WEBVTT - Testing and Data Addresses Omicron Concerns 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Karl Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.479 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You 0:00:23.480 --> 0:00:25.439 can also listen to our radio show at two pm 0:00:25.440 --> 0:00:27.880 Eastern Time on the Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:32.080 YouTube search Bloomberg Global News. Some of the key COVID 0:00:32.159 --> 0:00:36.640 headlines that are out there about South Africa, they're surgeon cases, um, 0:00:36.680 --> 0:00:39.200 not overwhelming hospitals so far. In New York City, Mayored 0:00:39.200 --> 0:00:41.640 Bill de Blasio saying the city will become the nation's 0:00:41.680 --> 0:00:44.520 first impose a vaccine mandate on private sector workers starting 0:00:44.520 --> 0:00:46.720 on December twice seven. But as you so rightfully pointed 0:00:46.760 --> 0:00:48.559 out to him, good luck with that, because you're not 0:00:48.600 --> 0:00:50.839 gonna be mayor anymore. Yeah, Eric Adams has his work 0:00:50.840 --> 0:00:52.519 cut off him if he even ends up going through 0:00:52.560 --> 0:00:55.920 with us, right, and we know how much difficulties President 0:00:56.000 --> 0:01:00.000 Biden has in terms of imposing any kind of vaccine mandates. 0:01:00.040 --> 0:01:01.680 One thing we're also watching is what's going on around 0:01:01.680 --> 0:01:04.880 the world, Carol, France, for example, closing its nightclubs for 0:01:04.880 --> 0:01:07.440 four weeks and we'll open vaccinations to children. So different 0:01:07.440 --> 0:01:09.120 stories playing out in different parts of the country, in 0:01:09.120 --> 0:01:11.120 different parts of the world to absolutely. So let's see 0:01:11.120 --> 0:01:13.720 what our next guest has to say. Dr Michael Blas 0:01:13.840 --> 0:01:16.920 is a chief medical officer at Annivasi Blavis excuse me, 0:01:17.000 --> 0:01:21.640 Dr Michael Blavis, chief medical officer at Annivasi Diagnostics. It's uh. 0:01:21.680 --> 0:01:25.000 He's also a practicing emergency department physician, and he joins 0:01:25.080 --> 0:01:27.199 us on the phone in Atlanta, and I just wanted 0:01:27.240 --> 0:01:29.520 to point out global COVID cases are topping two hundred 0:01:29.560 --> 0:01:33.280 sixty eight million deaths, surpassing uh five point two million. 0:01:33.360 --> 0:01:35.560 Just we've stopped doing those numbers, and when I see them, 0:01:35.560 --> 0:01:38.479 it always kind of stops my heart a little bit. Um. 0:01:38.640 --> 0:01:40.840 Dr Blavi's nice to have you here with us. How 0:01:40.880 --> 0:01:44.720 are you, thank you, Carol? Very good pleasure to be 0:01:44.840 --> 0:01:46.720 there with you. Well, tell us a little bit about 0:01:46.760 --> 0:01:49.600 what you guys are seeing in terms of the impact 0:01:49.680 --> 0:01:52.360 of the amicron variant and just generally in society when 0:01:52.400 --> 0:01:56.960 it comes to battling COVID. So I think there's a 0:01:57.000 --> 0:02:01.080 lot of kind of panic and concern. Rightfully, So, the 0:02:01.160 --> 0:02:03.440 last time we had a new variant that there was 0:02:03.440 --> 0:02:06.480 a lot of excitement about that was Delta. On the 0:02:06.560 --> 0:02:09.680 kind of the diagnostic side, there's a lot of I 0:02:09.680 --> 0:02:13.440 wouldn't say excitement, but some concern as well because there 0:02:13.440 --> 0:02:16.720 are so many mutations with the omicron variants. So everyone 0:02:16.760 --> 0:02:20.000 is scrambling to make sure their tests will accurately detect it. 0:02:20.080 --> 0:02:23.440 They're doing all sorts of simulations, and obviously on the 0:02:23.480 --> 0:02:26.799 diagnostic side or on the therapeutic side, everyone is worried 0:02:27.440 --> 0:02:29.800 will our treatments work just as well? And do we 0:02:29.840 --> 0:02:32.840 need to come up with new things? When do we know? 0:02:32.960 --> 0:02:35.880 When will we know? Because so far over the last 0:02:35.919 --> 0:02:37.480 six days, all we've been talking about is we do 0:02:37.560 --> 0:02:39.600 we need more data? We need more data? When do 0:02:39.680 --> 0:02:43.160 we get that data? So unfortunately it just takes time. 0:02:43.560 --> 0:02:47.000 We're really talking about three weeks now that we've been 0:02:47.040 --> 0:02:50.520 aware of it. So the genetic sequencing is almost completely done. 0:02:50.560 --> 0:02:52.919 We have some good data on that, so a lot 0:02:52.960 --> 0:02:55.800 of simulation can occur. For instance, we've looked at it 0:02:55.840 --> 0:03:02.639 and will detect the cases um like things like how well, uh, 0:03:02.840 --> 0:03:06.640 will the virus respond to current treatments. That takes people 0:03:06.840 --> 0:03:10.400 actually being studied, studies being approved and run, so something 0:03:10.440 --> 0:03:13.440 like that can take several months. Obviously, in the next 0:03:13.440 --> 0:03:16.360 few weeks we'll get more of a general idea of 0:03:16.400 --> 0:03:21.120 how severe the diseases or macron is, how quickly it spreads, 0:03:21.160 --> 0:03:24.240 and we'll get uh some news about our any tests 0:03:24.280 --> 0:03:27.000 failing to catch it, so that people will know do 0:03:27.080 --> 0:03:29.239 they have to choose a certain type of test? Are 0:03:29.240 --> 0:03:31.960 they okay? Just getting whatever they're used to getting? All right, 0:03:32.000 --> 0:03:33.760 So we've just got to be patient here in the meantime, 0:03:33.800 --> 0:03:36.880 just be prudent. It sounds like, UM, tell us a 0:03:36.880 --> 0:03:38.720 bit about the work that you guys are doing. You 0:03:38.760 --> 0:03:41.640 have a COVID nineteen test and detector. From what I understand, 0:03:41.680 --> 0:03:43.840 at least on your website, it's not yet cleared nor 0:03:43.880 --> 0:03:47.200 submitted been submitted to the FDA for authorization under the 0:03:47.200 --> 0:03:51.560 Emergency Use Act. Is that correct? That's correct. We're just 0:03:51.640 --> 0:03:56.040 starting our final study with patient enrollment now and hope 0:03:56.040 --> 0:03:59.280 to submit to the FDA in early January. So maybe 0:03:59.320 --> 0:04:01.880 be out on the market in late February or at 0:04:01.920 --> 0:04:06.160 least early March. And it's basically like a massive lab 0:04:06.520 --> 0:04:08.920 PCR that you would find in a hospital, but in 0:04:08.920 --> 0:04:11.120 in a tiny little box and one that gives you 0:04:11.240 --> 0:04:14.000 results in about thirty minutes or less. As well. How 0:04:14.080 --> 0:04:17.680 much does it cost or how might it cost? So 0:04:18.160 --> 0:04:21.320 the device itself, and we can only give ranges per 0:04:21.360 --> 0:04:24.760 FDA regulations. Uh, it might be kind of in the 0:04:24.920 --> 0:04:29.120 two range plus or minus. We haven't made any final decisions, 0:04:29.200 --> 0:04:31.520 and then the device can run up to about three 0:04:31.560 --> 0:04:34.920 thousand to five thousand tests in its lifetime, and how 0:04:35.000 --> 0:04:38.919 much each task costs is something we're still trying to determine. 0:04:39.320 --> 0:04:41.040 We want to bring down the price as much as 0:04:41.080 --> 0:04:44.479 possible to increase access, but obviously there are costs of 0:04:44.520 --> 0:04:50.240 manufacturing involved. So we're thinking probably in the fifty dollar range, 0:04:50.279 --> 0:04:53.400 but that hasn't been decided, and again we can't really 0:04:53.400 --> 0:04:58.200 give out any uh definitive numbers according to the FDA. 0:04:58.480 --> 0:05:00.000 What were your thoughts last week when you heard tries 0:05:00.000 --> 0:05:02.040 and in Biden said that he wants insurance companies to 0:05:02.120 --> 0:05:05.919 our cover at home testing starting in January, So you know, 0:05:05.960 --> 0:05:09.240 obviously as a company, Uh, you get excited about that. 0:05:09.279 --> 0:05:13.640 As an emergency physician who saw hundreds of patients and 0:05:13.640 --> 0:05:16.520 many very sick, I think this is a great idea 0:05:16.600 --> 0:05:20.880 because if we can really interrupt the spread of COVID vaccination, 0:05:20.920 --> 0:05:23.760 we all hope that everybody will get vaccinated, or at 0:05:23.800 --> 0:05:27.560 least you know that over seventy five mark and COVID 0:05:27.560 --> 0:05:30.440 will just go away and you know we'll be saved 0:05:30.520 --> 0:05:33.039 from it. That's not been the case. So the way 0:05:33.080 --> 0:05:36.480 we're going to stop COVID from spreading with each wave 0:05:36.920 --> 0:05:39.760 is to identify as quickly and easily as possible when 0:05:39.800 --> 0:05:42.719 somebody has an infection. So, for instance, I want to 0:05:42.720 --> 0:05:46.599 go to a party with people, I test quickly, easily, accurately, 0:05:47.000 --> 0:05:50.279 and um, then you know I find out on positive. Oops, 0:05:50.320 --> 0:05:51.960 I'm going to stay home. We're not going to infect 0:05:51.960 --> 0:05:54.600 anybody else. So if we can get to that point, 0:05:55.040 --> 0:05:57.039 I think it's really going to make an impact. But 0:05:57.440 --> 0:06:01.040 costs and access are both significant barriers. So people need 0:06:01.120 --> 0:06:03.280 to be able to test at home ideally and be 0:06:03.360 --> 0:06:06.560 able to afford to test. Yeah, I know, so many 0:06:06.600 --> 0:06:08.880 of the conversations that we have certainly have to do 0:06:09.040 --> 0:06:15.120 with the ability to affordable UH and accessible testing certainly 0:06:15.160 --> 0:06:18.880 going forward. Dr Michael blab Us, he's chief medical officer 0:06:18.920 --> 0:06:23.240 Anavasi Diagnostics. He's with us on the phone in Atlanta. 0:06:23.320 --> 0:06:25.480 We think about this. You talked about this a lot test. Well, 0:06:25.480 --> 0:06:28.360 we do weekly tests for our son who's in nursery 0:06:28.400 --> 0:06:31.000 school as part of the you know, the tuition there, 0:06:31.200 --> 0:06:35.440 and we forgot his salive example last week. Well we 0:06:35.480 --> 0:06:37.080 just have to give him an instant test at home. 0:06:37.120 --> 0:06:39.960 But you know the PCRs they're with bottle tests. Yeah, 0:06:40.040 --> 0:06:43.040 you know, it's a good point. This is Bloomberg Business 0:06:43.120 --> 0:06:46.919 Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic 0:06:47.400 --> 0:06:51.680 on Bloomberg Radio. You're listening to Bloomberg Business Week with 0:06:51.760 --> 0:06:56.599 Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. 0:06:56.839 --> 0:06:59.360 All right, so, um, love this story, so kind of them. 0:06:59.400 --> 0:07:02.360 I'm talking about Wall Street It, Tim, it just wants 0:07:02.400 --> 0:07:05.400 to sell a special index just for you. This story 0:07:05.440 --> 0:07:07.720 in the upcoming issue of Bloomberg Business Week magazine. It's 0:07:07.760 --> 0:07:10.640 also Today's Bloomberg Big Take. Pat Rickners, markets and finance 0:07:10.680 --> 0:07:12.760 reporter for Bloomberg Business Week. He's with us in the 0:07:12.760 --> 0:07:16.520 Bloomberg Interactive Broker's studio in New York. Justina Lee wrote 0:07:16.520 --> 0:07:19.480 the story. She's markets reporter at Bloomberg News. She joins 0:07:19.560 --> 0:07:21.960 us on the phone from London. So, the idea of 0:07:22.000 --> 0:07:25.520 investing in passive indexes and you know, those from perhaps 0:07:25.800 --> 0:07:28.760 Vanguard and others that track the SMP five hundred, it's 0:07:28.760 --> 0:07:33.120 been a really good thing for investors pat but not 0:07:33.200 --> 0:07:36.360 necessarily such a great thing for stock pickers. Yeah. You know, 0:07:36.720 --> 0:07:39.400 if I think of the two most tectonic changes in 0:07:39.400 --> 0:07:43.720 investing in my career, it's been m the adoption of 0:07:43.720 --> 0:07:46.600 index funds and then the shift of that to e 0:07:46.720 --> 0:07:49.080 t f s. And one of the things I found 0:07:49.120 --> 0:07:53.960 so fascinating about Justina's story was that, like, this is 0:07:54.240 --> 0:07:57.440 what people on Wall Street really hope will be the 0:07:57.480 --> 0:08:00.160 next step. Uh. In some ways it has all of 0:08:00.200 --> 0:08:03.400 the logic of indexing and ets, but they think it's 0:08:03.440 --> 0:08:06.559 a way that they can preserve an ability to charge 0:08:06.600 --> 0:08:08.720 higher fees. I'm just saying it, where where do you 0:08:08.760 --> 0:08:13.120 see this in its evolution? Right? It's it's kind of interesting, 0:08:13.200 --> 0:08:15.880 like you said, because it has some passive elements, but 0:08:16.000 --> 0:08:19.560 it really has some kind of an active ingredient. Um 0:08:19.760 --> 0:08:22.880 kind of smuggled into it because they kind of start 0:08:22.880 --> 0:08:25.000 what's the clients start with is an index, and then 0:08:25.000 --> 0:08:27.440 they can add and subtract from that list to end 0:08:27.480 --> 0:08:31.000 up with a personalized portfolio. And we're really seeing kind 0:08:31.000 --> 0:08:34.920 of the intersection of like technology as well as UM 0:08:35.000 --> 0:08:37.960 kind of this big personalization trend across a lot of 0:08:38.040 --> 0:08:40.280 other products. You know, if you think about Spotify or 0:08:40.360 --> 0:08:42.960 Netflix every where, I hurry you here. And and the 0:08:43.040 --> 0:08:45.800 question is, I mean, does the same concept also apply 0:08:45.920 --> 0:08:49.400 to investing. Yeah, it is kind of interesting in terms 0:08:49.480 --> 0:08:51.440 of so you basically take it index and you can 0:08:51.480 --> 0:08:54.199 kind of tweak it um. I know it's kind of 0:08:54.320 --> 0:08:56.240 earlier in the game, or is it like talk to 0:08:56.320 --> 0:08:59.600 us about kind of the establishment embracing this form of 0:08:59.640 --> 0:09:04.600 investor ding. So for now, direct indexing runs about three 0:09:05.040 --> 0:09:08.400 fifty billion dollars of assets, so it's so tiny if 0:09:08.440 --> 0:09:11.520 you compare that to the mutual fund or et s industry. 0:09:11.800 --> 0:09:14.120 But we're definitely seeing a lot of big moves all 0:09:14.160 --> 0:09:16.640 around to make this the next big thing. You know, 0:09:16.720 --> 0:09:21.960 we have had acquisitions from Franklin, Templeton, black Rock, Morgan, Stanley, Vanguard, 0:09:22.040 --> 0:09:24.720 even all the biggest names kind of wanting to get 0:09:24.760 --> 0:09:27.600 ahold of this, And I think the question is whether 0:09:27.800 --> 0:09:30.480 this will kind of end up being quite a niche 0:09:30.559 --> 0:09:33.280 product that maybe you can get a bit more fees on, 0:09:33.320 --> 0:09:35.960 and whether or whether it really will end up being 0:09:36.000 --> 0:09:38.000 a threat to E T F the mutual funds. Well, 0:09:38.000 --> 0:09:39.600 you know, in our tis at the top of the show, 0:09:39.640 --> 0:09:42.120 I said, well, is this altruistic like giving the client 0:09:42.200 --> 0:09:45.680 what they want? Or is it capitalistic or a little 0:09:45.679 --> 0:09:48.920 bit of both. Yeah, I think there really is a 0:09:48.920 --> 0:09:52.800 philosophical question here, because you know, the supporters of this day, 0:09:52.840 --> 0:09:55.360 even if the clients are not making the best position, 0:09:55.440 --> 0:09:58.280 you need to enable people to make them. You know, 0:09:58.360 --> 0:10:00.720 for instance, if you you have a client to hate 0:10:00.720 --> 0:10:03.440 s fossil fuel companies, I mean, maybe it's okay for 0:10:03.480 --> 0:10:06.200 them even if they lose a few basis points each 0:10:06.240 --> 0:10:09.240 year in performance. But of course we've also had a 0:10:09.320 --> 0:10:11.880 lot of research over the years showing that it's not 0:10:12.080 --> 0:10:15.480 that great when you let individuals you know, with busy lives, 0:10:15.640 --> 0:10:18.679 um if you worry about their own portfolios. So in 0:10:18.679 --> 0:10:22.800 that sense, I mean, are you actually just empowering uh? 0:10:23.440 --> 0:10:25.400 Investors might have something to say about that. I mean, 0:10:25.400 --> 0:10:28.040 I think there's also been you know, quite influential papers 0:10:28.040 --> 0:10:30.200 in the history of markets that show that even the 0:10:30.240 --> 0:10:34.040 best stock pickers can't repeatedly even after fees, especially after 0:10:34.080 --> 0:10:36.360 fees beat the markets just you know. So, I wonder 0:10:36.360 --> 0:10:38.280 in a in a where it comes when it comes 0:10:38.320 --> 0:10:42.160 down to fees, how much directing indexing will cost, especially 0:10:42.160 --> 0:10:44.839 compared to some passive vehicles. I mean hundred for example, 0:10:45.000 --> 0:10:47.520 more than this year. You could throw that into an 0:10:47.520 --> 0:10:51.320 et F with what like five basis points of a fee, yeah, 0:10:51.400 --> 0:10:54.800 or even lessen that at this point, Um, there isn't 0:10:54.800 --> 0:10:58.680 a lot of transparency in direct indexing fees, but Bloomberg 0:10:58.720 --> 0:11:02.560 Intelligence Estimate did that it's around thirty basis points, which 0:11:02.559 --> 0:11:04.880 is still higher than E T S where you can 0:11:04.880 --> 0:11:08.679 get almost zero at this point. So it is cheaper 0:11:08.720 --> 0:11:11.480 than your old school mutual fund, but it is more 0:11:11.520 --> 0:11:14.480 expensive than you know, the cheapest E T S, which 0:11:14.559 --> 0:11:16.800 I think really is to pitch here you know, somewhere 0:11:16.800 --> 0:11:20.240 have been more expensive but not you know, the cheapest 0:11:20.360 --> 0:11:27.440 of the products. No, that's okay, you know, it's interesting. Um, 0:11:28.080 --> 0:11:32.320 I guess I do wonder it's hard not for Wall 0:11:32.360 --> 0:11:34.360 Street who has been just watching so much of the 0:11:34.400 --> 0:11:37.400 money fly out because of index funds. And I agree 0:11:37.440 --> 0:11:39.400 with Pat. I mean, one of the first things I 0:11:39.440 --> 0:11:45.120 did in my financial journalistic career was producing mutual fund show. 0:11:45.600 --> 0:11:47.880 It was all about playing the strategies and you had 0:11:48.200 --> 0:11:51.440 you know, people were just piling money, uh into mutual funds. 0:11:51.440 --> 0:11:54.720 So it's fascinating how quickly it is evolved to the 0:11:54.760 --> 0:11:57.280 index world. Although John Bogel, you know, bless his soul, 0:11:57.880 --> 0:11:59.880 um and may rest in peace. You know what I 0:12:00.040 --> 0:12:01.600 said years ago, Well, this is the way to go. 0:12:01.640 --> 0:12:04.160 It makes sense. Um, it's a it's a smart strategy. 0:12:04.160 --> 0:12:07.360 But I do wonder about the fees that financial firms 0:12:07.360 --> 0:12:10.160 have been losing because everybody's been throwing money into index funds, 0:12:10.200 --> 0:12:12.599 and how much of that is a big part of it. 0:12:12.600 --> 0:12:14.400 And I guess well, time will tell, right in terms 0:12:14.400 --> 0:12:19.600 of performance. Yeah, and you mentioned fees. But another part is, 0:12:19.640 --> 0:12:22.200 of course, this is going to a few more single 0:12:22.400 --> 0:12:26.360 stock trading flow so even kind of if you look 0:12:26.440 --> 0:12:29.720 beneath that, this will also be better business for brokers 0:12:29.720 --> 0:12:33.160 and market makers to just like higher volumes. Actually, that's 0:12:33.160 --> 0:12:34.680 one of the fascinating things here is that a lot 0:12:34.760 --> 0:12:36.800 of this is built on the fact that trading costs 0:12:36.800 --> 0:12:38.680 have been driven so well so that one of the 0:12:38.679 --> 0:12:41.760 reasons you can do this is that, um, you know, 0:12:42.440 --> 0:12:45.359 at both the institutional level and the retail level. Um, 0:12:45.400 --> 0:12:48.160 all of these fees have like just fallen, fall and fallen. 0:12:48.200 --> 0:12:50.520 And that's one of the reasons that this is this 0:12:50.640 --> 0:12:54.400 is even possible. Um, where do you see that kind 0:12:54.400 --> 0:12:56.080 of playing into the evolution of this, the fact that like, 0:12:56.120 --> 0:12:57.480 I mean I could go on robin Hood and I 0:12:57.480 --> 0:13:00.960 could build an index that's not a pitch by and 0:13:01.000 --> 0:13:04.120 you're not gonna do it, absolutely not my my In fact, 0:13:04.120 --> 0:13:08.040 my two my two robin Hood holdings are a total 0:13:08.040 --> 0:13:13.920 stock market et F and a bond market index. Kind 0:13:14.000 --> 0:13:18.600 has a ring to it. Well just yeah, because like 0:13:19.559 --> 0:13:23.319 go ahead, yeah, because I guess. Um. The other thing 0:13:23.320 --> 0:13:26.240 is everic indexing has been around for a while, but 0:13:26.760 --> 0:13:29.079 it's kind of becoming a big thing because you know, 0:13:29.280 --> 0:13:33.160 as Pat mentioned, um, with trading getting so cheap and 0:13:33.240 --> 0:13:36.720 fractional shares, you can now offer this to people with 0:13:37.200 --> 0:13:40.480 much less assets. And I mean there's still a threshold 0:13:40.520 --> 0:13:43.040 of maybe a hundred thousand dollars. And of course, um, 0:13:43.160 --> 0:13:45.679 there's a tax benefits and makes more sense if this 0:13:45.760 --> 0:13:49.640 is an a taxable account. But this is going a 0:13:49.640 --> 0:13:52.120 lot more mainstream than it used to be. Can anybody 0:13:52.160 --> 0:13:54.559 do it? Just quickly, got about twenty seconds left here, Justina. 0:13:54.640 --> 0:13:58.679 Can anybody create their own index? Yeah? I mean if 0:13:58.760 --> 0:14:01.480 you have kind of quite a bit of money and 0:14:01.559 --> 0:14:03.559 talk to your financial advisor. I'm sure a lot of 0:14:03.640 --> 0:14:06.240 them want to sell this studio. Okay, so not anybody 0:14:06.240 --> 0:14:07.400 can do it. You have to have quite a lot 0:14:07.400 --> 0:14:10.120 of money. Okay, That's what we wanted to know, Justina. 0:14:10.160 --> 0:14:13.400 Thanks so much, Justina Lee. She's markets reporter. She's also 0:14:13.480 --> 0:14:17.160 Quantz reporter here at Bloomberg News on the phone from 0:14:17.160 --> 0:14:19.520 London along with our Patigney or Markets and Finance editor 0:14:19.640 --> 0:14:22.840 Bloomberg business Week. This story. Read it in its entirety 0:14:22.880 --> 0:14:24.840 at Bloomberg dot com, business Week dot com on the 0:14:24.880 --> 0:14:27.480 Bloomberg terminal end, in the new issue of the Business 0:14:27.480 --> 0:14:29.400 Week magazine that will be out later this week. It's 0:14:29.400 --> 0:14:32.360 also Today's Big Take, one big piece of journalism from 0:14:32.360 --> 0:14:34.600 around the world. You can read it at Bloomberg dot com. 0:14:34.640 --> 0:14:37.320 I love how the markets evolve and how you invest evolves. 0:14:42.080 --> 0:14:45.560 You're listening to Bloomberg Business Week with Carol Masser and 0:14:45.640 --> 0:14:50.440 Bloomberg Quick Takes. Tim Stenovian on Bloomberg Radio. Alright, folks, tennis, 0:14:50.720 --> 0:14:53.280 it's a really big deal in China, some fourteen million 0:14:53.320 --> 0:14:56.400 people play regularly, almost one quarter of the global total. 0:14:56.440 --> 0:14:59.640 According to some reporting by Andy Brown, it's been in 0:14:59.720 --> 0:15:02.920 a work in a lucrative market for the Women's Tennis Association. 0:15:03.000 --> 0:15:05.560 So why why did they walk away? What does it 0:15:05.600 --> 0:15:08.320 mean for other international businesses that operate in China? I 0:15:08.360 --> 0:15:10.920 mentioned Andy Brown, He wrote about it in his Saturday 0:15:10.960 --> 0:15:13.840 New Economy column. He joins us on the phone in 0:15:13.880 --> 0:15:16.960 New York City. He's the Bloomberg New Economy editorial director. Andy. 0:15:17.040 --> 0:15:19.920 Good to have you here again on Bloomberg Radio with 0:15:19.960 --> 0:15:22.640 Tim and myself. You write about how a tennis star 0:15:22.720 --> 0:15:26.800 may really hurt China. First of all, remind us by 0:15:26.800 --> 0:15:28.320 a story that I think it's safe to say that 0:15:28.360 --> 0:15:32.440 a lot of us have been riveted by it. Yeah, 0:15:32.560 --> 0:15:35.880 it um. The story is that the w t A 0:15:36.160 --> 0:15:39.400 and Steve Simon the Commission to have stood up for 0:15:39.480 --> 0:15:45.960 principle in China, and UM present a rare case of 0:15:46.040 --> 0:15:51.480 a business that you know, has put principal first over profits. 0:15:52.280 --> 0:15:56.000 We've had numerous examples of businesses that have come under attack, 0:15:56.800 --> 0:16:02.480 uh in China. I mean, marry at Hotel, Mercedes Bands, Versacchi, 0:16:02.720 --> 0:16:09.600 Valentino coach um for crossing China's red lines, and all 0:16:09.640 --> 0:16:13.920 of them have reflexively groveled and come up with these 0:16:14.040 --> 0:16:17.800 sort of trembling apologies because in the end they don't 0:16:17.840 --> 0:16:20.280 want to sacrifice their business in China. What happened obviously 0:16:20.280 --> 0:16:21.360 in the case of the w g d A, you 0:16:21.440 --> 0:16:26.080 had a theme Chinese female tennis punk fly. She comes out, 0:16:26.120 --> 0:16:30.440 she's making allegations of sexual abuse assault against a senior 0:16:30.520 --> 0:16:34.640 retired leader, and the w t A back her up. 0:16:35.320 --> 0:16:37.800 How is this different or? Actually, Andy, what I want 0:16:37.800 --> 0:16:39.520 to ask you is if this represents some sort of 0:16:39.560 --> 0:16:42.520 sea change in the way that American organizations doing business 0:16:42.520 --> 0:16:44.720 in China will act. I mean, and you write about 0:16:44.720 --> 0:16:46.920 the difference between this and what the NBA did just 0:16:47.000 --> 0:16:50.160 a couple of years ago. Yeah, you'd have to wonder 0:16:50.200 --> 0:16:53.880 whether the n B a um you know, at himself 0:16:53.960 --> 0:16:57.240 or would have responded in quite the same way. Um. 0:16:57.280 --> 0:16:58.880 You know, first of all, they came out and and 0:16:58.920 --> 0:17:01.840 it was a pretty bad response. When Darryl Morey, was 0:17:01.840 --> 0:17:05.439 then running the Houston Rockets, came out and tweeted his 0:17:05.560 --> 0:17:09.080 support for Hong Kong. But then they came out when 0:17:09.119 --> 0:17:10.800 they sort of they sort of folded, they came up 0:17:10.800 --> 0:17:13.159 with another statement in Chinese that said these comments have 0:17:13.280 --> 0:17:17.520 been irresponsible. Um. Look, I think I think the w 0:17:17.760 --> 0:17:20.560 t A in a sense of set a new standard 0:17:20.640 --> 0:17:24.080 for corporate behavior in China against which other companies and 0:17:24.119 --> 0:17:28.560 other sports leagues are now going to be judged. I 0:17:28.680 --> 0:17:32.399 don't think it means that, you know, companies from Nike 0:17:32.640 --> 0:17:35.520 to Starbucks who were all making a bundle in China 0:17:35.560 --> 0:17:39.840 are going to start start getting themselves all anguished about 0:17:40.000 --> 0:17:43.120 human rights and Gina and and thinking about pulling out. 0:17:43.280 --> 0:17:46.800 Not at all. But I think it could well be 0:17:46.840 --> 0:17:50.280 the case that businesses that don't actually have to be 0:17:50.880 --> 0:17:53.240 in China, they are not making a lot of money 0:17:53.240 --> 0:17:56.520 in China, they're in a sensitive area, sensitive from a 0:17:56.560 --> 0:18:00.880 political perspective, human rights perspective. For instance, in the media industry, 0:18:01.119 --> 0:18:03.640 we could well see exits, and in fact we are 0:18:03.720 --> 0:18:10.000 seeing exit LinkedIn packed Up, Gone Going, um Yahoo another example. Right, 0:18:10.080 --> 0:18:13.520 So it is going to have an impact, I think, 0:18:14.040 --> 0:18:17.520 in some way on just about every business that is 0:18:17.560 --> 0:18:19.960 in China, foreign business in the country. And you talk 0:18:20.040 --> 0:18:23.720 with so many CEOs and leaders global leaders. UM about 0:18:23.720 --> 0:18:26.159 the relationship between US and China. When does walk the 0:18:26.240 --> 0:18:30.440 talk really matter? Um? You know, I feel like we've 0:18:30.440 --> 0:18:33.040 had so many conversations, whether it was with George Floyd 0:18:33.160 --> 0:18:36.680 or U S China relations and inequities and people saying 0:18:36.680 --> 0:18:38.199 we've got to do bet our company is saying we 0:18:38.200 --> 0:18:41.480 have to do better. And yet I think about US China, 0:18:41.640 --> 0:18:43.879 you don't see a lot of companies, especially when you're 0:18:43.920 --> 0:18:45.800 talking about the amount of money that they can make 0:18:46.280 --> 0:18:48.680 in the Chinese market. Still you don't see a lot, 0:18:49.200 --> 0:18:52.960 you know, pulling out, even though there's some really egregious 0:18:53.080 --> 0:18:56.119 things that happened in China. So when does it matter 0:18:56.320 --> 0:19:01.280 on a corporate level? Yeah, Look, before we elevate the 0:19:01.440 --> 0:19:05.520 w t A to the saint hood, it's it's probably 0:19:05.640 --> 0:19:09.480 worth saying that the w t A would have taken 0:19:09.520 --> 0:19:14.000 a cold hard look at the business consequences of of 0:19:14.040 --> 0:19:18.720 pulling out of China. Um. You know, it's not automatic 0:19:18.880 --> 0:19:23.800 that the financial future of women's tennis is in China. 0:19:23.880 --> 0:19:27.320 Ask the p g A. It wasn't that long ago 0:19:27.640 --> 0:19:30.760 that China was building golf courses all over the place 0:19:31.119 --> 0:19:34.760 and the biggest names in golf from Um, you know, 0:19:34.840 --> 0:19:39.000 Jack Nicholas to Gary Player, we're all coming into design courses. 0:19:39.200 --> 0:19:41.159 Dent Thing comes into power into a thousand and twelve 0:19:41.560 --> 0:19:44.520 and closes a whole bunch of them down. He doesn't 0:19:44.600 --> 0:19:49.440 like golf. It's bourgeois, and you know, and and and 0:19:49.440 --> 0:19:51.679 and the game takes a big, big dive and by 0:19:51.720 --> 0:19:56.479 the way, revives spectacularly in the United States. Just reasons. 0:19:56.520 --> 0:19:58.520 So so you know, they would have looked at that. 0:19:58.640 --> 0:20:02.040 Nobody's playing Golden nobod playing professional tennis in China anyway. 0:20:02.080 --> 0:20:06.600 The country is in lockdown, and it's entirely possible that 0:20:06.800 --> 0:20:09.879 the tennis could go the same way as golf in China. 0:20:09.960 --> 0:20:13.080 It too is kind of elitist. Hey, Andy, I want 0:20:13.080 --> 0:20:16.200 to bring in what we learned about Ray Dalio's comments 0:20:16.200 --> 0:20:19.240 over the weekend, because last year he found himself the 0:20:19.560 --> 0:20:22.159 last week excuse me, after an interview on CNBC, he 0:20:22.200 --> 0:20:25.280 found himself the target of criticism. He said over the 0:20:25.280 --> 0:20:29.360 weekend that his comments on China human rights were misunderstood. 0:20:29.520 --> 0:20:33.199 So we do see UH portfolio managers founder of water 0:20:33.240 --> 0:20:36.720 Bridgewater for example, UH in hot water as well. As 0:20:36.760 --> 0:20:39.720 a result of this, Yeah, he came in for a 0:20:39.960 --> 0:20:44.280 norm of criticism essentially growing an equivalence between you know, 0:20:44.480 --> 0:20:47.920 dodgy human rights in the United States and human rights 0:20:47.960 --> 0:20:51.840 abuses inside. And Andrew rosso And sort of challenges him, 0:20:51.840 --> 0:20:53.600 and he says, yeah, but you know, there's all kinds 0:20:53.600 --> 0:20:57.440 of things wrong with with us, with with the United States, 0:20:57.520 --> 0:21:00.200 but nobody is getting disappeared, And and then he goes 0:21:00.200 --> 0:21:02.239 off on a long riff about how this is just 0:21:02.320 --> 0:21:05.760 sort of strict, China's being a strict parent. And if 0:21:05.800 --> 0:21:08.280 the storm of criticism not least by the way, from 0:21:08.280 --> 0:21:11.600 his number two, David McCormick, who evidently is weighing a 0:21:11.680 --> 0:21:15.399 run for Senate from from Virginia, you cannot run the 0:21:15.400 --> 0:21:20.240 public office in China now without being a kind of hawk. 0:21:20.640 --> 0:21:22.320 And you know, a lot of this comes down to 0:21:22.840 --> 0:21:26.040 public opinion that Ray Dalio just doesn't have the public 0:21:26.119 --> 0:21:28.760 on your side. You know, seventy six percent of Americans 0:21:28.800 --> 0:21:31.399 take a very negative view on China, according to the 0:21:31.480 --> 0:21:37.399 latest Pew survey. Interesting developments, Um a great column as always, Andy, 0:21:37.440 --> 0:21:40.440