Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, plus technology, politics, economics,
Speaker 1: all harnessing the power of Bloomberg Business Week reporters and editors,
Speaker 1: not to mention our hundred journalists and analysts more than
Speaker 1: a hundred and twenty countries. You can download Bloomberg Business
Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot Com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Let me throw out some
Speaker 1: numbers for you. More than eight two thousand hundred coronavirus
Speaker 1: cases they have been reported, with more new cases being
Speaker 1: reported outside China than within the country for the first time,
Speaker 1: highlighting the spread of the epidemic. Now, the first US
Speaker 1: case of the virus was confirmed in Washington State at
Speaker 1: Providence Regional Medical Center in Everett. That hospital is part
Speaker 1: of the twenty five billion dollar Providence St. Joseph Health System,
Speaker 1: which includes fifty one hospitals, more than eight hundred clinics,
Speaker 1: and a hundred fifteen thousand caregivers. Dr Amy Compton Phillips
Speaker 1: is chief clinical officer an executive vice president at Providence St.
Speaker 1: Joseph Health Health, and she joins us on the phone
Speaker 1: from Everett, Washington. UM. Dr Compton Phillips, nice to have
Speaker 1: you here with Jason and myself. So how do you
Speaker 1: now prepare for maybe what's expected in the US and
Speaker 1: what are your expectations for the virus spread here in
Speaker 1: the United States? Thanks so much for asking. Our expectation
Speaker 1: out here is that this virus is now circulating in
Speaker 1: the community and we need to be prepared for for
Speaker 1: in FLUXI patients with symptoms UM. And so that includes
Speaker 1: making sure that that UM all of those access points
Speaker 1: in the community, so doctor's offices, we have express care clinics,
Speaker 1: and Walgreens, we have urgent cares. All of those need
Speaker 1: to be prepared for people with symptoms UM. So we're
Speaker 1: really revving up our capacity not only to take care
Speaker 1: of patients when they come in, but also our online
Speaker 1: capabilities helping people have access to care through phone and
Speaker 1: through video visits so that they can get care from
Speaker 1: home and minimize the risk of transmitting the virus further UM.
Speaker 1: And then in our acute care hospitals we're making sure
Speaker 1: we're prepared not only to keep patients isolated as we
Speaker 1: need to with any person with infections with that can
Speaker 1: be transmitted through respiratory droplets, um, but also who may
Speaker 1: need more intensive care, so with respirators and ventilators and
Speaker 1: and more acute services. So it really is an all
Speaker 1: out attempt to make sure that we're ready and able
Speaker 1: to care for patients should this get significantly out of control.
Speaker 1: So Dr Cometon Phillips, obviously there's a whole lot of information,
Speaker 1: a lot of misinformation out there. Help us understand just
Speaker 1: as sort of human beings in the world, what should
Speaker 1: we be doing. What are you advising folks to do
Speaker 1: to to minimize it, but but also to sort of
Speaker 1: deal with this as this potentially spreads. Sure, well, I
Speaker 1: think the key thing is, right now, don't panic. It's
Speaker 1: one case. Does not mean you know, we have an
Speaker 1: epidemic here in the US. Um, it is like a
Speaker 1: very bad flu bug and people we've been dealing with
Speaker 1: the flu, and nobody is afraid of the flu, right, Um,
Speaker 1: so is this much worse than the flu? I think
Speaker 1: that's what we're trying to understand a little bit. It
Speaker 1: is a more severe version. Um So, it causes very
Speaker 1: similar symptoms. It causes fever, headache, cost shortness of breath.
Speaker 1: Um it's just so far in the statistics out of China,
Speaker 1: which we'll see if they play out here in the States.
Speaker 1: Um that of the people who get this infection about
Speaker 1: get a severe case. Um So it goes from from
Speaker 1: the average flue symptoms to having a cost of severe
Speaker 1: and short espress of severe you actually need supplemental oxygen
Speaker 1: um and in two and a half percent around the
Speaker 1: more between two and three percent of cases, it gets
Speaker 1: so severe causes death. Um So, one in five patients
Speaker 1: getting this infection in China needed needed much more acute treatment.
Speaker 1: And that's significantly worse than the the statistics in most years.
Speaker 1: Um So, it is like a very very virulent proof.
Speaker 1: One of the challenges is that, um, you know, most
Speaker 1: of us don't have antibodies to this version of coronavirus,
Speaker 1: and so being a novel infection, there's not any kind
Speaker 1: of what we would call herd immunity around where people
Speaker 1: are are more resistant to this journ and so and
Speaker 1: you described a little bit of what you guys are
Speaker 1: doing at your facilities. Um. You know, what should people
Speaker 1: expect if they go into a doctor's office or a
Speaker 1: hospital in terms of how they may be quarantined or
Speaker 1: how they may be treated. Yeah, what we have been
Speaker 1: doing up until yesterday is asking about travel history and
Speaker 1: and if you if you have been traveling, We've been
Speaker 1: asking you in h year isolated. If you're traveling and
Speaker 1: have symptoms, we would also um uh put you in
Speaker 1: a specific kind of isolation rooms, including negative pressure rooms,
Speaker 1: so that we could do a test safely and send
Speaker 1: that test off to the CDC UM or or to
Speaker 1: the state departments, depending on where we are, if the
Speaker 1: state department has capacity, UM, so that we could actually
Speaker 1: do this new test for for COVID nineteen UM. That said,
Speaker 1: now that now that we have at least one confirmed
Speaker 1: case in the US, UM, we're working with the CDC
Speaker 1: and with our departments of health in each state to
Speaker 1: say how broadly do we need to be testing patients
Speaker 1: here on the West Coast, which tends to be UM
Speaker 1: ground zero for infections that are coming over from the
Speaker 1: Pacific rim. I mean, have we learned something from treating
Speaker 1: that first patient that you guys, UM that actually was
Speaker 1: in your hospital system. We we have UM We've learned
Speaker 1: a couple of things. One is that in our first patient,
Speaker 1: and now we've treated several patients, but in our first patient, UM,
Speaker 1: he actually didn't quite well for several days and then
Speaker 1: to return for the worst UM. And so we know
Speaker 1: that we can't just we can't just write it off
Speaker 1: and say you're going to be fine. We actually are
Speaker 1: are being a little more cautious and watching people, so
Speaker 1: we know what the natural history of this new disease
Speaker 1: looks like. UM. And the second thing is that we
Speaker 1: were again in conjunction with the CDC and and UM
Speaker 1: several several of our national international experts, UM, we were
Speaker 1: able to get him access to an experimental drugs which
Speaker 1: made a big difference in his care. All Right, listen,
Speaker 1: we really enjoyed UM talking to you and getting UM
Speaker 1: your firsthand experience with all of this. So much appreciated,
Speaker 1: and I know our viewers and listeners appreciated as well.
Speaker 1: Dr Amy Compton Phillips, chief Clinical Officer and Executive vice
Speaker 1: President of Providence St. Joseph Health Health, on the phone
Speaker 1: from Everett, Washington. All right, so to me, this is
Speaker 1: one of the stories of our time. In many ways,
Speaker 1: the expansion of access to different kinds of investments, and
Speaker 1: we talked so much about it. We talked about the
Speaker 1: private markets, the public markets, and and it's really an
Speaker 1: important question as we think about our own retirement, as
Speaker 1: we think about institutional versus retail for yield in a
Speaker 1: low yield environment. Absolutely so, right at the heart of it.
Speaker 1: Uh is in this discussion, as often is, is near
Speaker 1: a case our columnist for Bloomberg Opinion joining us on
Speaker 1: the phone from Washington, d C. And you're great to
Speaker 1: have you back with us. Thanks for having me, Jason.
Speaker 1: All right, so give us the set up here. I
Speaker 1: love the headline, mom and pop should be free to
Speaker 1: skip private equity, which is sort of a provocative statement
Speaker 1: in the sense that private equity really wants these guys.
Speaker 1: And there's also been this sense that retail investors want
Speaker 1: to get a piece of this. You have a little
Speaker 1: bit of a different take. Yeah, I mean, you know,
Speaker 1: there's a yeah, there's a movement now to try to
Speaker 1: democratize private equity. Um. You know, I make an observation
Speaker 1: in the column, which is that you know, if you
Speaker 1: if you say to people, market should be available to everyone.
Speaker 1: You know, everyone should have equal access to market. That
Speaker 1: would be a pretty you know, banal statement in most respect,
Speaker 1: but when it comes to investing, it's hugely controversial because
Speaker 1: we have this idea that we need to put gates
Speaker 1: around certain investments to protect ordinary investors from themselves, because
Speaker 1: they're presumably not sophisticated enough to to have access to
Speaker 1: certain corners of the market. That includes private equity, that
Speaker 1: includes hedge funds and other in other places. The problem
Speaker 1: is that these gates eventually come down. They don't last forever.
Speaker 1: And we're talking now about giving access to ordinary investors
Speaker 1: private equity, which I support, but inevitably what happens is
Speaker 1: these gates come down too long. It takes too long
Speaker 1: for these gates to come down, and they come down
Speaker 1: after everyone else has feasted. And in this case, you know,
Speaker 1: private equity has been usually successful for the last three decades.
Speaker 1: Valuations are very high, and I worry that ordinary investors
Speaker 1: are going to be invited at the party just in
Speaker 1: time to get hurt. Well, that's what I love, you know,
Speaker 1: you know how we kind of look for peaks in
Speaker 1: the market and signs, and I feel like Sam's l
Speaker 1: sold his reat, you know, just ahead of the financial
Speaker 1: a crisis and mortgage melt out were like, all right,
Speaker 1: that was a peak. I do wonder if we talk
Speaker 1: about so much money that has been, um, you know,
Speaker 1: gathered by the private equity firms. We talked about all
Speaker 1: the dry powder that they have, and I do wonder
Speaker 1: if it's you know, a sign also along with the
Speaker 1: reaching out to more regular investors, that maybe it's a
Speaker 1: sign of the pe top I think it is, Carol.
Speaker 1: I mean, there's there's two different ways I think you
Speaker 1: could look at that. One is just objectively at the numbers.
Speaker 1: I mean, you look at the valuations pe there twice
Speaker 1: what they were twenty years ago, UM and also obviously
Speaker 1: relies heavily on leverage, and for the last three decades
Speaker 1: you had this secular trend of interest rates going from
Speaker 1: you know, very very high levels in the in the
Speaker 1: mid to late nineteen eighties to what they are now,
Speaker 1: which is on the floor. And when you take away
Speaker 1: those head winds, it's just difficult to see how private
Speaker 1: equity is going to be able to put up the
Speaker 1: numbers that it has in the past. And when you
Speaker 1: look at projections for private equity going forward, I mean
Speaker 1: there are some some people who think that returns are
Speaker 1: going to be even lower than what you're going to
Speaker 1: get from the S and P, which itself is not
Speaker 1: particularly cheap. But there's also to your point, Carol, there's
Speaker 1: also this mechanism, this is stealing that you know, the
Speaker 1: smart money knows what it's doing and and and when
Speaker 1: it when it owns rich assets, you know, maybe the
Speaker 1: thing to do is to is to dump it on
Speaker 1: unsuspecting ordinary investors. And so there's a feeling that that's
Speaker 1: happening to right. Well, it's interesting too, and here I
Speaker 1: think you point out point this out in your calm
Speaker 1: as well, that not all private equity is created equal
Speaker 1: to and and sort of ripping on your lead with
Speaker 1: your your ground show marks quote about I don't want
Speaker 1: to belong dating club that would have me as a member.
Speaker 1: You know, part of it is which private equity funds
Speaker 1: you could get into, because the really exclusive ones maybe
Speaker 1: they don't want to make room, you know, for other investors,
Speaker 1: because they've got all the money that they need. So
Speaker 1: not everyone's created equal here, right, that's right, And I
Speaker 1: think that's where you really have to distinguish, because you know,
Speaker 1: in private equity and particularly adventure, there's a big difference
Speaker 1: in the distribution of return um if you look at
Speaker 1: if you look at, for example, what the returns of
Speaker 1: the most successful private equity investors get, it's it's it's
Speaker 1: orders of magnitude greater than what the than what sort
Speaker 1: of like the average private equity returns are. And so
Speaker 1: there is also there there is also the feeling that
Speaker 1: as private equity proliferate, as fun proliferate, that to the
Speaker 1: except that they're going to be available to ordinary investors,
Speaker 1: or the ordinary investors are not going to get the
Speaker 1: top of the line access exactly. That's a further problem.
Speaker 1: All Right, we're gonna leave it. They're always good to
Speaker 1: catch up with. You love your columns in Your kids
Speaker 1: are columnists for bloom Grade Opinion, founder of Unison Advisors. Yeah,
Speaker 1: and that's exactly what abortion clinics are facing. They're getting
Speaker 1: nickel and dimed out of business. This is a fascinating story.
Speaker 1: It's my must read in Bloomberg Business Week magazine. Rebecca
Speaker 1: Greenfield is in charge of the diversity coverage here at
Speaker 1: Bloomberg News. This story reported by her and Cynthia Coon's
Speaker 1: Rebecca's here in our Bloomberg Interactive Broker Studio. As I said,
Speaker 1: it is my must read. What's going on here? Thanks
Speaker 1: for having mem Yeah, so we looked into the business
Speaker 1: of being an abortion provider in UM as you know,
Speaker 1: you know, with Donald Trump and the White House and
Speaker 1: a more conservative court, the climate on abortion is definitely changing.
Speaker 1: We wanted to see what does that mean for clinics
Speaker 1: and what is their business like. And so our story
Speaker 1: really digs into really how hard it is to run
Speaker 1: a clinic these days, and not just because of the
Speaker 1: laws or the political climate, but because of the business climate.
Speaker 1: We'll talk to us a little bit more and what
Speaker 1: that means. Yeah, so there are restrictive laws, and those
Speaker 1: laws oftentimes do make it costlier for clinics to operate,
Speaker 1: But then there's the general culture of fear and stigma
Speaker 1: that makes other business owners not really want to work
Speaker 1: with the business of abortion provider. And let me just
Speaker 1: jump in because you do talk about one individual in particular,
Speaker 1: Amy Heckstrom Miller Um, who is I think, in your words,
Speaker 1: de facto legal guardian of the choice movement. But she
Speaker 1: has talked about this abortion tax right, and this talk
Speaker 1: gets into some of the additional costs on running a clinic. Yeah,
Speaker 1: I love that phrase, like she she took, but yeah
Speaker 1: for to her. Listen the abortion tax the way she
Speaker 1: describes it, And what we found is kind of a
Speaker 1: litany of search charges or increased costs or general nuisances
Speaker 1: that make it more expensive to operate just because you're
Speaker 1: in the business of abortion or just because you're an
Speaker 1: abortion provider. So that can be anything from as little
Speaker 1: as your local plumber doesn't want to come work with
Speaker 1: you because he's scared of being targeted by protesters or
Speaker 1: because he doesn't want to work with an abortion provider.
Speaker 1: But we also found some bigger examples of this. So
Speaker 1: we found UM insurance companies dropping abortion clinics or not
Speaker 1: renewing their policies UM from their Business and Compliance insurance
Speaker 1: UM because they I mean potentially because they were fearing
Speaker 1: greater risks that these clinics might face in the giving
Speaker 1: climate that we're in now. And also banks declining loans.
Speaker 1: I mean that's a huge deal. Banks declining loans for
Speaker 1: people who want to open up clinics. It's really hard
Speaker 1: for these clinics, and it's kind of all wrapped up together.
Speaker 1: You know, you can't just say, oh, the bank is
Speaker 1: saying I don't want to be in the business of abortion.
Speaker 1: The bank might be saying that. They might be saying
Speaker 1: that there they don't want to get into the business
Speaker 1: for business reasons, because it is all tied up in
Speaker 1: this stick right right well, because often these are essentially
Speaker 1: even in this globalized world community bankers, you know, they're
Speaker 1: thinking about their other clients and and things like that.
Speaker 1: And as you say, uh, sort of sort of that
Speaker 1: spreading around you and Cynthia Coon's worked on this, it
Speaker 1: feels of a piece with a lot of the work
Speaker 1: she's done and you've done, put it into the context
Speaker 1: of sort of everything else that we're seeing in a
Speaker 1: in a changing world, it feels like, especially around both
Speaker 1: women's health and reproductive health in many ways. Yeah, like
Speaker 1: I said, we definitely came at those through lens. You know,
Speaker 1: people have written about abortion before, we've written about women's
Speaker 1: all before. But we really feel like we're in a
Speaker 1: moment right now, um, where the legislator looks different, where
Speaker 1: the courts look different, where things might actually change, and um,
Speaker 1: there's actually like a long history of these tactics and
Speaker 1: the kind of building to this moment now. So that's
Speaker 1: really where we thought this piece fit in. I wondered
Speaker 1: because you know, we talked earlier this week about a
Speaker 1: couple of stories. Of course this story that's in the magazine,
Speaker 1: but you know, putting together getting your head around. Okay,
Speaker 1: here we are, how many decades since Roe v. Wade, Right,
Speaker 1: And you would think that running a clinic would be
Speaker 1: an easier business to do or easier process. It's not.
Speaker 1: And yet at the beginning of the week we had
Speaker 1: Harvey Weinstein, right, uh, and so the charges against him,
Speaker 1: the verdict um and also doing some time and you know,
Speaker 1: the whole me too movement. We have actually in the
Speaker 1: last couple of years made some progress on that. So
Speaker 1: it's kind of you know, kind of these mixed blessings
Speaker 1: progress on that. And yet when you look at what's
Speaker 1: going on with abortion clinics, we're sliding backward. Yeah, it's
Speaker 1: it's a really dissonant right for this. So next week
Speaker 1: the Supreme Court is hearing um arguments in an abortion
Speaker 1: case that's really similar to an abortion case that they
Speaker 1: heard four years ago. And it's really I mean, it's
Speaker 1: potentially they could decide in the favor against the abortion clinics,
Speaker 1: and yeah, that would be a huge backslide. Basically four
Speaker 1: years ago they had this big victory and then it
Speaker 1: would be a backslide. Um. And then you put that
Speaker 1: against yeah, the whole me too movement, and that's kind
Speaker 1: of a grassroots movement. It's very pressuring companies. Um. We
Speaker 1: saw some movement in the criminal justice system with Harvey
Speaker 1: Winston on Monday, But I think, yeah, it's just this
Speaker 1: disconnect between basically like the laws and the court system
Speaker 1: and what I think grassroots movements are happening now well.
Speaker 1: And public opinion obviously plays into this as well. Was
Speaker 1: so powerful when it came to the Me Too movement
Speaker 1: and the velocity at which that happened obviously with Weinstein
Speaker 1: specifically and all the sort of powerful people who ultimately
Speaker 1: came forward there. But then the way that it that
Speaker 1: it really went viral in a lot of ways. And
Speaker 1: yet as you say, on the other side, in many
Speaker 1: cases that has empowered uh, this other side going the
Speaker 1: other way. Yeah, And we mentioned this this one statistic
Speaker 1: in the story where it's seven out of ten people
Speaker 1: according to a really reason survey, don't want to overturn
Speaker 1: movie weight. Um, so that is the public opinion here,
Speaker 1: of course, there's so much nuance and the abortion debate
Speaker 1: that does that statistic doesn't get at But I still
Speaker 1: think a lot of people would say they want most
Speaker 1: abortion to be legal in many cads. You also talk
Speaker 1: about the role of social media and all of this,
Speaker 1: and that has proved I admit a lot of momentum
Speaker 1: for the anti abortionists. Yeah. I don't know if you guys,
Speaker 1: do you remember we talked about this moment but in
Speaker 1: when those videos came out that purportedly showed Planned Parenthood
Speaker 1: selling um doing illegally selling field body parts and then
Speaker 1: it turned out to be a false claim and edited videos,
Speaker 1: and that moment I remember being such a huge deal.
Speaker 1: It also feels like it was much longer ago than
Speaker 1: to me. But in our story we found how impactful
Speaker 1: that was in the movement. It wasn't just a way
Speaker 1: to get people to kind of rally against or behind
Speaker 1: or for a Planned Parenthood, but it also motivated these
Speaker 1: anti abortion activists to target medical waste companies because they
Speaker 1: were saying, oh, yeah, these medical ways companies do work
Speaker 1: with abortion providers, and if we can get them to
Speaker 1: stop working with abortion providers, it will be really hard
Speaker 1: for those providers to do business. All right, Well, it's
Speaker 1: a really powerful story. Uh, Carol's must read. Uh. And
Speaker 1: further conversation with Rebecca Greenfield on our can show this
Speaker 1: weekend catch that starting Friday night, both an analysis of
Speaker 1: this story and a little more conversation about the impact
Speaker 1: of the Weinstein verdict, another story that Rebecca and her
Speaker 1: team have been falling very closely. She oversees all of
Speaker 1: our managing diversity coverage here at Bloomberg News. Our thanks
Speaker 1: to Rebecca Greenfield. Alright, so mid all the talk of markets.
Speaker 1: Companies continue to roll along, make decisions, People continue to
Speaker 1: come and go, and on the going side, a couple
Speaker 1: of people leaving some key roles over at Apple. And
Speaker 1: when we think about Apple and wanting to know exactly
Speaker 1: what's going on there and what it means, there's only
Speaker 1: one guy for us, that's smart German. He joins us
Speaker 1: from our Los Angeles bureau. I was delighted to catch
Speaker 1: up with him briefly earlier in the week. So Mark,
Speaker 1: tell us what's going on over at Apple that we're
Speaker 1: talking ops and supply chain here. Yeah, Hi, Jason, get
Speaker 1: you two? Yes, so too, Long time operations VPS, which
Speaker 1: is basically the highest level you can be in the
Speaker 1: Apple you know, in the Apple ranks other than a
Speaker 1: senior VP or the CEO, CEO, etcetera. Have left the company.
Speaker 1: One person named Nick for Lenza has retired. The other
Speaker 1: do Go Pasmog is planning to leave later this year
Speaker 1: and discussions about his exit. And they've both been very
Speaker 1: key to the manufacturing and supply chain, like you said,
Speaker 1: around nearly every major Apple product that you can think of.
Speaker 1: So how serious is this? Like, what does it mean?
Speaker 1: How do I read this as an investor? Yeah, this
Speaker 1: isn't the end of the world. This is like Jason said,
Speaker 1: it's the comings and goings of any corporation. People come,
Speaker 1: people go. But these were you know, the two notable
Speaker 1: names internally who who supervised you know, hundreds of people
Speaker 1: and oversaw lots of manufacturing. So it is you know,
Speaker 1: significant front from that standpoint. But does this change anything
Speaker 1: long term for the company? Does this have anything to
Speaker 1: do with the coronavirus of the trade war that's in
Speaker 1: now well? And are you point out in your story,
Speaker 1: which I think is really important for for folks to
Speaker 1: remember and understand, that operations has been the core of
Speaker 1: Tim Cook's Apple, right I mean, this is what has
Speaker 1: really helped this company extend its lead over its rivals
Speaker 1: to expand. This is the cornerstone of the strategy. So
Speaker 1: when people leave in this business, maybe you know, back
Speaker 1: in the day and the Steve jobs Apple, you know,
Speaker 1: people have been like, it's an ops guy, you know,
Speaker 1: don't worry as much about it. But this this is
Speaker 1: the core of the strategy here, yeah, Apple, and it's
Speaker 1: core is operated or run by operations people. I should
Speaker 1: say three of their most senior people on that senior
Speaker 1: executive team come from operations backgrounds. Like you said, Tim
Speaker 1: Cook as an operations guy. His number two, Jeff Williams,
Speaker 1: is an operations guy. They added a new operations person
Speaker 1: to the executive team that sort of replaced Johnny. I've
Speaker 1: on that executive leadership team, Sabby Khan. So this is
Speaker 1: an operations driven company and it's you know, for a
Speaker 1: long time the company, his division for ops hasn't really
Speaker 1: seen much shifting at that top level. But now you're
Speaker 1: seeing two people you know, coming and going in a
Speaker 1: very short period of time. So Mark got to ask
Speaker 1: you from a supply chain perspective, obviously, lots of people
Speaker 1: have been talking about Apple through the lens of the
Speaker 1: coronavirus and the impact there. They've made some changes. We've
Speaker 1: talked to you about it over the last year or so,
Speaker 1: especially in light of the trade war, help us understand
Speaker 1: the impact on supply chain and operations that the coronavirus
Speaker 1: is having. Now. So I think the impact is really
Speaker 1: going to be in the month of March and potentially
Speaker 1: in April. What you're going to start seeing is Apple
Speaker 1: running out of iPhones at a lot of retail stores
Speaker 1: in the United States, Europe, etcetera. So the impact is
Speaker 1: going to be there. But obviously people are now coming
Speaker 1: back to work, things are starting to ramp up, and
Speaker 1: there's about a four to six week lead time, right,
Speaker 1: so you're going to see some impact for the next
Speaker 1: two months. But I think after those two months things
Speaker 1: are going to start being uh, are going to start
Speaker 1: to clear up and things should be fine. But you know,
Speaker 1: there is some concern about the next iPhones. There is
Speaker 1: concerned about some of the engineering work because these things
Speaker 1: are developed hand in hand between Cupertino in China not
Speaker 1: being able to be done. Um. But not not to
Speaker 1: be too optimistic, but I honestly I don't anticipate any big,
Speaker 1: you know, shifts away from the iPhone normal September launch
Speaker 1: time for him because of this at this point. So
Speaker 1: it's not gonna okay, so it's not gonna mess anything
Speaker 1: up ultimately. Longer term here, I really don't think so.
Speaker 1: Uh what we're seeing now were some conferences being canceled.
Speaker 1: Souple was going to hold some sort of you know,
Speaker 1: product launch event in March. I would anticipate that would
Speaker 1: be sort of maybe like a press release situation instead,
Speaker 1: or maybe at a smaller sort of a smaller gathering.
Speaker 1: Other than that, I really don't see a long term
Speaker 1: impact alright. I just want to bring you a red
Speaker 1: headline crossing the Bloomberg right now has to do with
Speaker 1: some of the key Canadian exchanges. Uh TMX exchanges, including
Speaker 1: the t SX the Toronto Stock Exchange have been halted.
Speaker 1: Trading there have been halted due to some technical issues.
Speaker 1: That redhead crossing the Bloomberg just a few minutes ago.
Speaker 1: So we'll bring you more as that develops. But you know,
Speaker 1: obviously an important market, an important series of index the
Speaker 1: technical halt and now it's going to be closed for
Speaker 1: the rest of the day, that's right. Yeah, we're turning
Speaker 1: the t S T s X, t X, t s
Speaker 1: X V excuse me, and t s X Alpha exchanges.
Speaker 1: Technical halt was declared and TMX now saying that the
Speaker 1: technical halt to remain for the rest of the day
Speaker 1: on the t s X the Toronto Stock Exchange. So
Speaker 1: more on that as it develops. Our thanks to Mark
Speaker 1: German out in Los Angeles Tech Reporter bringing us the
Speaker 1: latest and greatest on Apple, as we said, some comings
Speaker 1: and goings as it relates to some top executives there,
Speaker 1: and a nice update from Mark as well on the
Speaker 1: supply chain, because if you think too last week, I
Speaker 1: think was it last week? You know, Apple was really,
Speaker 1: you know, among the first to come out and say
Speaker 1: here's how this is going to affect it being the
Speaker 1: coronavirus our operation, you know, sort of shutting some things down,
Speaker 1: and they talked about lower sales obviously in China right
Speaker 1: because their retail outlets were closed. So it totally makes sense.
Speaker 1: But I do wonder be coming off of US China
Speaker 1: trade war, coming off of the virus. I really do
Speaker 1: think there is a major rethink potentially going on when
Speaker 1: it comes to supply chains around the world. Oh journal, Yeah,
Speaker 1: but you let me drive. Oh no, no, no no, non, please,
Speaker 1: I'll do the right drivel. I want to drive, Just drive, baby,
Speaker 1: it's the questions. Drying. Yea, this is the Drive to
Speaker 1: the Globe community. Thanks well, Drying us to Dawn on
Speaker 1: Bloomberg Radio. All right, it's time for the Drive to
Speaker 1: the clothes on a Thursday, pretty ugly thursday here on
Speaker 1: the markets. Norm kindly back with us CEO and c
Speaker 1: I O of JAG Capital Management, looking after about one
Speaker 1: and a half billion dollars for clients, joins us on
Speaker 1: the phone from St. Louis, Nor. I'm great to have
Speaker 1: you back with Carol myself. Oh, thank you, so glad
Speaker 1: to be here. All right, So what do you make
Speaker 1: of a week like this? I know we're gonna talk
Speaker 1: about some big caps and some names that you're following,
Speaker 1: But how do you assess this? What are you hearing
Speaker 1: from your clients as they you know, look at so
Speaker 1: much read over the course of this week. Yeah, I
Speaker 1: think it is it is nerve racking. This is this
Speaker 1: has been you know, uh in terms of depths of
Speaker 1: decline compared to you know, historical corrections. And we're not
Speaker 1: that deep at least not at least not yet, but
Speaker 1: over this short of a period of time, it's it's,
Speaker 1: you know, getting to be somewhat unusual. I mean, we're
Speaker 1: you know, after all, I think we were at fifty
Speaker 1: two week highs on there really all time highs in
Speaker 1: the SMP five hundred about a week ago, right. So, uh,
Speaker 1: in just a few trading sessions, we've you know, we've
Speaker 1: fallen quite a bit as the as the fear levels
Speaker 1: of risin UM in terms of you know, uh, you
Speaker 1: know what I'm telling folks, Uh, you know, we've got
Speaker 1: to kind of I think, uh, you know, find a
Speaker 1: balance between you know, um, on the one hand, not
Speaker 1: being complacent about the virus risk, but on the other hand,
Speaker 1: uh not not not going too far in the other
Speaker 1: direction in terms of you know, fear. Uh So it's
Speaker 1: it's an interesting time. If it wasn't uh such an
Speaker 1: unpleasant uh you know backdrop, it would be you know, fascinating.
Speaker 1: So how do you make sense of a normal an environment?
Speaker 1: Though like this? I do wonder is it similar to
Speaker 1: some of the steep selloffs and then bounce backs that
Speaker 1: we've seen I feel like several times over the last
Speaker 1: few years, especially when the market got a little pricey
Speaker 1: or got a little elevated. UM, you know, is it
Speaker 1: similar to that? Is there something different about this one?
Speaker 1: I mean, I think many people safe to say, considering
Speaker 1: the run up that we've had in the past year,
Speaker 1: you know, it was looking four we're we're looking excuse me,
Speaker 1: for some kind of correction to bring valuations more in
Speaker 1: line with what made sense. Yeah, I mean this this,
Speaker 1: while it's unusual, it's it's certainly not um not unique.
Speaker 1: I mean, just to give one example, we had a
Speaker 1: uh back in in the in the late two thousand
Speaker 1: and eight summer of two thousands fifteen, UH, the SMP
Speaker 1: had about a ten percent down draft in in four days. Now,
Speaker 1: if today ends like it is, uh like it looks
Speaker 1: like it's going to uh, this will be at about
Speaker 1: an eleven eleven and a half percent draw down in
Speaker 1: five days. UM. So you know, again it's somewhat unusual,
Speaker 1: but but not unique. UM. And and and here's the
Speaker 1: tricky thing. In the past, as you as you kind
Speaker 1: of allude to, UM, these short, sharp, relatively deep pullbacks,
Speaker 1: unless they occur during you know, an ongoing bear market.
Speaker 1: You know, for example OH eight or early oh nine
Speaker 1: or uh two thousand, two thousand one, two thousand two.
Speaker 1: So with those exceptions, unless it's already unless we're already
Speaker 1: in a bowl market, the tendency over the next you know, uh,
Speaker 1: six months, twelve months has tended to be positive. Returns
Speaker 1: have tended to be positive and actually more positive than
Speaker 1: all other periods of roughly six or twelve months. And
Speaker 1: so talk to us about some names that you're watching
Speaker 1: amid all of this norm Yeah, so, um, you know,
Speaker 1: we've on Mac Microsoft as one of our largest holdings
Speaker 1: for for several years. Microsoft selling off um still you know,
Speaker 1: still not a classically cheap stock, but in terms of
Speaker 1: being extremely well run company that although they may experience it,
Speaker 1: you know, and they told us they're going to experience
Speaker 1: a bit of a slowdown near time in their Windows
Speaker 1: business because of what's happening in China. Um, you know,
Speaker 1: people are still going to use Microsoft software and solutions
Speaker 1: and cloud solutions and Microsoft Office on the I many years.
Speaker 1: I think you know that one looks interesting on further weakness. UM.
Speaker 1: Another one that that we've owned for a while and
Speaker 1: and really like it as kind of a a thought
Speaker 1: leader in retail, uh is Lulu Lemon, which I'm talking
Speaker 1: to you now. Um, you know, it's off about seven
Speaker 1: percent today and and you know, my my educated guess
Speaker 1: is it's related to their China exposure because that is a, um,
Speaker 1: you know, a material part of Lulu's UM growth strategy. Yeah,
Speaker 1: that's been a huge effort over the past few years.
Speaker 1: We wrote a story about that in the magazine late
Speaker 1: last year and that was a really big push, especially
Speaker 1: when their private equity owner, their former private equity owner, Advent,
Speaker 1: came back in right right, right, yeah. So so we
Speaker 1: like the management, we like their strategy. Um you know,
Speaker 1: we like their strategy with men'swear so to a certain extent.
Speaker 1: And I don't know this to be the case, but
Speaker 1: you know, as I look at my screen with several
Speaker 1: hundred tickers on it, you can see that those with
Speaker 1: the Chinese exposure, either actual or perceived, um you know,
Speaker 1: getting getting getting hit a bit, maybe more than than
Speaker 1: most of the other types of names. So um, so
Speaker 1: I think you know, you know, I'm not pound of
Speaker 1: the table, like I said, we have to draw you know,
Speaker 1: a healthy balance between respecting what's going on and and
Speaker 1: and not being complecent. Well, I forgive me if I
Speaker 1: can just break in because we are seeing stocks take
Speaker 1: another leg down. We are definitely at our loads of
Speaker 1: the session. We are now down officially a correction ten
Speaker 1: percent on the week for the Dow, the NASTAC, and
Speaker 1: the SNP five hundred of thousand points one thy one points,
Speaker 1: one thousand, twenty eight points lower on the Dow Jones
Speaker 1: Industrial Average, so we're down almost three point nine percent,
Speaker 1: down almost three point nine percent as well on the
Speaker 1: S and P five hundred. We are below three thousand
Speaker 1: on the s n P five hundred, and the NASDAC
Speaker 1: now looking at a decline of more than four percent,
Speaker 1: down three d sixty eight points. So you know, this
Speaker 1: is two here, We've got roughly less than five minutes
Speaker 1: left to the closing belt and we're selling into the close.
Speaker 1: So norm, I mean, that's not a sign you want
Speaker 1: to see. You want to see a little bit of
Speaker 1: a bounce back. Yeah, we saw that a little bit
Speaker 1: earlier today. And my good uh good friends, a long
Speaker 1: time subscriber of the Spoke Investments and they just they
Speaker 1: just tweeted that, Uh, the SMP is only declined ten
Speaker 1: in a week four other times since the end of
Speaker 1: World War two. UM April two thousand, September two thousand one,
Speaker 1: Octo October two thousand eight, and guess what October. So
Speaker 1: three of those other four instances were you know, in
Speaker 1: the midst of ongoing either at the beginning of or
Speaker 1: in the midst of ongoing bear markets. And this is, uh,
Speaker 1: this is kind of a standout. Yeah, absolutely, well, yes,
Speaker 1: certainly is standing out for all of us. Norm kindly,
Speaker 1: thank you so much for your time. Is always CEO
Speaker 1: and ce IO of Jack Capital Management, joining us on
Speaker 1: the phone from St. Louis. Thanks for listening to Bloomberg
Speaker 1: Business Week. You can subscribe to the podcast on iTunes, SoundCloud,
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