WEBVTT - Value Investors Must Adapt or Face Failure: Bruce Greenwald 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.160 --> 0:00:06.240 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.400 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.560 along with essential market moving news. Kind a Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:20.239 and on Bloomberg dot Com. Very excited to bring in 0:00:20.280 --> 0:00:23.880 our next guest. Bruce Greenwald is Professor emeritus at Columbia 0:00:23.960 --> 0:00:26.960 Business School. He is, of course famous for his seminal 0:00:27.000 --> 0:00:31.360 book on value investing. He's been teaching so many thousands 0:00:31.480 --> 0:00:35.480 of students about value investing during his days at Columbia 0:00:35.560 --> 0:00:38.559 over the past several decades, me being one of them. 0:00:38.600 --> 0:00:42.239 I remember very difficult days poring over the book of 0:00:42.280 --> 0:00:44.720 case studies that Bruce Greenwald used to hand out. But 0:00:44.880 --> 0:00:47.720 excited that he's back on for a fully updated edition 0:00:47.840 --> 0:00:51.280 of the seminal book Value Investing from Graham to Boot 0:00:51.440 --> 0:00:54.680 and beyond. So Bruce, welcome, Very great to have you 0:00:54.720 --> 0:00:57.760 on the program. It's been a rough decade for value investing, 0:00:57.760 --> 0:00:59.680 of course, but there was a little bit of talk 0:00:59.680 --> 0:01:03.080 recently that we might be heading into the value cycle again. 0:01:03.120 --> 0:01:05.679 What did you make of all of that. Look, I think, 0:01:06.160 --> 0:01:08.360 let me first say, Vanni, it's a real pleasure to 0:01:08.400 --> 0:01:13.720 talk to YouTube after so many years. The fact of 0:01:13.720 --> 0:01:16.360 the matter is that I think, in contrast to what 0:01:16.520 --> 0:01:20.319 happened in the tech boom at the end of the nineties, 0:01:20.760 --> 0:01:24.360 there are fundamental changes in the economy that have taken place. 0:01:24.840 --> 0:01:28.200 So even though the basic value principles are still going 0:01:28.240 --> 0:01:30.560 to be there, which is, you want to look intelligently 0:01:31.000 --> 0:01:34.920 for opportunities where you're more likely to be better positioned 0:01:34.959 --> 0:01:37.080 than the other side of the trade. You want to 0:01:37.120 --> 0:01:39.520 know the value of what you're buying, and you want 0:01:39.520 --> 0:01:42.840 to be disciplined. The changes in the world means you're 0:01:42.880 --> 0:01:45.759 going to have to apply them differently, and I think 0:01:45.800 --> 0:01:50.200 if value investors don't adapt, there may be short periods 0:01:50.240 --> 0:01:52.680 when they do well, but I don't think for the 0:01:52.760 --> 0:01:55.560 long term they're they're going to have the kinds of 0:01:56.560 --> 0:02:00.640 records that they historically had. So, Professor, what types of 0:02:00.680 --> 0:02:04.160 adaptations do you think investors should take to the extent 0:02:04.200 --> 0:02:07.440 that they really want to pursue value investing. Well, okay, 0:02:07.480 --> 0:02:11.240 so let's actually start with just what it is that's changed. 0:02:11.280 --> 0:02:14.080 So you have an idea of what you're adapting to. 0:02:14.720 --> 0:02:18.840 And there are two dominant trends in the global economy 0:02:18.880 --> 0:02:23.200 that affect investors. The first is manufacturing is dying and 0:02:23.240 --> 0:02:26.520 we're becoming a service economy, which means we're going from 0:02:26.639 --> 0:02:32.800 big centralized manufacturing facilities to very dispersed service facilities. And 0:02:32.880 --> 0:02:35.080 the second thing is, and this really amounts to the 0:02:35.160 --> 0:02:41.399 same thing tchech has basically disaggregated organizations. So you see 0:02:41.440 --> 0:02:44.200 it in the way that people work separately, which is 0:02:44.240 --> 0:02:46.320 the gig economy, but you also see it in the 0:02:46.360 --> 0:02:50.400 way in which organizations are separated out. So in the 0:02:50.440 --> 0:02:54.799 old days, if you are doing I t IBM did everything. 0:02:55.520 --> 0:02:58.320 If you look at it today, you know Microsoft does 0:02:58.360 --> 0:03:03.240 the operating system and basic functions, or Echo does the databases, 0:03:03.520 --> 0:03:07.680 Google does search, Intel does only the CPU chips, and 0:03:07.760 --> 0:03:13.320 Facebook does the interactions. So you're really going from large 0:03:13.320 --> 0:03:18.800 centralized organizations to really very decentralized one and that has 0:03:18.919 --> 0:03:24.919 three absolutely critical consequences. The first is that productivity growth 0:03:25.000 --> 0:03:29.919 is currently much harder on a decentralized basis, So going forward, 0:03:29.960 --> 0:03:32.560 you're not going to see the rate of improvement in 0:03:32.639 --> 0:03:35.960 productivity that you saw in the path. Although we're big 0:03:36.080 --> 0:03:39.960 organizations like McDonald's in the US learn to do it. 0:03:40.360 --> 0:03:42.400 We're going to do probably in the US better than 0:03:42.440 --> 0:03:46.400 other people. Second thing is when people work individually they 0:03:46.440 --> 0:03:50.120 get paid for what they do. They don't get paid 0:03:50.160 --> 0:03:53.240 the average wage, and that means that the distribution of 0:03:53.280 --> 0:03:57.800 income becomes much much more unequal, and that's going to continue. 0:03:58.520 --> 0:04:01.000 And I think the third thing, which is really what's 0:04:01.040 --> 0:04:04.720 crucial for value investors, is that you are moving from 0:04:05.080 --> 0:04:09.320 broad global markets, the gms, the gas of the world, 0:04:09.680 --> 0:04:15.960 to niche local markets. And big global markets are competitive 0:04:17.200 --> 0:04:20.240 small niche market I mean, for example, if you're gonna 0:04:20.279 --> 0:04:23.359 be viable at one percent market share, you're never going 0:04:23.400 --> 0:04:26.720 to keep anybody out of those big global markets, whereas 0:04:26.800 --> 0:04:32.200 small local markets are markets in which dominant competitors can 0:04:32.360 --> 0:04:37.560 enjoy barriers to entry based on economies of scale. And 0:04:37.760 --> 0:04:42.320 once that happens, once you've got these what Buffett refers 0:04:42.320 --> 0:04:46.520 to a franchise businesses, the whole investment world changes. So 0:04:46.600 --> 0:04:52.800 you have high returns on investment capital. So capital allocation 0:04:52.960 --> 0:04:56.880 can be hugely value creating as well as value destructive. 0:04:57.600 --> 0:05:00.760 You benefit from organic growth and revenue. I mean, if 0:05:00.800 --> 0:05:05.640 you're in a competitive market and revenue grows organically. Temporarily 0:05:05.720 --> 0:05:08.760 profits may go up, but then everybody enters and they 0:05:08.800 --> 0:05:13.000 just divide the business more finally, and the profits go away. 0:05:13.560 --> 0:05:17.200 And the same thing happens with the benefit of tech 0:05:17.240 --> 0:05:21.960 based margin growth, you know, is productivity goes up. In 0:05:22.040 --> 0:05:25.560 a competitive market, everybody rushes in. But if you benefit 0:05:25.880 --> 0:05:29.599 from barriers to entry, you get to enjoy that. And 0:05:29.680 --> 0:05:32.159 you see that, by the way, and what's happened to profits. 0:05:32.720 --> 0:05:35.680 In the early in the late eighties early nineties, profits 0:05:35.680 --> 0:05:40.680 were eight of national income. Today they're twelve to cent 0:05:40.800 --> 0:05:44.560 or higher, and they're probably going up. But here is 0:05:44.600 --> 0:05:50.960 the critical thing. Old fashioned asset based value investing is 0:05:51.080 --> 0:05:53.560 not going to do it for you. It's too small 0:05:53.600 --> 0:05:57.560 a part of the overall picture that assets aren't that 0:05:57.720 --> 0:06:01.479 important in a world where has got barriers to entry 0:06:01.800 --> 0:06:04.840 and franchise businesses, and there by the way, where you've 0:06:04.880 --> 0:06:08.679 got services and intangible assets, they're much harder to measure. 0:06:09.279 --> 0:06:12.160 So I think the first thing investors have to do 0:06:12.600 --> 0:06:16.200 is understand franchise businesses. Interesting case where we almost have 0:06:16.279 --> 0:06:17.719 a time, but I do want to get in one 0:06:17.720 --> 0:06:19.760 more question. If you talk to the likes of Joel 0:06:19.800 --> 0:06:22.680 greenbatt or Richard Bosina or Bill Miller, you'll come away 0:06:22.680 --> 0:06:26.880 with a very different style of value investing. A piece. Well, 0:06:26.880 --> 0:06:30.880 what distinguishes all of these different styles of value investing? Well, 0:06:30.960 --> 0:06:33.640 I don't think that they are as I say, there 0:06:33.640 --> 0:06:38.240 are three fundamental things that they all do. I think that, 0:06:38.880 --> 0:06:43.479 you know, the crucial difference between traditional value investors and 0:06:43.520 --> 0:06:47.080 them is that they've actually adapted much better, that they 0:06:47.160 --> 0:06:51.680 understand that growth creates value in this world, and you 0:06:51.839 --> 0:06:56.839 can't invest and look for value without understanding how to 0:06:56.880 --> 0:06:59.760 put value on growth. And I think that is the 0:07:00.000 --> 0:07:05.239 single overwhelming style difference. And I think, frankly the future 0:07:05.320 --> 0:07:08.760 lies with the Bill Millers and the Joel Green plots 0:07:08.800 --> 0:07:11.000 for the world. And in fact, what the book is 0:07:11.040 --> 0:07:15.240 really about is about adapting to this new environment where 0:07:15.240 --> 0:07:19.400 all of a sudden, the historical distinction between growth investing 0:07:19.800 --> 0:07:23.520 what you would call varieties of value investing and traditional 0:07:23.640 --> 0:07:29.440 sort of cigar but asset has gone away. A Bruce, 0:07:29.600 --> 0:07:32.760 thank you so much for joining us there. Bruce Bruce Greenwald, 0:07:32.800 --> 0:07:36.640 Professor Emeritus at Columbia Business School, Chairman of the Paradigm 0:07:36.640 --> 0:07:39.760 Capital Management, and senior advisor at First Eagle investment manager 0:07:40.000 --> 0:07:43.680 and of course author of the book Value Investing From 0:07:43.720 --> 0:07:47.600 Graham to Buffett and beyond. We always appreciate listening to 0:07:48.200 --> 0:07:51.160 the thoughts of Professor Greenwald. I think about value investing. 0:07:51.160 --> 0:07:55.200 It's really been challenging in this market where growth has 0:07:55.240 --> 0:07:59.120 really been the dominant theme really for a couple of decades. 0:07:59.240 --> 0:08:04.280 Right now and at this time now to take a 0:08:04.280 --> 0:08:07.880 look at the credit markets and maybe the markets more broadly, 0:08:07.920 --> 0:08:09.800 let's bring in MinC you count on Depine, chief investment 0:08:09.800 --> 0:08:12.679 officer of Western Asset Management. I say the credit markets 0:08:12.720 --> 0:08:14.960 because they're top of mind today, Mike, what with a 0:08:15.160 --> 0:08:17.320 MC being in a little bit of trouble. We know 0:08:17.360 --> 0:08:20.480 that the movie theaters have already tapped all the credit 0:08:20.560 --> 0:08:24.360 that possibly is available to them, except for private individuals 0:08:24.360 --> 0:08:27.120 that are looking to do that. And just curious as 0:08:27.120 --> 0:08:31.080 to where you see the credit markets right now, Well, 0:08:31.120 --> 0:08:34.320 there's no question and by the way, Vanni and Paul, 0:08:34.360 --> 0:08:37.280 thank you for having me on UM. There's no no 0:08:37.360 --> 0:08:41.240 question that UM, there is still stress in the credit market. 0:08:41.320 --> 0:08:45.520 You mentioned amc Um. There's a lot of companies, there's 0:08:45.520 --> 0:08:49.319 a lot of industries that have done pretty much everything 0:08:49.360 --> 0:08:53.679 they possibly could to survive to this point, UM, some 0:08:53.760 --> 0:08:55.640 aren't going to make it, and you actually see that 0:08:55.720 --> 0:08:59.640 in the default numbers. UM. I think many because the 0:08:59.679 --> 0:09:03.120 capital will markets up so quickly back in late March 0:09:03.160 --> 0:09:06.320 and early April UH, some were able to access that 0:09:06.400 --> 0:09:10.600 rescue financing and even though they paid dearly for doing that. UM. 0:09:10.640 --> 0:09:12.920 I think it's going to be a wise move on 0:09:12.960 --> 0:09:18.800 their part, and UM will at least minimize how many 0:09:18.840 --> 0:09:23.920 of these companies actually had to ultimately restructure or or 0:09:24.080 --> 0:09:27.080 file so UM. I think the credit markets right now, 0:09:27.200 --> 0:09:30.760 there's no question that some of the rally that we 0:09:30.760 --> 0:09:34.280 were expecting to occur in two thousand one, some of 0:09:34.280 --> 0:09:38.400 that has been pulled forward into two thousand twenty, just 0:09:38.440 --> 0:09:42.120 with clarity on the vaccine. UM. I think everyone's expecting 0:09:42.120 --> 0:09:46.000 as we are bouncing growth, a bouncing earnings UM. But 0:09:46.080 --> 0:09:49.680 that being said, I still think the credit markets have 0:09:49.960 --> 0:09:53.040 room for performance as we move forward over the next 0:09:53.040 --> 0:09:56.080 few quarters, probably going to be more of a focus 0:09:56.120 --> 0:09:59.880 on income, focus on carry trade versus what we've seen 0:10:00.000 --> 0:10:02.040 over the last two or three quarters, which has really 0:10:02.080 --> 0:10:05.480 been you know about capital appreciation and spread tightening. I 0:10:05.480 --> 0:10:09.720 think the magnitude of that spread tightening is probably behind 0:10:09.840 --> 0:10:14.440 us but but still opportunity UM in fixed income resectors 0:10:15.000 --> 0:10:19.560 broadly and UM in particular in credit. So, Mike, you 0:10:19.559 --> 0:10:22.880 talked about some performance maybe being brought forward a little 0:10:22.920 --> 0:10:25.400 bit here in let's talk about high yield. Is there 0:10:25.440 --> 0:10:29.000 any value left in high yield? It's amazing to me, 0:10:29.520 --> 0:10:32.200 you know, how well that market has performed, given some 0:10:32.280 --> 0:10:34.200 of the potential credit risks out there that are are 0:10:34.440 --> 0:10:39.120 quite likely, you know, even going well into Yeah, it 0:10:39.280 --> 0:10:41.480 is surprising. And if you just think about where we 0:10:41.480 --> 0:10:45.360 were uh in the depths of March and into early April, 0:10:45.400 --> 0:10:48.080 and you know, now high yields up over six percent 0:10:48.280 --> 0:10:51.280 year to date. UM. But I would say this, there's 0:10:51.320 --> 0:10:54.560 a lot of disparity in high yield UM. If you 0:10:54.600 --> 0:10:57.800 look at you know, just even by rating category UH, 0:10:57.920 --> 0:11:00.920 double B high quality is doing very well, you know, 0:11:01.040 --> 0:11:04.440 up nine and a half percent, triple CS uh. You know, 0:11:04.480 --> 0:11:07.959 just think of the lowest quality within high yield UH 0:11:08.360 --> 0:11:11.360 just up over a little over four percent year to date, 0:11:11.600 --> 0:11:15.480 and then take that even further UM by industry energy 0:11:16.120 --> 0:11:19.240 is negative still two percent year to date. UM. So 0:11:19.320 --> 0:11:22.160 there is a lot of disparity within the high yield market. 0:11:22.679 --> 0:11:25.400 And yes, we do still think there are opportunity. I 0:11:25.440 --> 0:11:27.840 think it's um. You know, again, if you go back 0:11:27.880 --> 0:11:31.160 to late March and early April, it was really just 0:11:31.559 --> 0:11:36.160 get risk in high yield. Clearly the downside had overshot 0:11:36.200 --> 0:11:38.880 and you just want to capitalize on that trade. I 0:11:38.920 --> 0:11:42.360 think going forward you're gonna see, um, just just a 0:11:42.360 --> 0:11:46.640 lot more disparity or um, you know, just different markets 0:11:46.800 --> 0:11:49.520 out performing in different markets under performing. So I think 0:11:49.520 --> 0:11:52.280 it's really gonna end up being you know, you got 0:11:52.280 --> 0:11:54.760 to pick the right credits, you gotta pick the right industries, 0:11:54.800 --> 0:12:00.200 really focus on bottom up discipline, fundamental research. Um. So. 0:12:00.280 --> 0:12:04.400 I I do think that's there's opportunity there. Um. But again, 0:12:04.559 --> 0:12:06.679 I don't think it's going to be as obvious, and 0:12:06.720 --> 0:12:08.480 I think it's gonna take a little more work to 0:12:08.559 --> 0:12:11.800 identify those trades. That said, we're not getting any new 0:12:11.840 --> 0:12:14.120 stimulus that we know of. Yes, I mean maybe it 0:12:14.120 --> 0:12:16.880 will happen, but we don't know how that will impact businesses. 0:12:17.440 --> 0:12:23.000 Surely there's going to be another round of bankruptcy, is Mike, Um, 0:12:23.280 --> 0:12:25.720 I do think. I mean, I don't think there's going 0:12:25.760 --> 0:12:29.840 to be an elevated spike of bankruptcies. UM. I think 0:12:30.600 --> 0:12:34.080 we know or at least have a reasonable idea of 0:12:34.160 --> 0:12:38.040 which companies are on the verge of having to file UM. 0:12:38.080 --> 0:12:40.240 If you look at trading levels, I think the market 0:12:40.240 --> 0:12:43.520 does a pretty good job of identifying those credits, and 0:12:43.559 --> 0:12:48.440 they tend to trade it very stressed or distressed prices. UM. 0:12:48.559 --> 0:12:50.720 I only I think the only way that we would 0:12:50.720 --> 0:12:53.920 get UM sort of a new flare up, if you will, 0:12:54.080 --> 0:12:58.200 or another round of defaults or bankruptcies, is if we 0:12:58.280 --> 0:13:02.400 had disappointment on the vaccine. I think between now and 0:13:02.480 --> 0:13:06.720 when we expect the vaccine to make its way into 0:13:06.880 --> 0:13:09.480 the broad population, let's call that maybe over the next 0:13:09.520 --> 0:13:14.760 two quarters. UM. I think the market is is expecting that. 0:13:14.880 --> 0:13:18.280 I think the liquidity and on most of the balance 0:13:18.320 --> 0:13:20.760 sheets of companies that are in the high old market 0:13:21.240 --> 0:13:24.520 is sufficient to get to that point. However, again, if 0:13:24.520 --> 0:13:29.160 we had disappointment and UM, you know that vaccine wasn't 0:13:29.160 --> 0:13:33.480 as successful or the vaccines aren't as successful, and this 0:13:33.600 --> 0:13:36.240 extends into the latter part of two thousand twenty one, 0:13:36.559 --> 0:13:38.559 I do think then you know you're you're you're going 0:13:38.640 --> 0:13:40.880 to see some more vulnerabilities. You're going to see some 0:13:40.920 --> 0:13:45.240 of these at risk sectors and at risk companies either 0:13:45.320 --> 0:13:49.360 have to get another round of secured financing, or perhaps, 0:13:49.360 --> 0:13:52.240 as you alluded to, UM, have to to restructure. But 0:13:52.520 --> 0:13:55.280 I don't think that's in our base case. Hey Mike, 0:13:55.320 --> 0:13:59.839 what's uh, what's your thoughts on Janet Yelling as by 0:13:59.840 --> 0:14:04.679 the Treasury Secretary nominee. Yeah, I think that was a 0:14:04.760 --> 0:14:09.960 wise choice. UM, definitely calming to the markets. UM. You know, 0:14:10.000 --> 0:14:13.760 even saw uh Larry Cudlow comment on that, and you 0:14:13.760 --> 0:14:16.880 know he's one of the few from the Trump administration 0:14:16.960 --> 0:14:20.320 to say anything, but clearly, I mean Janet Yell, you know, 0:14:20.560 --> 0:14:24.560 sensible views on the economy as a former FED chair. Um. 0:14:24.800 --> 0:14:26.680 You know, I think there's a certain level of comfort 0:14:26.840 --> 0:14:30.800 in the market knowing that she understands the cohesion that's 0:14:30.880 --> 0:14:35.520 necessary between between Fed and White House policy. UM. So 0:14:35.560 --> 0:14:37.400 I think that was a wise choice and I think 0:14:37.600 --> 0:14:44.600 definitely UM was was calming to the markets. So Michael, 0:14:44.640 --> 0:14:46.560 will you be looking out now through year end? Are 0:14:46.600 --> 0:14:50.800 we going to see this Santa calus while I continue? Yeah, 0:14:50.840 --> 0:14:54.000 I think you know the new issue volume that m 0:14:54.360 --> 0:14:57.440 in both the investment grade market and the high old market. 0:14:57.760 --> 0:14:59.800 You know, those are two records. There's just an extra 0:15:00.000 --> 0:15:03.040 ainary amount of new issuance UM. Now, a lot of 0:15:03.080 --> 0:15:06.200 that was for refinancing, which I think is a good thing. 0:15:06.240 --> 0:15:09.400 If you're a lender UM and you want to uh 0:15:09.600 --> 0:15:14.760 classify new issuance into something that's either bondholder friendly or 0:15:14.800 --> 0:15:19.120 bondholder not friendly, we'd obviously rather see more friendly purposes, 0:15:19.120 --> 0:15:22.800 which we would call refinancing. Is definitely a friend friendly 0:15:22.920 --> 0:15:26.200 use of proceeds UM. But clearly you're going to see 0:15:26.200 --> 0:15:29.040 a slowdown in new issue volume over the next couple 0:15:29.040 --> 0:15:33.240 of weeks. Um money continues to come into these markets, 0:15:33.240 --> 0:15:36.480 both investment grade and high yield have seen uh you know, 0:15:36.520 --> 0:15:40.600 an extraordinary amount of flows into both institutional as well 0:15:40.640 --> 0:15:44.520 as retail funds, So, you know, good technical backdrop from 0:15:44.520 --> 0:15:47.960 that perspective. More money continuing to come in, uh, you know, 0:15:48.520 --> 0:15:52.280 less new issue should result in at least stable spreads 0:15:52.280 --> 0:15:54.960 and stable markets. In my opinion, Hey, Mike, thanks so 0:15:55.040 --> 0:15:57.480 much for joining us. We really appreciate your thoughts. Might 0:15:57.520 --> 0:16:01.200 be Cannon, Deputy Chief investment officer for Western Asset Management 0:16:01.400 --> 0:16:05.360 based out in Pasadena, California, really giving us their thoughts 0:16:05.480 --> 0:16:11.000 on the fixed income markets. Again, new issuance all time high. Well, 0:16:11.000 --> 0:16:14.160 we have seen several shots now of nurses critical care 0:16:14.160 --> 0:16:18.560 and nurses getting their first adviser beyond take shots. So 0:16:18.600 --> 0:16:22.320 the first vaccines are out there. Let's get straight to 0:16:22.360 --> 0:16:25.280 Bob Landgrath, who is a Bloomberg healthcare reporter here for 0:16:25.360 --> 0:16:29.240 us on this rollout. So deaths are approaching three hundred 0:16:29.320 --> 0:16:33.000 thousand and continuing to rise. Bob, how fast can the 0:16:33.040 --> 0:16:36.200 distribution network get this vaccine out to where it needs 0:16:36.200 --> 0:16:39.320 to be? Oh? Yeah, no, this is going to take 0:16:39.360 --> 0:16:41.360 a while. This is a long slow process. And you 0:16:41.400 --> 0:16:45.000 mentioned the gas approaching three hundred thousand. Unfortunately, those deaths 0:16:45.000 --> 0:16:47.160 are going to continue to increase because many of them 0:16:47.160 --> 0:16:49.640 are essentially you know, they're based on people who have 0:16:49.680 --> 0:16:52.600 already been infected weeks ago. So the numbers want to 0:16:52.600 --> 0:16:56.800 continue to to go to to go up, to go 0:16:56.920 --> 0:16:58.280 up in the terms of the guests for a few 0:16:58.280 --> 0:17:02.320 weeks because the number of vaccines that are available, you know, 0:17:02.360 --> 0:17:04.040 that's just not going to make you a big impact 0:17:04.119 --> 0:17:05.880 on death for a while to come. But it's very 0:17:05.880 --> 0:17:09.159 important to get this rollout going absolutely, and the people 0:17:09.200 --> 0:17:15.080 that are being vaccinated now are you know, healthcare workers 0:17:15.240 --> 0:17:17.840 and then the nursing home residents as small fraction of 0:17:17.880 --> 0:17:21.000 the population those are kind of the priority people that 0:17:21.040 --> 0:17:23.399 haven't decided that will get it first, because you know, 0:17:23.400 --> 0:17:25.639 they're on the front lines. And in terms of the 0:17:25.640 --> 0:17:28.119 healthcare workers, and then the nursing home residents obviously have 0:17:28.240 --> 0:17:31.119 some of the highest death rates and account for a 0:17:31.200 --> 0:17:34.359 large percentage of the death toll in the United States. 0:17:34.359 --> 0:17:36.760 So right now there's in this initial way there's only 0:17:36.760 --> 0:17:39.680 two point nine million doses available, so that's a very 0:17:39.720 --> 0:17:44.640 small faction of even healthcare workers uh and uh uh 0:17:44.840 --> 0:17:46.880 nursing home residents, and and then the next week there's 0:17:46.880 --> 0:17:48.400 only more. In the week after that's gonna be more, 0:17:48.440 --> 0:17:50.520 and hopefully by the end of this week will get 0:17:50.520 --> 0:17:53.480 the moderna vaccine as well, not you approximately double the 0:17:53.560 --> 0:17:57.080 number of doses you know, available per week. Uh, So 0:17:57.280 --> 0:17:59.359 you know, it is starting to roll out. As people 0:17:59.359 --> 0:18:01.280 have said, this is kind of the who we hope 0:18:01.280 --> 0:18:02.920 this is the beginning of the end, but still only 0:18:02.960 --> 0:18:04.679 the beginning, and it's going to take a while, and 0:18:04.760 --> 0:18:08.000 that's very important. People still should take precautions until we 0:18:08.000 --> 0:18:10.720 get to this difficult period right now and much larger 0:18:10.720 --> 0:18:14.840 percentage of population is able to be vaccinated. Dr Faucci 0:18:15.160 --> 0:18:19.280 just now on MSNBC says Americans with no underlying conditions 0:18:19.280 --> 0:18:21.879 should get the vaccines at the end of March or 0:18:21.920 --> 0:18:25.040 the beginning of April can according to Dr Fauci, just 0:18:25.080 --> 0:18:30.439 now an MSNBC. UM, So interesting, Bob, what do we 0:18:30.480 --> 0:18:33.560 know about the MODERNA drug again? It we It looks 0:18:33.560 --> 0:18:35.520 like they're going to be just a week behind Fiser. 0:18:35.600 --> 0:18:39.080 Get the approval Thursday, I guess, and then maybe start 0:18:39.160 --> 0:18:40.680 rolling it out over the weekend like we just saw 0:18:40.800 --> 0:18:43.600 with Fiser. Is there any reason to believe that Moddarian 0:18:43.640 --> 0:18:48.080 will run into any roadbox. No, there are actually no 0:18:48.160 --> 0:18:50.880 reason to believe I'm the Durnal run into any load box. 0:18:50.960 --> 0:18:53.920 It's actually a very similar vaccine to the Fiser vaccine 0:18:53.960 --> 0:18:57.200 that they're both based on this messenger RNA technology. It's 0:18:57.200 --> 0:18:59.480 a new technology. It turns out to work be working 0:18:59.640 --> 0:19:02.720 very well against the coronavirus U. Both of these vaccines 0:19:02.760 --> 0:19:07.080 about efficacy rate, uh, and so this is very similar. 0:19:07.160 --> 0:19:09.800 So you know, unless there's some surprises, Yeah, this should 0:19:09.840 --> 0:19:12.520 should roll out around, start rolling out around and say Friday, 0:19:12.640 --> 0:19:15.760 unless there's some showstopp or surprise. We don't don't know 0:19:15.800 --> 0:19:17.960 about that. That's that's the very good news. You know 0:19:18.000 --> 0:19:19.920 that the bad news is that both of these because 0:19:19.960 --> 0:19:23.879 they're a new technology, isn't the manufacturing experience, and they 0:19:23.960 --> 0:19:27.199 have to make this enormous quantities and these factories are 0:19:27.240 --> 0:19:29.920 still current just gearing up now and that's why you're 0:19:29.960 --> 0:19:31.919 at first for the first few months, there's definitely, you know, 0:19:32.000 --> 0:19:33.879 going to be a shortage of vaccine to go around. 0:19:34.560 --> 0:19:36.960 Can you give us some idea of the supply chain 0:19:37.000 --> 0:19:39.400 and how it works and how you know a vaccine 0:19:39.400 --> 0:19:44.320 gets from a factory to a hospital. Yeah, there are 0:19:44.359 --> 0:19:48.520 several steps involved, and there's distribution hubs and UH. I 0:19:48.600 --> 0:19:51.560 know that UPS and set X are involved and helping 0:19:51.600 --> 0:19:56.520 ship uh the the Friser vaccine UH to to the 0:19:56.600 --> 0:19:59.160 right places where it's needed. Uh. It's a very complicated 0:19:59.160 --> 0:20:02.280 supply chain. Those governments monitoring it very closely. Once it 0:20:02.320 --> 0:20:06.320 gets into individual states and locations, then it's more the 0:20:06.320 --> 0:20:10.520 responsibility of the local states and hospital change to distribute 0:20:10.560 --> 0:20:12.800 it once they get their allocations. But the U. S. 0:20:12.840 --> 0:20:15.880 Government is kind of setting the allocations for the individual 0:20:15.880 --> 0:20:18.159 states and territories and that's kind of the first step. 0:20:18.480 --> 0:20:21.120 And then and then the manufacturing that's complicated as well. 0:20:21.160 --> 0:20:24.440 Because these are injections. There's a manufacturing of the raw ingredients, 0:20:24.480 --> 0:20:26.520 the m or and A itself at one factory, but 0:20:26.520 --> 0:20:29.080 then there's a separate factory that does you know, puts 0:20:29.119 --> 0:20:31.040 it into vials and insures it as sterile. So there's 0:20:31.040 --> 0:20:32.760 several steps there as well. So it's all kind of 0:20:32.800 --> 0:20:36.560 a very complicated system, made more complicated by the fact that, 0:20:37.040 --> 0:20:40.200 as everyone's probably heard by now, Fighter's vaccine, these extreme 0:20:40.280 --> 0:20:45.960 cold storage requirements, uh. And that means either extra ultracold freezers, 0:20:46.320 --> 0:20:49.760 special ultracote fezers, or special dry ice containers that fisers 0:20:49.800 --> 0:20:53.040 developed for places that don't have those freezers. Hey Bob, 0:20:53.040 --> 0:20:55.200 how do we or how does the how is it 0:20:55.280 --> 0:20:59.080 determined how much each state will receive? As it simply 0:20:59.640 --> 0:21:01.959 pop elation is an infection rates the we Is there 0:21:02.000 --> 0:21:06.119 a formula? Yeah? I believe that the government, I'm not 0:21:06.200 --> 0:21:08.480 totally sure sure the government's kind of U S government 0:21:08.520 --> 0:21:11.240 has set that that those figures, and I believe it's 0:21:11.320 --> 0:21:13.760 you know, due to you know, it's more in the 0:21:13.800 --> 0:21:18.000 total population in the group's uh, in the groups at 0:21:18.080 --> 0:21:20.880 risk for the vaccident, But I don't know the fine 0:21:20.920 --> 0:21:24.720 details of that. Where are we looking at more? Lockdown's 0:21:24.840 --> 0:21:26.679 build a Blasio here? In New York, the mayor of 0:21:26.680 --> 0:21:29.280 the city talking about the potential for New York City 0:21:29.320 --> 0:21:34.320 to go into lockdown. Is that happening around the country still? Yeah, so, uh, 0:21:34.440 --> 0:21:36.720 I mean, I think what people need to think about 0:21:36.960 --> 0:21:40.160 is uh that, yes, these vaccines are starting to law, 0:21:40.320 --> 0:21:42.639 and that's very very good news, you know. But the 0:21:42.680 --> 0:21:45.040 fact is we're still you know, in the thick of 0:21:45.080 --> 0:21:48.359 like the worst ways of the pandemic, and these vaccines 0:21:48.400 --> 0:21:51.960 are not gonna impact what's happening right now in terms 0:21:51.960 --> 0:21:53.800 of infections and deaths. You know, they're not kind of 0:21:53.840 --> 0:21:56.199 significant impact on that, you know, on a kind of 0:21:56.320 --> 0:21:59.840 broad basis, uh, for for quite you know, quite a while. 0:22:00.200 --> 0:22:03.000 Quite a number of people you know are vaccinated. Obviously 0:22:03.080 --> 0:22:05.520 they'll help the people who get the vaccines. That's just 0:22:05.600 --> 0:22:07.879 a very small percentage right now. So in terms of 0:22:07.880 --> 0:22:10.480 the big picture, you know, what we need to do 0:22:10.680 --> 0:22:13.560 to to to control this right now, it's the same 0:22:13.600 --> 0:22:16.040 things that we need to be doing more of. It's 0:22:16.720 --> 0:22:19.560 you know, avoiding credit places, wearing masks and all those things, 0:22:19.560 --> 0:22:21.520 and those are gonna need to replace day in place 0:22:21.600 --> 0:22:23.840 or quite some time. Hey, Bob, thanks so much for 0:22:24.000 --> 0:22:26.399 joining us. As always, you always appreciate your reporting about 0:22:26.480 --> 0:22:30.080 Langreth Bloomberg Healthcare reporter giving us the latest on the 0:22:30.160 --> 0:22:33.080 vaccine rollout. Again, we've all probably seen images from this 0:22:33.160 --> 0:22:38.000 morning vaccines being given around the country, Day one of 0:22:38.080 --> 0:22:40.320 vaccines and what is sure to be a long process. 0:22:42.840 --> 0:22:44.920 Did it's time now to take a look at the 0:22:44.960 --> 0:22:47.960 credit markets and then maybe the markets more broadly, let's 0:22:47.960 --> 0:22:49.960 bring in Mike Puccount and Deputy Chef Investment Officer of 0:22:50.040 --> 0:22:52.920 Western Asset Management. I say the credit markets because they're 0:22:52.920 --> 0:22:55.720 top of mind today, Mike, what with a MC being 0:22:55.760 --> 0:22:57.399 in a little bit of trouble. We know that the 0:22:57.400 --> 0:23:01.080 movie theaters have already topped all the credit the possibly 0:23:01.119 --> 0:23:04.520 is available as them except for private individuals that are 0:23:04.560 --> 0:23:07.600 looking to do that. And just curious as to where 0:23:07.640 --> 0:23:11.520