1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along

2
00:00:09,240 --> 00:00:13,080
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jay Ley. We bring

3
00:00:13,119 --> 00:00:17,159
Speaker 1: you insight from the best and economics, finance, investment, and

4
00:00:17,239 --> 00:00:23,280
Speaker 1: international relations. Find Bloomberg Surveillance, an Apple podcast, SoundCloud, Bloomberg

5
00:00:23,360 --> 00:00:29,200
Speaker 1: dot Com and of course on the Bloomberg terminal. Let's

6
00:00:29,200 --> 00:00:31,319
Speaker 1: get to an investor, Homward wars Seat I OT of

7
00:00:31,360 --> 00:00:34,040
Speaker 1: Growth Eanquities at Capelly Funds. How would I start right here?

8
00:00:34,080 --> 00:00:35,960
Speaker 1: From what you've heard? And that can change? But what

9
00:00:35,960 --> 00:00:41,879
Speaker 1: you've heard so far? Is this a game changing for you? A? Right? Jonathan? Um? Well,

10
00:00:41,880 --> 00:00:46,639
Speaker 1: I'll tell you yesterday, Um, I was very optimistic because

11
00:00:46,800 --> 00:00:49,280
Speaker 1: the message that I was getting yesterday was that the

12
00:00:49,360 --> 00:00:53,800
Speaker 1: existing existing vaccines would be fairly efficacious against the new

13
00:00:53,880 --> 00:00:57,440
Speaker 1: variant um and the data that we do have, which

14
00:00:57,480 --> 00:01:03,000
Speaker 1: is at of the country fact of those people over

15
00:01:03,160 --> 00:01:06,720
Speaker 1: the age of twelve, and we're administering about one point

16
00:01:06,760 --> 00:01:10,600
Speaker 1: eight million doses a day, So we have made tremendous progress,

17
00:01:10,880 --> 00:01:14,080
Speaker 1: unfortunately not enough as we should have made, but we

18
00:01:14,120 --> 00:01:15,920
Speaker 1: are on that We're on that path, and so I

19
00:01:15,959 --> 00:01:19,880
Speaker 1: was optimistic. Obviously, the comments out of the Maderna CEO.

20
00:01:20,640 --> 00:01:24,720
Speaker 1: Uh in the ft this morning are alarming, but again, um,

21
00:01:24,760 --> 00:01:27,800
Speaker 1: there is nothing new data wise. It's going to take

22
00:01:27,840 --> 00:01:29,720
Speaker 1: a couple of weeks, I think for them to have

23
00:01:29,760 --> 00:01:33,080
Speaker 1: a good handle on just how good the existing vaccines

24
00:01:33,120 --> 00:01:36,880
Speaker 1: are and how long it will take to develop one

25
00:01:36,920 --> 00:01:40,760
Speaker 1: that's more focused on the omicron variant. Howard Warden, I

26
00:01:41,160 --> 00:01:43,160
Speaker 1: don't think it's I don't think there's enough data to

27
00:01:43,200 --> 00:01:45,360
Speaker 1: support this being a game changer a yet. Howard. You

28
00:01:45,440 --> 00:01:47,760
Speaker 1: know what it means is we have to stay invested

29
00:01:47,800 --> 00:01:50,320
Speaker 1: as well. Do we shift investment and do we shift

30
00:01:50,360 --> 00:01:53,880
Speaker 1: our new investment the marginal dollar we're gonna place here

31
00:01:53,920 --> 00:01:59,280
Speaker 1: with this uncertainty? Does that change? Tom? I don't think so.

32
00:01:59,360 --> 00:02:03,360
Speaker 1: And and uh, of course, you know I started to investor.

33
00:02:03,440 --> 00:02:05,600
Speaker 1: I started working on Wall Street in the nineteen seventies,

34
00:02:05,600 --> 00:02:09,000
Speaker 1: and so I've seen this economy and the stock market,

35
00:02:09,040 --> 00:02:12,960
Speaker 1: whether all kinds of tournaments over the years, and essentially

36
00:02:13,000 --> 00:02:17,079
Speaker 1: every material downturn in the market was a good buying opportunity,

37
00:02:17,440 --> 00:02:19,720
Speaker 1: and I suspect this will be just the same, a

38
00:02:19,760 --> 00:02:23,680
Speaker 1: good buying opportunity for those investors that have the willingness

39
00:02:23,680 --> 00:02:28,040
Speaker 1: and patients to invest for a period of years, and so, uh,

40
00:02:28,280 --> 00:02:31,080
Speaker 1: you know, the focusing on what's going to happen this

41
00:02:31,160 --> 00:02:34,320
Speaker 1: week or next week, it does consume us more than

42
00:02:34,360 --> 00:02:37,760
Speaker 1: it should all too often, and that's hard. It's hard

43
00:02:37,760 --> 00:02:40,320
Speaker 1: to avoid that. But we really do try to focus

44
00:02:40,440 --> 00:02:44,560
Speaker 1: on the long term and really a lot of good

45
00:02:44,600 --> 00:02:47,919
Speaker 1: news that this this economy is very viber and it's

46
00:02:47,919 --> 00:02:50,760
Speaker 1: a technology driven global economy, and there's just so much

47
00:02:50,840 --> 00:02:54,320
Speaker 1: good about that. This is not the nineteen seventies where

48
00:02:54,560 --> 00:03:00,800
Speaker 1: we had you know, percent inflation, uh stagulation, uh sixteen

49
00:03:00,840 --> 00:03:05,880
Speaker 1: percent five year treasuries, thirty year treasuries inflation went from

50
00:03:05,919 --> 00:03:09,160
Speaker 1: five percent to fiftcent a couple of years. That's not

51
00:03:09,680 --> 00:03:15,280
Speaker 1: this economy, and so we've been spoiled and uh, you know,

52
00:03:15,720 --> 00:03:19,040
Speaker 1: so circumstances will change, but this is still an extremely

53
00:03:19,200 --> 00:03:22,320
Speaker 1: vibrat positive economy growing this year and going for the

54
00:03:22,360 --> 00:03:24,959
Speaker 1: next couple of years as far as we can see, well,

55
00:03:24,960 --> 00:03:27,160
Speaker 1: the economy may be vibrant, but you're not seeing that

56
00:03:27,200 --> 00:03:29,400
Speaker 1: reflected in rates. The tenure yield of south of one

57
00:03:29,560 --> 00:03:32,320
Speaker 1: forty three this morning. Do yields have to stay in

58
00:03:32,360 --> 00:03:35,240
Speaker 1: this lower range in order for equities to continue doing

59
00:03:35,240 --> 00:03:36,920
Speaker 1: well in it for a continue to be dips that

60
00:03:36,960 --> 00:03:42,440
Speaker 1: you want to buy. Well, that's a good question, because

61
00:03:42,480 --> 00:03:45,480
Speaker 1: we would anticipate some upward pressure on rates, I think,

62
00:03:45,600 --> 00:03:49,800
Speaker 1: as everyone has been anticipating, given the fact that the

63
00:03:49,800 --> 00:03:53,720
Speaker 1: economy is rebounding strongly from two percent growth last quarter

64
00:03:53,840 --> 00:03:59,240
Speaker 1: to five six seven percent growth this quarter onto a

65
00:03:59,560 --> 00:04:03,440
Speaker 1: probably something with a four percent growth handle next year. Uh.

66
00:04:03,440 --> 00:04:08,040
Speaker 1: And with the Fed beginning to remove the monetary stimulus

67
00:04:08,080 --> 00:04:10,840
Speaker 1: that's been so important stocks and to rate lower rates.

68
00:04:11,240 --> 00:04:14,240
Speaker 1: So yeah, rates should drift higher. Um. If rates go

69
00:04:14,320 --> 00:04:16,440
Speaker 1: back to where they were pre COVID, we're back to

70
00:04:16,520 --> 00:04:20,400
Speaker 1: one or two on a ten year, so up fifties

71
00:04:20,440 --> 00:04:23,159
Speaker 1: sixty basis points. And I think that would be my

72
00:04:23,240 --> 00:04:28,440
Speaker 1: base case scenario over the next three to six months. UM.

73
00:04:28,480 --> 00:04:31,400
Speaker 1: And that's okay, and that that might create some indigestion

74
00:04:31,480 --> 00:04:35,200
Speaker 1: four stocks, but very weather Well, we can certainly deal

75
00:04:35,240 --> 00:04:38,159
Speaker 1: with that. If we're completely wrong on the transitory nation

76
00:04:38,800 --> 00:04:43,320
Speaker 1: nature of this inflation and it becomes more persistent, uh,

77
00:04:43,320 --> 00:04:46,040
Speaker 1: and rates spiked materially higher, you know, three or four

78
00:04:46,120 --> 00:04:51,039
Speaker 1: percent kinds of handles on a note, then uh, yeah,

79
00:04:51,080 --> 00:04:53,080
Speaker 1: that's gonna be a problem for multiple for stocks to

80
00:04:53,160 --> 00:05:00,200
Speaker 1: tak what's the grint for this tree this on with

81
00:05:00,279 --> 00:05:03,479
Speaker 1: something like swell for those of you on radio. I

82
00:05:03,480 --> 00:05:06,160
Speaker 1: mean Farrell took the Howard Ward playbook and it's got

83
00:05:06,200 --> 00:05:08,800
Speaker 1: the cute white lights and the things like what seven

84
00:05:08,800 --> 00:05:11,880
Speaker 1: ft tall? How big is that thing? Howard? Right? You

85
00:05:11,880 --> 00:05:13,479
Speaker 1: know what? I think it looks bigger than it is.

86
00:05:13,520 --> 00:05:22,000
Speaker 1: It's nine Really, if you made in the USA our

87
00:05:22,120 --> 00:05:25,480
Speaker 1: next year. I mean, Mario's got the ugly colored lights going.

88
00:05:25,560 --> 00:05:27,960
Speaker 1: You gotta go with the ugly colored lights like me.

89
00:05:29,200 --> 00:05:31,960
Speaker 1: But it's good to catch that's got a lovely tree.

90
00:05:32,720 --> 00:05:42,520
Speaker 1: Bays Howard Ward of Confetti Funds, Thank you. We got

91
00:05:42,520 --> 00:05:45,600
Speaker 1: the advantage. Now we go to Houston, Texas. Victoria Fernandez

92
00:05:45,640 --> 00:05:47,920
Speaker 1: has the advantage. She gets to work with Robert dolf,

93
00:05:47,960 --> 00:05:51,279
Speaker 1: which is always a wonderful thing. Chief market strategist across

94
00:05:51,320 --> 00:05:55,000
Speaker 1: Mark Global Investments. Victoria, if we get a JP Morgan

95
00:05:55,200 --> 00:05:58,520
Speaker 1: eighty or a hundred or a hundred and ten whatever

96
00:05:58,760 --> 00:06:02,680
Speaker 1: dollars of barrel, you're hardwired to this in Texas. What

97
00:06:02,760 --> 00:06:05,680
Speaker 1: does it mean for America if we get a sustained

98
00:06:05,880 --> 00:06:10,720
Speaker 1: higher oil price? Well, I think you have two fold here, Tom.

99
00:06:10,760 --> 00:06:13,799
Speaker 1: I mean, obviously for the energy companies, they've been looking

100
00:06:13,800 --> 00:06:16,560
Speaker 1: for these prices to go higher. They need that revenue

101
00:06:16,600 --> 00:06:19,080
Speaker 1: to go ahead and put that capex in that you

102
00:06:19,120 --> 00:06:21,480
Speaker 1: guys were just talking about. But we're talking so much

103
00:06:21,520 --> 00:06:23,880
Speaker 1: about inflation and the effects that it's having on the

104
00:06:23,920 --> 00:06:26,919
Speaker 1: consumer and what that's going to mean. Obviously, that is

105
00:06:26,920 --> 00:06:29,920
Speaker 1: where a consumer feels it first and foremost is when

106
00:06:29,960 --> 00:06:32,000
Speaker 1: it comes to oil. I think we have a lot

107
00:06:32,080 --> 00:06:34,440
Speaker 1: of concerns here as to what OPEC plus is going

108
00:06:34,480 --> 00:06:37,039
Speaker 1: to do. We're going to hear from them later this week,

109
00:06:37,240 --> 00:06:40,400
Speaker 1: so we'll see what plays into that along with releasing

110
00:06:40,480 --> 00:06:42,800
Speaker 1: from the reserves. So I think there's a lot of

111
00:06:42,800 --> 00:06:44,960
Speaker 1: balls in the air when it comes to energy right now.

112
00:06:45,000 --> 00:06:46,919
Speaker 1: And just like we're talking about the variant, we have

113
00:06:46,960 --> 00:06:49,200
Speaker 1: to wait and see. Same thing is going to happen

114
00:06:49,200 --> 00:06:53,400
Speaker 1: with energy. Your clientele is a great cross section of

115
00:06:53,480 --> 00:06:56,520
Speaker 1: people out there working at it every day. They've made

116
00:06:56,560 --> 00:06:58,960
Speaker 1: up pot of money whatever, and they go see cross mark,

117
00:06:59,080 --> 00:07:02,279
Speaker 1: I get that. How scared of they of Omicron? How

118
00:07:02,320 --> 00:07:07,039
Speaker 1: scared of they of two thousand twenty two. You know,

119
00:07:07,080 --> 00:07:09,640
Speaker 1: it's interesting. I think this morning, and obviously I haven't

120
00:07:09,680 --> 00:07:11,600
Speaker 1: talked to clients yet this morning, but I think we

121
00:07:11,680 --> 00:07:13,960
Speaker 1: might hear a little bit of a different tone. You

122
00:07:14,000 --> 00:07:17,520
Speaker 1: hear Powell coming out and using that word uncertainty. We

123
00:07:17,640 --> 00:07:20,240
Speaker 1: know the markets don't like that word, so that's gonna

124
00:07:20,240 --> 00:07:23,240
Speaker 1: add some volatility. You have the Maderna CEO coming out

125
00:07:23,440 --> 00:07:25,559
Speaker 1: and saying that things are not going to be good.

126
00:07:25,880 --> 00:07:28,640
Speaker 1: That's going to feed into the psyche of the consumer.

127
00:07:28,960 --> 00:07:31,440
Speaker 1: We've talked many times about how we think the consumer

128
00:07:31,520 --> 00:07:34,680
Speaker 1: is leading this economy right now, and that strength of

129
00:07:34,720 --> 00:07:37,400
Speaker 1: the consumer we need to rely on. So I think

130
00:07:37,400 --> 00:07:39,760
Speaker 1: there's gonna be maybe a little bit more concern from

131
00:07:39,760 --> 00:07:43,000
Speaker 1: an investor perspective. But I think that's where my job

132
00:07:43,040 --> 00:07:44,880
Speaker 1: comes into play, where I need to tell people take

133
00:07:44,920 --> 00:07:47,160
Speaker 1: a step back. As you guys have said all morning,

134
00:07:47,240 --> 00:07:50,080
Speaker 1: we don't have the data yet. Let's not change our

135
00:07:50,160 --> 00:07:53,360
Speaker 1: outlook and our strategy until we know more. Victor, I

136
00:07:53,360 --> 00:07:55,080
Speaker 1: just want to pick up on something the chairman said

137
00:07:55,360 --> 00:07:58,000
Speaker 1: in that pre prepared statement out of his testimony later

138
00:07:58,040 --> 00:08:00,720
Speaker 1: and you picked up on that word uncertainty. The recent

139
00:08:00,880 --> 00:08:03,160
Speaker 1: rise and here's the quote in COVID nineteen cases and

140
00:08:03,200 --> 00:08:05,760
Speaker 1: the emergence of the omicron varium post downside risk to

141
00:08:05,800 --> 00:08:08,880
Speaker 1: employment and economic activity. That's well understood. Then he said

142
00:08:08,880 --> 00:08:12,480
Speaker 1: this and increased uncertainty for inflation. What do you think

143
00:08:12,520 --> 00:08:15,800
Speaker 1: that actually means? Increased uncertainty for inflation? Does that mean

144
00:08:15,880 --> 00:08:18,200
Speaker 1: upside risk to inflation? Does it mean downside risk too?

145
00:08:18,240 --> 00:08:21,440
Speaker 1: What does it mean? I think it's actually an upside

146
00:08:21,520 --> 00:08:24,360
Speaker 1: risk at first, because it's adding to that whole and

147
00:08:24,400 --> 00:08:25,920
Speaker 1: I know we hate to use the word, but it's

148
00:08:25,960 --> 00:08:30,360
Speaker 1: adding to that transitory component. If supply chains do not improve.

149
00:08:30,400 --> 00:08:31,920
Speaker 1: You know, we talked a couple of weeks ago and

150
00:08:31,920 --> 00:08:33,960
Speaker 1: we were saying we think we might be at peak

151
00:08:34,040 --> 00:08:37,199
Speaker 1: supply chain issues. We started to see shipping costs come down,

152
00:08:37,480 --> 00:08:39,760
Speaker 1: We started to see a little bit of um pressure

153
00:08:39,760 --> 00:08:42,880
Speaker 1: being relieved at the ports. If the variant now causes

154
00:08:42,880 --> 00:08:45,800
Speaker 1: people not to go to work, it causes restrictions and shutdowns,

155
00:08:46,000 --> 00:08:48,040
Speaker 1: all of that's going to ramp up again. And that's

156
00:08:48,040 --> 00:08:51,600
Speaker 1: going to lead back into how much of this is transitory?

157
00:08:51,640 --> 00:08:53,640
Speaker 1: What are we looking at for inflation? So I think

158
00:08:53,679 --> 00:08:57,760
Speaker 1: it's an upside concern um in the short term. Longer term,

159
00:08:57,800 --> 00:09:00,760
Speaker 1: I think we're still looking at inflation coming down next

160
00:09:00,840 --> 00:09:03,800
Speaker 1: year to a round three. So how do you position

161
00:09:03,880 --> 00:09:07,920
Speaker 1: then for the medium and longer term Victoria? Yeah? So, Kaylee,

162
00:09:08,000 --> 00:09:10,960
Speaker 1: what we told our clients before last week, and what

163
00:09:10,960 --> 00:09:12,920
Speaker 1: we're going to continue to tell them for now is

164
00:09:12,920 --> 00:09:15,959
Speaker 1: that we need to have that balanced portfolio. We like

165
00:09:16,160 --> 00:09:18,600
Speaker 1: those growth, those tech names that are in there, and

166
00:09:18,640 --> 00:09:20,320
Speaker 1: we don't want to get rid of them, but we

167
00:09:20,400 --> 00:09:22,760
Speaker 1: could trim those and build a little bit more on

168
00:09:22,800 --> 00:09:26,360
Speaker 1: the cyclical component of our portfolio. Some of those consumer

169
00:09:26,480 --> 00:09:29,880
Speaker 1: facing names that here in the fourth quarter would traditionally

170
00:09:29,920 --> 00:09:31,760
Speaker 1: do well, and we think they will once we get

171
00:09:31,800 --> 00:09:35,160
Speaker 1: past the initial reaction of this variant. So names we've

172
00:09:35,160 --> 00:09:39,040
Speaker 1: added like a CBS um, a Walgreens Boots, We've added

173
00:09:39,160 --> 00:09:42,200
Speaker 1: Lulu Women, even a name like pro Logists, which is

174
00:09:42,200 --> 00:09:45,480
Speaker 1: a real um in regards to logistics for shipping. So

175
00:09:45,559 --> 00:09:47,320
Speaker 1: I think you can start looking at some more of

176
00:09:47,320 --> 00:09:51,000
Speaker 1: those cyclical names to balance out your portfolio, especially when

177
00:09:51,040 --> 00:09:54,600
Speaker 1: you see the credit market still holding pretty strong. That's

178
00:09:54,600 --> 00:09:57,360
Speaker 1: a bullish signal for us. Victoria great to catch up

179
00:09:57,440 --> 00:09:59,319
Speaker 1: as always is going to see a Victoria Fernandez, the

180
00:09:59,640 --> 00:10:07,439
Speaker 1: of col smile on this small kid. Yesterday. It was

181
00:10:07,480 --> 00:10:10,480
Speaker 1: a magical day for us within the stress of Amicron

182
00:10:10,559 --> 00:10:12,880
Speaker 1: to speak to Peter Hotez and the good people at

183
00:10:12,960 --> 00:10:15,680
Speaker 1: Johns Hopkins as well, and what it's about is the

184
00:10:15,760 --> 00:10:20,040
Speaker 1: dispersion of our intellectual capital with hotels going from Rockefeller

185
00:10:20,200 --> 00:10:23,920
Speaker 1: University down to Baylor College over the years, or Laurence

186
00:10:24,000 --> 00:10:27,440
Speaker 1: sour of Johns Hopkins going up to Nebraska to the

187
00:10:27,520 --> 00:10:31,200
Speaker 1: first rate program at the University of Nebraska Medical Center.

188
00:10:31,240 --> 00:10:36,840
Speaker 1: And this is really serious adult stuff about special pathogens

189
00:10:36,840 --> 00:10:40,440
Speaker 1: like think ebola as well. Lauren, you are looking at

190
00:10:40,440 --> 00:10:45,839
Speaker 1: an unvaccinated population. My working number is thirteen times greater death.

191
00:10:46,440 --> 00:10:50,360
Speaker 1: Is A Macron a special pathogen that will get this

192
00:10:50,480 --> 00:10:55,280
Speaker 1: nation vaccinated. When we think about special pathogens, we think

193
00:10:55,280 --> 00:10:57,439
Speaker 1: about the tools in our tool kit that allow us

194
00:10:57,480 --> 00:11:00,560
Speaker 1: to treat, to manage, to to save live of the

195
00:11:00,600 --> 00:11:03,360
Speaker 1: patients who get the special pathogens. And I think right

196
00:11:03,400 --> 00:11:05,280
Speaker 1: now we're still waiting to see what's going to happen

197
00:11:05,280 --> 00:11:08,400
Speaker 1: with the vaccines around O. Macron. We know some of

198
00:11:08,400 --> 00:11:11,199
Speaker 1: our tools work, our tests still work, we know masks

199
00:11:11,240 --> 00:11:13,800
Speaker 1: still work, a lot of our treatments will still work

200
00:11:13,800 --> 00:11:16,760
Speaker 1: on O. Macron, and we may need boosters to improve

201
00:11:16,800 --> 00:11:20,360
Speaker 1: our ability to protect people against this new variant. But

202
00:11:20,440 --> 00:11:22,720
Speaker 1: I think right now we can say that getting your

203
00:11:22,800 --> 00:11:27,000
Speaker 1: vaccine is still critically important. An unfair question, but do

204
00:11:27,080 --> 00:11:30,559
Speaker 1: you within all your resources, including back at Johns Hopkins.

205
00:11:30,840 --> 00:11:33,960
Speaker 1: Do you have a timeline of when we'll get these answers?

206
00:11:35,400 --> 00:11:38,320
Speaker 1: I would guess we'll see updates on the vaccine in

207
00:11:38,360 --> 00:11:41,360
Speaker 1: the next couple of weeks. Science updates understanding how the

208
00:11:41,440 --> 00:11:46,199
Speaker 1: vaccine will affect UM, the how how the variant will

209
00:11:46,200 --> 00:11:49,360
Speaker 1: affect the vaccine efficacy UM, and then I would say

210
00:11:49,400 --> 00:11:52,240
Speaker 1: we could see new approvals for a vaccine if it

211
00:11:52,280 --> 00:11:54,360
Speaker 1: has to be updated in the next few months. So

212
00:11:54,400 --> 00:11:56,480
Speaker 1: I would say somewhere between two and four months we'll

213
00:11:56,520 --> 00:11:59,720
Speaker 1: see updates to the vaccine. Science is working around the clock,

214
00:11:59,720 --> 00:12:03,400
Speaker 1: and it's really incredible how fast these changes are happening.

215
00:12:03,440 --> 00:12:07,559
Speaker 1: To manage UM the changes to the virus that we're

216
00:12:07,600 --> 00:12:10,640
Speaker 1: seeing well, and Lauren, we've seen the virus change before.

217
00:12:10,679 --> 00:12:12,920
Speaker 1: We have been here in a similar moment before. We

218
00:12:13,360 --> 00:12:16,080
Speaker 1: maybe are still in it with delta in many places.

219
00:12:16,360 --> 00:12:20,840
Speaker 1: What stops the cycle of this happening again and again? UM,

220
00:12:20,880 --> 00:12:25,439
Speaker 1: Just like Dr Hota said yesterday, getting that vaccine rate high, high,

221
00:12:25,520 --> 00:12:29,120
Speaker 1: high UM, as many people vaccinated as possible is critical

222
00:12:29,160 --> 00:12:33,280
Speaker 1: to stopping and slowing down these UM these new variants.

223
00:12:33,320 --> 00:12:38,319
Speaker 1: So the variants moved through on vaccinated populations easier and UM,

224
00:12:38,400 --> 00:12:41,439
Speaker 1: when we start to see them appear in in populations

225
00:12:41,440 --> 00:12:43,720
Speaker 1: with lower vaccines they can get they can also move

226
00:12:43,760 --> 00:12:47,080
Speaker 1: out of those populations quicker. So getting as many people

227
00:12:47,160 --> 00:12:50,160
Speaker 1: vaccinated as possible as huge. I agree with him. I'd

228
00:12:50,160 --> 00:12:53,200
Speaker 1: love to see here in the US. Not only does

229
00:12:53,240 --> 00:12:56,079
Speaker 1: it protect against the variants, but it also protects against

230
00:12:56,120 --> 00:12:59,920
Speaker 1: the already circulating strains UM and reduces the likelihood of

231
00:13:00,000 --> 00:13:03,720
Speaker 1: severe disease and death. UM. We are seeing unnecessary death.

232
00:13:03,760 --> 00:13:07,040
Speaker 1: We're seeing unnecessary strain on our hospitals and healthcare systems,

233
00:13:07,360 --> 00:13:10,280
Speaker 1: and on our healthcare workers in particular well or And

234
00:13:10,320 --> 00:13:12,640
Speaker 1: it's not just about vaccinations as well, it's also about

235
00:13:12,720 --> 00:13:16,280
Speaker 1: the treatment of people who do end up testing positive

236
00:13:16,280 --> 00:13:20,240
Speaker 1: and getting sick. Do we know anything about the effectiveness

237
00:13:20,240 --> 00:13:23,439
Speaker 1: of treatments. We know that vaccine efficacy can change depending

238
00:13:23,440 --> 00:13:27,720
Speaker 1: on the variant does treatment as well. As of right now,

239
00:13:28,720 --> 00:13:31,560
Speaker 1: it's looking like our treatments will still be useful and

240
00:13:31,679 --> 00:13:35,440
Speaker 1: we still have incredible supportive care here in the United

241
00:13:35,440 --> 00:13:38,120
Speaker 1: States to to treat and take care of patients who

242
00:13:38,200 --> 00:13:41,120
Speaker 1: make their way into the hospital because of covid um

243
00:13:41,400 --> 00:13:45,000
Speaker 1: and the newly developed treatments look like they will continue

244
00:13:45,000 --> 00:13:47,240
Speaker 1: to work against mccran, which is great to hear. It's

245
00:13:47,280 --> 00:13:50,080
Speaker 1: great news. But we are still seeing the development of

246
00:13:50,200 --> 00:13:55,120
Speaker 1: new therapeutics coming down the pike, and UM, those will continue,

247
00:13:55,320 --> 00:13:58,480
Speaker 1: those developments will continue to happen even as new variants

248
00:13:58,520 --> 00:14:01,280
Speaker 1: pop up. For now, those tools still work for us

249
00:14:01,400 --> 00:14:04,559
Speaker 1: and the and the hope is that will keep people

250
00:14:04,600 --> 00:14:09,600
Speaker 1: out of the hospital. UM as the vaccines evolve and develop. Lauren,

251
00:14:09,880 --> 00:14:14,559
Speaker 1: your observation migrating from the East coast out to Nebraska

252
00:14:14,679 --> 00:14:18,760
Speaker 1: with a one point nine percent unemployment rate, what is

253
00:14:18,800 --> 00:14:22,840
Speaker 1: your observation on Olmaha, Lincoln and the rest of it

254
00:14:22,880 --> 00:14:27,160
Speaker 1: out to Cozad and beyond. I love Omaha. I mean,

255
00:14:27,200 --> 00:14:30,640
Speaker 1: I'm so happy whenever I'm there. It's a fantastic city.

256
00:14:30,720 --> 00:14:33,520
Speaker 1: And I think that one of the things that we're

257
00:14:33,560 --> 00:14:37,960
Speaker 1: seeing is that the hospital and healthcare utilization of people

258
00:14:37,960 --> 00:14:40,280
Speaker 1: getting COVID is still really high. So we would like

259
00:14:40,360 --> 00:14:43,600
Speaker 1: to see higher vaccination rates in Nebraska as well. UM.

260
00:14:43,840 --> 00:14:46,960
Speaker 1: And and it is a different it's a different environment

261
00:14:46,960 --> 00:14:51,040
Speaker 1: obviously in Baltimore. UM. I still live in Baltimore, so UM,

262
00:14:51,080 --> 00:14:52,920
Speaker 1: you know, I get, I get a flavor of both.

263
00:14:53,000 --> 00:14:56,000
Speaker 1: But we'd love to see increased vaccination rates in in

264
00:14:56,040 --> 00:14:59,040
Speaker 1: the more rural areas in Nebraska, UM in the city

265
00:14:59,240 --> 00:15:01,680
Speaker 1: and UM through the support of U and MC, there's

266
00:15:01,800 --> 00:15:05,880
Speaker 1: big pushes to get more people vaccinated every single day. Lauren,

267
00:15:05,920 --> 00:15:07,480
Speaker 1: it's been too long. It's always going to catch up

268
00:15:07,480 --> 00:15:09,680
Speaker 1: with you. Lauris sad there at the University of Nebraska

269
00:15:09,720 --> 00:15:18,520
Speaker 1: Medical Center. Thank you very much. This is a joy

270
00:15:18,560 --> 00:15:21,600
Speaker 1: in studio where it's Ian Shepherdson, chief economist and Pantheon

271
00:15:21,920 --> 00:15:25,000
Speaker 1: macro Economics, And what's so important about his focus on

272
00:15:25,320 --> 00:15:30,120
Speaker 1: the United States is also the Pantheon macro Economics expertise

273
00:15:30,560 --> 00:15:34,240
Speaker 1: on China. Craig Bottom doing that this morning in China.

274
00:15:34,320 --> 00:15:37,680
Speaker 1: His morning note talks about the infrastructure push of China,

275
00:15:37,960 --> 00:15:41,280
Speaker 1: and you clearly see a better China than the gloom

276
00:15:41,320 --> 00:15:44,320
Speaker 1: that's out there. Well, yeah, some of the gloom was

277
00:15:44,400 --> 00:15:47,360
Speaker 1: quite extreme. China's got some really big problems, but it's

278
00:15:47,440 --> 00:15:49,360
Speaker 1: it's not, you know, the end of the world. The

279
00:15:50,080 --> 00:15:52,160
Speaker 1: loss of the real estate driven model for growth that

280
00:15:52,200 --> 00:15:55,920
Speaker 1: they've had for so long requires a shift into other areas,

281
00:15:55,920 --> 00:15:57,600
Speaker 1: and infrastructure is clearly going to be one of them.

282
00:15:57,640 --> 00:15:59,760
Speaker 1: So it's very early days, and obviously the real estate

283
00:15:59,800 --> 00:16:01,800
Speaker 1: problems continue to roll on. This is going to be

284
00:16:01,880 --> 00:16:03,880
Speaker 1: with us for a very long time. But China does

285
00:16:03,960 --> 00:16:06,320
Speaker 1: have to find a different growth model to carry it

286
00:16:06,320 --> 00:16:08,760
Speaker 1: through now that it's lost that impetus from from real estate.

287
00:16:08,920 --> 00:16:11,600
Speaker 1: With your wonderful perspective, I think of only Leland Miller

288
00:16:11,640 --> 00:16:14,400
Speaker 1: of China Beije book who really has that dynamic going

289
00:16:14,400 --> 00:16:17,680
Speaker 1: back and forth across the Pacific. How does the Chinese

290
00:16:17,760 --> 00:16:23,560
Speaker 1: dynamics domestically affect your watch of the American economy. It's

291
00:16:23,560 --> 00:16:25,640
Speaker 1: a problem for us in the US because of the

292
00:16:25,680 --> 00:16:28,480
Speaker 1: disruptions that are caused by china zero COVID policies, so

293
00:16:28,640 --> 00:16:32,000
Speaker 1: disrupt the manufacturing, disrupt their logistic chains, disrupt their ports,

294
00:16:32,280 --> 00:16:35,560
Speaker 1: and of course with omicron, potentially they'll clamp down even more.

295
00:16:35,640 --> 00:16:37,680
Speaker 1: China doesn't show any signs of stepping away from that

296
00:16:37,760 --> 00:16:42,320
Speaker 1: zero COVID approach, and that means endless supply disruptions and

297
00:16:42,400 --> 00:16:45,760
Speaker 1: supply chain problems for US manufacturers and businesses seeking to

298
00:16:45,760 --> 00:16:48,520
Speaker 1: import components or finish goods from China. So I don't

299
00:16:48,520 --> 00:16:51,320
Speaker 1: see this going away. It's a primarily a problem of

300
00:16:51,360 --> 00:16:54,400
Speaker 1: the manufacturing sector. It's not the whole U S economy,

301
00:16:54,440 --> 00:16:57,080
Speaker 1: which is enthralled to the problems in China, but it's

302
00:16:57,080 --> 00:17:00,040
Speaker 1: certainly not helpful at the margin, and the omicron I

303
00:17:00,080 --> 00:17:02,160
Speaker 1: would makes things even more difficult to see ahead. And

304
00:17:02,200 --> 00:17:04,240
Speaker 1: that word endless is very different to the word that's

305
00:17:04,240 --> 00:17:06,400
Speaker 1: been used all year transit three. So I just wonder

306
00:17:06,440 --> 00:17:09,520
Speaker 1: a simple question, does the chairman have the time to wait,

307
00:17:09,760 --> 00:17:12,680
Speaker 1: to sit this out and wait? I think it does

308
00:17:13,480 --> 00:17:15,280
Speaker 1: if he gets ahead of what's coming over the next

309
00:17:15,280 --> 00:17:17,439
Speaker 1: few months and preps and markets for what's likely to

310
00:17:17,440 --> 00:17:21,040
Speaker 1: be some really horrible inflation figures for November, December, January,

311
00:17:21,320 --> 00:17:23,840
Speaker 1: then things start to get better. But at the moment,

312
00:17:24,000 --> 00:17:26,200
Speaker 1: the FED kind of seems reactive to these numbers, rather

313
00:17:26,240 --> 00:17:28,199
Speaker 1: than getting out front and saying to markets, hey, it's

314
00:17:28,240 --> 00:17:30,040
Speaker 1: it's going to be bad, it's going to be worse.

315
00:17:30,080 --> 00:17:32,400
Speaker 1: We might even see core inflation, I don't know, six

316
00:17:32,440 --> 00:17:35,600
Speaker 1: and a half percent potentially in February. Then it drops

317
00:17:35,680 --> 00:17:37,920
Speaker 1: very sharply. But it's a question of whether the FED

318
00:17:38,040 --> 00:17:39,920
Speaker 1: is prepared to dig in its heels and say we're

319
00:17:39,920 --> 00:17:41,960
Speaker 1: going to wait for the turn because we know it's coming,

320
00:17:42,840 --> 00:17:44,600
Speaker 1: or whether they feel that they have to respond, maybe

321
00:17:44,640 --> 00:17:46,920
Speaker 1: to take out something that they would call an insurance

322
00:17:46,920 --> 00:17:50,840
Speaker 1: policy against transitory becoming more embedded. That certainly seems to

323
00:17:50,840 --> 00:17:52,359
Speaker 1: be the way that they've gone with the taper, And

324
00:17:52,400 --> 00:17:54,040
Speaker 1: if it weren't for my chron, I'm sure they would

325
00:17:54,040 --> 00:17:56,560
Speaker 1: be doubling the pace at the taper at the December meeting.

326
00:17:56,560 --> 00:17:58,440
Speaker 1: Now now that someone certainly over that, do you think

327
00:17:58,440 --> 00:18:00,520
Speaker 1: they need to do that and to retain that ftionality

328
00:18:00,760 --> 00:18:02,280
Speaker 1: on rate? Do you think they need to go quicker?

329
00:18:02,880 --> 00:18:04,480
Speaker 1: I don't think they. I don't think they have to

330
00:18:04,560 --> 00:18:07,240
Speaker 1: because I'm really quite bullish about inflation in the medium term.

331
00:18:07,359 --> 00:18:08,960
Speaker 1: I very much by the idea that by the end

332
00:18:09,000 --> 00:18:10,760
Speaker 1: of next year we're going to be looking back and saying,

333
00:18:10,840 --> 00:18:13,560
Speaker 1: you know, really, what was all the fuss about, especially

334
00:18:13,560 --> 00:18:15,000
Speaker 1: in the good sector, where I think we'll see a

335
00:18:15,040 --> 00:18:19,879
Speaker 1: really dramatic turnaround. But the FED can't necessarily assume that

336
00:18:19,880 --> 00:18:22,520
Speaker 1: that's guaranteed to happen. And that's where this question of

337
00:18:22,560 --> 00:18:25,359
Speaker 1: taking out an insurance policy, giving yourself some more room

338
00:18:25,400 --> 00:18:28,200
Speaker 1: for maneuver just in case you're wrong, becomes a more

339
00:18:28,240 --> 00:18:30,959
Speaker 1: pressing question. And if it weren't Phar Macron, yeah, they

340
00:18:31,240 --> 00:18:33,040
Speaker 1: taper sooner, and that would open the door to a

341
00:18:33,160 --> 00:18:35,280
Speaker 1: rate I at some point in the second quarter, maybe

342
00:18:35,280 --> 00:18:37,479
Speaker 1: as soon as March that that will that would surprise me.

343
00:18:37,880 --> 00:18:40,560
Speaker 1: I do think that there's still a substantial body of

344
00:18:40,560 --> 00:18:42,440
Speaker 1: opinion within the FED that thinks that they need to

345
00:18:42,480 --> 00:18:44,600
Speaker 1: give it some more time. That they're pretty confident that

346
00:18:44,640 --> 00:18:46,840
Speaker 1: the lobor market is going to fix itself with with

347
00:18:46,960 --> 00:18:49,359
Speaker 1: rising participation over the next few months and ease some

348
00:18:49,400 --> 00:18:51,600
Speaker 1: of that wage pressure, But of course it might not.

349
00:18:52,200 --> 00:18:54,120
Speaker 1: And if it doesn't, then you're looking back saying, well,

350
00:18:54,160 --> 00:18:55,920
Speaker 1: you know, we should have been a bit more aggressive.

351
00:18:55,920 --> 00:18:57,880
Speaker 1: So there's a real balancing act to be made there.

352
00:18:58,480 --> 00:19:00,600
Speaker 1: And you know, right now markets have a pretty firm

353
00:19:00,640 --> 00:19:01,919
Speaker 1: view of the way the FED needs to go, but

354
00:19:02,040 --> 00:19:04,480
Speaker 1: I'm not sure it's quite so clear cut yet. Ian

355
00:19:04,520 --> 00:19:07,160
Speaker 1: does maximum employment that part of the doormandate not need

356
00:19:07,200 --> 00:19:10,600
Speaker 1: to be redefined for a pandemic era economy? Well, this

357
00:19:10,680 --> 00:19:13,120
Speaker 1: is a tricky one because what you know, they've never

358
00:19:13,160 --> 00:19:16,000
Speaker 1: defined maximum employment in very explicit terms. So do they

359
00:19:16,040 --> 00:19:17,960
Speaker 1: mean that the unemployment rate getting back to three and

360
00:19:18,000 --> 00:19:20,320
Speaker 1: a half like it was before COVID. Did they mean

361
00:19:20,359 --> 00:19:23,439
Speaker 1: the employment population ratio returned to where it was before COVID?

362
00:19:23,600 --> 00:19:25,720
Speaker 1: Did they mean the participation rate going back to where

363
00:19:25,720 --> 00:19:28,159
Speaker 1: it was before COVID. They've they've never really said, you know,

364
00:19:28,480 --> 00:19:30,800
Speaker 1: but I think that it's important to appreciate that chap

365
00:19:30,880 --> 00:19:34,440
Speaker 1: Power has been very keen for for a long time

366
00:19:34,480 --> 00:19:37,800
Speaker 1: now about reminding people how good the labor market was

367
00:19:37,840 --> 00:19:39,880
Speaker 1: before COVID and how much he wants to get back

368
00:19:39,880 --> 00:19:42,760
Speaker 1: to something that looks a lot like that before he

369
00:19:42,760 --> 00:19:45,159
Speaker 1: would consider the full employment mandate to have been reached,

370
00:19:45,359 --> 00:19:46,959
Speaker 1: whereas some of his colleagues I think are a bit

371
00:19:47,000 --> 00:19:50,280
Speaker 1: more gung ho, probably because they're more nervous about the

372
00:19:50,320 --> 00:19:53,520
Speaker 1: inflation outlook than the Mr Powell is. And there's a

373
00:19:53,600 --> 00:19:55,560
Speaker 1: very split opinion on the FED. And of course we've

374
00:19:55,560 --> 00:19:57,119
Speaker 1: got empty seats that need to be filled over the

375
00:19:57,200 --> 00:19:58,879
Speaker 1: next few months, so we may well see the balance

376
00:19:58,920 --> 00:20:01,240
Speaker 1: of power shift thing I think in favor of the

377
00:20:01,280 --> 00:20:03,280
Speaker 1: DOES in Washington and maybe away from some of the

378
00:20:03,320 --> 00:20:05,840
Speaker 1: more hawkish regional people. Well, if you game this out

379
00:20:05,840 --> 00:20:08,320
Speaker 1: and take what people have said the potential implications of

380
00:20:08,320 --> 00:20:10,639
Speaker 1: the macron varying, Again, there's things that we don't know,

381
00:20:10,680 --> 00:20:13,639
Speaker 1: but if you have an exacerbating supply side challenges feeding

382
00:20:13,640 --> 00:20:15,840
Speaker 1: into those inflation area dynamics at the same time, it

383
00:20:15,880 --> 00:20:19,400
Speaker 1: may be discourages people from re entering the labor market.

384
00:20:19,480 --> 00:20:21,360
Speaker 1: Will the FED end up in a situation where it's

385
00:20:21,359 --> 00:20:24,240
Speaker 1: forced to react to inflation even if the labor market

386
00:20:24,320 --> 00:20:26,439
Speaker 1: is not where it wants to be. Yeah, this is

387
00:20:26,600 --> 00:20:28,639
Speaker 1: this is now a real risk that that if mccron

388
00:20:28,760 --> 00:20:30,920
Speaker 1: keeps people out of the labor force, who would otherwise

389
00:20:30,960 --> 00:20:34,800
Speaker 1: have come back in easing this supply demand in balance

390
00:20:34,840 --> 00:20:37,800
Speaker 1: that we've got right now with very very high wage growth.

391
00:20:37,880 --> 00:20:40,440
Speaker 1: If if if a macron stops out and balance being

392
00:20:40,640 --> 00:20:43,560
Speaker 1: shifted in favor of more supply, then the wage numbers

393
00:20:43,600 --> 00:20:45,880
Speaker 1: won't slow down in the way that the FED needs

394
00:20:45,920 --> 00:20:48,040
Speaker 1: them to be, and they'll they'll be pushed into being

395
00:20:48,080 --> 00:20:50,399
Speaker 1: more aggressive. But at the moment, you know, this is

396
00:20:50,480 --> 00:20:52,359
Speaker 1: very premature. We don't know. We may find out over

397
00:20:52,359 --> 00:20:54,360
Speaker 1: the next couple of weeks that this is a great

398
00:20:54,400 --> 00:20:57,120
Speaker 1: deal of us about not very much, in which case

399
00:20:57,119 --> 00:20:58,879
Speaker 1: we're back on the on the previous track. We're all

400
00:20:58,920 --> 00:21:01,280
Speaker 1: speculating right now. And the message coming out of the

401
00:21:01,280 --> 00:21:03,439
Speaker 1: OXFID vaccine people is different to the message from the

402
00:21:03,440 --> 00:21:07,240
Speaker 1: madernav accinge people. So nobody, nobody really knows. And I

403
00:21:07,280 --> 00:21:09,400
Speaker 1: do think that the FED has maybe a bit more

404
00:21:09,480 --> 00:21:12,480
Speaker 1: time to deal with this than some people in markets think.

405
00:21:12,480 --> 00:21:14,080
Speaker 1: I don't think the US is on the verge of

406
00:21:14,119 --> 00:21:17,000
Speaker 1: some sort of sustained inflation explosion that I think patients

407
00:21:17,040 --> 00:21:19,240
Speaker 1: is a virtue in central banking most of the time.

408
00:21:19,880 --> 00:21:22,280
Speaker 1: The patients there is a key question in Ian Sheperdson.

409
00:21:22,320 --> 00:21:24,760
Speaker 1: What it comes down to is excellentity exposed. And the

410
00:21:24,840 --> 00:21:26,920
Speaker 1: Latin is they're going to wait for the data. They're

411
00:21:26,960 --> 00:21:30,159
Speaker 1: just gonna wait and wait. How how much does the

412
00:21:30,240 --> 00:21:33,040
Speaker 1: street right now, you know, just as a general statement,

413
00:21:33,160 --> 00:21:37,960
Speaker 1: underestimate their ability to go ex post and wait. Well

414
00:21:38,520 --> 00:21:42,119
Speaker 1: a lot. To me, it's a lot. Yeah, Massive markets

415
00:21:42,119 --> 00:21:44,879
Speaker 1: are markets are very gung home markets. Markets always want

416
00:21:44,920 --> 00:21:46,879
Speaker 1: things to change because volatility is where they make the

417
00:21:46,920 --> 00:21:49,720
Speaker 1: money or lose their money exactly. And the Fed, however,

418
00:21:49,880 --> 00:21:52,000
Speaker 1: you know, is not conducting policy on the basis of

419
00:21:52,040 --> 00:21:54,480
Speaker 1: what might make people more money in markets. It's conducting

420
00:21:54,480 --> 00:21:57,120
Speaker 1: policy on the basis of what's in the national interest.

421
00:21:57,440 --> 00:21:59,280
Speaker 1: And I think that's a strong case to be made

422
00:21:59,640 --> 00:22:01,920
Speaker 1: for way things. See how the labor market pans out

423
00:22:01,920 --> 00:22:04,840
Speaker 1: over the next few months. Most of the structural impediments

424
00:22:04,880 --> 00:22:09,639
Speaker 1: to rising participation have diminished. Now, schools are reopened, childcares reopened,

425
00:22:09,680 --> 00:22:12,760
Speaker 1: the extended benefits are all over. A COVID fear until

426
00:22:12,800 --> 00:22:15,400
Speaker 1: on Acron maybe was fading away. So it's very reasonable

427
00:22:15,440 --> 00:22:16,800
Speaker 1: to think that we're going to see a big rush

428
00:22:16,800 --> 00:22:18,480
Speaker 1: of people back into the labor force and ease some

429
00:22:18,520 --> 00:22:20,879
Speaker 1: of those pressures. And if the FED, you know, it

430
00:22:20,960 --> 00:22:23,600
Speaker 1: turns out to be wrong and those pressures don't ease, well,

431
00:22:23,600 --> 00:22:25,560
Speaker 1: there's maybe lost three or four months, which which I

432
00:22:25,680 --> 00:22:28,320
Speaker 1: very much doubt would be a medium term game changer.

433
00:22:28,560 --> 00:22:30,600
Speaker 1: And I think it's also important to people remember that

434
00:22:30,720 --> 00:22:34,560
Speaker 1: using monaschy policy to deal with something which is driven

435
00:22:34,560 --> 00:22:37,440
Speaker 1: by a shock, the COVID shock, is the wrong response

436
00:22:37,440 --> 00:22:39,960
Speaker 1: because policy works with a twelve to eighteen month lag

437
00:22:40,400 --> 00:22:42,680
Speaker 1: that's far longer than the time frame that I think

438
00:22:42,760 --> 00:22:45,320
Speaker 1: is reasonable to expect some of these COVID shocks to diminish.

439
00:22:45,320 --> 00:22:48,080
Speaker 1: So you end up doing something which which which proves

440
00:22:48,080 --> 00:22:51,439
Speaker 1: to be a mistake, unless, of course you're wrong and

441
00:22:51,480 --> 00:22:54,080
Speaker 1: those labor market pressures don't go away. But at the moment,

442
00:22:54,119 --> 00:22:55,840
Speaker 1: it's too early to make that judgment, and I think

443
00:22:55,880 --> 00:22:58,159
Speaker 1: they have more time than markets want to believe. I

444
00:22:58,200 --> 00:23:00,359
Speaker 1: do wint to drown in semantics here, I do think

445
00:23:00,400 --> 00:23:02,359
Speaker 1: the following is important, and isn't there an argument that

446
00:23:02,400 --> 00:23:05,920
Speaker 1: actually now they're more forecast dependent than they are data dependent,

447
00:23:06,520 --> 00:23:08,359
Speaker 1: that if you think about it, what they are relying

448
00:23:08,359 --> 00:23:11,000
Speaker 1: on is their own forecast. The data itself, the incoming

449
00:23:11,000 --> 00:23:13,960
Speaker 1: economic data, is already telling them that they're wrong and

450
00:23:13,960 --> 00:23:17,600
Speaker 1: they have been wrong. Well, certainly the current inflation rate

451
00:23:17,680 --> 00:23:19,879
Speaker 1: and the inflation right over the next few months is

452
00:23:19,880 --> 00:23:22,080
Speaker 1: going to generate a lot more horrible headlines, and no

453
00:23:22,160 --> 00:23:24,480
Speaker 1: question about that. But of course it's it's not the

454
00:23:24,520 --> 00:23:27,240
Speaker 1: job of monetary policy to try and fix today's headlines

455
00:23:27,400 --> 00:23:30,159
Speaker 1: or tomorrow's headlines. It's a job of monetary policy to

456
00:23:30,200 --> 00:23:33,960
Speaker 1: fix the headlines in twelve to eighteen months time. Sometimes

457
00:23:33,960 --> 00:23:36,360
Speaker 1: today's headlines carry a lot of information about what they're

458
00:23:36,400 --> 00:23:38,120
Speaker 1: going to look like in twelve to eighty months time.

459
00:23:38,440 --> 00:23:41,480
Speaker 1: But if you've got a shock rather than an economic

460
00:23:41,520 --> 00:23:44,280
Speaker 1: cycle that is generating the inflation numbers, then it's different.

461
00:23:44,320 --> 00:23:46,159
Speaker 1: And it may well be that today's headlines are a

462
00:23:46,240 --> 00:23:48,359
Speaker 1: terrible guide toward inflation will look like in twelve to

463
00:23:48,400 --> 00:23:50,879
Speaker 1: eighteen months time, and therefore you shouldn't use them to

464
00:23:51,000 --> 00:23:55,120
Speaker 1: drive policy. But the problem, of course is that if

465
00:23:55,160 --> 00:23:58,200
Speaker 1: you're wrong, then you find yourself in a much worse

466
00:23:58,240 --> 00:24:00,480
Speaker 1: position in twelve to eighteen months. I mean you have

467
00:24:00,560 --> 00:24:02,560
Speaker 1: to scramble the catch up to do what maybe you

468
00:24:02,560 --> 00:24:06,000
Speaker 1: should have done much earlier. But we don't have perfect foresight.

469
00:24:06,200 --> 00:24:09,320
Speaker 1: We have a great deal of uncertainty. I think they

470
00:24:09,359 --> 00:24:10,840
Speaker 1: can afford to wait a little bit longer. Are you

471
00:24:10,840 --> 00:24:14,440
Speaker 1: talking about newcast? I'm trying not to talk about every

472
00:24:14,440 --> 00:24:16,639
Speaker 1: time you said a shocking and I was thinking Newcastle

473
00:24:16,680 --> 00:24:20,160
Speaker 1: thirteen games, not a single win, facing relegation, a new owner,

474
00:24:20,200 --> 00:24:22,240
Speaker 1: they want to spend in a couple of months, can

475
00:24:22,280 --> 00:24:24,160
Speaker 1: they can they get this done? Can they stay up?

476
00:24:24,800 --> 00:24:26,760
Speaker 1: I think it's it's fifty fifty. I mean there's been

477
00:24:26,760 --> 00:24:28,800
Speaker 1: a different improvement under the new manager, but he's only

478
00:24:28,800 --> 00:24:30,480
Speaker 1: had two games, so I think we have to give

479
00:24:30,560 --> 00:24:32,800
Speaker 1: him bit of a chance to do. You two guys,

480
00:24:32,800 --> 00:24:34,359
Speaker 1: and we could go all day on this. But to

481
00:24:34,440 --> 00:24:38,080
Speaker 1: the two of you, is this another like men you

482
00:24:38,280 --> 00:24:41,040
Speaker 1: waiting to happen where a gazillion dollars is going to

483
00:24:41,119 --> 00:24:44,560
Speaker 1: come in and completely change what you want. If I

484
00:24:44,560 --> 00:24:46,600
Speaker 1: pick up the phone and say here's a gazillion dollars,

485
00:24:46,600 --> 00:24:48,320
Speaker 1: do you want to play for Manchester United. A lot

486
00:24:48,359 --> 00:24:51,000
Speaker 1: of people might say, sure, Tom, I'll join you. If

487
00:24:51,040 --> 00:24:52,359
Speaker 1: I pick up the phone and you say, here's a

488
00:24:52,400 --> 00:24:55,359
Speaker 1: gazillion dollarge. You've got to spend one year potentially in

489
00:24:55,400 --> 00:24:57,720
Speaker 1: the league below the Premier League next year because we

490
00:24:57,800 --> 00:25:01,199
Speaker 1: might get relegated Ian that's a different proposition. You've got

491
00:25:01,240 --> 00:25:05,040
Speaker 1: two massive gains coming up in Owich and Burnley. That's

492
00:25:05,040 --> 00:25:08,200
Speaker 1: a relegation fight. Think about January and when they want

493
00:25:08,240 --> 00:25:10,560
Speaker 1: to spend that money. You want to rebuild this business,

494
00:25:10,680 --> 00:25:13,399
Speaker 1: this football club. How easy is it going to be

495
00:25:13,480 --> 00:25:16,119
Speaker 1: to attract the talent in January? If we lose the

496
00:25:16,200 --> 00:25:18,200
Speaker 1: next two games, it's going to be extremely difficult because

497
00:25:18,240 --> 00:25:21,040
Speaker 1: we'll be really, really adrift and we'll be looking very

498
00:25:21,040 --> 00:25:23,439
Speaker 1: doomed and and you know, no big star is going

499
00:25:23,480 --> 00:25:25,800
Speaker 1: to come and want to play, you know, in Stoke

500
00:25:25,840 --> 00:25:28,359
Speaker 1: on a Wednesday night in January, that's for sure. I

501
00:25:28,400 --> 00:25:31,239
Speaker 1: have no idea what that means. Are you are you?

502
00:25:31,880 --> 00:25:35,800
Speaker 1: Are you the only one who actually cries watching deadlers?

503
00:25:35,880 --> 00:25:41,520
Speaker 1: So are you the only one watching a new Customers

504
00:25:42,000 --> 00:25:44,119
Speaker 1: has been a source of misery in my life for

505
00:25:44,160 --> 00:25:47,040
Speaker 1: the last forty years, another couple of years. I mean,

506
00:25:47,040 --> 00:25:50,280
Speaker 1: what differences. It's like is a red Sax fan from

507
00:25:50,280 --> 00:25:52,920
Speaker 1: the sixties, and it's good to see it in person too.

508
00:25:54,240 --> 00:25:56,560
Speaker 1: From Pantheon macro Economics and brought up that line from

509
00:25:56,600 --> 00:26:01,920
Speaker 1: Oxford University. Tom. No evidence that omicron defeats vaccines, of course,

510
00:26:02,040 --> 00:26:04,480
Speaker 1: no evidence that the opp cities true life. It's home,

511
00:26:04,560 --> 00:26:06,800
Speaker 1: so we need to waite for the evidence in the day. Sell.

512
00:26:07,320 --> 00:26:11,080
Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

513
00:26:11,200 --> 00:26:14,520
Speaker 1: us live weekdays from seven to ten am Eastern on

514
00:26:14,640 --> 00:26:18,879
Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six

515
00:26:19,000 --> 00:26:23,840
Speaker 1: to nine am for insight from the best in economics, finance, investment,

516
00:26:24,000 --> 00:26:29,000
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

517
00:26:29,119 --> 00:26:32,920
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

518
00:26:33,040 --> 00:26:37,159
Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg