WEBVTT - Surveillance: ECB's Challenge With Trichet 0:00:09.880 --> 0:00:12.960 Welcome to the Bloomberg Surveillance podcast and I'm Tom Keane. 0:00:13.480 --> 0:00:17.560 Daily we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.600 Bloomberg dot Com, and of course on the Bloomberg. Has 0:00:27.640 --> 0:00:30.200 the rally been justified? Ivan find set joining us now 0:00:30.280 --> 0:00:34.360 Tigers Financial Partner's Chief investment Officer. Ivan. Has the rally 0:00:34.400 --> 0:00:38.479 been justified by fundamentals? Well, I mean there's two issues, 0:00:38.520 --> 0:00:40.720 and the main issue is there's no place else to 0:00:40.760 --> 0:00:44.040 put your money, and it's the powerful results have been 0:00:44.120 --> 0:00:48.360 driven by the incredible efforts of FED Chairman Pal. I 0:00:48.400 --> 0:00:51.239 think FED Chairman Pal single handedly saved the world. I 0:00:51.240 --> 0:00:56.160 mean he acted swiftly and decisively in March, pumping tremendous 0:00:56.200 --> 0:00:59.520 amounts of liquidity into the financial markets, which in turn 0:00:59.600 --> 0:01:02.640 caused other central bankers around the world to do the same. 0:01:03.240 --> 0:01:06.360 And I think that's been the powerful driver of the 0:01:06.400 --> 0:01:09.520 recovery and the fact that, look, I believe in the 0:01:09.560 --> 0:01:14.000 resiliency and the of the and the detestinal fortitude of 0:01:14.000 --> 0:01:16.200 the human spirit that we will come back. We've come 0:01:16.200 --> 0:01:22.120 back from many bad situations, and innovation has led this recovery, 0:01:22.160 --> 0:01:24.080 and it's been led by the tech stocks which have 0:01:24.720 --> 0:01:28.760 empowered the ability to make this shift to support a 0:01:28.800 --> 0:01:32.960 remote and dispersed workforce as an example. Okay, I get 0:01:33.000 --> 0:01:36.000 that UM and it all makes sense. That narrative makes sense. 0:01:36.280 --> 0:01:39.039 And then you see things like Tesla where they do 0:01:39.080 --> 0:01:42.280 a stock split and their shares go infinitely higher. They 0:01:42.319 --> 0:01:45.160 go up by twelve even though you're basically just changing 0:01:45.160 --> 0:01:48.240 a five dollar bill into five ones, which shouldn't, all 0:01:48.360 --> 0:01:51.520 things being equal, make a stock more valuable. You see 0:01:51.520 --> 0:01:54.600 a similar type of move in Apple. What gives I 0:01:54.600 --> 0:01:58.560 mean are these signs of froth? Well, I mean there's 0:01:58.560 --> 0:02:02.320 always pockets of unique focus if you will, I think 0:02:02.360 --> 0:02:05.800 Apple deserves its valuation. I mean, we have a tremendous 0:02:05.800 --> 0:02:07.880 catalyst coming up in the launch of the five G 0:02:08.040 --> 0:02:12.960 enabled iPhone twelves. That will kick off a tremendous supercycle 0:02:13.320 --> 0:02:15.799 because many have been waiting to upgrade to the high 0:02:15.840 --> 0:02:19.400 speed five G enabled phones and there's going to be 0:02:19.440 --> 0:02:22.240 a huge pent up demand as the average iPhone in 0:02:22.360 --> 0:02:26.239 service today is over five years old. So that will 0:02:26.320 --> 0:02:31.640 drive a um a new upgrade cycle in Apple phones. 0:02:32.080 --> 0:02:36.560 Along with their Apple's focus on increasing their services revenue 0:02:36.560 --> 0:02:41.040 and offering more and more services entertainment, gaming, payment, shopping, 0:02:41.680 --> 0:02:45.119 UM that will enable them to further monetize this over 0:02:45.400 --> 0:02:50.400 one and a half billion installed iPhone user base. All right, 0:02:50.440 --> 0:02:52.080 So Ivan, you know, when I was in business school, 0:02:52.080 --> 0:02:54.200 when we were talking about and learning about markets, one 0:02:54.200 --> 0:02:56.359 of the things I learned was you need to have breath. 0:02:56.680 --> 0:02:58.320 You need if you want to have a healthy market, 0:02:58.360 --> 0:03:00.920 you need to have a breath across a wide swath 0:03:01.040 --> 0:03:04.840 of stocks and sectors. We are absolutely, absolutely not seeing 0:03:04.840 --> 0:03:07.720 that in this market. How concerned are you about that 0:03:07.800 --> 0:03:11.320 in terms of the lack of breath in this market? Well, 0:03:11.360 --> 0:03:13.840 that is correct. I mean it has been a very 0:03:13.960 --> 0:03:19.440 narrowly driven rally, primarily by tech stocks. But um technology 0:03:19.560 --> 0:03:22.959 drives our economy forward. I mean, so it's not unusual 0:03:23.040 --> 0:03:26.480 that they have been leading the market and increasingly becoming 0:03:26.520 --> 0:03:29.920 a dominant part of the economy. So two things are 0:03:29.960 --> 0:03:32.160 going to happen. I mean, the market is forward looking, 0:03:32.240 --> 0:03:34.920 and it is predicting that we will see this broadening out, 0:03:34.960 --> 0:03:38.760 that it will will see um improvements in the industrial sector, 0:03:38.760 --> 0:03:42.040 in the consumer sector, which we are seeing. There is 0:03:42.080 --> 0:03:45.960 a positive cadence of economic data that shows the manufacturing 0:03:46.480 --> 0:03:50.680 sector is improving. There's gradual improvement in consumer sentiments, so 0:03:50.840 --> 0:03:55.760 the consumer's outlook is improving. Retail is improving, restaurants where 0:03:55.760 --> 0:03:58.440 they can. So you saw huge jumps in retail sales 0:03:58.760 --> 0:04:02.000 when stores opened. You saw a huge jump and people 0:04:02.000 --> 0:04:04.680 going to restaurants when they could when westaurants started to 0:04:05.080 --> 0:04:07.880 open with outdoor dining. So there is pent up demand 0:04:08.160 --> 0:04:10.560 and I will I think you will see this broadening out. 0:04:11.040 --> 0:04:13.960 The other thing driving the market is optimism that we 0:04:14.000 --> 0:04:18.560 will get a vaccine, hopefully at least available by the 0:04:18.640 --> 0:04:21.279 end of the year. We have three companies scheduled to 0:04:21.320 --> 0:04:25.240 go into three partnerships scheduled to go into trials sometime 0:04:25.360 --> 0:04:29.720 in October. So that is the one thing, the one 0:04:29.800 --> 0:04:32.840 thing that will get us over the pandemic is a vaccine. 0:04:33.360 --> 0:04:36.320 And if we can get UH some type of approval 0:04:36.360 --> 0:04:38.480 by the end of the year and ramp up production 0:04:38.640 --> 0:04:41.000 in the beginning of the next year, we will see 0:04:41.040 --> 0:04:45.120 a tremendous recovery and the market will have correctly predicted 0:04:45.279 --> 0:04:47.599 the turnaround. All right, So I have an outside of 0:04:47.640 --> 0:04:50.440 the fang plus stocks, the six seven names that have 0:04:50.560 --> 0:04:52.680 really been driving this market. Where do you see some 0:04:52.760 --> 0:04:56.279 opportunity here if we're able to look towards the other side, 0:04:56.520 --> 0:05:00.839 perhaps some time I've and you will see a bounce 0:05:00.880 --> 0:05:03.800 back in the auto stocks. And looking at Tesla and 0:05:03.880 --> 0:05:07.080 the optimism over the electric car, General Motors is a 0:05:07.160 --> 0:05:10.200 tremendous play. Mary Barrett says she wants to have twenty 0:05:10.279 --> 0:05:13.960 electric vehicles on the market by three not that far off. 0:05:14.640 --> 0:05:17.920 Also the valuation I mean there. She even was asked 0:05:17.920 --> 0:05:22.320 the question, would you spin off this electric vehicle division 0:05:22.360 --> 0:05:25.039 at some point unlock value? She said, nothing's off the table. 0:05:25.120 --> 0:05:31.720 So General Motors will become a incredible electric vehicle play. Um. 0:05:31.760 --> 0:05:33.919 I think some of the depressed retailers, some of the 0:05:33.960 --> 0:05:38.280 depressed restaurants, and the cruise industry. I mean these stocks 0:05:38.320 --> 0:05:41.320 were decimated by no fault of their own. The cruise 0:05:41.360 --> 0:05:46.440 industry in January was looking at a record year and 0:05:46.640 --> 0:05:49.960 was decimated. And they are doing everything possible to put 0:05:49.960 --> 0:05:53.320 in place the ability to safely sail when they get 0:05:53.360 --> 0:05:56.640 the opportunity when they are allowed to start to sail again. 0:05:56.839 --> 0:05:59.600 I mean a company like Norwegian, which is my number 0:05:59.600 --> 0:06:01.599 one pick in the cruise industry. So there are a 0:06:01.640 --> 0:06:04.160 lot of depressed box So I still like a lot 0:06:04.160 --> 0:06:06.600 of the tech s docs, including a video with their 0:06:06.600 --> 0:06:10.760 announcement yesterday of their new high speed graphic cards. Other 0:06:10.880 --> 0:06:15.520 favorite chip players in the five G rollout are Quelcom 0:06:15.560 --> 0:06:19.279 and Skywork Solutions and Corvo Skyworks in Corvera, both Apple 0:06:19.560 --> 0:06:23.560 Key Apple suppliers. So the five G rollout is a 0:06:23.560 --> 0:06:27.880 powerful investing theme. The recovery of the consumer sector will 0:06:27.920 --> 0:06:30.760 be a powerful investing theme, and I believe it will 0:06:30.800 --> 0:06:35.800 recover and recover very strongly. Just really twenty seconds, how 0:06:35.920 --> 0:06:39.440 high the valuation of Amazon get It's now one point 0:06:39.560 --> 0:06:43.240 seven five trillion dollars. What's the peak in your view? Well, 0:06:43.360 --> 0:06:46.960 I have been recommending Amazon for sometime. It's on our 0:06:47.000 --> 0:06:49.920 focus list in our focus Opportunity portfolio. I don't really 0:06:50.000 --> 0:06:53.560 use price targets, but Amazon, I mean, they're just incredibly 0:06:54.040 --> 0:06:59.240 efficient in their delivery and fulfillment and logistics processes that 0:06:59.320 --> 0:07:02.440 they do support a lot of retail. They continue they 0:07:02.480 --> 0:07:07.080 are the biggest cloud infrastructure supplier, which service provider, which 0:07:07.120 --> 0:07:12.000 has enabled the remote workforce and the distributed workforce. They're 0:07:12.000 --> 0:07:16.440 getting into healthcare. They just announced. There wasn't twenty seconds Ivan, 0:07:16.680 --> 0:07:19.000 We'll have you back. We'll talk about Amazon. I will 0:07:19.000 --> 0:07:21.560 tell you this. It is something that you're not alone 0:07:21.600 --> 0:07:23.320 with a lot of people saying they can see a 0:07:23.400 --> 0:07:26.480 path lower, but they're not willing to sell their Amazon shares. 0:07:26.520 --> 0:07:28.360 Ivan find Set, Thanks for retting a good sport and 0:07:28.360 --> 0:07:33.640 thanks for being with us. Really appreciate it. This is 0:07:33.680 --> 0:07:37.640 the story of the day, by risk, period, full stop. 0:07:37.680 --> 0:07:40.080 The Fed has your back. Maybe Washington d C Will 0:07:40.120 --> 0:07:42.440 get your back as well. We will find out, and 0:07:42.560 --> 0:07:45.960 right now, let's find out with Steve Chivron, Federated Herme's 0:07:46.080 --> 0:07:49.600 portfolio manager. Steve. We have heard from person after person 0:07:49.600 --> 0:07:52.520 who has come on this show and said, by risk, 0:07:52.680 --> 0:07:55.480 that is the result right now from the Federal Reserve 0:07:55.520 --> 0:07:57.960 that has your back from the idea that we probably 0:07:57.960 --> 0:08:02.400 are entering a growth phase after the absolute decimation of 0:08:02.560 --> 0:08:06.080 the labor market earlier this year. Do you agree? Yeah. Look, 0:08:06.080 --> 0:08:08.280 I think the story behind the markets is sent a 0:08:08.440 --> 0:08:12.200 simple I think we've exited recession and we're entering the 0:08:12.240 --> 0:08:15.120 next recovery, which will lead to the next expansion um. 0:08:15.160 --> 0:08:17.320 And I think the reason why we've been able to 0:08:17.320 --> 0:08:20.880 get to hide so quickly is because there's three stats 0:08:20.920 --> 0:08:24.040 I think that explain it. Incomes her up seven and 0:08:24.040 --> 0:08:28.200 a half percent versus last year. Mortgage foreclosures are down 0:08:28.320 --> 0:08:30.520 from three quarters of a percent to two thirds of it. 0:08:31.880 --> 0:08:34.160 And while we did have two hundred bankruptcies in the 0:08:34.200 --> 0:08:36.760 second quarter, that's roughly one fourth of what we were 0:08:36.800 --> 0:08:39.760 doing on a quarterly basis in the Great Financial Crisis. 0:08:39.800 --> 0:08:43.640 So both Congress and the Federal Reserve have protected capital. 0:08:43.760 --> 0:08:47.720 They protected capital in this in this kind of downturn, 0:08:47.920 --> 0:08:51.720 and the consumer and businesses are better positioned then you 0:08:51.720 --> 0:08:53.760 would expect them to be, given the severity of the 0:08:53.800 --> 0:08:56.560 economic contraction that we had. Steve, what won't you buy 0:08:56.640 --> 0:08:59.600 right now? What won't I buy? Well? Look, I think 0:08:59.640 --> 0:09:01.959 you know piling into a treasury bond right here is 0:09:02.240 --> 0:09:04.640 probably not the smartest thing you know between fifty and 0:09:04.640 --> 0:09:09.120 seventy basis points. I think you know more importantly, and 0:09:09.280 --> 0:09:11.040 I am talking a little bit my own book here, 0:09:11.040 --> 0:09:13.280 but I wouldn't buy a whole bunch of ETFs. I 0:09:13.320 --> 0:09:15.920 don't want to own everything right now. I think that 0:09:16.000 --> 0:09:17.960 there are a lot of companies that are not going 0:09:18.000 --> 0:09:20.160 to do well coming out of this, and it's incumbent 0:09:20.240 --> 0:09:23.680 upon investors to be able to sort through industries and 0:09:23.720 --> 0:09:26.439 pick the winners and avoid the losers. I think that 0:09:26.440 --> 0:09:29.560 that's the key theme here. All right, Well, Steve, you know, 0:09:29.600 --> 0:09:31.200 one of the issues you talked about some of the 0:09:31.200 --> 0:09:34.040 positive economic developments, But the fact is a lot of 0:09:34.080 --> 0:09:36.960 that was driven by the fiscal stimulus, putting money into 0:09:37.360 --> 0:09:41.600 people's hands, into consumers hands, into small and midsized businesses hands. Uh. 0:09:41.600 --> 0:09:43.560 And of course the FETE is there with the backstop 0:09:44.200 --> 0:09:47.320 the fet You know, this stimulus is starting to wear out. 0:09:47.800 --> 0:09:51.000 How critical is it that we get new stimulus to 0:09:51.080 --> 0:09:55.080 continue to support the economy. Yeah, I think it's important. 0:09:55.120 --> 0:09:57.320 I don't know, I don't I wouldn't say it's critical. Um. 0:09:57.760 --> 0:09:59.960 I think, look, when you've done such a good job 0:10:00.040 --> 0:10:03.840 of supporting the economy thus far, it's kind of dumb 0:10:03.840 --> 0:10:05.880 to fumble the ball in the red zone here, right. 0:10:05.880 --> 0:10:09.800 I mean, you're probably one fiscal package away from getting 0:10:09.800 --> 0:10:11.920 yourself to towards a vaccine. But if you looked at 0:10:11.960 --> 0:10:14.320 the personal income number that came out earlier this week, 0:10:14.360 --> 0:10:17.480 what you saw was that while the impact of stimulus 0:10:17.559 --> 0:10:19.599 has has waned a little bit, you have seen a 0:10:19.679 --> 0:10:22.880 pick up in compensation from from from work, and so 0:10:23.240 --> 0:10:26.280 I think, look, the economy is healing, it's getting better. 0:10:26.360 --> 0:10:31.000 It's starting to become self sustaining. But there's enough uncertainty 0:10:31.040 --> 0:10:33.640 that anything one more bill probably makes sense. So it'd 0:10:33.640 --> 0:10:36.240 be nice to see Congress, you know, get their acting 0:10:36.320 --> 0:10:39.320 gear here and and get something done, all right, Steve. So, 0:10:39.520 --> 0:10:42.079 as we think about the equity markets, the theme obviously 0:10:42.120 --> 0:10:44.400 has been the you know that the handful of tech 0:10:44.440 --> 0:10:46.720 stocks to fang plus docks and driving in the market. 0:10:47.120 --> 0:10:50.760 When does value get its uh time in the limelight? 0:10:50.840 --> 0:10:55.400 If ever? Yeah, I think people are maybe misreading the 0:10:55.480 --> 0:10:58.360 narrow breath of the market. Narrow breath in the market 0:10:58.400 --> 0:11:00.600 at the end of the cycle is very rasome. Right. 0:11:00.880 --> 0:11:03.240 If every company's hit their fifty two week high and 0:11:03.240 --> 0:11:04.960 there's only two or three that are left that are 0:11:04.960 --> 0:11:08.320 pushing you higher, that is a sign of exhaustion. What 0:11:08.440 --> 0:11:10.960 we have here, though, is the companies that did the 0:11:11.000 --> 0:11:14.320 best during the recession have led us out and the 0:11:14.360 --> 0:11:17.360 other companies haven't participated yet. And we think that's really 0:11:17.360 --> 0:11:20.400 a sign of dry powder. And so as this recovery 0:11:20.440 --> 0:11:22.880 continues to take hold, as we do get closer to 0:11:22.920 --> 0:11:25.880 some kind of treatment vaccine type protocol, and we think 0:11:25.880 --> 0:11:28.080 that you're going to see other companies, some of which 0:11:28.080 --> 0:11:30.640 your value are going to start to participate in a 0:11:30.720 --> 0:11:34.680 much bigger way as the economic recovery intensifies here, and 0:11:34.720 --> 0:11:36.520 so we think that we're on the verge of that. 0:11:36.960 --> 0:11:38.760 We think you can play it in the value space. 0:11:38.840 --> 0:11:40.640 We also think you can play a similar theme in 0:11:40.679 --> 0:11:43.200 small caps, and we think you really don't want to 0:11:43.200 --> 0:11:47.000 be massively underweight international because those international industries have so 0:11:47.120 --> 0:11:49.360 much more value than than than the US do in 0:11:49.480 --> 0:11:53.840 terms of the sector composition. For NAZAC stocks are up 0:11:53.880 --> 0:11:58.760 more than two hundred and twenty percent so far this year. Yesterday, 0:11:58.960 --> 0:12:03.559 Zoom Video community patians rose more than forty one day. 0:12:03.640 --> 0:12:06.839 That was the rally. Some people saying that the justification 0:12:06.920 --> 0:12:09.440 for this is that the low yields make everything cheap. 0:12:09.840 --> 0:12:12.800 Is that the story? I think that's part of it. Look, 0:12:12.840 --> 0:12:16.520 I mean, you know, equity market multiples are are related 0:12:16.559 --> 0:12:19.160 to bond yields, and particularly corporate bond yields, and if 0:12:19.160 --> 0:12:21.120 you look at where the corporate bond yield is to 0:12:21.200 --> 0:12:24.040 be double a, it would suggest that the SMP could 0:12:24.040 --> 0:12:27.400 trade upwards of a high twenties or even low thirties multiple, 0:12:27.480 --> 0:12:29.920 which has never been the case before. I think that's 0:12:29.960 --> 0:12:31.720 part of it. But I think the bigger story here 0:12:31.720 --> 0:12:33.600 as well is that we're in the middle of a 0:12:33.600 --> 0:12:38.880 digital revolution, and what this pandemic has not slowed that revolution, 0:12:38.920 --> 0:12:41.640 it's accelerated it. You saw it in the Salesforce earnings. 0:12:41.679 --> 0:12:45.720 Company after company are looking to upgrade their tech, understanding 0:12:45.760 --> 0:12:47.040 that that's going to be a bigger part of the 0:12:47.040 --> 0:12:49.240 way that they do business. And so I think you've 0:12:49.240 --> 0:12:53.439 got this very interesting combination of this digital industrial revolution 0:12:53.920 --> 0:12:56.199 occurring at a time when you know, bond yields are 0:12:56.240 --> 0:12:59.960 so low um and the world has a scarcity of growth, 0:13:00.040 --> 0:13:02.280 and it exists in the US. It exists in US 0:13:02.440 --> 0:13:05.480 tech stocks, and so if you want access to that growth, 0:13:06.120 --> 0:13:08.319 there's a high price for it. So Steve are Robin 0:13:08.320 --> 0:13:10.720 Hood is right? I mean, are they on the right paths? 0:13:10.760 --> 0:13:13.440 Just buy everything that they say, Look, a stock splits 0:13:13.480 --> 0:13:15.480 as good of a reason as any to buy a stock. 0:13:16.360 --> 0:13:19.960 They're winning. Look, I think when you think about Robin Hood, 0:13:19.960 --> 0:13:21.880 the first thing we have to remember, especially those of 0:13:21.960 --> 0:13:25.160 us that are quote unquote professional investors, is everyone deserves 0:13:25.160 --> 0:13:28.240 the right to have access to the market. Um, there 0:13:28.280 --> 0:13:30.240 are gonna be folks there that maybe don't have as 0:13:30.320 --> 0:13:33.480 much history and experience with the market. That's why you know, 0:13:33.679 --> 0:13:37.600 media like yours exist help them understand that. I think ultimately, 0:13:37.800 --> 0:13:40.120 what companies are realizing is that if there is a 0:13:40.200 --> 0:13:43.239 retail demand, if they can make their shares more attractive 0:13:43.400 --> 0:13:46.360 or more accessible to those retail investors, they're gonna get 0:13:46.360 --> 0:13:49.160 rewarded because those retail investors want access to some of 0:13:49.200 --> 0:13:52.599 these companies. There will be some names that end in 0:13:52.679 --> 0:13:54.960 tears for folks because there's gonna be some hype trades. 0:13:54.960 --> 0:13:57.520 But at the end of the day, I think anytime 0:13:57.520 --> 0:13:59.920 there's more interest in the public markets and the com 0:14:00.040 --> 0:14:03.440 pounding returns, that's a good thing. It's our job as 0:14:03.440 --> 0:14:05.800 an investment industry to help make sure that those people 0:14:05.880 --> 0:14:08.400 have the tools and information to make the best decisions 0:14:08.400 --> 0:14:10.360 that they can. All Right, Steve, If I'm brave enough 0:14:10.360 --> 0:14:12.160 to look to the other side of this pandemic and 0:14:12.160 --> 0:14:15.079 I see an economic recovery in the next twelve months 0:14:15.080 --> 0:14:18.319 really accelerating, what are some of the beaten down sectors 0:14:18.320 --> 0:14:19.840 actually be looking at. Am I brave enough to go 0:14:19.880 --> 0:14:23.400 into financials for example? Yeah? Look, I think if you 0:14:23.480 --> 0:14:25.400 think that economic growth is going to improve, then you 0:14:25.400 --> 0:14:27.520 should expect, you know, long bonds to move up a 0:14:27.520 --> 0:14:30.920 little bit, not not anything you know that would be scary, 0:14:30.960 --> 0:14:33.560 and that would be beneficial to banks. Again, we come 0:14:33.560 --> 0:14:36.040 back to small caps, and we think small caps were 0:14:36.080 --> 0:14:38.960 three reasons their cyclical So as you get a cyclical 0:14:38.960 --> 0:14:41.360 improvement in the economy, they're gonna they're gonna benefit from that, 0:14:41.480 --> 0:14:44.680 much like value stocks. But in addition, fifty of their 0:14:44.720 --> 0:14:47.440 debt is variable rate bank debt, so low rates forever 0:14:47.720 --> 0:14:50.160 are really going to benefit them. And then finally in 0:14:50.400 --> 0:14:52.920 a year, in the first year following a recession bottom 0:14:52.960 --> 0:14:56.960 small caps tend to outperform large by about We think 0:14:57.040 --> 0:14:59.960 that's gonna be your your kind of play on octane 0:15:00.040 --> 0:15:02.560 here in terms of a cyclical recovery plan on oct 0:15:02.640 --> 0:15:05.040 and I like that. Steve Chevron and from Federated Hervey's 0:15:05.240 --> 0:15:12.480 thank you so much, because everyone who talks about the 0:15:12.520 --> 0:15:16.240 economic recovery says it will hinge on the trajectory of 0:15:16.280 --> 0:15:19.360 the virus. The trajectory of the virus is unclear. It 0:15:19.480 --> 0:15:22.240 is unsuspecting. It can pop up when you least suspected, 0:15:22.280 --> 0:15:24.200 even in places like New Zealand, which seemed to have 0:15:24.240 --> 0:15:27.000 gotten it under control. Doctor Deborah Fuller joining us now 0:15:27.080 --> 0:15:32.160 University of Washington School of Medicine, Microbiology Professor Dr Fuller. 0:15:32.160 --> 0:15:34.680 Where are we in this? Some people talk about going 0:15:34.720 --> 0:15:36.840 back to school, that it's going to be a disaster. 0:15:36.960 --> 0:15:40.720 Other people say it's fine. Kids are not vectors of 0:15:40.920 --> 0:15:45.520 this particular virus. What's your take. Yeah, so we're a 0:15:45.680 --> 0:15:49.560 you know, a phase where you know, we're we understand 0:15:49.640 --> 0:15:54.000 how to you know, potentially reduced transmission through you know, 0:15:54.080 --> 0:15:58.400 wearing a mask and practicing um, you know, hand washing 0:15:58.680 --> 0:16:02.200 and and the like. UM. But I'm not so sure 0:16:02.400 --> 0:16:05.320 that you know, the public is actually you know following 0:16:05.400 --> 0:16:08.280 through um correctly in all those practices. And I think 0:16:08.280 --> 0:16:11.320 that's where you know, sometimes you're seeing some schools opening 0:16:11.400 --> 0:16:14.880 up and saying, hey, we've implement all these practices, and 0:16:14.920 --> 0:16:19.160 then they see you know, high spike uh in induction rate. Uh. 0:16:19.200 --> 0:16:22.160 You know, unless you know people are hundred percent compliant 0:16:22.360 --> 0:16:25.760 with all of the you know, the rules, UM, that 0:16:25.960 --> 0:16:29.520 virus is going to take an opportunity and transmit. So 0:16:29.520 --> 0:16:31.840 so I think it's very difficult, uh, you know, in 0:16:31.880 --> 0:16:37.080 the absence of a vaccine, uh, to get everybody to collectively, um, 0:16:37.120 --> 0:16:40.640 you know, work as a team together, wear their masks, 0:16:40.880 --> 0:16:44.400 wash your hands, you know, uh, and uh, you know, 0:16:44.440 --> 0:16:47.840 follow the safe distancing practices that have been recommended. If 0:16:47.840 --> 0:16:51.240 they do that, we could probably safely open schools. And 0:16:51.400 --> 0:16:54.280 that's just you know, get people to cooperate. Dr Fuller, 0:16:54.360 --> 0:16:56.600 There's so many unknowns, at least from my vantage point. 0:16:56.600 --> 0:16:59.640 You see a compliant Can people pack in a subway 0:16:59.680 --> 0:17:02.840 cars if they have masks on? Can people go to 0:17:02.880 --> 0:17:05.800 outdoor dining and sit not exactly six feet away from 0:17:05.800 --> 0:17:08.280 each other but take their masks off to eat as 0:17:08.320 --> 0:17:11.000 long as they are outside? Are these things all safe? 0:17:11.359 --> 0:17:14.640 Or are we already engaging in practices that will necessarily 0:17:14.680 --> 0:17:18.399 spread the virus as we start to become less socially 0:17:18.440 --> 0:17:21.440 distant and try to get back to normal. Yeah, there's 0:17:21.480 --> 0:17:24.879 no guarantee you know that all these practices will you know, 0:17:24.920 --> 0:17:27.280 if you implement them together. And we're talking about you know, 0:17:27.359 --> 0:17:30.560 both the six feet distancing and the wearing of the 0:17:30.640 --> 0:17:34.320 mask and the hand washing. Um. But there is you know, 0:17:34.920 --> 0:17:38.480 evidence out there that it can reduce transmissions significantly. So 0:17:38.520 --> 0:17:41.359 it doesn't mean that, say, some virus still won't transmit. 0:17:41.440 --> 0:17:44.440 But the you know, the way viruses work is they uh, 0:17:44.480 --> 0:17:48.320 you know, the more people that get infected. Then that 0:17:48.560 --> 0:17:51.480 makes more people that can infect others. So if you 0:17:51.480 --> 0:17:55.480 can reduce the number of transmission events to very low levels, 0:17:55.520 --> 0:18:00.000 then yeah, people can go about their business much, um, 0:18:00.000 --> 0:18:03.000 you know, more effectively, and you can start to see, uh, 0:18:03.200 --> 0:18:06.960 the incidences of transmission decline. That's what you saw in 0:18:07.080 --> 0:18:10.120 some of the other countries like uh New Zealand where 0:18:10.119 --> 0:18:14.280 they just implemented these safe practices and you quickly saw uh, 0:18:14.440 --> 0:18:17.720 the you know, the that sort of you know, rate 0:18:17.720 --> 0:18:20.560 of transmission rate go down to almost zero. So it 0:18:20.680 --> 0:18:25.040 is possible. It's just uh it's and it's not guarantee, 0:18:25.119 --> 0:18:27.440 but it's you know, better than what we have right now. 0:18:27.760 --> 0:18:29.560 All right, professor, let's switch gears a little bit to 0:18:29.840 --> 0:18:33.040 the vaccine. That's a discussion I think everybody wants to have. 0:18:33.160 --> 0:18:36.479 Everybody's looking forward towards a vaccine. We know that there 0:18:36.480 --> 0:18:40.119 are approximately a dozen entities out there that are working 0:18:40.160 --> 0:18:44.000 aggressively on a vaccine or various stages. Give us your 0:18:44.160 --> 0:18:45.919 read of the landscape. I feel like I need a 0:18:45.960 --> 0:18:49.239 scorecard to keep track of all these entities out there, 0:18:49.240 --> 0:18:53.600 whether their universities or pharmaceutical companies, are biotech companies, companies. 0:18:53.640 --> 0:18:55.800 Give us your sense of where we are and maybe 0:18:55.840 --> 0:18:59.360 a sense of timing. Yeah, so this is actually we're 0:18:59.359 --> 0:19:02.800 enchering a very siding phase for vaccine development. Right now. 0:19:02.840 --> 0:19:06.159 There are I think about seven candidate vaccines that have 0:19:06.480 --> 0:19:10.200 entered into phase three clinical trials, and that's a stage 0:19:10.200 --> 0:19:13.359 where we're actually testing efficacy of the vaccine as well 0:19:13.400 --> 0:19:16.719 as continuing to test its safety. Is going in tens 0:19:16.760 --> 0:19:19.240 of thousands of people where some people will get up 0:19:19.240 --> 0:19:22.640 placebo and other people get the vaccine, and then it's 0:19:22.720 --> 0:19:25.879 just really a waiting time game where it really the 0:19:25.960 --> 0:19:29.199 viruses control of the timeline right now. What they're going 0:19:29.240 --> 0:19:31.080 to do is wait and see, you know, until a 0:19:31.080 --> 0:19:34.920 certain number of people become infected, and uh then they 0:19:34.960 --> 0:19:38.240 take uh, you know, they open up, take the blinders off, 0:19:38.240 --> 0:19:41.200 because they're blinded to you know, who belongs to what group, 0:19:41.480 --> 0:19:43.600 and they're going to determine are all the people who 0:19:43.760 --> 0:19:47.040 became infector of the majority of them in the placebo 0:19:47.080 --> 0:19:49.640 group and none of them in the vaccine group. And 0:19:49.840 --> 0:19:52.240 if that's the case, then they can then go to 0:19:52.359 --> 0:19:56.360 licensure and start to manufacture and distribute the saccine. For you. So, 0:19:56.680 --> 0:19:59.120 the fact that we have seven of them is very promising. 0:19:59.119 --> 0:20:02.760 That means that these vaccines have passed you know, high 0:20:03.119 --> 0:20:08.160 marks high uh uh marks for safety as well as 0:20:08.200 --> 0:20:10.600 demonstrating the kind of ImmunoGen a season that you're going 0:20:10.680 --> 0:20:14.640 to meet in an effective vaccine. So this is exciting. Uh. 0:20:14.680 --> 0:20:17.600 And so we're at in a sense, the final phase 0:20:17.640 --> 0:20:20.800 and we're perhaps maybe only months away from seeing the 0:20:20.840 --> 0:20:26.640 first vaccine license for for human use. Professor Health, how 0:20:26.680 --> 0:20:30.080 sure can we be about the safety of these um 0:20:30.440 --> 0:20:33.240 vaccines because you know it usually it takes years and 0:20:33.320 --> 0:20:35.320 years of testing, and it seems like we're going to 0:20:35.359 --> 0:20:38.000 get a potentially a vaccine within a year year and 0:20:38.040 --> 0:20:40.159 a half from the beginning of all this, and that 0:20:40.200 --> 0:20:43.600 calls into question safety. How do you think about that? Yeah, 0:20:43.640 --> 0:20:45.639 I mean the the years and years has to do 0:20:45.720 --> 0:20:49.720 with how the process has changed, you know, in the 0:20:49.760 --> 0:20:52.960 events of this pandemic. And the years is because the 0:20:53.040 --> 0:20:57.520 phase one, two, and three are done sequentially normally with 0:20:57.600 --> 0:21:00.119 a pandemic, they are being done in an old were 0:21:00.200 --> 0:21:03.639 laughing fashion, So all of the safety tests are still 0:21:03.680 --> 0:21:07.000 being done. Uh, nothing is being skipped. So by the 0:21:07.040 --> 0:21:11.720 time we have a vaccine that complete Space three successfully 0:21:11.840 --> 0:21:15.400 and shown to be effective and safe, we can be 0:21:15.560 --> 0:21:18.439 confident that it has gone through all of the checkmarks 0:21:18.440 --> 0:21:22.120 that are absolutely required, um, you know, right now to 0:21:22.320 --> 0:21:25.159 license a vaccine for public use. So Dr Fuller, you 0:21:25.160 --> 0:21:27.719 would be fine getting one of the first vaccines if 0:21:27.720 --> 0:21:30.879 it came out. Yeah, I wish I could, you know, 0:21:30.920 --> 0:21:32.919 but I you know, what you have to be aware 0:21:32.920 --> 0:21:35.640 of is that when these vaccines start coming out, they're 0:21:35.640 --> 0:21:38.240 not going to be billions of doses suddenly available for 0:21:38.320 --> 0:21:41.480 anybody to take. It's likely going to have to go 0:21:41.600 --> 0:21:44.840 into first responders and health care workers and the like. 0:21:45.480 --> 0:21:47.400 Uh and so it could be for some of us 0:21:47.480 --> 0:21:52.160 months even after the vaccines have been released for public use, 0:21:52.240 --> 0:21:55.439 before we're eligible to start to you know, show up 0:21:55.440 --> 0:21:58.200