Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
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Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio, or watch us on
Speaker 1: YouTube search Bloomberg Global News. So, as we mentioned earlier
Speaker 1: one year ago, today the US capital is breached by
Speaker 1: supporters of Donald Trump, storming the capital, transforming the global
Speaker 1: conversation around democracy in America. Today, the US is more
Speaker 1: divided than ever and a factor in that division, Tim,
Speaker 1: I think it's safe to say the rise of social
Speaker 1: media and the dominant players in that space. We're talking
Speaker 1: about Facebook and Twitter. Yeah, no question about that, Carol
Speaker 1: Naomi Nicks to social media reporter for Bloomberg new She
Speaker 1: joins us on the phone from our New York City bureau.
Speaker 1: Naomi um As we think back to what happened a
Speaker 1: year ago, and more to what happened in the wake
Speaker 1: of a year ago, and I'm talking about Facebook and Twitter,
Speaker 1: uh kicking Trump off of its platforms. How should we
Speaker 1: think about the role that social media companies have taken
Speaker 1: since then, Like, is it changed at all when it
Speaker 1: comes to trying to police their platforms? Well, I think
Speaker 1: in one significant way it has changed, right, and that
Speaker 1: is what you just mentioned, Um, that Facebook, Twitter, and
Speaker 1: YouTube actually and others made moves to kick Trump off
Speaker 1: their platforms. It was one of the most aggressive actions
Speaker 1: today on political leader and a government, um for violating
Speaker 1: their content rules. And you know that that is that
Speaker 1: is a notable because social media companies have traditionally shied
Speaker 1: away from trying to be the arbiters of truth. They
Speaker 1: like to have a hands off approach on political content.
Speaker 1: Having said that, there are other ways in which um,
Speaker 1: you know these they're a lot of risks that are
Speaker 1: still remain So social media companies are still um spreading
Speaker 1: content that uh roads trust in the democratic process. There
Speaker 1: is still misinformation about what happened in some of these
Speaker 1: social media platforms, and they still sort of have these
Speaker 1: struggles to balance growing their social networks with taking a
Speaker 1: more proactive approach. I can some of this contract, I
Speaker 1: have to say, Naomi, a line in your story. Um.
Speaker 1: A year later, social media companies still don't appear to
Speaker 1: have figured out how to put out these kinds of fire.
Speaker 1: So it says to me, the role of social media
Speaker 1: in igniting another round of fires, political or other, it
Speaker 1: could still happen. It could right So right now we have,
Speaker 1: particularly on the right, a continued drumbeat about, um, you know,
Speaker 1: whether they're the elect the electoral process is fair, whether
Speaker 1: there's widespread fraud. We still have misinformation spreading about that.
Speaker 1: So that's going to be a challenge for social media companies.
Speaker 1: And we're heading into mid term elections in which companies
Speaker 1: are going to have to be policing that kind of
Speaker 1: misinformation in small, hyperlocal races across the country, and that's
Speaker 1: going to be a challenge. What is hold for the
Speaker 1: former president and getting back on these platforms. Is he
Speaker 1: going to be able to get back onto Facebook, on Twitter,
Speaker 1: and on YouTube? So he's banned for two years on Facebook,
Speaker 1: he's permanently banned from Twitter, and so, um, you know
Speaker 1: that that's gonna be difficult for the mid terms. Um,
Speaker 1: but you know, we'll see what holds and whether he'll
Speaker 1: whether he runs again, and whether he'll be able to
Speaker 1: get some of his social media access back. But I
Speaker 1: think it's important to know that there are other political
Speaker 1: years following in his footsteps paddling this information about the election.
Speaker 1: And also, um, you know COVID nineteen. We saw Facebook
Speaker 1: and Twitter make moves early year this month to suspend
Speaker 1: Marjorie Green overspreading COVID miss info and so, uh, Trump
Speaker 1: might not be up for debate on these platforms, but
Speaker 1: there are other public segures who are right. And what's
Speaker 1: interesting my husband shared with my daughter and I um
Speaker 1: a political story today and the headline on is that
Speaker 1: they stormed the capital. Now they're running for office, and
Speaker 1: it talked about at least fifty seven individuals who played
Speaker 1: a role in the day's events, including someone who are
Speaker 1: arrested on charges related to the capital attack. Now we're
Speaker 1: running for office in two so politically will continue to
Speaker 1: feel their impact. When it comes to social media though,
Speaker 1: and Donald Trump specifically, he's developing his own media platforms.
Speaker 1: How do you think about that and how do you
Speaker 1: think that might factor in and how they might police
Speaker 1: maybe what they see is more liberal views. Yeah. Look,
Speaker 1: so there's definitely alternative social media platforms that Trump and
Speaker 1: other other folks who um feel they're being treated on fairly. Uh,
Speaker 1: the mainstream outlet's can falct to. You know, we saw
Speaker 1: that with Parwer and gab Um. I don't I think though,
Speaker 1: it's it's very much true that the mainstream players Facebook, Twitter, YouTube, um.
Speaker 1: You know, they have the dominant platform and these smaller
Speaker 1: these smaller platforms aren't going to be able to give
Speaker 1: people like Trump, uh the megaphone that they once had. Um.
Speaker 1: And we saw, you know, we saw some results. There
Speaker 1: was actually a study that the Washington Post covered from
Speaker 1: Signal Labs, you know, that show documented how some of
Speaker 1: the misinformation around the election declined in the wake of
Speaker 1: Trump's de platform ng um. And so I think it's, um,
Speaker 1: it'll be difficult for for Trump to be able to
Speaker 1: match uh, that kind of reach with his own platform.
Speaker 1: He Now mean, before we let you go, and just
Speaker 1: in the last thirty seconds that we have with you,
Speaker 1: talk a little bit about what was happening at Facebook
Speaker 1: on January six. Yeah, I mean, look, Facebook took down
Speaker 1: one of the stop the steel groups. But what would
Speaker 1: happen is it was kind of a game of whack
Speaker 1: a mole. Another group would pop up and it would
Speaker 1: grow really, really rapidly, and the company struggled to address
Speaker 1: those ballooning pages and group who were spreading misinformation about
Speaker 1: the election. Interesting, uh, and social media, you know, continue
Speaker 1: to get caught in the cross you know, hairs of
Speaker 1: all of this. But I think about Tim, how much
Speaker 1: how many people get their news from there, and so
Speaker 1: you have to think about what's the responsibility of them
Speaker 1: in terms of the platforms? Are they platforms? Are the
Speaker 1: media companies? And also you know Twitter's new CEO, what
Speaker 1: role does is he play in managing that type of
Speaker 1: stuff on the platform? I think that still remains to
Speaker 1: be seen since he's been there well in the CEO
Speaker 1: position for such a short time. And traditional media is
Speaker 1: increasingly becoming social media as well, and yet there's a
Speaker 1: responsibility about what goes on those platforms. All right, you're
Speaker 1: listening to Bloomberg business Speak or thanks to naomenic social
Speaker 1: media reporter a Bloomberg News this is Bloomberg Business Week
Speaker 1: with Carol mass Sure and Bloomberg Quick Takes. Tim Stinovic
Speaker 1: on Bloomberg Radio. So billionaire in Virgin group founder Richard
Speaker 1: Branson and his wife among the latest report getting COVID.
Speaker 1: Branson have said to have a mild case. We are
Speaker 1: seeing uh shortage of at home tests and trying to
Speaker 1: deal with that as well. No joke. I do feel
Speaker 1: like I have more friends right now with COVID who
Speaker 1: are in isolation than those who aren't. Yeah, every time
Speaker 1: I get on the but we see it playing out
Speaker 1: in the data to all over the place. Hey, let's
Speaker 1: get to our daily round up when it comes to
Speaker 1: the pandemic and COVID headlines. Dr in LUs Better back
Speaker 1: with us, clinical professor of Medicine at n y U
Speaker 1: Land going on the phone in New York City, and
Speaker 1: we know that you are under the weather as well,
Speaker 1: so we wish you well. How are you doing? But
Speaker 1: you you don't have COVID corrector at least you haven't
Speaker 1: tested positive. Is that right right? No, no positive tests yet.
Speaker 1: I've had you energens negatives and a nasal swab negative
Speaker 1: for flu um my bed is. When I test later today,
Speaker 1: I would not be shocked if it's positive, basically exposed
Speaker 1: as we all are too. Men patients who are asymptomatic
Speaker 1: who have COVID, and that's really part of the reason
Speaker 1: it's spreading so much is because people can spread it
Speaker 1: before they have any symptoms. What are the symptoms that
Speaker 1: you have right now really primarily a laryngitis and classic
Speaker 1: upper respiratory symptoms nasal congestions, sore throat, mild cloth that's
Speaker 1: really the classic omicron symptoms UM as opposed to the
Speaker 1: original alpha variant, which was much more deadly, much more lethal,
Speaker 1: with really lower respiratory symptoms. So we're seeing this huge
Speaker 1: spike in cases. Slight increase in hospitalization is not dramatic
Speaker 1: yet the death rate fairly flat, so we see that
Speaker 1: this is very contagious kind of mild to moderate symptoms
Speaker 1: UM with no significant increase in deaths at this point. Hey,
Speaker 1: Dr les Mater, I just want to make sure I
Speaker 1: get this right. The two antigen tests that you took,
Speaker 1: those are also known as rapid tests, right, those tests correct,
Speaker 1: Those showed that you do not have COVID. And then
Speaker 1: the nasal SWABI took us for the flu. You've tested
Speaker 1: negative for the flu, but you haven't yet taken a
Speaker 1: PCR test for COVID no. The nasal swab was a
Speaker 1: PCR test and that was for UH. It's a double
Speaker 1: it's called the LEAT. It's a rapid test which we
Speaker 1: have available in some centers and the turnaround is amazing.
Speaker 1: It's like thirty minutes or less. And that tests for
Speaker 1: FLU and PCR for COVID nineteen and that didn't You
Speaker 1: said he didn't have it though, that's right, But all
Speaker 1: of these tests are not perfect. We see longlines. People
Speaker 1: are getting tested for no symptoms or mild exposure. So
Speaker 1: really there's UH. I don't want to say we're running
Speaker 1: out of tests, but there's a very big demand, and
Speaker 1: really we're not changing the way we treat people at
Speaker 1: this point. A very select group get monoclonal antibodies. The
Speaker 1: prior monoclonal antibodies UM have been shown not to be
Speaker 1: that effective, so we do have for elderly people or
Speaker 1: people with underlying significant disease COPD, etcetera. There is some
Speaker 1: monoclonal antibodies and of course PAxx lavit from fisser UH,
Speaker 1: the oral medications UM, but really a lot of this
Speaker 1: is just symptomatic stay home rest, fluid hydration UH and
Speaker 1: it seems to resolve within you know, six to ten days,
Speaker 1: and you are triple vaccinated. Correct, yes, triple vaccinated. But
Speaker 1: I know patients who have had COVID three vaccines that
Speaker 1: have still gotten O macron. So you know, we know
Speaker 1: there are thirty two mutations, uh, thirty plus in the
Speaker 1: spike protein. So really this is able to evade UM
Speaker 1: a lot of the prior vaccines, which are still alpha vaccines, right,
Speaker 1: So it's um been a number of variants, and you
Speaker 1: know this may become endemic. You know, there may be
Speaker 1: sort of a yearly seasonal COVID. We've talked about that,
Speaker 1: but we won't need to come up eventually with a
Speaker 1: more specific both treatment and probably prevention uh in order
Speaker 1: to prevent us from becoming more seasonal. But if this point,
Speaker 1: I think we're going to reach our peak in January.
Speaker 1: Probably by end of January, February will see cases drop,
Speaker 1: mainly because everyone will have been exposed and m will
Speaker 1: be some degree herd immunity at least for this round
Speaker 1: and for this variant. Tim and I were talking about
Speaker 1: that earlier. We keep overhearing from various individuals where we're
Speaker 1: all going to get this. We're all going to get this,
Speaker 1: and we certainly have heard it from the likes of
Speaker 1: you and others in the medical community. At the same time,
Speaker 1: it's hard not to still in, you know, after two
Speaker 1: years and counting of doing everything and anything to avoid
Speaker 1: at the thought of Okay, in the end, we're all
Speaker 1: going to get it. Having said that, Dr LUs Bader,
Speaker 1: and you are so gracious to come on with us
Speaker 1: because we can hear it in your voice, and we
Speaker 1: hope you're gonna get a lot of rest after after
Speaker 1: we finish our conversation. Is there still the possibility of
Speaker 1: another variant, and as you said, it's multiple mute mutations
Speaker 1: in an omicron. Should we anticipate that there will be
Speaker 1: another variant possibly after this that could be even more
Speaker 1: probably matic? Personally, I don't think so. I think this
Speaker 1: widespread herd immunity, at least in the US will keep
Speaker 1: most everyone safe. You know, the O macron did develop
Speaker 1: uh in South Africa, so it's a big world. There
Speaker 1: are eight billion people. You know, it's hard to say
Speaker 1: for sure there won't be a son of omecron, which
Speaker 1: is possible. This coast seems to be very you know,
Speaker 1: displacing the alpha and Delta's it's highly contagious, very efficient. Personally,
Speaker 1: I think O Macron will be kind of the end
Speaker 1: of the global pandemic. I think everyone will get it.
Speaker 1: Most people will do fine, will get answer bodies. I
Speaker 1: don't think there's gonna be another variant, but it's certainly possible.
Speaker 1: Uh and hopefully it will be um much milder, but
Speaker 1: we don't know for sure. Well, we're certainly sending you
Speaker 1: our best wishes. Dr LUs Bader. Really appreciate you taking
Speaker 1: the time on a day when we know you're under
Speaker 1: the weather to share with us not only your experience
Speaker 1: but your outlook for the next few months. Yeah, take care,
Speaker 1: get better soon, and definitely go rest and and our
Speaker 1: thoughts are with you. Dr Ian last bad Or, Clinical
Speaker 1: professor of Medicine at n hy U Land Going Medical
Speaker 1: Center on the phone in New York City, as he said,
Speaker 1: he's so far he hasn't tested positive for it. But
Speaker 1: you know this is the tricky part of testing. You
Speaker 1: and I talked about this. I want to send him
Speaker 1: some soup. I want to send him some sus sounds
Speaker 1: like heat, some soup. Yeah, I hope he takes some
Speaker 1: rest and just really takes care of himself. You know
Speaker 1: he is vaccinated, and from what we hear from a
Speaker 1: lot of folks that when you are that certainly can
Speaker 1: put you at a great advantage. You're listening to Bloomberg
Speaker 1: Business Week with Carol Messer and Bloomberg Quick Takes Tim
Speaker 1: Stinovich on Bloomberg Radio. The new issue of Bloomberg Business Week,
Speaker 1: by the way out on news stands. It's also online
Speaker 1: at business week dot com, excuse me, and also on
Speaker 1: the Bloomberg terminal. Now, as we continue to battle the pandemic,
Speaker 1: we similarly similarly excuse me, I can't speak. I'm ready
Speaker 1: for Friday. We also continue to tally up the cost
Speaker 1: of it around the globe and Tim Bloomberg Business Week
Speaker 1: really gets into it this week about the progress when
Speaker 1: it comes to women, especially in those developed countries. Let's
Speaker 1: get into it with Jill Filipovic, freelance writer for Bloomberg
Speaker 1: Business Week. She joins us on the phone from Brooklyn jail.
Speaker 1: For twenty five years, girls in developing countries have been
Speaker 1: on this remarkable trajectory of progress, but the pandemic is
Speaker 1: reversing that. What did what did you find at the
Speaker 1: girls Rescue House in Kenya. Yeah, thanks so much for
Speaker 1: having me on. So I reported this story UM from
Speaker 1: Kenya from various parts of the country, looking at how
Speaker 1: not just COVID the disease, but COVID related shutdowns have
Speaker 1: essentially reversed twenty five years of pretty steady progress for girls.
Speaker 1: You know, what we've seen over the past quarter century
Speaker 1: is that girls were largely on an upward trajectory. They
Speaker 1: were staying in school longer, they were getting married and
Speaker 1: having babies later. They were living healthier and more prosperous lives.
Speaker 1: And then when COVID hit, and when three and fifty
Speaker 1: million children around the world, um, you know, we're out
Speaker 1: of school, miss being their most consistent meal of the day,
Speaker 1: often stuck at home and abusive situation is Um, what
Speaker 1: we've seen is that a lot of that progress has
Speaker 1: been reversed. Even if schools are reopening, a lot of
Speaker 1: girls are not going back, some because their parents are
Speaker 1: unemployed and camp paid to school fees. Um. Some many
Speaker 1: because they have gotten pregnant during the pandemic. UM. So
Speaker 1: it's it's a huge and slow moving disaster, and lots
Speaker 1: of public health experts and folks who work in the
Speaker 1: development space are essentially saying that now is the moment
Speaker 1: that we can act on this, and then if we
Speaker 1: don't put measures in place to reverse uh, these really
Speaker 1: disastrous effects for girls, we're going to see the ripple
Speaker 1: effects not just for this generation, but for generations to come. Well,
Speaker 1: and you get into Jill, this is a story we
Speaker 1: talked about with Bloomberg Business. We get our Joel Webber
Speaker 1: for our Bloomberg Business Week weekend show, which airs on
Speaker 1: the weekend on Bloomberg Radio and it's also on and
Speaker 1: on our podcast feed. But what's interesting is that you know,
Speaker 1: the pandemic has been going on for a couple of years,
Speaker 1: and you point out in your story that there's some
Speaker 1: really significant numbers already showing what has happened according to
Speaker 1: AID groups. You write, teen pregnancy rates and some Kenyan
Speaker 1: countries tripled in the first few months of the pandemic.
Speaker 1: Early numbers indicating the adolescent maternal deaths and still births
Speaker 1: increased during that same period. You know, very easy for
Speaker 1: us in the developed world to to maybe not think
Speaker 1: so much about teenage pregnancy or potentially losing your life
Speaker 1: from a pregnancy, because we don't have the problems on
Speaker 1: the same scale that the developing world it has UH
Speaker 1: and and they really continue to have to deal with that,
Speaker 1: and it really can set women back in a big way, right.
Speaker 1: And I think one thing to keep in mind is
Speaker 1: that when we talk about investing in women and girls,
Speaker 1: that's a really high yield investment. UM. We're not just
Speaker 1: investing in individuals. When you invest in a girl and
Speaker 1: a woman, you invested an entire community. We know that
Speaker 1: girls to delay marriage and delay child bearing go on
Speaker 1: to have healthier children. We know that educated women are
Speaker 1: more likely to raise children who are able to pursue
Speaker 1: education themselves. We know that women who have higher levels
Speaker 1: of education and can plan their families are less likely
Speaker 1: to be stuck in abusive relationships. They're less likely to
Speaker 1: die in child of birth, and their children are less
Speaker 1: likely to die at young ages. And so you have
Speaker 1: all of these downstream ripple effects UH, and they can
Speaker 1: be positive repo effects if we invest in girls. The
Speaker 1: problem with what we're seeing with COVID's impact on girls
Speaker 1: and the impact of COVID shutdowns UH is that many
Speaker 1: of these positive impacts have been walked back, and we're
Speaker 1: seeing girls start to have babies earlier, get married earlier
Speaker 1: undergoes things like female genital cutting UM, and that impacts
Speaker 1: obviously the opportunities for these girls right now, but also
Speaker 1: for their children, and for the entirety of their communities,
Speaker 1: and frankly for the entire economy and well being of
Speaker 1: the world. Well, Jill, you know, Carol mentioned that we
Speaker 1: spoke about this in our recording for the Weekend show,
Speaker 1: And the point that I brought up is that we
Speaker 1: hear so much about daily data cases, worldwide hospitalizations, worldwide
Speaker 1: deaths worldwide. Those are the direct effects of COVID, but
Speaker 1: the the indirect effects of COVID. I'm wondering how you
Speaker 1: measure the indirect effects that you write about in your story.
Speaker 1: What is the data? What are the data that we
Speaker 1: need to be paying attention to. Well, So part of
Speaker 1: the challenge is that because because of COVID itself, because
Speaker 1: it's a contagious respiratory illness, the gold standard for data gathering,
Speaker 1: which is essentially home visits, so going face to face
Speaker 1: with people UM has largely been suspended, and so a
Speaker 1: lot of data gathering organizations are relying on things like
Speaker 1: phone interviews. Well, in many parts of the world, the
Speaker 1: most powerful person in the household who is usually the
Speaker 1: father is the person who has control of the phone, right,
Speaker 1: So you may not be reaching the most vulnerable members
Speaker 1: of that household. You probably aren't reaching adolescent girls. So
Speaker 1: there are huge gaps in the data. Um. The data
Speaker 1: that we do have shows a pretty dire picture. UM.
Speaker 1: You know, I know you already mentioned this, but it
Speaker 1: shows an uptick uh in adolescent pregnancies, and adolescent pregnancy
Speaker 1: is the number one killer of girls in the developing world,
Speaker 1: of adolescent girls and the developing world. UM. So, so
Speaker 1: that's a pretty significant problem. Uh. We know that huge
Speaker 1: numbers of young people have gone hungry. We know that
Speaker 1: we've seen increased reports of domestic violence, uh and not
Speaker 1: just partner violence, but no violence in the home parents
Speaker 1: of using children, for example. UM. And we know that
Speaker 1: many children have not returned to school after they've dropped out. UM.
Speaker 1: In Kenya, for example, once schools reopened, significantly larger proportions
Speaker 1: of boys than girls returned to the classroom. UM. So
Speaker 1: a lot of these girls are just lost. Um. And still,
Speaker 1: because COVID is an ongoing crisis US, we don't fully
Speaker 1: know just how devastating the impacts are. You know reminder
Speaker 1: that we talked him and I talked about this a lot,
Speaker 1: Um Jill, this idea that this pandemic, you know, you
Speaker 1: really have to think about your community. Uh. It's not
Speaker 1: necessarily those who live next door to you, your neighborhood,
Speaker 1: or who you work with, but it's also your global community.
Speaker 1: Right in terms of getting this under control. UM, just
Speaker 1: got about forty seconds left here. The responsibility of the
Speaker 1: developed world and helping out this is important. It's it's
Speaker 1: very important. So, I mean, one thing the developed world
Speaker 1: can do is as we're funding COVID recovery, to remember
Speaker 1: that we are all deeply connected. The lesson we really
Speaker 1: should have learned during a global pandemic, UM, and so
Speaker 1: making sure that as we are doing a recovery, that
Speaker 1: it is looking beyond our borders, and that we're making
Speaker 1: sure that we invest uh in girls and women and
Speaker 1: the people that have really borne the largest front of
Speaker 1: this pandemic, not just physically but also economically and terms
Speaker 1: of development. All Right, we're gonna leave it on that note, UM, Jill,
Speaker 1: thank you so much. Really an important read, uh and
Speaker 1: some great reporting. UM Jill Philippovich. She is a Bloomberg
Speaker 1: Business Week freelance writer. This story is in the new
Speaker 1: issue of Bloomberg Business Week magazine. You can get that
Speaker 1: on newsstand at Bloomberg business Week dot com and also
Speaker 1: of course on the Bloomberg Terminal and again catch it
Speaker 1: in our weekends. Yeah, it's a powerful story. It's a
Speaker 1: heart wrenching story. Definitely encourage everyone to check it out again,
Speaker 1: available at Bloomberg dot com, on the Bloomberg Terminal, and
Speaker 1: on newstands. So like, we'll be measuring the impact of
Speaker 1: the pandemic for some time, right, I mean, look at
Speaker 1: just schools in the US. Exactly. All right, you're listening
Speaker 1: to Bloomberg Radio. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: So Tim, if you're under forty, you've never seen a
Speaker 1: hawk is fed? Okay? President company and included me right exactly,
Speaker 1: And this is what our macroman Cameron Cries writes about
Speaker 1: in this column today. This story, by the way, among
Speaker 1: our most read on the Bloomberg terminal. Everyon is macro
Speaker 1: strategist for Bloomberg News. He joins us on the phone
Speaker 1: from Connecticut. You can follow him on Twitter. By the
Speaker 1: way at fifth Rule, Hey Cameron, I got a question
Speaker 1: for you, Um, when was the last time that the
Speaker 1: Federal Reserve exhibited a quote strong commitment to address elevated
Speaker 1: inflation pressures? The question? Right, I think you can you
Speaker 1: can pretty much argue it was. Um. You know, I
Speaker 1: like to think of tightening cycles in two broad categories.
Speaker 1: One is a central bank that's hiking because it quote
Speaker 1: unquote wants to I it wants to adjust the level
Speaker 1: of rate. It's almost in a preemptive fashion. Um. And
Speaker 1: then there's the central bank tighten the titan because they
Speaker 1: have to, which is because inflation is becoming an issue.
Speaker 1: And I certainly think that if you look back to
Speaker 1: two thousand four, two thousand six cycle and then the
Speaker 1: most recent one from the end of through the end
Speaker 1: of UM, both of those were cycles in which the
Speaker 1: Fed hiked because as they wanted to. And characteristics of
Speaker 1: that sort of cycle is that they can guide exactly
Speaker 1: what they're gonna do. They move very deliberately basis points
Speaker 1: to move. They're not trying to shock anybody. They don't
Speaker 1: want to upset the apple cart. Um. If you go
Speaker 1: back to cycle, they hugged very very aggressively with several
Speaker 1: moves of fifty basis points or more, and that sent
Speaker 1: shock waves through the bond market. Um even the cycles
Speaker 1: and ended with a fifty basis point hiked if you
Speaker 1: were forty Really, if you're forty five or below, you've
Speaker 1: never seen the FED hiked by more than basis points.
Speaker 1: So you know, I was thinking about your column when
Speaker 1: you were thinking about how to address the FMC minutes yesterday,
Speaker 1: Cameron and the subsequent market reaction. Why did you write
Speaker 1: this particular column today. Well, I think it's a combination
Speaker 1: of of of a few things. Um. One is that
Speaker 1: they deliberately there were there was a co hoard of
Speaker 1: the committee that deliberately, you know, said that they wanted
Speaker 1: to show the mortket is strong commitment to combating inflation,
Speaker 1: and that's something that hasn't been evident, I mean literally
Speaker 1: in decades UM. And the second, I think is sort
Speaker 1: of the starting point that we're coming from, which is
Speaker 1: really yields or extraordinarily low whether you look at nominal
Speaker 1: treasury yields versus spot inflation, or if you look at
Speaker 1: tips yields, which are more beforeward looking UM measure of
Speaker 1: of real interest rates. There and you have a great
Speaker 1: can I just point out for it's obviously this is
Speaker 1: gonna play so well on radio, but you can go
Speaker 1: to the Bloomberg terminal Blomber dot com. But you've a
Speaker 1: great chart in your story that gives us in perspective
Speaker 1: on yields, right, really yields where we are today versus
Speaker 1: where we are we're twenty years ago. Yeah, I mean
Speaker 1: we've moved up thirty five basis points over the last
Speaker 1: week or so in ten you're real yields, which is
Speaker 1: a pretty big move. We've gone from like minus one
Speaker 1: a leven to minus seventy seven. Um. That's a big move.
Speaker 1: But if you look at the chart, yeah, it doesn't
Speaker 1: even touch the side. It's it's it's it's minuscule. Um.
Speaker 1: I think you can argue more, uh, which is more
Speaker 1: relevant to your average your average listenering, your average investor.
Speaker 1: Is that those extremely negative real real interest rates or
Speaker 1: sort of the foundation for what you might term excessive valuations,
Speaker 1: particularly in riskier areas of the market. You know, the
Speaker 1: speculative stocks that make no money, uh, crypto, the meme stocks, um,
Speaker 1: what have you. And so I think the natural implication
Speaker 1: is if in as the FED does execute a legitimately
Speaker 1: hawkish policy cycle, and and in fairness, the jury remains
Speaker 1: out on that will see how things evolved. But if
Speaker 1: that happens, we could see a very significant move higher
Speaker 1: in real indust rates, and those being the foundation of
Speaker 1: pricing across the risky asset spectrum, could really send I
Speaker 1: think a few shock waves, uh into some of these
Speaker 1: some of these asset and we're already seeing it, certainly
Speaker 1: in some of the more speculative areas of the market.
Speaker 1: So for example, that the NASDA can positive is it's
Speaker 1: you know, it's higher today, but just by one tenth
Speaker 1: of one percent. Do you think that that message that
Speaker 1: was the message that that tech got yesterday, but it's
Speaker 1: somehow not getting it today. I mean, help make the
Speaker 1: connection beyond just a one day of volatility when it
Speaker 1: comes to those high flying tech names. Yeah, I mean
Speaker 1: I think absolutely that it's not just yesterday. I really
Speaker 1: this week. You know, you've seen tech underperformed small caps,
Speaker 1: you've seen growth underperformed value. Those are sort of the
Speaker 1: classic um indications of sort of perceived policy tightening because uh,
Speaker 1: these extraordinarily expensive stocks tech generally um, you know them
Speaker 1: if you will the meme stocks, the innovation stocks, whatever
Speaker 1: you want to call them, a little more specifically, they're
Speaker 1: sort of their priced, uh, you know, kind of discounting
Speaker 1: earnings into the infinite future, you know, today, giving them
Speaker 1: a very high value today. And obviously the higher than
Speaker 1: interest rates go, the more of a discount factor that
Speaker 1: you have to apply in the lower the current present
Speaker 1: value is of those earnings into the into the distant future. Yeah, exactly,
Speaker 1: just and certainly explained some of the pressure that we've seen,
Speaker 1: particularly on some of those higher valued companies. Hey, Cameron
Speaker 1: thinks so much. Karen christ macro strategist at Bloomberg News,
Speaker 1: joining us on the phone in Connecticut. Yeah, but you
Speaker 1: let me drive. Oh no, no, no, no, this is
Speaker 1: not a toy. Please, I'll do the riding revels. I
Speaker 1: don't want to dry. It's good question that drives. This
Speaker 1: is the drive to the globe cimul thing. We'll drive
Speaker 1: up down on Bloomberg Radio. All Right, just about ten
Speaker 1: minutes left in today's trading session, and it's been an
Speaker 1: interesting week already here in still got another day to go.
Speaker 1: We've got that monthly jobs report. Let's get to it.
Speaker 1: The Drive to the close alan Za from founding partner
Speaker 1: in co CEO at i Q Capital with us once
Speaker 1: you get on the phone from Foster City, California. First
Speaker 1: of all, Allen, happy New Year from Tim and me.
Speaker 1: How are you? Hey? I'm doing great, Carol, Happy New
Speaker 1: York to you, and I can tell you thankfully. The
Speaker 1: buildings isn't shaking like a last time. Oh yeah, that's
Speaker 1: yet that small earthquake last time you're on the phone
Speaker 1: with us. Although the markets are shaking. So that's what's
Speaker 1: shaking right now. So doing great? Um? Actually a notice
Speaker 1: that sound terrible. Nice to see a little turbulence and weakness,
Speaker 1: which if you happen to have, you know, a constructive
Speaker 1: longer term view, this is the time to step in
Speaker 1: and increase or consider maintaining. It's not increasing your equity exposure,
Speaker 1: so you know, you get squeaked by this, but yeah,
Speaker 1: buying opportunity, this is this is the time. Though we're mean,
Speaker 1: we're only down, we're only down three on the NASDAC
Speaker 1: year to day. Are you going to expect more buying
Speaker 1: opportunities in the coming weeks and coming months, You never
Speaker 1: know for sure, And of course in the stock pickers
Speaker 1: market as well, some of these stocks, particularly stocks that
Speaker 1: aren't earning anything anytime sooner or interest rate sense of
Speaker 1: work down far more than three UH. If I were
Speaker 1: a long term investor, I would be beginning to dollar
Speaker 1: cost average and being a buyer here. UM. If I
Speaker 1: held stock exposure already, I would not be in a panic.
Speaker 1: I would be looking for eventually the way to increase
Speaker 1: my exposure, particularly to US equities and particularly to growth
Speaker 1: oriented UM US centric businesses, because once we get through
Speaker 1: the stimulus of the pandemic and our economic growth decelerates,
Speaker 1: we are going to get back to the world that
Speaker 1: looked like before two nineteen and twenty, which was a
Speaker 1: slow grinding economy, which was why these large cap tech
Speaker 1: companies that grew despite slow economic global growth still did
Speaker 1: quite well. So that is selectively where you still want
Speaker 1: to be looking equities. It's interesting that you say that, Alan,
Speaker 1: because certainly it's a big part of the conversation has
Speaker 1: been with a trillion dollar tech route that we've seen
Speaker 1: in so many names here in this first week of
Speaker 1: the new year, and so names that have been driving,
Speaker 1: especially those big tech names you know who they are.
Speaker 1: This is an opportunity to maybe get in in at
Speaker 1: a lower valuation. I think so again nibbling. Everyone's gonna say, oh,
Speaker 1: that's balance from Silicon Valley talk in his book. But no,
Speaker 1: that is well where have you added? Where where have
Speaker 1: you or where did you tell people to add? Let's say,
Speaker 1: in the last twenty four hours, people coming, We're saying,
Speaker 1: don't panic. Um right. We think this year US equities
Speaker 1: will once again do better than non US equities, both
Speaker 1: emerging market in international non US development markets because of
Speaker 1: better growth, because of better growth. Yes, in fact, you're
Speaker 1: gonna give me to punch line a different way. We
Speaker 1: think Europe is going to be very weak economically, could
Speaker 1: even go into a recession, and China struggling to grow economically.
Speaker 1: That actually will be forces to keep long term interest
Speaker 1: rates down. I think this rise we're seeing in yields
Speaker 1: is to a degree a head fake. I'll be surprised
Speaker 1: if at the end of the year the ten years
Speaker 1: as high as it is today at one and three
Speaker 1: quarters percent. Therefore, therefore, I am willing to buy large
Speaker 1: growth stocks now. I still would rather be in companies
Speaker 1: that really generate earnings. I hate to say this to
Speaker 1: many companies have recently gone public because they are far
Speaker 1: more sensitive to interest rates, and if that outlook is wrong,
Speaker 1: they will get hurt further. But you're safe play. Then
Speaker 1: you're not buying No, no, um no, that was not
Speaker 1: what I would recommend because you know, obviously the earnings aren't.
Speaker 1: Trying to derive a valuation model when a company doesn't
Speaker 1: have things is incredibly complicated. And again, evaluation is based
Speaker 1: on a discounted cashlow model, and the higher the interest rate,
Speaker 1: the less the value of the dollars five, eight, ten
Speaker 1: years from now. Therefore, the company isn't worth as much
Speaker 1: in my model, and that's why I sell that stock.
Speaker 1: If I'm buying the large capitality names, they're generating earnings
Speaker 1: that can figure out the multiple because I know we're
Speaker 1: going to have you back on uh later this year,
Speaker 1: several times before the end of the year. Give me
Speaker 1: that where you where you think that the yield on
Speaker 1: the ten year is going to be by the end
Speaker 1: of the year. I think it's gonna be aroubum one
Speaker 1: and a half percent of the Yeah. Look, there's two
Speaker 1: different things going on with interest rates. First of all,
Speaker 1: we have all those long term secular things. We had
Speaker 1: slow growth, we had aging populations, in the developed countries,
Speaker 1: which is zero Japan and the US globalization, which is
Speaker 1: still around. We have tremendous technological progress pushing down prices.
Speaker 1: Those are the secular forces. On top of that, glowth
Speaker 1: is going to decelerate as we go through the year.
Speaker 1: And most importantly, there's a tremendous correlation between. It happens
Speaker 1: with the German bond market in the US bond market.
Speaker 1: It's a global bond market. And when Japanese tenure bonds,
Speaker 1: you'll do nothing, and German bonds are yielding the negative,
Speaker 1: people roll into the U s Treasury market. So I
Speaker 1: am not fearful that we're in a wage spiral inflation
Speaker 1: that's going to decimate the bowl market. It's not over.
Speaker 1: So there is no alternative basically to the US. Having
Speaker 1: said that, in your history of investing, have there been
Speaker 1: times where you have aggressively been overweight either your exposure
Speaker 1: to Asia or to Europe or is the US really
Speaker 1: always kind of a guiding light within your portfolio management? No,
Speaker 1: it's it's in the nineties. You come back a long way.
Speaker 1: It was the era of consumption, particularly in China, and
Speaker 1: it was emerging markets in the ninety nitre roaring um.
Speaker 1: So there were times, but in the last decade, US
Speaker 1: pre eminence in equities is it's been very clear, and
Speaker 1: there's no evidence that that should change anytime soon, particularly
Speaker 1: because most countries have very significant problems with their balance
Speaker 1: sheets the governments at least, and the US is a
Speaker 1: more stabilized place of which to invest. So um emerging
Speaker 1: markets haven't yet stabilized to the point that putting tremendous
Speaker 1: amounts of capital that makes a lot of them. Hey, Allen,
Speaker 1: we only have twenty seconds left with you, But um,
Speaker 1: when do you think we're going to get to that
Speaker 1: point what the world looked before? Like? When are we
Speaker 1: passed the omicron? When are when are we looking past
Speaker 1: the virus and just got about We're behind? We're pasted
Speaker 1: Amicron in three months or less, there may be another
Speaker 1: variant coming. Masks are gonna be worn for the next
Speaker 1: two to three years, but god willing, Amicron is evidence
Speaker 1: that the variants are actually getting less virulent, and hopefully
Speaker 1: that mitigates further hospitalizations and deaths. So we will slowly
Speaker 1: evolved back to something like it looked, although masks will
Speaker 1: probably be worn for a few more years. All right well,
Speaker 1: still optimistic and still liking the United States and especially
Speaker 1: when it comes to those large US growth names. Hey Ellen,
Speaker 1: Happy New Year. Nice to check in with you. Alan Zaffron,
Speaker 1: founding partner and co CEO at I e Q Capital
Speaker 1: on the phone from Foster City, California. Good to check
Speaker 1: in with them, and do stay safe. Thanks for listening
Speaker 1: to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
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