WEBVTT - Surveillance: Yield Correction With Caron 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 Jailey, 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 --> 0:00:30.560 and of course, on the Bloomberg Terminal. The perfect guest 0:00:30.600 --> 0:00:33.120 to start this week's confer which with Jim Karen of 0:00:33.120 --> 0:00:38.000 Morgan Stanley Investment Management, Fixed income portfolio Manager. Jim first question, sir, 0:00:38.479 --> 0:00:42.319 what are we doing back up near one fifty? Well, 0:00:42.360 --> 0:00:44.960 good morning, thank you for having me on your show. Look, 0:00:45.000 --> 0:00:47.159 I think there's a couple of things that are going on. 0:00:47.159 --> 0:00:49.400 One of them is very technical. One of the reasons 0:00:49.440 --> 0:00:52.600 why yields were so low was because the Treasury General 0:00:52.640 --> 0:00:55.200 account had been drawn down so much. Now that's really 0:00:55.240 --> 0:00:58.040 technical speak for saying that there wasn't a lot of 0:00:58.400 --> 0:01:01.560 net issuance of US treasure reads over the last couple 0:01:01.600 --> 0:01:05.000 of months. In fact, nearly zero net issuance. Today, all 0:01:05.040 --> 0:01:06.880 of that is starting to change a lot of things 0:01:06.880 --> 0:01:09.399 are changing right now that are leading to higher yields. 0:01:09.600 --> 0:01:12.200 Number One, now we're start going to start to get 0:01:12.319 --> 0:01:16.520 net positive supply, so more positive net supply is coming 0:01:16.800 --> 0:01:19.040 to the markets. That and the fact that we're getting 0:01:19.040 --> 0:01:22.839 closer to a deal on the deficit, then the question 0:01:22.880 --> 0:01:25.559 becomes is it going to be I'm sorry, a deal 0:01:25.600 --> 0:01:28.120 on the infrastructure bill? And the question then becomes is 0:01:28.120 --> 0:01:31.960 it going to be deficit financed? So that's another argument 0:01:32.040 --> 0:01:36.160 for higher debt into the future. The third point is tapering. 0:01:36.440 --> 0:01:39.800 The FED is announced pretty aggressively. It seems like at 0:01:39.800 --> 0:01:43.399 the September FOMC last week that probably by December they're 0:01:43.440 --> 0:01:46.600 gonna start tapering. So all of the factors that we're 0:01:46.680 --> 0:01:49.920 keeping yields lower in the second quarter and for part 0:01:49.920 --> 0:01:53.160 of the third quarter are now starting to run in reverse, 0:01:53.520 --> 0:01:55.800 and you're seeing yields start to move higher. Not to 0:01:55.840 --> 0:01:58.480 mention that energy prices are moving up and even some 0:01:58.600 --> 0:02:01.800 of the COVID cases are are on the decline. We 0:02:01.840 --> 0:02:05.440 could be setting ourselves up for a much stronger, much 0:02:05.480 --> 0:02:09.560 awaited for fourth quarter, and all of this is pushing 0:02:09.600 --> 0:02:13.079 treasury yields higher. And it makes sense. Yeah, Jim Carren. 0:02:13.120 --> 0:02:15.359 When you're on the Gorman Gulf Stream, you're flying at 0:02:15.360 --> 0:02:17.640 thirty two thou feet and you're looking down in the 0:02:17.720 --> 0:02:20.920 yield market, What is the ten uere yield where you 0:02:21.080 --> 0:02:24.840 signal shift or you signal trip point. We're in a 0:02:24.880 --> 0:02:28.320 one seven, maybe one fifty, But what's the level where 0:02:28.360 --> 0:02:32.520 you go things have changed. I think we're past that. 0:02:32.760 --> 0:02:35.280 I think it's around one forty. The fact that we've 0:02:35.639 --> 0:02:38.760 gotten a back above one forty is telling us that 0:02:39.160 --> 0:02:43.000 the correction lower in yields is over with. We have 0:02:43.040 --> 0:02:45.960 to start thinking about yields progressing up back towards the 0:02:46.000 --> 0:02:49.800 March thirty one highs around one seventy five, even up 0:02:49.840 --> 0:02:53.280 to one eight percent, and it's even possible that you 0:02:53.320 --> 0:02:56.280 could start to even test two percent by end of 0:02:56.280 --> 0:02:58.680 this year beginning of next year. I think it would 0:02:58.680 --> 0:03:00.800 be hard to get above two percent and stay there, 0:03:01.080 --> 0:03:03.840 but I think that's the trajectory that we're on, and 0:03:03.880 --> 0:03:06.160 the fact that many people have squared up most of 0:03:06.160 --> 0:03:08.760 their positions. I would say the market's not overly short, 0:03:08.840 --> 0:03:12.720 so the technicals are are suggesting that you could actually 0:03:12.760 --> 0:03:15.160 get a push higher. So Tom, I think that we've 0:03:15.200 --> 0:03:18.360 already tripped that switch, and that we're already in the 0:03:18.440 --> 0:03:21.200 mode to get towards higher yields. Plus all the supply 0:03:21.320 --> 0:03:24.160 that's coming. Jim you talked about higher oil prices. We 0:03:24.200 --> 0:03:27.760 also talk about supply chain disruptions. Are these events Are 0:03:27.840 --> 0:03:34.239 these appearances inflationary or disinflationary? Lisa, Absolutely, It's is a 0:03:34.280 --> 0:03:36.200 great it is a great point, and I'm glad we're 0:03:36.240 --> 0:03:40.120 talking about this. This is inflationary. Um, what we're going 0:03:40.160 --> 0:03:45.119 to see our rolling supply shortages and so so yes, 0:03:45.200 --> 0:03:47.360 you know, one day it might be one thing, another 0:03:47.440 --> 0:03:49.480 day it could be natural gas, another day it could 0:03:49.480 --> 0:03:51.720 be oil, and and you're gonna start to see this 0:03:51.840 --> 0:03:55.120 just on a rolling basis going forward as the supply 0:03:55.200 --> 0:03:58.400 chains are getting readjusted, and then when price gets too high, 0:03:58.480 --> 0:04:01.080 demand will fall that ass price will come down and 0:04:01.120 --> 0:04:03.960 it will be another asset, commodity assets turned to start 0:04:04.000 --> 0:04:06.680 to move higher. So I think this is getting embedded 0:04:07.040 --> 0:04:12.240 importantly into the psychology of consumers, that prices are going 0:04:12.280 --> 0:04:16.080 to stay perpetually high. That doesn't mean that we have 0:04:16.200 --> 0:04:19.239 runaway inflation. It just means it's going to be harder 0:04:19.279 --> 0:04:23.080 to get below two percent inflation. So now think about this. 0:04:23.520 --> 0:04:26.400 Even the people say the Fed was hawkish, the median 0:04:26.480 --> 0:04:29.919 dot in was at one point seven five for the 0:04:29.960 --> 0:04:33.440 FED funds rate. But inflation is supposed to is supposed 0:04:33.480 --> 0:04:35.679 to be between two and two and a half percent, 0:04:35.760 --> 0:04:38.080 or at least it's being expected to be between two 0:04:38.080 --> 0:04:40.560 and two and a percent, which means that the real 0:04:40.680 --> 0:04:43.120 Fed funds rate is still going to be minus twenty 0:04:43.120 --> 0:04:47.080 five to minus fifty basis points. This is still very 0:04:47.200 --> 0:04:51.680 accommodative uh FED policy at the current moment. There's nothing 0:04:51.720 --> 0:04:54.119 hawkish about this. So, Jim, let's put all this together. 0:04:54.160 --> 0:04:56.039 When you say it's hand to get below two percent 0:04:56.080 --> 0:04:58.720 on inflation, just explain to us and accountli of lines 0:04:58.760 --> 0:05:00.760 why it's difficult to get up one night s eight 0:05:00.920 --> 0:05:04.919 on a tenure yield. Well, well, for right now, we 0:05:04.960 --> 0:05:07.680 are still doing quantitative easing, so there is still some 0:05:07.720 --> 0:05:11.280 asset purchases that are going through. Bond yields around the world. 0:05:11.320 --> 0:05:13.760 Although they are starting to rise, we're seeing that in 0:05:13.800 --> 0:05:16.840 Europe are still very very low. So I think that 0:05:16.880 --> 0:05:19.120 there is an interest rate differential and then it will 0:05:19.160 --> 0:05:22.320 come back down to the dollar. Dollar appreciation um At 0:05:22.400 --> 0:05:24.440 least in the near term. You could see some dollar 0:05:24.480 --> 0:05:29.640 appreciation that would keep foreign investors interested in the U. S. 0:05:29.680 --> 0:05:32.120 Treasury market, but that I think is a cycle. Tom. 0:05:32.160 --> 0:05:35.400 I'm a long term dollar bear. Eventually, these deficits and 0:05:35.440 --> 0:05:37.240 everything else that's going to catch up to the dollar, 0:05:37.320 --> 0:05:40.560 and that's gonna push it lower. And foreign investors, which 0:05:40.680 --> 0:05:43.400 the US demand you know, relies on heavily for demand, 0:05:44.080 --> 0:05:48.560 is is going to require higher yields to indice entice 0:05:48.880 --> 0:05:51.960 foreign investors to come in and buy US treasuries. Jim, 0:05:52.120 --> 0:05:54.159 thank you, sir as all wise and have a good week. 0:05:54.320 --> 0:05:56.640 Jim Cannon, that of more can standing investment management of 0:05:56.680 --> 0:06:05.600 fixed income pull folio manager. We've got to start with 0:06:05.640 --> 0:06:08.240 a fantastic guest this morning, Jean Parvan, head of the 0:06:08.279 --> 0:06:11.320 black Rock Investment Institute. John, you've got this framework, the 0:06:11.400 --> 0:06:13.680 new nominal, and allow you to explain that in just 0:06:13.760 --> 0:06:17.239 a moment, the conversation we're having once we start raising 0:06:17.279 --> 0:06:20.200 interest rates in America maybe the back end of next year. 0:06:20.240 --> 0:06:22.839 Who knows, Sean, I can't predict next year. How steep 0:06:22.880 --> 0:06:25.000 will that policy path be, How shallow will it be, 0:06:25.080 --> 0:06:28.600 How loose will any potential tiening be? The answer to that, John, 0:06:30.080 --> 0:06:31.680 I think it's gonna be the shallow as we've seen 0:06:31.720 --> 0:06:34.520 in decades. Um. You know, we have to go back 0:06:34.520 --> 0:06:36.880 to maybe the fifties and the sixties to see the 0:06:36.920 --> 0:06:38.760 same kind of shadow pad as I think we're going 0:06:38.800 --> 0:06:41.560 to see so nothing of the you know, recent cycle. 0:06:41.640 --> 0:06:44.359 I think is is a guide much shadower, and I 0:06:44.400 --> 0:06:47.400 think we've seen more, much more, you know, ongoing evidence 0:06:47.440 --> 0:06:50.560 that they are, you know, on the slow path. I 0:06:50.600 --> 0:06:53.159 think they've been very deliberate to try to separate the 0:06:53.400 --> 0:06:56.680 taper discussion last week from from the liftoff and from 0:06:56.800 --> 0:06:59.160 from what it's work. We cannot predict wate, we need two. 0:06:59.200 --> 0:07:01.200 But I think it's a eight twenty three story. The 0:07:01.320 --> 0:07:05.200 first rate hike jump a black rock in your team 0:07:05.600 --> 0:07:08.400 unabashedly say your pro risk I mean, you mean snow 0:07:08.400 --> 0:07:11.920 words about it. How do these changes, the worry worry, 0:07:11.960 --> 0:07:16.400 worry out there affect corporate thinking with a higher yield regime, 0:07:16.440 --> 0:07:18.840 with steepening of the curb and on and on, how 0:07:18.840 --> 0:07:23.920 does pro risk come over the corporate action? Yeah, so 0:07:23.960 --> 0:07:27.960 the pet had for for you know, equities and risk 0:07:28.000 --> 0:07:30.880 assess break higher is getting narrower. So I mean, I 0:07:31.000 --> 0:07:34.000 just want I want to college that. And after a streak, 0:07:34.040 --> 0:07:35.840 I mean, you look at the chart of the smps 0:07:36.200 --> 0:07:38.720 you start in general, and you look at it and 0:07:38.720 --> 0:07:41.200 there's no way you can tell them in the pandemic. So, 0:07:41.280 --> 0:07:43.480 I mean this does race question. I think we're gonna 0:07:43.480 --> 0:07:46.120 be an environment where markets will be more primed to 0:07:46.520 --> 0:07:49.960 look at risk and maybe more natility. But in that environment, 0:07:50.000 --> 0:07:53.120 we still think that the fundamentals are constructive for for 0:07:53.240 --> 0:07:55.320 the time being, and as a result, we would you know, 0:07:55.360 --> 0:07:57.920 look through that. That's where the pro risk on a 0:07:58.000 --> 0:08:02.240 bashing version is coming from. How concerned are you about 0:08:02.240 --> 0:08:04.360 what's going on in China with respect to not only 0:08:04.360 --> 0:08:07.040 the scrutiny of the tech companies, but also what some 0:08:07.040 --> 0:08:11.640 people are calling an increasing energy crisis, especially as the 0:08:12.240 --> 0:08:15.440 regulators try to clamp down on fossil fuel usage ahead 0:08:15.440 --> 0:08:19.120 of the Olympics. Yeah, so I think, I mean broader 0:08:19.240 --> 0:08:21.960 story and in China is that you know, the direction 0:08:21.960 --> 0:08:25.880 of travel towards UH, a greater role of social objective 0:08:26.000 --> 0:08:30.920 politics over economics is is unmistakable. Um, it's playing out 0:08:31.120 --> 0:08:33.600 and I think we should we should all acknowledge that 0:08:34.080 --> 0:08:37.959 it changes the lens eens of investment. However, Um, you know, 0:08:38.320 --> 0:08:42.000 we've seen a very steep decline activity throughout the course 0:08:42.040 --> 0:08:45.800 of one I mean, you know from earlier this year 0:08:45.840 --> 0:08:48.679 to queue Ford is going to look so for as 0:08:48.679 --> 0:08:51.200 far as we're concerned. So that's a pretty seem decline, 0:08:51.200 --> 0:08:53.960 and even a country that is, you know, on the 0:08:54.040 --> 0:08:57.360 path to put other objectives in front um, I think 0:08:57.360 --> 0:09:00.640 they cannot ignore this weakening growth. So that makes us 0:09:00.720 --> 0:09:04.880 you know, we've been neutral on Chinese equities for for 0:09:04.880 --> 0:09:08.559 for the last few months, but we start to think 0:09:08.600 --> 0:09:12.000 now that it's time to dip our toe back or 0:09:12.040 --> 0:09:15.920 start to dip our though in the Chinese equities, given 0:09:16.000 --> 0:09:18.720 that you know, we see some easing of the various 0:09:18.760 --> 0:09:22.080 palty tools over the next few months. Can you elaborate 0:09:22.120 --> 0:09:25.960 on dipping your toe back into Chinese equities? Where do 0:09:26.000 --> 0:09:28.360 you see a sort of a safe place to park 0:09:28.400 --> 0:09:32.920 amid still a lot of ongoing on certainty. I should 0:09:32.920 --> 0:09:35.680 I should qualify the back because we've just broken out 0:09:35.720 --> 0:09:38.280 the Chinese equities as a as a stem alone asset 0:09:38.280 --> 0:09:41.439 class for the first time in June or Minion outlooks, 0:09:41.440 --> 0:09:44.080 so I mean, there's no bad aspects. So but we're 0:09:44.200 --> 0:09:46.720 dipping our toes in the sense that you know, you've 0:09:46.720 --> 0:09:50.720 seen on the performance of the Chinese equities over US 0:09:50.760 --> 0:09:54.480 equities for good reasons. That's where we were neutral. But 0:09:54.559 --> 0:09:57.079 at the same time, that's a pretty the gap as 0:09:57.480 --> 0:10:00.240 has been pretty material in terms of the two regions. 0:10:00.320 --> 0:10:02.480 And while there's a lot of uncertainty, I mean that 0:10:02.480 --> 0:10:05.120 means the recipium has increased quite considerably. And now I 0:10:05.120 --> 0:10:08.360 think it's the time to think about opportunities reappearing. I'm 0:10:08.360 --> 0:10:10.880 thinking about the broad market exposures here as opposed to 0:10:11.000 --> 0:10:14.320 specific and um But that broad market explosure, that broad 0:10:14.320 --> 0:10:16.480 market story, I think is a repriced quite a bit. 0:10:16.800 --> 0:10:19.040 John just quickly find a question, how do you reconcile 0:10:19.080 --> 0:10:22.560 your bond market call, your federal reserve call with where 0:10:22.600 --> 0:10:25.040 you want to own in the equity market domestically here 0:10:25.040 --> 0:10:29.840 in America. So we think the bad market call. Just 0:10:29.880 --> 0:10:32.199 to clarify, as we think rates on the way way 0:10:32.280 --> 0:10:34.600 up on the ten uere We've been like increasing our 0:10:34.679 --> 0:10:38.480 underweight US treasuries over the course of the last few months. 0:10:38.520 --> 0:10:40.839 Our conviction has not waned, despite the fact that it 0:10:41.200 --> 0:10:43.400 has been stubbornly low over the course of the last 0:10:43.400 --> 0:10:46.560 few months. But we think that the direction is up. 0:10:47.000 --> 0:10:48.880 That said, it's in the context to go back where 0:10:48.920 --> 0:10:51.000 we started, where we're going to see a very shallow 0:10:51.400 --> 0:10:54.959 normalization of policy rate in the US and as a result, 0:10:55.240 --> 0:10:58.160 and some more inflation coming. But this combination of an 0:10:58.200 --> 0:11:01.880 inflation coming through with very oh rate um, it's it's um. 0:11:01.920 --> 0:11:04.440 It's a real rate environment that's very negative and contin 0:11:04.480 --> 0:11:06.840 used to be and that will be um you know, 0:11:06.920 --> 0:11:10.840 supportive of of equity or risk ascid even the U S. 0:11:11.040 --> 0:11:13.200 We're neutral on US equity though, just to be clear, 0:11:13.600 --> 0:11:16.720 uh and I think that's more coming from this the juncture, 0:11:16.760 --> 0:11:19.640 the fiscal policy landscape on the tax front, that ceiling. 0:11:20.280 --> 0:11:22.640 Uh and and we're gonna we're gonna hear more this week. 0:11:23.280 --> 0:11:26.080 We want to just right there, just I want to 0:11:26.080 --> 0:11:30.160 make that clear. You care about the dead ceiling. We 0:11:30.240 --> 0:11:32.760 think there's headline restaurant the dead ceiling. Ultimately, we put 0:11:32.760 --> 0:11:35.160 out a note last week where we say, uh, you know, 0:11:35.280 --> 0:11:37.480 there's gonna be noise. The market is prone to be 0:11:37.600 --> 0:11:40.520 reacting to noise and this juncture, like we said, but 0:11:40.679 --> 0:11:43.320 we will advise looking through. But the headline risk is there. 0:11:43.760 --> 0:11:45.920 But again we haven't certainly around the how big this 0:11:46.040 --> 0:11:48.320 package will be. As a result, we haven't certainly around 0:11:48.400 --> 0:11:51.360 corporate taxes and the like. And that's a neutral the 0:11:51.400 --> 0:11:54.280 neutral sense on US equity. Joan, thank you, Jean Bavan. 0:11:54.520 --> 0:12:01.760 There of blank Rock the Investment Institute had right now 0:12:01.840 --> 0:12:04.079 joining us on a political moment and what it means 0:12:04.080 --> 0:12:07.760 for economics financial investment. Gregory Vellier joins us with a 0:12:07.840 --> 0:12:11.760 g F Investments always a stude on the moment a hand, Greg, 0:12:11.800 --> 0:12:15.240 I am dumbfounded by Democrats taking a victory now like 0:12:15.280 --> 0:12:18.960 it was sixty four sixty five and the resounding win 0:12:19.040 --> 0:12:21.960 of L. B. J Lyndon Baines Johnson off of the 0:12:22.000 --> 0:12:27.040 assassination of JFK took sixtent of the vote. Biden took 0:12:27.080 --> 0:12:29.800 fifty one point three percent of the vote. How much 0:12:29.840 --> 0:12:33.000 of a majority does the president have to ram through 0:12:33.440 --> 0:12:37.640 this set of legislative pieces. He doesn't have much, Tom. 0:12:37.800 --> 0:12:40.359 I think that that is one of the big realizations 0:12:40.400 --> 0:12:44.440 over the last weekend. Nancy Pelosi, of all people, said 0:12:44.480 --> 0:12:46.560 that we're not going to be at three point five trillion. 0:12:46.679 --> 0:12:49.680 That was a big concession in my opinion. And then 0:12:49.720 --> 0:12:52.560 she threw out another concession, Tom, and that is that 0:12:52.760 --> 0:12:54.880 we're not going to have a government shutdown. At the 0:12:54.960 --> 0:12:58.160 end of this week. They'll do an extension. So those 0:12:58.200 --> 0:13:00.280 two thinks make me a little more up to stick. 0:13:00.520 --> 0:13:03.560 And I'm not euphoric, but I think the chances of 0:13:03.600 --> 0:13:07.640 a major crisis are still remote. And then one final point, 0:13:07.720 --> 0:13:10.679 I urge everyone to read the Wall Street Journal piece 0:13:11.040 --> 0:13:14.000 on the Fed's tools. If we were to have a 0:13:14.040 --> 0:13:17.680 debt real debt crisis and a default crisis, the FED 0:13:17.760 --> 0:13:20.520 has options. They can sell some of their treasuries, they 0:13:20.559 --> 0:13:24.360 can buy defaulting treasuries. So this this is a serious story, 0:13:24.640 --> 0:13:29.360 but it's not an apocalyptic story. Greg, very importantly, do 0:13:29.400 --> 0:13:33.760 you sense negotiations that are normal, that they have a 0:13:33.800 --> 0:13:37.000 give and take and a back and forth among well 0:13:37.080 --> 0:13:42.960 meaning politicians. No, I don't see it yet. I think 0:13:42.960 --> 0:13:45.400 that there's a lot of anger at Mitch McConnell because 0:13:45.400 --> 0:13:48.600 the Republicans spent like drunken sailors for four years with 0:13:48.679 --> 0:13:50.920 tax cuts and a lot of spending. I think there's 0:13:50.920 --> 0:13:54.040 a lot of resentment toward him right now. Frankly, I 0:13:54.080 --> 0:13:58.800 think the negotiations that really matter are among Democrats. You 0:13:58.880 --> 0:14:01.640 still got to get a full of very important moderates 0:14:01.640 --> 0:14:04.560 on board. That's coming, But I think a deal with 0:14:04.640 --> 0:14:08.760 Republicans comes later in the fall. Greg, you mentioned this 0:14:08.840 --> 0:14:11.120 Nick Timorrow story in the Walster Tournal. Let's go there. 0:14:11.160 --> 0:14:13.200 This idea that the FED could be thrust once again, 0:14:13.520 --> 0:14:16.480 it's the political spotlight actually taking a role in trying 0:14:16.480 --> 0:14:20.120 to stave off a political default. How much is this 0:14:20.200 --> 0:14:23.000 a risk for the Federal Reserve that when Congress stalls 0:14:23.000 --> 0:14:26.000 out and can't get stuff done, the Federal Reserve has 0:14:26.000 --> 0:14:28.480 to sort of be left holding the bag and takes 0:14:28.480 --> 0:14:32.480 a lot of heat as a result on all sides. Yeah, Lisa, 0:14:32.520 --> 0:14:35.480 it's a good point. They dread this. They don't want 0:14:35.480 --> 0:14:37.520 to get an image of being the you know, the 0:14:37.600 --> 0:14:41.320 lender of last resort. Uh And I think they would 0:14:41.400 --> 0:14:44.120 make it clear this is an exception. But you read 0:14:44.200 --> 0:14:47.360 the piece that they've been there before, they've considered these options. 0:14:47.640 --> 0:14:49.960 There's a lot of controversy with them, including some of 0:14:49.960 --> 0:14:52.600 the active traders at the FED, and now there's going 0:14:52.640 --> 0:14:55.240 to be controversy over this. Well, you know, that's just 0:14:55.360 --> 0:14:57.840 the way things are right now. It's a very controversial, 0:14:58.440 --> 0:15:01.840 dysfunctional period and w it's the way things are, especially 0:15:01.880 --> 0:15:03.760 at a time when FED Chair J. Powell is up 0:15:04.280 --> 0:15:08.880 for the potential renomination by Jerome by President Biden. There's 0:15:08.880 --> 0:15:11.760 a question though here how much inflation is starting to 0:15:11.800 --> 0:15:15.200 concern Democrats more than it had previously, and perhaps this 0:15:15.240 --> 0:15:17.120 is one of the reasons for some of the concessions 0:15:17.320 --> 0:15:19.880 the Nancy Pelosi made. Do you really feel like that's 0:15:19.920 --> 0:15:23.600 the case? Yeah, I think that more and more voters 0:15:23.640 --> 0:15:28.120 around the country are linking together higher prices and big spending. 0:15:28.160 --> 0:15:31.160 I'm not sure the correlation is there, but the voters 0:15:31.240 --> 0:15:33.880 believe that, and as long as they do, I think 0:15:33.880 --> 0:15:36.800 at price tag like three point five trillion is just 0:15:36.960 --> 0:15:41.400 too rich. Greg I was looking at ed case of Hawaii. 0:15:41.760 --> 0:15:45.400 It's a hugely democratic state, and he is clearly a 0:15:45.480 --> 0:15:49.920 moderate Democrat as well. What does Speaker Pelosi have to 0:15:50.040 --> 0:15:55.800 offer moderates blue dogs like Ed case of Hawaii, Well, 0:15:55.840 --> 0:15:57.720 not a lot to on That's that's one of the 0:15:57.800 --> 0:16:01.040 problems here. Maybe she's gonna for him a better chance 0:16:01.080 --> 0:16:05.400 of getting reelected. An awful lot of Democrats I talked to, 0:16:05.520 --> 0:16:09.840 or their staffs anyway, are saying they're scared about. The 0:16:10.240 --> 0:16:13.000 issue is not will the Republicans win the House? The 0:16:13.040 --> 0:16:15.760 issue is by how much? Will they win the House 0:16:15.800 --> 0:16:18.840 by ten, twelve, fifteen, twenty seats. When you start talking 0:16:18.880 --> 0:16:21.680 about numbers like that, a lot of people, like the 0:16:21.760 --> 0:16:25.760 gentleman from Hawaii run for cover. So just before we 0:16:25.840 --> 0:16:27.160 let you go, you said that three and a half 0:16:27.240 --> 0:16:29.560 trillion dollar plan is a pipe geam. Even Nancy Pelosi 0:16:29.600 --> 0:16:32.080 said that what are you seeing in terms of what 0:16:32.200 --> 0:16:34.520 the likely bill will look like in terms of size 0:16:34.720 --> 0:16:38.640 and in terms of taxes, well under two. But there's 0:16:38.680 --> 0:16:41.280 so many gimmicks. Some of these programs are five years, 0:16:41.280 --> 0:16:44.360 some or seven, some of ten. Some will expire and 0:16:44.360 --> 0:16:47.080 then get shoved shoved off to the States. There's a 0:16:47.120 --> 0:16:50.280 lot of gimmickry. But I think that let's say something 0:16:50.320 --> 0:16:54.200 more around two is far more likely, and it's not 0:16:54.320 --> 0:16:58.520 him if investments. Gregg, thank you on the week ahead 0:16:58.560 --> 0:17:07.480 and beyond. We have a rare treat right now. We'll 0:17:07.480 --> 0:17:09.800 get right to a Lloyd Miner is one of the 0:17:09.840 --> 0:17:12.520 most different physicians I know out there. He has someone 0:17:12.600 --> 0:17:16.199 with world class first order research on the balance of 0:17:16.200 --> 0:17:19.440 the ear. He has taken that over to medicine and 0:17:19.520 --> 0:17:22.200 the management of hospitals and all among other things that 0:17:22.280 --> 0:17:25.600 Johns Hopkins a residency at Duke a few years ago 0:17:25.920 --> 0:17:28.320 in olds Court and Palo Alto. Right now, what's your 0:17:28.320 --> 0:17:31.480 biggest headache right now? Dean? I think our biggest concern 0:17:31.600 --> 0:17:33.200 right now is to make sure that we continue to 0:17:33.240 --> 0:17:36.640 provide outstanding healthcare, that we take care of our students 0:17:36.680 --> 0:17:39.600 eighteen thousand students back on our campus, and that we 0:17:39.640 --> 0:17:43.760 comply with the federal mandate that the Biden administration is 0:17:43.760 --> 0:17:47.960 issued with regard to the vaccine mandate. What is your 0:17:48.080 --> 0:17:53.600 strategy with your unvaccinated staff. Well, first time we have 0:17:53.640 --> 0:18:01.200 a highly vaccinated it's between within your hospitals, within our hospitals, yes, 0:18:02.080 --> 0:18:04.480 and and around the university. It's similar. I mean, we're 0:18:04.560 --> 0:18:07.880 still gathering that information. We want to make sure that 0:18:07.880 --> 0:18:10.320 that we're providing those who wish to apply for a 0:18:10.359 --> 0:18:13.399 religious or medical exemption, that we provide the avenue to 0:18:14.040 --> 0:18:18.119 you know, issue that application and have it reviewed. But 0:18:18.520 --> 0:18:21.199 we know that these vaccinations are among the safest and 0:18:21.240 --> 0:18:24.600 most effective vaccinations ever developed. We want to make sure 0:18:24.640 --> 0:18:27.920 that we answer any questions people have and ultimately get 0:18:27.960 --> 0:18:31.399 a fully vaccinated workforce. Meanwhile, Dr Minor over in New 0:18:31.480 --> 0:18:35.280 York State, there is a mandate that healthcare workers get 0:18:35.400 --> 0:18:38.960 vaccinated and actually the governor and Kathy Hokel has said 0:18:39.000 --> 0:18:41.560 that she may bring in the National Guard to fill 0:18:41.640 --> 0:18:45.359 empty healthcare rules once this mandate goes into effect, which 0:18:45.480 --> 0:18:47.600 is this week. What do you make of all this? 0:18:48.400 --> 0:18:52.560 It's really important that our healthcare organizations, hospitals, clinics be 0:18:52.640 --> 0:18:56.040 able to continue to provide outstanding care. You know, the 0:18:56.119 --> 0:18:59.919 real tragedy early on in the pandemic was in places 0:19:00.080 --> 0:19:03.600 like New York where the healthcare workforce became overwhelmed. We 0:19:03.640 --> 0:19:08.200 had too many patients overwhelming our facilities and our workforce. 0:19:08.560 --> 0:19:11.920 So I think having skilled, trained healthcare personnel, and if 0:19:11.920 --> 0:19:16.000 that's the National Guard, uh, then then perhaps that's appropriately 0:19:16.119 --> 0:19:18.720 making sure we continue to provide care to patients when 0:19:18.720 --> 0:19:21.080 they need it by skilled personnel is going to be 0:19:21.119 --> 0:19:24.240 really important. Dr Dr Miner. If there are people who 0:19:24.320 --> 0:19:29.200 doubt the efficacy or doubt the potential risks of the vaccine, 0:19:29.720 --> 0:19:32.119 what does it send them in terms of messaging that 0:19:32.160 --> 0:19:35.280 a lot of healthcare workers are not getting vaccinated themselves. 0:19:36.560 --> 0:19:39.360 I think it's a difficult message and uh and one 0:19:39.400 --> 0:19:42.159 that concerns me a lot. We we have a highly 0:19:42.240 --> 0:19:44.920 vaccinated healthcare workforce where we are, and I think that's 0:19:44.920 --> 0:19:50.080 true across most areas of the country. It's the pandemic 0:19:50.119 --> 0:19:53.040 has been overwhelming and overwhelming experience for all of us. 0:19:53.400 --> 0:19:55.840 But I think the steps at the FDA, the c 0:19:55.960 --> 0:19:59.080 d C have taken to ensure the safety and efficacy 0:19:59.080 --> 0:20:02.040 of these vaccines are remarkable, and we need to do 0:20:02.240 --> 0:20:05.600 the best job we can in healthcare to communicate that 0:20:05.720 --> 0:20:09.720 message so that more people feel reassured and get vaccinated. 0:20:10.119 --> 0:20:14.320 Our listeners are viewers have to be confused by the 0:20:14.320 --> 0:20:20.440 cacophony of politics. F D a federal this maybe world 0:20:20.440 --> 0:20:25.399 health organization, but certainly c DC. What's your desire for 0:20:25.560 --> 0:20:31.040 c DC and Washington officials to get on the same page, Tom, 0:20:31.080 --> 0:20:35.320 I think it's really important that that federal agencies UH 0:20:35.359 --> 0:20:38.080 and the FDA and CDC in particular are aligned, and 0:20:38.359 --> 0:20:43.520 I think Dr Willinsky. Director Willinsky of course ultimately issued 0:20:43.560 --> 0:20:46.800 a ruling aligning the CDC recommendations pretty much with the 0:20:46.880 --> 0:20:50.159 FDA recommendations. But there was, as you described, there was 0:20:50.240 --> 0:20:52.560 a lot of back and forth with the advisory committee. 0:20:52.560 --> 0:20:55.560 It's important to have advisory committees. They represent a diversity 0:20:55.600 --> 0:20:58.520 of opinions and areas of expertise. But at the end 0:20:58.560 --> 0:21:00.720 of the day, it's up to the leaders to make 0:21:00.720 --> 0:21:03.480 sure the alignments. There is this one off like is 0:21:03.480 --> 0:21:05.880 this something new for you with all of your decades 0:21:05.920 --> 0:21:07.679 of experience, or is this sort of the way the 0:21:07.680 --> 0:21:12.760 sausage is made within the vaccine bacteria community. Well, COVID 0:21:12.840 --> 0:21:15.520 is certainly one off for all of us. But and 0:21:15.560 --> 0:21:19.840 I think ordinarily Tom these disagreements do exist in a 0:21:19.840 --> 0:21:24.359 healthy way between regulatory agencies. But we're in the midst 0:21:24.359 --> 0:21:27.200 of a huge crisis, and so alignment and coordination is 0:21:27.240 --> 0:21:30.760 particularly important getting us through this crisis. Dr Monner, there 0:21:30.800 --> 0:21:32.800 was a study that came out of Oxford University that 0:21:32.920 --> 0:21:35.720 came out this morning that said that American men lost 0:21:35.760 --> 0:21:38.639 more than two years of lifespan as a result of 0:21:38.640 --> 0:21:41.679 the COVID pandemic. When we look back on this period, 0:21:41.720 --> 0:21:47.040 what will be the healthcare legacy of the COVID pandemic. Well, 0:21:47.080 --> 0:21:49.760 I hope the legacy will be how we responded as 0:21:49.800 --> 0:21:51.879 a as a nation and how we responded as a 0:21:51.920 --> 0:21:55.320 healthcare community. Certainly, there are many aspects of that response 0:21:55.440 --> 0:21:58.240 that we wish were different, but I think we've all 0:21:58.320 --> 0:22:00.560 learned a lot and are learning a lot. I am 0:22:00.600 --> 0:22:03.879 just so proud every day to work with an amazing 0:22:04.080 --> 0:22:08.160 group of dedicated healthcare professionals where I am at Stanford, 0:22:08.160 --> 0:22:10.840