attention 0:17:29.640 --> 0:17:35.520 to air quality, get air hepa filtration devices for classrooms 0:17:35.520 --> 0:17:38.600 and public spaces, and you know, and you should be 0:17:38.680 --> 0:17:43.200 okay within the spike. And let's not get into d NA, 0:17:43.640 --> 0:17:45.720 m r NA and the rest of it and the 0:17:45.960 --> 0:17:50.120 very fancy Greek letters of your world. Do the vaccines 0:17:50.200 --> 0:17:53.159 that we have now do they have a confidence to 0:17:53.280 --> 0:17:57.280 carry over to these other variants or should we worry 0:17:57.359 --> 0:18:00.439 about it like we worry about say, steph lecocca in 0:18:00.480 --> 0:18:05.840 the bacteria world. Right, Yeah, so it is a concern, 0:18:05.960 --> 0:18:09.240 but it's not something we've seen yet, and so people 0:18:09.280 --> 0:18:12.000 don't need to worry that their vaccines are not effective 0:18:12.119 --> 0:18:15.000 right now. What we're seeing is that UM, you know, 0:18:15.119 --> 0:18:20.200 some there might be some fewer antibody responses from one 0:18:20.280 --> 0:18:23.200 variant or another, but you're the vaccines are good. Thankfully, 0:18:23.280 --> 0:18:26.119 your immune system is a little more complicated than just 0:18:26.280 --> 0:18:29.560 one way of measuring it, and um, your immune system, 0:18:29.680 --> 0:18:32.560 We've were involved, creatures. We've been going to war against 0:18:32.680 --> 0:18:36.000 infectious diseases for a very long time. So, UM, you 0:18:36.080 --> 0:18:38.920 know we're gonna be okay as long as you get 0:18:38.920 --> 0:18:42.320 the vaccine. And if we need to have an updated one, um, 0:18:42.359 --> 0:18:44.240 that will happen at some point in the future. But 0:18:44.400 --> 0:18:46.919 things look good right now. We're evolved creatures. I like 0:18:47.040 --> 0:18:49.480 that some of us are. Dr Gronville. There is a 0:18:49.640 --> 0:18:52.600 question also about the booster shots, because, especially as we 0:18:52.640 --> 0:18:55.639 hear from MODERNA that there m R and a vaccine 0:18:55.760 --> 0:19:00.840 remains effective six months after the second the idea here 0:19:00.840 --> 0:19:04.919 of nine efficacy basically being nearly the same as initially 0:19:05.000 --> 0:19:08.359 does this basically remove the need for near term boosters 0:19:08.400 --> 0:19:10.840 and lengthen the recovery time that we could potentially have 0:19:11.160 --> 0:19:15.280 economically and socially. So just to clarify, so they saw 0:19:15.320 --> 0:19:18.320 that efficacy six months out, that that doesn't mean that 0:19:18.440 --> 0:19:20.840 the vaccine only last for six months. We think that 0:19:20.880 --> 0:19:23.960 the vaccines will last potentially for years before you might 0:19:24.000 --> 0:19:26.480 need a booster. And yes, you're right that that probably 0:19:26.520 --> 0:19:29.920 means that for most people they will not need a booster. 0:19:29.960 --> 0:19:33.359 I think most people are thinking boosters might be necessary 0:19:33.680 --> 0:19:37.560 or probably will be necessary for people who have um 0:19:37.600 --> 0:19:42.360 IM you know, compromise it. You position there's uh conditions 0:19:42.400 --> 0:19:45.840 like they might have had a liver transplant, or they 0:19:45.880 --> 0:19:49.199 are very elderly, or they have some other condition that 0:19:49.320 --> 0:19:52.040 is going to lead to them needing to have a 0:19:52.080 --> 0:19:55.280 booster shot. Meanwhile, that's good news. On the bad news, 0:19:55.320 --> 0:19:58.399 the vaccine has not prevented the spread of the delta variant. 0:19:58.640 --> 0:20:00.879 Is it a feudal goal to try to eliminate the 0:20:00.920 --> 0:20:05.960 circulation entirely of these viruses? We're not, um So, any 0:20:06.000 --> 0:20:08.960 talk of eradication just put that out of your mind. 0:20:09.160 --> 0:20:11.560 Um it's not going to happen. Um This is a 0:20:11.640 --> 0:20:15.120 virus that's very It called a generalist virus. It infects 0:20:15.119 --> 0:20:19.360 other animals. People have gotten infected from animals from there, 0:20:19.400 --> 0:20:22.320 from mink, it's gone to mank and back, and it 0:20:22.400 --> 0:20:25.359 probably has gone to two pets and back too. But 0:20:25.440 --> 0:20:29.320 we haven't seen that yet. Um So, I that's not 0:20:29.359 --> 0:20:32.120 going to happen. But we can make it something that 0:20:32.320 --> 0:20:35.240 is not going to cause people from the hospital and 0:20:35.520 --> 0:20:37.879 that's really you know, what we need to to be 0:20:37.960 --> 0:20:41.880 focused on. We need to prevent morbidity and mortality. Dr 0:20:41.920 --> 0:20:44.840 Granville John Ferrald is really focused on China, the dynamics 0:20:44.880 --> 0:20:47.520 of this pandemic in China, and we've had reports from 0:20:47.960 --> 0:20:50.840 experts there that this time is different. How do you 0:20:50.880 --> 0:20:55.480 interpret the size, the scope, the scale of China and 0:20:55.520 --> 0:21:01.840 their ability to contain to diminish hospitalizations and deaths UM. 0:21:01.920 --> 0:21:05.359 China has some uh, some ability to move in different 0:21:05.359 --> 0:21:08.720 directions and require things that other places do not. UM. 0:21:08.720 --> 0:21:11.800 But humans are the same everywhere and UM. I think 0:21:11.800 --> 0:21:15.960 people UM have a natural tendency to congregate and UM. 0:21:16.000 --> 0:21:18.640 So that's going to be a challenge in combating any 0:21:18.680 --> 0:21:22.240 infectious disease UM that has passed from person to person 0:21:22.800 --> 0:21:25.800 and UM, and it can be counterproductive if you're not 0:21:26.080 --> 0:21:29.960 fully getting all the information that you need. UM. But yes, 0:21:30.000 --> 0:21:34.320 this variant is definitely more challenging than others because people 0:21:34.359 --> 0:21:36.879 have a lot more virus in their nose UM, and 0:21:36.920 --> 0:21:39.760 they're breathing more out and so they're in they're infectious 0:21:39.840 --> 0:21:42.520 for longer. And so that's UH, that's why it's going 0:21:42.560 --> 0:21:44.760 to be a challenge for even countries that have done 0:21:44.840 --> 0:21:47.200 very well with the with the disease so far. Doctor, 0:21:47.240 --> 0:21:49.200