WEBVTT - Surveillance: Covid Communication Efforts 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz. Daily we bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com, 0:00:23.920 --> 0:00:29.760 and of course on the Bloomberg terminal. This is not 0:00:29.840 --> 0:00:32.440 only the Interview of the day, the Interview of the month, 0:00:32.479 --> 0:00:35.720 but indeed I would suggest this is the conversation of 0:00:35.800 --> 0:00:39.080 the summer. It was long ago and far away where 0:00:39.080 --> 0:00:43.240 a radiologist from Mount Sinai came into my studios through 0:00:43.280 --> 0:00:46.720 on the ground some X rays from Wuhan and said, Tom, 0:00:46.760 --> 0:00:51.159 this is serious. That is followed with medical people worldwide 0:00:51.400 --> 0:00:55.840 helping Bloomberg Surveillance to understand this horrific pandemic. Nowa it 0:00:55.960 --> 0:00:59.800 is time for education with leadership in the first founding 0:00:59.800 --> 0:01:03.200 partner at Verizon, Hans Westberg joins us, the chairman, the 0:01:03.320 --> 0:01:06.440 chief executive officer, and we're thrilled that the woman that's 0:01:06.520 --> 0:01:10.040 making this up, Lisa Sherman of the Acclaim ad Council 0:01:10.120 --> 0:01:13.360 joins us today. Hans. Let me go to you first. Simply, 0:01:13.480 --> 0:01:16.320 you got on board before Apple before Benny off its 0:01:16.360 --> 0:01:20.680 salesforce and said, this matters. Why is Verizon that communicates, 0:01:20.920 --> 0:01:24.440 Why is Verizon helping Lisa Sherman and messaging what we 0:01:24.480 --> 0:01:28.280 need to do on COVID And this says, well, well, 0:01:28.319 --> 0:01:30.440 no one. As you mentioned in the beginning, this is 0:01:31.040 --> 0:01:34.160 unheard of. Pandemic has hit so hard on this count 0:01:34.319 --> 0:01:37.720 and the rest of the world. And of course one 0:01:37.760 --> 0:01:40.360 thing that is important, of course the communication around it 0:01:40.440 --> 0:01:44.840 and and raising the awareness and the science around the 0:01:44.920 --> 0:01:47.720 vaccine coming up right now. And we thought that when 0:01:47.800 --> 0:01:51.200 vaccine is coming out, we have a very big responsibility 0:01:51.280 --> 0:01:54.480 as a huge employer and it's a big company to 0:01:54.520 --> 0:01:58.600 be part of that communication about their awareness and also 0:01:58.640 --> 0:02:01.480 about the science around it. This I sup in our 0:02:01.520 --> 0:02:04.280 society that as a government of the information and that 0:02:04.320 --> 0:02:07.400 has been heating most heatd by these pandemics. So for us, 0:02:07.400 --> 0:02:10.200 it was a national to be a founding bout Runce 0:02:10.400 --> 0:02:13.200 Lisa Sherman. My mother sold war bonds. This is a 0:02:13.240 --> 0:02:15.800 few wars ago, and that was started by the AD 0:02:15.840 --> 0:02:19.160 Council in the nineteen forties. I grew up with only 0:02:19.200 --> 0:02:22.120 you can prevent forest fires, and now it's only you 0:02:22.160 --> 0:02:25.280 can prevent COVID. The AD Council has been definitive and 0:02:25.400 --> 0:02:29.400 messaging America. How are you going to message education to 0:02:29.480 --> 0:02:34.000 get the courage to vaccinate in America? Well, first of all, Tom, 0:02:34.000 --> 0:02:36.640 thanks for having me. Uh. We're clearly dealing with the 0:02:36.639 --> 0:02:40.399 biggest public health crisis in our lifetime, and we fundamentally 0:02:40.440 --> 0:02:43.600 knew at the AD Council that we had to launched 0:02:43.680 --> 0:02:48.280 the largest public the public education effort in our history. 0:02:48.480 --> 0:02:53.760 Um So we've recently launched a massive, coordinated communications campaign 0:02:54.200 --> 0:02:58.160 that brings in every every sector in the economy, and 0:02:58.240 --> 0:03:02.440 our focus is really on trying to get people to 0:03:02.560 --> 0:03:07.240 have confidence in the COVID nineteen vaccines, which you know, 0:03:07.280 --> 0:03:09.839 the fact that we have them in such short order 0:03:09.960 --> 0:03:13.600 is is nothing short of of heroic. But at the 0:03:13.680 --> 0:03:17.600 same time, you know, what we're seeing is high levels 0:03:17.720 --> 0:03:22.560 of vaccine hesitancy. Just the data probably pretty current, about 0:03:22.600 --> 0:03:26.280 fifty cent of people right now have either begun the 0:03:26.320 --> 0:03:29.919 process of vaccination, have it at least one of the shots, 0:03:30.880 --> 0:03:34.800 or intend to get vaccinated. The other end of the spectrum, 0:03:34.800 --> 0:03:37.280 you've got about fifteen percent of the people who say 0:03:37.280 --> 0:03:40.040 they're never going to get it. So our focus is 0:03:40.120 --> 0:03:43.640 really to to talk to the thirty five percent of 0:03:43.680 --> 0:03:48.320 Americans who frankly are taking a weight and see attitude. Lisa, 0:03:48.320 --> 0:03:50.560 can you tell us about the nature of that thirty 0:03:50.640 --> 0:03:54.160 five percent? In other words, is there a unifying characteristic 0:03:54.520 --> 0:03:57.200 of individuals in the United States who don't want to 0:03:57.240 --> 0:04:00.680 get the vaccine? You know, we've done a lot of 0:04:00.680 --> 0:04:04.559 work and trying to understand hesitancy, and it's pretty complicated 0:04:04.600 --> 0:04:08.680 and it's very nuanced. You know, it ranges from everything. 0:04:08.720 --> 0:04:11.200 People have a lot of questions and they just want 0:04:11.240 --> 0:04:14.600 answers to their questions. Some of it could be you know, 0:04:14.640 --> 0:04:17.400 how did this happen so quickly? Did people trade off 0:04:18.160 --> 0:04:25.479 um efficacy for speed? Others have longstanding concerns because of inequities, 0:04:25.480 --> 0:04:28.320 and especially in the black and Hispanic communities where there 0:04:28.320 --> 0:04:33.080 have been long standing inequities in the healthcare community. So 0:04:33.120 --> 0:04:37.560 we see higher levels of hesitancy among Black and Hispanic communities. 0:04:37.640 --> 0:04:43.120 We also have begun to see more hesitancy among conservatives. UM. 0:04:43.240 --> 0:04:47.200 These are folks who also have a lot of questions UM. 0:04:47.240 --> 0:04:50.800 And really the common thread I would say, Lisa, is 0:04:50.839 --> 0:04:53.160 that people don't want to be told what to do. 0:04:53.800 --> 0:04:56.760 They want the information, They want to be able to 0:04:56.800 --> 0:04:59.920 ask their questions. They want to feel empowered to make 0:05:00.160 --> 0:05:03.240 decisions with themselves and for their families. So we go 0:05:03.320 --> 0:05:05.640 from the public health side to the business side, and Hans, 0:05:05.640 --> 0:05:08.839 there's a question of mobility and cities of traffic to 0:05:08.880 --> 0:05:11.440 retail stores. You see the nexus of all of this, 0:05:11.600 --> 0:05:14.640 both with mobile data as well as your retail stores. 0:05:14.800 --> 0:05:19.279 Are you seeing people materially increased mobility as vaccinations pick 0:05:19.400 --> 0:05:21.240 up or has it been slower than you would have 0:05:21.240 --> 0:05:26.240 otherwise expected. It was a time in the May last 0:05:26.320 --> 0:05:29.839 year and we measured this sometimes on how mobile people 0:05:29.839 --> 0:05:34.479 are is how the moving in between radio towers, and 0:05:34.560 --> 0:05:37.320 it was done in some of the most urban places 0:05:37.320 --> 0:05:41.280 sixty six, meaning people moved sixty percent less they were 0:05:41.320 --> 0:05:44.599 staying home. That mobility is slowly coming back, and we 0:05:44.640 --> 0:05:47.240 have seen a clear and improvement the loss of the 0:05:47.320 --> 0:05:50.400 months are where as the optimist not coming. But as 0:05:50.440 --> 0:05:52.800 we all know, and the optimism is in the end 0:05:52.839 --> 0:05:54.320 of the tunnel, so we just need to see that 0:05:54.400 --> 0:05:56.760 we get to this first. But clearly we see more 0:05:56.839 --> 0:06:02.240 food traffic in urban areas, more mobility in areas. Right now, Lisa, 0:06:02.279 --> 0:06:03.840 I want to go back to the branding of all 0:06:03.920 --> 0:06:06.920 this you did this advitacount for years. The idea of 0:06:06.920 --> 0:06:09.520 a mind is a terrible thing to waste. The crying 0:06:09.520 --> 0:06:12.320 Indian ad campaign, which I remember clear as a day 0:06:12.600 --> 0:06:15.400 from Earth Day, years and years ago. Can you just 0:06:15.600 --> 0:06:19.560 message now or do you need celebrities? Dolly Parton has 0:06:19.560 --> 0:06:22.800 had the biggest impact so far. Miss Parton was out 0:06:22.800 --> 0:06:26.200 there with her COVID confidence. Do you need celebrities? So 0:06:26.320 --> 0:06:30.719 Hans Vestberg is happy with your program. Well, what I 0:06:30.760 --> 0:06:33.159 will say that, and I mentioned it at the top. 0:06:33.240 --> 0:06:38.320 You know, trust is at the core of hesitancy, and 0:06:38.320 --> 0:06:41.760 and so I think what we have, what we know 0:06:41.880 --> 0:06:45.080 and believe, is that not only is the messaging important, 0:06:45.400 --> 0:06:49.240 but the messenger is also critically important. Who are those 0:06:49.279 --> 0:06:53.239 trusted messengers that each of these hesitant groups really believe 0:06:53.480 --> 0:06:56.719 and trust and feel comfortable with. And so for the 0:06:56.800 --> 0:07:00.839 common thread again, another common thread to Lisa's question is 0:07:00.839 --> 0:07:04.360 that medical experts are at the forefront. They're the number 0:07:04.400 --> 0:07:09.520 one people want to understand from their nurses, pharmacists, have 0:07:09.640 --> 0:07:12.840 they taken it? And then there are amplifiers, those people 0:07:12.880 --> 0:07:15.840 that can allow sort of helpful So I don't mean 0:07:15.880 --> 0:07:18.200 to interrupt because of time, I think your observation is 0:07:18.240 --> 0:07:21.760 so so important here. Franklin Graham set up a set 0:07:21.800 --> 0:07:25.240 of tents on Central Park outside Mount Sinai at the 0:07:25.280 --> 0:07:28.280 beginning of this What do you need from the evangelical 0:07:28.520 --> 0:07:33.080 leadership away from the medical community to get evangelicals and 0:07:33.120 --> 0:07:37.000 conservative Republicans on board? What does he add, Council need 0:07:37.360 --> 0:07:42.560 from Franklin Graham. Look, we've engaged broad based faith faith 0:07:42.640 --> 0:07:47.160 leaders who understand that this is not an either or decision. 0:07:47.360 --> 0:07:51.280 You can have deep faith and believe that the vaccine 0:07:51.360 --> 0:07:54.440 can help you and and free you to get back 0:07:54.440 --> 0:07:58.040 to life um and and and keep your family safe 0:07:58.800 --> 0:08:01.800 hunts hunts. There also a question about the faith in 0:08:01.840 --> 0:08:04.040 a better future, and we're looking at a way to 0:08:04.440 --> 0:08:08.400 track towards a modern era of tech prowess. And before 0:08:08.400 --> 0:08:10.000 we let you go, we have to ask about the 0:08:10.000 --> 0:08:12.920 infrastructure bill that Biden has put together and the five 0:08:13.040 --> 0:08:17.120 G build out in the United States. What's your impression 0:08:17.160 --> 0:08:20.080 of what's laid out in the proposal as it currently is. 0:08:20.120 --> 0:08:22.840 How much will it help get five G roll out 0:08:22.880 --> 0:08:25.480 in a smooth and consistent way across the United States? 0:08:26.240 --> 0:08:28.600 As I think that five years an important piece of it. 0:08:28.640 --> 0:08:31.360 But I think that when we understand where lead from 0:08:31.360 --> 0:08:33.800 five to seven years when it comes to digitalization in 0:08:33.880 --> 0:08:37.199 this country, Taylor Health, remote learning and all of that. 0:08:37.440 --> 0:08:39.760 I think it's important. And there's three pieces that's all 0:08:39.800 --> 0:08:44.520 of the the in front accessibility, a broad band, affordability 0:08:44.640 --> 0:08:48.080 and usability and all these three needs to play together 0:08:48.240 --> 0:08:50.640 in action, the close and the digular divine that when 0:08:51.080 --> 0:08:53.640 open with this leap from with one of the most 0:08:53.640 --> 0:08:57.240 sustainable technologies mobility broad by the clown. So I think 0:08:57.320 --> 0:09:00.439 that's what we what we are talking about and talking 0:09:00.440 --> 0:09:03.239 to the administration about that we need to think holistically 0:09:03.360 --> 0:09:05.640 in order to solve the problem. It's not only one thing, 0:09:05.679 --> 0:09:08.360 but clearly five D is an important piece of it. 0:09:08.640 --> 0:09:11.400 We're rolling out quick and we've ever done before, and 0:09:11.480 --> 0:09:13.679 more than we're ever done before, we have increased our 0:09:13.720 --> 0:09:16.880 called capis again. So this is an important piece for USS. 0:09:17.000 --> 0:09:19.360 Hans Vetsburg, thank you so much for joining us today 0:09:19.400 --> 0:09:22.560 with Verizon and their leadership on this program. And Lisa Sherman, 0:09:22.600 --> 0:09:25.920 good luck on your program. To me, it's absolutely definitive. 0:09:25.920 --> 0:09:28.319 As we go into the end of two thousand twenty one, 0:09:28.360 --> 0:09:31.760 Miss Sherman with the AD Council President and ce Oh 0:09:36.840 --> 0:09:40.079 Katherine Man here for a three hour conversation. She's City 0:09:40.080 --> 0:09:43.600 Group Global Chief Economy is Kathy Man. I really want 0:09:43.600 --> 0:09:47.000 to talk about the locomotive here, that is the US. 0:09:47.160 --> 0:09:50.120 Geta gop and Haff talks about the divergences that are real. 0:09:50.480 --> 0:09:55.520 Are there any trains behind the locomotive and what's the caboose? Well, 0:09:56.000 --> 0:09:57.840 you know, the US is a locomotive. It's the one 0:09:57.880 --> 0:10:01.319 country that's growing faster than everyone else relative to its 0:10:01.360 --> 0:10:05.360 historical experience. So it's the one that is going to 0:10:05.400 --> 0:10:08.840 be running a larger trade deficit over the next year 0:10:08.960 --> 0:10:13.520 or so um and virtually everyone else is either running 0:10:13.520 --> 0:10:16.440 a smaller deficit or running a bigger surplus. So, uh, 0:10:16.520 --> 0:10:19.800 the US is back back on track to be the locomotive. 0:10:20.320 --> 0:10:22.080 The problem is it's not quite as large as it 0:10:22.160 --> 0:10:24.400 used to be relative to the global economy. It's not 0:10:24.520 --> 0:10:27.600 quite as powerful locomotive as it used to be, So 0:10:27.640 --> 0:10:29.240 it's going to be a challenge to get up the hill. 0:10:29.520 --> 0:10:31.640 And there's also a question of how much this really 0:10:31.679 --> 0:10:33.680 brings the rest of the world along with it. And 0:10:33.760 --> 0:10:36.480 that's one of the big disagreements frankly on Wall Street 0:10:36.520 --> 0:10:38.360 that I'm hearing how much just continue to bet on 0:10:38.400 --> 0:10:40.960 the US versus the rest of the world, or to 0:10:41.040 --> 0:10:43.360 bet on other areas that will get carried along. What's 0:10:43.400 --> 0:10:46.080 your view on that? Based on a concept of a 0:10:46.120 --> 0:10:50.480 strengthening dollar given the amount of dollar denominated debt out there, well, 0:10:50.520 --> 0:10:52.840 so emerging markets are the ones who tend to be 0:10:52.920 --> 0:10:55.960 most at risk UM when we're talking about dollar denominated debt. 0:10:56.240 --> 0:10:58.720 But I think it's important to think about the two 0:10:58.760 --> 0:11:01.800 factors that are relevant when thinking about an appreciation of 0:11:01.840 --> 0:11:05.280 the dollar. The first role is that it does and 0:11:05.280 --> 0:11:07.800 and the stronger U s economy that's associated with the 0:11:07.800 --> 0:11:11.280 stronger dollar UM. That is the trade channel, which is 0:11:11.320 --> 0:11:14.760 an important channel bringing in imports, helping economies to grow 0:11:14.760 --> 0:11:18.960 through that channel, relative to the concerns about dollar denominated 0:11:19.000 --> 0:11:21.760 debt and the exposure that countries have when you have 0:11:21.840 --> 0:11:24.440 an appreciation of the dollars, So those two are in 0:11:24.480 --> 0:11:28.480 opposition to one another. What we have found in doing 0:11:28.520 --> 0:11:31.840 some work looking at the Taper tantrum period relative to 0:11:31.840 --> 0:11:34.480 where we are now, is that many more economies are 0:11:34.480 --> 0:11:40.160 in the position of gaining when the dollar appreciates, because 0:11:40.200 --> 0:11:42.960 not only do they have dollar denominated debt, but they 0:11:43.000 --> 0:11:45.880 also have dollar denominated reserves, and so you have to 0:11:45.920 --> 0:11:48.760 consider that as well when thinking about the exposure on 0:11:48.800 --> 0:11:52.280 the financial side. So this is an argument perhaps that 0:11:52.360 --> 0:11:54.800 the rest of the world can come along more than 0:11:54.880 --> 0:11:57.319 some people think. Is that your view here that we're 0:11:57.320 --> 0:12:00.280 going to see an acceleration that picks up speed in 0:12:00.320 --> 0:12:04.080 the emerging markets in perhaps Europe? Perhaps two is the 0:12:04.160 --> 0:12:07.160 U s slows down well, So I think we have 0:12:07.280 --> 0:12:09.480 to consider not you know, the US is not the 0:12:09.520 --> 0:12:12.240 only thing that's in is going to be positive for 0:12:12.280 --> 0:12:15.040 emerging markets. There are a lot of negatives or downside risks, 0:12:15.240 --> 0:12:17.880 and of course that has to do with the vaccination 0:12:18.320 --> 0:12:22.000 path um and how soon those economies can get vaccinated 0:12:22.280 --> 0:12:24.360 and how soon they can get back on track with 0:12:24.480 --> 0:12:28.640 their own internal domestic demand. I mean, that's an important 0:12:28.720 --> 0:12:32.440 ingredient in the growth process for any economy, is domestic demand. 0:12:32.640 --> 0:12:35.960 They can't entirely depend on export led growth. Again, we 0:12:36.040 --> 0:12:38.600 have to remember the US as a locomotive is not 0:12:38.720 --> 0:12:41.720 as strong a locomotive as it used to be, say 0:12:41.720 --> 0:12:45.240 twenty years or four years used to be. In part 0:12:45.280 --> 0:12:47.960 of this, Catherine Man, is whether we are a more 0:12:48.080 --> 0:12:52.280 open or less open economy. Where does the US stand 0:12:52.360 --> 0:12:58.079 right now is an open economy that dynamic to other nations. Well, 0:12:58.120 --> 0:13:01.360 you know, the globalization as as a general rule has 0:13:01.400 --> 0:13:04.360 been on the back foot for more than a decade 0:13:04.520 --> 0:13:07.480 um in terms of their slowing of integration into the 0:13:07.480 --> 0:13:11.680 global economy. There's basically been a generalized slowdown in terms 0:13:11.720 --> 0:13:14.480 of that integration, and the US is no exception from that. 0:13:14.960 --> 0:13:17.360 Uh And, of course, on the back of the last 0:13:17.360 --> 0:13:21.760 administration's approach to trade policy, which was to be very protectionists, 0:13:21.920 --> 0:13:25.880 that of course, uh made the US less open. The 0:13:25.960 --> 0:13:30.080 general tenor of the debate is not towards openness. So 0:13:30.440 --> 0:13:34.720 we have to be concerned about both the politics of 0:13:34.720 --> 0:13:37.800 of of an enlargening trade deficit that we that we 0:13:37.840 --> 0:13:39.960 will see in the data. We have to worry about 0:13:39.960 --> 0:13:43.720 the politics of it leading to potentially even more of 0:13:43.800 --> 0:13:47.320 a retrenchment in terms of globalization. Do we have to 0:13:47.320 --> 0:13:52.040 worry about debt sustainability? Uh So, debt sustainability, it's very 0:13:52.080 --> 0:13:55.280 much a question of whish economies are going to be 0:13:55.320 --> 0:13:57.480 able to grow fast enough to put them on put 0:13:57.520 --> 0:14:01.200 themselves on a sustainable path. Uh So, there's an intimate 0:14:01.200 --> 0:14:05.800 relationship between domestic demand led growth export orientation. For most 0:14:05.840 --> 0:14:08.920 of the world UH and debt sustainability. But in the 0:14:09.040 --> 0:14:12.760 longer term, of course, what really matters for debt sustainability 0:14:12.800 --> 0:14:17.120 is long term capacity or of what we call potential output, 0:14:17.360 --> 0:14:21.400 and that depends intimately on business investment. We've got to 0:14:21.440 --> 0:14:26.400 have business investment being catalyzed by the infrastructure programs that 0:14:26.480 --> 0:14:28.960 the US is talking about, that Europe is talking about, 0:14:29.000 --> 0:14:31.000 that a number of countries are talking about in the 0:14:31.000 --> 0:14:34.520 context of their net zero commitments. Something that is climate 0:14:34.520 --> 0:14:38.840 oriented is going to require private sector investment, and that's 0:14:38.840 --> 0:14:42.280 a critical ingredient, along with of course labor markets and 0:14:42.600 --> 0:14:45.760 UH and and productivity growth. Kiltainman, a few years ago 0:14:45.840 --> 0:14:49.560 at the Massachusetts Institute of Technology, you had the privilege 0:14:49.600 --> 0:14:52.960 of working with Rudy Dornbush. He handed you to the 0:14:53.000 --> 0:14:57.400 Bible as you graduated from m I T tell us 0:14:57.400 --> 0:15:00.640 about the Bible, that the great Rudy Dornbush, and did 0:15:00.640 --> 0:15:04.600 you right? So Rudy was one of my thesis advisors, 0:15:04.920 --> 0:15:07.640 Paul Grupman being the other. And what really gave me 0:15:07.800 --> 0:15:12.960 signed copy of the first edition of Robert Mundel's International 0:15:12.960 --> 0:15:18.160 Economics um and that really represents both both Rudy's his 0:15:18.280 --> 0:15:22.480 first edition, by the way, open economy macro economics which 0:15:22.520 --> 0:15:26.760 integrated goods and markets and asset markets in one place. 0:15:27.040 --> 0:15:30.480 You know that his bible and then of course his 0:15:30.760 --> 0:15:35.600 mentors bible, meaning Robert Mundel's international economics. Those are really 0:15:36.000 --> 0:15:39.960 my bible's today. The continuity of this doctor man is 0:15:40.040 --> 0:15:43.280 absolutely extraordinary. I can think of nowhere else where there's 0:15:43.280 --> 0:15:47.360 such a cadence as there is an international economics. What 0:15:47.520 --> 0:15:54.400 do we think today that Robert Mundel invented fifty years ago? Well, 0:15:54.440 --> 0:15:57.720 you know, the most famous thing that we have been 0:15:57.720 --> 0:16:00.720 working with in the open economy that has his name 0:16:00.760 --> 0:16:05.080 on it is the Mundell Fleming model, which put three 0:16:05.160 --> 0:16:09.520 different markets together, the sort of the I S curve 0:16:09.600 --> 0:16:13.840 meaning the the investment savings part of the economy, the 0:16:13.840 --> 0:16:17.440 monetary policy the so called LM curve, and then the 0:16:17.520 --> 0:16:20.720 open economy meaning balance of payments and how that change 0:16:20.760 --> 0:16:24.320 with regard to exchange rates and external demand. So um, 0:16:24.320 --> 0:16:26.800 those are the three markets that continue to be the 0:16:26.880 --> 0:16:30.120 important ones. How we measure them as different, how we 0:16:30.200 --> 0:16:32.840 think that they work together is different, But those still 0:16:32.880 --> 0:16:37.120 are the drivers of economic performance, and today taken for 0:16:37.160 --> 0:16:41.800 granted and at the time foundationally and revolutionary for Robert 0:16:41.960 --> 0:16:44.440 Mandel dr Man, thank you so much. With City Group, 0:16:44.440 --> 0:16:55.280 their global chief economists, Laureate of Columbia years old, who 0:16:55.280 --> 0:16:58.720 were to do here is really frame where this equity 0:16:58.800 --> 0:17:01.920 market is. And you can do that by looking back 0:17:01.960 --> 0:17:05.040 at decades long ago and far away. On a Friday evening, 0:17:05.080 --> 0:17:08.240 Martin's wide would sit across some LaRue Keiser and he 0:17:08.240 --> 0:17:12.160 would quietly whisper, don't fight the Fed. She was at 0:17:12.280 --> 0:17:16.280 zwag Avatar years ago, Liziene Saunders out of Delaware, and 0:17:16.320 --> 0:17:19.360 of course has become one of our most important equity 0:17:19.480 --> 0:17:23.520 stock market voices across this nation. Lizene Saunders joins us 0:17:23.680 --> 0:17:27.280 this morning from Charles schwab Boy. I'll tell you, Lizie, 0:17:27.280 --> 0:17:31.440 the money that's been lost by people don't fight this Fed. 0:17:31.760 --> 0:17:36.760 They've gotten crushed, haven't they. It really is quite extraordinary, 0:17:36.840 --> 0:17:39.280 and but a lot of people don't remember, since we're 0:17:39.359 --> 0:17:42.880 not all that past the when your anniversary at below 0:17:43.280 --> 0:17:45.600 is that it was actually on Latch twenty third, two 0:17:45.600 --> 0:17:48.960 thousand and twenty that the said announced many of the 0:17:49.119 --> 0:17:52.960 backstop learning facilities they were put in place specifically for 0:17:53.000 --> 0:17:55.640 the pandemic that kind of bridge over to help the 0:17:55.680 --> 0:17:58.840 main street side of the economy, and that just showed then, 0:17:58.880 --> 0:18:01.679 and I think we'll bill are watching the power of 0:18:01.840 --> 0:18:06.359 the Fed's words, even if it predates specific accents. The 0:18:06.480 --> 0:18:10.160 consensus launch of earnings off of grimness a year ago 0:18:10.359 --> 0:18:14.359 is up fifty earnings. What is the liz Ane Saunders 0:18:14.560 --> 0:18:20.080 run rate of actual earnings growth forward? Well, so fifty 0:18:20.080 --> 0:18:22.280 four is for the second quarter, which, of course the 0:18:22.320 --> 0:18:25.359 comp relative to the second quarter of last year is 0:18:25.400 --> 0:18:29.800 the easiest. First quarter consensus is up twenty four, and 0:18:29.960 --> 0:18:33.760 you've got big leadership areas in terms of contributions at 0:18:33.760 --> 0:18:38.840 the sector level consumer discretionary, financial material. So clearly the 0:18:39.040 --> 0:18:42.360 cyclical bias to what you're going to see the biggest 0:18:42.920 --> 0:18:48.240 pops um you know, longer term, we've seen earnings growth 0:18:48.280 --> 0:18:52.719 significantly above GDP growth obviously, but I think the story 0:18:52.840 --> 0:18:57.679 looking ahead will be one potentially about profit margins, and 0:18:57.720 --> 0:19:00.680 I think that's key to watch and list sent two 0:19:00.720 --> 0:19:05.520 in this quarters or first quarter orange season, which begins imminently, 0:19:05.880 --> 0:19:09.560 is what do we hear from companies um, not just 0:19:09.680 --> 0:19:12.880 about first quarter earnings but guidance for the out earnings. 0:19:12.920 --> 0:19:15.880 Do more companies step up their pace of guidance, because 0:19:15.920 --> 0:19:18.600 remember you had a record number of companies with drawing 0:19:18.640 --> 0:19:22.840 guidance altogether at the midpoint of last year. But also 0:19:23.080 --> 0:19:25.600 what many of the price increases that we're seeing in 0:19:25.640 --> 0:19:29.800 this gutting inflation, what that means for profit margins as 0:19:29.800 --> 0:19:32.280 we look to the next couple of quarters. And behind 0:19:32.320 --> 0:19:34.359 this uncertainty is a question of whether we're setting the 0:19:34.359 --> 0:19:36.960 bar too high or the bar too low. And just 0:19:37.000 --> 0:19:39.720 want to bring you this news from CNN that President 0:19:39.760 --> 0:19:43.280 Biden wants all adults vaccinated or at least eligible to 0:19:43.359 --> 0:19:47.320 be vaccinated by April nineteen, again bringing forward the deadline 0:19:47.320 --> 0:19:50.240 originally it was May one this idea of perhaps we 0:19:50.280 --> 0:19:53.159 set our expectations too low at the outset when it 0:19:53.200 --> 0:19:56.360 comes to earning lissans. Are we setting our expectations too 0:19:56.400 --> 0:19:59.320 low or too high? I don't think we know the 0:19:59.359 --> 0:20:02.439 answer to the yet. The latest trends in terms of 0:20:02.720 --> 0:20:07.200 revisions and ostensiblieve that's as as analysts get more guiding 0:20:08.040 --> 0:20:12.160 is for the first quarter we're up to sixty seven 0:20:13.240 --> 0:20:18.080 positive revisions versus negative revisions, So that trend is good. 0:20:18.119 --> 0:20:20.720 But we certainly may get to a point where you 0:20:20.840 --> 0:20:25.400 shift from last year's story of analysts when left basically 0:20:25.400 --> 0:20:28.679 to their own devices to try to gauge where UH 0:20:29.040 --> 0:20:31.960 numbers were going to fall. Ended up bearing on the 0:20:31.960 --> 0:20:34.200 side of setting the bar too low, and that's why 0:20:34.240 --> 0:20:36.119 we had a record beat rate in the second quarter, 0:20:36.160 --> 0:20:38.720 record beat rate in the third quarter, we had a 0:20:38.800 --> 0:20:40.800 strong beat rate in the fourth quarter. In the fourth 0:20:40.840 --> 0:20:44.440 quarter we actually went back into positive territory in year 0:20:44.480 --> 0:20:48.520 over year growth terms. The question is the enthusiasm associated 0:20:48.600 --> 0:20:52.120 with the reopening of the economy that strength were likely 0:20:52.160 --> 0:20:55.360 to see in GDP numbers. UH The analysts now been 0:20:55.440 --> 0:20:58.359 beholden enough that they're going to raise the bar, and 0:20:58.720 --> 0:21:01.560 there's just there's there's no precedent for the kind of 0:21:01.680 --> 0:21:04.280 environment and the nature of this crisis and the impact 0:21:04.320 --> 0:21:09.240 to earnings and visibility even at this stage, regardless of 0:21:09.280 --> 0:21:12.199 what we know about her immunity and vaccine. So I 0:21:12.200 --> 0:21:14.800 think it's it's still really really tricky to try to 0:21:14.840 --> 0:21:17.920 gauge where the bar is set relative to where companies 0:21:17.920 --> 0:21:20.360 are going to report LAS. And there's a wisdom of analysts, 0:21:20.400 --> 0:21:22.600 and then there's a wisdom of markets. And right now 0:21:23.000 --> 0:21:25.960 from the what you can see in markets are equity 0:21:26.000 --> 0:21:29.600 traders pricing in a greater proportion of beats than the 0:21:29.600 --> 0:21:32.560 equity analysts on Wall Street, the idea that they're actually 0:21:32.800 --> 0:21:37.720 foreseeing and pricing in something much more robust. Well, those 0:21:37.760 --> 0:21:42.119 companies that are providing guidance are are quite optimistic, and 0:21:42.160 --> 0:21:45.280 that's where you're seeing the upward revisions. I think analysts 0:21:45.720 --> 0:21:49.320 covering industries or companies where there's still that limited guidance 0:21:49.359 --> 0:21:52.280 and you can think about the obvious areas, whether it's 0:21:52.280 --> 0:21:55.600 in leisure, hospitality, the service society, the economy where they're 0:21:55.640 --> 0:22:00.199 still isn't that visibility or based knowledge yet of the 0:22:00.240 --> 0:22:03.840 reopening is going to look like that's still a prospective thing. 0:22:03.880 --> 0:22:06.239 I think on the good side of the economy, I 0:22:06.320 --> 0:22:09.720 do worry that estimate bar may have gotten up a 0:22:09.760 --> 0:22:11.959 little bit. I think the whole pent up demand story 0:22:12.440 --> 0:22:15.800 which has been driving optimism, I think is more valid 0:22:15.800 --> 0:22:17.840 on the services side of the economy than it is 0:22:17.880 --> 0:22:20.240 on the good side of the economy. Pretty much across 0:22:20.240 --> 0:22:23.800 the spectrum of durable goods, be it um, housing, autos, 0:22:23.880 --> 0:22:29.800 these cars, anything home improvement related electronics UM I actually 0:22:29.880 --> 0:22:32.200 think that there is a risk of pent down demand, 0:22:32.640 --> 0:22:35.080 not so much pent up demand, because we're well above 0:22:35.119 --> 0:22:39.320 pre pandemic levels in those segments. Of the the economy, 0:22:39.440 --> 0:22:42.880 and I think there's too much extrapolating of that strength 0:22:42.920 --> 0:22:45.800 in the past year out into the future. Is that 0:22:45.960 --> 0:22:48.560 one final question, what are we doing with our money? 0:22:48.680 --> 0:22:51.399 What does Schwab see that we're actually allocating out in 0:22:51.440 --> 0:22:55.000 four oh one case. You know, it's been interesting the 0:22:55.320 --> 0:22:58.480 flows lately. They've definitely taken on a little bit more 0:22:58.520 --> 0:23:02.800 of a defensive posture, at least at the subasset class level. 0:23:02.880 --> 0:23:07.360 So the flows into utility utilities are actually the strongest 0:23:07.400 --> 0:23:09.880 in the past months, which is quite extraordinary. And then 0:23:10.320 --> 0:23:13.760 prior hot areas like communications services and financials are on 0:23:13.800 --> 0:23:15.879 the lower end of the spectrum, but also at the 0:23:15.920 --> 0:23:19.280 broader asset class level, definitely seeing a pick up an 0:23:19.280 --> 0:23:22.760 interest outside the US, so positive flows in the map 0:23:23.119 --> 0:23:25.919 past month or so into parts of the rest of 0:23:25.920 --> 0:23:28.600 the world, particularly emerging markets, and actually a bit of 0:23:28.640 --> 0:23:32.760 outflows out of the domestic equity side. And we we've 0:23:32.840 --> 0:23:37.520 had an you know, and overweight on developed international um 0:23:37.800 --> 0:23:41.560