Speaker 1: This is Bloomberg Business Week. I'm Karl Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanivik. We're here every day bringing
Speaker 1: you the latest news from the world to business and finance,
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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
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Speaker 1: stories about the virus and vaccine rollout. Tim and I
Speaker 1: just felt like brought you two disturbing ones about long
Speaker 1: haulers study showing COVID can kill months after the infection,
Speaker 1: and then Brazil how it's expanding out to younger people.
Speaker 1: The other thing Tim, you and I've talked a lot
Speaker 1: about is what's going on in India. Yeah, the rising
Speaker 1: cases dramatically. They're especially given that a year ago this
Speaker 1: was a country that was in lockdown. This is happening
Speaker 1: so quickly. Yeah, it's really tough to kind of watch.
Speaker 1: Let's get an update though on COVID nineteen and what
Speaker 1: we're seeing globally when it comes to the virus. Dr
Speaker 1: Amos Hidalga is an infectious disease physician Senior scholar at
Speaker 1: Johns Hopkins Center for Health Security at the Bloomberg School
Speaker 1: of Public Health, supported by Michael R. Bloomberg, founder of Bloomberg,
Speaker 1: Gulp and Bloomberg Philanthropies. Dr Dlja with us on the
Speaker 1: phone in Pittsburgh. DRDLJA, Nice to have you back here
Speaker 1: with Tim and myself. How are you? I'm good? Are
Speaker 1: you doing okay? Doing okay? Although a little bummed out
Speaker 1: by some of these long hauler stories and also just
Speaker 1: looking at what's going on in India. Everybody keeps reminding
Speaker 1: us that unless we get this globally under control, we
Speaker 1: will not get beyond COVID. How do you see it?
Speaker 1: I definitely think that's the case that we have a
Speaker 1: worldwide pandemic and the world will still be disrupted. The
Speaker 1: world will not be safe until this virus is controlled
Speaker 1: in all the countries around the globe, and it's going
Speaker 1: to take some time, probably well into two So there
Speaker 1: really needs to be a shift in priorities as we
Speaker 1: get most of our population vaccinated to trying to came
Speaker 1: this all over all over the globe, and it's going
Speaker 1: to be, you know, one of the biggest public health
Speaker 1: challenges that we face, because it is a really steep,
Speaker 1: uphill battle in places like India and Brazil and even
Speaker 1: Europe and even Canada. What's the right way to do
Speaker 1: that though? Is it is it with the mr Anda
Speaker 1: vaccines or is it is it really with these other vaccines,
Speaker 1: potentially the Johnson and Johnson vaccine, the astros ennica shot,
Speaker 1: ones that don't need to be stored in such cold conditions,
Speaker 1: one that don't necessarily need two shots. It's all of
Speaker 1: the above. It's whatever you can do. So if you
Speaker 1: have places that can handle the storage requirements of the
Speaker 1: astrosenica and fisor vaccines, you can use those. In other places,
Speaker 1: you're going to need to use the Johnson and Johnson,
Speaker 1: the mastros ennica vaccines, and there are other vaccines as
Speaker 1: well that we have some data from that are developed
Speaker 1: in other countries. But it really has to be anything
Speaker 1: that you can get into people's arms that has efficacy
Speaker 1: at preventing seriously, the hospitalization and death needs to be
Speaker 1: what what occurs. And there are MR and A vaccines
Speaker 1: that are in development and don't have those storage requirements. So,
Speaker 1: for example, there's a German company called cure Vac as
Speaker 1: an m R and A vaccine that doesn't require that
Speaker 1: cold temperature storage. That could also be an option. To remember,
Speaker 1: we've got Novavacs in the wings as well. Their Phase
Speaker 1: three data should be coming up, so there's likely to
Speaker 1: be multiple candidates. And I think we just basically have
Speaker 1: to blanket the world with whatever they can get in
Speaker 1: order to stamp out this infection. Well, I just want
Speaker 1: to push that a little bit further. Was talking to
Speaker 1: somebody who's from India, was just talking about all the
Speaker 1: vaccines that they are developing specifically. We don't really hear
Speaker 1: about it because we're focusing so much at least in
Speaker 1: the US and some of the vaccines that we directly
Speaker 1: have access to. But you know, ultimately, as you said,
Speaker 1: we're gonna need multiple tools. That's been kind of a
Speaker 1: story from day one on all of this. Or do
Speaker 1: you see in terms of getting it really under control
Speaker 1: globally that companies like Maderna Fiser are really going to
Speaker 1: have to step up big time Maderna adviser. Are you know?
Speaker 1: Their vaccines have been proven to be highly efficacious, they
Speaker 1: have manufacturing capacity, they have not had any major hiccups.
Speaker 1: They do think that they're going to be a component
Speaker 1: of how we vaccinate the world, whether or not they're
Speaker 1: the major component. With astros aneka and and Johnson and
Speaker 1: john Us and other vaccines as well as Chinese vaccines,
Speaker 1: Russian vaccines and other ones that we don't know about,
Speaker 1: it's likely to be a hodgepodge. But I do think
Speaker 1: that the vaccines that have the most proven track record
Speaker 1: tend to be the Fisermadurna vaccines, So those are obviously
Speaker 1: going to be the ones that people will try to
Speaker 1: use if they have the ability to to use them
Speaker 1: in those situations. But I don't think that astras nic
Speaker 1: and Johnson Johnsons should be dismissed. I think those are
Speaker 1: really great vaccines for and I would take those vaccines now.
Speaker 1: I think those vaccines should be used in the United
Speaker 1: States as well. But so I really think it's going
Speaker 1: to be a portfolio approach in each country is gonna
Speaker 1: have different requirements and different capacities to be able to vaccinate.
Speaker 1: When do you think J and J that shot could
Speaker 1: be approved again Friday. I suspect and Friday the puzzle
Speaker 1: be lift. You'll see lifted. They'll see something similar probably
Speaker 1: what the E m A did. There'll be a warning
Speaker 1: label on it saying that there is this side effect
Speaker 1: risk of clots and that if you are at higher
Speaker 1: risk for those clots, if you're in that age group
Speaker 1: that we saw the signal, int haveing to dicussion with
Speaker 1: your doctors. I suspect Friday, um, and hopefully this will
Speaker 1: be something that we can resume at the same pace
Speaker 1: as before. I don't know if that's going to be
Speaker 1: the case, because some polling does show vaccine hesitancy has
Speaker 1: increased with Johnson and Johnson. But it is important that
Speaker 1: now Johnson and Johnson has unpaused what's going on in Europe,
Speaker 1: They're going to continue to roll out in Europe, which
Speaker 1: is really important. Uh, and hopefully we'll see this vaccine
Speaker 1: return to kind of its place of prominence, I think
Speaker 1: where it belongs. Hey, Dr geal Joanes, just the last
Speaker 1: minute that we have and then we'll come back with you.
Speaker 1: I'm wondering about what happens if the virus goes uncontained
Speaker 1: in other parts of the world when the United States
Speaker 1: does get to so called herd immunity. I know the
Speaker 1: worst case scenarios that variations developed or variance develop, excuse me,
Speaker 1: that can penetrate vaccinations. But does anything indicate to you
Speaker 1: that that could be a real possibility right now, because
Speaker 1: these vaccines thus far have have proven really resilient to
Speaker 1: these variant variations, right these variants exactly. So, I do
Speaker 1: think variances will continue to occur as the virus french
Speaker 1: from person to person. But I'm I'm confident that our
Speaker 1: vaccines will be able to stop what matters, serious disease, hospitalization,
Speaker 1: and death, even when it comes to problematic variance. That's
Speaker 1: what we've seen so far. But but it will be
Speaker 1: challenging if the world is not if the world is
Speaker 1: still not containing this virus, because international travel, international trade,
Speaker 1: all of that is still going to be disrupted for
Speaker 1: some period of time. Let's get right back to Dr
Speaker 1: Ames Adulge, a senior scholar an infectious disease physician at
Speaker 1: the Center for Health Security, I think JOHNS. Hopkins Bloomberg
Speaker 1: School of Health. He joins us on the phone from Pittsburgh.
Speaker 1: Dr adulge. I want to talk with you again about
Speaker 1: messaging and what a difference a vaccine makes, because we
Speaker 1: are getting mixed messages from different people about what is
Speaker 1: safe and what is not safe to do after you
Speaker 1: get completely vaccinated, tell me what you do now that
Speaker 1: you've received both of your shots. I'm basically as close
Speaker 1: to my normal like as as I can be, and
Speaker 1: I tend to be a very risk tolerant person, and
Speaker 1: I was taking calculated risks the entire pandemic even before
Speaker 1: I was vaccinated. So I may be a bit of
Speaker 1: an abarition in my field, but I think it's important
Speaker 1: remember that once you're fully vaccinated, the whole risk calculation
Speaker 1: that we've had to go through for so long is
Speaker 1: completely altered because you are now basically protected from serious
Speaker 1: disease and hospitalization or death. You're also very unlikely to
Speaker 1: even develop symptomatic infection, and you're very unlikely to be
Speaker 1: a spreader of infection. So I do think that while
Speaker 1: the risk is not zero, it is very close to zero,
Speaker 1: and it is something to me that I find acceptable,
Speaker 1: and I think that's what we need to be telling
Speaker 1: people that, based on your risk tolerance, start to re
Speaker 1: engage with the world, and that's going to move the needle.
Speaker 1: I think on vaccine hesitancy, because there's many people who
Speaker 1: think that, you know, if the vaccine doesn't change anything,
Speaker 1: why am I going through all of us? And I
Speaker 1: think there's been a lot of underselling of this vaccine
Speaker 1: and we're paying the consequence for it. So what does
Speaker 1: that mean though for people who have kids? Because kids
Speaker 1: are still a group that that can't be vaccinated. And
Speaker 1: this is something I know I'm going through. My friends
Speaker 1: are going through. Okay, so we're vaccinated, they're vaccinated, but
Speaker 1: our kids aren't. So you know, what's safe for for
Speaker 1: what safe behavior for us? Can we all get together?
Speaker 1: We don't know. So there's a great article in the
Speaker 1: New York Times to me by David Leonhardt said, I
Speaker 1: was quoted in some other colleagues that hockeyes were quoted
Speaker 1: in the talk directly on this issue. So I recommend that.
Speaker 1: But in general, this is all going to depend on
Speaker 1: your risk tolerance. Children tend to be spared from the
Speaker 1: severe consequences of disease, children that tend not to be
Speaker 1: major spreaders of infection, So I think that you can
Speaker 1: be much more flexible with children. Remember what you did
Speaker 1: during flu season? What did you do with your children
Speaker 1: during flu season? Probably not that much different. But every year,
Speaker 1: right even with the flu see even with the flu shot,
Speaker 1: the number of deaths that occur in children, you know
Speaker 1: in the hundreds every year from influenza, even with the
Speaker 1: ability of the vaccine. So just remember, just try to
Speaker 1: risk calibrate. And I'm not trying to minimize what COVID
Speaker 1: nineteen is overall, but in children, influenza has a more
Speaker 1: dangerous illness than than COVID nineteen is. And I think
Speaker 1: that's that's not the case in adults, but it's not
Speaker 1: the case overall, But in children, I think you have
Speaker 1: a lot more flexibility. So I do think that you
Speaker 1: can as much as your risk tolerance allows do this
Speaker 1: obvious seem a child that's asmatic, that's a different story,
Speaker 1: or a child that has special needs or medical problems
Speaker 1: or lung disease or immunit suppressed, you have to be
Speaker 1: much more careful. But if you've got a healthy child
Speaker 1: that doesn't have those conditions, I think you could be
Speaker 1: a lot more free with with how you interact once
Speaker 1: your family is vaccinator, or even before, because many children
Speaker 1: have been interacting throughout this pandemic. Remember, we've had schools open,
Speaker 1: we've had daycare centers open, we've had Little League sports,
Speaker 1: and we haven't really seen major negative effects and children.
Speaker 1: Nothing on the scale of what would worry me or
Speaker 1: what I think is an unacceptable risk if that's difficirom
Speaker 1: person to person. So we have a great story in
Speaker 1: Bloemberg Business Week magazine this week. It's the Remarks and
Speaker 1: it talks about how, since the beginning of the pandemic,
Speaker 1: exactly when the US might reach her immunity for COVID
Speaker 1: nineteen has been furiously debated in congressional hearings. Kind of
Speaker 1: shorthand for the end of the pandemic dr adage, is
Speaker 1: herd immunity truly kind of shorthand for the end of
Speaker 1: the pandemic? Is that the case that if if we
Speaker 1: get to her immunity, we could stop this virus or
Speaker 1: it's not so simple. I don't think it's so simple.
Speaker 1: I think her immunity is an important threshold to think
Speaker 1: about it, but it's not the holy grail to me.
Speaker 1: We get to the end of the pandemic, we get
Speaker 1: to the end of the public health emergency when we
Speaker 1: no longer have to fear for hospital capacity concerns, when
Speaker 1: we've taken away the ability of the virus to cause
Speaker 1: serious disease, hospitalization, death. And we're going to get there
Speaker 1: long before we get to her immunity because for for
Speaker 1: her community, we have to think about vaccinating every person.
Speaker 1: And remember this vaccine is only emergency a proof for
Speaker 1: children or people about the age of sixteen. You don't
Speaker 1: even include children there. So that's gonna be sometimes what
Speaker 1: I think it needs to be dispelled, as this notion
Speaker 1: that COVID nineteen is going to go away, that it's
Speaker 1: not going to be anything anybody talks about three years
Speaker 1: from now. That's not the case. Remember there are four
Speaker 1: other coronaviruses that cause of our common coals. This coronavirus
Speaker 1: stars kvie two is going to establish itself and has
Speaker 1: established itself in the human population. It's already infected other animals.
Speaker 1: We can't eradicate it or eliminate it. What we're going
Speaker 1: to have to do is live with it, but live
Speaker 1: with it in a in a tam or form. Because
Speaker 1: so many of our high risk individuals will be vaccinated,
Speaker 1: but we're still going to have cases. We're still gonna
Speaker 1: have disruption from what We're still going to have to
Speaker 1: think about it, but it's not going to be something
Speaker 1: that's very different from many of the other respiratory viruses
Speaker 1: that we deal with on a day in and day
Speaker 1: out basis every year, because the vaccine will have really
Speaker 1: just changed what this virus is capable of. All right,
Speaker 1: Gonna leave it on that note, Dr amish Adaga, thank
Speaker 1: you so much, Infectious disease Physicians, Senior Scholar at Johns
Speaker 1: Hopkins Center for Health Security at the Bloomberg School of
Speaker 1: Public Health. Supported by Michael R. Bloomberg, Founder of Bloomberg
Speaker 1: LP and Bloomberg Philanthropies. This is Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio.
Speaker 1: President Biden Tim getting ready to mark his one day
Speaker 1: in office that will happen this coming week, and with
Speaker 1: that in mind, this week's cover story in Bloomberg Business
Speaker 1: Week magazine takes really kind of a look back, reminding
Speaker 1: us of all the things that President Biden had to
Speaker 1: deal with when he took office. The health pandemic, a
Speaker 1: sacking economy, are reckoning with centuries of racial injustice and
Speaker 1: the existent threat of climate change. But it ain't over. Yeah,
Speaker 1: now comes the hard part. Nancy Cook is white House
Speaker 1: reporter at Bloomberg News, joining us on the phone from Washington,
Speaker 1: d C. Nancy, I'm really happy that we're getting to
Speaker 1: speak with you about this cover story in the latest
Speaker 1: issue of Bloomberg Business Week. When you think about the
Speaker 1: first one hundred days, Um, how has Biden done? Like,
Speaker 1: how has he been able to do this? I think
Speaker 1: most people would say that Biden has done a pretty
Speaker 1: good job. You know, he has a majority of Americans
Speaker 1: support him and pulling Democrats, even people who wish the
Speaker 1: Senator Elizabeth Warren or Bernie Sanders had won the nomination.
Speaker 1: They're really happy with him. Um, And he's even pulling
Speaker 1: well with Republicans who feel like, you know, he's done
Speaker 1: a pretty good job handling COVID and so what he
Speaker 1: walked into chiefly were, you know, a pandemic and low
Speaker 1: vaccination rates and schools closed and the economy really in
Speaker 1: a swamp. And the hundred days has really been about
Speaker 1: trying to solve those two crises. And they've gotten a
Speaker 1: lot of that by ramping up the vaccine distribution by
Speaker 1: getting more people vaccinated, and then passing this sweeping one
Speaker 1: point nine trillion dollar COVID relief bill which gives money
Speaker 1: for things like testing and school reopening and so so
Speaker 1: much of the first one days have just been dealing
Speaker 1: with crisis and now becomes the hard part where he's
Speaker 1: really trying to do something to cement his legacy. Right. Listen,
Speaker 1: he came into office, I mean, the whole pandemic, nobody
Speaker 1: had a playbook, but it did feel like they hit
Speaker 1: the ground running with a playbook in terms of dealing,
Speaker 1: you know, with the vaccine rollout, in dealing with economic
Speaker 1: stimulus and a lot of things. What is the playbook
Speaker 1: for the next one days? What does it need to be?
Speaker 1: What do people say it needs to be? Well, I
Speaker 1: think the playbook that they're trying to do is now
Speaker 1: that they have I mean, they still have to deal
Speaker 1: with the pandemic, and there's still a lot of fallout
Speaker 1: from the economic downturn, so no one in the White
Speaker 1: House is discounting that. But what they're trying to do
Speaker 1: now is sort of reshape the economy and propose the
Speaker 1: big ideas that Democrats have long wanted to do. And
Speaker 1: so that includes everything from infrastructure to more money for
Speaker 1: childcare and elder care. And that's the sweeping set of packages.
Speaker 1: President Biden is going to unveil this the third one
Speaker 1: that he's talking about um on Wednesday, this coming Wednesday
Speaker 1: at the State of the Union. And and those those
Speaker 1: the most recent two packages, the infrastructure and this upcoming
Speaker 1: families one. You know, that's more than three trillion dollars
Speaker 1: in spending that they are proposing. They want to offset
Speaker 1: it with tax increases, but again, it's a huge amount
Speaker 1: of money, and their goal is to really not just
Speaker 1: bring the economy back to where it was, but also
Speaker 1: sort of try to make some tweaks to it and
Speaker 1: reshape it. So obviously it's really ambitious. And the Biden
Speaker 1: administration and Democrats, well Biden administration, you know, is the
Speaker 1: Biden Biden's president. Democrats control the House and Senate, but
Speaker 1: barely uh and there are some modern modern Democrats who
Speaker 1: don't support these plans as they are right now. How
Speaker 1: does Biden sell this and and to what extent does
Speaker 1: it involve selling the plan to the American pe pole
Speaker 1: in a way that President Obama didn't do when it
Speaker 1: came to Obamacare. That's a great question. So the way
Speaker 1: that they sold the COVID relief bill, which is the
Speaker 1: way they're going to try to sell these two bills,
Speaker 1: was really to try to build public support outside of Washington.
Speaker 1: So what they have tried to do is to find
Speaker 1: unity or bipartisanship, not really as Democratic lawmakers and Republican
Speaker 1: lawmakers on Capitol Hill a green but more to try
Speaker 1: to promote policies and and put forward ideas that appealed
Speaker 1: to the majority of Americans. And so with the infrastructure package,
Speaker 1: for instance, you know, sevent of Republican voters are in
Speaker 1: favor of rebuilding roads and bridges, more job training, increasing
Speaker 1: broad brand access, and those are the things that the
Speaker 1: Biden White House is going to keep focusing on. These
Speaker 1: plans that appeal to Democratic and Republican voters, not necessarily
Speaker 1: just lawmakers on Capitol Hill. That's really the political strategy.
Speaker 1: Is it a smart strategy? Does it work? Will it work?
Speaker 1: It works with a COVID release bill it worked very well,
Speaker 1: And and I think that they feel like based on
Speaker 1: what they saw during the Obama administration and how much
Speaker 1: Obama was tied up with trying to go with after
Speaker 1: Republicans and WU Republicans who didn't really want to work
Speaker 1: with him. I think that the Biden administration learned some
Speaker 1: lessons and felt like they had to go another way
Speaker 1: and it was a gamble, but it worked for the
Speaker 1: COVID relief bill, and I think they're going to try
Speaker 1: the same thing with these next two packages. So enter
Speaker 1: two and that's when you know, the mid terms are
Speaker 1: and I'm wondering how the ambitious goals of the Biden
Speaker 1: administration has right now I have to get done before
Speaker 1: and how that can change the landscape in Washington. Well, really,
Speaker 1: they feel like they, you know, the midterm elections, the
Speaker 1: party in power typically loses, and so I think the
Speaker 1: White House is very focused on the mid terms and
Speaker 1: they feel like, you know, they have a window of
Speaker 1: time to try to get these major things done and
Speaker 1: they're going to go for it. And I think so
Speaker 1: much of the argument heading into the mid terms for
Speaker 1: the Biden administration is going to be an economic one.
Speaker 1: Are you better off financially than you were two years ago?
Speaker 1: You know, are you making more money? Um? Is the
Speaker 1: stock market in a good place where the kids schools reopening?
Speaker 1: Are there more people in the middle class, and so
Speaker 1: it's really it's interesting because it's a it's an area
Speaker 1: where Republicans have so dominated. Typically Republican politicians get higher
Speaker 1: polling for their handling of the economy. But what we've
Speaker 1: seen in recent polling is Biden is getting very high
Speaker 1: marks for a handling the economy, and so so much
Speaker 1: of that political argument in two is going to be
Speaker 1: around that. Nancy, what about though taxes and higher corporate
Speaker 1: taxes are capital gains taxes, which obviously are skewed towards
Speaker 1: the wealthy and corporations. But I do wonder how that
Speaker 1: might impact you know, you need to pay for what
Speaker 1: he's trying to do, I get that right, But I
Speaker 1: mean I do wonder how that might impact something like
Speaker 1: the mid terms. Ultimately, well, I think it, you know,
Speaker 1: depends what they can pass through corporus. Um. You know that.
Speaker 1: That's why I feel like the by An administration is
Speaker 1: thinking big and proposing what they want and then what
Speaker 1: asked to Congress is like a whole other reality check,
Speaker 1: but also raising taxes on corporations and wealthy people. Right now,
Speaker 1: polls really well, I think that there's a feeling during
Speaker 1: the pandemic that wealthy people worked from home, you know,
Speaker 1: they held onto their houses. They sort of they managed
Speaker 1: to ride it and they were okay, whereas a lot
Speaker 1: of other frontline workers, you know, we're put in dangerous
Speaker 1: positions having to go to work or lost their jobs.
Speaker 1: And so the idea of, like in polling, raising taxes
Speaker 1: on corporations and wealthy people is is overwhelmingly popular now
Speaker 1: and I think the Biden administration is trying to take
Speaker 1: advantage of that. What's the key metric for us to
Speaker 1: keep an eye on when we're thinking about the President
Speaker 1: Biden's effectiveness as a leader? Right, I mean, public polling
Speaker 1: is important, certainly, but but what do you look for? Well,
Speaker 1: I think that some of the key metrics when I
Speaker 1: talk to administration officials, like the things that they're watching are, um,
Speaker 1: what does the unemployment rate look like in two years? Um?
Speaker 1: You know, what does the GDP look like? Um? You know?
Speaker 1: These are what is when how soon does the country
Speaker 1: get back to full employment? When does the unemployment rate go? Um,
Speaker 1: you know, down to the fours again? And I think
Speaker 1: that that is something Those are some of the benchmarks
Speaker 1: that they're looking for in addition to just trying to
Speaker 1: control the corona very briefly, what a targy sectory, yell
Speaker 1: and tell you about that. I think that she is
Speaker 1: closely watching the labor market. Okay, yeah, that's what she
Speaker 1: likes to do. Nancy Cook, thank you so much, White
Speaker 1: House reporter at Bloomberg newsroom, Morow Journal. Yeah, but you
Speaker 1: let me drive. Oh no, no, no no, no, please, I'll
Speaker 1: do le. I want to drive. Just drive, baby, it's
Speaker 1: the questions. Get drying. This is the drive to the
Speaker 1: globe community. Thanks, we'll try us down on Bloomberg Radio.
Speaker 1: Is indeed just about ten minutes not and a half,
Speaker 1: to be exact, left in today's trading session. Let's get
Speaker 1: to the drive to the clothes. Aaron Kennon is back
Speaker 1: with US co founder and chief executive officer Clear Harbord
Speaker 1: Asset Management one billion dollars in assets under management, back
Speaker 1: with us on the phone in Stanford, Connecticut. Aaron, nice
Speaker 1: to have you here. A lot going on. I gotta
Speaker 1: ask you though, first not market related, but Harvard working.
Speaker 1: How's it going? Because I still remember when you said
Speaker 1: we pulled our people, close our offices out of New York.
Speaker 1: We're going to kind of embrace hybrid and work that way,
Speaker 1: you're still doing that? How's it going? So we opened
Speaker 1: up our new headquarters in Stamford back in in July,
Speaker 1: and we've been rotating UM in and out ever since then,
Speaker 1: Carol Um, So we were sort of normalizing. Now. I
Speaker 1: men every day and really look look forward to seeing
Speaker 1: my colleagues in the office. We do wear masks when
Speaker 1: we're out of our individual offices, but certainly feel as
Speaker 1: though the collaborative environment's adding value. Well, I gotta cut
Speaker 1: right to the chase here and get to the big
Speaker 1: news today that Bloomberg and a Boomberg colleagues broke. It's okay,
Speaker 1: the president eyeing a capital gains taxes high as forty
Speaker 1: three point four percent for the wealthy. As soon as
Speaker 1: that happened, stocks moved lower. Well, as soon as the
Speaker 1: news report came out, stocks moved lower on the news. Um.
Speaker 1: Your initial reaction to this right, well, you know, I
Speaker 1: think as a political calculus, it could make good sense
Speaker 1: for you know, occurring favor with the Democratic base. But
Speaker 1: if the goal is ultimately too increased tax revenue, I
Speaker 1: think it sort of fails miserably. Uh. It's sort of
Speaker 1: counterproductive in so many ways because the wealthy um as
Speaker 1: they do even now, but I think they'll do to
Speaker 1: an either even greater degree, will just allocate more of
Speaker 1: their earnings to non for profits more than earnings to
Speaker 1: do and advised funds UM. I think they'll hold off
Speaker 1: on on making those those capital gains sales because of
Speaker 1: course the tax code allows for stepped up capital gains
Speaker 1: upon death, and so that basis just steps up after
Speaker 1: they're passing anyway, So it just doesn't seem to achieve
Speaker 1: the desired economical and I think it sort of prevents
Speaker 1: the fluidity of capital moving around the system as it
Speaker 1: should in a natural way. I think you could have
Speaker 1: asset prices trading at at at valuations that are uh,
Speaker 1: sort of unhealthy uh and and artificial in some nature
Speaker 1: because there's just sort of a lack of uh an
Speaker 1: ability or willingness to to make sales well. And it's
Speaker 1: interesting too, you know, our Mike McKee talked earlier Aaron,
Speaker 1: and he made reference to when Clinton at present Clinton
Speaker 1: then raised corporate gains a capital gains taxes too, and
Speaker 1: he said, you know, we went into a budget surplus.
Speaker 1: There are lots of things we need to look at
Speaker 1: when we're talking about this. But I mean, is there
Speaker 1: a time in history that you can look back and
Speaker 1: kind of get an idea of what might happen in
Speaker 1: terms of the equity markets as a result of a
Speaker 1: higher capital gains tax. Well, I think you know, you
Speaker 1: end up it's sort of like the corporate tax, right right,
Speaker 1: you know, if you if you start nudging that upward.
Speaker 1: To um, you had your CEO of a Chipotle on
Speaker 1: just a little while ago, and he didn't want to
Speaker 1: say it, but but I think he wanted to say was, well,
Speaker 1: we have we have to raise prices, right, and if
Speaker 1: we're going to maintain our earnings, we have to raise
Speaker 1: our prices. So who has to pay more for burrito?
Speaker 1: It's the consumer. So who's who's kidding who? Right? So
Speaker 1: I think this is sort of the reality. There's a
Speaker 1: lot of politics embedded in this. I will um, I
Speaker 1: will admit that this is probably a first sort of
Speaker 1: shot at at goal for for the Biden administration. They
Speaker 1: know they're probably not going to settle settle at forty
Speaker 1: three point four percent at the high rate of capital gains.
Speaker 1: But but it just doesn't make great economic sense either.
Speaker 1: But you know, the Biden admistry and has some very
Speaker 1: ambitious plans for for the next two years and the
Speaker 1: next four years at beyond. It hopes Um, how how
Speaker 1: does it pay for those? Right, it's already floated, Uh,
Speaker 1: increasing the corporate tax rate. It's something that Di asked
Speaker 1: Brian nicol Cheese, CEO of Chipotle about. But they're gonna
Speaker 1: have to pay for it in other ways too, And
Speaker 1: like you said, politically, this may be a way to
Speaker 1: do it. Yeah, I just don't think the pie expands,
Speaker 1: and I think that's the challenge here. I think the
Speaker 1: pie actually shrinks under this proposal, and so we're asking
Speaker 1: us how do we expand the pie? And I think,
Speaker 1: you know, a stimulative economic policies can can do that.
Speaker 1: On the edges, we are at a in an environment
Speaker 1: where we've spent massive percentage of our GDP on fiscal stimulus,
Speaker 1: and that's certainly going to provide growth, but not sustainable
Speaker 1: sort of growth. I think the secular trend will will
Speaker 1: rear its unfortunate head and perhaps two thousand, twenty four
Speaker 1: and beyond, and then we'll have to contend with the
Speaker 1: massive deficits that we've built up over the last not
Speaker 1: just twelve months. Of course, but last many years, and
Speaker 1: and those headwinds to growth due to the deficits will
Speaker 1: be you know, another point of concern for for the
Speaker 1: economy and for earnings. But for now we're seeing record earnings,
Speaker 1: record growth. We think we'll probably see ten GDP annualized
Speaker 1: GDP growth next quarter, which will probably be a peak
Speaker 1: for the cycle. Um and and Europe will probably start
Speaker 1: to accelerate their growth profile towards the back end of
Speaker 1: this year as the vaccine rollout improves there. And I
Speaker 1: think that's the other story of the moment right now, frankly,
Speaker 1: which is it's not a synchronous growth story globally. You know,
Speaker 1: we walked into the beginning of this year and we thought, well,
Speaker 1: all of the world will have this vaccine rollout at
Speaker 1: the same time, so we're going to see the synchronous growth.
Speaker 1: We're not. And I think that has positive ramifications for
Speaker 1: the inflation story too. That demand side is not occurring
Speaker 1: all at once globally. It's happening here and it will
Speaker 1: roll into Europe and then South America and hopefully India
Speaker 1: after they consort out their vaccine woes. But unfortunate because
Speaker 1: it's we really do need to see the vaccine moving
Speaker 1: more aggressively around. Hey Aaron, though, but so what is
Speaker 1: your take on the infrastructure plan and the plan by
Speaker 1: the Biden administration the president specifically, you know about investing
Speaker 1: in America's future? We see China, do it? I know
Speaker 1: these are two different, very two very different countries. But
Speaker 1: I do wonder as an investor, do we at some
Speaker 1: point need to give companies a break, give a country
Speaker 1: a break to invest in the future, whether it's rebuilding
Speaker 1: the semiconductor industry, whether it's rebuilding you know, alternative energy
Speaker 1: or building alternative energy, you know, should we not be
Speaker 1: providing support for that because that's kind of our future?
Speaker 1: I do think there are some key um The transportation
Speaker 1: component of the infrastructure bill has a great deal of merit,
Speaker 1: right we need we need highway systems, we need bridges,
Speaker 1: we need WiFi, we need five G in this country.
Speaker 1: We need to be able to compete heat. But when
Speaker 1: we're going to compete, we also have to compete on
Speaker 1: a reasonably level playing ground as as it pertains to taxation.
Speaker 1: And I guess that's where I sort of go back to,
Speaker 1: you know, that point. I think if if, if the
Speaker 1: Biden administration's objective is to bring back jobs to America.
Speaker 1: We need to be able to compete with the world
Speaker 1: to do that because not only is money fungible, but
Speaker 1: a lot of these goods and services are fungible to
Speaker 1: and so I think taxation is a critical variable there
Speaker 1: as it pertains to the decarbonization initiative. I think this
Speaker 1: is the future in so many different ways in both
Speaker 1: the United States and around the world, and there are
Speaker 1: huge opportunities. Now I'm putting my investment cap on when
Speaker 1: I say this. There are huge opportunities and tail winds
Speaker 1: that we believe, you know, one can invest in over
Speaker 1: long periods of time, whether it's you know, wind and
Speaker 1: solar or frankliness may sound counterintuitive, but the demand side
Speaker 1: on the on the metals and mining side of the docket,
Speaker 1: where opper demand is going to outstrip supply massively over
Speaker 1: the next several years. We think by five dred to
Speaker 1: based on many different research reports of of late between
Speaker 1: now and two thousand and thirty, and we just do
Speaker 1: not have the supply online. It takes eight years to
Speaker 1: build a mind to and what's important about copper, of course,
Speaker 1: is it's required to build a wind turbine to bring
Speaker 1: solar on board and and to really decarbonizing entire pactrical grid. Hey,
Speaker 1: we gotta run. Always good to check in with you.
Speaker 1: I really appreciate it. Aaron Kennedy's co founder, chief executive
Speaker 1: officer at Clear Harbor Asset Management. Thanks for listening to
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